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Shores nearing key water-sewer vote

STORY BY LISA ZAHNER, (Week of January 26, 2012)

The city of Vero Beach and Indian River County made their final pitches to the town of Indian River Shores Monday for more than $100 million worth of water and sewer utility business over the next 30 years.

At the conclusion of the meeting, no decision was made, but at least the town knows what’s clear and what’s still negotiable.

Rates are somewhat of a no-brainer – the Shores would either get county rates from the county or county rates from Vero. Most residents would be better off, condos would benefit the most and only very large consumers of water would pay more than they do now.

The winner of the franchise would collect a 6 percent fee that would fund either Vero’s city or Indian River County’s government functions.

The two items still in play are ownership of the pipes, pumps and tanks within the town limits – both now and at the end of the 30-year agreement – and how best to ensure all the communities in the Shores get adequate quantities of reuse water at a fair price.

The reuse issue, on the Vero side at least, has a great deal of moving parts, which the city has crafted into a new three-tiered rate. Vero has individual contracts with gated communities in the Shores, and charges different rates depending on how and where the reuse water is delivered and who gets billed for it.

As those contracts expire, Vero is offering to negotiate new ones at rates characterized by Mayor Tom Cadden as “exorbitant.”

Vero Beach City Manager Jim O’Connor explained to the Shores council and the 16 members of the public present that renewal of those reuse water contracts is not being actively pursued by the city pending the Shores’ decision on the water-sewer franchise agreement.

“We would renew the contracts if they want to negotiate a renewal rate,” O’Connor said. “It is our intent that we adopt this three-tier structure if the Town of Indian River Shores takes us on for water, sewer and reuse.”

Cadden said it shouldn’t take a new franchise agreement to get current customers – like Bermuda Bay which has been getting reuse water for 20 years from Vero – a deal on irrigation water. He said that no matter what, Shores communities will be utility customers of Vero until November 2016.

“I treat this as a fairly hostile movement,” Cadden said. “Why would you not let Bermuda Bay sign a five-year agreement with you?”

Councilman Dick Haverland underscored how important reuse water is to the Shores and how Vero, in his opinion, has failed to respond to the town’s needs by making a proposal that’s much more expensive for the treated wastewater commodity.

“Your offer appears to be grossly non-competitive – $6 million more per year – and at the end of the contract, you say you want the infrastructure to be yours,” Haverland said. “On the surface, it appears you have no interest in retaining our business.”

O’Connor said Vero needs an answer from the Shores soon so the city can chart a course going forward.

“What we’re trying to do is plan for the future and these franchises allow us to do that,” he said.

County Administrator Joe Baird emphasized that the county utility is financially stable – with $246 million in assets, including $60 million in cash – and would not need to adapt its management to whether it added an additional few thousand customers in the Shores.

But he said adding the Shores would afford the county additional economies of scale, which could reduce rates for everyone on the county system.

That statement underlined what’s really at stake in the decision that rests on the Shores Town Council: whether Vero Beach will be able to keep its own water-sewer utility going forward. Indian River County Utility Director Erik Olson ventured to say what many were probably thinking.

“What I would hope would be, that this would be the catalyst toward working towards regionalization,” Olson said. “Logic tells me that if the town would make the decision to go with the county, it would be the catalyst to get us to work together.”