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Shores’ last-ditch utility appeal goes nowhere in court

STORY BY LISA ZAHNER (Week of October 26, 2023)

The Florida Supreme Court has declined to hear the Town of Indian River Shores’ last-ditch appeal of a 2020 breach of contract lawsuit against the City of Vero Beach over utility rates, so Shores leaders will continue to pursue two other avenues for eventual rate relief.

First is the town’s looming April 1, 2024, deadline to give Vero Beach formal notice whether the town plans to renew its 15-year water-sewer franchise agreement with the city for another 15 years in 2027.

Renewing would presumably lock the town into 15 more years of financing the city’s plans to relocate its wastewater treatment plant operations from the current site on the Indian River Lagoon to the Vero Beach Regional Airport.

Getting out of that agreement means finding an alternative service provider to step up and be ready to take over by Oct. 1, 2027. Shores staff and council members are actively negotiating with top Indian River County managers in an effort to broker such a deal.

“We were always focused on the town’s options both before and after the April 2024 notice date. The Supreme Court hearing the appeal was merely one option,” Foley said last week.

Second, town staff and council members will try to build upon relationships they forged in Tallahassee during the 2023 legislative session to bring municipal utilities like Vero under state regulation.

Last year, legislators took an interest in the plight of utility customers outside the city limits who are indirectly taxed through large general fund transfers. No wide-reaching changes were made last year as lawmakers opted to target Gainesville Regional Utilities’ practices as a test-case for fiscal reforms.

Gainesville is widely seen as the most egregious case of using outside utility customers’ dollars to fund general government functions, and Alachua County’s state House Rep. Chuck Clemons led the charge, and Gov. Ron DeSantis has replaced members of Gainesville’s utility governing board with his own appointees.

Clemons and his committee invited Indian River Shores officials to the state’s capital to speak on the issue in March, before the Shores’ petition for redress of the town’s grievances was rejected by the 4th District Court of Appeals – and before the Shores tried to convince the Florida Supreme Court to take up the case.

“No motion for rehearing will be entertained by the court,” the Oct. 12 Florida Supreme Court denial stated, closing the door to the state’s top appellate venue.

Now that all avenues for judicial remedy have been exhausted, legislators might be more inclined to act in the upcoming 2024 session, Foley said last week. In other words, if the law currently on the books renders a valid utility franchise agreement worthless, maybe it’s time to change the law.

Vero’s legal team led by City Attorney John Turner and outside counsel from the GrayRobinson law firm has long held that Circuit Court Judge Janet Croom correctly ruled in the city’s favor granting summary judgment in the case, based upon Vero’s statutory power to set its own rates – rates sufficient to cover the cost of providing the utility service plus a fair rate of return.

Those rights clashed with a clause in a 2012 franchise agreement whereby Vero promised to charge Indian River Shores customers Indian River County rates. In January 2020, after abiding by that agreement for more than seven years, Vero decided it would no longer be bound by rates set by another governing body. The Shores had hoped the Florida Supreme Court might intervene in defense of the utility franchise agreement, based upon a 1955 precedent-setting utility case.

“I am disappointed with the Florida Supreme Court’s decision not to hear the appeal. The town will continue with its concurrent strategies of pursuing legislative solutions and seeking in earnest an alternative supplier of water and sewer service to evaluate a change at the soonest feasible time,” Foley said.

“I would also reiterate that the ever-escalating cost of the City of Vero Beach’s plan to relocate the water treatment plant will undoubtedly lead to excessive water service costs for its customers. Currently acknowledged to now cost at least $250 million with debt service, we believe the cost will be even higher than Mayor Cotugno’s latest estimate if the project is completed,” Foley said.

Initial estimates said the plant might cost $82 million, plus $74 million in financing costs over 30 years for a total of $156 million. Vero has not yet gone out to bid on the project, but in anticipation of debt service payments, the city imposed double-digit water-sewer increases on Jan. 1, and again on Oct. 1.

“Indeed, the city has consistently lowballed the cost of the relocation project. This is reminiscent of the higher costs to City of Vero Beach residents and utility customers before electric service was transferred to Florida Power & Light.”