The price has been set for a Villages utility district’s purchase of another utility owned by The Villages Developer – and the transaction is moving forward.
The board of the North Sumter County Utility Dependent District (NSCUDD) learned Thursday morning that the cost to purchase the Central Sumter Utility Co. (CSU) will be about $98.5 million. That price was based on reports submitted by two firms that evaluated CSU to come up with a fair price.
NSCUDD’s consultant, PFM Financial Advisors LLC, placed the value of the utility at about $93.9 million, while the Developer’s consultant, Stantec Consulting Services Inc., set it at a little more than $103 million.
The actual price tag for CSU will be $98.5 million because NSCUDD and the Developer already had agreements in place to move forward. One of those stated that if the lesser of the two preliminary valuations was greater than 5 percent lower, but not greater than 10 percent lower of the higher of the figures, the utility boards would agree to set the purchase price at the average of the two valuations. The difference was 9.77 percent, which paved the way for the price to be automatically set and the purchase to move forward.
At Thursday’s NSCUDD board meeting, Assistant District Manager Kenny Blocker said consultants from Jones Edmonds also are working on a report about CSU. Per the requirements of the proposed sale, Jones Edmonds was hired to provide an update to a previous asset condition assessment they performed four years ago when a similar purchase deal fell through.
Blocker said he met with the consultants on Wednesday and they already had visited all of the CSU facilities, which includes the wastewater treatment plant, the water plant, a tower and lift stations.
“Their overall findings are that the system is well maintained and operated,” Blocker said. “Most utilities they see in the government space are very reactionary. Something breaks, they go fix it. We’re more preventive in taking care of those things up front.”
Villager Dan Warren, a retired engineer with an extensive background in water, wastewater and solid waste systems, along with serving on government boards, offered several thoughts about the impending CSU purchase. He encouraged the board to make sure it’s the right thing to do and to inundate the public with information about the deal.
“It appears to me, and I’m sure the rest of the public, as being under the radar,” he said. “I’ll give you the benefit of the doubt that that’s not intentional.”
Warren, who purchased his Village of Gilchrist home in 2013, said it’s important to realize the impact the sale will have on Villages residents.
“I’m hearing $100 million here. That’s a huge impact on our ratepayers and on our community,” he said. “So, I would ask you to get some information out to the public. Force-feed them.”
Warren said it’s crucial for residents to understand the advantages and disadvantages to the utility purchase.
“I think it’s really important to talk about the pluses and the minuses,” he said. “Because any issue like this has got pluses and minuses.”
Warren also encouraged board members to consider things other than price, such as additional liability, smudge disposal, operational efficiencies and cost vs. value.
“You’ve got an asset here that has different lives – pumps shorter lives, pipes longer lives,” he said. “The Developer should have been accumulating sinking funds for the replacement of these various pieces of the puzzle.”
Warren said the board needs to find out if those sinking funds exist and if they are part of the purchase agreement.
“I think it’s crucial,” he said.
Finally, Warren said, the board should ask the Developer what his audited costs were to construct the utility system.
“What did the Developer pay for the system that you’re looking at purchasing?” he asked. “It’s a depreciating asset in some terms, so it’s another way to look at it.”
The NSCUDD board voted 6-1 last month to move ahead with the purchase of CSU. Those in favor of the purchase were Chairman Charlie Smith, Dominic Berardi, Jerry Watts, Matt Friedland, Diane Spencer and Tom Hosken, while Richard Rademacher opposed the decision.
CSU owns and operates a potable water treatment and distribution system and wastewater collection, treatment and disposal system and provides services to a portion of The Villages in unincorporated Sumter County, Wildwood and Fruitland Park. It is headed by a who’s who of Villages management, that according to the Florida Division of Corporations, or sunbiz.org, includes:
- President Mark Morse, Developer of The Villages;
- Vice President Martin L. Dzuro, who serves as assistant to the vice president of The Villages;
- Vice President Robert L. Chandler IV, vice president of development for The Villages;
- Vice President Harper D. Boone, son of Villages owner Jennifer Parr;
- Vice President Ryan McCabe, operations manager of The Villages and husband of Parr’s daughter, Paige;
- Secretary Kelsea Morse Manley, director of operations for The Villages; and
- Treasurer Kenneth D. Stoff, treasurer of the Holding Company of The Villages. Stoff also represents the Brownwood Community Development District on the Project Wide Advisory Committee.