Wednesday, May 31, 2023

What makes Disney Special? A different way to look at Reedy Creek - Part 2

 


The Vital Role of Reedy Creek in Disney's Success

The Walt Disney Company is a global entertainment powerhouse known for its theme parks, resorts, and cherished characters that have won millions of people's hearts. However, Reedy Creek is an essential operational framework that guarantees the successful running of Disney's most famous theme park locations, hidden beneath the magic and imagination. In this post, we'll look at why Disney needs Reedy Creek to sustain its unmatched standard of excellence.


Walt's vision for EPCOT

Independence and Adaptability

One of the primary advantages of RCID for Disney is its autonomy. As a special-purpose government entity, the district has considerable authority to make decisions and enact policies without interference from other governmental entities. This independence enables Disney to swiftly respond to shifting market trends, customer demands, and technological advancements, ensuring the resort remains pertinent and innovative in a highly competitive industry.

As initially conceived, independence was granted to Disney by the Florida legislature with an eye toward Disney creating a residential community on the property (EPCOT). The thinking at the time was that the Disney company wanted to try new things and push the state of the art in what could be done for a prototype community of tomorrow. At that time, Disney argued that they couldn't build EPCOT - hindered by outdated building codes, zoning regulation red tape, and be caught between two county governments (Orange and Osceola) with competing agendas. 

As it turned out - Disney toyed with the idea of building a residential community with Lake Buena Vista and slowly backed away from that vision until EPCOT was transformed into a theme park vision. While granted to create a residential development, these special powers proved helpful in creating and running a leisure resort. The special feeling and ambiance of the Walt Disney World property is in no small part due to this special arrangement with RCID. 


Sightlines can be controlled because zoning is tightly controlled, preserving the unique nature of the property.

Zoning and Land Use Control

The RCID has authority over land use and zoning within its jurisdiction, giving Disney unmatched control over the development and expansion of its properties. This ability enables Disney to strategically plan the layout of theme parks, resorts, and infrastructure, optimizing visitor experiences and preserving a consistent atmosphere throughout the resort. Having direct oversight, Disney can maintain its distinct brand identity and ensure that Disney magic is consistently delivered.

Imagine if a local government decided to zone the property according to its whims and wants. The government might have competing needs that might not align with the vision or needs of the property. Could a prison be built right next to the Magic Kingdom? While unlikely, it becomes possible once Disney loses control over how land use is allocated and zoned within the district. 



Reedy Creek constructed, owns, and operates the parking garages in the Disney Springs Area. Photo by Michael Rivera, via Wikimedia Commons

Taxing and Fiscal Advantages

The RCID's taxing and fiscal capabilities are a further essential feature. The district is authorized to levy and collect taxes within its borders as a separate governmental entity. This gives Disney significant financial advantages, allowing them to continually improve and expand their facilities by reinvesting the generated revenue into the resort. Using these funds, Disney can enhance guest experiences, upgrade infrastructure, and introduce new attractions, keeping the resort on the cutting edge of entertainment innovation.

The unique aspect of control of RCID by Disney - allows Disney to ensure that government funds are allocated in the best way for the resort's development. While Disney is still paying taxes as any normal landowner would - this arrangement ensures that the money they pay in taxes is used to build infrastructure that directly improves and enhances the property, vs. the money being spent on some other governmental priority that might not be in the best interest of the property. 

As an example of how this works in reality on the property, when Disney was looking to make transportation infrastructure improvements in the Disney springs area, Disney elected to have Reedy Creek construct and operate the parking garages to support the expansion of the shopping district. The arrangement saved Disney millions of dollars. Unlike Disney, Reedy Creek can finance the garages with tax-free bonds. And unlike Disney, Reedy Creek is not required to pay sales tax on the materials used to construct them.

Because investors purchasing tax-free bonds are not required to pay federal income tax on the interest they earn from municipal bonds, they are willing to tolerate lower interest rates than they would for corporate bonds. The cost savings estimate is that the disparity will amount to at least several hundred thousand dollars per year over the 20-year term of the bonds, and those savings will go to Disney. Ultimately these savings help to make Disney more profitable, allowing Disney to build things that other companies couldn't or wouldn't because it might not be profitable absent Disney's unique advantage. This directly benefits the property and, ultimately, the visitor with the development that we would not otherwise be able to enjoy. 

Collaboration and Long-Term Planning 

The intimate partnership between Disney and the RCID promotes a culture of long-term planning and growth. This partnership enables the development of comprehensive master plans, ensuring that Disney's expansion initiatives align with the district's vision for sustainable growth. By collaborating, both entities can mitigate potential problems and execute large-scale projects efficiently, thereby preserving the resort's quality and integrity.

This long-term-planning area is a somewhat important aspect that most people just skip or gloss over. It comes down to who is deciding the future direction of the resort. The comprehensive plan's control can drive how the property, and Walt Disney World, develop in the future. Maintaining control of RCID long-term is vital to Disney's interest in maintaining creative control over the property.



Conclusion

Since its inception, the district has provided Disney with the necessary legal framework, flexibility, and financial advantages for its success. By granting Disney autonomy in decision-making and control over land use, the RCID has enabled the company to continue innovating and providing visitors with unmatched experiences. In addition, the partnership between Disney and the RCID ensures long-term planning and the preservation of the Disney brand. Consequently, Disney's continued partnership with the Reedy Creek Improvement District is essential to its continued success and the enchantment of millions of visitors who come to experience the majesty of Disney.

If you missed part one of this series, you can read it here

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