The Plantation Bay utility the county bought in 2013 for $5.5 million, though it was barely worth $1 million, has been trouble since then–operationally, financially and politically.
It’s been one of the more serious crises County Administrator Jerry Cameron inherited from his predecessor, Craig Coffey, the architect of the 2013 million deal, which also included $700,000 in connection fee credits to Mori Hosseini’s ICI Homes, owner of Plantation Bay. The county has amassed $13 million in debts with the acquisition and since. It conceded only two months ago that it was incapable of properly running the utility, so it brought in U.S. Waters to run it, and the Florida Government Utility Authority to take over management. FGUA runs 87 utility systems in about a dozen Florida counties, with 131,000 customers.
Wednesday evening, the county hosted a town hall meeting at a Plantation Bay clubhouse that drew upwards of 120 people looking to know what will happen to their utility, the quality of their water, the size of their bills and the ownership of the plant.
In essence, Cameron said there will not be a utility rate increases in 2020, but he couldn’t make promises beyond that. And there will be no reverse-osmosis plant, as previously planned: the cost would be too high and not justified with more realistic improvements ahead.
FGUA will manage the utility and US Water will run it, as it has done for the past two weeks, operating the potable water plant 24 hours a day instead of eight, and thus improving the quality of the water, to residents’ audible satisfaction Wednesday.
FGUA will not take ownership of the utility. With $13 million hanging over it, it’s too indebted. “Nobody will take that with its current debt load, you can’t give it away,” Cameron said. But the contract with FGUA is open-ended, Cameron said.
Meanwhile, the county is attempting to “repurpose” a $1.8 million grant to allow the money to be used for “rehabilitation of existing technology,” Cameron said, and the county is hoping it can work with ICI and legislators to have the original $5.5 million loan–which does not hang over Bunnell, incidentally–either forgiven or reduced. But the bulk of the debt burden remains on the county’s, and more particularly, on Plantation Bay residents.
The 130-minute meeting could have been raucous. Cameron opened it with a plea to “be civil” and avoid personal attacks. He had also hugged Jane Gentile-Youd, the firebrand Plantation Bay resident of 18 years who did much, over the past six, to keep the utility’s clunks banging in commissioners’ ears. It appears to have been a wise move. Gwentile-Youd, who ran for the county commission two years ago and continues to be one of the most piercing thorns in the commission’s side–and an Ahab to Al Hadeed, harpooning the county attorney every chance she gets–left the meeting satisfied. That was at least one gauge of the meeting’s outcome.
“It was good,” she said. Cameron, she said, “took over a monster, and God bless this man for trying his best, for taking–how can I take this without sounding unfeminine–taking crap and turning it into flowers, just taking the horrible and trying to do the very best he can.”
Cameron urged Plantation bay residents to look forward rather than dwell on past battles.
“The goal has always been, it is now, has been, is to give you quality water, to get the utility out from under the consent order, on schedule,” Cameron said, referring to the Florida Department of Environmental Protection Consent Order to improve the sewer plant–a consent order that had been issued to the Plantation Bay developer and, controversially, transferred to the county, indemnifying the developer. That consent order is still hanging over the county.
“It is not about placing blame,” Cameron continued, “it is not about resurrecting the dead, it is about moving forward, and coming to an acceptable result. I do have one promise to make: that at the end of this meeting, everybody won’t be happy. Some people will, others won’t, and if I completely reversed it, everybody still wouldn’t be happy. People have ideas about what they want. Many of these ideas are formed without having access to the complete facts.”
Cameron said “it was the most civil discourse that I’ve seen on a controversial issue since I arrived here.”
“The question is, are we going to sit around and bitch about what was wrong si years ago,” County Commission Chairman Dave Sullivan said. “That was water over the dam. I think we’ve got a reasonable chance to make it work right now,” but it’ll need getting everybody on board.
But there was some rewriting of history by Hadeed, the county attorney.
It’s accurate that Flagler County partnered with Bunnell government in 2013 to buy the utility. But there was never any doubt at the time–and as extensively reported meetings in January, February and March that year made clear– that Coffey was driving the deal, and that the parnership with Bunnell was a marriage of convenience, because Bunnell could, as a city, qualify for a certain lower-interest rate loan as the county could not. “At some point they may fade out of the picture and it may be just Flagler County,” Coffey said of Bunnell at the time. The Bunnell city manager back then, Arkando Martinez, had no doubt who was driving the deal: “It’s basically being a good neighbor to my county, we feel good that they came to us, and what we’re trying to do is work together,” Martinez was quoted as saying then.
As a March 2013 FlaglerLive story reported after a town hall when county and Bunnell officials explained the deal to Plantation Bay residents: “The county is the driving force behind the purchase, but the county cannot secure grants nor can it secure 30-year loans to finance the project, as cities can. So by joining with Bunnell, the county is piggy-backing on Bunnell’s ability to secure those advantages. ‘Doing it without them would have been a lot more expensive over time,’ McLaughlin said.” Nate McLaughlin was one of the four county commissioners who approved the deal.
