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Passing the Hat



When it comes to the relationship between Disney and Central Florida, local leaders fumble around like the three blind mice of the old children's song. With visions obscured by their partner's powerful pixie dust, the officials just keep running in circles -- while their tails are chopped off by a corporate carving knife.

Consider the pattern.

Whenever Disney needs help, it turns to government. Although tourism was tanking before Sept. 11, the terrorist strikes have given Disney and the rest of the tourism industry a rationale for government assistance: They're claiming victim status.

In early October, tourism leaders including Disney asked Orange County Chairman Richard Crotty to become the Rudy Giuliani of Central Florida and rescue their industry. He agreed to film a public-service announcement for them, and to fly to England as their pitchman.

Crotty also consented to give $1 million in county funds to advertise area attractions, supplementing Disney's own advertising. From all appearances, Crotty had become the chairman of Orlando Tourism Inc., rather than of Orange County, where assistance needs were growing for laid-off amusement workers.

So, what happens when the community needs assistance from Disney? For instance, helping to address problems spawned by Disney's growth -- problems like widening roads, adding interchanges, providing law enforcement and supplying affordable housing?

Disney has historically turned a cold shoulder to such requests, saying in effect: "That's your problem. We came here and created all this growth, but we have a special charter, granted by the state in 1967. That charter gives us immunity from taxes, fees and regulations imposed upon others."

The routine, which effectively chops off debate, goes way back. In 1972, soon after the Magic Kingdom opened, Florida adopted a planning law requiring special scrutiny of "developments of regional impact." These are large projects that have an impact beyond a single county on roads, housing and utilities. If the impact is significant, regional planners can ask the developer to mitigate it.

For example, when Seminole Towne Center was proposed, regional planners concluded that the megamall would create an affordable housing shortage in the surrounding Sanford-Lake Mary-Alta-monte Springs area. So the developer had to pay into an affordable-housing trust fund.

But Disney refused to comply with the 1972 planning law, citing its 1967 charter. Epcot, Disney-MGM, Pleasure Island, Downtown Disney, the Animal Kingdom and Disney's panoply of hotels all escaped DRI review. No mitigation of off-site impacts was required for the Mouse.

In 1985, Orange County adopted a transportation impact fee. Its purpose: to make developers pay part of the cost of widening roads to support new construction. Who pays the fee? Not Disney; its charter grants it immunity.

Later, Orange County adopted a utility and law-enforcement tax for property owners in the unincorporated county. Who pays? Again, not Disney. As always, its lawyers say: "Let everyone else pay. Our charter grants us immunity."

How did Disney acquire these immunities?

When it came to Florida in the mid-1960s, Disney pledged to build an experimental prototype community of tomorrow, Epcot. It would be a place where "20,000 people would live and work and play," Disney execs said, a place "always in a state of becoming," requiring governmental "flexibility." To accomplish their goal, they said they needed their own private government, a sort of Vatican with Mouse ears, empowered to provide on-site municipal services but immune from responsibility for off-site impacts. To ensure flexibility, they needed, among other things, the power to build a nuclear power plant, construct an airport, and license the manufacture and sale of alcoholic beverages -- all without state oversight.

In 1967, the legislature compliantly gave Disney everything it wanted. The following year the state Supreme Court granted it municipal bonding authority. Like the legislature, the court was told that Disney needed bonding power to build a real city. While the authority would be held by a private company, it would nevertheless benefit "the numerous inhabitants" on the Disney property, the court decided.

What of these "numerous inhabitants" today? In 1975, the Disney Co. unveiled a revised plan for Epcot. It would not be a functioning city with real residents but, instead, a sort of permanent world's fair, with industrial pavilions demonstrating new technologies and country pavilions showcasing the cultures of the world.

Speaking in 1975, a company representative called the model-city concept "only one visual depiction of one way to go." Despite what Disney had told the legislature and Supreme Court, it was eliminating real residents (who could vote) but was keeping the powers and immunities linked to the model-city idea.

Amazing as it may seem, Disney got away with it. It escaped from regulations, taxes and fees because of its charter, which it had acquired through misrepresentation, promising to build a city. Today, the charter works like a pre-nuptial agreement, preventing the community and the company from bargaining as equals over the terms of their relationship.

But there's more to the story. Like other corporations, except on a bigger scale, Disney uses an army of lobbyists, lawyers, planners and engineers to overwhelm local officials, bending and manipulating them in a slow process that typically occurs outside of public view.

In such a manner, Disney convinced Osceola County to spend $22 million for intersection improvements on I-4 and the expansion of U.S. Highway 192 to support building Celebration. The new community was supposed to appease Osceola politicians, who objected that all Disney's taxable development was in Orange County. Yet, before it could even begin to collect a growth dividend from the development of Celebration, Osceola had to pay the piper for those road upgrades. Then, Disney persuaded Osceola to enter into another financial arrangement to build Osceola Parkway, the county's most expensive public-works project ever. The toll road was needed to support the development of Disney's Animal Kingdom, which opened in 1998. Because ridership estimates were inflated, the toll road has become a gigantic boondoggle. And the county, not Disney, is left holding the bag, despite promises that the $153 million road would be self-financing.

