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Attorney fees in sale of Vero electric mounting

STORY BY EILEEN KELLEY, (Week of December 20, 2012)

The recent increase in what are already bloated electric rates for Vero Beach utility customers comes as the bill for the attorney hired to help sell the utility to Florida Power and Light continues to mount, with legal expenses now expected to run hundreds of thousands of dollars more than originally expected.

When the City Council approved the initial $50,000 to hire the Palm Beach law firm of Edwards Wildman and Palmer 15 months ago, council members were told legal fees to get the city out of its electric contracts and sell the system to FP&L would total about $500,000.

But the cost is already well past that mark and the sale is at least a year – if not more – away from being completed.

The city already has paid $637,865 for the Palm Beach attorneys advising the council on the sale and there is a bill of $155,951 that still needs to be paid. 

Could it be that when all is said and done, the tab will top seven figures?

City Manager Jim O’Connor  – while not eager to speculate on the mounting costs – said he doesn’t anticipate that the bill for the lawyers will double from where it is now but he estimated another $300,000 may be needed before the sale is finally concluded.

“We’ve done a lot of heavy lifting,” said O’Connor.

But there is still much to do, especially when it comes to the Florida Municipal Power Agency. The city is a member of that group and the FMPA must OK any move by the city to get out of legal commitments to buy power.

Should the FMPA have any legal costs that are above and beyond what is typical to run its operations, the city may have to foot that bill as well.

City residents are not the only ones paying the legal fees through their electric bills. More county residents are Vero utility customers than city residents.

O’Connor and Vero Beach Budget Director Cindy Lawson told City Council members Dec. 11 that effective the following day, utility rates would increase 5.8 percent. The increase followed another steep one last January when rates jumped 6.1 percent.

When asked if it’s possible that the rate increase was needed to cover lead attorney John Igoe’s $500-an-hour fees, Lawson said she didn’t look at one particular thing. “I look at total revenue and the expenses that I need to cover.”

Mild winters the last two years – which impacted the city’s ability to generate higher revenues – were part of the reasoning behind the rate increase, Lawson said. Neither Lawson nor Utility Director Tom Richardson could provide Vero Beach 32963 with a projection of how much money the new 5.8 percent increase would generate.

A public referendum will be held on the utility sale in March if the council passes it after a January public hearing.

The wording of the referendum – “Do you approve of selling and otherwise disposing of the City of Vero Beach electric utility and substantially all of its assets?”  – was debated at length by City Council.”

City Attorney Wayne Comment said Igoe insisted “disposing” be in the referendum’s legal language.

After Igoe’s input and comments by City Council members, the referendum language ballooned to more than 50 words.  The ballot question now reads:

“Do you approve of the sale and disposition of the City of Vero Beach electric utility and substantially all of its assets for the purpose of exiting the electric utility business under terms substantially similar to the asset, purchase and sale agreement between the city and Florida Power & Light Company?”