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Sugar deal gets state's final okay

Water managers on Tuesday narrowly approved a $1.34-billion deal to buy a sprawling swath of sugar fields, a landmark purchase that promises to dramatically reshape Everglades restoration and nearby farming communities.

A deeply divided South Florida Water Management District's governing board voted 4-3 to accept the deal with U.S. Sugar Corp., supporting Gov. Charlie Crist's appeal to seize a "historic opportunity.''

The approval came despite an array of questions, topped by concerns about the state's deepening financial crisis and widening criticism from legislators, rival growers and Everglades communities that the price tag and economic risks are too high.

The board made one change that could potentially put the deal in doubt, adding an "out" clause intended to protect the agency from bankrupting its budget if state revenues plummet.

"If we counter, we could lose it,'' said board member Shannon Estenoz, a environmental activist from Plantation. "I am personally willing to take the risk of adding in the financial 'out' language.''

U.S. Sugar executives have insisted over the past month that the deal was a one-time, one-shot, nonnegotiable offer. But the board's counteroffer left intact a contract that stands to resolve many of its business problems.

Mike Sole, secretary of the Florida Department of Environmental Protection and the state's chief negotiator, acknowledged the budget concerns but said to the board, "Can we afford not to do this?''

For environmentalists, the move puts a long-sought prize within grasp: 300 square miles of fields and citrus groves some liken to "the holy grail.'' Supporters say the land could go a long way toward resolving a slew of Florida's most expensive and frustrating environmental problems in one fell swoop — at least when, or if, the state can find $4-billion or so needed to build the huge reservoirs and marshes envisioned.

The decision was a political win for Crist, who brokered the deal with the U.S. Sugar Corp. and championed it against a growing alliance of powerful opposition, including state lawmakers and U.S. Sugar's chief rival, Florida Crystals.

The governor pushed the deal hard in the final days before the take-it-or-leave-it deadline set by U.S. Sugar, with aides saying Crist made phone calls to board members while on his honeymoon in southwest Florida.

While the board approval was crucial to keeping the deal alive, it isn't done yet. There are hurdles and deadlines ahead, including board decisions on two mining permits on U.S. Sugar land, and a number of financial questions.

The agency must secure bonds to bankroll the deal in a shaky credit market. Lawmakers, who meet next week in special session to deal with a $2-billion shortfall in state revenue, also could cut agency funding. The district, which gets about half its budget from property taxes in 16 counties, also expects revenues to fall for the next several years.

The contract includes several "outs'' that would allow the board to back out of the deal before a Sept. 25, 2009, closing if, when all the numbers come in, it proves too expensive for the agency to afford.

With the deal, environmentalists say the state gets a chance to reinvigorate the stalled restoration of the Everglades, quell years of bickering over pollution by "Big Sugar,'' dramatically reduce polluted water flowing down the St. Lucie and Caloosahatchee rivers and — most critically — get more much-needed clean water flowing into the struggling, shrunken River of Grass.

But those benefits come at a considerable tradeoff: The projects needed to actually restore the system won't be built for years, perhaps decades. Under the deal, U.S. Sugar will continue farming most of the land for seven years, and the district engineers acknowledged there may not be money to build much else for a decade or more.

The proposal to buy U.S. Sugar's land, which will eventually be used for reservoirs and marshes to store and clean up water for the remnant marsh, drew international headlines when Crist announced it in June.

The nationwide economic crisis and dwindling property tax revenues threatened to undermine the deal. It also drew criticism from a rival company trying to buy U.S. Sugar.

Critics contend the deal is less about saving the Everglades than bailing out U.S. Sugar, which lost money last year and was more than $600-million in debt from the construction of a new, state-of-the-art mill in Clewiston.

Florida Crystals and small growers also argue the seven-year leaseback provision, which will give U.S. Sugar almost all its land at $50 an acre — a fourth of going market rates and for free in the final year — would hurt the growers' businesses and give U.S. Sugar a competitive advantage.

The Crist administration worked to shore up shaky board support over recent weeks.

Times/Herald Tallahassee Bureau writer Mary Ellen Klas contributed to this report.

Elements of the deal

Total price: $1.34-billion, which the state will borrow and repay with a tax on South Florida residents.

Total land: 181,000 acres

•Florida agrees to buy the land holdings of U.S. Sugar to allow for the restoration of the Everglades, which has been harmed, in part, by farming.

•For seven years, U.S. Sugar can lease back the land to continue farming while a restoration plan is developed.

An ''out'' clause has been added to allow the state to back out if budget concerns make the purchase impossible. The deal formally will close on Sept. 25, 2009.

Sugar deal gets state's final okay 12/16/08 [Last modified: Thursday, December 18, 2008 12:36pm]
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