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Vero, county in new try to settle utility dispute

STORY BY LISA ZAHNER (Week of November 4, 2021)

Vero Beach and Indian River County negotiating teams will make one more last-ditch effort to avoid formal mediation of a dispute involving the city’s water-sewer utility territory, but the outcome will likely be a public declaration of impasse.

After previous meetings proved less than fruitful, Vero Beach sent the county a letter outlining the terms under which it would settle. Those terms included the continuation of a 6 percent transfer of water-sewer revenue from out-of-city customers into Vero’s general fund, and south barrier island residents paying unknown rates – yet to be set by the city’s upcoming rate study.

“City will establish rates that are just and equitable that recover the costs associated with providing utility service,” the letter signed by City Manager Monte Falls and Mayor Robbie Brackett said.

The county had asked for the South Beach customers to be charged county rates until Indian River Shores’ franchise agreement expires in 2027, then for Vero to charge city rates with increases capped at 5 percent until 2032. The county also wants Vero to end its practice of skimming 6 percent of water-sewer revenue off into the city’s general fund.

The two areas where the city and county agree are that all customers should receive the same quality of service whether inside or outside the city, and that Vero would not tack a surcharge onto outside customers’ utility bills.

If Vero and the county cannot come together on rates for south barrier island customers and the transfers into the general fund, the next step would be to hire a mediator to referee the dispute. County Attorney Dylan Reingold said he does not expect to bring a list of mediators to the next meeting with the city’s negotiators – the particulars of that meeting are yet to be set.

“I am sure, however, that the county and the city will be able to agree on a mediator if we end up going to the mediation stage. There are plenty of good local mediators,” Reingold said.

Indian River Shores is closely watching the Vero-county negotiations as they may impact the town’s two utility disputes with Vero – a breach of contract lawsuit in state circuit court and an antitrust lawsuit in federal court.

Upon reading the letter outlining how far away Vero and the county are on settlement terms, Shores Mayor Brian Foley said, “The town has a right to choose who will provide essential water and wastewater services within its boundaries, and the city’s latest offer to the county tries again to avoid free and fair competition.

“The county’s own legal counsel has opined on at least two separate occasions that the prior territorial agreement is not permanent. The county should be wary of the city’s invitation to agree to an unlawful, permanent allocation of customers.”

As for the city’s 6 percent transfers into the general fund, Foley said, “The city’s insistence on transferring utility revenues paid by non-resident customers to the city’s general revenue fund is classic ‘taxation without representation.’ The town will continue to seek to protect itself and its residents from such conduct.”

The Indian River Shores Town Council and the Vero Beach City Council are scheduled to meet in joint session at 10 a.m. Nov. 19 at Indian River Charter High School to try to resolve the Shores’ federal lawsuit against Vero out of court.

With regard to the breach of contract lawsuit in state court, things are moving forward toward a civil trial or other court action. On Oct. 11, the City of Vero Beach petitioned Judge Janet Croom for a summary judgment in the case. Then on Oct. 28 the Shores filed a notice that the town’s attorneys would be deposing Vero Water-Sewer Utilities Director Rob Bolton on Nov. 9.

Indian River Shores must give Vero notice by October 2023 if the town plans to not renew its franchise agreement with the city. Vero has been serving south barrier island customers without a valid franchise agreement for several years.

Together, the Shores and south barrier island residents make up roughly one third of Vero’s utility customers. Vero needs certainty about how many customers it will be serving in the decades to come because the city has committed to build a new utility plant at the Vero Beach Regional Airport and to dismantle the sewer plant on the river.