Discussion of the U.S. Sugar Option

Governing Board Meeting May 14, 2015

Presentation Outline

Introduction and Overview of Contract Steps Required for Acquisition Agreement Terms and Conditions Ongoing Restoration Efforts Project Location Characteristics Governing Board Questions and

Discussion

2

Terminology Definitions

Second Amended and Restated Agreement = 2010 Purchase Agreement Lease Agreement = Lease Exclusive 3-Year Option (expired

October 11, 2013) = 2013 Option Initial Non-Exclusive Option = 2015

Option Non-Exclusive Entire Option = 2020

Option

3

2010 Purchase Agreement

4

October 12, 2010 - SFWMD purchased 26,791 acres for $197,396,088

Legend 2010 Purchase Agreement – 26,800 acres 2015 Option – 46,800 acres 2020 Option – 153,000 acres

2015 Option

5

• 46,800 acres to be acquired at fair market value

• Expires October 11, 2015

Legend 2010 Purchase Agreement – 26,800 acres 2015 Option – 46,800 acres 2020 Option – 153,000 acres

2020 Option

6

• 153,209 acres to be acquired at fair market value

• Expires October 11, 2020

Legend 2010 Purchase Agreement – 26,800 acres 2015 Option – 46,800 acres 2020 Option – 153,000 acres

2015 Option

7

2015 Option Lands - 46,800 acres

Legend 2010 Purchase Agreement – 26,800 acres 2015 Option – 46,800 acres 2020 Option – 153,000 acres

Steps Required for Acquisition

Ben Ward

Process for Exercising the Option

Section 26.a Purchase Agreement - SFWMD sends notice of exercise of option Section 26.d Purchase Agreement – SFWMD

submits appraisal of proposed purchase price as part of notice of exercise of option US Sugar may obtain its own appraisal

9

Real Estate Data for Valuation

Items needed to exercise the 2015 Option Real Estate Title Mapping/Legal Description Environmental Inspections Cultural Resources Appraisals (2) Appraisal Review

10

Valuation Challenges

Complete for October 8th Governing Board meeting Expedited schedule for all services Typical completion timeframe 120+ days for

appraisals Valuation determination will be conditioned

on a number of assumptions Services costs: $500K-$1M

11

Agreement Terms and Conditions

Tom Teets

12

Funding the Acquisition

Section 26.o 2010 Purchase Agreement - Buyer must have funds available to close and that there will be no contingency in the Sale and Purchase Agreement on the District obtaining financing to obtain such funds Cost estimate for land purchase: $500-700M

13

Lease Agreement

Section 3 Lease – 2015 Option lands are subject to a 20 year leaseback to U.S. Sugar

14

Lease Agreement

Section 4.F (1) Lease - SFWMD can terminate 10,000 acres of cane land in the first ten-year term and an additional 10,000 acres of cane land in the second ten-year term. • 2010-2020 – 10,000 acres • 2020-2030 – 10,000 acres

15

Lease Agreement

Section 4.F (2) Lease - SFWMD has terminated ~8,700 acres in the STA-1W land exchange • ~1,300 acres remain of the 10,000 acres in the

first ten-year term 11,300 acres available in the first 20 years

16

Lease Considerations

Section 4.F (10) 2010 Purchase Agreement - U.S. Sugar does not vacate until project construction actually commences • Section 4.F (8) Lease - The District must

provide two successive one-year notices that it will use the land for a District funded project approved by the Governing Board to be constructed on the land or in exchange for land on which a project is to be constructed

• Section 4.F (10) Lease - Notwithstanding such notices, U.S. Sugar may still continue to farm the Leaseback lands until the District determines that continued farming is incompatible with project construction on the Leaseback lands or project construction on the exchange lands

17

Lease Considerations

Section 22 Lease - Land Exchange • Option Lands are managed as part of the

larger land holdings of U.S. Sugar • Any Option Lands that are exchanged will need

access, drainage, and irrigation rights over other U.S. Sugar property

• Major road and other infrastructure improvements will need to be developed on the Options Lands since U.S. Sugar relies on rail transportation not available to exchanging party

• The Lease only requires that U.S. Sugar vacate the Leaseback lands at one time and not on a field by field basis

18

Use of Eminent Domain Section 26.l 2010 Purchase Agreement

SFWMD represented that it did not intend at the time to acquire the 2020 Option Property (153,200 acres) by condemnation If SFWMD condemns any portion of the 2020

Option Property during Option Period (ends October 11, 2020), the entire 2020 option is automatically exercised unless U.S. Sugar notifies SFWMD it will terminate the Option but without waiving any rights or remedies with respect to breach

19

Ongoing Restoration Efforts Tom Teets

Proposed land acquisition is not part of a cost-shared CERP project For any project to become CERP cost share

eligible • Follow the CERP planning process • Receive authorization and appropriation from

Congress If the project and land are not identified as a

cost-effective selected alternative, the CERP cost share could be jeopardized

Relationship to CERP

21

Relationship to CERP

Impact to ongoing CERP projects • Reduces or eliminates state funding for CERP

projects currently being implemented thus delaying projects and associated benefits

• Could require projects being constructed by Corps of Engineers to be delayed due to lack of SFWMD cost share

Loss of momentum implementing and deriving benefits from projects under construction or ready to go to construction

22

Project Location Characteristics

Jeffrey R. Kivett

Project Specific Site Characteristics

STA 3/4

STA 5/6

A-2 FEB

A-1 FEB

Option Land

Railroads

Power Lines

STA 2

24

Utility and transportation relocations Embankment

lengths Depth of

organic soils on the site

Power Lines

Option Land

Railroads

County Road

Removal Replacement Transmission Lines 7 Miles 14.5 Miles

Railroads 20 Miles 23 Miles

County Road 3.4 Miles 3.4 Miles

Utility and Transportation Relocations

District is responsible for relocation of infrastructure

Responsibilities include cost for removal of utilities as well as installation of replacement services

Siting of relocation must be on purchased lands, reducing available acreage for the project

Estimated cost of $50 million

25

US Sugar Option 1

Embankment Lengths

To utilize all 25,000 acres 33.3 miles of levee required

• Square reservoir same acreage has 25.6 miles of levees

• Rectangular reservoir of same acreage has 27 miles of levees

Due to irregular shape only ~21,000 acres of the 25,000 acres can be used cost effectively

Building in two phases would add approximately 5.5 miles of levees

One mile of levee costs approximately $30.5M 26

Reservoir requires construction on stable foundation

All organic soils need to be removed

Each foot of soil removed has to be replaced with a foot of select fill

Site contains ~5-8 feet of organic soils 27

Depth of Organic Soils

Land Availability and Cost Summary

Acquire 46,800 acres Design project on ~25,000 acres

• Cost effective project area ~21,000 acres 11,300 acres available until 2030

Cost Estimates

• Real Estate: $500K-1M • Land purchase: $500-700M • Project: $2.5B

28

Governing Board Questions and Discussion

Additional information regarding the Contract may be found at http://sfwmd.link/USSCPurchaseDocs