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Shores goes for quick savings on water, but uneasy over Vero plan

STORY BY LISA ZAHNER, (Week of February 23, 2012)

While the Indian River Shores decision Monday to stick with the City of Vero Beach as its water and sewer services provider came as a big disappointment to those who hoped a vote the other way would have all but forced Vero to sell the utility to Indian River County, Town Council members made it clear they still favor water-sewer regionalization.

“I’m one of those believers who think we really ought to regionalize, but I don’t think the citizens of this town should be the mechanism to get the two parties to negotiate,” Councilman Mike Ochsner said.

Instead of voting to switch to the County as its water and sewer service provider and waiting for 2016 for the savings to kick in, the Shores Council voted 4-to-1 to negotiate a new 30-year deal with Vero Beach – which will result in lower rates starting Oct. 1 – even though several council members think there is little likelihood that Vero can deliver on its promises without bankrupting its utility.

Under the deal on the table, Shores utility customers who get their water and sewer services from Vero – depending upon the final plan that’s chosen and approved by both the Town Council and the Vero Beach City Council – will get either a 10 percent reduction from current city rates or a decrease that will match county rates.

The vast majority of residents who use the “average” of 6,000 to 8,000 gallons per month would see a reduction somewhere in the neighborhood of 20 percent after the county rate structure is applied.

Condominium residents would benefit the most from county rates, as their bills would go down by 30 percent or more. Water-sewer customers with moderate to low use could see reductions in monthly bills in the 30 percent range as well. Very large users of water in the 12,000 gallon per month range and up could see an increase in their monthly bills.

The Shores will also as of Oct. 1 get low county reuse water rates of 67 cents per 1,000 gallons of the gray, irrigation water that in recent months has become like gold on the bargaining table.

It’s still unclear what the rest of Vero’s water-sewer customers will pay Oct. 1, as City Manager Jim O’Connor would not commit to switching the whole system over to county rates.

Central Beach ratepayers and mainland city customers could get stuck paying higher city rates. South Beach customers could get their current 10 percent surcharge jacked up to the 25 percent that Vero Utility Director Rob Bolton said last year the city was allowed, by law, to charge.

No one knows exactly how Vero City Manager Jim O’Connor, water chief Rob Bolton, and Finance Director Cindy Lawson will make the numbers work. And Shores officials don’t really care.

“The financial condition of the city is their problem,” said Shores Councilman Jerry Weick.

If the Shores chooses the county rate option from Vero, Weick’s statement is the truth.  Vero would need to match county rates even if the utility was bleeding cash.

But Mayor Tom Cadden has touted the Vero rate minus the current 10 percent surcharge as potentially a better deal than county rates. Signing on for Vero rates – which the city hopes to keep stable through an elaborate optimization plan proposed by GAI Consultants – would tie the Shores rates to the ability of Vero officials to manage their utility.

Mayor Pilar Turner has said that she will not vote for a final franchise with the Shores that does not make sense financially for the city as a whole.

Turner also said that she will not vote for the franchise contract if city staffers cannot produce complete and accurate long-term financial modeling of the plan in a timely manner.

County Administrator Joe Baird and his staffers walked away from the Monday meeting obviously disappointed, but also somewhat bemused by the Shores decision and at the task now before O’Connor and Bolton to make the numbers work.

“The Vero Beach City Council is now going to be faced with approving a 30-year deal that’s based on absolutely no financial analysis,” Baird said.

Baird also said that should the city not be able to offer all its customers – mainland, city beachside, South Beach and Shores – the same deal, it will be a political hot potato for three City Council members who face re-election in November.

Vero Utility Commission member and former Councilman Brian Heady said he was more than a bit befuddled at the way the Vero proposal – with its many financial concessions to the Shores – was fast-tracked through at City Hall.

“I just don’t get it. On Vero’s side, they don’t ask the Finance Commission, they don’t ask the Utility Commission. The city manager decides what the deal is going to be and that’s what it is,” Heady said. “It certainly doesn’t do anything to encourage people to be actively involved, because they’re not going to accomplish a whole lot. The city staff still just kind of does things.”

Heady said he’s amazed O’Connor, who was hired by the previous council with the mission of divesting the city of its utilities and streamlining the government, seems bent on doing just the opposite.

“The governing bodies are not about to allow the sacred cows of the utilities that have been the sources of income to disappear,” Heady said.