Water managers review Florida-U.S. Sugar deal

Water managers began their final review Tuesday morning before a crucial vote on the state's $1.34 billion bid to buy U.S. Sugar's sprawling farm fields.

On the eve of a crucial and still-uncertain vote, Gov. Charlie Crist sent a letter to the South Florida Water Management District's governing board, urging them to back what he called an ''unprecedented'' opportunity that would pay dividends from the Everglades to Florida Bay for centuries. ''The historic nature of this moment cannot be lost,'' he wrote.

But a grim economic forecast, along with growing opposition from state lawmakers and Glades-area communities, post significant hurdles to approval.

Because of a decline in property values and tax revenues, the board will face unanticipated budget cutting in coming years -- up to 22 percent and $100 million a year. That could undermine what appeared to be shaky board support for the state's bid to convert a swath of Big Sugar land into Everglades restoration projects.

The deal's numbers looked starkly more daunting than in June when Crist proposed a blockbuster buyout of the state's largest sugar grower. Then, based on predictions of growing revenue, district money managers calculated that an even-more expensive $1.75 billion deal to acquire the entire company could be done without raising property taxes or cutting operations.

''Six months ago, people worked for Lehman Brothers. Six month ago, AIG was the largest insurance company in the world. Six months ago, Fannie Mae and Freddie Mac were on solid ground,'' said Charles Dauray, one of seven board members. ``We've had incredible change, including this country going into hock for $2 trillion.''

Other key numbers also have changed.

Factoring in a lease that will let the company continue to farm the land at $50 an acre for seven years, or about a quarter of market rates, two new appraisals put the value of U.S. Sugar's 180,000 acres at about $1 billion -- roughly $300 million less than before. Rising interest rates could add hundreds of millions in bond costs and push the price over 30 years to as much as $3.4 billion.

Board member Shannon Estenoz, an environmental activist from Plantation, cautioned that appraisals didn't fully reflect the value of a deal that could go a long way toward resolving water-storage and pollution problems that have damaged the Glades, rivers, estuaries and bays across South Florida.

''This isn't just a purely business decision,'' she said.

Still, the sobering economic climate is likely to play a big role in the decision.

In three scenarios, the water management report forecast spending cuts of 2 to 22 percent over the next two years. The most likely one showed revenues falling by nearly 9 percent and the agency's spending power plunging by nearly 20 percent, or $88 million, by 2010.

If that happened, district financial experts said, the land buy would trigger subsequent cutbacks in ''core operations,'' which include an array of work from Everglades research to the purchase of flood-control equipment.

The dire forecast underlined warnings from critics, who argue the state is rushing into a bad deal that they say will cost the state too much and cost rural communities jobs. U.S. Sugar has set a Tuesday deadline for the board to approve the deal.

Business leaders from Clewiston, supported by high schoolers bused in for the Monday hearing in the district's West Palm Beach headquarters, urged the board to reject the deal or postpone the vote and try to coax U.S. Sugar back to the bargaining table.

Gaylon Lawrence Jr., one of the owners of a Tennessee-based agricultural concern that is trying to buy U.S. Sugar, told the board the state could cut a better, cheaper deal with his company.

''You've got an all-or-nothing deal here,'' he said. ``It's not fair to the community. It's not fair to the Everglades.''

On Tuesday, Rep. Denise Grimsley, R-Lake Placid, plans to take the extraordinary step of speaking against the deal via a recorded video message.

Crist, in his letter, pledged to support a so-called ''inland port,'' a trucking storage and shipping hub sought by Glades-area communities and businesses, including U.S. Sugar rival Florida Crystals, which is fighting the land deal.

Mark Kraus, senior vice president of the Everglades Foundation, urged the board to consider the broader benefits the land buy will eventually provide.

''I've heard repeatedly, this costs too much,'' he said. ``I'd ask you to consider this: What is the water supply worth? What is a restored Everglades worth?''

Miami Herald staff writers Mary Ellen Klas and Marc Caputo contributed to this story.