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Proposal for takeover of Aloha Utilities moves ahead

A public utility agency has finalized a proposal to buy Aloha Utilities and its smelly, black water problems in southwest Pasco County for $90.5-million.

The Florida Governmental Utility Authority, which Pasco County joined this spring so it could purchase private water and sewer providers, could take over service to Aloha's 25,000 customers in December, if the deal is approved.

The deal would pave the way for Pasco County Utilities to eventually take the reins of Aloha, one of the largest private utilities in the county.

The County Commission will take up the sale Oct. 7, and the agency's board is scheduled to meet about it a day later in New Port Richey.

To various degrees, customers would still pay higher rates. But members of the Committee for Better Water Now — customers who pressed for more changes — issued a statement calling the deal "the best thing to happen for Aloha customers in the more than 15 years that we have been battling Aloha regarding its unsatisfactory service."

As part of the deal, the agency would pump $14-million into improving the water service for Aloha customers. The agency would tap into Pasco's utility lines in four places to bring in county water, and would reduce or stop using two Aloha wells blamed for the foul water.

Aloha's previous plans for the "anion exchange" treatment system would be scrapped.

"We realized there will be better ways to improve the water quality," said Brian Armstrong, the agency's lead negotiator.

Price not set yet

One big question, however, will be the purchase price, which is $20-million to $30-million above a previous county estimate of Aloha's worth. One of Pasco's guiding principles when it joined the agency was to not raise rates to support purchase prices. But county commissioners said they were optimistic about the deal.

The upshot for customers critical of Aloha is new management, and a new plan to improve water quality. Aloha has been dogged by state sanctions for years, and faces a state order for major improvements that customers — notably state Sen. Mike Fasano, R-New Port Richey — say have been unfairly delayed.

"I'm pleased that in some way, some form, some fashion, there's going to be accountability," Fasano said. "That's what needs to happen. Right now, we have a utility company that's accountable to no one."

Under this deal, Pasco eventually could add Aloha to its own utility system without immediately paying the purchase price. The Florida Governmental Utility Authority would buy Aloha using a 30-year bond, covered by utility payments from customers. If Pasco takes over Aloha, it would simply be responsible for any unpaid debts.

Armstrong said a recently approved rate increase that nearly doubled the typical Aloha customer's bill to nearly $30 will go ahead. But another big rate increase proposed by Aloha will be reduced.

Customers in the Seven Springs area, the largest group, will face another 27 percent rate hike, he said. Customers in Aloha Gardens will face 5 percent increases.

It's unlikely Aloha's senior managers will keep their jobs, but field staff can stay, pending interviews, Armstrong said.

Steve Watford, Aloha's president, did not return a call Monday seeking comment.

While several county commissioners lauded the concept of the purchase, they said they were still waiting for answers on some questions, including the purchase price.

After a round of talks, the county also seeks specifics about whether the rates will fully pay for bonding, and how to square higher rates for Aloha customers than Pasco charges county utility customers.

County Commissioner Ann Hildebrand said she is excited about the proposal.

"I think that it's going to be very good news for the Aloha customers," she said. The alternative "is that they keep the status quo, which is not a good deal for them."

David DeCamp can be reached at ddecamp@sptimes.com or toll-free at 1-800-333-7505, ext. 6232.

>>Fast Facts

No price break

The proposal would not mean lower rates for Aloha customers. A recently approved rate increase that nearly doubled the typical Aloha customer's bill to nearly $30 will go ahead.

Proposal for takeover of Aloha Utilities moves ahead 09/29/08 [Last modified: Wednesday, October 1, 2008 2:58pm]
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