When you’re in Disney World, lost in the eerily self-contained universe of its vast theme parks, it can be hard to see that you’re also in the Reedy Creek Improvement District, a special governance zone that gives the Walt Disney Company powers very like those of a county government. In April, Governor Ron DeSantis and the Florida legislature passed a bill that would do away with Reedy Creek. But dissolving the district may result in a host of unfortunate consequences. On episode 48 of The Politics of Everything, hosts Laura Marsh and Alex Pareene discuss the surprising past and uncertain future of Disney’s Reedy Creek with Jacob Schumer, a lawyer in Maitland, Florida, and Richard Foglesong, a historian and political scientist and the author of Married to the Mouse: Walt Disney World and Orlando.
Alex: Walt Disney World’s Magic Kingdom theme park is known as the most magical place on earth. The Disney World resort in Central Florida consists of four theme parks, countless hotels, waterparks, golf courses, a shopping and nightlife district, and even its own public transit system. But Disney World isn’t just a resort. It’s its own government.
Laura: Walt Disney World is the brand. Reedy Creek Improvement District is the formal name for the land on which the magic happens. It’s one of more than a thousand special districts in Florida, but it’s by far the most unusual. Back in the 1960s, Walt Disney himself helped carve out powers to grant his corporation the ability to govern a piece of land twice the size of Manhattan.
Alex: Now, thanks to a Republican governor with higher political aspirations, that era of governance may be coming to an end. Ron DeSantis and the Florida legislature moved this April to end the special status of Disney World.
Laura: But Disney may have the last laugh. On today’s show we’re looking into the history of Reedy Creek and asking whether a conservative culture war can defeat contract law. I’m Laura Marsh.
Alex: I’m Alex Pareene.
Laura: This is The Politics of Everything.
Laura: So Alex, you didn’t go to Florida for this episode as research, but you have recently been to Florida and you went to Disney World, right?
Alex: Well, we’re talking about the tax code, so I actually should claim I went there for research so I can write it off.
Laura: Put it on expenses!
Alex: I was in Disney World recently with my kid. I have a young kid.
Laura: I’ve been to Disneyland, the one in California. I’ve never really understood what the difference is between the two of them.
Alex: There are some important differences. Disneyland is situated within Southern California, in Anaheim, which is a real town. When you walk out of Disneyland, you’re in Anaheim, you’re in this town. When you’re in Disney World, which is ostensibly in Orlando, Florida, there is no walking out. It’s this completely self-contained place. You arrive, you get your car parked in one of the lots, and then you’re just ensconced in Disney World until you leave to go back home. Your resort hotel—ours was like a fake Coney Island thing—and all of these businesses, which are real restaurants and bars, are still Disney. The whole thing is stage-managed in this way that would be impossible for most other tourist locations to accomplish. You can’t stage-manage a real city, but this is a place the size of a city that is almost entirely staged-managed. It’s a really remarkable and strange place.
Laura: I guess even if you’re an urban planner who’s been given a lot of power in a town, you can do things like zoning and building codes and you can encourage development, but you can’t actually build every restaurant and decide where every road goes. You just don’t have that power.
Alex: Exactly. You know, in Aspen they can tax residents to maintain infrastructure. They can’t be like, “We’re going to make this part of town look like New Orleans for some reason. We’re just going to build it. It’s going to look like New Orleans. That’s just going to be what it looks like here.”
Laura: I think when people go to Disney, they expect it to be strange. They don’t think it’s weird that you’re like, “Oh, this is like New Orleans,” because you’re there for a theme park, so you just expect that theme park experience to be extended. That’s what we all know, and that’s how Disney is marketed. I think the strangeness that people are unaware of is all the laws and regulations that allow that to happen and the amount of power that a company like Disney would need in order to make these kinds of decisions.
Alex: Yeah, absolutely. It’s not just about owning the land. There’s really nowhere else in the country where you could make a Disney World. So we wanted to figure out how Disney made a Disney World. We’re speaking now with Jacob Schumer, an attorney specializing in local government issues who lives in Maitland, Florida. He recently wrote a Bloomberg article titled, “The Contractual Impossibility of Unwinding Disney’s Reedy Creek.” Jacob, thank you for talking to us.
Jacob Schumer: Thank you for having me.
