BOMBSHELL: Report From First-Ever Audit Shows How Much Power Disney Had in Central Florida

I’ve been a Disney fan my whole life. The company’s movies, TV shows, music, and especially theme parks have been a key part of my family’s life. That’s why it pains me to see the direction Disney has taken in recent years. Commitment to far-left cultural content and draining the fun out of the vacation experience for guests have tarnished Disney’s formerly immaculate reputation.

But the most astounding thing is how Disney took advantage of the state of Florida in order to wield astonishing quasi-governmental power over its Walt Disney World property for 55 years. We’ve seen bits and pieces of Disney’s power within the Reedy Creek Improvement District (RCID), and I’ve written multiple articles detailing what we knew.

As a small-government conservative, it's been a strange phenomenon to side with a state government over a private company. However, the way Disney has taken advantage of its status via RCID meant that the state of Florida did the right thing stepping in and remedying the situation.

A newly released report (which I've embedded at the end of this column) of the first comprehensive audit of Disney and RCID shows the scope of Disney’s power and influence and how the company used RCID to benefit itself with little to no concern for the region as a whole.

The report clocks in at a whopping 72 pages, along with a table of contents. I’ve read it all, and the following is my summary of Disney’s shocking power and how it used that level of control to line its pockets and avoid accountability. Buckle in for a heck of a ride.

The history

Books like Chad Denver Emerson's "Project Future" and my own "Neon Crosses" detail the history of Disney's fascinating maneuvers to secure the land that would become Walt Disney World. Walt Disney and his team used a network of companies that were untraceable to Disney to scoop up the land without paying a premium price.

Once the land belonged to Disney, the company had to figure out a way to achieve its goals — including Walt's dream of a city of the future — without tangling in red tape. So Disney decided to take advantage of a Florida law that allowed for the creation of special improvement districts for certain projects. The legislature passed the measure, and the Reedy Creek Improvement District was born.

Walt Disney died before RCID became a reality, and his futuristic city dream died with him. However, the company maintained that the city idea was still on the table, so it essentially operated RCID for over five decades based on false pretenses.

Related: Total Control Was Always Disney's Plan

I've long maintained that RCID served a beneficial purpose for Disney in those early days, allowing the company to develop and implement innovative technologies without bureaucracy getting in the way. The report refers to RCID as a "step stool to ensure that Disney’s second location got up and running quickly and without a hitch," which is an apt description. But Disney wore out RCID's welcome and used it to wield unprecedented power.

"As the years passed, the true nature of the deal became increasingly clear," reads the report from the Central Florida Tourism Oversight District (CFTOD), which replaced RCID. "Reedy Creek was allegedly a 'partnership,' an equal relationship between a private company and the State of Florida and its citizens. In reality, it was neither in form nor function. Reedy Creek was simply a creature of Disney."

"Indeed, the city Disney said it planned to build never came to pass, and to this day, Disney’s special district is essentially void of individual residents," the report continues.

Money and power

Disney is a massive company, and over the years it has added multiple other brands and companies like ABC, ESPN, Marvel, Star Wars, and National Geographic into its fold. In 2022, the Walt Disney Company (TWDC) brought in $82.7 billion, over a third of which came from its parks, resorts, and consumer products.

However, the benefits that TWDC was supposed to bring into central Florida via RDIC didn't materialize. According to the report, "the citizens of Osceola and Orange Counties paid for the operation of the district without receiving their entitled rights to participation and benefit." Instead, Disney kept the vast majority of the money for itself, paying itself property taxes and holding other taxes to Orange and Osceola Counties at bay with burdensome litigation.

Back in April, I wrote:

Disney Parks and its other entities have 90 pending lawsuits contesting property tax assessments from Orange County over a seven-year period...
The Orange County School System alone — where many cast members’ kids attend — could lose anywhere between $52 million and $105 million.

For over 50 years, nobody at the state level challenged the power that Disney had via RCID. That's largely because not many people knew what was going on.

"Hardly anyone outside of the special district knew about the scope and scale of the problems plaguing it," the report states. "Moreover, due to the sheer size of Disney, virtually no one in Tallahassee was keen to take on the company. As such, complacency and an absence of political will allowed Disney to use the public-private partnership to entrench and amplify its corporate power." Until Ron DeSantis came along, that is.

A fig leaf of representation

The act establishing RCID gave Disney an astonishing litany of powers. In exchange, the district was supposed to have a Board of Supervisors that the residents of the cities within the district — Bay Lake and Lake Buena Vista — voted on. The cities also have their own city councils. But, as you probably imagined, Disney made sure there was a catch.

"The City Councils of the two cities are made up of a handful of residents (less than 30 residents in each city) living in two mobile home parks (one mobile home park in each city) owned by Walt Disney Parks & Resorts U.S., Inc.," the report explains. "Only people approved by Disney are permitted to enter into leases and live within such mobile home parks within the two cities. Thus, only registered voters handpicked by Disney to live within Disney’s mobile home parks are eligible to serve on the City Councils of the two cities. This bizarre landlord-tenant relationship between the City Council members of the Cities and Disney raises serious questions."

