Disney Could Face a Lawsuit From New Reedy Creek Board

The Reedy Creek Improvement District has drastically changed since a new board was appointed, and it doesn’t look like the changes are stopping anytime soon.

Reedy Creek (now called the Central Florida Tourism Oversight District) has a new, Governor DeSantis-appointed board that recently held its first meeting, giving us an idea of what might be in store.  But now, after a second meeting, we have a better look into what exactly the new board hopes to accomplish — and it doesn’t bode well for Disney.

The Board of Supervisors for the District recently had its first meeting on March 8th, and we learned more about what the board wants to change — including ending the two cities in the district (Bay Lake and Lake Buena Vista) and hiring its own lawyers. You can read more about these changes here.

But, the board met for a second time on March 29th, and members outlined even more changes they’d like to see happen for Reedy Creek — starting with those lawyers. The new board is hiring four separate law firms to deal with “potential legal challenges” for what the board did when Disney originally appointed members, according to Bob Hazen with WESH.

One of the firms hired by the new board, Cooper & Kirk, includes attorney Adam Laxalt, who was DeSantis’ roommate when he was training at the Naval Justice School in 2005.

The new #DeSantis-appointed board of 'Reedy Creek' meets today, hiring law firms to handle 'potential legal challenges' for things the board did back when #Disney appointed the members. #WESH pic.twitter.com/S1kAxWeiq2

— Bob Hazen WESH (@HazenWESH) March 29, 2023

Before the new board was appointed, the previous members made agreements with Disney that give it control over Reedy Creek land for the next 30 years, which the new District’s legal counsel has called “unusual” and “suspect.” The special counsel went on to say that the agreements between Disney and the former board were “unlawful.”

Board Member Ron Peri shared that the agreements stripped the board of its power and “made Disney the government,” suggesting the new board should fight them.

Per the Orlando Sentinel, the development agreement bars the new District from regulating building height and using the Disney name or “fanciful characters such as Mickey Mouse” without Disney’s approval. The document declares this is valid until “21 years after the death of the last survivor of the descendants of King Charles III, king of England.”

Another member, Board Chair Martin Garcia, explained how rich and powerful Disney is, and that the District could take an “adversarial position” against the company — even suggesting they litigate all the way to the United States Supreme Court in “protracted litigation.” He did not share what constitutional or federal laws the new board says Disney violated that would make this lawsuit fall under SCOTUS’ purview.

For a while, there were a lot of concerns surrounding the uncertain future of Reedy Creek and how that could impact its outstanding bonds. There is about $78 million in outstanding bonds related to Reedy Creek, but they were able to remove a negative rating due to the Florida law that now clarifies the powers of the District.

Certain actions could lead to a negative rating action or downgrade when it comes to the bonds including a sustained rise in leverage, a rise in operating costs that lead to a lower operating risk assessment, or any kind of structural shift that “undermine[s] the sustainability of the Walt Disney Company’s theme park business in the district.”

So, the new board will still want to be careful. Rocking the boat too much could cause the District’s bond rating to downgrade and cause more issues.

Later during the March 29th meeting, the board began making moves to replace John Classe, the current Board Administrator who served while the Disney-controlled board was in place.

The board (more properly the Central Florida Tourism Oversight Board now) is making moves to eventually replace Administrator John Classe, who also served when the Disney-appointed members were in power.

— Bob Hazen WESH (@HazenWESH) March 29, 2023

UPDATE: Disney has issued a statement noting that all agreements between Disney and the District were appropriate and discussed in open, noticed public forums in accordance with Florida’s Sunshine Law.

Statement from #Disney:
“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.” #WESH

— Bob Hazen WESH (@HazenWESH) March 29, 2023

It’s clear that the war for Reedy Creek is far from over — with the new board just holding its first few meetings, we could start to see more changes and updates in the coming months. The law firms hired to represent the new District were brought on to challenge agreements made before the new members were appointed, and it’s possible that this is just the start.

We’ll continue to look out for more updates from the Central Florida Tourism Oversight District and how it could change the way Disney World operates. For the latest Disney news, stay tuned to AllEars.

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