TALLAHASSEE -- South Florida's steep drop in property values threatens to claim another victim: the governor's $1.34 billion plan to buy U.S. Sugar Corp. land for Everglades restoration.

Property values are expected to drop 12 percent statewide in the 2009-10 budget year but in the 16 counties that make up the South Florida Water Management District, property values have dropped at least 14 percent, early state estimates show.

It raises the question of whether we can ''afford this deal,'' said Sen. J.D. Alexander, the Lake Wales Republican who is the Senate budget chief and a vocal opponent of the $1.34 billion proposal.

The water management district draws much of its annual budget from property taxes on the 16 counties it oversees, including Miami-Dade, Broward, Palm Beach and Monroe. Without the expected tax revenue, district officials acknowledge they may not be able to afford the estimated $100 million in annual debt payments to bankroll the deal. ''I'm deeply concerned,'' said Shannon Estenoz, vice chair of the South Florida Water Management District's governing board. ``There is just an irony about this. It's the best land to buy at the worst possible time.''

But Gov. Charlie Crist, the architect of the deal, said Monday that he hopes the declining property values won't interfere with his ambitious plan to buy up 180,000 acres of U.S. Sugar land. If it does, he is open to considering other options. ''There may be a way to sort of modify it to save some money in light of [declining tax revenues],'' Crist said.

Among the options the governor's staff and water management district officials are considering is a plan to scale back the deal by allowing other property owners, such as Florida Crystals and other yet-to-be-named parties, to purchase the sugar mill and other pieces of land that the state buys from U.S. Sugar.

The deal would involve a transaction that allows the state to buy the U.S. Sugar property and then simultaneously sell parts of it.

''Because of the economic conditions today people are raising a lot of questions about whether you want to do this deal,'' said Robert Coker, vice president of public affairs for U.S. Sugar. ``It's forcing a lot of people to go back and be as creative as they can to find ways to get that goal accomplished.''

At Estenoz's behest, the governing board inserted a financial ''out'' clause when it approved the $1.34 billion contract with U.S. Sugar in December, cautioning that the state's deepening financial crisis could undermine the agency's ability to close the deal. The board can withdraw the offer if financing the purchase threatens to bankrupt the agency's budget or gut ''core'' operations.

State economists meeting at the Revenue Estimating Conference last week concluded that property values throughout the state will drop 12 percent in the next budget year.

The Herald/Times analyzed the economists' data and found that, if the numbers are correct, the 16 counties of the water management district should expect a 14 percent drop in property values in the 2009-10 budget year.

That would reduce the district's total ad valorem revenue value from $522 million in 2008-09 to $449 million. In the previous year, the district's property-tax revenue dropped only 5 percent.

Estenoz, who did not attend the Tallahassee hearing, said the decision about whether to pull out is up to the board. All but one of eight were appointed by Crist, who has championed the deal.

Once the agency has final revenue numbers and credit costs, she said board members would have to weigh any trade-offs before deciding whether to close the deal. ''I don't think we can answer the question yet,'' she said.

The district has until Sept. 1 to sign off on the deal that will enable the state to purchase 30-year bonds. County tax collectors have until July 1 to certify the final property values.

Staff writers Marc Caputo and Steve Bousquet contributed to this report.

Mary Ellen Klas can be reached at meklas@MiamiHerald.com

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