The SFWMD and Martin County have settled with Lake Point. That’s not bad for me, but it is bad for Florida taxpayers and Florida water resources.
The SFWMD settled after getting a summary judgment from the court in 2016 in their favor on the key issue in the case. Referring to the original agreement between the District and Lake Point, Judge McManus concluded:
“The Acquisition and Development Agreement is not ambiguous and it clearly states nothing about selling water or reserving the rights to sell water. “
Even though the SFWMD had a favorable ruling in 2016, they settled in 2017 agreeing to extend the 20 year mining term to 50 years and to delay any donation of land to the public to 2067.
A SFWMD news release contains the following: "This settlement gets a solid environmental project back on track," said SFWMD Governing Board Chairman Dan O'Keefe.
It’s difficult to understand how a private party commercially mining a parcel for 50 years and then giving what’s left to the District is “a solid environmental project.”
The Palm Beach Post noted that the District did not seem thrilled with the settlement:
Brian Accardo, general counsel for the water management district, said the district just had to “swallow” some aspects of the settlement with Lake Point to end the expensive legal wrangling.
“The exposure in this case was $60 million for the district, but we could settle it by agreeing to buy rock we would have paid for anyway,” Accardo said. “I’d rather buy 50 tons of rock a year than take a chance with a jury and lose.” (note: there was a typo in the original story. Accardo actually referred to 50,000 tons of rock.)
The release claims the settlement “allowed” the District to buy rock from Lake Point at a fair market price. That’s questionable. If you include trucking costs, it gives Lake Point an exclusive no bid contract for 15 years that requires the District to buy rock at a non-competitive price.
Why non-competitive? Because the price set in the agreement is for rock delivered to the District at the Lake Point site. Since the District then has to pay transportation costs to deliver the material to projects as far as 100 miles away, it seems obvious that the cost of giving Lake Point an exclusive contract is going to be much higher than taking bids for delivery at the project site. The settlement requires that, IF the District opts to buy cheaper rock closer to their project, they must pay Lake Point $12/ton for every ton of riprap they don’t buy from Lake Point.
If a court finds the no-bid contract unenforceable in the first year after approval of the settlement, the District will be required to pay Lake Point $19.6 million dollars.
The other big issue in the settlement is whether it allows Lake Point to sell water. Given Judge McManus’ ruling that the agreement between Lake Point and the District had nothing in it about selling water, concerns have been expressed about the possibility that the wording in the settlement sets a precedent that might have consequences for the public ownership of Florida’s water resources.
Unlike the original contract, the wording in the settlement is ambiguous as to whether Lake Point can earn revenue by selling its “irrigation rights.’
Now that the District has established the precedent that they will not fight Lake Point in court, even when they have a judge who has ruled they are right, it seems probable that the interpretation of the wording in the settlement agreement will be left to Lake Point.
The following backup material below includes a link to:
the SFWMD press release
the entire settlement agreement between Lake Point and the District
hi-lighted excerpts from that agreement.
PALM BEACH POST ARTICLE
EXCERPTS FROM THE SETTLEMENT AGREEMENT
LENGTH OF TIME FOR THE MINING OPERATION
Section 3.4(b). Section 3.4(b) remains unchanged except that the reference to a "Twenty (20) year reservation” in the first sentence shall instead refer to a “Fifty (50) year reservation
VI. Lake Point Entitled to All Revenue of any Kind. The Parties agree that Lake Point is entitled to earn and collect all revenue of any kind from any lawful activities or use associated with the Lake Point Property, including without limitation, any revenues associated with mining, farming, lease or sale of Water Storage, Water transfer, Water transportation, Water conveyance, Water use or irrigations rights, or any other rights, benefits, or entitlements whatsoever associated with the Lake Point Property, until such time as the Lake Point Property, or portions of same, are donated and conveyed to the District. After the Property or any portion thereof is donated to the District, Lake Point may use and collect all revenue from that portion of the Property until the end of the Mining or Farming Reservation only for uses associated with: mining, farming, water storage, Water transfer, water transportation, Water conveyance, or Water use or irrigation, unless another use is agreed to by the Parties, and so long as such uses do not materially impair the use of the Property by the District for the purpose provided in the Development Agreement. The District is not obligated to Lake Point to cooperate or assist in obtaining any permits, licenses, entitlements, payment of fees or other costs related in any way with the activities identified above.
REQUIREMENTS FOR ROCK PURCHASES
This is the section of the settlement agreement that deals with the requirement that Lake Point be granted an exclusive contract to sell riprap to the District for the northern part of the District for 15 years. It includes penalties if the District doesn’t need 50,000 tons a year if riprap or buys it elsewhere and if a court finds the requirements unenforceable.
VIII. District Purchase of Material from Lake Point.
The Parties agree to incorporate this section into the Development Agreement as an addendum.
а. The Parties agree that Lake Point shall be the exclusive provider of any specification of Rip Rap material (“Rip Rap' or “Rip Rap Material”) to the District from Lake Point's Mining Activities for the next fifteen (15) years commencing on October 1, 2017 in the geographic area reflected on the map in the attached Exhibit “A.”
