Miami Herald: Florida-U.S. Sugar deal OK’d with limits

BY CURTIS MORGAN
cmorgan@MiamiHerald.com

Aug. 27, 2009 — Water managers won crucial judicial approval Wednesday to borrow up to $650 million for the first phase of Gov. Charlie Crist’s land deal with U.S. Sugar.

But Palm Beach Circuit Judge Donald Hafele balked at extending the credit line as far as the South Florida Water Management District had sought — up to $2.2 billion.

He whacked the district’s bonding request by two-thirds. That cap at the least could complicate, and potentially jeopardize, plans to purchase the sugar giant’s remaining acres and build the Everglades restoration reservoirs and treatment marshes.

The decision, almost certain to be appealed to the Florida Supreme Court, keeps the controversial land deal alive and on track — a significant legal and political win for the district and the governor who has championed it.

Carol Wehle, the district’s executive director, said water managers were elated they had cleared a major hurdle toward closing on the $536 million purchase of 73,000 acres from U.S. Sugar.

She said no other previous acquisition would do as much to help resolve water supply and quality problems that have affected not just the Everglades, but Lake Okeechobee and coastal estuaries as well, for decades.

“The most exciting thing about this is keeping our ability to buy this land,” she said.

PARTIAL VICTORY Still, the 36-page ruling was enough of a split decision that the Miccosukee Tribe and U.S. Sugar rival Florida Crystals Corp., who challenged the deal as a multibillion-dollar boondoggle for taxpayers, claimed partial victory.

“The district can’t possibly think this is a victory. You can’t go in and ask for $2.2 billion and walk out with $650 million and claim that,” Crystals attorney Joe Klock said.

Klock and Miccosukee attorney Dexter Lehtinen argued the district doesn’t have the money to build anything on the land or purchase the company’s remaining 107,000 acres — a three-year option that is costing the district $50 million — and that the deal will siphon money from other projects and delay Everglades restoration by decades.

DISTRICT AUTHORITY In his ruling, Hafele rejected many of the technical challenges to the district’s financing plan, finding the district was within its authority to issue bonds — at least for the initial land purchase that he wrote would clearly benefit the public by helping restore the Everglades.

But he rejected additional dollars for the remaining, larger chuck of U.S. Sugar land — 107,000 acres that, under the terms of the option, would cost the district another $790 million.

“The record is essentially devoid of any information discussing how the remaining 107,000 acres (if acquired) would be utilized,” Hafele wrote. “While detailed, specific plans are unnecessary, this is not to say that the District may seek bond validations with ideas so nebulous that the court cannot determine their legality.”

The judge also acknowledged “strong arguments” that the deal might be “economically impossible,” but said that legal precedents blocked him from considering economic considerations.

“I think he went as far as he thought he could go,” Klock said.

DOWNSIZED The district’s $2.2 billion request reflected the cost of the original deal proposed more than a year ago by Crist, which was for all of U.S. Sugar’s 180,000-plus acres, its mill, railroad and other assests. It has been downsized twice since.

FINANCING Hafele approved $650 million, which would cover the initial 73,000 acres, a first year of debt and assorted legal and financing fees. The district, which hopes to close the deal by next year, still needs to secure financing in a still-shaky credit market.

Wehle and district Chairman Eric Buermann said the purchase would improve restoration efforts with or without the remaining U.S. Sugar land. But they also said they also had other options to acquire it in the future — through additional bonds, land swaps or other deals with third parties or new revenues if the economy turns around.

“I really think the rest of it will fall into place as we move forward,” said Buermann. “Two or three years is an eternity when it comes to the economy and financing.”

Though they hope to someday acquire all of U.S. Sugar’s lands, environmentalists still hailed the rulings as a key step.

“This is a substantial piece of property that we need to go forward,” said Thom Rumberger, chairman of the Everglades Trust.

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