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Developer wins suit against Hillsborough

After six weeks of complex testimony about bonds, contracts and corporations, a jury took less than 90 minutes Friday to decide in favor of a private sewer developer that sued Hillsborough County for breach of contract.

Providence Venture Inc. now will try to recover as much as $13-million in damages from the county in an unscheduled second phase of the trial.

Hillsborough has already spent about $1-million defending the case.

The case arose from a 1987 public-private plan for a Riverview sewage treatment plant. In 1989, Hillsborough commissioners voted to change the deal just as the private side was closing on a bond sale. That effectively killed the deal.

County officials reached Friday night expressed dismay about the verdict, and surprise at how fast it came.

"I'm just very disappointed," said Commissioner Phyllis Busansky, adding that the county will "absolutely" appeal.

"Well, that's the wisdom of the jury," said Commissioner Pam Iorio. "I really think the board acted in the public's interest."

County Administrator Fred Karl, who as county attorney in 1989 advised the commission to change its deal with Providence Venture, sat at the defense table through most of the trial. He underwent oral surgery on Friday, and could not comment on the outcome.

Walton McMichael, on the other hand, expressed his feelings about the verdict by screaming "Yes!" as he left the courthouse.

McMichael, president of Providence Venture, was the plaintiff in the case.

"We're very pleased," he said. "The county clearly breached the agreement. That was so clear."

Jurors apparently agreed. Caroline McDaniels, the foreperson, said Providence attorney Richard Gilbert of Tampa showed that Providence met every obligation it had in the public-private effort to bring sewer service to the Riverview area.

"The supporting evidence was very strong," McDaniels said.

She also said jurors were not swayed by the county's contentions that Providence Venture deliberately misled the county about how it would secure the bonds needed to build the project, or who really made up Providence Venture.

In closing arguments Friday, the county's outside attorney, Albert Phillips of Atlanta, reminded the jury how McMichael quietly converted ownership of the corporation from four major developers to himself, without ever informing the county.

Gilbert, Providence Venture's attorney, said afterward that the corporate identity and letter of credit issues were red herrings.

They were issues neither party felt were that important when they made the contract in 1987, Gilbert said.

Back then, the biggest concern was getting sewer service to the rapidly growing Riverview area. Four major developers formed Providence Venture, and proposed to build the system sooner and run it cheaper than the county could.

Hillsborough commissioners liked the idea so much they entered the contract without bidding, an action the county now claims was illegal and should nullify the contract. Jurors rejected that theory Friday.

By 1989, the county realized Providence stood to make an $8.5-million profit, while Hillsborough still would have to shell out $4.2-million to build a plant to treat sludge, a byproduct of sewage treatment.

At an emergency meeting in March 1989, the commission voted 4-3 to make Providence rebate to the county $269 from every $2,507 fee to hook up to the new sewer system. That would amount to about $4.2-million. Providence officials said that change would make it impossible for them to sell the bonds needed to finance the project.

The four developers later sold their interests to McMichael for $4. He then re-formed the Providence Venture corporation. The county argued at trial that McMichael was effectively disguising himself as the former Providence Venture, and that county officials never knew the true corporate identity had changed.

Hillsborough also claimed that Providence itself breached the contract by securing financing through a bond sale before Hillsborough's special bond lawyer gave his approval. The county argued that a letter of credit for Providence was an implied requirement of the contract. Providence never obtained such a guarantee.