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City, county seem headed for court over water/sewer

STORY BY LISA ZAHNER (Week of January 16, 2014)

Chances are growing increasingly bleak that Vero Beach and Indian River County will avoid a costly legal battle over the right to provide water, sewer and reuse water service to South Beach and mainland county customers by 2017 as Vero city officials slammed the door on the county’s latest effort to broker a deal.

There’s only one thing the sides agree upon: that county residents – whether or not they stay on the Vero system long-term – should pay Indian River County utility rates, not Vero rates plus a 10 percent surcharge, as has historically been the case.

As the fight moves into its fifth year, top city staff and council members have changed, but Vero and the county still differ on such basic issues as whether or not Vero has a permanent right to serve customers outside the city limits, and who owns the pipes, pumps and other equipment needed to provide service.

Mayor Dick Winger declared the latest county proposal drafted by County Attorney Dylan Reingold “unacceptable in the substance of rights and ownership” and then, during the last City Council meeting, added that the county’s latest proposal was also “highly prejudicial.”

“I feel that the City of Vero Beach should be willing to grant all of its customers – customers are important to us, we love customers – the same terms we gave Indian River Shores or the county gives Sebastian,” Winger said. “And the county should be willing to do and follow the precedents rather than set a new precedent.”

Reingold is set to present the proposal to the Vero council on Jan. 21, but Winger said he wanted City Manager Jim O’Connor and City Attorney Wayne Coment to attempt to iron out some of the differences instead of having what would be a fruitless meeting about the terms as presented.

“Having reviewed this document, there are some appalling things,” said Councilwoman Pilar Turner. For example, if the city ever terminates the agreement, the city will relinquish ownership of the utility infrastructure to the county. “There are several clauses in here that I just kind-of went, ‘You’ve got to be kidding’ – way too one-sided,” Turner said.

“It’s just childish some of the stuff I read in there,” said Councilman Craig Fletcher.

Vero says that Florida law and a decades-old document give it a permanent territory, which includes the South Beach, mainland county and Indian River Shores customers it began to serve in the 1980s before the county had a robust utility system of its own.

County officials have rejected the presumption of a permanent territory and dispute some of Vero’s ownership rights to infrastructure they say developers and lot owners paid the city to build.

The third major sticking point is whether or not Vero should tack on a 6 percent fee to utility bills. Vero says yes, the county says no. The county wants to split a 3 percent franchise fee with the city instead.

Turner agreed with Winger’s rejection of the county proposal, adding that she had concerns South Beach customers might make demands on the city’s reuse water system that the city could not fulfill.

The treated or “reclaimed” wastewater has become a hot commodity in recent years, with communities like Vero Isles waiting to hook up and benefit from the more economical and eco-friendly means of watering lawns and landscaping.

County Commissioner Bob Solari, a Riomar resident who has spearheaded efforts to bring the South Beach and mainland county customers under the county utility system one way or another, said Monday he suspected there was a misunderstanding with relation to parts of the proposed deal.

“Aside from Councilperson Turner’s comment on reclaimed water, it seems to me the Council has perhaps overreacted,” Solari said.

After reading the document and listening to the council discussion, Solari said he thought the issue of the ownership of the infrastructure seemed to be the sticking point.

“This simply says that nothing in the agreement is to somehow give ownership to things that the City does not now own. It does not give the County any ownership rights to anything that it does not now own,” Solari said.

“That said, there is an issue of ownership rights to some of the infrastructure. In a number of instances the developer of areas in the South Beach area built and paid for the infrastructure. The Moorings is a good example of this. They then dedicated it to the County or City.”

If the city was compensated on the front end, it should not also be compensated on the back end, Solari asserts. “I do not believe that the County should pay the City for infrastructure for which customers have already paid and delivered to a governmental entity.”

County legal staff, after embarking upon a research project with the help of Moorings resident Dr. Stephen Faherty and the South Beach Property Owners Association, says it has documents proving that developers, builders and lot owners – not the city – paid for a portion of the utility infrastructure that Vero now wants to charge the county millions of dollars to buy back.

“The agreement can’t be exactly same as the Shores agreement,” Faherty said, not only because Indian River Shores is an incorporated entity and the county customers are not, but also because the city brokered various agreements with developers, property owners and builders who paid for the city water main to be built down south A1A.  

Tired of paying higher Vero rates plus a 10 percent surcharge, Moorings resident Faherty in September 2009 asked the county to give Vero Beach notice that the county would pull its South Beach and mainland customers off the Vero water-sewer system in March 2017 when the franchise expires.

The county did not issue that notice until more than a year later, but Faherty’s request set off a series of events that, more than four years later, have left South Beach customers still in the same boat, paying Vero rates plus a 10 percent surcharge.

Vero, the county and Indian River Shores held a series of meetings about possible consolidation of the city and county water systems. Studies were commissioned, a committee was formed and consultants were hired. Vero had its system appraised and the county offered to take over the Vero water system the cost of its debt.

In the meantime, the Shores two years ago brokered a deal with the city to get county rates four years ahead of the town’s scheduled franchise termination.

Attorneys and staffers for both sides have differing opinions. Both Vero and the county have hired law firms that specialize in utility law and those attorneys have penned opinions that are as different as night and day, supporting their clients’ claims.

If Vero and the county cannot agree to terms, county officials have said they will take over the South Beach and mainland county customers, boring water mains under the Indian River Lagoon if necessary and battling it out in court over the territorial and ownership rights.