BRADENTON, Fla. — The South Florida Water Management District paid $194 million in cash Tuesday for the purchase of 26,800 acres of land from U.S. Sugar Corp. for Everglades restoration, and may use debt to buy additional acreage over the next decade.
The district, a state agency that oversees water resources in 16 South Florida counties, closed on the first phase of the controversial sugar and citrus land purchase in a transaction that included options to buy the remaining 153,000 acres owned by U.S. Sugar.
It took more than two years to close the deal, which was renegotiated and downsized several times because of the economic slowdown, which has seen the district’s property tax revenues decline by nearly $150 million, or 30%, since 2008.
The initial purchase covers 42 square miles. It did not require a tax increase because the water district used cash from reserves set aside for land and capital projects.
The land formerly owned by U.S. Sugar will be used to construct water-quality improvement projects aimed at restoring the environmentally sensitive Everglades. The so-called River of Grass ecosystem has been damaged by polluting agricultural activities, stormwater runoff, and development.
“Once considered out of reach, the district now has ready access to thousands of acres of strategically situated property to advance Florida’s steady progress in restoring the Everglades,” said Eric Buermann, chairman of the district’s governing board.
The deal provides the district with three options over the next 10 years to buy more parcels or all of the remaining property as economic conditions improve.
U.S. Sugar could sell all or parts of the options, but the district has a right of first refusal.
Meanwhile, the district continues its long battle in the Florida Supreme Court to have certificates of participation validated that could be used to purchase additional U.S. Sugar acreage in the future, according to court documents.
The district sought validation of $2.2 billion of COPs in district court in October 2008, but the process was contested by the Miccosukee Tribe of Indians and New Hope Sugar Co., a rival of U.S. Sugar.
In August 2009, Palm Beach County District Judge Donald Hafel ruled the district had the lawful authority to sell the debt but limited the amount of COPs it could issue to $650 million.
The Miccosukee Tribe and New Hope Sugar appealed the validation, which automatically sent it up to the state Supreme Court where it remains in limbo. Although justices heard oral arguments in April, they have not yet ruled.
In a brief updating the justices on this week’s planned purchase of 26,800 acres, the district’s attorneys said the $650 million bonding authority approved by the lower court “could be used if the district were to exercise its options to purchase the remaining lands.”
“The resolutions adopted by the district governing board and by the South Florida Water Management District Leasing Corp. that authorized the certificates of participation financing ... have not been repealed,” the brief said.
The challengers contend that the use of COPs to buy private land doesn’t serve a public purpose and that the district is not authorized to sell the certificates.
There is no indication when justices might rule on the validation, but it is not the district’s first request to sell COPs.
In March 2006, a Florida judge validated the district’s issuance of up to $1.8 billion of certificates with the proceeds to be used to accelerate eight specific projects to provide flood control and restore portions of the Everglades.
In the first deal of its kind for environmental restoration, the district sold $546.1 million of COPs in October 2006.
At the end of fiscal 2009, the district had $979.8 million of COPs outstanding through 2037, including principal and interest. They are rated AA by Fitch Ratings, Aa3 by Moody’s Investors Service, and AA-plus by Standard & Poor’s.
The Water Management District also has $41.35 million of 2002 and 2003 special obligation land-acquisition bonds outstanding through 2016. They are rated A by Fitch, A2 by Moody’s, and A-plus by Standard & Poor’s.