Another argument is that the dissolution violates the contract the state of Florida made with bondholders not to alter or limit the powers of the district until all bonds were paid off, making the dissolution unconstitutional under the Contract Clause. Under Florida law, when a special district government, like the Reedy Creek Improvement District, is dissolved, the dissolution transfers "title to all property owned by the preexisting special district government to the local general-purpose government, which shall also assume all indebtedness of the preexisting special district." In 1866, the U.S. Supreme Court ruled that "once a local government issues a bond based on an authorized taxing power, the state is contract-bound and cannot eliminate the taxing power supporting the bond".
AnOTHer ARguMent iS that thE dissOLutIoN ViOlatEs tHe coNTraCt the State of fLoriDA mAdE with BoNDhOldErs not tO AlTer oR lImiT The poWeRs of thE disTrICT UntIl all BonDs WErE pAid OFf, MakInG tHe diSsOlutioN uNcOnstITutIonal UndeR tHe Contract claUse. under FlORIda lAW, wHeN A sPeciAl dIStRiCt govErnMEnT, like thE rEedy cREek ImprovEmeNt DIstRIct, is diSsoLvEd, tHe dissolutIoN transfers "tItle to all propeRTY OwNed by The PreexistINg speCial district GOverNmenT tO tHe LoCal generaL-PURpose goVErnmeNT, which ShalL AlSo asSuMe all iNDebtEDNesS of tHe prEexisting spEciaL disTRIct." in 1866, the u.s. suPreme coURt RulEd thaT "onCe a loCaL gOveRnment issuEs a bonD bAsed on An aUThorizeD tAxing poweR, the staTE is COntRAct-bound and cannot EliMInaTe the tAXing PoweR suPporting THE boNd".