DeSantis Tourism Board, Disney Reach Settlement to End Legal Feud

Special to The Washington Post / Lori Rozsa, Aaron Gregg

13:01 JST, March 28, 2024

The board appointed by Gov. Ron DeSantis to oversee Disney’s former special taxing district agreed Wednesday to a settlement with the entertainment giant, capping a legal feud over who should control development at the sprawling theme park complex.

The Central Florida Tourism Oversight District, made up of DeSantis appointees, agreed to drop its lawsuit against the company in exchange for Disney relinquishing some control over its 25,000-acre property. Disney will also drop a lawsuit of its own over public records from the district.

Both sides on Wednesday made statements indicating they’re ready to move on from the political battle that started in 2022, when Disney’s former CEO criticized a DeSantis-backed law that critics dubbed “don’t say gay.”

Disney is still appealing a federal lawsuit dismissed in January that alleges DeSantis violated the company’s First Amendment rights but has agreed to hit pause for now. The future of that case hinges on “pending negotiations” between the company and the district over new development, according to the settlement.

“This is a political victory for Gov. DeSantis,” said Aubrey Jewett, a political science professor at the University of Central Florida. “It seems like the white flag of surrender has been raised over Cinderella’s castle.”

The feud between the governor and Disney started over one of DeSantis’ most high-profile pieces of legislation, the Parental Rights in Education bill. Disney’s chief executive at the time, Bob Chapek, came out in opposition to the legislation, which prohibited instruction on gender identity and sexual orientation in kindergarten through third grade.

The bill’s vague language led some teachers to pull LGBTQ-related books from library shelves and dismantle pride-related activities and organizations. A recent settlement over the legislation, which has now been expanded to all grade levels, clarified that the restrictions only apply to classroom instruction.

In response to Disney’s opposition to the bill, DeSantis pushed for legislation dismantling the Reedy Creek tax district, which for decades has managed the expansive property that encompasses Walt Disney World in central Florida. Opponents of the governor saw it as a retaliatory power grab. Supporters said it was a needed measure to address inequities that gave Disney a privilege over other theme park companies.

Disney later filed a lawsuit alleging DeSantis was punishing the company for exercising its right to free speech, threatening its business operations, jeopardizing its economic future in the region and violating its constitutional rights.

Meanwhile, the new Disney World oversight board installed by DeSantis accused its predecessor of using an 11th-hour agreement to sharply curtail the board’s powers and bolster the company’s control over the amusement park property.

The DeSantis-appointed board criticized those actions, which granted Disney broad veto powers over any improvements or changes to properties at its theme park and included a “royal lives” clause that made it valid in perpetuity.

The board sued in state court, and Wednesday’s settlement declares that actions taken by the former Reedy Creek special taxing district days before it was taken over by DeSantis appointees would be “null and void.” That included a long-lasting development agreement that would have greatly limited what the new board could do.

Both sides praised the settlement as an opportunity to turn a page.

“This agreement opens a new chapter of constructive engagement with the new leadership of the district and serves the interests of all parties by enabling significant continued investment and the creation of thousands of direct and indirect jobs and economic opportunity in the State,” Jeff Vahle, president of Walt Disney World Resort, said in a statement.

Charles Barakat, chairman of the tourism board, said he was “very much pleased” with the settlement.

“I’m certainly eager to work with Disney, and all the businesses, to make the country’s tourism destination famous for a second reason, which is good governance,” he said.

The political battle has nonetheless had a political and economic fallout. Disney has become more selective regarding its investments in Florida. Disney chief executive Bob Iger has hinted that corporate investments in the state could be in jeopardy.

“Does the state want us to invest more, employ more people, and pay more taxes, or not?” Iger said in a call with investors last year.

Disney canceled a planned development at Lake Nona Town Center in Orange County in May, citing “new leadership and changing business conditions.” The company also pulled the plug on an immersive Star Wars-themed Orlando hotel less than two years after it was opened. Spokespeople for DeSantis have said the canceled investment at Lake Nona had more to do with business failures on the part of Disney.

But the company has also said it has big plans for future development, and that will require cooperation with the tourism district, which oversees infrastructure, taxes, and other municipal services for the theme park property.

The business segment that includes Disney theme parks has seen its revenue grow steadily from $23.5 billion in fiscal year 2017, up to $28.7 billion in fiscal year 2022. For the final three months of 2023, Disney saw its profit from domestic theme parks decline by about 2 percent.

The company said it saw lower attendance than at the end of 2022, when foot traffic was boosted by a 50-year anniversary celebration that year. In September, the company announced plans to nearly double the amount of capital it devotes to theme parks and cruises, through a $60 billion, 10-year investment plan. It touted more than a thousand acres of land for possible future expansion, pointing to its U.S. theme parks in Orlando and Anaheim, as well as parks in Paris and Tokyo.

Disney’s stock price is up about 28 percent since the beginning of 2023.

Jewett said that recent changes at the district may have helped convince Disney that the DeSantis board was more willing to work with the company. The district has a new chairman who replaced Martin Garcia, who was sharply critical of Disney, calling them “naughty,” among other things.

It also has a new administrator, Stephanie Kopelousos, a DeSantis adviser who is experienced in local government. Kopelousos also worked to get Disney a carve-out from a “Big Tech” social media bill the governor signed in 2021.

“She has a reputation for being very competent with the nuts and bolts and getting things done,” Jewett said. “I think she’s somebody Disney feels they can work with.”

The settlement did not include an admission of liability from either side, nor did it include any money changing hands. The board relinquished control of several permits “as a material inducement” to Disney, according to a copy of the settlement agreement.

The DeSantis administration celebrated the settlement.

“Moving forward, we stand ready to work with Disney and the District to help promote economic growth, family-friendly tourism, and accountable government in Central Florida,” DeSantis communications director Bryan Griffin said in a statement.