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Despite outcry, buyer pushes utility's sale

Two legislators, a slew of attorneys and officials from 14 affected communities all pleaded with them: Don't do it.

But at the end of daylong hearing Monday, the Florida Water Services Authority voted to move forward with the $507-million Florida Water sale that would put the state's largest water utility in the hands of two tiny Panhandle towns.

"I think this is going to be very good for these people (the customers)," said Lance Reese, who chairs the authority, a coalition formed by the towns of Gulf Breeze and Milton.

"I know they don't like it," he said, "but I think it will be good."

The authority's financial advisers said the sale would keep rates low for customers.

But local officials representing about 85 percent of the customers served by Florida Water say the sale price is too high, and the deal will only line the pockets of two towns hundreds of miles removed from their customers. Gulf Breeze and Milton will share at least $1.5-million of the annual profits.

Critics also complained that the deal would strip local communities of their ability to control utility rates, collect taxes from the utility and control their local water supply.

"Imagine if all cities were as predatory as this," said Virginia Cassady, a city attorney for Palm Coast. "We would be like the warring cities of Greece over 2,000 years ago."

Added Jonathan Netts, a member of the Palm Coast City Council: "There is a certain arrogance and pomposity here that you are going to decide what is in our best interest."

In fact, Monday was the second time the authority held a hearing to determine whether the Florida Water purchase was in the public interest. The first hearing, held Sept. 19, was advertised only in the Pensacola News Journal and drew no one served by Florida Water's 152 systems.

The hearing Monday, advertised in 21 newspapers covering Florida Water's service territories, drew about 70 attorneys and local officials critical of the deal.

Mike Twomey and Susan Fox, attorneys representing Collier County and the Citrus community of Sugarmill Woods, said Monday's hearing at the Hyatt Regency in Orlando was "inappropriate."

Both attorneys have filed legal challenges to the authority's Sept. 19 decision to purchase Florida Water. Now that the matter is in the hands of the court, they said, the authority could be charged with contempt of court for taking further action.

Nonsense, said Richard Lott, the authority's bond counsel.

"Even though people have challenged the acquisition in court, you should not be concerned that will adversely impact the transaction," Lott said.

The authority has hired the Orlando law firm of Akerman Senterfitt to fight the seven legal challenges, but Florida Water is picking up the attorney's bill.

"The fact that someone else is paying the tab _ you still shouldn't trivialize these lawsuits," cautioned Robert Knight, Citrus County's utilities regulatory director.

Authority members say the deal, set to close by Dec. 15, is the best value for customers.

Instead of carving up Florida Water's 152 systems and selling them to the local communities, the authority would keep the utility giant intact.

Lott said that creates "economies of scale." Instead of hiring separate lawyers, engineers and permitting staff for each system, he said, the systems can keep costs low by sharing staff.

Critics didn't buy it. John Arceri, a Marco Island City Council member, asked why the deal is significantly more than a $450-million offer by the Florida Governmental Utility Authority, a coalition of counties that negotiated for a year to buy Florida Water.

"Everyone keeps saying efficiency and the economies of scale," Arceri said. "Nobody mentions that I'm paying $57-million more under your deal."

Many of the communities represented Monday supported the failed FGUA offer, which would have allowed local governments to take over the Florida Water systems in their areas by assuming the bond debt.

They argue that would have created an economy of scale on the local level, as the former Florida Water systems would have been absorbed into city and county utility systems.

State Sen. Anna Cowin, R-Leesburg, raised the same flag she had raised about the FGUA deal: Once in the hands of a government entity, the utility is not regulated by the state Public Service Commission or local utility boards.

"The fact remains if, indeed, you become Darth Vaders of the water services, there's really no protection we have," Cowin said.

State Rep. Frank Attkisson, R-Kissimmee, also criticized the two towns for acting against the wishes and best interests of Florida Water's 500,000 customers. He provided copies of legislation he will propose to limit local governments' abilities to buy utilities outside their areas.

"What is the difference between what you're doing and what the Soviet Union did 20 years ago, save the intervention of the military?" Atkinson asked.

Despite the spate of media coverage, however, the pending sale has prompted just 76 phone calls from customers, said Ida Roberts, Florida Water's vice president of customer services.

Only 13 of the calls were negative, she added.

"The sale has not proved to be the slightest bit controversial for our customers," Roberts said.

Authority member Robert Smith said the outcry had come from the local officials deflecting criticism for their own failure to buy Florida Water through the FGUA proposal.

"It just appears to me, as an outsider looking in, a lot of elected officials are trying to cover their tracks, because this is an issue that has been before them for quite some time, and it has not been resolved," Smith said.

_ Bridget Hall Grumet can be reached at (352) 860-7303 or