BRADENTON, Fla. - The South Florida Water Management District is in court today arguing that a judge should validate $2.2 billion of certificates of participation, but at least four petitions opposing the validation have been filed.
The district plans to use $1.34 billion of the debt to finance the purchase of U.S. Sugar Corp.'s 180,000 acres of sugar cane fields and citrus groves in South Florida as part of its plan to restore the famed Everglades.
Typically, court validations are routine and they prevent future legal challenges after debt is sold.
Today's case is being heard in the Circuit Court of the 15th Judicial District in Palm Beach County, where the water management district is headquartered.
Petitions opposing the district's sale of the COPs have been filed that raise statutory and constitutional issues as well as questions relating to public policy and the feasibility of the purchase.
"We feel this is a special statutory proceeding solely to determine whether the district complied with the proper legal process in authorizing the bonds," said bond counsel Randy Hanna with Bryant Miller Olive PA. "We believe the district complied with that process and it is certainly our hope that the judge will approve the petition of the district."
Petitioners opposing the validation include two U.S. Sugar competitors, New Hope Sugar Co. and Okeelanta Corp., which are affiliated with Florida Crystals.
The Miccosukee Tribe of Florida also is opposing the validation, as is one of the tribe's attorneys, Dexter Lehtinen.
Another petition has been filed by five individuals who live in the area affected by the U.S. Sugar buyout and Concerned Citizens of the Glades Inc., a nonprofit organization created in January to "promote, preserve, and protect economic interests and well-being of the Glades-area residents," according to incorporation papers.
"I think it's going to be as hard-fought a validation case as one we'll ever see," predicted Thomas Wilkes, a partner at GrayRobinson PA representing the five individuals and Concerned Citizens of the Glades.
In addition to arguing that the sale of COPs to purchase the land will violate the public-purpose requirement of the state constitution, Wilkes said his case also questions whether the district can legally issue the certificates if they have not been approved by voters in the district, and whether legislative approval is necessary before the COPs are sold.
The case also contends that the water district has not complied with legal requirements such as establishing a trust indenture under which a trustee will certify the proper expenditures of the COP proceeds, and publishing a "truth-in-borrowing' notice detailing the proposed debt sale.
Hanna said the validity of COPs was recently confirmed in a case before the Florida Supreme Court. And he pointed out that the district has successfully validated COPs before.
The district in 2006 validated $1.8 billion of certificates of participation for an Everglades restoration program called Acceler8.
"We look forward to the hearing and feel comfortable with the district's legal position," Hanna said.
Challenges to a circuit court decision in validation cases go directly to the Florida Supreme Court.
"I think at this point it's probable that whoever loses is going to take an appeal to the Supreme Court," Wilkes said.
In addition to the validation, New Hope Sugar Co., Okeelanta Corp., and the Miccosukee Tribe have filed petitions for administrative hearings.
