Paying for Florida’s Highway Infrastructure in Light of the Feud Between Disney and DeSantis

Highway infrastructure is notoriously the responsibility of public entities. Usually, the federal government provides grants to state and local governments to build and maintain highways. There are a few notable exceptions. For the last several decades, there has been a significant portion of highway infrastructure in central Florida that is largely maintained by a private corporation rather than the government, and has been since the inception of many of those highways. Said differently, the state of Florida has never budgeted for the maintenance of approximately 175 miles of highway infrastructure because the cost was previously covered by The Walt Disney Company.

Disney had a unique legal status in Florida for nearly 60 years. The Reedy Creek Improvement Act granted Disney the authority to govern itself as a county government. For any readers who have attended law school, it may be helpful to think of this setup as a giant company town from your Constitutional Law class hypotheticals. This ultimately means the company has been responsible for sanitation, waste disposal, utilities, drainage, and other obligations typically left to local governments. Of course, these obligations are coupled with the power to tax. Reedy Creek is permitted to tax property at a rate about three times greater than the maximum of that for other Floridian cities. The purpose of these unique tax structures is to pay the massive debts from issuing bonds, which Reedy Creek is authorized to do like any other special district. Reedy Creek’s bondholders have historically had their interests statutorily protected by the Reedy Creek Improvement Act (also known as House Bill No. 486 (1967)). Section 56 of the law states that 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 and to fulfill the terms of any agreement made with the holders of such bonds or other obligations, that it will not in any way impair the rights or remedies of the holders, and that it will not modify in any way the exemption from taxation provided in the Act, 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.

Florida Governor Ron DeSantis has publicly feuded with Disney for approximately a year over Republican-backed legislation outlawing content in schools about gender identity and sexual orientation, which colloquially is dubbed the “Don’t Say Gay” law. Though the details of that dispute are outside the scope of this blog post, the relevant context can be summarized by understanding Disney has historically supported Florida Republicans’ campaigns (to the tune of at least $250,000 to the Republican state legislators who voted to pass the Don’t Say Gay law in the first place, among other recent contributions) more than it has supported its left-of-center counterparts. Despite that support, Disney was pressured by its employees in Florida to publicly condemn the law through social media and in-person protests and Disney eventually spoke out against the bill after it had already been signed into law. Consequently, with inspiration from Governor DeSantis, the Florida House of Representatives successfully voted to dissolve Disney’s self-governance status. Disney’s legal team has filed suit against the state, claiming the revocation of the company’s special district status is both a retaliatory and unconstitutional violation of the company’s First Amendment rights.

Returning to the consequences this will have for roads in central Florida, Disney owns 175 miles of road, 67 miles of navigable waterways, 350 buses (the third largest bus fleet in Florida), three water bridges, and 750 boats (the world’s fifth largest navy). Disney also employs roughly 75,000 people, making it one of Florida’s largest employers. The company’s transportation capacities have facilitated something of a symbiotic relationship between Disney and Florida. For example, in 2005, Disney spent $50 million to build a stretch of highway to funnel thousands of cars off Florida’s I-4 to alleviate congestion, promote safety, and extend the lifetime of the existing highway infrastructure. This expense was in addition to a donation of $7.5 million and 200 acres to the state Department of Transportation. Kevin Hoeflinch, the then-project manager for the Western Beltway design, stated, “Outside of the transportation agencies, the only entity that came to the table with anything was Disney…. Without the [land] donation and the funds to make up the shortfall, I don’t imagine this project would have been built.” The maintenance of the existing infrastructure and funding for future projects would seemingly then fall on the shoulders of the state government, which has never budgeted for the aforementioned infrastructure because it has been constructed after the enactment of the Reedy Creek Special District.

The state could additionally be burdened with the special district’s outstanding bond debt. While Governor DeSantis is adamant that Disney will pay the bond debt, Orange and Osceola Counties have publicly expressed concern about needing to raise taxes to maintain the 40 square acres of infrastructure. “It is an over $160,000,000 obligation, which officials say they do not have the money to cover.” Of course, Disney claims the state will have to absorb the bond debt because the state violated several promises made to bondholders, including the promises to not interfere with the district’s ability to fulfill the terms of the bond agreements and not impair bondholders’ rights until the bonds were paid in full, the state will bear the cost. In an NPR article interviewing Orange County attorneys who work in municipal and property law, one interviewee noted that, “I can’t see any way [terminating the special district’s status] holds up against a challenge”.

The contractual impossibility of the dissolution is likely going to be left to the courts to iron out but what remains is the daunting question of how to maintain central Florida’s highway infrastructure in a way that is safe and efficient in light of the budget crisis. Governor DeSantis has suggested a toll road and hotel tax to potentially cover the growing costs. Earlier this year, the district approved a $176 million project to improve the roads around the resort area, which included the construction of a four-lane bridge. How this political feud (namely Governor DeSantis’s insistence that there is no need to increase Orange and Osceola County taxes) changes the status of the project is still unclear, however this project will serve as a microcosm for future transportation projects’ funding in central Florida now that the financial linchpin has been removed for seemingly little more than internet culture wars.