Hernando commissioners balk at paying $10-million more than a study says Florida Water Service is worth.
By JEFFREY S. SOLOCHEK, Times Staff Writer
© St. Petersburg Times, published July 2, 2002
BROOKSVILLE -- Florida Water Services' Spring Hill operations are not worth as much as the Florida Governmental Utility Authority has said, according to a preliminary independent evaluation paid for by the Hernando County Commission.
Depending on what appraisal method is used, the utility's value ranges between $18.3-million and $37-million, Coastal Engineering Associates reported Friday after more than a month of research. The FGUA, which wants to buy all of Florida Water's systems statewide with bonds that taxpayers would repay, has said the Spring Hill system is worth $47.9-million.
The county-sponsored study, which cost taxpayers $241,500, could result in Hernando County's deciding not to participate in the utility buyout.
"They're going to have to come up with some pretty strong answers, and I can't imagine what those might be, for us to pay $10-million more than what it's worth," Commissioner Diane Rowden said. "It kind of looks like the handwriting is on the wall if that's a determining factor."
Commissioner Chris Kingsley said he believed all along that the price proposed by the FGUA was inflated.
"I don't think there's any advantage to us going in with (FGUA) if they think it's worth $48-million," Kingsley said.
The commission has until July 18 to decide whether to join the FGUA, which repeatedly has postponed its purchase offer while seeking to appease growing discontent among several governments that have expressed doubts about the buyout.
Many have hired consultants to independently verify the value of their systems.
During that delay, state Sen. Anna Cowin, R-Leesburg, and state Rep. Frank Attkisson, R-Kissimmee, have challenged the FGUA's authority and spoken about amending its role through legislation.
The FGUA is a four-county government coalition set up by legislators to bring private utilities into public ownership. The FGUA issues low-cost bonds, then warehouses the utilities until interested counties and cities take on the debt.
Len Tria, a consultant with Coastal Engineering, said his company hoped its several analyses -- which included everything from depreciated reproduction cost to the rate base that private firms would look to for return on investment -- would help Hernando commissioners make a reasoned decision about the FGUA plans.
Tria would not say what the company believed the commission should do, though. Rather, the firm offered to meet with commissioners to discuss the report and determine which method best reflects the true value.
The county's special counsel on the buyout, Bruce Snow, said he would advise the commission to contact the FGUA and Florida Water with its concerns after its review with Coastal.
For the county to pursue the deal, Snow said, the FGUA and the utility will need to budge.
"If not, in my judgment, it makes it difficult for the commission to say we're going to go forward with the FGUA deal," he concluded. "That's ultimately why (commissioners) asked for this report in the first place."
-- Staff writer Jennifer Farrell contributed to this report.