Florida Action Against Disney More Complicated Than Lawmakers May Have Known

That plan to strip the Disney Corp. of its special municipality status in Florida? It’s more complicated than many Florida officials may have realized.

A week after the Florida Legislature acted with lightning speed to dissolve the Reedy Creek Improvement District, a 25,000-acre parcel near Orlando controlled by Disney, with its own firefighting and other municipal services, indications are that the move will ultimately amount to few real changes.

“I don’t think this would have an impact either way and I don’t think it will ultimately happen,” said Geoff Bichler, an Orlando attorney who has represented employees in workers’ compensation claims against the district.

The Legislature, at the request of Florida Gov. Ron DeSantis, voted to end Disney’s 55-year-old self-governing status in retribution for Disney’s criticism of Florida’s “Don’t Say Gay” law that restricts what can be taught in public schools. The effective date of the dissolution is June 2023, when it’s expected that the municipal services and workers would be absorbed by Orange County and Osceola County governments.

The law immediately raised questions about what would happen to Reedy Creek employees’ benefits, including workers’ compensation payments for injured workers, and other insurance contracts the district may be a party to.

The president of the Reedy Creek Firefighters Association, Jon Shirey, told the Orlando Sentinel newspaper that dissolving the district will end first responders’ lifelong health insurance paid by the district, along with complimentary lifetime Disney passes. Workers also have access to other perks, including a discount on Met Life auto insurance.

“For our retirees who plan their lives and their finances around a benefit that they were promised for life, this is incredibly concerning,” Shirey said.

Others, though, have said that at least some benefits will be left untouched if the Disney city goes away. Reedy Creek employees, like other municipal workers in the state, will likely remain part of the state employees retirement system.

And the self-insured district is required to keep enough reserves to pay lifetime and long-term workers’ comp benefits well into the future, even if the district ceases to exist, attorneys said.

“If an agency/district dissolves, there is a process or procedure in place for existing claim and future claims,” explained Tonya Oliver, an Orlando lawyer who has handled many Reedy Creek firefighter workers’ comp claims.

Another question may be harder to answer: Would the county governments that absorb the district be any more accepting of comp claims than the Disney district was?

During the early days of the COVID-19 pandemic, fire workers criticized Reedy Creek administration for fighting comp claims and time off for sick and exposed first responders. Eight firefighter/paramedics fell ill from the virus in summer, 2020, but the district denied the claims, forcing the men to burn through their personal sick time and vacation time, workers said.

A spokesman for the district said at the time that firefighters in the Magic Kingdom already had plenty of time off, including unusually large amounts of union-negotiated leave time.

A check of Florida workers’ compensation court records shows that 61 comp claims filed by Reedy Creek workers in the last 20 years have been contested.

In the end, concerns about dissolving Reedy Creek may all be for naught. The district posted a notice to investors last week that the Legislature’s actions violated a 1967 agreement with the district, in which the state pledged to pay off all of the district’s bond debt if it altered the rights of the district, the Miami Herald reported.

That bond debt could be as much as $1 billion, according to news reports. Disney said it will continue operating as it has.

“In light of the State of Florida’s pledge to the District’s bondholders, Reedy Creek expects to explore its options while continuing its present operations, including levying and collecting its ad valorem taxes and collecting its utility revenues, paying debt service on its ad valorem tax bonds and utility revenue bonds, complying with its bond covenants and operating and maintaining its properties,” the statement from Reedy Creek reads.

The punitive action against Disney is also getting pushback from the county that would have to absorb part of the district. Orange County Mayor Jerry Demings told reporters last week that if Reedy Creek were to be entirely dissolved, it would be “catastrophic” for his county’s budget, according to news reports. The district currently reimburses the sheriff’s office when its services are needed, including those for two smaller municipalities controlled by Disney that were created at the same time as Reedy Creek.

Law professors also have said that Disney will have a valid constitutional argument and will likely prevail in litigation over the dissolution. Lawmakers appeared to act to punish the Disney Corp. because of what it said publicly about the Parental Rights, or “Don’t Say Gay,” law.

That retribution could be seen by the courts as a violation of the corporation’s and its officers’ right to free speech.

Ironically, the Reedy Creek model was once touted as a potential solution to some of Florida’s property insurance woes. In 2010, the Competitive Enterprise Institute argued that Disney had been able to survive several hurricanes without significant damage, partly because the district was able to set building codes at a level that made structures more wind resistant.

Development in the district also was done in a holistic manner that minimized flooding, and the relatively affluent district did not have a diverse constituency to consider and was able to set taxes high enough to enforce building codes and ordinances to help minimize storm damage.

The self-governing approach could work in other parts of Florida, the Institute’s Arin Greenwood proposed.

Other questions remain on the logistics of it all, including what would happen to excess liability and other insurance contracts the district it may hold. Officials with the district could not be reached this week, but the head of the Florida Association of Special Districts said that Orange and Osceola counties would probably be able to assume most of the district’s self-insured assets and liabilities without disruption.

“It would be more like a merger than a dissolution,” said David Ramba, executive director of the FASD. Statutes also have provided for a relatively seamless way to reconstitute the district, if necessary, he said.

Most observers reached by the Insurance Journal predicted that the dissolution won’t happen, once “cooler heads” prevail in the Legislature, perhaps after the November election. But some perks now enjoyed by the district could be scaled back next year.

One of those perks that could be done away with is Reedy Creek’s ability to build its own nuclear plant if it so desired. Ramba said it’s highly unlikely Disney officials would ever want that. But as the law now reads – at least until June 2023 – a nuclear cooling tower next to the Cinderella Castle is perfectly legal.

Photo: Associated Press

Topics Florida Legislation