BRADENTON, Fla. - Saying economic reality forced a major change in what would be the largest land purchase in Florida's history, Gov. Charlie Crist yesterday announced yet another scaled-back approach to buying land owned by U.S. Sugar Corp. to restore the Everglades.
The new deal would enable the state to initially purchase 72,500 acres for $533 million as opposed to 180,000 acres for $1.34 billion. The restructured deal will include an option to purchase the remaining 107,500 acres of U.S. Sugar property for restoration within 10 years.
The South Florida Water Management District plans to sell certificates of participation to finance the land purchase. The agency will continue on its current course to have up to $2.2 billion of COPs validated by a court, district executive director Carol Wehle said yesterday.
A petition to validate the COPs under the initial purchase plan was filed last fall. Because the district covers all or parts of 16 South Florida counties, the validation process can take months to complete.
Wehle said the validation would determine if the district has the legal authority to issue the debt regardless of the amount that is sold. It also would prevent future legal challenges, especially after the debt is sold.
However, four parties are contesting the validation of the debt. One challenger, a competitor of U.S. Sugar, has said the deal is nothing more than a bailout of an ailing company and the financing does not serve an appropriate public purpose.
A judge in the validation case held a three-day hearing last month and has scheduled a status call for next Wednesday. If the judge validates the COPs, that decision could be appealed to the Florida Supreme Court.
Meanwhile, the Water Management District's governing board also will get its first look at the new deal in meetings next Wednesday and Thursday. The details of the complex deal are still being negotiated.
"Nothing worthwhile in life is easy - this is not easy - but it is certainly worthwhile," Crist said yesterday while announcing the new, phased-in purchase of U.S. Sugar land to protect and restore the Everglades, which he called a unique, one-of-a-kind "symbol that the world recognizes."
But since the deal was first announced last June, the governor said he received many calls from people saying it just wouldn't work in this economy.
In addition to bond market problems and the tightening of credit, Wehle said state economists twice announced that the district would suffer deep cuts in the property tax revenue it anticipated receiving. Property values across Florida are plummeting, reducing the potential amounts that taxing authorities, like the district, will receive.
In the region that the district covers, property values declined by 16% last year.
With that in mind, Wehle said the district looked at revenues over five years and developed a conservative approach about what would be available for debt service to support the new, restructured deal.
"I am comfortable that even if the economy continues to go negative over the next year or two that it's a deal the district can afford," Wehle said.
The U.S. Sugar deal has been controversial from the start largely because of its price tag. Even some state lawmakers said it was a deal the district could not afford, particularly with no end in sight to declining revenues due to the recession.
There was also criticism about the initial plan, which would have allowed U.S. Sugar to lease back some of the land for $50 an acre a year - a price many thought too low. The company always planned to continue its operations on some portion of the property for several years, while the district planned and implemented restoration projects.
The new deal would reduce the initial public investment by 60% in addition to reducing annual debt service payments by an estimated $65 million. It would also increase the land lease rate to $150 an acre per year to generate a minimum of $40 million in revenue and avoid at least $11 million in land management costs, according to state officials.
