Rating Agency Wary as DeSantis Signs Disney Bill

Rating Agency Wary as DeSantis Signs Disney Bill

By Dara Kam, The News Service of Florida

TALLAHASSEE — Gov. Ron DeSantis on Friday signed a bill aimed at dissolving a special taxing district that has granted Walt Disney World unique self-governing powers for more than five decades, even as a leading bond-rating agency cautioned investors about the proposed changes.

The bill (SB 4-C) targets the Reedy Creek Improvement District, which encompasses about 25,000 acres in Orange and Osceola counties on property in and around the “most magical place on earth.” The district has authority over issues such as land use and provides traditional functions of government, including fire protection and wastewater services.

DeSantis, who is seeking re-election and is widely mentioned as a potential 2024 Republican presidential candidate, came out swinging against Disney — one of the state’s largest employers and a major tourism draw — after the company vowed to fight a controversial law restricting education on sexual orientation and gender identity in schools.

The governor added two Disney-related measures to a special session this week on congressional redistricting. The Republican-controlled Legislature quickly took up the bills and passed them.

During a bill-signing ceremony Friday in Hialeah Gardens, DeSantis acknowledged that the measures were aimed at punishing Disney for defying him on the education bill, which was formally titled the “Parental Rights in Education Act” but was dubbed by opponents as the “don’t say gay” bill.

“We signed the bill, and then incredibly they (Disney officials) say we are going to work to repeal parents’ rights in Florida, and I’m just thinking to myself, you’re a corporation based in Burbank, Calif., and you’re going to marshal your economic might to attack the parents of my state? We view that as a provocation and we’re going to fight back against that,” the governor said at the campaign-style event.

The measure affects the Reedy Creek district and five smaller special districts: the Bradford County Development Authority, the Sunshine Water Control District in Broward County, the Eastpoint Water and Sewer District in Franklin County, the Hamilton County Development Authority and the Marion County Law Library.

The law would dissolve the districts on June 1, 2023, though it would allow the Legislature to re-establish the districts before then.

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 negative watch indicates the ratings could stay at their present levels or potentially be downgraded,” Fitch said.

The negative watch “reflects the lack of clarity regarding the allocation” of the district’s assets and liabilities, “including the administration of revenues pledged to approximately $1 billion in outstanding debt,” following the dissolution of the district, Fitch said.

Fitch said the debt is expected to be transferred to Orange County and, to a lesser extent, Osceola County.

“Fitch believes the mechanics of implementation will be complicated, increasing the probability of negative rating action,” the agency said.

The Fitch alert, issued before DeSantis signed the bill later in the day, did not lower the district’s bond ratings but cautioned investors about future actions.

The message also touched on what is known as ESG, or environmental, social, and governance principles, which the agency ranks on a scale of one to five. Scores of one or two indicate “no impact on the credit score rating;” a score of three reflects minimal risk; and scores of four and five “indicate that the ESG risk is either an emerging risk or a contributing factor to the credit decision,” according to Fitch’s website.

Fitch revised the Reedy Creek district’s “general government” score on “rule of law, institutional & regulatory quality, control of corruption” from three to five “to reflect state actions to dissolve the district, which points to a substantially reduced degree of independence from political pressure,” the agency said.

“These actions potentially diminish government effectiveness and could prove harmful to bondholders, which has a negative impact on the credit profile and is highly relevant to the Negative Watch action,” Fitch said.

Meanwhile, S&P Global Ratings Agency on Friday did not issue a warning about the Reedy Creek district but acknowledged the district’s pending dissolution.

The legislation did not lay out a plan for exactly how the district’s debt obligations would be transferred.

During debate on the measure this week, Democrats warned that taxpayers in Central Florida could be on the hook to pick up the tab for the outstanding debt as well as utilities and other services.

Rep. Andrew Learned, D-Brandon, told The News Service of Florida that Fitch’s warning translates into “real world consequences” for DeSantis and Republican lawmakers’ culture wars. He noted that the credit-agency warning came even before the district is dissolved.

“That’s the main takeaway. We are all going to pay more now, just because of the threat. Nothing even has to change. Just the threat of it changing is going to raise prices and affect bond ratings. And that’s what’s happening,” Learned said.

But DeSantis brushed off such concerns Friday.

