Sweeeeeet! Well, Not Exactly For One CU In The Everglades
Your disaster plan has no doubt gotten much more detailed and sophisticated in a post 9/11 and Katrina World. Those run-of-the-mill disasters, fires and floods and tornadoes? You're ready. The slightly more exotic but increasingly common internal threats? You've put new procedures in place and updated your insurance. And those supposedly once-a-century disasters and terrorist attacks? You aren't waiting 100 years to get your act together.
What about this threat? Say your state government swoops into town and announces a surprise deal to buy not just the one company in a one-company town that your CU serves, but much of the land surrounding it. And here's the best part: the plan is to turn all of it into swamp! Have a contingency plan for that?
Everglades FCU in Clewiston, Fla., is dealing with just such a scenario. It's is in the heart of South Florida's sugar country, and in a not-so-sweet announcement for some, the state of Florida announced a surprise deal to buy U.S. Sugar Corp. and its 187,000 acres of land for several-billion dollars.
It's all part of an enormous effort by the state and federal government, which is spending billions of its own, to reverse damage done to the Everglades by a century of farming and development. The rich "muck" and year-round sunshine yields large crops of sugar and vegetables, and it worked out pretty nicely when farming and sugar interests needed to drain all that water to get to the muck and well, what do you know, water was just what was needed by Snow Bird retirees moving into those condo farms along the coast--and now it's all mucked up.
It wasn't long after the Everglades began to be drained in 1905 that small towns began to take root where once only Native American tribes had ventured. In 1920 a Tampa banker, Alonzo Clewis, helped to establish "Clewiston" and it became the home to U.S. Sugar. Like steel and autos in some northern cities, Clewiston became a company town. U.S. Sugar helped pay for a library and a golf course. A sign outside of town proclaims Clewiston "America's Sweetest Town." There's the Sugarland Highway. Athletic contests are held at Cane Field.
While some grew to become multi-millionaires from sugar, most in Clewiston and surrounding towns have not had it so sweet. It's a working town and one in which its $29-million credit union has played an integral role since it was founded in 1985. The credit union has as much a stake as anyone in how the purchase of U.S. Sugar by the state plays out.
"We've not had any knee-jerk reaction. We're being very cautious," says Everglades FCU CEO Linda Pelham. "We are going to continue to serve our members as best we can. If we could just get some definitive answers (from the state) that would help a great deal."
Pelham and EFCU aren't alone with their questions. The only ones to make more money from the Everglades than the sugar producers are the attorneys for the various parties challenging the restoration plans. And the only thing that moves slower than the River of Grass is the Everglades clean-up, and Pelham noted it could take "years" for all the lawsuits to work their way through the courts. Still, she acknowledges the state's announcement has caught many folks here off-guard.
"We were shocked," said Pelham. "Would I say it was a total surprise? I wouldn't say it was 100%, as the company has been positioning itself for some time to do something. It is facing a big lawsuit by ex-employees, so there had been a lot of speculation. But the deal with the state of Florida was a surprise, as the company has had to deal with a lot of (environmental) rules and regulations. Don't get me wrong-I'm all for the environment, but not when it comes at the expense of a community."
Pelham said Everglades FCU has actually been preparing for some sort of change for years. It went to a community charter in 2002 on "the off-chance that something like this might happen."
An analysis the credit union has done showed 14% of its outstanding loans are tied to U.S. Sugar, the local citrus industry, or the CSX Railroad that serves both. Reminded Pelham, "That means that 86%" of its loans are not tied to the big three.
"We had a board meeting the day after the June 24 announcement," she said. "What we really need is concrete information to make decisions. We're not going to stop lending. I would say that 'cautious' is the word to describe us. As part of our community charter, a section of our disaster plan does deal with the plant closing. We didn't want to be tied into just that one group."
Whatever occurs, it won't happen quickly. U.S. Sugar's contract with the state of Florida allows for at least another six years before any closing occurs. That leaves Everglades FCU time to deal with other issues.
"Knock on wood we have had no foreclosures," said Pelham. "But the real estate market is terrible. When the bubble popped, it popped big. We do have mortgages available, it's just that no one is coming in for them. People just do not want to enter into any long-term debts, and I don't blame them. We lost two (mortgages) the week of the announcement."
Other types of loans have "picked up," however, and Pelham said EFCU had a "decent" July." I would say we're encouraged," she said.
Frank J. Diekmann can be reached at fdiekmann