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South Beach may vote on water-sewer

STORY BY LISA ZAHNER, (Week of February 2, 2012)

The question of who will provide water and sewer service to South Beach residents may be put to an extraordinary one-precinct referendum with an eye to bolstering Indian River County’s claim that it is entitled to take over those customers in March 2017.

County Commissioner Bob Solari in a Jan. 27 memo proposed that the county consider placing a question on this November’ ballot allowing South Beach residents south of Castaway Cove ratepayers to help determine who provides their utility service.

The county is preparing to fight – or preferably to ward off – a protracted battle with Vero Beach over extricating residents of the Moorings, Sandpointe, Seagrove and other South barrier island developments from the Vero water-sewer system.

Vero Beach city staffers are determined to defend their interest in South Beach, insisting it is a “permanent” territory and have said they’ll only abandon water and sewer service to county residents there if  a court orders them to do so.

 Legal teams on both sides have posed arguments based on Florida statutes and the concept of home rule. If no amicable solution is reached, a court battle looms.

“There are certain State statutes, which suggest that the City could make the transfer of present City customers who live in the County, difficult,” Solari wrote. “I would like to see if the Board would like to direct staff to look into the costs and legalities of having a one precinct referendum – the South Barrier Island – in order to clearly and objectively verify the will of the City’s County customers.”

The matter will be on Tuesday’s County Commission agenda.

Indian River County gave the City of Vero Beach notice long ago that it would not renew the 30-year franchise with the city when it expires in March 2017. The five-year notice was not required until this spring, but it was delivered early for both practical and political reasons.

County officials needed to begin planning the new infrastructure and Vero officials could also figure the reduction in customers and revenue into its capital plans and financial projections. It was also thought the decision might prompt talks about the consolidation of the city and county utility systems under the county umbrella.

Vero Beach hired GAI Consultants’ Gerry Hartman and his attorney Tom Cloud of Gray Robinson law firm for advice. In an April 18, opinion, Cloud pointed to various agreements approved by county commissioners in the 1970s and 1980s that allowed Vero to serve the South Beach customers in the first place.

“I am of the opinion that the City’s exclusive right to provide water and sewer service to the South Beach area exists and will continue to exist unabated whether or not the County’s franchises terminate,” Cloud wrote  in the memo.

Based upon the opinion that the city has a permanent service territory, and therefore a permanent right to serve the South Beach customers, Vero assumes those customers would remain in the system.

Meanwhile, Indian River County hired its own utility lawyers, Nabors Giblin and Nickerson, to analyze the issue. The firm issued an opinion Jan. 13 that disputes the City of Vero Beach’s claim to “exclusive right” to serve the south barrier island.

The position asserting Vero’s permanent territory was relied on by GAI last summer when it placed a value on the city water-sewer utility of more than $100 million.

“We disagree,” said Brian Armstrong of Nabors Giblin. The interests of home rule and the circumstances surrounding the granting of the franchise agreement, he said, supersede any city claims on a permanent territory.

“The county is the single entity with legislative authority, under its constitutional and statutory home rule authority, to designate which entity will serve the unincorporated areas of the county, “Armstrong states, adding that the 1959 franchise law is clear in this regard.

The fact that the county commission in the 1980s needed to grant a franchise, Armstrong states, is proof it had the power to grant a franchise. Armstrong asserts that the county commission still has the power to grant the city a franchise or – more importantly – to not grant the city a franchise.

The county had no established utility system of its own that could serve the South Beach customers in 1987, so the only way at the time to provide utilities to the Moorings and other developments was to sign with Vero. The county charter, backed up by the 1959 franchise law, gives commissioners the power to grant such franchises, the lawyers argue.

GAI has valued the utility assets on the south barrier island at just under $10 million – a sum Vero expects the county to pay in the event the city ever does turn over the South Beach area.

What if Vero refuses to negotiate a deal with the county for the utility assets so the county can serve its residents come 2017?

Armstrong said the county has the right to condemn the assets and take them.