On the buyout of US Sugar ... by gimleteye

The announcement, last week, that Governor Charlie Crist had negotiated the buyout by the state of 187,000 acres of land owned by US Sugar had the impact of a meteor striking the community of interests surrounding the restoration of the Everglades.

As the dust settles, details of the historic event are emerging. (Click on read more, for The Palm Beach Post story, Saturday)

The entire $10 billion plus plan to restore the remnant Everglades has been shaped to the fact of sugar's existence within and pollution of the historic Everglades. The Everglades Agricultural Area, around the southern rim of Lake Okeechobee, comprises some 700,000 acres of former wetlands: a huge barrier to the connectivity needed to restore water flow to the remnant Everglades all the way to Florida Bay.

The Comprehensive Everglades Restoration Plan was hatched 15 years ago, based on the observed steady decline of the Everglades ecosystem over a period of more than fifty years. Even then, it was a plan based on political expediency; not on what could be done for the Everglades--from the saw grass to Florida Bay and the coral reef.

It was based on what a Democratic president, Bill Clinton, and US Senator Bob Graham found acceptable for political and economic interests marching lockstep according to the profits ginned from growing sugar.

The Palm Beach Post on Saturday begins to get at the back story, orchestrated by a Republican governor who has dispelled the dark shadow cast over environmental efforts by his predecessor, Governor Jeb Bush. The Post concludes that what changed, was "the people".

To be sure, without Governor Crist and his staff-- who had spent years watching a plan unfold that was irredeemable from the very first-- the buyout would not have occurred.

But the 600 pound gorilla in the room, accounting for the timing of the deal, are none of the characters in The Palm Beach Post Story, including Mary Barley and Paul Tudor Jones-- representing the determined defenders of the Everglades.

The 600 pound gorilla is the massive implosion of the growth model in Florida: low density, scattered subdivisions in farmland.

Miami shows the gorilla at work; you can see it from the Florida Turnpike in Homestead: lobbyists joined at the hip with farmers and land speculators--often one and the same-- who minted money in an extraordinarily short period of time-- from 2000 to 2006.

The model was spectacularly effective in chewing up farmland and blocking regulations, ignoring the cost to the environment, of water supply and wastewater, of pollution and toxics. In Miami-Dade County, the commissioners who orchestrated the most devastating impacts are not only still in power, they appear to have a permanent incumbency.

The model relied on a chokehold on the Governor's Mansion. And it is over because it was unsustainable. It is the crash in housing markets that lead executives of US Sugar to conclude that the best time to sell is now.

I am guessing that the insiders in Florida's environmental movement cannot believe this moment has come to pass.

The acquisition of lands owned by US Sugar will throw the governmental mess known as the Comprehensive Everglades Restoration Plan into the trash compactor of history. What might emerge is a re-energized effort based on the common sense plan to create enough contiguous wetlands to actually have a positive effect on the River of Grass.

Still, it is a big "might". There are plenty of details to work out and sore feelings to assuage (including a vibrant community of lawyers, lobbyists, engineering firms, scientists for rent and political sycophants who have made millions from perpetuating conflict over the Everglades).

It is apparent, too, that the deal will require land swaps with the Fanjul family, owners of Flo-Sun. But even the Fanjuls must realize the new economic reality: their dreams of condo farms dancing like sugar plum fairies through the EAA is not going to happen.

Governor Crist finds himself in the curious position of having engineered the most important moment in the history of efforts to restore the Everglades, that could not have happened without the economic hurricane unleashed by the excesses of the "free market". Now, he should move quickly to block incompatible uses in the Everglades Agricultural Area from subverting the last, best chance for the Everglades.




Political pluck, power dovetailed in state-U.S. Sugar deal

By STACEY SINGER

Palm Beach Post Staff Writer

Saturday, June 28, 2008

Standing on his skiff, hedge fund billionaire Paul Tudor Jones II grew
more confident with each cast into the salty shallows of Florida Bay -
snook or no snook.

His goal was more ambitious than catching a few fish. He hoped to
persuade Florida's newly elected governor, Charlie Crist, to loosen
Big Sugar's grip on the agency charged with restoring Florida's
Everglades, the South Florida Water Management District.

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Success would be like catching a 16-pound bonefish, something huge,
and maddeningly elusive under Gov. Jeb Bush. It would mean real
progress toward Everglades restoration. Progress toward a clean and
healthy Florida Bay.

No other governor, not even Big-Tobacco-slaying Democrat Lawton
Chiles, had been willing to tackle sugar in hand-to-hand combat.
Fighting sugar head-on was political suicide. Yet surrounded by
sparkling water and mangrove flats in February 2007, Crist was
receptive.

