Disney could get more than half a billion dollars in state tax breaks for building a regional hub in Orlando’s Lake Nona community where it plans to put more than 2,000 employees moving from California, documents show.
Disney’s capital investment for the project could be as much as $864 million, according to company projections made in documents released to the Orlando Sentinel on Wednesday from the state’s Department of Economic Opportunity.
An estimate in the documents shows Disney could claim more than $570 million in tax breaks over 20 years for the project.
The tax break would be among the largest in state history for a single corporation.
In 2006, a biotech company called Sanford Burnham received $300 million in state and local taxes to move to Orlando but had to return some of the funds for failing to meet the requirements in its original incentive agreement. In 2003, the Scripps Research Institute got $600 million in state and local tax money to set up in Palm Beach County.
Disney is eligible for the money under the state’s Capital Investment Tax Credit program, for which it was approved in February 2020, according to Christina Pushaw, press secretary for the governor.
Disney revealed last week it is planning to move more than 2,000 Disney Parks, Experiences and Products positions from California to a new campus in Orlando. The average wage for the positions is $120,000 annually.
It’s too early to know how many of those 2,000 employees will decide to move to Florida. Those affected will be informed by Nov. 1 and have three months to make a decision once they are notified.
In its application, Disney acknowledged there is a “potential risk of competition poaching of key executives during the transition.”
Disney did not respond to questions sent by the Sentinel but instead issued a statement Wednesday night.
“Like other companies, we are utilizing an existing incentive offered by the state of Florida in the development of the new regional hub where we will be bringing more than 2,000 professional roles to Central Florida and making a sizable investment in this community where we have a long-standing presence and commitment,” the unsigned statement read.
The incentives are “worse than a zero-sum game,” said Greg LeRoy, executive director of a non-partisan research center on incentives called Good Jobs First. He said California is losing tax base with the jobs leaving and Florida is losing part of its tax base with the incentives while also needing more services from the growth those jobs could bring.
“We call this interstate job fraud,” LeRoy said. “At the end of the day, you’ve also got less revenue available for public services.”
Neither Disney nor the state revealed specific figures for the tax incentives for the project until DEO responded to a public records request from the Sentinel on Wednesday.
The campus is expected to be about 300,000 to 400,000 square feet, Disney’s application shows.
“Taxpayer intends to establish a regional campus that will take this international enterprise into the 21st century with a state-of-the-art modern overhaul of the operational software systems that helps drive the success for this company to create an efficient management system,” the application states.
The application did not include the address of the campus.
“Incentive opportunities will be an integral part of the overall decision in determining the location for this project,” it said.
Before the onset of the coronavirus pandemic, the company reported $11.05 billion in net income in the fiscal year ending Sept. 28, 2019, on revenues of $69.6 billion.
The state’s Capital Investment Tax Credit reduces corporate income tax with an annual credit based on eligible capital costs from certain projects. Those costs include acquisition, construction, installation and equipping the project, according to a document from Enterprise Florida.
The credit can be for 100% on a project with a capital investment of at least $100 million. Annually, it is up to 5% of the eligible costs for up to 20 years. If it is not used up in that time because of insufficient tax liability, the rest can be used over the following 10 years, according to Enterprise Florida.
The Sentinel previously reported Universal Orlando is in line for nearly $350 million in state tax breaks to build a new headquarters for a division that designs its theme parks, rides and hotels.
afuller@orlandosentinel.com