THE MAP APPEARS TO INCLUDE ALL OF THE sfwmd NORTH OF THE CALOOSAHATCHEE RIVER AND THE ST. LUCIE CANAL PLUS THE AREA EAST OF THE LAKE TO THE COAST DOWN TO THE LOWER END OF THE ART MARSHALL WILDLIFE REFUGE.
b. The District promises, covenants, and guarantees that it will purchase a minimum of 50,000 tons of Rip Rap Material from Lake Points Mining Activities annually during the fifteen (15) year period referenced in Section VIII.a above. Lake Point promises, covenants, and guarantees that it will sell a minimum of 50,000 tons of Rip Rap Material to the District from Lake Point's Mining Activities annually during the fifteen (15) year period referenced in Section VIII.a. above.
C. If the District does not purchase the minimum 50,000 tons of Rip Rap Material each year (calculated as each twelve-month period beginning October 1) from Lake Point, as described in Section VIII.b. above, then the District shall pay Lake Point at the end of each twelve-month period, as liquidated damages, $20.00 perton for each ton of Rip Rap Material not purchased. Lake Point will give the District a credit of S20.00 per ton against future purchases in excess of the Subsequent year's minimum purchase requirements. The credit described in the preceding sentence shall only be valid for one (1) year following the year in which the purchase shortfall occurred, unless otherwise agreed to by the Parties.
For any twelve-month period, if the District purchases in excess of 65,000 tons of Rip Rap, the District will be entitled to a credit for such tonnage toward the minimum purchase requirements for the next one (1) year following the year in which the excess purchase occurred, unless otherwise agreed to by the Parties.
The District shall pay Lake Point the price of $28.00 per ton for Rip Rap (the “Base Price”). Beginning October 1, 2017, and on each subsequent month, the Base Price shall be adjusted by the Producer Price Index for sand, gravel, and crushed stone, not seasonally adjusted, as published by the U.S. Department of Labor, Bureau of Labor Statistics (the “PPI”) (the “Base Adjusted Price”).
The District shall notify Lake Point of any upcoming District project within thirty (30) days after the completion of the design phase of same so that Lake Point may properly supply the Rip Rap Material.
The District may issue a change order for any contract it has with Lake Point for any project subject to the terms of the applicable contract, but shall be obligated to pay a change fee of $12.00 per ton of Rip Rap not delivered, and shall be otherwise obligated to purchase the minimum tonnage of Rip Rap as provided in this Settlement Agreement.
Lake Point agrees to provide Rip Rap Material to the District that meets the specifications set forth in Exhibit “B.” Prior to each contract for Rip Rap, the District and Lake Point shall agree in writing as to all technical and engineering specifications required by the District for the specific project, and Lake Point shall agree in Writing that it can meet or exceed those specifications. After the Parties agree in Writing that Lake Point can meet or exceed the specifications, if for any reason, after testing for compliance with the agreed upon specifications in Exhibit “B” (as modified herein), the District determines in good faith that the Rip Rap does not meet specifications, the District shall not be obligated to purchase the nonconforming Rip Rap. However, the District shall give Lake Point a reasonable opportunity to cure any failure to meet said technical and engineering specifications for Rip Rap. If Lake Point agrees in writing as to all technical and engineering specifications required by the District for a specific project and cannot perform after an opportunity to cure, the District may purchase Rip Rap from other suppliers and may deduct such tonnage from the minimum annual purchase requirements under this Settlement Agreement. Testing for compliance with the agreed upon specifications will occur at the Lake Point Property as provided for in Exhibit “B.” The District will have a designated production and storage area at the Lake Point Property, separate and apart from other customers and Lake Point production. Once any purchased Rip Rap leaves the Lake Point Property, Lake Point shall have no further obligation or liability with regard to its compliance with any technical or engineering specifications for such specified project.
If the District (1) demands Rip Rap specifications in excess of the specifications of Exhibit “B,” and Lake Point refuses to agree in writing as to those additional specifications required by the District for the specific project; or (2) refuses to accept Rip Rap when (i) the Specific Gravity (standard surface dry basis) is greater than or equal to 2.35 as referenced in paragraph 2.01.B. 1 or (ii) the stone wear, as referenced in paragraph 2.01.B.8 is less than or equal to 42.5 percent (%), the District may purchase such Rip Rap from other suppliers. In such event, the District may not deduct such tonnage from the minimum annual purchase requirements under this Settlement Agreement.
If Lake Point cannot sell Rip Rap for reasons unrelated to any technical or engineering specifications imposed by the District, and the District must purchase Rip Rap from other suppliers, the District may deduct such tonnage from the minimum annual purchase requirements under this Settlement Agreement. Finally, the District shall have no obligation to purchase Rip Rap from Lake Point if mining operations cease, except for Acts of God or War.
