As Reedy Creek overcomes shock, attorneys say Disney deal could be in trouble

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LAKE BUENA VISTA, Fla. — Reedy Creek’s new governing board is expected to formally vote to declare the deal the district’s old board struck with Disney in February void, setting off the preliminary step needed for a legal battle to begin.

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The board members and their small army of attorneys have been feverishly working since late March, when the deal was discovered. The development agreement allows Disney maximum building rights over its property for the next three decades.

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A separate set of restrictive covenants gives the company veto power over whatever Reedy Creek, now formally called the Central Tourism Oversight District, does with its own property for the next century or so – specifically, and famously, until 20 years after the last living heir of King Charles dies.

Board members and Gov. DeSantis’ team in Tallahassee were initially shocked by the deal. It was the first time in recent memory state Republicans had their powers pre-empted, a move they enjoy deploying over county and municipal governments whenever they find it convenient.

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“We gave governmental control to Disney,” Brian Aungst summarized at the time.

Ahead of Wednesday morning’s vote, the district released the formal list of 92 arguments it made to convince a judge the agreement and the covenants were void.

The arguments included an array of sunshine law violations and unconstitutional measures the district and Disney allegedly took as they crafted the deal and even the comprehensive plan the agreement was based on.

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WFTV asked multiple attorneys with experience in government law to review the arguments and summarize their thoughts. Collectively, they came to the same conclusion: some of the arguments were baloney, while several of them – if the facts were as stated – would be enough to void the deal or destroy most of the power Disney had over the district.

Chief among them were the sunshine law violations. The attorneys weren’t convinced by allegations Reedy Creek failed to mail notices to all property owners, but took long looks at the accusations the district dropped the ball when working with Lake Buena Vista and Bay Lake.

The municipalities, the documents alleged, did not give proper notice or hold hearings even though the agreement included property within their borders, something attorney Jacob Schumer said was problematic.

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“If it’s true that these ordinances that the development agreement relied upon were not procedurally followed at all, then I think that a judge may likely find that that’s a enough of a problem to throw out the development agreement,” Schumer said, cautioning that it was an assumption the facts were as Reedy Creek presented.

However, he (along with other attorneys WFTV spoke to) said Disney could choose to push a legal concept known as estoppel, which in plain terms means Disney was relying on the district to follow the rules when the two parties made the agreement and the district shouldn’t use them to wriggle out of the deal.

“Developers in other parts of the state might be concerned that a government can make an agreement and set landmines where they fail to meet some kind of procedural requirement, and can then later to say, ‘Nevermind, we don’t respect it,’” Schumer said, adding Disney’s prior influence over the board may complicate that.

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WFTV asked board member Brian Aungst, also an attorney, about the possibility of an estoppel argument when he first announced his discovery of the deal in late March.

“I’ll defer to legal counsel, but I think it’s highly likely that it could be argued that these documents are void,” he said at the time. “They have no legal effect, and therefore shouldn’t even be terminated because they don’t exist.”

Even if a judge gives Disney its agreement, it could be under terms the company would be less than happy about. Multiple attorneys flagged a provision that forces Reedy Creek to provide whatever infrastructure Disney needs for all 30 years of the agreement.

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One attorney said that was unconstitutional beyond a 12-month period, and there was a commonly exploited loophole in state law that Reedy Creek’s old board apparently forgot to write into the deal.

They summarized all their thoughts by saying if they were the judge, they’d rule the development agreement legal except for that portion, which would mean Disney could build whichever buildings it wanted, but Reedy Creek was under no obligation to run power, water and sewer lines to them.

Throughout this process, Disney and its attorneys have remained quiet except for two statements maintaining the agreement was legal. No one, outside of the company’s legal team and executives, know what the company’s strategy is, but few believe the legal team was incompetent enough to skip the most basic procedural steps when passing this deal.

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Some have theorized this agreement was a Hail Mary to see if the company could get away with maintaining autonomy that company leaders didn’t truly expect to work. Another theory put forward was that this agreement was simply a distraction meant to bog down the district or collect evidence toward a First Amendment retaliation case many anticipate Disney will eventually file.

Schumer and other attorneys said even if the development agreement is struck down, nothing in case law prevents the restrictive covenants from going into effect. The district is arguing the two are intrinsically tied together, but those arguments have largely been dismissed as reaching by independent observers.

If the district were given the option of eliminating only one deal, the covenants would be far more preferred, since they bind Reedy Creek from making changes to its own property – and last far longer.

“All they would get to do if the development agreement is thrown out, is basically guide Disney World itself, which maybe they aren’t as interested in because it has less to do with actual government work,” Schumer said.

Reedy Creek or Disney could file a lawsuit moments after the vote is taken Wednesday, though it is unclear if that will happen right away. The vote gives Florida’s court system jurisdiction, which Reedy Creek would prefer, but Disney would still have multiple opportunities to file a lawsuit in friendlier federal court

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