Florida's two sugar giants slugged it out in public Friday, arguing over whether Gov. Charlie Crist's proposed buyout of U.S. Sugar is actually a sneaky government bailout of an ailing company.
Florida Crystals filed a legal challenge to the state's plan to borrow $1.34-billion to buy l81,000 acres from rival U.S. Sugar for Everglades restoration. The problem, Florida Crystals contends, lies in a provision that allows U.S. Sugar to lease the land back for seven years and continue farming it.
Meanwhile, a new appraisal of the deal said the terms of the lease in the proposed contract are far too generous to U.S. Sugar, to the point where the state will lose some $300-million.
The new developments come only four days before the final vote on whether the state will buy virtually all of U.S. Sugar's property to use for Everglades restoration. Although the deal has the backing of Crist and several environmental groups, the Florida Farm Bureau opposes it, and some lawmakers are calling for it to be put on hold.
State officials have made it clear that they need Florida Crystals' cooperation to make the buyout work, because they will likely need to swap U.S. Sugar land in exchange for Florida Crystals' property to create a man-made flow-way between Lake Okeechobee and the River of Grass.
The deal calls for the state to borrow $1.34-billion so the South Florida Water Management District can buy U.S. Sugar's land and pay back the money with taxes on South Florida residents. The district would then lease the land back to U.S. Sugar while state officials plan the restoration.
"The issuance of these bonds is for an illegal purpose, specifically, use of the district's taxing power to bail out a private company, allowing that company to sell its assets to the district and then indefinitely remain on the sold land to farm and profit from it while the taxpayers support its private purpose," the legal challenge says.
The contract, already approved by U.S. Sugar, puts other sugar companies "at a competitive disadvantage by allowing U.S. Sugar to lease back the land it sells at below market rates," Florida Crystals spokesman Gaston Castens said in an e-mail to the St. Petersburg Times.
Robert Coker of U.S. Sugar insisted the buyout is not a bailout but a legitimate way to jump start the Everglades restoration plan, which is already years behind schedule. He also accused Florida Crystals of opposing the buyout all along. But Castens said the company doesn't object to Crist's buyout plan, just the contract terms.
A new appraisal of the deal by a West Palm Beach company called Anderson & Carr says Florida Crystals is correct: the lease price is far below the market rate. Instead of $50 an acre, the state should be charging about $200, the appraisers said. The below-market lease rate results in a loss of $300-million to the state over seven years.
Coker countered that the lease price was appropriate. After all, he said, it's not like there are a lot of other companies lined up waiting to lease that land.