Wednesday, December 6, 2023

Don't like your local government? Disney's response - we'll just make our own!


Back in 1966, the Disney company set up its own governing district for its properties in and around what is today Walt Disney World.  It called the resulting body the Reedy Creek Improvement District (RCID) (recently renamed the Central Florida Tourism Oversight District [CFTOD).  Wikipedia describes its creation.

The Reedy Creek Improvement District had the authority of a governmental body, but was not subject to the constraints of a governmental body. That changed under the 2023 act, which gave the Florida governor the authority to name its board members, replacing the original five-member Board of Supervisors controlled by the Walt Disney Company, the majority landowner of the District.

. . .

Walt Disney knew that his plans for the land would be easier to carry out with more independence. Among his ideas for his Florida project was his proposed EPCOT, the Experimental Prototype Community of Tomorrow, which was to be a futuristic planned city (and which was also known as Progress City). He envisioned a real working city with both commercial and residential areas, but one that also continued to showcase and test new ideas and concepts for urban living. Therefore, the Disney company petitioned the Florida State Legislature for the creation of the Reedy Creek Improvement District, which would have almost total autonomy within its borders. Residents of Orange and Osceola counties did not need to pay any taxes unless they were residents of the district. Services like land use regulation and planning, building codes, surface water control, drainage, waste treatment, utilities, roads, bridges, fire protection, emergency medical services, and environmental services were overseen by the district. The only areas where the district had to submit to the county and state would be property taxes and elevator inspections. The planned EPCOT city was also emphasized in this lobbying effort.

. . .

To maintain full control of the district, it was important for Disney to limit the voting rights of the inhabitants, rights which were only meant to include landowners owning more than one-half acre. Since Disney owned most of the land, the residents would simply be renting their homes.

There's more at the link.

This year the RCID was replaced by the CFTOD, following major political and policy differences that emerged between Disney and Florida governor Ron DeSantis.  A lawsuit by Disney against the change is currently before Florida courts.  However, that lawsuit may now be a moot point, as an independent audit of the RCID/CFTOD has apparently demonstrated the truth of many of the Governor's allegations against it.

Disney secured the ability to effectively govern itself in Florida for more than half a century by performing a “bait and switch” on the state, and used its “complete and unaccountable governmental power” to “maximize its profits” at “the expense of the public good,” according to an independent audit of the entertainment giant’s role in the state.

The audit of the Reedy Creek Improvement District (RCID), which was established by Florida to bring Disney’s business to the state in 1966, found that Disney seized complete control of the government entity, and used the structure to establish itself as one of the world’s largest corporations. The report, obtained by The Daily Wire, says the steps Disney took to maintain control over RCID are “shocking,” and that its establishment “facilitated the most egregious exhibition of corporate cronyism in modern American history.”

. . .

The audit ... found that Disney used shady tactics to maintain its control of power, hand-picking government officials, and making payments to district employees that were “akin to bribes.” It also used the district to avoid taxation, and thrust costs on taxpayers in surrounding communities.

. . .

The report lays out how even the democratic aspects of the RCID were meticulously controlled by Disney. Board members, for example, were only eligible if they owned land in the district, so Disney would temporarily deed plots of inaccessible land that board members could hold during the duration of their service, and forfeit it back to Disney at the end. The company would even continue to pay the property tax for the board members.

The system ensured that the board “would be responsive to Disney’s preferences and would serve Disney’s interests,” the report states.

Again, more at the link.

Many of Disney's and the RCID's shenanigans were clearly against the law.

For decades Reedy Creeky employees were treated as if they were Disney World cast members. The annual passes that are a standard benefit to Disney employees, were given to Reedy Creek employees and they were told it was a “gift from the Walt Disney Company.”

What Reedy Creek was actually doing was buying the passes with the tax money that had been collected from the Walt Disney Company. They were giving Disney’s tax money back to the company. Then they lied to their employees about the gift part. None of this was reported to the IRS.

A bigger problem is the 50% discount on Disney cruise lines. There is no getting around the fact that Reedy Creek and Disney broke Florida’s public disclosure laws. These benefits were never reported as taxable benefits, which they are.

More at the link.

As another report sums up:

“Disney had wholly outmaneuvered the legislature and pulled off an incredible act,” the report reads. “It had established an extra-constitutional governing authority – ‘an experimental absolute monarchy’ – within the borders of the State of Florida, and, accordingly, the United States – one that strikingly resembled, without exaggeration, a kingdom of yore.”

Nice job if you can get it!

And another summary:

One final thing. Disney Freedom of Speech lawsuit is now dead. Oh, their lawyers will keep it alive for as long as they can but DeSantis and company will have no trouble claiming that RCID was disbanded, not because of Disney’s politics but because of criminal activity.

The more I read about this mess, the more it appears - assuming the audit is correct in its findings - that Disney has been engaged in criminal activity (i.e. in clear violation of black-letter state and Federal law) for literally decades, and expected to continue to do so.  Its outrage at Governor DeSantis' actions in response to its political interference with his policies was not so much based on injured innocence as on the very real (and, according to the audit, justifiable) threat his decisions posed to its finances.

Pass the popcorn, folks.  I think Disney's going to be in very hot water over this, particularly when the IRS starts asking questions about all that tax evasion over more than half a century.  Adding interest and penalties to that bill, plus any fines that are levied, and we may be looking at a very substantial sum indeed - possibly one large enough to threaten Disney's bottom line.



Elentari said...

Florida journalist Carl Hiaasen wrote an expose of Disney entitled "Team Rodent": highly recommended!

MNW said...

They are already hurting bad gor prodcing woke bombs and pushing the message*. The near religious ahearnce to the message* lead them to fight the FL law and opened themselves up to this. I inagine that if they stayed a policticly nutral orginization focused on family entertainment without pushing a divant agenda this arrangement woukd have continued on as before.

