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County to Vero: City water-sewer utility is ‘not worth purchasing’

STORY BY LISA ZAHNER, (Week of March 1, 2012)

The Indian River Board of County Commissioners on Tuesday is expected to revoke the offer it made last year to buy the Vero Beach water-sewer utility and fold it into a consolidated county system.

The county made its offer to take over the Vero utility – which would have enabled closure of the city’s riverfront sewage plant – for the cost of paying off the city’s bonds before Vero’s consultants placed a far higher value on the system and the city started discussing major tweaks to rates and staffing and operations.

County Administrator Joe Baird said that he and other top staffers, after crunching the numbers, agreed that keeping approximately $25 million in limbo waiting for Vero to possibly decide to sell isn’t the best use of the county ratepayers’ resources.

“The city’s revenue stream is declining,” Baird said. “We think looking at it, based on their revenue stream, that we don’t think it’s worth purchasing.”

Baird said he, Budget Director Jason Brown and Utilities Director Erik Olson also favored taking off the table the offer Indian River Shores rejected last week in favor of negotiating a new 30-year franchise agreement with Vero Beach for potable water and sewer services.

Commissioner Bob Solari also advocates the revocation and said he’s spoken with County Attorney Alan Polackwich about it, and that Polackwich advised it was a smart move to “tie up loose ends.”

“I think that the county would want to do it because there’s no sense in having multiple offers on the table that people have said no to,” Solari said. “All we’ve gotten is kicked a few dozen times for doing what we thought was good for the community.”

Solari said county officials huddled after the Indian River Shores Town Council meeting last week during which the town decided to try to reach an agreement to stick with Vero Beach Utilities.

“As far as I can tell, we’ve done all we could to put forth a very good offer to the Shores and the City of Vero Beach,” Solari said. “I think it’s just a good business practice, when someone has rejected an offer, not to have a unilateral option hanging out there.”

“The better option would be for us to use (the $25 million) to pay off our bonds,” Baird said. “We think it’s in the best interest of our customers not to buy the City of Vero Beach water-sewer utility at this time. If we pay off the bonds in 2015, we could probably offer a slight rate decrease.”

In 2015, about $14.2 million of bonds can be paid off, reducing the annual debt payments by nearly $2.5 million. Then in 2019, another $11.3 million in bonds can be decreased, cutting county expenses by another $2.8 million. Combined, Baird said the two payoffs would reduce the utility’s annual budget by about 10 percent.

Baird said that the county’s offer to sell bulk reuse water to Vero for them to re-sell to supplement the supply available to the Shores is also probably off the table.

“Based on the revenue stream, we would only do it if we could tap into the John’s Island lines five feet away,” Baird said. “There are other customers – Orchid and Windsor down the road – which would be more beneficial for us. We don’t need to incur the costs.  There’s not that much of a revenue stream.”