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A Times Editorial

Utilize caution with water buy


© St. Petersburg Times
published February 3, 2002

Even as a proposal to purchase Florida Water Services progresses, the more apparent it becomes that doing so may not be the best available option for Hernando County.

It also is more obvious than ever that the commission does not have enough information about the current deal to make an informed decision, and that it has not sufficiently explored other possibilities.

Two knowledgeable advisers independently supported those conclusions when they appeared in separate County Commission meetings last week to offer opinions about the proposal to buy Florida Water, which operates about 150 water and sewer systems in 27 counties. The proposal is being peddled by the Florida Governmental Utilities Authority.

The FGUA buys private utilities by issuing revenue bonds, and warehouses them until counties and cities can assume the debt. According to the FGUA, Florida Water's statewide worth is $515-million, and $44.2-million of that total value is in Hernando County, where Florida Water has about 33,000 customers.

But Bruce Snow, the former County Attorney who now is retained to handle utility-related issues, said at a workshop meeting Thursday that the FGUA's estimate of Florida Water may be high, and that it is possible the county could obtain it for less without the FGUA's help.

In his comprehensive analysis of the proposal by the FGUA, Snow labeled the organization an "unregulated monopoly." He pointed out that, despite promises to the contrary, the FGUA would have the authority to raise rates and impose special assessments on customers once the buyout takes place, and that neither the county nor the state Public Service Commission could prevent that from happening.

Snow also said the County Commission could wait two years and condemn Florida Water's operation, which would require only that taxpayers underwrite revenue bonds and pay the utility a fair market price. Snow placed that number at $30.2-million, plus legal fees, which is still at least $10-million less than the FGUA is prepared to pay now.

Two days before, an independent consultant who was hired to help the county develop a long-term strategy for controlling its water supply was asked by Commissioner Diane Rowden to share his opinion of whether the FGUA proposal was sound. Gerald Hartman said he didn't see how the commission could make an informed decision until someone other than the FGUA had assessed Florida Water's system in Hernando County. Absent such an independent and objective estimate, it would be impossible for the commissioners to credibly evaluate the proposal, he said.

Hartman also used the word "monopoly" to describe the FGUA and suggested that condemning the utility was a viable option.

On Tuesday, the commission is scheduled to discuss the possibility of hiring a firm to conduct an independent appraisal of Florida Water's local operation. Hartman's firm, Hartman & Associates, had been in line for that job several months ago, but the commission placed the idea on the back burner after questions arose about whether County Administrator Paul McIntosh intentionally violated county policy by awarding several contracts to Hartman.

If commissioners intend to move forward with the FGUA deal, the obvious answer is yes; they should hire someone to give them an objective and detailed appraisal of Florida Water. That very well may be Hartman. But it should be clear that the FGUA, whose administrators stand to make millions if the buyout goes through, should not be solely relied on to render impartial advice on this issue.

But perhaps commissioners should postpone that discussion until after they have asked a more fundamental question:

Other than unsubstantiated speculation, is there a compelling and pressing reason for the county to own and operate the utility?

As we have since last fall, when details of this muted and muddled deal first came to light, we urge commissioners to move carefully and deliberately, and to keep their eyes wide open. It is not often they find themselves the linchpin of a half-billion-dollar transaction.

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