DeSantis orders investigation into Disney district’s board. Disney CEO Iger fires back

Blindsided by a decision by the Disney-aligned governing board to undercut his authority over the special taxing district that oversees development at Walt Disney World, Gov. Ron DeSantis on Monday ordered an investigation into what he said appears to be “self-dealing” and other “ethical violations.”

Disney has defended the actions of the Reedy Creek Improvement Board, and on Monday Walt Disney Company CEO Bob Iger shot back. Addressing questions at the company’s annual shareholder’s meeting he called the governor’s attempts at retaliation for Disney’s speaking out against the state’s gender identity legislation passed last year as “anti-business and anti-Florida.”

DeSantis said the decision by the Reedy Creek Improvement District to “enter into last-minute development and restrictive covenant agreements with Walt Disney Parks and Resorts, U.S., Inc,” was designed to “usurp” the authority of the successor board he had appointed, DeSantis wrote in a letter to Melinda Miguel, his chief inspector general.

He asked her to launch a civil and criminal investigation with the Florida Department of Law Enforcement into the actions of the former Reedy Creek Improvement District board. Based on initial observations of his legal counsel, he said, the board engaged in “inadequate notice, lack of consideration, improper delegation of authority, and ethical violations, such as conflicts of interest and self-dealing.”

DeSantis spokesman Jeremy Redfern said the agreements “are likely invalid, and all legislative options are back on the table,” although he did not specify what that may entail.

Disney has stood by the actions of the Reedy Creek board, saying in a statement last week that “all agreements signed between Disney and the District were appropriate, and were discussed and approved in open, noticed public forums in compliance with Florida’s Government in the Sunshine law.” The company did not immediately respond to requests for comment about the DeSantis investigation.

Iger said Monday that the company will invest $17 billion and create 13,000 jobs at Walt Disney World over the next 10 years. He also took a jab at the governor’s criticism.

“A year ago we took a position on legislation — and, while we may not have handled it well — the governor got very angry with the position we took,’’ he said during the virtual meeting. “...A company has a right to freedom of speech just like an individual does...Our point is, that any action that thwarts those efforts simply to retaliate against a position the company took sounds not only anti-business, but anti-Florida.”

Outgoing board approved long-term agreements

The conflict began in February, days before Florida legislators voted to advance the governor’s proposal to take control of the Reedy Creek Improvement District. At a publicly-noticed meeting with news reporters present, the district board voted to sign a series of agreements that undercut the authority of the DeSantis-appointed board, which has been named the Central Florida Tourism Oversight District.

In addition to no one noticing the implications of the vote until last week, no one also called attention to the fact that the agreements remain in effect until 21 years after the death of the last descendant of King Charles III, the king of England.

The governor’s response has been expected since last week, when the board he appointed announced that it had been outmaneuvered.

“This essentially makes Disney the government,” said Ron Peri, one of the five members of the new board appointed by DeSantis. “This board loses, for practical purposes, the majority of its ability to do anything beyond maintain the roads and maintain basic infrastructure.”

READ MORE: Disney outmaneuvered DeSantis’ new governing board, but a legal fight is brewing

DeSantis’ staff last week said the agreements between Disney and the former board “may have significant legal infirmities that would render the contracts void,” and the governor hinted that legal action would follow. “You ain’t seen nothing yet,’’ the governor declared on Thursday.

Now, questions remain as to whether the agreements were in line with Florida law, whether the state and Legislature can retroactively overturn them, and how far the governor can go to interfere in the property rights of a private company.

The agreements leave in place the local land-use regulations that favor Disney for the next 30 years, and the set of restrictive covenants limit what the DeSantis-aligned board can do with Disney’s property.

Broad state land-use laws may be at issue

A challenge “would take a change in how we understand local government law in order for Disney to lose because it really follows that local government development act very closely,’ said Jake Schumer, a municipal attorney in the suburban Orlando law firm of Shepard, Smith, Kohlmyer & Hand in an interview with the Herald/Times.

The reaction from the governor’s allies on the board, however, was to fight the move in court.

After the board discovered the Reedy Creek board’s maneuver, the DeSantis-aligned board agreed to hire four law firms, whose fees will be paid by the tax revenues into the district by Disney.

The law firms include Cooper & Kirk, a Washington, D.C., law firm the DeSantis administration has paid at least $5.8 million to defend his culture war policies attacking Big Tech, vaccine passports on cruise ships and limits to felons voting.

The board also hired the new Tallahassee law firm of Lawson Huck Gonzalez, which was launched earlier this year with Alan Lawson, a retired Florida Supreme Court justice, and Jason Gonzalez, a leader in The Florida Federalist Society. And the board approved two Orlando firms to pursue the challenge — Nardella & Nardella and Waugh Grant.

Last week, Attorney General Ashley Moody also intervened, sending a public records request for all communications between the former members of the Reedy Creek Improvement District and Disney officials.

DeSantis indicated in his letter that he wants any violations “referred to the appropriate authorities.”

The inspector general and the Legislature

“These collusive and self-dealing arrangements aim to nullify the recently passed legislation, undercut Florida’s legislative process, and defy the will of Floridians,’’ he wrote in the letter to Miguel.

As chief inspector general, Miguel is charged with conducting independent audits and investigations but her role is not entirely independent of the governor. He appoints her, and she reports directly to him.

Although DeSantis appears ready to ask the Legislature to intervene, the presiding officers had mixed reactions when asked about it last week.

Senate President Kathleen Passidomo, R-Naples, said legislators would “take a look at it,” but she did not “anticipate doing anything in the near term.”

House Speaker Paul Renner, R-Palm Coast, said that he was not sure what the Legislature could do and said he was “fully supportive of the governor taking action.”

“What’s happened is disingenuous to say the least,’’ Renner said, adding it involved a “lack of candor.”

What DeSantis asks to be investigated

The governor‘s letter asks the inspector general’s investigation to focus on the following:

▪ Reedy Creek’s adherence to applicable Florida civil and criminal laws and ethics requirements;

▪ The qualifications of Reedy Creek’s prior Board of Supervisors and the legal validity of their actions;

▪ The involvement of Walt Disney World employees and agents in the execution of Reedy Creek’s actions;

▪ Any financial gain or benefit derived by Walt Disney World as a result of Reedy Creek’s actions and Reedy Creek’s justification for such actions;

▪ All Reedy Creek board, employee, or agent communications related to Reedy Creek’s actions, including those with Walt Disney World employees and agents;

▪ All Reedy Creek board, employee, or agent communications related to House Bill 9-B, Reedy Creek Improvement District, Orange and Osceola Counties, and the Central Florida Florida Tourism Oversight District.

Mary Ellen Klas can be reached at meklas@miamiherald.com and @MaryEllenKlas