The Yankee Lake Deal

Even by Florida standards of real estate wheeler-dealers, Jeno Paulucci is awesome. With $126 million worth of property in central Florida's Seminole County, he commands respect—or fear —from local governments and land-use planners. In a startling inquiry into Paulucci's latest venture, three Orlando Sentinel reporters demonstrated how the pizza king and developer pitted city and county governments against one another and parlayed a wilderness of mostly sand and swamp into millions of dollars—all at local taxpayers' expense. 

 

Seminole County — They voted on the deal with Jeno Paulucci at two a.m., but by then it was little more than a formality. The deal had been arranged in two months of private negotiations. The votes had been lined up in closed-door briefings days earlier. Secrecy had guaranteed success. 

The outcome would surprise only the public. 

With four "ayes," Seminole County commissioners bought 2,867 acres of mostly swamp and sand at Yankee Lake from Paulucci for a mammoth sewage treatment and disposal plant, spent $7.5 million on their biggest land purchase ever, and abruptly changed a decade of planning for much of the county's future. 

As they congratulated themselves, the commissioners did not mention that they were taking a risk with public money. Or that they had suddenly elbowed the city of Sanford out of its only solution to a growing pollution crisis. 

They especially did not mention what has since become very clear — that the major benefactor of the deal was not the residents of Seminole County but Paulucci, the county's richest and perhaps most powerful resident. 

Paulucci made $4 million cash on the Yankee Lake deal, more than doubling his money on an 11-month investment. But Paulucci, already with a fortune estimated at $450 million, got something perhaps even more valuable: a government guarantee that he will get all the sewage treatment capacity he needs to develop thousands of acres he controls in Seminole County. 

What led to that early morning vote is a story that, in its simplest terms, is about swamps and sewage, the small city that lost out and the millionaire developer who made still another fortune. 

More than that, it is another chapter in the bigger story of Florida's growth: how politically influential developers often benefit from the way local governments spend public money. 

 

In the first week of August 1985, Jim Bible, the man who runs Seminole County's utilities, met privately with the men who run Jeno Paulucci's development empire at the offices of the developer's posh Heathrow community. 

On its surface, the meeting was only about sewage: a plan by Heathrow officials to build a large treatment plant and the county's objection to it. But the real issues were money and a subtle struggle between Seminole and Sanford for control of utilities in the rapidly growing northern part of the county. 

Paulucci controls thousands of acres of prime real estate in Seminole County, but most of it is undeveloped. Vacant property is worth what can be built there, and little can be built without sewage service. 

In mid-1985, figuring out how to get sewage service was one of Paulucci's major unsolved problems. His solution, and the focus of the meeting with Bible, was a plan to build a plant that could treat five million gallons of waste a day on 60 acres he owns near Interstate 4 and County Road 46A, just outside the northeast corner of Paulucci's exclusive 1,268-acre Heathrow project. 

Bible hated the idea. The plant would be bigger than any of the county's. Just four months on the job, Bible wasn't eager to contend with a large sewage operation owned by the county's most powerful developer. 

What Bible said he discovered was that Heathrow officials weren't so thrilled with their own idea. The plant would cost millions to build. When they began to discuss whether there was an alternative that could satisfy both sides, a deal began to take shape. Paulucci's right-hand man, Roger Soderstrom, would drop plans for the Heathrow plant if Bible would start pushing his bosses for a county-built plant that could service Heathrow and Paulucci's future developments. 

Soderstrom even offered to help. Bible said Soderstrom told him, "We've got a piece of property that might work." Soderstrom explained that Paulucci owned a large chunk of northwest Seminole County at Yankee Lake. And it was for sale. 

The city of Sanford, under threat by state environmental officials, was already trying to get the Yankee Lake property to dispose of its sewage. For decades the city has dumped its treated sewage into Lake Monroe, a 15-square-mile wide spot in the St. Johns River. In 1981, the Florida Department of Environmental Regulation ordered the city to stop. 

If treated sewage can't be dumped into the lake, it must be dumped on land and allowed to soak in or evaporate. Buying enough land would cost millions of dollars, and the city fought the DER order. In late 1983, city officials hedged their bet and began scouting around for property. 

By November 1983, Sanford had hired engineers to check out nine potential sites. By December, the engineers were pretty sure that only one, Yankee Lake, had any chance of working. By the time Sanford was ready to make an offer, Yankee Lake had been bought by Paulucci. But he had no interest in selling the property for a sewage treatment operation that wouldn't serve his developments. 

Instead, Paulucci sold the land to Seminole County for $1.4 million more than the city's highest offer. The county also agreed to provide Paulucci's planned developments with sewage service and to make other concessions the city would not, or could not, make. 

The county did it without the usual — some say essential — appraisals, engineering studies, advance notice and public discussions. In fact, the critics said, the county's actions seemed designed to prevent scrutiny of the deal before it had become a reality, although county officials bristle at that suggestion. 

