Company Districts

Fordham Journal of Corporate & Financial Law, Apr 2025

Special districts that are owned or controlled by private entities and act almost uniformly like a company town can be dubbed a “company district.” These special districts, similar to historical company towns, have autonomy over the districts, control the local government, and only have to answer to the state government. Historical company towns like Pullman, Illinois and Hershey, Pennsylvania had almost canonical command over the land within their boundaries. Company districts operate their business similar to a company town—in a city that the private entity controls, but do not have employees living on-site. Company districts benefit by being immune to city or county regulations. Similar to historic company towns in their heyday such as Pullman, Illinois, company districts are now at risk of adverse state legislation, regulation, or judicial action. This risk is exemplified by the Walt Disney Company, which until 2023, controlled the Reedy Creek Improvement District in central Florida, a prototypical company district that allowed them to self-govern at the town and county level. This example of a company district is significant, as the Florida state government took adverse action against Reedy Creek as a response to corporate political meddling. While Florida’s legal action is likely a political reaction, this story raises important questions about the dark side of company districts. Critics have issued warnings that company districts like Reedy Creek lack transparency, are undemocratic, and wield a vast level of unchecked powers. Given recent state attempts to exert control over their operations, company districts should consider themselves on notice and at risk of adverse state legislation, regulation, or judicial action. This Note, in comparing company districts to the fate of company towns historically, concludes that state governments concerned about these special districts should take a bespoke approach to legislate against them. Historic company towns faced various adverse actions depending on the circumstances of their demise. Likewise, modern company districts are unique and should be addressed individually, rather than by sweeping legislative action as suggested by some recent commentators. Furthermore, federal courts have and can restrict the rights of private property owners, including the private entities that control company towns and company districts, to maintain protections for citizens as a whole.

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Company Districts

Fordham Journal of Corporate & Financial Law Volume 30 Issue 1 Article 6 2025 Company Districts C.J. Suglia Fordham University School of Law Follow this and additional works at: https://ir.lawnet.fordham.edu/jcfl Part of the Agency Commons, Business Administration, Management, and Operations Commons, Business Intelligence Commons, Business Law, Public Responsibility, and Ethics Commons, Land Use Law Commons, Law and Society Commons, Other Law Commons, and the State and Local Government Law Commons Recommended Citation 30 Fordham J. Corp. & Fin. L. 215 (2025). This Note is brought to you for free and open access by FLASH: The Fordham Law Archive of Scholarship and History. It has been accepted for inclusion in Fordham Journal of Corporate & Financial Law by an authorized editor of FLASH: The Fordham Law Archive of Scholarship and History. For more information, please contact . COMPANY DISTRICTS C.J. Suglia * ABSTRACT Special districts that are owned or controlled by private entities and act almost uniformly like a company town can be dubbed a “company district.” These special districts, similar to historical company towns, have autonomy over the districts, control the local government, and only have to answer to the state government. Historical company towns like Pullman, Illinois and Hershey, Pennsylvania had almost canonical command over the land within their boundaries. Company districts operate their business similar to a company town—in a city that the private entity controls, but do not have employees living on-site. Company districts benefit by being immune to city or county regulations. Similar to historic company towns in their heyday such as Pullman, Illinois, company districts are now at risk of adverse state legislation, regulation, or judicial action. This risk is exemplified by the Walt Disney Company, which until 2023, controlled the Reedy Creek Improvement District in central Florida, a prototypical company district that allowed them to self-govern at the town and county level. This example of a company district is significant, as the Florida state government took adverse action against Reedy Creek as a response to corporate political meddling. While Florida’s legal action is likely a political reaction, this story raises important questions about the dark side of company districts. Critics have issued warnings that company districts like Reedy Creek lack transparency, are undemocratic, and wield a vast level of unchecked powers. Given recent state attempts to exert control over their operations, company districts should consider themselves on notice and at risk of adverse state legislation, regulation, or judicial action. This Note, in comparing company districts to the fate of company towns J.D. Candidate, Fordham University School of Law, 2025; B.A., Wake Forest University, 2020. Chief among the many blessings God has given me is my family whom I love dearly: Jim, Ann-Marie, Emily, Rob, and Dottie. Thank you, Professor Nestor Davidson for your assistance. * 215 216 FORDHAM JOURNAL OF CORPORATE & FINANCIAL LAW [Vol. XXX historically, concludes that state governments concerned about these special districts should take a bespoke approach to legislate against them. Historic company towns faced various adverse actions depending on the circumstances of their demise. Likewise, modern company districts are unique and should be addressed individually, rather than by sweeping legislative action as suggested by some recent commentators. Furthermore, federal courts have and can restrict the rights of private property owners, including the private entities that control company towns and company districts, to maintain protections for citizens as a whole. INTRODUCTION...................................................................................... 216 I. COMPANY DISTRICTS’ TAKEOVER OF LOCAL GOVERNANCE.......... 217 A. Types of Special Districts ...................................................... 218 B. Historical Company Towns ................................................... 219 C. Decline in Relevance of Company Towns............................. 221 D. History of The Walt Disney Company’s Special District ...... 222 1. One Man’s Dream............................................................ 222 2. The Roy Disney Era, et seq. ............................................ 224 3. The Fall of Reedy Creek .................................................. 226 E. Company Districts ................................................................. 229 II. THE FUTURE FOR COMPANY DISTRICTS ......................................... 230 III. THE SIMPLE SOLUTION TO COMPANY DISTRICTS ........................... 233 CONCLUSION ......................................................................................... 235 INTRODUCTION Almost a decade ago, the Wall Street Journal used the phrase “CEO activism” to describe the advent of corporate executives who provided opinions on hot button issues in politics. 1 In 2022, the CEO of the Walt Disney Company forayed into CEO activism by speaking out against a Florida bill concerning sexual orientation and gender identity education in kindergarten through third grade. 2 1. See Ronnie Chatterji & Andrew Ward, Should CEOs Comment on Politically Contentious Topics?, WALL ST. J., (Sept. 30, 2023, 9:00 AM), https://www.wsj.com/ business/c-suite/ceo-company-politics-public-comments-beb94d8 (describing “the landscape for CEO activists” from 2015 through 2023). 2. See Skyler Swisher & Steven Lemongello, Chapek Says Disney Opposes “Don’t Say Gay” Law, Will Meet With DeSantis, ORLANDO SENTINEL, (Mar. 9, 2022, 11:35 PM), https://www.orlandosentinel.com/2022/03/09/chapek-says-disney-opposesdont-say-gay-law-will-meet-with-desantis/. 2025] COMPANY DISTRICTS 217 Disney, however, is different from most of its corporate peers; it benefits from a special district in Florida where it can govern its theme parks, hotels, and restaurants without having to deal with regulatory red tape from city or county government. 3 What legislatures give may also be taken away, and thus, the Florida government sought to meet the CEO activism by advocating to strip Disney of its special district. 4 What is striking is the similarity between company towns and special districts like the one Disney controlled. 5 Even more intriguing is the similarity between a state taking adverse action against a private entity who controls a special district and the historical actions taken against company towns. Part II of this Note will examine those similarities, and Part III will explain how this subset of special districts could be legislated or regulated against now that they are receiving outsized attention. 6 I. COMPANY DISTRICTS’ TAKEOVER OF LOCAL GOVERNANCE Not all local government is created equal. Although a typical municipality (e.g., town, city, village) is answerable to the county government, there are certain districts that fall outside o (...truncated)


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C.J. Suglia. Company Districts, Fordham Journal of Corporate & Financial Law, 2025, pp. 215, Volume 30, Issue 1,