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County joins effort to buy private utility firms

NEW PORT RICHEY — Commissioners voted Wednesday to join a multicounty agency that specializes in acquiring private water companies.

Its first order of business is to pursue a buyout of Aloha Utilities, Mad Hatter Utility, Lindrick Service Corp. and Holiday Utility.

At the top of the list is Aloha, which residents say is years late in cleaning up the smelly, discolored water it sometimes delivers to 25,000 customers in southwest Pasco.

The agency, the Florida Governmental Utility Authority, is a nonprofit association of nine county and three city governments, created in 1999 when Sarasota County sought to buy out Avatar Utilities. It's controlled by a board of directors with one representative per member government, staffed by a contracted manager with the sole task of buying and running private utilities for local governments.

Commissioners agreed Wednesday to pay the agency's $238,700 fee to work on Pasco's buyout plan.

The move signals shifting sentiment on the prospect of Aloha's sale to Pasco.

"In the past, we sent letters but they said they didn't want to sell," County Administrator John Gallagher told commissioners. "But recently they've decided that they want to sell. … (But) we just don't have time to go through that long detailed negotiation."

William Sundstrom, Aloha's attorney, was more reserved about the proposal. "We are neither in favor of nor opposed to this," he said.

The deal temporarily halts Aloha's plan for a $6-million "anion exchange" system to clean up its water supply.

Residents say they don't object to this new delay, as Aloha has been late anyway in delivering the fix.

Bob Nabors, counsel for the utility authority, said he plans to return to the County Commission in four months with a tentative purchase price for Aloha.

What happens next, depending on the outcome of public hearings, could go something like this:

If the authority agrees on a purchase price with Aloha and Pasco, it floats bonds for the purchase, to be repaid with revenues from the utility. The county then has the option to take control of Aloha any time from the authority, under the same financing arrangements.

This model has worked in six utility purchases since 1999, Nabors said.

As a guiding principle, which doesn't amount to a commitment, customers will not see any rate increases for at least five years, Nabors said.

This means Aloha may not get the 100 percent rate increase it recently won from the Florida Public Service Commission. That deal depended on tying into Pasco's water system to feed Aloha's growing service area.

If the purchase goes through, the authority will open an office in Pasco County to handle customers, Nabors said.

"We will put a full court press on this project," Nabors said. "Our challenge is to move as quickly as we can but with prudence. We don't want to be rushed into any deal."

Chuin-Wei Yap can be reached at cyap@sptimes.com or (813) 909-4613.

County joins effort to buy private utility firms 02/27/08 [Last modified: Wednesday, February 27, 2008 9:39pm]
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