Why did Disney want and get its own county?
Disney World opened 51 years ago, with tickets priced at $3.50 for adults, $2.50 for teens, and $1 for kids.
The company has been in the news recently for wanting to undo Florida legislature’s work in preventing public school systems from teaching sexual orientation and gender identity lessons to kids in K-3 (at the same time, Walt Disney won’t live its principles by building a 2SLGBTQQIA+ ride for K-3-age kids).
The company has also been in the news after the same legislature passed a law undoing the company’s ability to run its own county, the Reedy Creek Improvement District (WPTV). Democrats in Massachusetts and California have been predicting that this will be disastrous for ordinary taxpayers in Florida, who will be on the hook for the $1 billion that Reedy Creek has borrowed (applying the general principle that people in Florida are too stupid not to understand their own interests).
Buying Disney’s World: The Story of How Florida Swampland Became Walt Disney World, a 2021 book by Aaron Goldberg, was written before these 2022 disputes, but provides interesting background information.
First, why did Disney want to have its own county?
To pay for the infrastructure throughout the property—such as roads, sewer systems, and water lines—the Reedy Creek Improvement District sold federally subsidized tax-exempt municipal bonds.
Florida did not have a personal income tax at the time (nor does it now). Therefore, allowing Disney to borrow money tax-free did not cost Florida anything. The Federal income tax rates hit 50 percent at $22,000 per year and 70 percent at $100,000 per year, so Disney would have been able to borrow at a substantial savings compared to if the company had to issue conventional taxable corporate bonds (see discussion in the comments about whether a 50 percent tax rate implies that a muni can be sold at half the yield of a same-risk same-duration corporate bond).
How could the arrangement be justified? If it is that easy, why not have the Florida state government give every company a 1-foot-square county-like “district” to administer and then the company can use its district to issue tax-exempt bonds? Disney told the legislature that the planned primary use for the 27,000 acres it had purchased was a town: Experimental Prototype Community of Tomorrow (EPCOT). Walt in 1966:
But the most exciting, by far the most important part of our Florida project—in fact, the heart of everything we’ll be doing in Disney World—will be our experimental prototype city of tomorrow. We call it E.P.C.O.T. spelled E-P-C-O-T: Experimental Prototype Community of Tomorrow. Here it is in larger scale.
No city of today will serve as the guide for the city of tomorrow. E.P.C.O.T. will be a planned environment demonstrating to the world what American communities can accomplish through proper control of planning and design.
E.P.C.O.T. begins with an idea new among cities built since the birth of the automobile. We call it the radial plan. Picture a wheel: like the spokes of a wheel, the city fans out along a series of radials from a bustling hub at the center of E.P.C.O.T. A network of transportation systems radiate from the central hub carrying people to and from the heart of the city. These transportation systems circulate to and through four primary spheres of activity surrounding the central core. First, the area of business and commerce … next, the high-density apartment housing … then the broad greenbelt and recreation lands … and finally the low-density, neighborhood residential streets. E.P.C.O.T.’s dynamic urban center will offer the excitement and variety of activities found only in the metropolitan cities: cultural, social, business, and entertainment.
Among its major features will be a cosmopolitan hotel and convention center towering thirty or more stories. Shopping areas where stores and whole streets recreate the character and adventure of places ‘round the world … theaters for dramatic and musical productions … restaurants and a variety of nightlife attractions. And a wide range of office buildings, some containing services required by E.P.C.O.T.’s residents, but most of them designed especially to suit local and regional needs of major corporations. But most important, this entire fifty acres of city streets and buildings will be completely enclosed. In this climate-controlled environment, shoppers, theatergoers, and people just out for a stroll will enjoy ideal weather conditions, protected day and night from rain, heat and cold, and humidity.
Here the pedestrian will be king, free to walk and browse without fear of motorized vehicles. Only electric powered vehicles will travel above the streets of E.P.C.O.T.’s central city.
One of the ideas was a three-level road system. Trucks on the bottom. Cars in the middle. Pedestrians, bicycles, and electric golf carts on the top. There would be a “greenbelt” around the high-rise offices and apartment buildings. Beyond the greenbelt would be single-family homes. At least 20,000 people, which was a substantial number in a time before mass immigration, would live in E.P.C.O.T.
Since it would be primarily a municipality, in other words, it made sense for Disney to have the right to issue tax-free muni bonds.
An unrelated tidbit of potential interest is that two of the principal managers for getting Disney World ready for visitors were MIT graduates.
General Joe Potter (birth name William Potter, nickname Joe) was an integral part of the early team working on the Florida land acquisition and helped with the legislation to form the RCID.
A graduate of the Massachusetts Institute of Technology with a degree in civil engineering, General Joe was a logistics planner for the invasion of Normandy and commanded the troop section of the Propaganda and Psychological Warfare Division during World War II.
Potter worked behind the scenes, overseeing the construction of the park’s infrastructure, which included underground utilities, a sewer system, and a power grid, along with water treatment plants and land reclamation measures. The other Joe, Rear Admiral Joseph W. Fowler, was at the helm of just about everything else Potter wasn’t handling, including the creation of the theme park itself, the hotels, transportation, and the like. Admiral Fowler had graduated second in his class from the US Naval Academy in 1917. Like General Potter, Fowler was also a graduate of MIT, with a master’s degree in naval architecture.
What was the land worth before Disney showed up? Somewhere between $45 and $150 per acre (950 in 2022 Bidies). By keeping its plans secret, the company paid roughly $200 per acre to buy up 43 square miles of land (2X the size of Manhattan and similar to San Francisco, but without all of the homeless encampments). As soon as word leaked out to the media, “land prices in the area skyrocketed to over $1,000 an acre.” (Disney paid $7,000 an acre in 2019 for 1,600 additional acres of swap.)
The prices on opening day in 1971?
General Admission: adult admission, $3.50; junior admission, ages twelve through seventeen, $2.50; and children three through eleven, $1.00. If you felt the need to bring man’s best friend, your four-legged friend could stay at the Disney kennel for fifty cents a day, which included a lunch. The cost of individual attractions ranged from ten cents to ninety cents. … you could spend the night at the Polynesian Village or the Contemporary for $25.00 to $44.00 a night at either hotel.
The book notes that in 2010, Disney actually did build a handful of houses inside Disney World: Golden Oak. Right now they seem to be selling for about $1,000 per square foot. A few hundred people live there, but presumably anyone with $5-20 million to spend on a house will also have additional houses in which to live.
Circling back to the original topic, Disney was able to cut its costs tremendously at the expense of the average Federal taxpayer. What’s curious is that DeSantis-hating folks in other states who’ve been paying Disney’s tax bills advocate for this arrangement to continue. They’re so against DeSantis that they’re in favor of corporate welfare that actually costs them personally (since if people who buy Disney World (“Reedy Creek”) bonds don’t have to pay tax on the interest, taxes necessary to run the Federal government will have to be extracted from ordinary schlubs) and if you ask them “How much longer do you think Disney should have the right to issue tax-free municipal bonds?” they don’t propose any end date.
From Disney World during Code Orange coronapanic (September 2021):
(I still can’t figure out how President Biden’s first executive order wasn’t shutting down all U.S. theme parks. Schools were still closed in many big U.S. cities when Biden took office. Why allow daily superspreader operations if it was too dangerous to run schools New York, Boston, Los Angeles, San Francisco, etc.?)
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