Selecting members of the Board of Supervisors was even more sketchy. The elections for the board were the same; residents of the cities in the district could vote for Disney's handpicked candidates. To qualify for a board seat, a candidate had to own an acre of property within the district, but Disney had a solution.

From the report:

To constitute the board, Disney would identify an acceptable individual candidate, temporarily deed to him or her a small plot of inaccessible land within the District, and then nominate the individual for election to the board. The board thereby consisted solely of individuals hand-picked by Disney prior to the 2023 legislative reform. At least one past board member served on the RCID Board of Supervisors while simultaneously working directly for Disney.
Disney’s deed of land to board members was only temporary. If a board member resigned from the board or otherwise department board service for any reason, the plot of land would revert back to Disney. Because the board members owned land in the District, they incurred property tax liability. Yet Disney paid this tax liability on behalf of most board members. This was effectively a cash gift from Disney, likely in violation of the ethical obligations imposed on public officers by Florida law.
Thus, under the pre-2023 governance structure, Disney controlled who got nominated, who got elected, and who got to stay on the board.

Conflicts of (Disney's) interest

When it came to RCID, Disney maintained multiple conflicts of interest, but they centered on one interest: TWDC. There's nothing wrong with a company pursuing its own interests, but Disney did that at the expense of non-Disney businesses and taxpayers throughout the district.

For many years, RCID employees were considered Disney employees, and even after the company spun the district's employees onto a separate payroll, it made sure that employees maintained their loyalty to Disney. I'll tell you more about the perks RCID employees received later.

In addition to keeping employees in Disney's pockets, RCID's decisions dovetailed with Disney's interests at every turn.

"The RCID’s infrastructure included roads, utilities, and water management, all essential to Disney and other businesses and owners," the report reveals. "While non-Disney businesses certainly benefited from this infrastructure, due to Disney’s control, infrastructure decisions were tailored to benefit Disney without significant regard or consideration of the needs of other businesses and taxpayers within the District."

The non-Disney businesses within the district reaped the benefits of RCID's infrastructure and police protection, but the report explains that "non-Disney businesses and owners had little say in the RCID’s decisions and operations."

The cozy relationship between Disney and RCID meant that the district conducted business in complete secrecy. The Board of Supervisors did not hold public meetings; therefore neither the public nor the media could find out what was going on or have a say. Additionally, RCID hired the same law firm that represented Disney to represent it, and one of the firm's partners was skittish about the public finding out about it.

"Because of Disney’s corporate influence, the autonomy and legitimacy of the RCID was in question," the report states. "Infrastructure development, zoning laws, environmental regulations, and public safety measures clearly prioritized and favored Disney’s interests. Such a focus not only undermines the original mandate of the RCID as a public entity but also raises questions about the transparency, fairness, and legality of its operations."

When Disney built several massive parking garages for its Disney Springs shopping, dining, and entertainment complex, RCID paid for the construction with $700 million in taxpayer funding. The garages only benefit Disney and its Disney Springs tenants.

"This is an example of how Disney used the RCID as its private government to accomplish its own purposes at the expense of [the] public," the report points out. "Other District taxpayers recognize the unfairness of paying tax dollars to the District, only to see the money spent on projects that benefit Disney exclusively."

Disney also took advantage of taxes from the two cities for police protection. The cities in the district pay for general police protection but also for off-duty Orange County officers to help with special events and other types of security. This benefits Disney to the tune of tens of millions of dollars, but non-Disney businesses in the district don't get to reap the benefits of public money for private security.

The report explains, "This arrangement improperly benefits Disney by allowing Disney to receive an exclusive benefit (off-duty police support paid for by the Cities), even though the tax revenue that pays for the benefit comes from both Disney and non-Disney tax payments."

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Regional impact

Walt Disney World's success had tremendous positive effects on central Florida, but it also brought headaches. Disney could have done much to remedy those problems by paying the same impact fees that other companies have to pay for construction. Smaller developers can't get away with not paying these fees, so why should Disney?

"Overall, Disney’s growth in central Florida has come at the expense of neighboring communities who have been forced to absorb the negative externalities of Disney’s business model," the report explains. "In the central Florida arrangement, Disney gets workers, but the region gets long commute times and heavy traffic, with the associated pollution and environmental consequences, unaffordable housing that leaves many on the brink of homelessness, and a glut of low-wage jobs with little promise of upward economic mobility."

Disney's impact fees would have contributed $130 million to the region, which would go a long way toward remedying some of the infrastructure issues plaguing the area. Earlier in this column, I mentioned the ad valorem taxes that Disney and RCID use lawfare to delay or avoid paying; these would have had a beneficial impact on the community around the district.

On top of RCID refusing to pay its impact fees, it also deferred four years' worth of repairs to the roads under the district's jurisdiction, leading to even more repairs, coupled with increased costs due to inflation. The report points out that Disney could do far more to benefit the area it calls home.

"Any other local government would have demanded that Disney better tend to its communitarian obligations, demanding that Disney built or set aside land for affordable housing before expanding resort properties, for example," the report explains. "But Disney controlled the Reedy Creek Improvement District, and so the Reedy Creek Improvement District served Disney’s interests — not the interests of the wider community."