Their stock has dropped and they are facing a board room take-over. I do not see them surviving, especially if a D is not in office after next year

nick flandrey said...

Given the biased and inflammatory language of the quoted articles, I wouldn't trust any of the allegations or conclusions.

Walt Disney was dismayed and disappointed by the cheap schlockmeisters that appeared to profit off his new Disneyland park in California, and (unstated, but I've worked there) the extortionate behavior of local government and regulatory bodies. He vowed to control the area around his new venture in Florida, and the state of Florida couldn't hand him the authority he needed fast enough. The STATE gave him that power, in perpetuity, then changed their mind when the current managers got involved in politics. Florida was just fine with Reedy Creek until Disney corporate came out against the parental rights bill. It's payback for their activism, pure and simple.

Remember that central Florida is a pestilential swamp, and orange groves. To this day cattle raising is an important industry in Florida, ie. it's rural. There was no guarantee that the new parks would succeed or be anything more than the world's largest civil engineering project gone wrong. Disney created the theme park as it exists today out of the whole cloth. He built the infrastructure of a city, from sewage treatment, water purification, trash collection, roads, and telecommunications in the middle of a swamp. Since he was building and managing a city, he asked for and received the power to govern a city.

In the process he created a MASSIVE wealth creation machine, and was copied by pretty much everyone who also wanted a money machine. There wouldn't be an Orlando tourist industry, or tradeshow and exhibition mecca without the risk Disney took.

The attack on RCMD with the law changing with the stroke of a pen should serve as a terrifying reminder that ANY agreement with government can change at any time. ANY agreement. Anyone who values living in a society with rule of law should be horrified by the State's actions, not applauding them.


Beans said...

Nick, yes, RCMD was a big gamble on Disney's part.

But The RAT also violated federal, state and local laws since, oh, about 10 seconds after Walt died. From covering up deaths to shoddy construction to buy-offs of politicians to playing fast and furious with accounting rules to covering up sexual assaults and pedophilia to, well, just about any law or regulation that non-Disney, non-Reedy Creek companies have had to stick to.

And the bad part? It's been reported on locally and statewide for over 50 years. None of this is new. None of it. Any other company would have gotten a serious colonoscopy by the IRS, a RICO investigation or 100 by the DOJ, a full-up assault by the EPA and FWS, and that's just on the federal level.

The Rat has swung a heavy hammer, smashing competition and complaints much like the traditional Mob. Oh, they don't probably actually physically hurt people, but they do use their tentacles in just about every thing to ruin the lives of whistleblowers and those who 'know too much.' Want a job after working for The Rat and been a known dissident? Gee, how far do you have to move to get away from said Rat? (The answer is that thin strip of nothing that runs north/south through the country, as Ratland controls the west coast and RatWorld controls the east coast. Trust me on this, having known high-paid dissidents and nay-sayers and watched them have to move to nowhereland to escape the claws of the Rat.)

Yes, there wouldn't be much of whOrlando without the Rat. But the Rat has also stomped on the counties and the state, stomped on people's lives, stomped on laws and regulations. It's a modern day corporate Kaiju (big rubber costumed monster stomping unstoppably on the land, substitute whOrlando for Tokyo...)

Rick T said...

My experience with the DisRat is in the IT space and they do NOT have good reputation. Their attitude is vendors should pay them to put hardware in their environment yet they are very restrictive on being a reference account. Yes, they expect the hardware for free but allow no marketing benefit in return.

Aesop said...

Point Of Order:

1) Walt actually wanted to found EPCOT as an actual inhabited city.

2) And having the bad fortune to have died in December 1966, he was not responsible for the subsequent corporate shenanigans perpetrated in the past 50 years.

3) All those shenanigans have been common knowledge nationwide {hint: I've lived 2000 miles away my entire life, never been to DW so much as one time, yet have known the mechanics of their control over their fiefdom for 40 years; this is not any secret deal whatsoever, and never was}, and until DeSantis finally saying "enough", nobody in FL government ever uttered a peep of protest.

I applaud DeSantis for finally ending the charade, but anyone anywhere pretending what was obvious was some devious secret is lying out of both sides of their mouth. It was openly done, with the full co-operation and connivance of innumerable public and private entities, in a list both long and distinguished.

The Come To Jesus Parade on this should be about a mile long, and there'll be three (if not ten) FL officials in the parade for every Disney Corp. person.

It doesn't make Mauschwitz any less culpable, but there should be an honest recognition that this has been a group effort, from Day One.

Anonymous said...

There's pros and cons above regarding the House of the Mouse, but I'm not getting involved in that.

However, if the IRS gets involved, and gets nasty, I can say that the penalty for federal income tax fraud is 75% of the additional tax owed. Also, there is NO statute of limitations for income tax fraud.


TCK said...

Why would the demonrat financial gestapo be interested in punishing their corporate brownshirts?

Bob said...

I've always compared the Disneyworld way of self-government to be like Indian Reservations all across the country, except that Disney did not receive billions of tax dollars from the feds every single year.

Sentenza said...

I'm surprised that First Amendment lawsuit is still going on because it puts Disney in the position of admitting securities fraud with the RCID. The State of Florida has not done anything to Disney as a business, but has taken action against Disney as a government.

Since Florida's actions are against Disney as a government, Disney's lawsuit about the First Amendment should be meritless.

Disney as a government has been issuing tax free government bonds, committing securities fraud, and Bob Iger has essentially admitted to just that during shareholder meetings.

This whole thing is a mess, but Disney is woke, so, just like Hunter Biden, I'm sure the Segregationist Joe's administration will ignore that and Disney's various tax issues and then complain about people who don't pay their "fair share" of taxes.