Factbox: What is the special tax designation Disney might lose?

Security officers staff the entrance at the Walt Disney World’s Magic Kingdom in Orlando, Florida, U.S. June 13, 2016. REUTERS/Barbara Liston/File Photo

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April 21 (Reuters) – A Florida bill that would eliminate the special tax district that gives the Walt Disney Co (DIS.N) the ability to govern its theme parks won approval from lawmakers on Thursday, sending the legislation to Governor Ron DeSantis for his signature.

Disney’s designation has allowed the company to control the area including and surrounding Walt Disney World, comprised of an array of theme parks, hotels, golf courses and other entertainment venues. read more

Here is what is at stake for Disney:

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WHAT IS THE SPECIAL TAXING DISTRICT AND WHY WAS IT SET UP?

The Florida State legislature created the Reedy Creek Improvement District in 1967 to promote the development of Walt Disney World on a 38.5-square mile patch of pasture and swamp land in Central Florida.

Disney pays taxes to the Reedy Creek Improvement District and two counties its resort straddles, Orange and Osceola. The district, in turn, provides services, including fire response, emergency medical services, water and sewage treatment, and can issue municipal bonds to finance infrastructure projects, which comes with tax advantages.

In practice, the arrangement gives Disney control over municipal services and autonomy when it comes to how the land is used and developed, exempting it from some regulations.

Walt Disney World paid $780.3 million in state and local taxes in 2021. Dissolving the district would mean the company could no longer finance improvements through municipal bonds, which carry tax advantages. It’s unclear what that would mean for Disney’s operating costs.

The legislation might end up increasing the tax burden on Orange and Osceola residents, who would have to foot the bill for all the services Disney pays for through the special district, including roads, fire service and water. They might also have to pick up the tab for $58 million in debt service.

The move marks the culmination of a feud between the company and DeSantis, who began targeting Disney after it criticized legislation that bars classroom discussion of sexual orientation or gender identity in the state’s primary schools and prohibits teachings “not age appropriate” for other grades.

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Reporting by Dawn Chmielewski in Los Angeles and Maria Caspiani in New York. Editing by Bernard Orr

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