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County clashes with Vero over water and sewer rates

STORY BY LISA ZAHNER (Week of August 5, 2021)

Vero Beach’s announcement that it plans to convert all of its water and sewer customers – those within the city limits, those outside the city living on the South Barrier Island, and those in the Town of Indian River Shores – to a new “one-rate” plan in 2022 has gotten an icy initial reception.

County Administrator Jason Brown and County Attorney Dylan Reingold first heard the news two weeks ago at a meeting ostensibly intended to work out details of a new water-sewer franchise agreement for unincorporated South Barrier Island residents.

Reingold and Brown in June had proposed a deal to gradually transition South Barrier Island water-sewer customers to controlled city rates in 2027 after six years on the county rate structure. In exchange for that, the county would agree not to challenge Vero’s claim of a permanent utility service territory, thereby ending a territorial dispute with the city.

But within the first five minutes of the meeting, it was clear the county-proposed settlement deal was dead.

Vero City Manager Monte Falls announced Vero would “no longer offer rates that do not reflect the cost associated with operating our utility, and we will agree to offer the same rates to all of our customers within our service territory.

“We will be undertaking a rate study to establish rates, fees and charges that are just and equitable, which are based on the cost of operating our utility,” Falls said. “Once adopted, these rates will be implemented for all customers within the service territory.”

That would seem to beg the question of whether Vero intended to honor the rate scheme that it agreed to with the Shores in 2012 to provide the town with water and sewer service through 2027.

“Are you telling me publicly,” Brown asked, “that it is not the intent of the City of Vero Beach to abide by the utility franchise agreement you have with the Shores, not just with reuse rates, and I know that’s a separate lawsuit and I don’t expect you to talk about that, but with regard to water and wastewater rates through 2027?”

To that, Falls reiterated, “we intend on having a rate study and adopting rates, fees and charges that reflect the operating cost of our utility.”

Well, Brown said, “the next concern that I have, honestly, is entering into an agreement with an entity that’s already entered into an agreement with another municipality (the Shores), that you’re just not honoring.”

Regardless of any prior contractual agreements, it’s now Vero’s position that every ratepayer must equally share the burden of paying the $70 million cost of constructing a new wastewater treatment plant at the airport and moving the existing plant off the riverfront. In May, the city’s rate consultant estimated that would require gradual rate increases of nearly $18 per month, phased in over a 10-year period.

Right now, customers in the city limits pay city rates, as set by the city council. Customers in the Shores pay county rates, set by the county – except for reuse irrigation water rates, which are the subject of a pending lawsuit between the town and the city.

South Barrier Island customers also pay county rates, plus a 6 percent fee to the county, but they have no guarantee that those rates won’t increase with a simple vote of the city council because their old franchise agreement expired in 2017, yet service continued.

Indian River Shores’ current franchise agreement was supposed to guarantee county rates until 2027 – terms negotiated by then-city manager Jim O’Connor to stop the Shores from switching to Indian River County Utilities to get better rates.