Alex: It’s a little funny: This conversation that began with a culture-war debate now turns on something called the Reedy Creek Improvement District and, I think, fairly arcane issues of tax law and contractual obligation to bond holders—which of course is what I would love to be discussing. So if you could help us out a little bit, what is the Reedy Creek Improvement District, and what makes it sort of a special place?
Jacob: A special district usually does one or two things, like manage freeways, manage a hospital—that kind of thing. But Reedy Creek has a lot of powers, almost to the point of being like a city or county. Obviously it’s heavily associated with Disney because Disney or people associated with Disney own all that property. But actually the word Disney is not a feature of the bill that created Reedy Creek.
Alex: Right. They said, “We’re just going to create this special district—for reasons—that has all this power.” And it just so happens that basically all the land in it is at least controlled by Disney. Is that right?
Jacob: That’s my understanding. That’s not that uncommon—in that local government usually is represented in some form by people that represent the landowners or the residents. But because it was drawn around the property Disney owns, it became a kind of Disney-run government. It has a lot of taxing power. It can tax three times higher than cities and counties can in order to maintain all this infrastructure that they’re authorized to take care of.
Alex: That’s property taxes, right?
Jacob: That is, yes. Reedy Creek can charge three times higher property taxes than the surrounding counties can, than the cities can. It also has a lot of other special features, like the ability to start their own utilities.
Laura: Why do they need to charge high taxes to build roads and stuff there? They own all the land—why can’t they just build roads? Why did they need to tax themselves an insanely high property tax that you can’t tax anyone else in Florida to build roads?
Jacob: When Disney decides to tax itself through Reedy Creek, the taxes that they pay to Reedy Creek are somehow tax deductible, because they’re paying local taxes to a government. Also, if it’s a government building a road, that gives Reedy Creek the ability to get grant funding and other kinds of funding.
Alex: Right, if I’m building a road in front of my hotel and it’s part of my hotel, I’m paying all the costs of building that road. But if I’m taxing myself to have a government build the road, I’m eligible for state highway funding. I’m eligible for the kind of money that every other municipality gets to build and maintain roads.
Jacob: Also, they need to connect these roads to the highway system and all that. There’s another benefit, which is sovereign immunity. Reedy Creek is sovereign immune, to the same extent that other governments are.
Laura: What does that mean?
Jacob: That means if Reedy Creek does something negligent that causes an injury, whoever gets injured is limited in how much they can go after Reedy Creek. Also, there are some actions that you just can’t take against the government, because there’s still sovereign immunity.
Alex: Sovereign immunity is a judicial doctrine, right?
Jacob: It’s a long-standing legal doctrine. It’s treated as a central assumption—a law—that you can’t sue the king. The only time you can sue the king is if the king lets you.
Alex: It’s a doctrine that severely limits your ability to sue a government, a municipality, a city, a state, etc.
Alex: I can see why Disney World would want that.
Laura: One way of looking at this special improvement district is that they have all this power and it was going to them under this special improvement district status. These are just powers, so you could take them away, right? Why is that so difficult?
Jacob: The reason why it’s so difficult, in this instance, to take any powers away from Reedy Creek is that the state of Florida promised not to take away any powers from Reedy Creek. In the 1967 special act that created Reedy Creek, there’s a specific section that says the state of Florida covenants to all bond holders that it will not alter or abridge the powers given to the district. They also did the same thing for the federal government. They promised the federal government that they wouldn’t alter or abridge Reedy Creek’s powers. In this case that’s important because there’s a billion dollars in outstanding debt that all says the state of Florida has promised not to alter these powers. If you dissolve a district, then you are altering those powers.
Alex: Right, so you have the fact that it was pretty unambiguous language. Florida was like, “We promise we will never change this arrangement.” But part of the reason for making that promise is that, from my understanding, Reedy Creek has all this debt. If you were a bond holder, this was an attractive investment because you had this promise from Florida—“We will never change the terms of this agreement”—so you feel comfortable lending money to Reedy Creek.
Jacob: If you talk to people that sell bonds, the most important part of a bond is the reliability of the payment. Certainly having a legal promise not to affect the district means that that portion of the district is reliable, because the law can’t be changed.
Alex: Legally, I guess, if they try to dissolve it that bond debt now belongs to Orange and Osceola county.
Jacob: There’s an existing statute that says that when a special district is dissolved, the local general-purpose government takes on the outstanding debt. Because Reedy Creek straddles two counties, theoretically the two counties and maybe the cities within Reedy Creek will take on the debt. From what I’ve read, the tax increase would be something like 25 percent. It would be a pretty heavy tax increase for both counties.
