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Authority wonders about deal for utility

With the sale of Florida Water Services to two Panhandle towns apparently battered into nonexistence by court rulings, the company's once spurned suitor is cautiously hoping the utility giant will again look favorably on its offer.

Representatives of the Florida Governmental Utility Authority, whose members were caught unawares in September when the company announced a deal with the towns of Milton and Gulf Breeze, say they are ready to negotiate but are unsure whether Florida Water's deal with the tiny Panhandle communities is truly finished.

Florida Water said Monday it was ending its $492-million sale agreements with the towns. The announcement came on the heels of a Leon County judge's ruling that would have put the transaction under the scrutiny of the state Public Service Commission. Florida Water serves more than 500,000 customers in 26 Florida counties, including Pasco, Hernando and Citrus.

The contract between the company and the two towns prevents negotiations with other parties until termination clauses have been invoked. It's unclear whether that step has been taken. Gulf Breeze City Manager Buz Eddy said the contract did allow for "unilateral withdrawal" but said he was unsure if the deal was legally dead.

"We still have a contract, as far as we are concerned," Eddy said. "I still think we ought to pursue making the purchase."

Lisa Lochridge, a spokeswoman for Florida Water, said there was no reason to think the company's announcement should not be taken at face value, but, like Eddy, was unsure whether a legal termination of the contract had occurred.

With Florida Water's announcement, Hernando County Attorney Garth Coller said it appeared the "forces of good had defeated the forces of evil" but would "wait to see the corpse."

Hernando County is one of many jurisdictions who look favorably on the utility authority's bid to own Florida Water. The consortium's principal members are Citrus, Nassau, Polk and Osceola counties. With the $492-million deal between Florida Water and the Panhandle towns foundering under the legal onslaught of local governments, the utility authority made a $416-million offer for the facility in February.

"That is a firm offer for the system," said utility authority spokeswoman Honey Rand.

Citrus County Administrator Richard Wesch said the break up of the sale to the Panhandle towns bolsters the utility authority's proposal, which has the support of local governments, many of whom feared ownership of Florida Water by Milton and Gulf Breeze would put distant entities not accountable to citizens in control of water resources.

"The deal provides true public ownership," said Wesch, who is also a utility authority board member.

Even Eddy, the Gulf Breeze city manager, agrees that the utility authority offer will be easier for regulators to swallow, although both the Panhandle towns and the utility authority used the same state utilities laws to form partnerships to purchase Florida Water.

"A lot of the folks who were challenging our ownership of the system were supporters of FGUA," Eddy said. "I don't think they would challenge themselves as they would challenge us."

Attorney Coller said the utility authority's offer was likely the best Florida Water could expect to get for its system and that Hernando County supported the group's bid, though the county wished to keep other options open.

"The official position of the board is that the FGUA's deal is the most appropriate, but that is subject to change," he said.

Hernando County officials have considered condemnation of the Florida Water's Spring Hill utility in the past, but have never proceeded seriously, noting that such a move violates its contract with the company. That contract expires in April of 2004, however, and Coller noted that condemnation can take a long time to accomplish.

"That has always been one of our tools open to us, and if that becomes our only option, we will take it," he said.

Before dramatic and costly action such as condemnation, the question of whether the deal between Florida Water and the Panhandle towns is truly over remains.

"All we can do is be hopeful," Rand of the utility authority said. "The door is open. We are standing by ready to talk."

_ Will Van Sant covers Hernando County government and can be reached at 754-6127. Send e-mail to Times Staff Writer Alex Leary contributed to this story.

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