By Nathan Crooks | Bloomberg
Florida’s Republican-controlled legislature has cleared a measure to strip Walt Disney Co. of its self-governance privileges in the state, escalating a feud between Gov. Ron DeSantis and the Burbank-based entertainment giant.
The legislation, which could lead to the dissolution of the Reedy Creek Improvement District created in 1967 in parts of Orange and Osceola counties, was approved by the House of Representatives in a 70-38 vote. It was passed by the Senate on Wednesday and now goes to DeSantis for his signature.
“This is political retribution that is at play here,” Jerry Demings, the Democratic mayor of Orange County said Thursday ahead of the vote, adding that Disney had a great partnership with the local community. “We’re trying to understand what the legislature truly is trying to do in this case, but I believe they have not adequately contemplated the ramifications.”
The whirlwind legislative action could have major consequences for Disney, which has been in a heated dispute with DeSantis, a potential 2024 Republican presidential candidate, after the company criticized a law he backed that limits school instruction about gender identity and sexual orientation.
DeSantis, who has championed a number of culture-war issues this year, asked legislators to consider the move in a surprise proclamation on Tuesday, with bills being introduced in both houses later that day.
The Thursday vote in the House took place without any debate during a contentious session where Democratic representatives staged a protest about a separate congressional redistricting bill.
Christina Pushaw, a spokeswoman for DeSantis, said Thursday the governor supported a “more level-playing field for all businesses in Florida” and that it was not retaliatory to “pass legislation that gets rid of carve-outs and promotes a fairer environment for all companies to do business.”
The Reedy Creek Improvement District has about $1 billion of municipal bonds currently outstanding, according to data compiled by Bloomberg. The action raised questions about who will be on the hook for paying back this debt and how Disney will move forward after being able to govern its own municipal functions for more than 50 years.
‘Political theater’
The district has its own building codes and approval process for new projects, meaning that Disney often doesn’t have to wade through bureaucratic channels spanning multiple governments to get things done.
“This legislature has become the puppet to the governor, and I think it’s political theater at worst,” State Sen. Lori Berman, a Democrat, said Wednesday ahead of the Senate vote, criticizing the hasty nature of the passing. “I feel like I’m living in an alternative reality.”
In addition to ending Disney’s district, the measure also eliminates five similar districts in other parts of the state as of June 1, 2023, barring any further legislative action. Under current Florida statutes, the debts and assets of a special district that is dissolved would be passed to the municipal government that takes over.
“The districts that are affected have not had any legislative oversight in over 50 years,” State Sen. Jennifer Bradley, a Republican, said on Wednesday. “Some of the districts have incredibly sweeping powers such that a single company could start construction on a nuclear reactor. At any other time, that would not be controversial to say we need to stop and have a little oversight over this process.”
Reedy Creek said in a statement Thursday that the state of Florida had promised to fulfill the terms of any agreement made with bondholders.
“We oppose the governor taking action against a company because of their opposition to that bill,” White House deputy press secretary Karine Jean-Pierre said, speaking to reporters aboard Air Force One.
Republicans argued in the debate ahead of the law’s passing that they would have over a year to address any issues that might come up. Democrats said there was no guarantee that further action would be taken.
DeSantis, who has also supported legislation this year to ban abortions after 15 weeks of pregnancy and limit “corporate wokeness and critical race theory,” intensified his criticism of Disney earlier this month when he said the company shouldn’t have its own set of rules. He also criticized content he said wasn’t appropriate for children.
“I can tell you as a parent of young kids, that is not what I want to be seeing them talking about pushing an agenda, an ideological agenda,” he said on April 1. “These videos with these people out in California who are working very high up in this company, the stuff coming out of their mouths is unbelievable, that they view their programming as a way to inject a lot of these topics into programming for very young kids.”
Stock falls
DeSantis’s attack added to a downbeat week for Disney, whose history in the state as an economic heavyweight has been connected to its special status for decades.
The stock closed Wednesday at the lowest since November 2020 as Netflix’s disastrous earnings report cast a pall over Disney’s own streaming ambitions. Shares were down 2.3% to $121.66 by the close in New York.
“It seems to us like the impact on DIS is more symbolic than real $ as far as we can tell, though political theater is never great for stock sentiment,” Wells Fargo & Co. analysts wrote earlier Thursday in a report.
Disney has been a fixture of the Florida economy since founder Walt Disney first scouted out the more than 25,000 acres of swampland he would use to build the company’s second theme park in the mid-1960s.
With the nearest power and water lines 10 miles or more away, Disney got the Florida legislature to create the special taxing district that would help pay the cost of services such as power, water, roads and fire protection the company would need to build iconic structures such as Cinderella Castle and the Contemporary Resort.
The company is now among the state’s largest employers, with more than 70,000 local workers. Its businesses there include four theme parks and more than 29,000 hotel rooms. Its flagship park, the Magic Kingdom, welcomed nearly 21 million guests in 2019, and Disney paid a combined $780.3 million in state and local taxes in 2021.
Disney has continued to invest in its Florida attractions, with the Star Wars-themed Galactic Starcruiser hotel opening last month and a Guardians of the Galaxy roller coaster coming in May. And under a deal arranged last year with Florida economic development officials, the company plans to relocate 2,000 more workers from California to a new corporate campus in the Orlando area.
Disney declined to comment on the Florida house and senate’s vote to terminate the Reedy Creek district.
Richard Foglesong, a historian and political scientist who wrote a book about Disney’s history in Florida, said Disney now had to navigate a very complex balancing act, with “something to lose on both sides.”
“I expect them to defend themselves without being overtly partisan,” he said in an interview when asked how he thought Disney would respond. “And I think that’s advisable for them to do.”
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