In the event this section of the Settlement Agreement is held to be unenforceable by a court of competent jurisdiction for any reason, and after the termination of any appeal or expiration of all appellate rights, the District shall pay to Lake Point the remaining amount due for the remaining life of this Settlement Agreement. For example, if this Settlement Agreement were deemed to be unenforceable by a court of competent jurisdiction one year from the Effective Date of the Settlement Agreement, then the District would be obligated to pay Lake Point money totaling 750,000 tons of Rip Rap multiplied by the Base Adjusted Price. Said payment shall be due within thirty (30) days.
l. For the purposes of this section of the Settlement Agreement, purchase of Rip Rap occurs when and only if it crosses the scale on the Lake Point Property and a ticket is generated for such purchase. Once the Rip Rap has crossed the scale and a ticket is generated, Lake Point will invoice the District the following day, and the District will process and pay the invoice within thirty (30) days.
A copy of the map delineating the area where Lake Point has an exclusive contract can be found in Ex A page 21 on the link to the settlement agreement above.
MARTIN COUNTY SETTLEMENT
Martin County will pay Lake Point $12 million for 400 acres adjacent to the rockpits. Commissioner Ciampi noted that Martin County residents will never be able to use the 400 acres. The market value set by the Martin County Property Appraiser on the 400 acres is a fraction of the $12 million the County is paying Lake Point. If the County fails to close on the property and pay the $12 million by January 18, 2018 they will forfeit a $4 million escrow and be subject to a breach of contract suit.
The County agreed to change the A2 zoning category so that Lake Point could operate a cement plant on the site. The change will apply to all A2 zoning, not just the Lake Point site. If homeowners in A2 zoning object, the County is required to seek monetary sanctions against them.
The County accepted all of the conditions of the District’s settlement that included certain exemptions for Lake Point from County regulations. The County also accepted a reduction in the standard hauling fees for mining operations as well as an amendment to County borrowing rules to allow borrowing $15 million for Lake Point expenses.
Below are hi-lighted excerpts from the County’s settlement agreement with Lake Point.
SALE OF 400 ACRES FOR $12 MILLION
Sale of Acquired Property to the County.
Conveyance and Purchase Price. Lake Point shall convey to the County a portion of the Lake Point Property ("Acquired Property”) pursuant to the Purchase and Sale Agreement, a copy of which is attached hereto as Exhibit B (the “Purchase and Sale Agreement”), which shall be executed by the County Administrator and Lake Point and upon approval of the County Board of County Commissioners shall become effective. The purchase price for the County Acquired Property shall be twelve million dollars ($12,000,000) to be paid to Lake Point via wire transfer of cleared funds on the Closing Date (defined in the Purchase and Sale Agreement). The County shall place four million dollars ($4,000,000) in escrow with Lake Point’s legal counsel, as Escrow Agent, in the manner set forth in the Purchase and Sale Agreement. The deposit of funds placed into escrow shall become non-refundable according to the terms stated in the Purchase and Sale Agreement. Should the County fail to close on the Acquired Property on the Closing Date, if such failure to close is not the result of a default by Lake Point, or otherwise default under the Purchase and Sale Agreement, then, at Lake Point's sole and absolute discretion, this Settlement Agreement shall terminate and become null and void and the Parties shall proceed to trial on the Lawsuit. In order to be effective, Lake Point must exercise its right to terminate within six (6) months of the Closing Date (defined in the Purchase and Sale Agreement). Lake Point's termination of this Agreement in conformity with this article shall not divest Lake Point of the deposit placed in escrow that became non-refundable under the terms of the Purchase and Sale Agreement, and, in such event, Lake Point may pursue enforcement of any and all remedies available to Lake Point arising from the County's breach of the Purchase and Sale Agreement, all of which remedies shall be cumulative and not exclusive. For purposes of clarity, however, if Lake Point defaults under the Purchase and Sale Agreement, the County shall not have the right to terminate this Settlement Agreement, which shall remain in full force and effect notwithstanding any default by Lake Point under the Purchase and Sale Agreement, and in such event, the County's remedies for such default shall be limited to those remedies expressly provided in the Purchase and Sale Agreement.
Closing. The closing of the transaction under the Purchase and Sale Agreement shall occur on January 18, 2018 (the "Closing Date'), time being of the essence, unless this date is extended by the mutual agreement of the Parties.
CHANGING IN ALLOWED USES IN A2 ZONING CATEGORY
Cement, the County will consider proposed revisions to Section 3.412, Article 3 of the LDR's to allow construction of a concrete batch plant on the Lake Point Property, a copy of which is attached hereto as Exhibit D (“Redi-Mix Concrete Plant Amendment'). The County shall expedite the process allowable under the law in order to ensure that the Redi-Mix Concrete Plant Amendment is approved or denied without delay. Should any third party make a challenge to the Redi-Mix Concrete Plant Amendment, the County agrees, at its expense, to move to expedite the consideration and resolution of any such challenge(s) and to seek any and all allowable sanctions against such third-party challenger(s). If the County is successful in obtaining sanctions (including attorneys’ fees and costs) against a thirdparty challenger, the County agrees that it will not waive, forgive or reduce the awarded amount. Lake Point is specifically relying on these representations in order to enter into this Settlement Agreement.