New Disney district's biggest concern is Milton, analysts say

A new board of supervisors and a new name shouldn't impact the first bond sale by the district enveloping Disney's theme parks since Florida stripped Disney of its control of the district, but Hurricane Milton's impact is a concern, analysts said.

The Central Florida Tourism Oversight District, which had been the Reedy Creek Improvement District, planned to price $99 million of ad valorem tax bonds on Thursday.

Bloomberg News

The bonds will mature from 2025 to 2044 and are callable in 2034. The proceeds will be used to build and improve roads and bridges in the district.

The municipal advisor, Public Resources Advisory Group, and lead underwriter BofA Securities didn't immediately respond to inquiries as to whether they still expect a Thursday pricing.

Florida last year dissolved all independent special districts created before 1968.

The district retains the credit strengths of the old one, said Fitch Ratings Director Patrick Goggins. The board still has the power to raise taxes or cut spending and has healthy reserves, he added.

Funding fire protection and infrastructure spending remain priorities, Goggins noted. These are the important credit considerations, he said.

Fitch Ratings rates the bonds AA-minus with a stable outlook as does S&P Global Ratings.

Though the changes to the district board seem to have little impact on its credit, Fitch Ratings Director Kevin Dolan said the agency is keeping an eye on Hurricane Milton, which as of noon, Eastern, Tuesday, was a Category 4 hurricane expected to hit Central Florida Thursday.

"Milton seems to be an unprecedented sized storm that will affect Central Florida," Dolan said. "So that is a concern … It looks troubling."

There tends to be much rebuilding and reimbursements from state and federal agencies after hurricanes, Goggins said. Florida entities tend to have strong reserves in anticipation of hurricanes. However, the hurricane could have a long-term impact on the tax base.

The transfer of appointment powers from the districts' property owners to the governor and state senate was punishment for the Walt Disney Co. for its opposition to the so-called "Don't Say Gay" education law. The Parental Rights in Education Act bans public school instruction about sexual orientation or gender identity for children through the third grade.

Disney filed multiple lawsuits over the state government's takeover of the district. These were settled in March, with DeSantis agreeing to use a 2020-approved comprehensive plan as the guiding document and one of the board members appointed by DeSantis being replaced by a member friendly to Disney.

Disney has plans to expand its facilities and the settlement provides clarity, Goggins said.

Ben Watkins, director of Florida Division of Bond Finance, said the dispute between Disney and the state's government is in the past and won't be an issue politically or financially going forward.

The district's investor presentation boasts the district has had a 98% increase in assessed value since 2014 and is utilizing only 12.95 of an allowed 30 millage assessment.

Total fiscal 2024 revenue is expected to be 5.7% above fiscal 2023's while expenditures are expected to be up 3.2%, the presentation said.