You Won't Believe How Disney Took Advantage of Its Self-Governing Status

Asher Heimermann, CC BY-SA 4.0 , via Wikimedia Commons

This week, I’ve been writing about Wednesday’s epic meeting of the new Central Florida Tourism Oversight District (CFTOD). The board discussed its bold plans for the future of the district as well as the shenanigans Disney masterminded to hold on to its self-governing power after the state dismantled the Reedy Creek Improvement District (RCID).

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The state of Florida established the RCID in 1967 to allow Disney to develop innovations for the property that would become Walt Disney World without having to work around government red tape. As I wrote in my book Neon Crosses:

“Before Walt died, the legal team discovered a somewhat obscure Florida law that allowed for the creation of special improvement districts with a different form of governance than a traditional municipality. Bob Foster convinced Walt that petitioning the state legislature to allow Disney to govern its own property under that law was the way to go. An improvement district would grant the company exemptions from local building codes and would allow Disney to create its own first response and telecommunications services.”

At the time the RCID was necessary, and it was effective. But over time, what the CFTOD board referred to as a “sweetheart deal” became unnecessary. Earlier this year, the state of Florida revoked the RCID’s authority and replaced it with the CFTOD, whose board members serve at the pleasure of the governor.

Now, I’m both a capitalist and a believer in small government, but what you’ll see below in statements from Wednesday’s meeting is how tightly Disney held onto its quasi-governmental authority and how the company usurped many of the legitimate roles of state and local government. Florida had to take down the RCID, and you’re about to see why.

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Related: A ‘Caper Worthy of Scrooge McDuck’: Behind Disney’s Reedy Creek Maneuvers

One of the most egregious examples of Disney’s abuse of its privileges via the RCID is the company’s efforts to avoid paying property taxes. Disney Parks and its other entities have 90 pending lawsuits contesting property tax assessments from Orange County over a seven-year period.

“In those complaints, they allege the assessments do not represent the just value of the parcels, and they claim that they exceed the fair market value of those properties,” explained one of the attorneys addressing the board. “The taxes for these years have already been paid to all the taxing entities, including to the district.”

If Disney wins these lawsuits, the county must return all or part of the property taxes that the company paid, meaning that “the district has a substantial contingent liability of potentially having to refund billions of dollars to Disney if the Orange County Property Appraiser does not prevail on these lawsuits.” The Orange County School System alone — where many cast members’ kids attend — could lose anywhere between $52 million and $105 million. The CFTOD board voted unanimously to aggressively defend the county in these lawsuits.

The RCID’s relationship with state transportation authorities (or lack thereof) it telling as well. Will Watts, assistant secretary of engineering and operations for the Florida Department of Transportation, spoke about his department’s relationship with the district.

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“As Florida’s transportation system impacts every aspect of daily living, maintaining strategic relationships with both public private, and quasi-governmental partners is paramount,” he told the board. “This includes regional organizations and special districts like the Central Florida Tourism Oversight District our relationship with a prior Reedy Creek Improvement District is unique compared to any other entity in Florida.”

Watts explained that, via RCID, Disney had “the best of both worlds” in terms of “the private and the government worlds and were not subject to the same oversight in terms of uniform protocols and standards or local standards.” He noted that RCID attempted to influence the DOT on numerous occasions, intervening to make sure that the department didn’t interfere with the district’s control over its transportation infrastructure.

The state requires inspection of all forms of transit; however, Watts pointed out that some of Walt Disney World’s transit systems haven’t had the proper inspections by the Florida DOT.

“As the governor mentioned earlier this week the monorail system and [its] structures are one of the few systems in the state in the country that are not reviewed or inspected by any government entity,” Watts said. “This was highlighted also by the National Transportation Safety Board in 2009” following a collision that claimed the life of a monorail pilot.

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I’ll say from personal experience that I’ve never felt unsafe on any Walt Disney World monorail, boat, or bus, nor have I been worried when I was driving myself or even walking. But that doesn’t make the RCID’s avoidance of state oversight any less unnerving.

Next up was Deputy Secretary for the Florida Department of Business and Professional Regulation (DBPR) Brian McManus, who explained how his department handles much of the licensing, health, and safety issues throughout the Sunshine State.

“Our division of hotels and restaurants, licenses and inspects all public food service and lodging establishments in the state,” McManus told the board. “We inspect hotels and motels twice a year and we inspect restaurants between one and four times per year based on risk during these inspections, we evaluate everything from sanitation and cleanliness to compliance with state Human Trafficking Awareness laws.”

Related: Disney May Soon Wish It Hadn’t Messed With Florida

The RCID has allowed the DBPR into its facilities, but the results weren’t encouraging.

“We estimate there are 359 permanent food service establishments of 28 hotels and motels in the district,” McManus explained. “Inspection of these establishments over the last 15 months have yielded over 3,300 violations, which include 393 high-priority violations. The category of high-priority violations is considered to be capable of directly contributing to foodborne illness or injury. This is just one example of how important maintaining proper sanitation standards are for the safety of our residents, visitors, and workers.”

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McManus also told the board that his inspectors met “resistance” from establishments within the RCID that they generally didn’t experience in other parts of the state. Again, in all the times I’ve been to Walt Disney World and eaten at restaurants and stayed at resorts, I’ve never felt unsafe, but these stats show how ineffective Disney’s self-governance has been.

Deputy Chief of Staff at the Department of Health Weesam Khoury, herself an Orlando native, explained how pool and water park inspections take place in Florida and why such inspections are so important. She also told the board how the rules were different for Disney and its 267 pools than they were for any other facility in the entire state.

“The difference between Disney and other properties through Reedy Creek is that Disney is solely responsible for reporting and management of any incidents,” Khoury said. “Disney addressed their complaints in-house creating the risk of conflicts of interest.”

RCID’s autonomy over pool inspections has been in place for less than a decade, but Khoury demonstrated how it hasn’t been effective.

“Since 1996, the department is aware of over 7,000 violations on Disney property,” she said. “Since inspections were delegated to Disney in 2014, over 3,000 violations occurred. Disney was the judge and jury for these incidents since 2014. And the state is only aware of what was reported to us. There was no availability for confirmation or assessment to ensure protocol was followed. Essentially, there was no external oversight for the pools and water parks.”

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These testimonies alone demonstrate that the RCID long outlived its usefulness and effectiveness, and we know that there are more stories that these officials didn’t have the time to tell the board. The state of Florida has done the right thing in taking proper responsibility and divesting Disney of its self-governing status. It was long overdue.

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