Perks galore

RCID employees received a litany of perks that would make any Disney fan green with envy. However, the report reveals that much of this largesse wasn't on the up and up, with the auditors comparing the perks to bribes:

The RCID employees received numerous special privileges from Disney that were not available to members of the general public and far exceeded the discounts available to ordinary annual passholders. As a regulated entity, it was inappropriate for Disney to gift these benefits to the very people charged with regulating Disney. Indeed, receiving these special privileges was inconsistent with the public’s expectations for governmental entities serving the public and demonstrates that the RCID was “captured” by Disney, whom it was charged with regulating. Indeed, the RCID effectively acted as a subsidiary of Disney rather than as an independent government entity.

RCID employees got annual passes that allowed them to visit any Disney park worldwide except for Tokyo Disneyland. They received the same 40% discount on merchandise that Disney cast members get, including access to items that weren't available to the general public. For comparison, an annual pass for the general public costs $1,449 a year plus tax (Florida residents have more options) and is only good for use at Walt Disney World.

Other perks included impressive discounts on resort stays and other services, transferrable tickets (trust me, it's an absolute hassle for members of the general public to transfer tickets), the same years-of-service celebrations Disney cast members had, and access to the Disney intranet (complete with cast member employee numbers).

"This arrangement also demonstrated clear favoritism toward Disney," the report says. "Each year, RCID paid millions of dollars to Disney for Disney services and merchandise for its employees. This included discounts on Disney merchandise — effectively subsidizing employees who purchased Disney items, thereby encouraging such purchases and also lining Disney’s pockets by reimbursing the discounted amounts using public tax dollars."

Discounts didn't apply to non-Disney companies within RCID. For example, district employees could get steep discounts on Disney merchandise at Disney Springs, but merchandise at places like Uniqlo, the Coca-Cola store, Lilly Pulitzer, or Ron Jon Surf Shop wasn't subject to discounts.

Disney paid millions of dollars a year in unethical perks to RCID employees. Taxpayer money funded many of these perks. Additionally, according to the report, "RCID did not collect taxes from or pay taxes on behalf of employees for the Complimentary Tickets, which were a valuable and taxable fringe benefit."

Shoddy recordkeeping

The audit uncovered the fact that RCID didn't have a contract management system, which an entity of that size and scope should have had. The district couldn't keep track of contracts as they moved through the drafting, approval, and signing processes, and sometimes the district would lose contracts.

Employees often couldn't access current or former contracts when their work required them to do so. This was the result of RCID hiring people who didn't have experience in the municipal sector, and it continued up to the end of RCID.

"On numerous occasions, the contracting department received fully executed contracts without having been previously informed that the contracts were under consideration, let alone ready for approval," the report states. "This was true of a series of contracts that RCID entered with Disney in the last days before the Florida legislature reconstituted RCID as CFTOD."

All of this contract confusion was on top of the fact that RCID had a tight list of Disney-approved vendors. This list barely changed over the years, and it was difficult or impossible for companies not on the list to bid on RCID projects.

'Entanglement'

One of the most interesting factors in the report was the blurring of the lines between Disney and RCID. The auditors referred to this phenomenon as "entanglement."

"It was often difficult for RCID to know where RCID’s responsibilities ended and Disney’s responsibilities began," the report states. "RCID could not always distinguish the boundaries of its authority from Disney’s authority."

RCID employees sometimes maintained landscaping at intersections on Disney property. Non-Disney businesses knew that Disney kept a tight rein on RCID's contracting process and that choosing a business not on Disney's approved list would delay permitting. Disney's policy banning photography in backstage areas of the parks complicated RCID's ability to take photos of district equipment.

The most egregious example of this problem was Reedy Creek Energy Services (RCES). The utility company is a Disney entity, and RCES employees work for Disney. RCES is a monopoly within RCID, but RCID bore the responsibility for maintaining Disney-owned RCES facilities.

Additionally, according to the report, "the electric, natural gas, water, chilled water, and hot water utility systems in the RCID were owned by Disney." The "entanglement" between RCID and Disney was so strong and obvious that, during the transition to CFTOD, employees said that it was important “to get more separation between RCID & Disney."

Righting the wrongs

The state of Florida set up the CFTOD as a remedy to all of the issues I've written about above. The CFTOD detangles Disney from the management of the district and adds layers of accountability both to the people who live in the district and the state and to the tourists who enjoy the region. It's a shame that it took so many years to realize how badly RCID had run its course, but hopefully, residents and visitors alike will begin to see the difference that CFTOD brings to the area.

I'll always love Disney; it's been too big a part of my life for too long for me not to. In a way, I've viewed these articles that I've written about Disney's problems as a sort of tough love, my attempts to get Disney to mend its ways and fix its problems. The CFTOD is fixing one major predicament, and Bob Iger has at least acknowledged the wokeness issue. Now, all we need to do is for Disney to bring back the uncomplicated vacation experience that guests loved for so many years. C'mon Disney, is that too much to ask?

Read the full report below:

RCID Audit Report by PJ Media on Scribd