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Water board to buy out partner in desal plant

The 8-1 vote means that the public utility now takes on the full risk of finishing the desal plant and getting it online.

By JEAN HELLER, Times Staff Writer

© St. Petersburg Times, published March 23, 2002


The 8-1 vote means that the public utility now takes on the full risk of finishing the desal plant and getting it online.

With a single dissenting vote, the Tampa Bay Water board agreed Friday to buy out its desalination developer and become the sole owner of the half-finished plant in southern Hillsborough County.

While the move is expected to ease the way -- and reduce the cost -- of financing the rest of the project, it also shifts from the private to public sector whatever risk remains in getting the plant online and running properly.

When that happens early next year, the plant will deliver 25-million gallons of new water to Tampa Bay Water's regional supply system, making it possible to reduce pumping in 11 regional well fields where years of overuse have caused severe environmental damage.

"For us not to accept this would certainly mean delays and additional costs," said board member Charlie Miranda, who also is chairman of the Tampa City Council. "I'm not completely comfortable. . . . But I'm going to support the motion because the alternatives would be much more detrimental."

Miranda echoed the discomfort of several other board members, who would have preferred to see Tampa Bay Desal, a private company wholly owned by Poseidon Resources, finish the $110-million project and operate it for several years before the utility took it over.

But the dismal credit rating of the parent company of one of Tampa Bay Desal's principal contractors made financing an iffy and potentially expensive proposition.

"The rationale for doing this is very clear when you look at the bottom line," said Pinellas County Commissioner Susan Latvala, a member of the Tampa Bay Water board. "Now it's in our control, and I'm very confident we will be able to handle it."

Sonny Vergara, executive director of the Southwest Florida Water Management District, gave the buyout a boost, reiterating his judgment earlier this week that the plan is a reasonable solution to a financing crisis.

"We were concerned that the decision be a reasonable one," Vergara said. "Our interest was to reach a level of comfort with what you were contemplating. . . . We are comfortable."

Tampa Bay Desal, which will be paid $10.3-million under a termination agreement, will remain on the job as a contractor to Tampa Bay Water to see the plant through to the finish, and possibly beyond.

The buyout almost surely will have ramifications for Tampa Bay Water's plans to build a second desalination plant along the Gulf Coast in the Anclote area along the Pinellas-Pasco border. The utility staff is leaning toward a recommendation that Tampa Bay Water go it alone from the outset, eliminating private sector ownership altogether.

That would skirt the problems that faced the first plant but would shift all the risk, including permitting, to Tampa Bay Water and its six member governments, the cities of St. Petersburg, Tampa and New Port Richey and Pinellas, Hillsborough and Pasco counties.

The lone dissenter in the 8-1 vote on the buyout was Hillsborough Commissioner Ronda Storms.

"At the very outset (of the desalination project) we said the risk is too great for us to take," Storms said, which is why Tampa Bay Water turned to the private sector. "So I think it's wrong to assume the benefits will outweigh the risks (now). It's still a bad deal for us."

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