County avoids utility headache

Exert from ------

County avoids utility headache Series: COLUMN; [STATE Edition]
JEFF WEBB. St. Petersburg Times. St. Petersburg, Fla.: Jul 20, 2005. pg. 2
Abstract (Document Summary)

Joining the FGUA would have been a mistake for a number of reasons. First, the consortium, which issues bonds to buy private utilities and then sells them back to governments, had a huge self- interest. Counties do not profit, but the lawyers rake in plenty by acting as bond counsel, which means they make money when the FGUA issues the bonds and for acquisition fees. In the deal that was on the table back in 2001, FGUA lawyers stood to pocket almost $4- million.

Neighboring Citrus County joined the FGUA and the organization bought several privately run utilities there, including Florida Water in 2003. The Citrus County Commission was told it would be involved in any rate-setting decisions, and that no increases would be proposed for five years.

That angered Citrus County commissioners, so FGUA officials backtracked and withdrew most of the assessments. But that misstep, coupled with the FGUA's initial refusal to work with the county on setting rates, has some commissioners up there threatening to buy the utility systems and kick the FGUA to the curb. They're also thinking about replacing their representative on the FGUA, Richard Wesch, who just happens to be their county administrator and once was the assistant county attorney. He, too, lobbied hard on behalf of the FGUA.

Full Text (702 words)
Copyright Times Publishing Co. Jul 20, 2005

Hernando County commissioners and many of their top staff members will tell you that purchasing the sewer and water utility in Spring Hill from Florida Water Services was one of the most farsighted achievements in county government's history.

That agreement was finalized in 2004, but the let's-make-a-deal dance dragged on for three years before.

Granted, taking over the utility was a bold move. The county - make that taxpayers - paid $36-million for it ($81-million with interest on the 30-year bonds), and millions more will be spent upgrading, expanding and maintaining the system's pipes, wells and treatment plants to accommodate the increase in users. But if all goes according to plans, customers should be better off because the County Commission will have full control over the rates and the quality of service. It eliminates the profit-making middleman and makes the commission more accountable.

But before the commissioners decided that the direct purchase of Florida Water was their top priority, they almost bought into a deal - make that "were almost sold a bill of goods" - by the Florida Governmental Utility Authority.

What's more, they almost did so on the advice of former county administrator Paul McIntosh and current County Attorney Garth Coller, who met secretly with utility authority officials and updated commissioners individually, shutting out the public from the process. They called it their "game plan" to protect the county's water.

Their "game," played in private and plagued by controversy, cost them and the commission credibility, and it almost cost taxpayers more money than it should have.

Joining the FGUA would have been a mistake for a number of reasons. First, the consortium, which issues bonds to buy private utilities and then sells them back to governments, had a huge self- interest. Counties do not profit, but the lawyers rake in plenty by acting as bond counsel, which means they make money when the FGUA issues the bonds and for acquisition fees. In the deal that was on the table back in 2001, FGUA lawyers stood to pocket almost $4- million.

Second, only four of Florida's 67 counties were members of the FGUA. The organization had never tackled a project as big as the purchase of Florida Water, which owned and operated about 150 water and sewer systems in 27 counties. It served about 33,000 customers in Spring Hill.

Commissioners, despite the advice they received from McIntosh and Coller, eventually rejected the FGUA's overtures and decided to pursue a deal on their own. It was a wise move, although some critics still argue that the county paid too much for the utility.

But now those commissioners have a new reason to pat themselves on the back for their good judgment.

Neighboring Citrus County joined the FGUA and the organization bought several privately run utilities there, including Florida Water in 2003. The Citrus County Commission was told it would be involved in any rate-setting decisions, and that no increases would be proposed for five years.

But recently the FGUA told more than 4,000 property owners that they would be charged between $2,000 and $6,000 to pay for future water line expansions. Some had already paid to be hooked into the system, so it amounted to them paying twice.

That angered Citrus County commissioners, so FGUA officials backtracked and withdrew most of the assessments. But that misstep, coupled with the FGUA's initial refusal to work with the county on setting rates, has some commissioners up there threatening to buy the utility systems and kick the FGUA to the curb. They're also thinking about replacing their representative on the FGUA, Richard Wesch, who just happens to be their county administrator and once was the assistant county attorney. He, too, lobbied hard on behalf of the FGUA.

Everything may not be rosy for the Hernando County Commission as it continues to struggle with issues related to the Florida Water Services utility, including problems with water pressure and the possibility that rates may have to be increased.

But the commissioners should be thankful they can deal with the problem directly, and not be in the cross fire between the faceless FGUA and several thousand angry faces in Spring Hill.

Reach Jeff Webb at webb@sptimes.com, or 754-6123.