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MERGING PUBLIC AND PRIVATE GOVERNANCE: HOW DISNEY’S REEDY CREEK IMPROVEMENT DISTRICT “RE-IMAGINED” THE TRADITIONAL DIVISION OF LOCAL REGULATORY POWERS CHAD D. EMERSON∗ I. INTRODUCTION .................................................................................................. 177 II. PRIVATIZING TRADITIONAL PUBLIC AREAS OF GOVERNANCE ............................ 178 A. The History of Special Districts ................................................................. 179 B. The Legal Operation of Improvement Districts.......................................... 181 III. THE HISTORY OF DISNEY’S REEDY CREEK IMPROVEMENT DISTRICT ................. 182 A. The Early Planning Years.......................................................................... 183 B. The Decisionmaking Period ....................................................................... 187 1. The Project Future Seminar ................................................................ 187 2. The Improvement District Strategy ..................................................... 191 3. Maintaining Legal Control of Reedy Creek ......................................... 192 C. The Legal and Legislative Years ................................................................ 194 1. The Creation of the Reedy Creek Drainage District............................. 194 2. A Shakeup in the State Legislature ..................................................... 194 3. The Unexpected Death of Walt Disney ................................................. 195 4. The Creation of the Reedy Creek Improvement District and Its Two Cities .................................................................................................... 195 (a) Chapter 67-784: Creating the Reedy Creek Improvement District 195 (b) The Legislation Creating the City of Reedy Creek and the City of Bay Lake ........................................................................................ 197 5. A Legal Challenge to Disney’s New Improvement District .................. 199 IV. THE RATIONALE FOR ESTABLISHING THE REEDY CREEK IMPROVEMENT DISTRICT ........................................................................................................... 202 V. THE POSITIVE IMPACT OF THE REEDY CREEK IMPROVEMENT DISTRICT ON STATE AND LOCAL INTERESTS ........................................................................... 203 A. The 1967 ERA Report................................................................................. 205 B. The 1983 Disney World Effect Study ......................................................... 207 C. The 2004 Fishkind Study ........................................................................... 208 D. Other Economic Impacts of Reedy Creek ................................................... 209 E. Noneconomic Impacts of Reedy Creek ........................................................ 210 F. Opportunities to Repeal the District’s Regulatory Powers ......................... 212 VI. CONCLUSION ..................................................................................................... 214 I. INTRODUCTION On November 22, 1963, one airplane flight changed the course of Central Florida—and in many ways the entire nation.1 Aboard the plane was Walter Elias Disney,2 the creative genius who had ushered in a new era of American entertainment through his animated fea- ∗. Chad D. Emerson is an Associate Professor of Law at Faulkner University Tho- mas Goode Jones School of Law. He thanks his research assistant, Davy Hay, for his sup- port with this Article as well as Ray Maxwell, who serves as the lead administrator for the Reedy Creek Improvement District. 1. See RICHARD E. FOGLESONG, MARRIED TO THE MOUSE 14 (2001). 2. Id.
178 FLORIDA STATE UNIVERSITY LAW REVIEW [Vol. 36:177 tures and Disneyland theme park in Anaheim, California. From his window seat, Disney looked down on acreage of undeveloped land,3 including rural swampland and citrus groves4 —a physical environ- ment that hardly seemed ripe for what would soon become one of the largest private developments in the United States. Yet, as was his skill, Disney saw an opportunity where others did not—so much so that a small team of Disney confidants soon began acquiring 27,000 of these isolated acres for what would ultimately become the iconic Walt Disney World Resort.5 This Article analyzes the legal and regulatory events that enabled Disney’s vision to become a reality. This series of events uniquely melded public governance with private enterprise to create a system designed to facilitate Disney’s massive project without resorting to a large public investment. Indeed, when the Florida Legislature created the Reedy Creek Improvement District (the “District” or “Reedy Creek” or “Improve- ment District”), it empowered the District with authority “typically reserved for municipal and county governments.”6 The Legislature accomplished this through use of a special district.7 While Reedy Creek was certainly not the first special district, Disney’s version was unique in the broad scope of its authority. This Article examines the history of special districts generally and the Reedy Creek Improvement District specifically. It then analyzes the positive benefits that both Disney and the general public have realized since the Florida Legislature empowered the District with authority normally vested in public governments. In doing so, the Ar- ticle concludes that under certain circumstances, such as the case at hand, granting public powers to private parties can result in a more effective and efficient method of governing. This is the lesson—and the story—of the Reedy Creek Improve- ment District. II. PRIVATIZING TRADITIONAL PUBLIC AREAS OF GOVERNANCE Historically, most regulatory functions in this country have been divided among the federal, state, and local governments. However, since the World War II era, another form of government—the special 3. See Robert N. Jenkins, How One Man, and One Mouse, Changed Us, ST. PETERSBURG TIMES, Dec. 12, 1999, http://www.sptimes.com/News/121299/news_pf/Travel/ How_one_man__and_one_.shtml. 4. STEVE MANNHEIM, WALT DISNEY AND THE QUEST FOR COMMUNITY 68 (2002). 5. FOGLESONG, supra note 1, at 46. 6. OFFICE OF PROGRAM POLICY ANALYSIS & GOV’T ACCOUNTABILITY, FLA. LEG., CENTRAL FLORIDA’S REEDY CREEK IMPROVEMENT DISTRICT HAS WIDE-RANGING AUTHORITY, Rep. No. 04-81, at 3 (2004) [hereinafter REEDY CREEK IMPROVEMENT DISTRICT REPORT]. 7. See id.
