Senate proposal would retroactively invalidate Disney deal with taxing district

Following the command of Gov. Ron DeSantis, a state senator has drafted an amendment to retroactively invalidate a development agreement between Walt Disney World and its special taxing district that has undercut the governor’s control of the district’s new governing board.

The amendment, by Sen. Blaise Ingoglia, R-Spring Hill, is scheduled to come before the Senate Rules Committee on Wednesday, and follow through on the governor’s threat to end what he called a “sham agreement.” The agreement effectively limits what the governor’s appointees can do with the special district that houses Disney’s theme parks and resorts.

In February, on the eve of a special legislative session to give DeSantis control over the Reedy Creek Improvement District, the Disney-backed board outmaneuvered the governor. It entered into last-minute development and restrictive covenant agreements with Walt Disney Parks and Resorts, U.S., Inc. that essentially require Disney to sign off on any changes made by a governor-controlled board for decades to come.

Ingoglia’s amendment to SB 1604, a bill relating to land use and development regulations, voids those documents by prohibiting the district from entering into an agreement within three months of getting a new board. The amendment also requires the DeSantis-appointed governing board, now called the Central Florida Tourism Oversight District Board, to review and readopt any development agreement approved by the previous board.

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Ingoglia said at a news conference with DeSantis on Monday in Lake Buena Vista that his goal was to wrench control from Disney and give it to the state.

“They were their own government, and I would argue that is an egregious form of corporate welfare,’’ he said. “It’s unconscionable that one corporation would hold that much power. So what did we do? We took away that power, returned it to the people and put everyone on a level playing field.”

Original intentions of the 1967 agreement with Disney

Ingoglia, like DeSantis, did not mention that the reason the state created the Reedy Creek Improvement District in 1967 was to allow the company to tax itself to build an infrastructure for municipal services on which to operate the theme park, which at the time was more than 16 miles from the nearest urban development.

They also did not mention that the company not only pays more than $160 million annual tax — at a tax rate three times higher than that paid by residents of Orange and Osceola counties, the money is used to maintain a higher level of services and infrastructure than the counties provide. The taxing district is governed by the board, which until February was appointed by The Walt Disney Co.

On Wednesday, the DeSantis-appointed board of supervisors is scheduled to meet and will also attempt to void the Disney-backed agreement, DeSantis said.

“They thought that they could create some type of development agreements that would essentially render everything that we did null and void and put them in control in perpetuity for this,’’ DeSantis said at the special district headquarters. “Well, that’s not going to fly right now.“

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The feud began when Disney voiced opposition to the Legislature’s passage of the Parental Rights in Education Bill in 2022, which prohibited classroom instruction on gender identity issues in certain grades. The fight continued this year after Disney CEO Bob Iger called DeSantis’ move “anti-business and anti-Florida.”

Although DeSantis suggested he was interested in more punitive measures aimed at Disney, such as possibly building a state prison next to the company’s theme parks and imposing new regulations on its rides and monorails, the amendment attempts to void the development agreement and the restrictive covenants but does not impose additional restrictions.

Legal analysis leans in Disney’s favor

Legal analysts who reviewed Ingoglia’s amendment told the Herald/Times that the proposal is likely to face a legal challenge, and the proposal could be declared unconstitutional under the Contracts Clause of both the U.S. and Florida constitutions. If approved, the change could establish new precedent for handling development in Florida.

“That clause prohibits government actions to impair an existing contract,’’ said Jake Schumer, a municipal attorney in the suburban Orlando law firm of Shepard, Smith, Kohlmyer & Hand.

He said the state will argue that the contract wasn’t impaired because state law allows for modifications, but Disney will argue that state law isn’t meant to allow the Legislature to veto contracts but merely to allow lawmakers to enact new regulations.

“I think Disney’s argument is stronger, but it’s not a slam dunk,’’ Schumer said. But the amendment is also intended to apply to the restrictive covenants, which imposed restrictions on the governor-controlled board for things like building heights and other development decisions.

By attempting to repeal those covenants, the amendment is “a clear violation of the contracts clause,’’ Schumer argued. “It would be a major change in the law for the bill to be held up as to the application to that agreement.”

Florida statute “does not authorize this state on its own to modify or revoke a development agreement,’’ said Michael Wolf, a professor of local government and property law at the University of Florida,

Jane West, a lawyer and policy and planning director for 1000 Friends of Florida, a growth management advocacy organization, said the amendment is not likely to affect other development agreements in force in other parts of the state.

“In my opinion, this language of this amendment is so narrowly tailored that it would have practically zero application in any other development agreement context that I am aware of — which is good for the rest of Florida, not so much for Disney,’’ West said.

First Amendment could come into play

If legislators pass the amendment, they will also tee up a major First Amendment case, the legal experts said. The company could argue that the governor and Legislature are attempting to punish it for speaking out.

“If Disney can demonstrate all of this is an attempt of this Legislature and the governor to bully them or punish them because their executives were taking a position that is unpopular with the duly elected representatives of the people, then it is entitled to First Amendment protection,’’ Wolf said.

“The entire thing is arguably prohibited retaliation under the First Amendment because it springs from Disney’s protected speech against the education bill, and the new [amendment] seems clearly targeted only at Reedy Creek,’’ Schumer said.

Wolf also said that the measure could also be invalidated by the court because it attempts to retroactively apply to the Disney agreements. In 1999 the Florida Supreme Court ruled in Metro-Dade County v. Chase Fed. Hous. Corp. that “generally due process considerations prevent the State from retroactively abolishing vested rights.”

Miami Herald editor Adrian Ruhi contributed to this report.

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