Disney’s Reedy Creek blasted as ‘corporate cronyism’ in DeSantis district’s report

ORLANDO, Fla. — A new report drafted for Gov. Ron DeSantis’ tourism oversight district slams Reedy Creek, the government Disney effectively ran for decades, calling it the “most egregious exhibition of corporate cronyism in modern American history.”

The 80-page review of the Reedy Creek Improvement District accuses the previous Disney-aligned leadership of offering “benefits and perks that were akin to bribes” and failing to meet affordable housing and transportation needs in Central Florida created by Disney World.

“It had established an extra-constitutional governing authority— ‘an experimental absolute monarchy’ — within the borders of the State of Florida, and, accordingly, the United States — one that strikingly resembled, without exaggeration, a kingdom of yore,” the report concludes.

Disney fired back, calling the DeSantis-controlled Central Florida Tourism Oversight District’s report “an exercise in revisionist history.”

“It is neither objective nor credible, and only seeks to advance CFTOD’s interests in its wasteful litigation that could derail investment within the district,” the unsigned company statement read. “Further, it does not change the fact that the CFTOD board was appointed by the governor to punish Disney for exercising its Constitutional right to free speech.”

The tourism oversight district’s board will consider Wednesday whether to accept the report, which was prepared by a group of experts it hired. If accepted, the report will be provided to DeSantis and the Florida Legislature as required by a new law overhauling the special district.

The report outlines the history of Reedy Creek, which state lawmakers approved in 1967 to entice Walt Disney to build his East Coast theme park in Florida. Disney’s deal has been likened to the company’s property becoming Florida’s 68th county or a “Vatican with mouse ears.”

For more than 50 years, the special district granted Disney “near-total governing authority” over the public entity that provides fire protection, utilities and other government services for Disney World, the report states. As the primary landowner, Disney had the power to pick the district’s five board members in elections.

That arrangement was upended earlier this year when state lawmakers gave the governor the authority to appoint the board, subject to Senate confirmation. DeSantis removed the Disney-aligned board and installed five Republican allies in February.

Latest salvo in feud

The scathing report is the latest in a feud that started last year when Disney opposed legislation critics called the “don’t say gay” law that limited classroom instruction on sexual orientation and gender identity.

Disney and DeSantis are now battling in court. Disney filed a federal lawsuit accusing DeSantis and state officials of engaging in a “targeted campaign of government retaliation.” The new tourism oversight district sued Disney in state court, asking a judge to void agreements that limit its authority over development.

The report accuses Disney of capturing the district’s loyalty over the years through “high-end annual passes that provided free access to Disney parks around the world and were not available to the public; steep discounts on Disney cruises, dining, and merchandise; access to cast-member-only shopping depots; discounted entrance to ticketed Disney special events; and other similar perks.”

“For years, the company treated district employees like Disney employees by, for instance, providing complimentary annual passes and steep discounts — benefits and perks that were akin to bribes,” the report states. “Not surprisingly then, the District’s employees believed that it was their job to prioritize the interests of Disney.”

Between fiscal year 2018 and fiscal year 2023, the district’s expenditures on these benefits ranged from $1.78 million to $2.54 million annually, according to the report. The previous leadership did not consider those benefits to be taxable income, and the new administration is seeking an agreement with the Internal Revenue Service to resolve those tax issues, the report states.

An attached letter estimates the potential tax liability to be more than $2 million. The new board ended the Disney perks program after it took over, replacing it with a $3,000 stipend. Unionized employees, who make up about half of the district’s workforce, are bargaining to receive that payment.

The tourism oversight district’s forensic audit found former district administrator John Classe incurred nearly $166,000 in charges on his district American Express card for expenses that included retirement parties, holiday and city resident parties, sports tickets and food and beverages during a 15-month time frame that began in 2021 and ended in 2022.

Classe did not immediately respond to a request for comment.

Affordable housing, roads

Although Disney pays county property taxes, the report faulted the district for failing to build affordable housing and allowing Disney to avoid impact fees that developers pay to help build roads and other infrastructure.

“When Central Florida residents sit in bumper-to-bumper traffic on I-4, they should know that Disney bears significant blame. And although Disney paid ad valorem taxes to Orange and Osceola Counties when required, it also engaged in aggressive litigation tactics — filing dozens upon dozens of lawsuits — to eliminate as much of Disney’s tax burden as possible,” the report’s authors wrote.

It appeared the old district gave the district administrator “nearly unchecked authority to execute multimillion-dollar and long-term contracts without oversight from the Board of Supervisors or any other publicly transparent process,” the report said.

One of the experts used for the review was Donald J. Kochan, a conservative law professor at George Mason University. The district agreed to pay Kochan $110,000 for his work, board records show.

Last month, Disney touted its contributions to Florida in its own report. The Disney-commissioned study conducted by Oxford Economics found the corporation has a statewide $40.3 billion economic impact and accounts for 263,000 direct and indirect jobs.

Disney generates $3.1 billion in annual state and local tax revenue, according to the report. In 2022, Disney announced it would build 1,300 affordable housing units near its theme parks. Company officials said earlier this year the first apartments will be available in 2026.

The Central Florida Tourism Oversight District has been under scrutiny for its own hiring and contracting decisions. The board’s new administrator, Glen Gilzean, is a DeSantis ally. His candidacy was boosted by Michael Sasso, another DeSantis ally who served on the tourism oversight board and was the best man in Gilzean’s wedding over the summer.

Two competing candidates with experience working as city managers in Central Florida told the Orlando Sentinel they were never contacted for an interview.

The new board hired Cooper & Kirk, a conservative law firm that lists Adam Laxalt as a partner. Laxalt is a longtime friend of DeSantis and recently stepped down as the chairman of the Super PAC supporting his presidential run.

No-bid contract killed

District officials recently canceled a $242,500 no-bid contract to improve the district’s 911 system awarded to a company owned by Freddie Figgers, who served with Gilzean on the Florida Commission on Ethics. Figgers requested the contract be subject to competitive bidding after media reports on the deal.

District officials have adopted new policies to correct the Disney-aligned leadership’s past “anti-competitive” arrangements, according to the report.

Since adopting a new procurement policy, the district has competitively awarded about $50 million in contracts, including $14 million to vendors that are new to the district, according to the report.