Maitland attorney says Disney's right: state has to pay off debt before it can dissolve Reedy Creek
Disney says the Reedy Creek Improvement District can’t be disbanded by the Florida legislature and Gov. Ron DeSantis until all the district’s debt is paid off. A local lawyer says Disney’s right and that the move is illegal.
Here’s my brief write-up on why the Florida legislature can’t dissolve Reedy Creek due to basic protections for sovereign debts.
There’s been a lot of talk about whether Florida lawmakers can legally dissolve Disney’s RCID, but there’s one basic reason why it can’t—it promised #bond purchasers that it wouldn’t, says Jacob Schumer of @ShepardFirm in today's @tax Insights. #tax https://t.co/gy0s3zgegv— Kelly Phillips Erb (@taxgirl) April 26, 2022
Gov. Ron DeSantis signed the legislation disbanding the Reedy Creek Improvement District late Friday.
But in a statement, Disney says unless the district’s debts are paid off, the dissolution can’t move forward. The district carries about $1 billion dollars in debt.
Jacob Schumer, an attorney at Shepard, Smith, Kohlmyer & Hand, in Maitland says the company is right.
“Under the constitution, a state can’t basically promise to bond holders that they’re going to respect the debt. And then eliminate the district that took out that debt.”
Schumer says he doesn’t think the state’s case would hold up in the event of a lawsuit.
“Disney I believe is correct that they can’t do that without having all the bonds be paid in full. There are many ways options that Florida has to kind of address this and maybe make the case not so clear cut. But as the law stands, I can’t see any way it holds up against a challenge. Though somebody will have to challenge it.”
Right now, the district is scheduled to be dissolved by June 2023. Disney says it will continue to operate as normal.
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