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Disney sues DeSantis and oversight board after vote to nullify agreement with special taxing district

<i>Joe Burbank/Orlando Sentinel/Getty Images</i><br/>Disney on Wednesday sued after the board appointed by Gov. Ron DeSantis voted to invalidate an agreement struck between Disney and the previous board in February. Pictured are the headquarters of Disney's Reedy Creek Improvement District in Lake Buena Vista
Joe Burbank/Orlando Sentinel/Getty Images
Disney on Wednesday sued after the board appointed by Gov. Ron DeSantis voted to invalidate an agreement struck between Disney and the previous board in February. Pictured are the headquarters of Disney's Reedy Creek Improvement District in Lake Buena Vista

By Eric Bradner and Steve Contorno, CNN

Walt Disney Parks and Resorts on Wednesday sued Florida Gov. Ron DeSantis and his hand-picked oversight board, accusing the Republican 2024 presidential prospect of weaponizing his political power to punish the company for exercising its free speech rights.

The lawsuit was filed in federal court minutes after the board appointed by DeSantis to oversee Disney’s special taxing district sought to claw back its power from the entertainment giant, voting to invalidate an agreement struck between Disney and the previous board in February, just before that board’s dissolution.

“What they created is an absolute legal mess, OK? It will not work,” said Martin Garcia, chairman of the DeSantis-picked Central Florida Tourism Oversight District board of supervisors.

Wednesday’s moves are the latest escalation in the fight between DeSantis and Disney as DeSantis moves toward a 2024 presidential bid.

Disney responded by suing DeSantis, the board and Florida Department of Economic Opportunity acting secretary Meredith Ivey, seeking to block the board’s moves.

The lawsuit characterizes Wednesday’s vote as the “latest strike” in “a targeted campaign of government retaliation — orchestrated at every step by Governor DeSantis as punishment for Disney’s protected speech.”

It says DeSantis’ retaliation “now threatens Disney’s business operations, jeopardizes its economic future in the region, and violates its constitutional rights.”

“Disney finds itself in this regrettable position because it expressed a viewpoint the Governor and his allies did not like. Disney wishes that things could have been resolved a different way,” the lawsuit says. “But Disney also knows that it is fortunate to have the resources to take a stand against the State’s retaliation — a stand smaller businesses and individuals might not be able to take when the State comes after them for expressing their own views. In America, the government cannot punish you for speaking your mind.”

The board’s move Wednesday was expected, and board members in previous meetings had previewed its argument over why it saw the agreement as invalid. In March, the board hired a team of law firms to represent the district in “potential legal challenges” with Walt Disney Parks and Resorts, signaling that DeSantis’ appointees anticipated the fight was headed to the court room.

Disney CEO Bob Iger hinted at the entertainment giant’s case against the state when he told shareholders earlier this month that “the company has a right to freedom of speech just like individuals do.”

“The governor got very angry about the position that Disney took, and it seems like he’s decided to retaliate against us. … in effect, to seek to punish a company for its exercise of a constitutional right,” Iger said. “And that just seems really wrong to me — against any company or individual, but particularly against a company that means so much to the state that you live in.”

The fight now shifts to the courts, where Disney, in its 77-page lawsuit, is seeking an injunction that would block the board from exercising the power DeSantis and the Republican-led legislature sought to hand it.

“We are unaware of any legal right that a company has to operate its own government or maintain special privileges not held by other businesses in the state,” DeSantis communications director Taryn Fenske said. “This lawsuit is yet another unfortunate example of their hope to undermine the will of the Florida voters and operate outside the bounds of the law.”

DeSantis, speaking at a news conference in Jerusalem, blasted Disney’s lawsuit against him Thursday, saying the company did not “want to pay the same taxes as everybody else.”

“I don’t think the suit has merit. I think it’s political,” DeSantis said, accusing the entertainment giant of being “upset that they are actually having to live by the same rules as everybody else.”

