In a further sign that the Reedy Creek Improvement District — a special district that gives The Walt Disney Company phenomenal government powers over Disney World — is in actual trouble, Fitch Ratings has dropped the district’s bond rating:
If it is dissolved, the Reedy Creek district’s debt obligations, revenues and responsibilities would be transferred to Osceola and Orange counties and the small cities of Lake Buena Vista and Bay Lake.
The legislative action prompted credit-rating agency Fitch Ratings on Friday to place a “rating watch negative” on about $1 billion in outstanding district debt.
The district has about $79 million in outstanding utilities revenue and refunding bonds and approximately $766 million in outstanding ad valorem tax bonds, according to an alert issued by Fitch. The district’s various debt ratings range from A to AA-, Fitch said.
The Reedy Creek Improvement District is reassuring their investors on Florida’s pledge to fulfill the terms of any agreement made with bond holders: https://t.co/a0imSpXHB9 pic.twitter.com/symxd55Zth
— LaughingPlace.com (@laughing_place) April 26, 2022
The entire process of dissolving the Reedy Creek Improvement District is likely to be in the court system for a long time, as well as likely requiring more legislative action to clarify how all of this is to occur. If you’re interested in a look at just how complicated all of this is, That Park Place recommends reading a Jacob Schumer article out of Bloomberg:
The Contractual Impossibility of Unwinding Disney’s Reedy Creek
While we can’t endorse the opinions or subjective findings of Mr. Schumer, especially the idea that this can’t or won’t be done, the article does a great job of relaying the level of complication involved in all of this. Given the drop in ratings by Fitch, the business side of things is taking all of this quite seriously. It should also be noted That Park Place is working to determine the underwriter for the bonds as that will have significant impact on how all of this plays out over time. One thing readers shouldn’t worry about is the idea that taxes will increase for Central Florida residents — the idea that a governor up for reelection would take action resulting in tax increases on voters is far fetched at best. It’s also not legal according to Florida law that prevents taxation from increasing dramatically year-to-year.
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