Federal Judge Dismisses Lawsuit Over Dissolution Of Disney District

FLORIDA — A federal judge has thrown out a lawsuit filed by Orange and Osceola county residents objecting to the Florida Legislature revoking Walt Disney Co.'s right to self-govern.

Just a week after Michael and Edward Foronda of Kissimmee and Vivian Gorsky of Orange Park filed their lawsuit, U.S. District Court Chief Judge Cecilia Altonaga dismissed it on the basis that the federal court lacks the standing to rule on the issue.

Senate Bill 4C, signed by Gov. Ron DeSantis on April 21, dissolved the independent special district formed in 1967 — known as the Reedy Creek Improvement District — that allows Walt Disney World to self-govern its theme park properties in Orange and Osceola counties.

During a special legislative session on congressional redistricting, DeSantis called on the Legislature to revoke Disney's special district status after Disney executives spoke out publicly against the governor's bill (House Bill 1557 or the Parental Rights in Education bill) that prohibits discussions of sexual orientation or gender identity issues with students in kindergarten through third grade.

The residents' attorney, William Sanchez of Miami, a Democrat running for U.S. Sen. Marco Rubio's seat, argued that the bill violates Florida taxpayers' federal constitutional rights as well as the Florida Bill of Rights for Taxpayers because it will lead to "significant injury to taxpayers."

"Gov. DeSantis and certain Republican lawmakers made it very clear that they were signing this new bill in order to punish Disney's special status because many Disney employees had expressed disagreement with the 'Don't Say Gay' bill," wrote Sanchez in the complaint he filed on behalf of the three residents. "Even though the governor and certain Republican lawmakers welcome a fight with Disney on this matter, they appear to not want to follow constitutional guidelines and previous legally enforceable agreements involving over $1 billion in bond issuances."

Sanchez noted that a number of experts "have publicly opined on this matter, and the great majority have indicated that the new bill will probably lead to increased taxes for the residents of the Orlando area, as well as those that live throughout the State of Florida."

He said his clients, who are property owners in Orange and Osceola counties, "fear that they will now have to assume the tax burden that Disney previously assumed under the special tax status."

He quoted Orange County Tax Collector Scott Randolph, who said the county will have to raise property taxes because the dissolution of the special district would "leave the county responsible for more than $1 billion in debt servicing, in addition to the cost of covering services Disney currently manages, like the fire department."

Walt Disney Co. hasn't provided a specific figure but said its bond debt for the Reedy Creek Improvement District is between $1 billion and $2 billion. Additionally, under the Reedy Creek agreement, Disney said it pays more than $160 million a year for fire protection, emergency services, road maintenance, water and wastewater collection services, solid waste services, utilities and other expenses entailed in serving the 25,000-acre district.

The district encompasses four theme parks, two water parks, one sports complex, 175 miles of road, 67 miles of waterway, the cities of Bay Lake and Lake Buena Vista, more than 40,000 hotel rooms and hundreds of restaurants and retail stores.

See related stories:

• Retribution Against Disney Could Cost Florida Billions Of Dollars
• FL Senate Passes Bill Dissolving Disney's Reedy Creek District
• Disney's Special Governance Targeted By DeSantis Over 'Don't Say Gay'
• Retaliation Against Disney For Opposing Bill May Cost FL $2 Billion

In a statement to bondholders, the Reedy Creek Improvement District said the bill violates the state's legal statutory and contractual obligations under the Reedy Creek Improvement District agreement, which forbids the state from dissolving the district until all bond obligations are met.

“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 district said in its statement.

The district has yet to take any legal action against the state.

When asked his reaction to Disney's statement, DeSantis made it clear that Disney, not the state, would pay the bond obligations.

"It just simply ends with them being treated the same as every other company in Florida," he said. "They're going to follow laws. They're not going to have their own government. They're going to pay their debts, pay their taxes."

While Altonaga dismissed the case on the basis that the claim didn't give sufficient evidence that the plaintiffs had been injured, she left the door open for other lawsuits.

Among the defects in the lawsuit was the fact that it was filed in federal court when the issue fell within the jurisdiction of the Florida courts because it involves state officials sued for enacting a state law.

Since the case was not dismissed with prejudice, it can be reopened at a later time or in a different court. The dissolution of the Reedy Creek Improvement District doesn't go into effect until 2023.