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County, Lindrick Advance Buyout Bid

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By JULIA FERRANTE, The Tampa Tribune

Published: February 12, 2008

NEW PORT RICHEY - The owner of Lindrick Service Corp. and Pasco County officials appear to be closer to deal that would allow the county to buy the utility for a reduced price and defer an additional payment for several years.

Officials confirmed last week the parties have been in discussions but have not agreed on a sale price or ironed out a plan to convert Lindrick's estimated 7,128 customers - measured in "equivalent residential connections" - to county water.

Joseph Borda, Lindrick's owner, has come down on his price, proposing that the county pay $14.5 million upfront and an additional $2 million in 2012, based on the future value of the company. In January 2007, Borda was asking for $18 million, according to a proposal he submitted to county officials then. Borda could not be reached for comment.
County Administrator John Gallagher said he will ask the county commissioners later this month to consider hiring a consultant to shepherd the acquisition of Lindrick and other private utilities.

Pasco officials have been in informal negotiations with Borda since 2003, but the private utility, which was built in the 1950s, has a history or entering into unsuccessful talks with other local governments. Borda's price has fluctuated from as low as $3 million more than a decade ago to more than $20 million after system upgrades.

Pasco officials are interested in acquiring Lindrick and a handful of other private utilities including holdout Aloha Utilities so they may offer consistent service and rates to residents and to boost county assets. The county has bought a handful of other smaller private utilities, including Forest Hills, Betmar and Skyview, in recent years.

One of the sticking points in negotiations with private utilities is that owners usually want compensation for their future growth. Borda, for instance, predicts his company will be worth at least $2 million more in four years because of additional customers and infrastructure, his written proposal shows.

"If they have another 500 lots to be developed, they want credit for that up front," said Pasco County Commissioner Ann Hildebrand, a 37-year Lindrick customer. "We have not wanted to do that."

Bruce Kennedy, the assistant county administrator for utilities, agreed that discussion of "futures" usually stalls negotiations.

"If you pay a price based on some certain revenues and they don't happen, then you have to get that back from the rate payers," Kennedy said. "It's not anything they currently own or have but they think it's out there."

Pat Gorecki, a Lindrick customer since 1987, said she hopes the county and Borda can reach a deal. She said Lindrick cannot handle the growth expected in its west Pasco territory.

"I think the days of having private utilities, small utilities, are over. They are not cost-effective," Gorecki said. "Lindrick has repeatedly not kept its system up to standards. If it stays in private ownership we would repeatedly have our rates raised."

If Lindrick remains in private ownership, customers could face a significant rate increase - up to 28 percent - to help pay for state-mandated improvements to Lindrick's system, Borda's consultant, Burton & Associations said.

By 2010, when Pasco County Utilities customers are estimated to pay $107.08 per month for water and sewer services, Lindrick customers would pay $133.31 per month, a consultant's analysis shows. Lindrick expects to have 7,881 customers by 2012.

Pasco officials argue they can offer Lindrick customers better quality water with fewer service failures at a better price.

Commissioner Michael Cox, who negotiated with Lindrick when he was mayor of Port Richey, said Borda seems more willing to make a deal.

"It looks like it may be getting a little closer," Cox said. "But I've seen more prices from Borda than Carter has liver pills."

Hildebrand agreed "there has been movement" in Borda's price. She did not want to jeopardize negotiations by discussing details.

"There was no confirmation or resolution of the selling price. I don't believe they've come together yet," she said. "This is the same conversation: First song, second verse."

Reporter Julia Ferrante can be reached at (813) 948-4220 or jferrante@tampatrib.com.

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