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Legislators leap into fray over utility sale

As legal battles over the sale of Florida Water Services to two cities continue, lawmakers push for accountability in such sales.

By CARRIE JOHNSON, Times Staff Writer
© St. Petersburg Times
published January 5, 2003

INVERNESS -- They have been pummeled with lawsuits and subjected to public outcry, but Florida Water Services officials are still forging ahead with the sale of the massive utility to two tiny Panhandle cities.

The purchase is scheduled to close Feb. 14, although the avalanche of legal challenges damaged the project's bond rating and forced Florida Water to drop the sale price from $507-million to $492-million. The rating is just a step above junk bond status.

But while the sale of Florida's largest privately owned utility slowly moves forward, critics have not halted their efforts to derail the deal and ensure another like it never happens.

While most of the battle so far has been fought in the courtroom, legislators are now launching their own attack from Tallahassee.

Among those taking the lead is state Sen. Anna Cowin, R-Leesburg, who had concerns about the sale as early as June. Back then, the intended buyer was the Florida Governmental Utility Authority, a coalition of counties, including Citrus, that tried to buy the water system last year.

Cowin's fears about a lack of accountability prompted her to ask the state's Office of Program Policy Analysis and Government Accountability, which assists the Legislature in analyzing how the state is spending tax dollars, to look into the sale of utilities to intergovernmental agencies.

Her intended target was the FGUA. But the surprise deal that was eventually struck between Florida Water and the cities of Milton and Gulf Breeze was much, much worse, she said.

"It was like we were fighting a brush fire, and the explosion happened somewhere else," Cowin said.

The report requested by Cowin was released in December. It details several problems associated with the sale of utility systems to groups consisting of more than one government agency.

Top among them: a lack of accountability.

Customers who are served by utilities controlled by their own government can complain to elected officials. Privately owned utilities are regulated by the state's Public Services Commission.

But intergovernmental agencies are exempt from oversight by the Public Services Commission and can't be controlled by a single county.

Even those consumers with government officials on the utility's board may not always be properly represented, the report noted.

"A member government may object to a proposed utility acquisition or rate increase affecting its residents but be outvoted by the other members," it reads.

To increase accountability, the policy office suggested that any sale of a utility must be approved by the locality where the majority of customers live. Also, the Public Services Commission should be authorized to settle any disputes over rates and terms of service.

Finally, the locality with the most customers should be allowed to purchase utilities owned by intergovernmental agencies, the report concludes.

County Administrator Richard Wesch said the report's findings don't really apply to the FGUA, a sentiment Cowin echoed.

"Once they were put under the microscope, they really started to play ball," she said.

Said Wesch, "Everything recommended in the report is a principle mandated by the FGUA."

Cowin said she plans to file legislation that will mirror the recommendations made in the report.

But Florida Water Services says it doesn't believe the report will have much of an impact.

"We're not concerned about it having an effect on the sale," said spokeswoman Lisa Lochridge.

Florida Water Services operates in about 26 counties, with 150 utility systems and about 500,000 customers throughout Florida. Among Florida Water's systems are those in Sugarmill Woods, Pine Ridge and Spring Hill.

The FGUA, which includes Citrus County, had been working for a year to acquire Florida Water. But the rug was pulled out from under its feet in September, when Gulf Breeze and Milton stepped in with a successful offer.

Also jumping into the melee is state Rep. Frank Attkisson, R-Kissimmee, who is filing a bill that would subject out-of-town utilities owners to oversight by local county commissions.

Attkisson said he objects strongly to the proposed sale of Florida Water, arguing it leaves consumers without a voice.

"If a citizen wants to complain about service or rates, they will have to travel 200 to 300 miles to Gulf Breeze, which is where the board meetings are going to be held. Why should we design a government that distant from the citizenry?" Attkisson asked.

Sens. Mike Fasano, R-New Port Richey, and Nancy Argenziano, R-Crystal River, have introduced a bill that would force an agency like the one Gulf Breeze and Milton formed to request permission from localities to acquire the utilities that service their residents.

"We want to make it very clear that there has to be accountability, whether it is the city of Milton or any other city," Fasano said.

But as the legislators gear up for the next session, which starts in March, other opponents continue their fight in a more immediate forum: the courts.

The residents of Collier County, Palm Coast and Sugarmill Woods received a small victory when a judge they believed had a pro-Florida Water bias stepped down from their case against Florida Water on Dec. 23.

Several of the petitioners had filed complaints against Circuit Judge Michael G. Allen, saying he was trying to speed up the lawsuit to comply with Florida Water's scheduled closing date of Dec. 15. The date was later pushed back.

They also alleged Allen was making decisions without receiving proper input from the lawyers representing the localities, Mike Twomey and Susan Fox.

Under Florida law, a judge must step down from a case if the motion seeking his disqualification is deemed "legally sufficient."

Skip Christensen, president of the Sugarmill Woods Civic Association, said he was relieved by the judge's decision.

"Under Judge Allen, we really didn't think we would get a fair shake," he said.

-- Carrie Johnson can be reached at 860-7309 or .

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