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Shores says Vero threatens suit over water-sewer

STORY BY LISA ZAHNER, (Week of September 15, 2011)

The head of the Vero Beach water and sewer utility appears to have upped the tension level between the city and the town of Indian River Shores by raising the possibility of Vero suing the Shores over ownership of water-sewer equipment, sewerage lines and other assets within town borders.

While Vero City Manager Jim O’Connor says water-sewer Director Rob Bolton assured him he did not make any remarks to Shores Town Manager Richard Jefferson that could have been perceived as threatening, that’s not the account of their meeting that Jefferson subsequently shared with members of the Shores Town Council.

"They (Vero) threatened to sue us if we go with the county for water and sewer," said Shores council member Jerry Weick.

“I had heard that there was a threat of a potential lawsuit," said council member Dick Haverland said. "My personal reaction based on what I know now is: 'Bring it on.'  Hopefully clearer heads will prevail."

Jefferson confirmed he had met with Bolton, and said that “as for any lawsuits, this is simply Rob Bolton’s feelings and as far as I know no City Council member has indicated the same sentiment."

O'Connor denied that the city was hinting it might take legal action. "We have not threatened,” he said. “There has been no threatening from the city. The ownership of the lines has been a debatable issue.”

In recent months, Vero has threatened, via its staff and advisory commissions, to cut off the reuse water it supplies to the Shores if the town signs on with Indian River County for potable water and sewer services.

The meeting between Bolton and Jefferson where the possibility of litigation Shores came up ostensibly was to discuss the rates the city charges Shores customers for reuse water.  After the two met, according to Indian River County officials, Jefferson called County Utility Director Erik Olson and asked for an urgent meeting.

"Rob (Bolton) quoted a price on reuse water of $1.97 per 1,000 gals. While the county is anticipating a charge of $.65 per 1,000 (gallons) for pressurized reuse per my meeting with Erik Olson," Jefferson said. "The city and county are very similar on water and sewer. It is the difference in reuse I am trying to comprehend.”

Meanwhile, Shores Mayor Tom Cadden said he plans to place on the agenda for next Thursday an item authorizing the town to send a letter to Vero Beach giving the city notice that the Shores will not be renewing its franchise agreement with the city.

The agreement states that either party should give five years' notice should it wish to not renew the franchise. The Shores Town Council has known for more than a year that it would not renew the franchise agreement as written, but the town had not sent the notification letter.

"This doesn't mean that negotiations will stop," Cadden said.

While negotiations between the Shores and Vero Beach have resulted in two agreements that O’Connor sent the Shores last month offering it two different rate options if it would sign on for another 30 years, the new Vero City manager acknowledged that the question of who owns utility assets in the Shores has cast a cloud over the talks.

Town officials had been advised that it was pretty clear cut – ownership of the utility assets reverts back to the Shores at the conclusion of the 30-year franchise agreement that expires in November 2016 – except for a handful of tanks and lines specifically mentioned in the original document.

But that is not the position of city officials. 

As a result, the county has asked the Tallahassee law firm of Nabors Giblin and Nickerson for a legal opinion on ownership of utility assets in the shores as part of its current effort to evaluate GAI Consultants' appraisal of Vero's water-sewer system.

Haverland, who has cautioned his fellow council members not to sign with Vero Beach without a long-term price guarantee, said he's still confident in the town's position on the ownership.

"I believe the infrastructure becomes ours at the expiration of the contract and believe we should be paid a fair price for it – independent of the price we may negotiate for water," Haverland said. "I would be very angry and surprised if it were true that Vero Beach was considering a suit. To date this competition for Indian River Shores’ business has been conducted on a professional level. My personal reaction would be very negative."

The Shores earlier this year was counting on some sort of regional solution taking hold so its Council would not be placed in the pivotal role choosing between Vero Beach and the County for its water and sewer services.

"I happen to believe that the economics of the water business favor the county and Vero Beach ultimately uniting,” Haverland said. He said it is clear from the Vero Beach consultant’s report that the city system could be run more efficiently.

"Between that and the economies of scale that surely exist, it would appear everyone would be better served by a single entity," he said.

It was once thought there were three votes on the Shores Town Council to stay with Vero Beach Utilities. But after this last round of so-called negotiations, it's not so clear which way the Town Council could go.

"A real bone of contention for me is the fact that these utilities are totally unregulated. A far bigger issue is Vero Beach since I have no vote," Haverland said.

Speaking of negotiations, O'Connor offered some advice ¬– welcome or not – to the Shores.

"It would be my recommendation that if Indian River Shores chooses to accept the county offer, that at the end of our contractual period that the City either lease or sell the assets owned by the City to the County," he wrote in an e-mail Sunday. "This would be a negotiated deal between the City and County."