2009] DISNEY’S REEDY CREEK IMPROVEMENT DISTRICT 179 district—has grown increasingly popular.8 The United States Census Bureau defines special districts as follows: Special district governments are independent, special-purpose go- vernmental units (other than school district governments), that ex- ist as separate entities with substantial administrative and fiscal independence from general-purpose local governments. As defined for census purposes, the term ‘‘special district governments’’ ex- cludes school district governments.9 Special districts are distinguished from more conventional forms of government in that they typically serve a “limited purpose” compared to the “general purpose” of states, cities, counties, and the like.10 The “limited” distinction refers to the fact that most special districts are established with a narrower scope of regulatory authority than con- ventional forms of government.11 To understand why special districts have grown in use, a consideration of their history is informative. A. The History of Special Districts The historical development of special districts in the United States has consisted of three major chronological phases. First, in the early- to mid-1800s, states encountered an increased demand for in- frastructure improvements because of a more mobile and industrial population.12 To address these specific needs without burdening the general purpose government, states established special districts and gave the districts the authority to issue bonds to pay for the im- provements.13 This strategy permitted states to increase the spending capacity for such projects while avoiding the need to dramatically in- crease taxes on the overall population.14 Unfortunately, some states imbibed in too much of a good thing. As one commentator explained, “[t]he profligate creation of special districts and issuance of debt were blamed, in part, for the financial panic of 1837, which led to the passage of the first limits on state leg- 8. Sara C. Galvan, Wrestling with MUDS to Pin Down the Truth About Special Dis- tricts, 75 FORDHAM L. REV. 3041, 3043 (2007). 9. 1 U.S. CENSUS BUREAU, U.S. DEP’T OF COMMERCE, 2002 CENSUS OF GOVERNMENTS, INDIVIDUAL STATE DESCRIPTIONS, at vi (2005) [hereinafter INDIVIDUAL STATE DESCRIPTIONS], available at http://www.census.gov/prod/2005pubs/gc021x2.pdf. 10. See id. 11. See id. 12. Barbara Coyle McCabe, Special Districts: An Alternative to Consolidation, in CITY- COUNTY CONSOLIDATION AND ITS ALTERNATIVES 142-43 (Jered B. Carr & Richard C. Feiock eds., 2004). 13. Id. at 132; see id. at 142-43. One example of this strategy is the series of canals throughout the state that the New York Legislature approved after the success of the Erie Canal. Id. at 143. Rather than pay for these from the state’s general fund, the Legislature created a series of special districts to finance and administer this specific-purpose enterprise. Id. 14. See id. at 142-43.
180 FLORIDA STATE UNIVERSITY LAW REVIEW [Vol. 36:177 islative power.”15 These events resulted in decreased use of special districts.16 That is, until another financial crisis reversed that trend.17 As the 1930s began, the Great Depression struck the United States with severe economic turmoil. To help counter the effects, President Roosevelt, in part, turned back to special districts.18 Roose- velt viewed these types of entities as an efficient governmental form for accomplishing specific tasks.19 As a result, “he promoted the use of public authorities and special districts to accomplish many public aims”—one of the most significant being the creation of the Tennes- see Valley Authority, which was essentially an expansive special dis- trict centered on resource management and services.20 By the 1950s, another shift occurred as “the chief proponents of special districts began to shift from national leaders to state and lo- cal executives and private entrepreneurs.”21 This represented a re- turn to the nineteenth century trend where states viewed special dis- tricts—and their financing authority—as a tool for large infrastructure projects. Former New York Governor Nelson Rockefeller represented a prime example of this shift. During his term from 1959 to 1974, the Governor established over twenty special district-type entities.22 This trend continued into the 1980s as general purpose govern- ments, faced with reduced federal aid, sought to increase infrastruc- ture and development capacity without raising taxes or directly going into debt.23 To do this, municipalities created a form of special dis- trict, the business improvement district, to administer and finance the revitalization of certain smaller segments within the larger city24—a strategy which, again, distributed the cost (and risk) of such efforts more narrowly than would the general purpose government acting directly on the matter. As the twentieth century passed into the twenty-first century, the trend toward creating special districts in the United States contin- ued. By 2002, the U.S. Census Bureau calculated that there were more than 85,000 “governmental units” in the United States.25 Roughly 38,000 of this total were general purpose forms of local gov- 15. Id. at 143. 16. See id. at 143-44. 17. Id. at 144. 18. Jerry Mitchell, Public Enterprises in the United States, in PUBLIC ENTERPRISE MANAGEMENT: INTERNATIONAL CASE STUDIES 68, 69 (Ali Farazmand ed., 1996). 19. Id. 20. Id. 21. McCabe, supra note 12, at 145. 22. Id. 23. Id. at 146. 24. Id. at 146-47. 25. INDIVIDUAL STATE DESCRIPTIONS, supra note 9, at v.