Florida Faces First Amendment, Contract, and Budget Issues in Dissolving Disney District

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Florida faces all sorts of obstacles in its bid to strip Disney World of its self-governing status. Disney’s Florida theme parks have long enjoyed the status of a special purpose district, allowed to operate as its own city. Since 1967, this special purpose district—known as the Reedy Creek Improvement District—meant that The Walt Disney Co. had governmental control over the lands in and around its Florida theme parks, an area now encompassing around 25,000 acres. When the district was created, “the land was little more than uninhabited pasture and swamp,” notes CNN. “With the special purpose district, Disney took over responsibility for providing municipal services like power, water, roads and fire protection—but were also freed from dealing with legal red tape or paying taxes for services that benefited the broader public.”

But after criticizing a Florida bill aimed at discussions of LGBTQ issues in schools, and saying the company would pause political donations in Florida as a result, Disney earned the wrath of Florida Gov. Ron DeSantis and other Republican lawmakers. Earlier this month, they retaliated by eliminating the Reedy Creek Improvement District, effective June 1, 2023.

At the bill’s signing, DeSantis called the special purpose district status “an aberration.”

“You’re a corporation based in Burbank, California, and you’re gonna marshal your economic might to attack the parents in my state. We view that as a provocation, but we’re gonna fight back,” said DeSantis.

The move may violate the First Amendment, say some constitutional lawyers.

“Singling out a business in a way that detrimentally affects its free speech rights is always problematic,” Clay Calvert, a law professor at the University of Florida, told Mediaite. In this case, it’s “textbook viewpoint discrimination” and “presumptively unconstitutional.”

“If Disney can prove that that’s what happened—that there was a retaliation against Disney by the state of Florida, who sought to take away a benefit that the government had previously gave to Disney—that might set for a retaliation claim under the first amendment,” First Amendment lawyer Lawrence Walters told WESH 2 Florida.

“The question is not whether Disney has a ‘right’ to some special tax status; it is whether government officials may use the power of the state to punish a corporation for speaking out on political issues,” writes constitutional lawyer Robert Corn-Revere in commentary for the Foundation for Individual Rights in Education.

“No one could plausibly suggest that Governor DeSantis could condition Disney’s ability to do business in Florida on making contributions to his campaign or on a commitment to publicly support his legislative agenda. Likewise, it would have been equally unconstitutional for Florida to have attached such conditions to the creation of the Reedy Creek Improvement District back in 1967,” Corn-Revere writes. “The same goes for revoking the tax district status simply because Disney publicly disagreed with the governor. The Constitution does not give license to politicians to use the machinery of government to reward those willing to mouth the party line or to punish those who refuse to do so.”

Florida’s dissolution of the district also runs up against contractual concerns. “There’s a much more basic reason [than the First Amendment] Florida can’t dissolve Reedy Creek—it promised bond purchasers that it wouldn’t,” notes Florida attorney Jacob Schumer at Bloomberg Tax:

Reedy Creek, like other special districts, can borrow money by issuing bonds, which can then be purchased by investors looking for fixed payments. Just like any other debt, the terms of the bond are based on the specific bond contract at issue. Reedy Creek is authorized to issue a few different kinds of bonds, but the most important ones are those that promise to pay from the property taxes collected by the district and those that pay from utility system revenue.

Reedy Creek’s bond offerings very much rely on the district’s unique powers. Its property-tax-based bonds discuss that the district can tax up to 30 mills and promise to tax at a rate high enough to pay the bonds. Its utility revenue bonds discuss the district’s various powers to generate utility revenue and promises to fix fees and charges sufficient to generate sufficient revenue to pay the bonds.

In authorizing Reedy Creek to issue bonds, the Florida legislature included a remarkable statement—included in Reedy Creek’s bond offerings—regarding its own promise to bondholders: “The State of Florida pledges to the holders of any bonds issued under this Act that it will not limit or alter the rights of the District to own, acquire, construct, reconstruct, improve, maintain, operate or furnish the projects or to levy and collect the taxes, assessments, rentals, rates, fees, tolls, fares and other charges provided for herein … until all such bonds together with interest thereon, and all costs and expenses in connection with any action or proceeding by or on behalf of such holders, are fully met and discharged.”

If Florida wants to end Disney’s special status, the counties where Reedy Creek is located (Orange and Osceola) could inherit Reedy Creek’s over $1 billion in bond debt and it will also violate contractual obligations to bondholders, Schumer writes. Besides, “both the U.S. and Florida constitutions place strict limitations on the government’s ability to impair its own contracts.”

Which means that in addition to being very pricey, the move could be unconstitutional independent of any First Amendment concerns.

The contract conflict has not gone unnoticed by Disney. “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 Reedy Creek Improvement District said in a statement to investors.

Should the dissolution proceed, it will be pricey for local governments and taxpayers. In addition to assuming bond debt, Orange County would have to provide services the Disney district currently provides for itself. “The cost of providing its services is $105 million a year and the cost of its debt services is $58 million a year,” reports the Miami Herald.

