TREASURE COAST NEWSPAPERS • July 16, 2009
http://www.floridatoday.com/article/20090716/BREAKINGNEWS/90716019/1086/Will+Wall+St.+get+public+land+as+collateral+for+US+Sugar+dealSouth Florida water managers may offer Wall Street more than a quarter-million acres of state-owned lands, including thousands of acres of Everglades restoration tracts, as collateral to finance Gov. Charlie Crist’s land deal with U.S. Sugar Corp. and future environmental projects, records show.
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The South Florida Water Management District has identified 283,000 acres worth $1.5 billion — including preserve lands, filter marshes and Everglades-area wetlands — that could be used to guarantee some of the $2.2 billion they intend to borrow to buy the U.S. Sugar land and recreate the historic flow of water from Lake Okeechobee to the Everglades.
The collateral might also include 2.8 acres under the Herbert Hoover Dike.
The proposal, which water managers say remains under consideration, emerged in internal agency e-mails and other documents that opponents of the U.S. Sugar deal have cited in their legal battle to block financing for what would be the state’s most expensive conservation land purchase ever.
Water managers say using the land as collateral would, at little risk to taxpayers, enable the district to obtain tax-free financing, which would translate to savings of tens of millions of dollars over the 30-year loan.
“We’re pursuing this as an option,” said Paul Dumars, the water district’s chief financial officer. “At the end of the day, we would save taxpayer dollars.”
But opponents of the U.S. Sugar deal say the proposal is reckless and illustrates the extraordinary financial strain that the deal would place on the South Florida water agency and its taxpayers in all or part of 16 Florida counties.
“It would be stupid to do it,” said Joseph Klock, who represents chief U.S. Sugar competitor Florida Crystals, one of the deal’s opponents. “It would be political suicide.”
The complex financing scheme would involve “certificates of participation,” similar to bonds but which circumvent the need for voter approval.
The water agency would use property taxes collected in its 16 counties to make 30 years of annual debt payments to trustee Deutsche Bank, which would in turn repay investors in the certificates. If the district defaulted, Deutsche Bank could use the land to generate a return for investors — for example, by leasing land to farmers.
Everything would revert to state ownership and control at the end of the 30-year term, according to agency officials.
