Florida is about to crush a half century of special privileges for Disney in Florida. Where does the Magic Kingdom go from here?

April 22, 2022, 2:36 PM UTC

The Walt Disney Company has enjoyed enormous legal privileges in Florida for more than half a century. 

Four Disney theme parks—Magic Kingdom, Epcot, Animal Kingdom, and MGM Studios—spread over 25,000 acres in Florida have been able to operate less like a company and more like a city because they’re categorized as part of the Reedy Creek Improvement District.  

But a new bill that just passed the Florida House and Senate could change all that. 

SB 4-C aims to dissolve all special districts in the state established before the ratification of the Florida state constitution in 1968—including Reedy Creek. It passed the Republican-held Senate on Wednesday and the Republican-held House on Thursday. It’s now up to Republican governor Ron DeSantis to sign it into law, which is likely considering he called for the bill in the first place.

What started with a difference of opinion with the Florida governor has escalated into legislation that would strip Disney of its special advantages. Here’s what’s happening.

Disney’s far-reaching power

The Reed Creek district was created in the first place because company founder Walt Disney wanted to create a futuristic city in Florida—a dream that never came true, according to Clark.  

Instead, it allows Disney to regulate things in the parks like emergency services, infrastructure, and construction without county interference. That gives the company supreme say over its day-to-day operations.

“They can have their own nuclear plant—they can build their own airport if they want to,” Jim Clark, a professor of Florida history at University of Central Florida, told Fortune. “Disney gets to decide what its priorities are as opposed to the county government deciding what the priorities should be.”

“They can have their own nuclear plant—they can build their own airport if they want to.”

—Jim Clark, professor of history, University of Central Florida

Although the Florida bill targets six special districts in Florida (there are about 1,600 total), Reedy Creek is by far the most important one. The others were formed to do things like build a law library or monitor water supply, according to David Ramba, executive director of the Florida Association of Special Districts.

“Reedy Creek is like the elephant of special districts because it has virtually every power a special district could have,” he told Fortune.

The district currently sprawls over two counties: Orange and Osceola, with most of the land falling in Orange County. If and when Reedy Creek is dissolved, the company will have to engage with different municipal systems in the state in a way it never has before. 

“That would mean that now they would have to answer to two county commissions’ building departments, all kinds of levels of bureaucracy that they’ve been avoiding for half a century,” says Clark.

Disney and the Reedy Creek Improvement District did not respond to Fortune’s request to comment.

How it all began—Florida’s “Don’t Say Gay” bill 

DeSantis first clashed with Disney after the company publicly opposed Florida’s Parental Rights in Education Law as it was moving through the state’s legislature. Popularly known as “Don’t Say Gay,” the law is part of a rash of legislation across the U.S. aimed at limiting discourse around LGBTQ+ issues in schools. 

Disney and its CEO, Bob Chapek, initially stayed silent on the bill. But following criticism and protests from employees and consumers, the company issued several statements and suspended all political donations in Florida.

“If Disney wants to pick a fight, they chose the wrong guy,” wrote DeSantis in an email to supporters on Wednesday, the New York Times reported. “I will not allow a woke corporation based in California to run our state.”

Big questions about the future of Disney theme parks in Florida

Disney has operated its parks in Florida independently for decades, and the new Florida bill will inevitably lead to some sticky questions for both the state and company.

“I think a lot of lawyers and a lot of accountants are going to get some summer bonuses trying to do the math on how to unwind a 50 year government,” says Ramba.

I think a lot of lawyers and a lot of accountants are going to get some summer bonuses trying to do the math on how to unwind a 50 year government.

David Ramba, executive director of the Florida Association of Special Districts

The bill does not prevent future special districts from forming, and in fact includes text that allows them to reestablish after dissolution—something that Orange and Osceola counties might consider if they hope to avoid picking up Disney’s bill for the land’s upkeep.

For the coming year, Disney has budgeted nearly $170 million for Reedy Creek. Dissolving the district would make the two counties responsible for its maintenance and possibly force them to increase property taxes to accommodate the new burden. 

Reedy Creek also owns nearly $1 billion in bonded debt accumulated over the last several decades to finance major projects, something that could fall on the counties if they don’t form a new dependent special district to assess the debt back on Disney, says Ramba. 

Disney employs dozens of lobbyists in Florida who advocate for the company’s interests, securing tax breaks and pushing legislation in its favor. 

“I would imagine that Disney realizes they’re gonna lose this round,” says Clark. “And as soon as the dust settles, they will start lobbying for some new [district].”

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