“Unless they want to cut services and cut spending elsewhere, they’re going to have to find a way to absorb $163 million,” Scott Randolph, Orange County tax collector, told the Herald. This could add an additional $200-$250 per year for the median household, Randolph estimated.


UKRAINE UPDATES

Russian foreign minister Sergey Lavrov said “the risks now are considerable” that the war in Ukraine could turn into a nuclear conflict. “I would not want to elevate those risks artificially. Many would like that. The danger is serious, real. And we must not underestimate it,” he told a state TV interviewer on Monday night. Lavrov accused NATO of engaging “in a war with Russia through a proxy” and “arming that proxy.”

“It’s very, very important that we don’t accept the way that the Russians are trying to frame what is happening in Ukraine,” commented British Prime Minister Boris Johnson. “They are trying to frame this as a conflict between Russia and the West, or Russia and NATO. That’s not what is going on.”

• The U.S. and other Ukraine allies want to send more weapons to Ukraine.

• Russia is shutting off gas to Poland and Bulgaria.

• Individual Americans can now sponsor Ukrainians seeking temporary refuge in the U.S.


FREE MINDS

Elon Musk remains confused and confusing regarding free speech.By ‘free speech’, I simply mean that which matches the law,” Musk tweeted yesterday. “I am against censorship that goes far beyond the law. If people want less free speech, they will ask government to pass laws to that effect. Therefore, going beyond the law is contrary to the will of the people.”


FREE MARKETS

The Biden administration is banning incandescent light bulbs. “The new rule states that light bulbs must emit a minimum of 45 lumens per watt,” CNN reports:

Lumens are a measure of brightness. The rule is an effective nail in the coffin for incandescent bulbs, which use a higher wattage than LED bulbs for the same amount of brightness.

Old bulbs that don’t meet the new standard will need to be phased out of production within 75 days, and the Department of Energy will work with manufacturers to ease the transition. Full enforcement of the rule will go into effect in July 2023, which is also the deadline for retailers to stop selling them.

The scheme got rolling back in the George W. Bush years and implementation started under Barack Obama, but the Trump administration hit pause on the plan.

The Biden administration says the switch will save consumers money and be good for the environment—which is exactly why a government ban on incandescent bulbs isn’t needed. Consumers have already been switching en masse to LED bulbs, notes CNN:

Even with the Trump administration’s delay, LED use has been increasing in US households. Nearly half of US households said they used LED bulbs for most or all their indoor lighting, according to the 2020 Residential Energy Consumption Survey. It was a huge increase from the 2015 survey, where just 4% of households reported using LED’s for most or all indoor light use.


QUICK HITS

• President Joe Biden used his clemency powers for the first time yesterday, issuing three pardons and 75 commutations. “All but one of the beneficiaries were convicted of drug offenses, and many were serving egregiously long prison terms of the sort that Biden enthusiastically supported during his 36 years in the Senate,” notes Reason‘s Jacob Sullum.

• Almost 60 percent of people in U.S. have COVID-19 antibodies in their blood, according to the Centers for Disease Control and Prevention. For children ages 11 and younger, it’s nearly 75 percent.

• Twitter founder Jack Dorsey offers his thoughts about Elon Musk buying the company. “In principle, I don’t believe anyone should own or run Twitter. It wants to be a public good at a protocol level, not a company,” tweeted Dorsey. “Solving for the problem of it being a company however, Elon is the singular solution I trust. I trust his mission to extend the light of consciousness.”

• Oklahoma is banning nonbinary birth certificates.

• The city of Fort Worth, Texas, will begin mining bitcoin. “Three Bitmain Antminer S9 mining rigs will run 24 hours a day, seven days a week, in the climate-controlled information technology wing of Fort Worth City Hall,” reports CNBC.

• Florida has banned ranked-choice voting. “This means cities or counties can’t pass their own laws on ranked-choice voting,” notes WPTV Palm Beach.

• Los Angeles County Sheriff Alex Villanueva is under scrutiny for investigating a reporter who implicated him in a police-abuse coverup.

• Residents of Llano County, Texas, are suing over county officials in federal court over the removal of books from local public libraries. “Though Plaintiffs differ in their ages, professions, and individual religious and political beliefs, they are fiercely united in their love for reading public library books and in their belief that the government cannot dictate which books they can and cannot read,” states their lawsuit.

• A new measure passed in Kentucky will “politicize county library boards,” warns PEN America.

• “The 5th U.S. Circuit Court of Appeals on Tuesday ended a legal challenge to Texas’ nearly total ban on abortion brought by providers across the state,” reports the Austin American-Statesman. “The appeals court dismissed the remaining challenge in the suit after the Texas Supreme Court in March said state licensing officials are not responsible for enforcing the abortion ban and therefore cannot be sued.”

The post Florida Faces First Amendment, Contract, and Budget Issues in Dissolving Disney District appeared first on Reason.com.


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