Laura: For an individual living in that area, if this is a tax that would be levied through local taxes, that could be the difference between being able to afford staying in your home and making your mortgage payments and getting by, and not. If your taxes go up by a couple thousand dollars, that’s really a significant amount for the average person.
Jacob: For people that own property in Orange and Osceola, it could be a very heavy tax increase if it went through.
Laura: If you put aside the question of the two counties—say that they’re going to find a solution where this debt isn’t passed directly to those people. Then what? I mean, what are the effects more broadly on the state of Florida and on Disney’s ability to operate its theme park as a world-famous tourist attraction?
Jacob: Reedy Creek is mostly built. It’s much less important to Disney now than it was when Disney was first starting out because all of this infrastructure is already there. It was mostly a matter of convenience, where they don’t have to go to the counties to get permits because they get this special exemption from local government permitting. But Universal, for example, survives without this exception and seems to get along. Let’s say that the debt isn’t an issue. Somehow the counties absorb the cost and there’s no issues there. One question is going to be, “Are the counties going to maintain all this infrastructure, all these roads, to the same standard that Disney has had for a long time?” It’s one of many questions that is just like, “Who knows how this could work in the future?”
Alex: I mean, it’s funny: Disney created a private high-tax, high-service government that might have to be absorbed into Florida’s more general culture of lower taxes and lower standard of service. I mean, I think Disney operates the third-largest public transit system in the state—and you know, those buses come a lot.
Jacob: They do.
Alex: Jacob, that was extremely informative. Thank you so much for talking to us.
Jacob: No problem. Thanks for having me on.
Laura: So Disney World has enjoyed a very special arrangement with the state of Florida.
Alex: The company operates with the powers of a government but without being beholden to any voters.
Laura: After a short break, we’ll be back to talk about how Disney struck this deal with Florida.
Laura: We’re talking about how Disney came to have this Reedy Creek Improvement District. Richard Foglesong is a historian and political scientist and the author of the 2003 book Married to the Mouse: Walt Disney World and Orlando. Richard, thank you so much for joining us.
Richard Foglesong: It’s good to be here. Thanks for inviting me.
Laura: You’ve been studying this for a long time. We’re hoping you can help us get to the bottom of some of these mysteries. Walt Disney was based in California. Why did he come to Florida in the first place?
Richard: Well, the company came to Florida because they had discovered that only 10 percent of the people who came to Disneyland in California came from east of the Mississippi river. They concluded that there was potentially a market for an East Coast Disneyland. Soon after Disneyland opened, there were cities and states that were petitioning the Disney company to come to them. So on the one hand they thought there was a market, and on the other hand they were getting feelers from other places on the East Coast inviting the Disney company to come there.
Laura: Was there anything particularly hospitable about the political climate in Florida for a big company that wanted to set up its own kind of private kingdom?
Richard: You have to go back to California. There were two things that the Disney company didn’t like about their California location. One was that they didn’t have enough land and there was all this ticky-tacky neon jungle, hamburger joints and whatnot, surrounding Disneyland close up. They didn’t like competing with that. When Walt gave his first and actually only press conference, in November of 1965 in Florida, he said, “We don’t like it. We get blamed for it, but we didn’t create it,” referring to the neon jungle. The second thing was that they didn’t like having to deal with the city of Anaheim. They didn’t like depending upon public services provided by Anaheim; they didn’t like being regulated by the city of Anaheim. They wanted to have their own government so that they could self-regulate, and they wanted to have their own government so that they could provide public services themselves.
Alex: And Florida was a place where it was easier for them to get that done?
Richard: At the time, Florida wasn’t that big a deal, and the Disney company was. Really Disney had all the marbles. They could demand things and get them because Orlando and Florida needed them. They got the Reedy Creek Improvement District, and they got a lot of powers with it, several of which they would never use—the atomic power plant, an airport.…
Laura: It’s kind of amazing to think of a company negotiating for the atomic power plant, you know, just in case—just to set the bar really high.
Alex: Just down the line if we need it.
Laura: If they’ll let you have that, they’ll let you build any roller-coaster you want.
Alex: When they got all of this land—I believe the amount of land that they have is twice the size of Manhattan—were their plans more ambitious than a theme park? I’ve read that Disney wanted to build the future city and all this other stuff. Were they actually serious about all of that kind of utopian community stuff? Or was it really just about making a theme park?
