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Utility deal riles counties' leaders

© St. Petersburg Times
published September 24, 2002

Government leaders from Citrus County to Marco Island are reacting with shock and outrage to a roughly $500-million deal that would basically give two tiny Panhandle towns control over water and sewer properties now part of the Florida Water Services empire.

The president of one watchdog group, Florida Utility Watch, calls the deal a ripoff that could lead to higher water and sewer rates for people served by Florida Water.

State Sen. Ginny Brown Waite said that the deal was suspicious and that she had a gut feeling something about the deal stinks.

The controversy already has county leaders talking about lawsuits and court injunctions aimed at getting the Panhandle towns of Gulf Breeze and Milton to quash the deal before it's too late.

Florida Water officials and reprepresentatives of Gulf Breeze and Milton say, yes, they stand to make some money. But they say this is a perfectly legal arrangement that won't affect utility rates.

For more than a year, a coalition of local governments led by Citrus, Nassau and Polk counties had been trying to develop a proposal to buy all of Florida Water Services' properties -- water and sewer systems that reach into 28 counties, almost all of them in Central and South Florida.

In Citrus County, it includes about 12,000 customers in Sugarmill Woods, Citrus Springs and Pine Ridge, plus smaller systems in Apache Shores, Golden Terrace, Gospel Island, Lakeside, Oak Forest, Point O' Woods, Rolling Green and Spring Gardens.

But the coalition -- known as the Florida Governmental Utility Authority -- was outmaneuvered by Gulf Breeze and Milton.

The towns, with a combined population of less than 13,000, formed the Florida Water Services Authority Thursday and struck the deal to buy the utilities giant the same day.

They intend to finance their roughly $500-million purchase with a 30-year bond that will pay back the cost with revenue from the water and utility services. Of course, they must first find investors and insurers to back the deal.

Under the deal, Florida Water Services would still operate the water and sewer systems, while Gulf Breeze and Milton would get any profits from the water and sewer services.

Gulf Breeze became involved in the deal after the city's bond attorney was approached by Greenberg Traurig, a law firm Florida Water Services had hired to shop around their properties.

Florida Water spokesperson Lisa Lochridge said her company had begun to seek a new buyer when FGUA's right to exclusive negotiations expired in mid May.

An FGUA spokesperson, Honey Rand, said the coalition would still make a scaled-down $419-million offer to Florida Water, just in case the new deal falls through.

And Mike Twomey, of the nonprofit Florida Utility watch, thinks something fishy is afoot.

"I think it's clear that the whole thing was orchestrated by Florida Water Services," Twomey said. "They went and found them some lawyers, and they found some lobbyists, and they found some tiny governments they could use so they could sell the system, take out $100-million and still run the system without any regulation."

Citrus County Administrator Richard Wesch fired off an angry letter Monday to Florida Water Service's parent company, ALLETE Inc., threatening legal action if the county's concerns were not addressed.

Wesch will seek approval today from the Citrus County Commission to further investigate the sale and initiate a lawsuit, if necessary, to block it.

Wesch said his primary concern was the county's lack of oversight. If the sale is allowed to stand, two tiny communities with a combined population equaling the number of Florida Water customers in Citrus would set rates for more than 500,000 residents throughout the state.

He also questioned whether the communities followed Florida's Government-in-the-Sunshine laws when striking the deal.

Some Citrus County Commission members expressed hesitation over potential litigation. Commissioner Gary Bartell said he had a "mountain" of unanswered questions, but wanted more information before giving the county permission to launch a lawsuit.

"So far, all we have is a thumbnail sketch of what's going on. We still need to get all the facts.

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