Water district OKs sweet deal for U.S. Sugar land

Purchase could destroy economy in area, some say

By Ryan Hiraki

December 20, 2008

A gamble to spend $1.34 billion on Everglades restoration got narrow approval Tuesday by state water managers who still could face financial issues and conflicts with nearby farmers.

The debate lasted about eight hours and included input from more than 20 members of the public, a majority of them opposed to the deal, before the South Florida Water Management District governing board finally voted 4-3 to buy 180,000 acres from U.S. Sugar Corp.

The deal, which includes allowing U.S. Sugar to operate for seven more years, has come under scrutiny because the state is facing a $2.3 billion budget shortfall, and, even after acquiring the land, there is much more work to do.

State officials face the challenge of reviving the economy of inland Florida, especially Clewiston, a town that will lose 1,700 jobs when U.S. Sugar closes.

And water managers likely have to swap part of the land with Florida Crystals, the sugar company that owns 32,000 acres impeding the natural path of water from Lake Okeechobee to Everglades National Park. Florida Crystals has filed a legal challenge against the deal, arguing the district is using taxing power to bail out a private company - U.S. Sugar Corp.

"When you have this kind of deal, it's not perfect," said Eric Buermann, chairman of the water management district governing board, who supported the deal. "But I think (Gov. Charlie Crist) is right. It's a visionary move.

"When Thomas Jefferson made the Louisiana Purchase, he was soundly criticized in the press."

The sugar purchase is intended to not only restore the Everglades, but prevent pollution in the Caloosahatchee and St. Lucie rivers. After the 2004 and 2005 hurricane seasons, fresh water from the lake was sent down both rivers, carrying pollutants that caused algal blooms that chased people from beaches in Lee and Martin counties.

Those beaches are major attractions for tourism. In Lee, tourism generates $2 billion annually.

The Everglades are a tourist attraction, too. The park averages more than a million visitors a year.

"The people of Florida are desperate for you to exhibit leadership," Kirk Fordham, chief executive officer of the Everglades Foundation, told the governing board. "If you don't acquire the necessary land soon, the ecosystem that provides Floridians with their water supply will collapse soon."

A financial collapse was a concern, too.

Water managers are borrowing to pay for the land. They will know by September if they are financially strong enough to borrow $1.34 billion. And to protect themselves, a clause was added that allows them to void the deal if the economy worsens to the point the sugar purchase hinders the day-to-day operation of the water district, which is responsible for water management in 16 counties from Orlando to the Keys.

The deal already was scaled back from its original $1.75 billion and 187,000 acres because of money concerns, especially when interest to borrow the money could cost taxpayers another $1.5 billion.

"If we buy this 180,000 acres, and we don't have dance partners, if Florida Crystals doesn't come to the floor, we're going to have all this debt for 15 years that we can't pay off," said governing board member Charles Dauray, who voted no.

Residents, business people and officials from Clewiston, the Hendry County town of 15,000 that has been synonymous with U.S. Sugar for almost eight decades, were happy with Dauray's vote.

Before the decision, they told the governing board approving the purchase without an economic transition plan would be devastating.

"The loss of 1,700 jobs will annihilate our community, creating an economic Hiroshima," Deborah Van Sickle, chief credit officer for First Bank of Clewiston, said as she cried at the podium.

There was even another option on the table, from the Lawrence Group, a Tennessee farming group that offered to pay $300 a share for U.S. Sugar's assets and sell back part of the land to the state. Water managers dismissed the offer because of a lack of specifics. But the majority of them did not want to risk losing the land forever by voting no.

"Buying all of (U.S. Sugar's) land gives us the opportunity to do land swaps," said governing board member Melissa Meeker, who voted yes. "If we go to the Lawrence Group and acquire a little bit of land, or to Florida Crystals and acquire a little bit of land, we don't have that leverage. We don't have that leverage. We don't have that bargaining power."