Richard: It is indeed true that he had an interest in new towns. When he flew up and down the East Coast, he looked at places like Reston, Virginia, for example, a new town, so-called, in the 1960s. However—this is very important—something that I discovered in getting access to the Disney archives in Burbank: In fact, they never intended to build a community where 20,000 people would “live and work and play.” That was a misrepresentation of their intentions. In order to have these government powers, they needed to have a general-purpose local government—like the city of Orlando; like New York—because only a general-purpose local governor that has elections where people vote, where people elect a mayor and a city council, could exercise these public powers to regulate and inspect buildings, for example, and to provide public services. The Reedy Creek Improvement District does not have elections. It has, well, elections based on the good capitalist principle of one acre equals one vote.
Laura: This is the form of democracy that we had in like eighteenth-century England.
Richard: Well, right. That’s not the American way. Sometimes it may seem that way, but no.
Laura: Not officially.
Richard: Correct. So what they did was to create a two-tier system of government. There are two cities, Bay Lake and Lake Buena Vista. Right now, there are about 52 people who live in these two cities. Between the two, 52 people. They elect the city council and the mayor, and they appoint a planning and zoning commission. So the public powers—this is widely misunderstood—belong to those two cities, or false cities, and then the execution of those powers is given over to this thing called the Reedy Creek Improvement District that doesn’t have elections as they’re supposed to exist in the United States.
Laura: The 52 people in those towns that you mentioned—they’re the kind of voting public of these two towns. That’s not just someone who’s like, “Oh hey, I found this house on Zillow and I’m moving into the neighborhood and so it just turns out I’m going to have a vote in the Reedy Creek Improvement District.”
Richard: The people who live there are trusted, supervisory-level, long-term, nonunion employees. You see from that description that it’s like a company town or two company towns. This was a way an attorney for the Disney company, Paul Helliwell, figured out how they could comply with the law that said that only a popularly elected government could exercise planning and zoning authority and provide public services—how they could do that end around and have it both ways.
Laura: I think that’s one of the reasons we wanted to do this episode. There are lots of challenges to democracy and lots of ways in which democracy doesn’t work as it should in the United States. But this is such an interesting example of a place where there’s a kind of a carve-out of local democracy and a company can actually set it up pretty much however they want.
Richard: Well, that’s right. You know, this is something that I have taught about and discussed with students over a long period of time. The question, “What’s the best way to build the city? Based upon centralized land ownership and administration, or based upon capitalism and democracy?” It might be noted that American cities are the first cities in world history to be built under the principles of capitalism and democracy. We call that a liberal society. The problem with democracy—there are many advantages; I believe in democracy—
Laura: Good caveat.
Richard: The problem with democracy is that it fragments power. Well, that’s a good thing in many respects, but it does make it difficult to govern the city. The other problem is fragmented landownership. What the Disney company wanted was to have a city that was built on centralized administration and common landownership. That’s what they got by owning all the land and by creating a centralized government as well. They thought that solved the problem of governance in American cities. There was a better way to do it. In fact, as a city, Disney is pretty well built.
Alex: What I find interesting is that a lot of the framing of the special improvement district describes it as a benefit that Disney’s getting from the state of Florida. The way you described it, Disney actually did give them a good deal back in the ’60s. “We will take care of infrastructure. We will bring tourist tax dollars to your state. We’ll handle the hard part of running this. In exchange, we got all this land and all these powers.” Would you say that’s still fair? That it’s a fairer deal than many people think?
Richard: No, I wouldn’t. There’s more to the story. I guess I mentioned one thing: Disney misrepresented its intentions. It said that it needed these powers in order to build a community where 20,000 people would live and work and play—quote, Walt Disney. They never intended to build that place. Second, in the mid-’80s, Florida—fast-growing by that time—adopted so-called growth management legislation that involved impact fees, where landowners or developers who were beyond paying taxes were required to make payments to help subsidize roads, water, sewers, and things of that sort. Well Disney held up his hand and said, “We’re not paying that, because the powers that we were granted gave us protection into the future—from subsequent laws. So we’re exempted from that.” As a result, Disney doesn’t pay the so-called impact fees for a lot of things: for law enforcement, for roads, for sewers, and on and on.
