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Utility dispute seems headed to mediation

STORY BY LISA ZAHNER (Week of October 28, 2021)

The Vero Beach City Council is not thrilled with terms Indian River County proposed to settle an ongoing legal dispute over Vero’s water-sewer service territory, and county officials are frustrated that Vero seems unwilling to compromise to strike a deal.

One aspect of the county’s latest pitch would work to Vero’s benefit – the county would agree not go after Vero’s water-sewer customers on the South barrier island and Indian River Shores. But the city does not want to give the county what it wants to gain that assurance.

In order to make a deal, the county wants control over the rates its unincorporated South Beach residents would pay for the next five to 10 years, with no surcharge on top of the regular rates. The county also wants Vero to end its long-standing practice of transferring a portion of the water-sewer utility revenue into its general fund, and to ensure that unincorporated county customers of Vero’s utility get the same level of service as people who live in the city limits.

“We agree on two of those. We agree that there shouldn’t be an outside the city surcharge, and we agree that all our customers receive the same level of service,” City Manager Monte Falls said. “But when it comes to rates, we have been firm in saying that the city should be able to establish rates that are just and equitable to recover the cost of operating our utility. That’s the same manner in which the county sets its rates.”

Falls said it’s also not reasonable for the county to dictate how the city runs its utility business. He said the law allows a surcharge, as does the 1987 franchise agreement with the county, but the city over time agreed to stop charging the outside city surcharge. And the 6 percent transfer into the general fund is the city’s return on investment for owning and operating the utility – all perfectly legal.

“If the county is not interested in the city’s customers, and wants to avoid unnecessary litigation, it should acknowledge the terms of the 1989 territorial agreement, that are consistent with state law, and accept the terms of the franchise agreement that we think are reasonable,” Falls said. “If not, it’s time to stop wasting time and move onto the next step of the 164 proceedings, which is mediation.”

Vero has been serving the unincorporated South Barrier Island residents without a franchise agreement for the past four years after a 30-year contract signed in 1987 was allowed to expire because the parties could not agree on the terms of a new agreement. Vero had begun charging South barrier island customers Indian River County rates, but there is no guarantee that would continue.