BRADENTON, Fla. – Florida's incoming state Senate president wants to use his powerful position to back an environmental program financed with the largest state bond program in 15 years.
Sen. Joe Negron, R-Stuart, said he will sponsor a $2.4 billion environmental program – of which $1.2 billion would be financed with state-issued bonds – during the 2017 legislative session. It would build massive reservoirs to store polluted water to prevent toxic algae blooms like those that blighted Florida's southeast coast this summer.
The other half of the program's cost would be paid by the federal government.
The idea faces an uphill battle because Negron's Republican colleagues, including Gov. Rick Scott, have been largely debt-averse for the past five years. There is also resistance to the state purchasing the land.
Negron said his plan offers a solution to years of caustic blue-green algae blooms that have choked marine life and threaten human health. They are caused by bacteria-laden water releases from central Florida's 730-square-mile Lake Okeechobee.
The releases, controlled by a federal agency, caused dangerous and malodorous blooms this summer along the Atlantic Ocean's Treasure Coast of Indian River, St. Lucie, and Martin counties.
"For too long, our community has been plagued by tremendous environmental and economic impacts as hundreds of millions of gallons of water are released from Lake Okeechobee each year," said Negron, whose district encompasses the Treasure Coast. "Permanent storage south of Lake Okeechobee is unquestionably needed as part of the overall plan to solve this catastrophic problem."
Negron's proposal calls for purchasing land to build reservoirs that would store 120 billion gallons of water on 60,000 acres in areas south of Lake Okeechobee – a plan he has estimated will cost $2.4 billion.
No details have been given about how the funding from the federal government would be requested or how long it would take to get.
The bond program would be financed with 20-year bonds secured with collections from a documentary tax on real estate transactions, which have surged since the end of the 2008 recession.
If lawmakers agree to Negron's plan in next year's session, it would be the first major issuance of new money bonds for a state environmental program in more than a decade.
Ben Watkins, director of the Division of Bond Finance, said he had not received details about Negron's proposal but that documentary stamp taxes could support the new program.
Watkins said that it would be unlikely that the state would issue all $1.2 billion of revenue bonds at one time.
"That would be unusual for us to do that," he said. "It could be done but not sure it would be designed that way."
Negron's plan calls for bonds to be issued under the Florida Forever bond program, an existing environmental land-buying effort for which $3 billion of debt was authorized in 2001.
About $1.02 billion of outstanding Florida Forever bonds are secured by documentary stamp tax revenues, according to Division of Bond Finance documents.
Another $246.7 million of parity debt is outstanding under the Everglades Restoration Bond Program.
Those bonds are rated Aa3 by Moody's Investors Service, and AA-minus by Fitch Ratings and S&P Global Ratings.
Revenue supporting the environmental programs through real estate transfer taxes has surged since Florida's housing market rebounded after the recession, with tax collections increasing by double-digit percentages between 2013 and 2015.
In 2015, collections totaled $2.12 billion, a 17% increase over the prior year.
In fiscal 2016, revenues totaled $2.27 billion, a 7.4% increase.
Pledged revenues provided debt service coverage of 13.06 times for the Florida Forever program in 2016.
Scott would have to sign off on Negron's proposal, and has opposed issuing debt since taking office in 2011.
He has agreed to finance transportation projects and very small new-money issuances in other sectors.
The governor has not said if he will support Negron's proposal.
Florida has issued only two new money transactions for environmental programs during the past five years - $46.4 million in fiscal 2013 and $46.7 million earlier this year.
The proceeds were used to help build a sewer system in the Florida Keys.
Between 2011 and 2016, the Division of Bond Finance issued five Florida Forever refunding bond transactions totaling $742.8 million.
The refundings returned $103.8 million in present value savings that likely would open additional capacity in the program.
Negron will pursue his financing program when the Legislature meets in March.
Florida's share of the new bond program, he said, will be secured by documentary stamp taxes authorized by the voter-approved constitutional Amendment 1 in November 2014.
The amendment mandates that 33% of taxes collected on real estate transfers annually must be used to purchase and improve land for conservation and recreation, creating a guarantee that a minimum amount of money will be spent by the state each for environmental purposes.
The amendment specifically allows the tax to be leveraged with bonds, though none have been approved by lawmakers to date.
In mid-2015, after the Legislature first enacted Amendment 1, environmental groups sued Florida contending that the state budget improperly devoted $300 million in documentary tax revenue to unauthorized expenses such as operations and salaries.
The lawsuit is still pending.
Environmentalists, however, commended Negron for agreeing to sponsor the $2.4 billion reservoir program.
They said it complements the state's efforts to protect the famed Everglades, a so-called river of grass that spans a wide swath across south Florida and supports numerous species of plants and animals.
"The toxic, algae blooms and seagrass die-offs plaguing Florida's coastal estuaries and Florida Bay show why Everglades restoration is more important than ever," said the nonprofit Everglades Foundation. "We commend Senator Negron for getting to work on this issue with scientists to create a viable action plan in response to the harmful discharges."
Negron said his program is aimed at limiting limit growth of harmful, slimy algae from agricultural runoff and other bacteria that pollute Lake Okeechobee water, and is then released to flow from central to south Florida and coastal areas.
The U.S. Army Corps of Engineers controls the releases to relieve the amount of water pressing on the earthen dike that surrounds the lake.
In July, the governor declared a state of emergency in Martin and St. Lucie counties saying that it would allow state and local government agencies to mitigate the spread of algae blooms "by redirecting the flow of water in and out of Lake Okeechobee into various storage areas."
In addition to a debt-averse governor and lawmakers, Negron could see resistance because his $2.4 billion plan depends on the state purchasing two areas he says "appear optimal" for water storage.
Both are owned by major sugar-producing companies that have not agreed to sell.
In addition, some officials have rejected the science behind using large reservoirs to filter polluted water, while others support it.
Negron has discussed the project with the governor's office, incoming Speaker of the House, Rep. Richard Corcoran, R-Land O'Lakes, and other members of the Legislature, said his spokeswoman, Katie Betta.
"We do not have additional information about the specific bonding process at this time," Betta said. "We would not anticipate legislation [to be filed] until later this fall or early next year when the majority of the 2017 legislation begins to move through the committee process."
Another key component of Negron's plan is getting the federal government to chip in its share.
U.S. Sen. Marco Rubio, a Republican who is running for reelection this year, has said that he will not support federal funding for the reservoir program until the conclusion of a massive federal-state plan that is already in the works to clean up the Florida Everglades.
Rubio said that Negron's plan would cause confusion about Florida's priorities for federal funding.