Alex: It’s funny because I think anyone that goes to Disney World—you know, a city resident like myself—will comment, like, “Oh, you know, everything is so clean.” As you say, the centrality of planning means that they can plan where everything will go. But as a model of city governance, as you say, it’s also not a place where people live. Fifty people live there. Millions pass through it, and millions use its quasi-public transportation system to get around it, but it’s such a strange place because it’s not a place that houses people.
Richard: Here’s the irony. I should’ve mentioned affordable housing. It’s something else they don’t support. They’ve got all this undeveloped land where they could have affordable housing close by to people’s place of work, people who work on Disney property, and Disney’s not going to build housing on their property because the people who live there can vote there. That would be a real problem. Now if you stop and think about it, those are issues—affordable housing at the top of the list—that might be of more concern to Democratic state legislators. The people who might be more concerned about the benefits that Disney gets here, I think, would not be Governor DeSantis and other Republicans; they would be Democrats.
Laura: That’s the thing about this—it’s kind of ideologically scrambling, right? Typically, like you’re saying, Republicans support big business and handing over powers to big business. All the kinds of tax cuts and exemptions that Disney has been getting are sort of broadly in line with a Republican agenda. But it’s the Republican Party that is saying, “We would like to take this away from you. We don’t think you should be a special improvement district anymore.” It’s not a Democrat who’s doing that.
Richard: I actually don’t think that Republicans have that big a problem with Reedy Creek Improvement District. Rather, they want to punish the Disney company for disagreeing with them on the issue of wokeness. Over the years, Republicans have been very helpful to the Disney company, not just because Republicans tend to be more pro-business, and not just because the Disney company makes larger campaign contributions to the Republicans, but also because this is the kind of urban public policy that historically Republicans have valued. It’s really privatization and deregulation. Deregulating so Disney could do things on its own; privatizing public services. If you go back to the ’70s and ’80s, those were the kinds of public policies that Republican politicians talked about. What’s intriguing about what Republican Governor DeSantis is doing, is he’s bringing the cultural wars to urban policy.
Alex: Typically, too, contracts and contract law are also sacrosanct to conservatives. Again, this is a funny thing to think about, because in this sort of culture war against Disney, they’re trying to tear up a contract signed with a private corporation. At the same time, I think a lot of liberals would find it offensive that a company could claim that contract law gives it the eternal right to ignore democracy.
Richard: Yeah. You could imagine grounds for negotiation and compromise here between Democratic and Republican legislators. Theoretically you could, where Democrats would say, “Yeah, let’s also get Disney to pay impact fees that they don’t currently pay.” You can imagine common cause, but guess what? I don’t think that’s going to happen.
Laura: Your book’s called Married to the Mouse, and it talks about the fact that once you’re in this kind of relationship with a company, it’s pretty hard to get out of it. You don’t have that much control over where it goes. Do you see the dissolution of this if it goes forward as potentially very difficult?
Richard: I think the consequences are so dire here that this will not happen. I think Disney outsmarted their accusers in this regard. They didn’t say much while the legislation was being considered, I think because they understand how bonds are paid for better than critics. So they just didn’t say much and waited for the issue to arise after the fact when the law was passed in 72 hours.
Laura: What do you think is going to happen?
Richard: I think Disney can afford to give up some of its powers and thereby appear to compromise. Disneyland in California does not have these powers, and it seems to work pretty well. That would suggest that Disney World can do just fine without having an atomic power plant.
Alex: Without dictatorial—
Laura: They could be very, very powerful without being all powerful, and that would still be a pretty good business model.
Laura: Thank you so much, Richard Foglesong, for talking with us. It’s been great to have you on the show.
Richard: Thank you very much. I enjoyed being on.
Alex: The Politics of Everything is co-produced by Talkhouse.
Laura: Emily Cooke is our executive producer.
Alex: Myron Kaplan is our audio editor.
Laura: If you enjoyed The Politics of Everything and you want to support the show, one thing you can do is go to wherever you listen to the podcast and rate it. Every rating and review helps.
Alex: Thanks for listening.
You know, this reminds me of Brexit. They’re like, “We just gotta get out of this deal!” without thinking through any of the consequences of what getting out of the deal would actually look like in real life. Actually, you know what? This might be fruitful because we can just do a dumb joke that’s like, Disexit. Dis… Chip… Chip and Dexit. Mickey Mex—Mickey Mouxick. Mickey Mexit. Donald—Donald Dexit. Waltsit. Fantaish … it.