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WILL VAN SANTBut other county officials aren't worried about the plan to raise money to keep the Hernando running while a feud over a water utility purchase rages.
BROOKSVILLE - Seizing what they viewed as a fleeting opportunity, on Oct. 30, Hernando County officials moved to liquidate $36-million in assets to purchase Florida Water's Spring Hill utility.
The decision came at an emergency meeting called hours after a circuit judge ruled against a bid by the city of Weeki Wachee to condemn the utility and in favor of the county's friendly acquisition.
Then, as now, plans call for the county to issue bonds to replace the liquidated millions. But a recent notice by Weeki Wachee that it plans to appeal the judge's decision has complicated what was already a risky move.
With the liquidation, the county took immediate ownership of the utility and its assets. But the board made its decision knowing a Weeki Wachee appeal could make bond rating agencies skittish and jeopardize the county's coffers. Even County Attorney Garth Coller, who lobbied for the liquidation, saying the risks were minimal, said at the time that his reputation was on the line.
While county attorneys are still optimistic, Hernando's money managers are nervous. The different views underscore how a government employee's specific mission affects his or her perspective on an issue.
Lawyers are paid to take risks to win. Financial managers don't like to take chances.
"I'm concerned," said county finance director Amy Gillis. "I'm very concerned."
What worries Gillis is the possibility that an appeal will lead rating agencies to delay or prevent the county from issuing the bonds. The agencies must assign ratings and the bonds must be insured before they can go to market.
One rating agency and has told county legal staffers that letters of assurance that the appeal will fail from prominent players in the utility acquisition would satisfy them.
Yet Gillis said she has no confirmation that such letters of assurance will suffice. Further, she said, the opinion of a single rating agency does not carry much weight.
"We need all the rating agencies and insurers to feel comfortable with this to move forward and issue the bonds," she said.
While there is no specific date when the county must have the $36-million back, Gillis said as the coming year proceeds and the funds are not replaced, cash flow problems will result.
County budget director George Zoettlein said he is confident that the county will win its legal fight but shares Gillis' concern about how long it will take. "From a financial point of view," he said, "we have to look at how much it is costing us while the case is unresolved."
The costs, he said, include lost interest on the liquidated cash and the possibility of rising interest rates. So far, the move is costing about $75,000 a month, Zoettlein said.
Assistant County Attorney Fred Wagner, who handles Hernando's bond issues, said he understands the concerns Gillis and Zoettlein have. But there is nothing surprising about Weeki Wachee's notice of appeal and no reasonable chance for them to prevail, he said.
"I'm anything but panicked," Wagner said. Wagner said he was confident the rating agencies, staffed by what he called "relatively bright people," can be made to see how ridiculous Weeki Wachee's claim to the utility is.
A city of nine people, Weeki Wachee is best known for its mermaid shows. The Spring Hill utility provides water and wastewater service to some 33,000 people.
Wagner said it's possible the bonds could be issued at the beginning of the year. Even if the county faces lengthy delays in issuing the bonds, Wagner said, short-term financing could be used to prevent the cash-flow problems that worry Gillis and Zoettlein.
Such an interim solution will cost money, of course, but Wagner said the amount would be negligible.
- Will Van Sant can be reached at 754-6127. Send e-mail to vansant@sptimes.com