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The Villages
Monday, July 26, 2021

Villager leery of potential $80+ million purchase of company from the Developer

A Villager serving on the North Sumter County Utility Dependent District Board of Directors is worried about a potential $80+ million purchase of an irrigation company from the Developer of The Villages.

The resident-funded NSCUDD has “an opportunity” to purchase the Sumter Water Conservation Authority irrigation systems which presently provide non-potable irrigation to a portion of The Villages.

The seller would be The Villages Operating Co.

In 2019, the NSCUDD board agreed to pay $98.5 million for the Developer-owned Central Sumter Utility.

“This purchase will allow the local oversight of the irrigation system that compliments the previously purchased CSU utility to the NSCUDD Board.  Local oversight allows for local decision making and rate setting instead of the Public Service Commission in Tallahassee,” Deputy District Manager Kenny Blocker said in a memo to the NSCUDD Board of Directors.

He described SWCA as the “sister component” of CSU during a discussion of the possible purchase Thursday during the NSCUDD board meeting at Savannah Center.

NSCUDD Director Richard Rademacher predicted the purchase could wind up costing residents $82 to $83 million. He said he fears the board will lose control during a valuation process.

The potential purchase price would be determined by the following process:

The Seller and Purchaser agree that if the lesser of the two Preliminary Valuations is not greater than 5% less than the higher Preliminary Valuation, then the Purchase Price shall be established at the lesser of the two Preliminary Valuations.  If the lesser of the two Preliminary Valuations is greater than 5% lower, but not greater than 10% lower of the higher of the two Preliminary Valuations, the Purchaser and Seller agree that the Purchase Price shall be established at the average of the two Preliminary Valuations.  If the two of the Preliminary Valuations is greater than 10% lower than the higher of the two Preliminary Valuations, then the Seller and Purchaser shall promptly instruct their respective valuation firms to meet and reconcile and agreed upon determination of value.

PFM Financial Advisors LLC will perform the valuation of SWCA.

Rademacher, a Village of Hillsborough resident, pointed out that Fishkind & Associates – a group that prepared a valuation of CSU for the Developer when a similar deal fell through in 2015 – is now part of PFM. Six years ago, during the ill-fated version of the CSU sale, Fishkind delivered a valuation that was about $20 million higher than the opposing valuation.

During the CSU negotiations in 2019, Rademacher pointed out that Fishkind & Associates has worked with the Developer dating back to at least 1993. 

Rademacher said he is fearful that the board will get locked into a price structure that it will be unable to influence.

“Once the valuations are done, we are out of it. We as a board are done,” Rademacher said.

Blocker suggested that Rademacher was “putting the cart ahead of the horse.”

NSCUDD legal counsel Kevin Stone agreed with Blocker’s statement.

“If the valuations are not acceptable, the board can terminate the agreement,” Stone said.

The board voted to move ahead with the process.

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