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Shores water decision awaits new Vero study

(Week of June 2, 2011)

First Indian River Shores had a water-sewer proposal from Vero Beach but none from Indian River County. For nearly six months former Mayor Bill Kenyon and then Mayor Tom Cadden waited for the County proposal, even pleading for something on paper to consider.

The County made its pitch last week, offering the Shores regular County rates and access to reuse water, with or without a successful deal on a consolidated utility.

The County would take over the Shores utility assets and absorb the costs of connecting the Shores to the County system.

The proposal seemed to go over well with the Town Council and not one member had any major objections to the terms.

Overall, Indian River County water rates are lower for all but the largest consumers of water and County sewer rates are significantly lower than Vero Beach.

So the Shores can finally make a decision, right?

Wrong. Now there’s no valid proposal from Vero Beach.

The new Vero Beach City Council won’t stand by the proposal it agreed to in concept last year.

Instead, it’s hired GAI Consultants to do an appraisal of the water-sewer system and to do an “optimization study.”

It has also tasked the staff with crunching some very important numbers related to projected rates for the next five to ten years.

That will take a few months and will cost Vero Beach ratepayers – not taxpayers, but water-sewer ratepayers, including Shores and South Beach customers – a whopping $173,000.

The bottom line is that the Shores is back to square one, playing the waiting game.

When asked why the Shores couldn’t just vote to approve the County proposal if it seems like a good deal, Town Manager Richard Jefferson said the Town would wait for GAI to finish its work – however long that takes -- so the Shores can consider a revised proposal from Vero.

Presumably, a voting majority of the Town Council could press the issue and demand that the County proposal to be placed on an agenda for an up-or-down vote this summer, but that would go very much against the wishes of Mayor Tom Cadden, who has long made it clear he feels the Shores should stay with Vero.

GAI Consultants Vice President Gerry Hartman, who also worked for the Shores last year when the draft proposals were being drawn up, also advocated that the Shores stay with Vero Beach.

The tempting thing about staying with Vero would be that the Town would get out of the current 30-year franchise agreement five years early and have the 10 per cent water-sewer surcharge residents currently are paying removed.

That would save Town residents about $300,000 per year immediately.

The downside to staying with Vero is the uncertainty about what might happen to rates, especially if the County pulls its South barrier island customers off the city system in 2016.

Rate hikes imposed by Vero could, in the long run, cost the Shores a lot more than $300,000 per year.

Indian River County rates have not gone up since 1999 and the county staff has stated repeatedly that there are no plans to raise rates for at least the next five years.

Having the Shores on the county system would help provide additional economies of scale that should keep county rates low.

County Administrator Joe Baird went so far as to say that a three-year rate guarantee for the Shores would be acceptable to the County.

Though future rates are the biggest question mark in staying with Vero, another unknown rests in troubling and wholly unsubstantiated statements made by Mayor Jay Kramer.

Kramer has bragged about getting an offer from a private company to buy the Vero system for $50 million. On another tangent, Kramer has also proposed setting up some sort of “utility authority” to be run by a for-profit entity.

Additionally, the Vero Mayor has advocated shrinking the city’s utilities and just serving the area inside the Vero Beach border.

This concept may be the only one that becomes a reality if the Shores decides to follow the example of the South barrier island and joins the Indian River County system.

While the Vero Beach City Council, the Vero utility staff and GAI Consultants figure all this out over the next few months, the County will also be working out some details of its own.

According to Erik Olson, the County will be considering allowing customers to have separate irrigation meters for potable water – either by allowing the practice system wide or by grandfathering in Shores customers already set up with such meters.

The Town of Indian River Shores has until early November to give Vero Beach a five-year notice about renewing or not renewing its 30-year franchise with the city unless an extension is granted.

Should Vero Beach and Indian River County be able to hammer out a deal to consolidate utility systems in the meantime, the Shores would be part of the consolidated system.

But the move by the Vero Beach City Council to commission an appraisal and an “optimization study” to streamline operations of the city system makes the probability of a consolidation deal appear increasingly unlikely.