Even if no laws were broken, what was done and the way it was done raise several issues: 

♦ When the county's and Paulucci's representatives met in a series of private sessions at which they worked out the deal, there was an unusual representative at the negotiating table: an engineer from the same firm that Sanford had hired to evaluate sewage disposal sites for the city. 

The same engineering firm that was persuading Sanford to buy Yankee Lake also was working for Paulucci — while Paulucci was trying to make sure that it was the county, rather than the city, that obtained Yankee Lake. The firm — Conklin, Porter and Holmes Engineers — had inside information that was crucial to the success of Sanford's plans. But the engineers never informed the city in writing that they were also on Paulucci's payroll. State law requires written notice if engineers have a conflict of interest. 

♦ Paulucci's family, companies and associates made political contributions of thousands of dollars to county commissioners' campaigns during the past few years. One commissioner, Bob Sturm, raised more than $20,000 at a fund-raising party at Paulucci's Heathrow Country Club last year. 

♦ County officials might have paid much more for the Yankee Lake property than they needed to. Paulucci was in a position either to take what the county was willing to offer or, within weeks, face a certain condemnation lawsuit by Sanford to take the property. The only firm numbers of the property's value that the county had were two appraisals done for Sanford — the higher about $5.6 million — and a half-finished appraisal the county requested just weeks before it bought the property. 

County officials seem unconcerned about whether they spent too much of the public's money for it. "I know the price of property," Commissioner Bill Kirchoff said. "It looked like a fair enough price for the land." 

♦ Much of the county's reasoning for buying Yankee Lake — that the county needs a huge sewage plant and that one can be built on the environmentally sensitive tract — was based on little more than guesswork. State officials could ultimately kill the project for environmental reasons, a move that would throw a very expensive wrench into the county's plans. 

Jim Hulbert, head of the Florida Department of Environmental Regulation's Orlando laboratory, said he believes that the agency will block any plan that would put wastewater into the St. Johns River. 

 

Since buying the Yankee Lake property 18 months ago, county officials have remained confident they will get the approvals they need to make the project a success — despite concerns like those of Hulbert's. 

County utilities chief Jim Bible said, "The more we find out about the site and its potential for what it can do for us, the more comfortable we are." Which is precisely why the turn of events two weeks ago at a routine hearing shocked county officials. 

The Board of Zoning Adjustment, appointed by the county commission itself, was considering the county's request for the zoning approval needed to build the plant. Compared with the complex environmental reviews by the DER and the St. Johns River Water Management District that are still ahead, the rezoning was supposed to be an open-and-shut issue, almost a rubber-stamp approval of the county's plans. 

Bible gave a brief description of the project and assured the board and the audience that it wouldn't harm the St. Johns and Wekiva rivers. Instead of a 15-minute hearing and quick approval, Bible found himself uncomfortably defending the project during nearly two hours of pointed questions from the public and the zoning board: 

Where were the soil tests and borings supporting the plan? If this was a regional sewage plant, why didn't it include the city of Sanford, which was working on a plan to buy Yankee Lake when Seminole suddenly stepped in to buy it in a two a.m. vote? Had county officials actually refused to turn over documents about the plant to the public? 

In the end, after a brief discussion of the possibility of denying the zoning request, the board voted four to one to delay the decision for 30 days, a delay that Bible had warned could jeopardize the project. 

For Bible and the other top county officials, it was an embarrassing blow. But Bible and other county officials said they are confident that they eventually may be allowed to treat 40 million gallons of sewage a day at Yankee Lake, enough to serve 133,000 homes. 

"I hear those numbers and just say, 'Wow!'" said Bill Bostwick, DER's deputy district manager in Orlando. The county's figures, he said, may be "a lot of wishful thinking." 

By the time environmental studies are done, the county will have spent more than $20 million for land, engineering work and construction of the project's first phase. 

Jeno Paulucci bristles when critics try to characterize Yankee Lake as his deal, or a shrewd handling of the city and county governments to make money, or an attempt to have the county solve his problems at the expense of Sanford and the public. 

Paulucci said those characterizations are lies. His view is perhaps best summed up in a brief note he wrote to County Commissioner Bill Kirchoff, who made the motion to buy Yankee Lake, just hours after the commission had voted for the deal. 

"It was nice talking to you yesterday from Minneapolis, Bill," the note began. 

"I am very pleased that we were able to work this out and that the county confirmed the purchase last night," it went on. 

"To me, and I am sure to you and the rest of the county commissioners, it is living evidence of a very fine working relationship between the county commissioners and the Paulucci family and the Heathrow management. It is this type of cooperation I have always felt has been needed between the private sector and the public sector and you can expect us to continue to cooperate accordingly for the mutual benefit of the general public. 

"Kindest regards, Jeno F. Paulucci."