The yearlong fight has strained what had long been a cozy relationship between Florida’s government and the state’s best-known employer and attraction of tourist dollars. DeSantis earlier this month suggested the state could build a prison or competing theme park on what had for decades been Disney-controlled property.

The Florida governor’s battle with Disney has become a flashpoint in the early stages of the 2024 Republican presidential primary. Former President Donald Trump and a slew of other candidates and potential rivals, including former New Jersey Gov. Chris Christie, have lambasted DeSantis for his actions, characterizing them as anti-business.

After a hearing in which several business owners, including those who run restaurants and bars at Disney World locations, urged the board to work with Disney, Garcia said the board would seek to raise taxes to pay for its legal fees in evaluating and combatting what he called “eleventh hour agreements.”

“Because that’s going to cost us money, we’re going to have to raise taxes to pay for that,” Garcia said.

The Central Florida Tourism Oversight District board of supervisors — the board named by DeSantis and packed with his allies earlier this year — took over the Reedy Creek Improvement District, the special taxing district that for half a century gave Disney control over the land around its Central Florida theme parks.

But before the DeSantis-selected board was in place, Disney in February reached an agreement with the outgoing board that seemed to render the body powerless to control the entertainment giant. The DeSantis administration was unaware of the agreement for a month and vowed retribution after it became public.

The agreements Disney signed with the previous board ensured the company’s development rights throughout the district for the next 30 years and in some cases prevented the board from taking significant action without first getting approval from the company. One provision restricted the new board from using any of Disney’s “fanciful characters” until “21 years after the death of the last survivor of the descendants of King Charles III, king of England.”

Its development agreement was approved over the course of two public meetings held two weeks apart earlier this year, both noticed in the local Orlando newspaper and attended by about a dozen residents and members of the media. No one from the governor’s office was present at either meeting, according to the meeting minutes.

In Wednesday’s meeting, the board’s special general counsel, Daniel Langley, walked through its legal argument for nullifying the deal between Disney and the previous board.

He said the board had not provided the required public notice of its meetings, and said the agreement was not properly approved by two municipalities within the district, the cities of Bay Lake and Lake Buena Vista.

He also argued that previous amendments to Disney’s long-term comprehensive plan were not properly vetted and approved by those two municipalities.

“The bottom line is that a development agreement has to be approved by the governing body of a jurisdiction, and that didn’t happen from the cities that have jurisdiction,” Langley said.

Former Florida Supreme Court justice Alan Lawson, an attorney hired by the district, said that “the old board attempted to act without legal authority to act.”

“This is essentially about what it means to live and work in a country governed by the rule of law. Everyone must play by the same rules,” he said. “Disney was openly and legally granted unique and special privilege — that privilege of running its own government for a time. That era has ended.”

The end of a decades-old agreement

The state legislature created the Reedy Creek Improvement District in 1967 and effectively gave Disney the power to control municipal services like power, water, roads and fire protection around its Central Florida theme parks that didn’t exist before Walt Disney and his builders arrived. But the special district also freed Disney from bureaucratic red tape and made it cheaper to borrow to finance infrastructure projects around its theme parks, among other significant advantages.

That special arrangement, though criticized at times, was largely protected by state politicians as both Disney and Florida benefited from the tourism boom.

The unlikely fracturing of Florida’s relationship with its most iconic business started during the contentious debate last year over state legislation to restrict certain classroom instruction on sexuality and gender identity. Disney’s then-CEO, Bob Chapek, facing pressure from his employees, reluctantly objected to the bill, leading DeSantis to criticize the company. When DeSantis signed the legislation into law, Disney announced it would push for its repeal. DeSantis then targeted Disney’s special governing powers.

For DeSantis, who has built a political brand by going toe-to-toe with businesses he identifies as “woke,” the latest twist threatens to undermine a central pillar of his story as he lays the groundwork for a likely presidential campaign. An entire chapter of his new autobiography is devoted to Disney, and the saga is well-featured in the stump speech he has delivered around the country in recent weeks.

This story has been updated with additional reporting.

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