For more than 30 years, the environmental aristocrats who bankrolled
state advocacy groups have sounded the same theme: Return farmland to
wetlands, so that water can flow like a sheet from Lake Okeechobee to
the Everglades, and finally into Florida Bay, the way nature intended.

Yet farm interests stood in the way, and in Florida government, they
have remained as fixed as the horizon. In nearly 10 years, the plan to
restore the Everglades had never broached a Big-Sugar buyout. All the
more reason that jaws dropped when Crist last week stood side-by-side
with the U.S. Sugar CEO Robert Buker, announcing the largest
conservation land deal in the history of Florida, a $1.75 billion plan
to buy the 80-year-old company's assets.

How that moment came to be has been a mystery to many, from sugar
industry watchers to political insiders. Crist has long had an
interest in the Everglades and has assembled a staff with similar
interests. But the large and complex deal also bears the imprint of
Jones, a top Wall Street expert in commodities markets and a
passionate conservationist who owns a vacation home in Islamorada.

Jones, traveling in Africa, did not respond to e-mailed questions
about his role. But his colleagues and advisers to Crist acknowledge a
relationship has developed between the two, one so close that Jones
reportedly knew of Sugar's openness to sell its assets in November,
several months before the executive director of the South Florida
Water Management District or even Florida Secretary of Environmental
Protection Mike Sole.

Crist's chief of staff, Eric Eikenberg, acknowledged the fishing trips
and phone calls Crist and Jones have shared.

"There is a relationship there that has been formed out of respect,"
said Eikenberg. "They've had multiple conversations since the governor
took office."

Crist is a Republican, and Jones is a top fund-raiser for Barack
Obama, a Democrat. Still, the longtime politician and the liberal
billionaire have much in common. Both found their environmental
epiphany at the end of a fishing pole. Fish don't like dirty water.

And both had crossed Big Sugar before. Jones had seen Crist willing to
vote against the sugar lobby 12 years earlier, back when both men
supported a penny-a-pound sugar tax to pay for pollution clean-up.
Jones had bankrolled the sugar-tax campaign with an $11 million
investment. His devotion to that cause provoked U.S. Sugar's Buker to
tell The Miami Herald in 1996 that Jones was "a cockroach."

"You shine a light on him and he runs away," Buker said then.

The sugar tax try failed.

Tide turns for industry

In the intervening years, both Crist and Jones grew more powerful.
Jones ascended from commodities trader to Wall Street wizard, becoming
one of the wealthiest men in the world according to Forbes, zipping in
and out of about 30 commodities markets and assembling companies, one
of which manages an estimated $20 billion in assets. Colleagues say he
hasn't traded in sugar in 15 years, and they insist he does not have
any financial interest in the debt the state plans to issue for the
purchase.

The 53-year-old father of four has been as devoted to his family, his
recreation and his philanthropies as he is his hedge funds. Married to
Australian model Sonja, Jones founded New York's poverty-fighting
Robin Hood Foundation, and he helped found Miami's Everglades
Foundation, devoted to restoring the environment.

Jones, who was born in Memphis, is an avid hunter and fisherman.

In Greenwich, Conn., he's known for decorating his waterfront mansion
at Christmastime in such an elaborate manner that he must hire
off-duty police to manage the traffic.

In Islamorada, he's known for his ownership of the Coral Bowl, a local
bowling alley that he saved from closure for his children and their
friends in 2000.

Jones got his start trading cotton and earned a reputation as a hedge
fund genius at a young age after predicting the stock market crash of
1987. His environmental awakening came through his Islamorada
neighbor, the late George Barley, who was his frequent fishing
companion. Active in politics, he hedges his donations the same way he
does his investments, becoming one of Obama's top fund-raisers even as
he gave the maximum to Rudolph Giuliani and Mitt Romney.

Crist, meanwhile, skipped like a stone from law-and-order legislator
to attorney general to green governor, thanks in part, to the
half-million worth of Jones' checks to the state Republican Party.

Sugar's star had not risen so high. By last summer, the sugar industry
found itself facing unprecedented challenges. Free trade pressures in
Washington threatened its long-protected federal subsidies. The
black-gold muck that nourished its cane would not last forever, but
there was a backup plan to build hundreds of thousands of homes in
Palm Beach County's Everglades Agricultural Area. The real estate
downturn threatened that plan.

Meanwhile, the company was fighting a bitter and costly lawsuit from
its employee-shareholders. They had learned that the company's board,
dominated by descendants of Charles Stewart Mott, had nixed an offer
that would have given them nearly $100 a share more than U.S. Sugar
told them their shares were worth.

Amid this, a drought and a newly environmentally sensitive water
district board was, U.S. Sugar felt, threatening the dependability of
its water supply.