“We’re going to take care of all that. Don’t worry. We have everything thought out. Don’t let anyone tell you that somehow Disney is going to get a tax cut out of this. They’re going to pay more taxes as a result of that,” he said.

DeSantis on Friday also signed a separate bill targeting Disney that will remove an exemption for theme parks that was placed in a 2021 law seeking to punish social-media platforms that strip users from platforms or flag users’ posts.

A federal judge last year issued a preliminary injunction blocking the law from being enforced, saying it was “riddled with imprecision and ambiguity.”

An Atlanta-based appeals court is scheduled to hear arguments Thursday in the state’s appeal of U.S. District Judge Robert Hinkle’s decision.

11 Responses to "Rating Agency Wary as DeSantis Signs Disney Bill"

  1. Quite likely the threat of existing debt is going to be addressed by the legislature prior to June of 2023 and is thus nothing but a leftist scare tactic…most intelegent folks have quite likely figgured that out. Contrary to the leftist scare tactics in play the tax revenue from Disney becoming just a regular business will be a windfall to the 2 counties involved. I read additional scare tactics about Disney Fire Fighters may not have their sweet Disney retirement benifit of forever health insurance…well they may well have to go on medicade medicare like the rest of us…nothing in life is guranteed and as a matter of fact if that happens to them the Fire Fighters should blaim the Disney CEO for foolishly kicking the hornets nest that is what the citizens of Florida became after the Disney CEO did what he did. What happened is a 100% cause and effect thing with the Disney CEO being the cause and the citizens of Florida raining hell down on Disney through their duely elected officials in the Florida Legislature acting on behalf of the good citizens of Florida. That is how government should serve it’s citizens. Disney needs to pucker up and start kissing some serious Florida Butt if they are ever going to recover from Disney’s own self inflected foolishness.

  2. Did the legislation Desantis signed eliminate any of the land of the Reedy Creek Improvement District or eliminate the tax burden tjat Disney owes as a landowner of over 25 hotels and 40 sq miles?

    Disney will have to pay for its water, fire and police services, etc just as every other landowner in the state does.

    While there may be some temporary uncertainty, as long as the mouse pays its fair share, there wont be any issues other than the fake issue Disney and its allies have made of thin air, misinformation style.

  3. “The message also touched on what is known as ESG, or environmental, social, and governance principles, which the agency ranks on a scale of one to five.”

    Using touchy feely metrics will hurt Fitch’s reputation as a reliable rating agency much more than the bond rating.

  4. Time for Disney to sleep in the bed they made for themselves. I never thought I would want to see something I grew up and loved so much crash and burn so hard. My kids mean more to me than that stupid mouse ever will.

  5. Mayor John FAILey
    Leadership You CAN’T Trust.

    * paid for campaign contributions in exchange for $27 million of your tax dollars*

  6. From A to AA- rating? … I say a fair price to pay to protect our children from the Racist Woke Supremacists, and pervert Groomers.

  7. Another self inflicted wound that was avoidable by the Woke.

    Wait till the Durham report, voter fraud findings, and Nancy Pelosi’s Insurrection are not only exposed, but prosecuted. They won’t recover before the next election, or the next, or the next… They may never recover.

    On the local level the Doak Stadium vote for mis-handling 27 million dollars will be the undoing of Mayor Dailey, Nick Maddox, Bill Proctor, and Diane Williams-Cox.

    Mayor Dailey and David Bellamy promote themselves as moderates, but they fool no one.

    Again, when you sell your soul for immorality and campaign contributions it will catch up with you.

  8. So the rating agency is “woke” too…big deal it wont change anything.
    So Judge Hinkle is “woke” too…big deal…everyone already knows that…wont change anything.
    So the author of this hit piece Dara Kam is “woke” and works for a fake news “woke” employer…big deal wont change anything.

    None of the above minions of the dark side can touch the greatest Govorner Florida has ever had…relax good citizens your Governor’s got your back against the “woke” dark side.

  9. Thank you Governor DeSantis, Senate President Simpson, House Speaker Sprowls and the Republican state legislators!

    Thank you for passing the Disney bills that will help protect our children from the groomers and at the same time make Disney pay their fair share in taxes. (Note: Disney will pay more taxes not the taxpayers)

    Thank you for passing the Governor’s 20-8 congressional redistricting map reflecting the Republican voter majority in the State.

Leave a Reply

Your email address will not be published.