Florida Water District OKs COP-Backed Land Purchase to Help Restore Everglades

BRADENTON, Fla. - The South Florida Water Management District's board of governors has agreed to pay $1.34 billion to U.S. Sugar Corp. for 180,000 acres of sugar cane fields and citrus groves in a purchase to be financed with certificates of participation.

Although there were concerns about looming state budget cuts, the status of the financial markets next year, and the economy of communities affected by the deal, the board voted 4 to 3 on Tuesday to approve the land acquisition contract to help restore the Florida Everglades.

After a day-long meeting to discuss the contract and budgetary concerns, the board approved the contract with an amendment that enables them to back out before closing on the sale.

The amendment, which U.S. Sugar must approve, allows district governors before closing to review economic conditions, including interest rates and revenue streams, and determine if the district can finance the purchase and still meet its statutory mandates and legal obligations.

"The amendment was a non-material modification within the authorized scope of the company's board approval last week," U.S. Sugar said in a statement after the district governors voted.

However, the district may not be able to finance the deal for several months because the court case seeking to validate $2.2 billion of COPs has been challenged by an opponent who believes issuance of the debt is not a paramount public purpose, according to bond counsel Randy Hanna, with Bryant Miller Olive PA.

"We will actually have a trial on Feb. 6 where the district will present its case," Hanna told governing board members. "If people still oppose [the validation] at that time, they will present their case. Then there's an appeal right that goes up to the Florida Supreme Court."

Florida Crystals, a rival of U.S. Sugar, contested the validation and said that issuance of the COPs would be illegal because it represents a "bailout" of a private company. Florida Crystals wanted the water management district to consider a multi-party deal with U.S. Sugar's proposal that would involve land swaps. The district declined.

Gaston Cantens, spokesperson for Florida Crystals, could not be reached yesterday for comment about whether the company would continue to challenge the COP validation in light of the governing board's action to approve the purchase contract.

Cantens told the governing board on Tuesday that "Florida Crystals is adamantly opposed to this deal."

In approving the contract, governors said the land represented the only opportunity for the district to adequately manage the quality, quantity, and timing of water flowing into the Everglades. It also enables the district to manage drinking water resources and provide flood containment for the 7.5 million people within the district now and provide for future growth.

Under terms of the contract, the district now has until Jan. 15 to inspect the property and determine if it is acceptable. If it is not, the district could terminate the contract.

The purchase must close within 90 days of bond validation, but no later than Sept. 25, 2009.

Given the potential for the COP validation to be appealed to the state Supreme Court, Hanna told district governors, "I cannot assure you we can meet that outside deadline."

The high court typically acts quickly on bond validation cases but there is no set timeframe for decisions.

A major concern of the governing board on Tuesday is an upcoming special session of the Legislature that has been called for Jan. 5 through Jan. 16 to make budget cuts of up to $2 billion due to sharply falling state revenues.

The water management district is a state agency and receives a portion of its revenues from the state, although a major portion of its budget is funded from property taxes collected in the 16 counties included in the district.

Gov. Charlie Crist, who brokered the deal and first announced it in June, sent a letter to district board members on Monday urging them to vote for the contract.

"This land acquisition is the most important step in the history of true Everglades restoration," Crist said in a statement after the governing board approved the contract.

Under terms of the deal, U.S. Sugar will continue historical agricultural operations under a seven-year lease paying the state rent of $50 per acre for the first six years. The company also will be required to pay all property taxes and assessments.

Because U.S. Sugar is a company registered in Delaware and operates under that state's laws, the company must be "shopped" for the next two months to give other interested purchasers a chance to make a better offer.

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