Two months after his Florida Bay fishing trip with Jones, Crist had
made two key appointments to the water district board: Miami attorney
Eric Buermann was a former general counsel to the Bush-Cheney
campaign, but he also carried pro-environment credentials such as a
membership in the Theodore Roosevelt Society. Shannon Estenoz, a civil
engineer, was a leading Everglades advocate.

Environmental leaders were thrilled with Estenoz and cautiously
optimistic about Buermann. The sugar industry was less pleased,
particularly with Estenoz.

Buermann became chairman of the governing board, with Estenoz as vice chair.

And things changed. There was a time when the water district could be
counted on to allow farmers to recycle their polluted runoff into Lake
Okeechobee when necessary. But when the historically low lake levels
struck last summer, Crist's appointees led the charge in voting
against such backpumping. It made no sense to allow pollution of the
waterways when they were spending billions to restore and clean them,
they said.

"It was the first time they had lost in the 20 years I've been
around," said Tallahassee lawyer and environmental advocate Thom
Rumberger. "They got slapped in the face."

U.S. Sugar's Robert Coker asked Crist for a meeting. In November,
Coker sent two lobbyists, Brian Ballard and Mac Stipanovich, to "help
him better understand our perspective," Coker said, to see that he was
"sensitive to our need for sustainability."

They discussed backpumping, lake levels, court-ordered pollution
controls. Crist ended the meeting by shocking the lobbyists.

"What the governor said was, 'There are a lot of complex matters.
Maybe what we ought to do is just buy U.S. Sugar out,' " Coker said.

Ballard and Stipanovich took the proposal back to Coker.

"I was very stunned. That was not the expectation we had for that
meeting. What we hoped to get out of that meeting was a commitment to
work on issues in a cooperative way," he said.

And yet when the proposals went back to U.S. Sugar's board, it was not rejected.

"When you own something and build something for 80 years, you develop
an emotional attachment to the business and to the land. The
descendants of Charles Stewart Mott, who make up the majority of our
board, have had offers in the past for all or parts of our company and
our land. They never felt it met their criteria," he said.

But Crist's offer had their attention.

"We believe that our company and our board and our shareholders have
gotten two things. We've gotten reasonable fair value - not what we
thought we could have gotten," Coker said. "And at the same time, they
know these lands are going to be used to ensure the future of the
Florida Everglades. I think that's a legacy they were comfortable
with."

At Crist's announcement, a day on which God, Teddy Roosevelt and the
Louisiana Purchase were invoked, Coker found himself shaking hands
with George Barley's widow, Mary, co-founder with Jones of the
Everglades Foundation.

It was a strange moment. Coker and Barley had been bitter political
opponents for decades.

Coker said Crist brought fresh faces to the issue. Diana Sawaya-Crane
had worked for Crist when he was attorney general. He made her a
cabinet aide and designated her an environmental adviser. Eikenberg, a
former aide to former U.S. Rep. E. Clay Shaw, had worked on Everglades
funding in Washington.

Looking for the big 'wow'

Meanwhile, Michael Sole, Crist's new environmental protection
secretary, had regulated pollution and other matters in 17 years with
the agency. Sole had experience organizing state deals to buy and
preserve large tracts of land, including the Babcock Ranch Preserve.

In February, Crist asked all of them to work on assessing the
feasibility and desirability of acquiring U.S. Sugar's land.

"Every day, the concept became more and more, 'Not only is this
viable, but, wow, this is the right thing to do for Everglades
restoration,' " Sole said.

A year earlier, Sole and Eikenberg had sat in a briefing on Everglades
restoration, looking at a map with more than 200 small and complex
projects needed to store dirty farm water and runoff, clean it, and
enable it to flow when needed into the Everglades.

Looking at the map, Eikenberg said he could only shake his head at the
complexity and expense. Water district Executive Director Carol Wehle
recalls how Eikenberg ended that initial meeting.

"He said, 'This is messy and it's complicated, and it's a lot of
little projects. Isn't there some big wow that would move a lot of
this forward?' " Wehle recalled.

Buying U.S. Sugar didn't even enter her mind. It was never on the
table. Eikenberg and Sole said they didn't raise the possibility,
either.

"It never would have occurred to me to say, 'Hey, what if we bought
out U.S. Sugar,' " Wehle said.

That the day had come was as amazing to Wehle as it was to Eikenberg,
Sole and even U.S. Sugar's Buker, who had fought the environmentalists
so hard, for so long.

Asked what had transpired in 10 years of Everglades restoration to
make U.S. Sugar suddenly receptive to selling its assets, Buker, put
it simply: "What changed in 10 years ago from now is the people have
changed."