Walt Disney World, the nation's largest single-site employer, is expected next year to lose its special tax district, a status that helped transform roughly 25,000 acres of swampland into more than $75 billion in annual economic activity and boosted commercial real estate development across the state.

The Reedy Creek Improvement District, encompassing Walt Disney World and the cities of Bay Lake and Lake Buena Vista, gives the park's owner — Burbank, California-based entertainment giant Walt Disney Co. — privileges of a local government, including emergency response services, road maintenance, waste collection and electricity. It also let Disney expedite building four theme parks, 67 miles of waterways, 175 miles of roads and more than 40,000 hotel rooms, the district said.

On Friday, in a fight over Disney's opposition to a Florida law passed this year to restrict school teaching on gender and sexuality, Florida Gov. Ron DeSantis signed into law a bill abolishing Reedy Creek and other special tax districts formed before Nov. 5, 1968, to promote commercial real estate development. The Florida House passed the bill Thursday after the Senate passed it on Wednesday. The law is expected to take effect June 1, 2023, but does allow for the reestablishment of these districts on or after that date.

The law is a sudden disruption for Disney's Central Florida theme park operations, and its consequences may be anything but magical for Central Florida residents and businesses. Jerry Demings, mayor of Orange County — the state's largest county that is home to parts of Disney World and will no doubt be affected by the bill — said the law would be "catastrophic" to the county's budget and taxpayers. And the dissolution of no fewer than five other special tax districts around the state restricts the ability to offer incentives to attract businesses and increase commercial development in those areas.

"This came out of nowhere," said Richard Foglesong, a historian and political scientist who authored the book "Married to the Mouse" about Disney and Florida's economic development partnership. "No one really knows what's going to happen here."

The Florida state government's response is seen as potentially affecting companies around the country that want to take stances on certain political issues. "I think you're going to see many companies get back to the basics," said John Boyd, principal of Boca Raton, Florida-based The Boyd Co., who helps businesses decide where to locate. "They don't want to deal with this type of social legislation. They want to make decisions focused on the best interests of the company and shareholders."

In the case of Walt Disney World, its Reedy Creek Improvement District essentially taxes itself to provide services for the massive theme park, and the elimination of the special district may mean Osceola and Orange counties, where the theme park operates, would have to provide those services.

While Disney already pays millions of dollars annually in taxes, the entertainment giant would not pay any new taxes to the counties if its special district were dissolved. That may result in an unexpected tax burden on the county's residents and businesses without any additional revenue coming to the local government bodies. The region has long billed itself as a low-cost and low-tax alternative to attract businesses and residents, owing largely to the state of Florida's lack of income tax.

Given its autonomy, Disney is able to greenlight construction projects within the improvement district, speeding the development process for billions of dollars of projects including the Epcot, Hollywood Studios, Animal Kingdom and Star Wars: Galaxy's Edge theme parks that have opened since Disney World opened its doors in October 1971. If the bill is signed into law, that would all change.

"With the removal of the Reed Creek District, Disney would have to seek permission from local governments for approval of any new construction projects," said Lisa Dilts, principal of Central Florida real estate consultant Compspring. "If they were required to do that, it could slow the time frame of their construction projects considerably. The employees and contractors that support the district would likely need to find new work in the absence of a district to operate."

While the building of Disney World sparked economic activity that totaled about $75 billion a year, according to a 2019 Oxford Economics study, various figures have been quoted as to what kind of financial fallout the law may have on the residents and businesses of Osceola and Orange counties should the tax burden of supporting the park fall upon local government bodies. What's more, Reedy Creek issues its own bonds, which Disney pays, and those bonds would end up becoming Orange and Osceola counties' responsibility under the new law.

As a result, Orange County alone may have to raise $163 million per year to pay for Reedy Creek's operations and debt services, according to a series of tweets by Orange County tax collector Scott Randolph.

That may result in additional property taxes, particularly for homeowners in Orange County. Housing costs have soared in the fast-growing county and its largest city of Orlando during the pandemic as a flood of jobs and residents rolled into Central Florida. Apartment rents jumped more than 23% year over year in Orlando alone, among the highest rent increases in the country, according to CoStar data.

"This is going to be a very unpopular move in Central Florida, a market where 20% of our workers are in the services industry and are already struggling with the cost of housing," said Lisa McNatt, director of market analytics in Orlando for CoStar Group.

A representative for Disney and the governor's office did not respond to requests to comment from CoStar News.

Disney is assessing the ramifications of the law on its Florida operations outside of Disney World. The company revealed plans this month to build 1,300 affordable housing units on 80 acres in Orange County. However, the plans are in the early stages and still need government approvals.

The company also is in the process of moving at least 2,000 jobs from Southern California to a new campus in the southeast Orlando master-planned development of Lake Nona. The decision, formally announced in July 2021, was made in part because of "Florida’s business-friendly climate," according to a statement by Josh D’Amaro, the chairman of Disney's parks, experiences and products division.

A representative for Lake Nona's developer, Tavistock Development, declined CoStar News' request for comment on the status of that job relocation.

In addition to Disney's Reedy Creek Improvement District, the state is facing the dissolution of at least five other special tax districts. The Hamilton County Development Authority, which straddles the border between Georgia and Florida near the intersection of interstates 10 and 75 is one of those special tax districts that would dissolve.

The law would stop the economic development authority there from attracting projects that create jobs and capital investment in the district, said Chadd Mathis, the district's economic development director. Mathis said the governor's office hasn't reached out to the district to discuss how the bill would affect the authority.

Once the law takes effect, the authority would work to reestablish itself, Mathis said. "This will cost us unnecessary money with lobbyist and lawyer fees for certain."