Having exhausted Osceola's available infrastructure funding, the Disney juggernaut turned to Orange County. Needing an interchange at I-4 and Osceola Parkway to support Animal Kingdom, Disney asked Orange County to pay half the cost -- $53 million. The county, then headed by chairman Linda Chapin, readily complied. However, county commissioners were not told when they voted that the interchange was mostly in Osceola County.

What would local officials see if they opened their eyes and stopped running like the three blind mice?

To start, they might see how much Disney doesn't have to pay. By avoiding law-enforcement and utility taxes, it escapes from an estimated $15 million a year, according to the Orange County comptroller. Add to that transportation impact fees, conservatively estimated at $2 million per year, and you get a total of $17 million -- enough to build an elementary school.

Sure, Disney makes philanthropic contributions in the community. The donations reportedly total about $2.8 million given to Central Florida causes annually. That figure is modest, however, in relationship to the company's size, and in relationship to Disney contributions in metropolitan Los Angeles (Disneyland's home turf). There, the Disney family, through the Walt and Lilly Disney Foundation, contributed $100 million just to build the Walt Disney Concert Hall, home of the city's philharmonic orchestra. More to the point, the gifts of $2.8 million for the Orlando area are meager in comparison to the $17 million in taxes and fees Disney doesn't pay.

Thus Disney gets a double benefit. It avoids taxes yet gets credit for its philanthropic contributions, despite the imbalance between the two. As well, Disney's voluntary contributions win it support from social-service organizations, deterring criticism from board members who might otherwise get off the reservation and speak ill of The Mouse.

If they opened their eyes, local officials might also see the ill effects of tourism's low wages. It's the paradox of Orlando's amazing growth: low salaries amidst rampant job growth.

According to figures from the Economic Development Commission of Mid-Florida, real wages in Orange County have been stagnant since 1987. In Osceola County, which is more tourism-dependent, real wages have fallen in the past two decades. Only in Seminole County, the least dependent on tourism, have real wages improved in the past decade.

What's the underlying problem? Florida Trend, a business magazine, saw it after Epcot opened in 1982. Personal income in Central Florida lagged behind the rest of the state, it reported, because of the "heavy concentration of employment in low-wage occupations such as tourism and hotel service." In 1999, the Economic Development Commission of Mid-Florida made a similar observation: Only 12 percent of the new jobs created in the 1990s, when Disney cast-members grew to 55,000, earned more than the average wage in the community.

From 1993 to 1998, Disney's starting hourly wage was $5.85, a figure that rose to $6.25 in 1998. Workers top out after five years at the grand figure of $10.43. For perspective, the federal government says the poverty level for a family of three is $13,880, which requires an hourly wage of $6.67. Workers earning less than $8.67 are eligible for food stamps.

Former Orange County chairman Mel Martinez, a devout conservative, acknowledged the problem, suggesting that political ideology is no deterrent to seeing the cold, hard facts. Martinez, who left to become U.S. Secretary for Housing & Urban Development in the current Bush administration, said in an interview: "Tourism has a synergy that keeps it going so dramatically. But what is the work force that feeds this beast? It's not what we want to have as a community." The tourism work force, says Martinez, is "very dependent on the social network that the community provides."

In his view, the hot-button issue was the tourism tax. That is the 5 percent tariff on hotel bills that annually generates over $100 million for Orange County. By law, the tax can only be used for tourism-related purposes, a restriction that Disney interprets self-servingly.

In our interview, Martinez expressed anger that Disney's representative on the Tourist Development Council had consistently voted against sharing these dollars with the Orlando Science Center, a community resource.

Las Vegas is the only U.S. city with a larger share of its work force in the amusements sector of the economy. Yet Vegas, unlike Orlando, uses tourism tax money for schools and roads to benefit residents rather than tourists.

Before the terrorist strikes, some wanted to follow Vegas' lead. State Rep. Andy Gardiner, a Republican, had sponsored legislation to broaden the use of the tax. And the Tourist Development Council had unanimously voted to grant tourist-tax money to the arts.

That was then -- before Sept. 11. Now, the appointed county chairman, Richard Crotty, has become a spokesman for Disney and tourism. We would like to think that he is asking for something in return. Like having Disney play by the same rules and pay the same taxes and fees as everyone else, at least once the economy bounces back. Stay tuned.

Meanwhile, keep singing: "See how they run. See how the run."

Rick Foglesong teaches political science at Rollins College. He is the author of Married to the Mouse: Walt Disney World and Orlando (Yale University Press, 2001).


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