On Wednesday evening, Hadeed’s version was at variance with the record. He had Bunnell driving the deal–with Hosseini doing an “end run” around the county to sell the utility with Bunnell as the buyer.
“The system was in incredibly bad shape, they said from the get-go it would take us $3.9 million to bring the utility up to some sort of level of service where it wasn’t violating OSHA standards and utility delivery standards,” Hadeed told the assembly. The “they” he was referring to was FGUA, which had placed the value of the utility at $1 million. At the time, Hosseini was looking to sell the utility to the county for $9 million.
Hadeed said Hosseini, through David Haas, the former Flagler County administrator who’d become a key Hosseini deputy in Flagler, then approached Bunnell government, offering to sell it the utility. “This doesn’t make sense,” Hadeed said, since Bunnell’s small size was incongruous with running the utility for so many people.
“So it was an immediate disconnect, right? This doesn’t make sense,” Hadeed said. “And how can they afford it? Well, they worked and they came up with a deal, and I was totally shocked. And their deal was that they would go and get a Department of Environmental Protection loan to acquire the utility and to make improvements. Now, again, with the previous work that I’d done, my familiarity, I knew that the Department of Environmental Protection had never extended an acquisition loan to buy a troubled utility. It gives you improvement loans, but no acquisition. So the people I advised said, you don’t need to worry, they don’t do acquisition loans. Then they had their deal, they talked to DEP and I was shocked. So the deal they agreed to, some of you may know this, was $5.5 million, purchase price. Except that was not the real purchase price.” Hadeed then spoke of providing the additional credits in connection fees, though he said it was Bunnell extending the credits and capping other fees. That lost revenue, however, is the county’s lost revenue now.
“It was a bad financial deal and I advised very much against it. I did that in meetings, public meetings, it’s on the record,” Hadeed said “the board of county commissioners were very concerned about Bunnell taking on this challenge.”
If that’s the case, neither Coffey nor any of the county commissioners spoke of it in those terms at any of the public meetings in 2013, casting Bunnell’s role as Martinez did–as a good neighbor whose help was crucial to get the loan on better terms.
“You’re going to have to make utility investments if you pursue this opportunity,” Coffey told his commissioners in January 2013, a month before they voted to buy the utility, and when the partnership with Bunnell was made clear, but as a financial partnership. “If you’re expecting a plant that’s 100 percent, everything is perfect, you don’t want this deal, because this isn’t it. You’re buying the dealership. You are not buying the cars on the lot, per se. And those plants, the developers has used the facility going back to ’85.” Pressing his point, Coffey said the financing of the deal would be $7 million, a cost the county knew it would bear–not Bunnell.
“I think we’re only going to be financing $7 million,” Coffey said at that January meeting, “because there’s things you can do to keep it at $7 million.”
There was never a mention of Bunnell bearing any of the cost, though there was concern that the costs were only just beginning.
“With all that,” McLaughlin said, “$7 million is still sufficient to make this thing happen. You’re not going to come back to us and say we need to go borrow another million dollars.”
“Well, I’m not going to tell you I’m not,” Coffey said during a meeting when he was clearly and insistently pushing commissioners toward the deal. In that regard, he was right: the costs haven’t stopped accumulating, though had commissioners anticipated that the debt load would be double the financing cost Coffey was presenting to them, they would almost certainly not have approved the deal. (Plantation Bay was just one of many of Coffey’s big deals, many of which went south. The same year, he pushed the commission to acquire the old Memorial Hospital in Bunnell to turn it into a sheriff’s operations center, what became another catastrophic acquisition.)
Hadeed described the PlantatioN Bay discussions of 2013 differently Wednesday: “The commission said, you know, we’ve got to make sure this happens correctly, so they decided to help partner with Bunnell.” He said the county was not the purchaser, which is strictly correct–Bunnell was the owner of the utility in the immediate aftermath of the deal–but it was concerned, “and in the interest of the residents of Plantation Bay, the commission decided that they needed to partner to make sure this didn’t go south, that the utility didn’t go south.”
The county administration’s own timeline of the Plantation bay utility, prepared in May 2019, made no mention of Bunnell leading the acquisition deal. To the contrary. Ehoing articles at the time, the administration’s timeline stated that in the January 2013 meeting, “The Flagler County Board of County Commissioners reached consensus for former County Administrator Craig Coffey to create a partnership with the City of Bunnell to acquire the Plantation Bay Utility System from Mori Hosseini.”
And when Cameron or Sullivan or other commissioners speak of the 2013 deal, all of them acknowledge the county–not Bunnell–overpaid.
Bunnell pulled out in 2015