‘Shell Companies And Shady Lawyers’: Why Did Disney Get To Govern Itself In Florida?

The Walt Disney Company — once a family-friendly entertainment firm that brought together Americans from all walks of life — is currently making national headlines for all the wrong reasons. Beyond going out of its way to shove LGBTQ+ scenes into its programming, Disney is now opposing state laws meant to protect children from radical gender ideology — most notably, a Texas measure to investigate transgender medical procedures on children as child abuse and a Florida parental rights bill. (Disclosure: The Daily Wire has announced plans for kids entertainment content)

In response, Gov. Ron DeSantis (R-FL) repeatedly vowed that Disney would “never run this state” as long as he is in charge. Taking more concrete steps, DeSantis recently declared that “Disney is a guest in Florida” and is supporting legislation to end the Reedy Creek Improvement District — a 39-square-mile special governing and tax district that hosts Disney World.

Why does a giant entertainment conglomerate get to self-govern on its very own slice of land in the Sunshine State — and who is left better off as that privilege appears to be coming to a close?

Shell Companies and Scheming Lawyers

If you have ever visited Disney World Resort in Lake Buena Vista, Florida, you have been to the Reedy Creek Improvement District. Sitting in central Florida to the southwest of Orlando, the area was feverishly pursued by Walt Disney himself as the home of his company’s second theme park.

Frustrated by the businesses that crowded Disneyland in California, Walt Disney set up multiple shell companies — with names like Latin-American Development and Management Corp., Tomahawk Properties, and M.T. Lott Co. — to grab tens of thousands of acres in Florida. According to journalist and author David Koenig, who has spent years covering the rise of Disney, the strategy was meant to mask Disney’s intentions in the region and thereby keep real estate as inexpensive as possible.

“There were dozens of landholders, and as soon as someone heard that Disney bought lot one, they knew the price on lots two through 50 would go through the roof,” Koenig explained to the Los Angeles Times. “It had to appear as if it were just a coincidence that there were 10 different companies buying land in the same area.”

Disney took other measures to hide the fact that it was the “mystery” land buyer acquiring uninhabited swampland at a breakneck pace. A blog post from Disney acknowledges that legal counsel Bob Foster — working under the pseudonym “Bob Price” — took steps to obfuscate Disney’s intentions from citizens of Florida. 

“On my trips back to California, I would visit my mother in Kansas, which required a stop in St. Louis,” Foster said. “At least on a couple of occasions, I did not conceal that I was flying to that city. So it was not surprising when McDonnell Aircraft, headquartered in St. Louis, was soon identified, ‘on reliable authority,’ as being the mystery industry!”

When the dust settled, the property that would become Disney World was snapped up at an average cost of $180 per acre — “an incredible feat considering that shortly after the announcement was made, a nearby acre sold for more than $300,000,” Disney boasts. For those keeping score, Disney thus acquired property at 0.06% of its soon-to-be market value by keeping its activities under wraps.

At some level, one may laud Walt Disney and his team for their shrewd capitalism. Yet Disney soon turned to a far less impressive form of protecting its holdings — namely, lobbying the Florida state government.

Ministry of Mouse

For several decades, Disney has been a powerful political influence in Florida. According to data from Open Secrets, the company gave $350,000 to $610,000 to seven firms lobbying in Florida during the 2020 election year, followed by $460,000 to $719,974 to eight firms in 2021.

Still, Disney’s greatest lobbying victory came in the years after it acquired the large tracts of land in central Florida.

Gov. Claude Kirk (R-FL) signed the Reedy Creek Improvement Act in 1967 — the year after Walt Disney passed away — in response to the company’s lobby. The legislation allowed the state legislature to establish the Reedy Creek Improvement District, allowing Disney to act with the same authority as a county government for its 39-square-mile property. The district encompasses the cities of Bay Lake and Lake Buena Vista, as well as 175 lane miles of roadway, 67 miles of waterway, various power and water plants, hundreds of restaurants and retail properties, and more than 40,000 hotel rooms.

Most importantly, Reedy Creek has permission to levy taxes, issue bonds, and write its own construction and wastewater management laws — avoiding the regulatory headaches with which other companies throughout the state must wrestle. 

Indeed, Disney’s most recent foray into woke politics gave Florida officials an excuse to adjust what they see as longstanding undue privileges for Disney.

“Someone said Disney has all these special perks,” DeSantis said earlier this month. “Should you retaliate against them for them coming out and demagoguing this bill? I don’t believe you ‘retaliate,’ but I think what I would say is, as a matter of first principle, I don’t support special privileges in law just because a company is powerful, and they’ve been able to wield a lot of power.”

Meanwhile, State Rep. Spencer Roach (R-FL) dubbed Reedy Creek “the largest tax evasion scam in Florida history, if not U.S. history.”

“They have an advantage,” Roach commented, “and it’s anti-economic liberty. That is my bent here. Really, the fundamental question should be: Why did we do this in the first place? As Floridians, do we believe in free markets or not? If we do, then this is wrong.”

One Clear Winner

Florida’s House of Representatives and Gov. DeSantis are prepared to revoke Disney’s privileges. What can Disney — and taxpayers — expect as the fallout begins?

For one, Disney is anticipated to lose “tens of millions of dollars a year,” a source familiar with the company’s finances told The Wall Street Journal. Indeed, Disney’s stock price continued to plummet after the Florida Senate passed its legislation — continuing a decline that began amid backlash to Disney’s pushback against the parental rights bill. Nevertheless, the legislation to end Disney’s special district allows the company to re-establish an entity after Reedy Creek’s dissolution, which would occur by June 1, 2023.

In the meantime, Orange County and Osceola County would likely pick up governance responsibility for Reedy Creek, Florida Association of Special Districts executive director David Ramba told The Wall Street Journal. However, citizens may also pick up the responsibility of servicing Reedy Creek’s $977 million in long-term bond debt, even as Disney begins to redirect its tax payments to local governments.

No matter how the magic stars align, University of Central Florida historian James Clark concluded that there is only one “clear winner” from the situation.

“If taxpayers get stuck with the bonds, then the counties will be the big losers from this bill, and Disney loses a lot by losing the control they get from having Reedy Creek,” Clark said. “The only clear winner if this bill passes is Ron DeSantis.”

“Whatever you do,” Walt Disney once said, “do it well.” It seems that DeSantis has taken that advice to heart.

The views expressed in this opinion piece are the author’s own and do not necessarily represent those of The Daily Wire.

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