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Shores scolds county for offer to Vero in utility dispute

STORY BY LISA ZAHNER (Week of July 22, 2021)

Vero Beach and Indian River County top staffers were meeting this week to settle a dispute regarding Vero’s claim to a permanent water-sewer service territory beyond city limits.

The claimed territory includes the South Barrier Island and the Town of Indian River Shores, and the Shores’ utilities attorney has strongly opposed the county’s foray into a deal with Vero, calling it “a per se antitrust conspiracy.”

County Administrator Jason Brown and County Attorney Dylan Reingold last month told Vero officials the county would agree not to challenge Vero’s territorial claims based upon a 32-year-old document if Vero charges the unincorporated South Beach customers county rates until 2027, then shifts them to city rates with a 5-percent rate increase cap until 2032, after which they would transition to regular city rates.

“They (Vero) seem to be receptive of that,” Brown told the County Commission last week, adding that the county staff is “trying to provide some rate protection for the South Barrier Island customers.”

If the parties come to terms, a new water-sewer franchise agreement would be executed, locking the South Barrier Island into Vero’s utility. Vero has been serving the South Beach customers with no valid franchise agreement since the old contract expired in 2017.

Attorney Bruce May, who represented Indian River Shores in matters related to the Vero electric utility sale and in franchise and territorial disputes, urged county officials in a July 14 letter to push ahead with getting legal clarification about what Vero’s rights are when it comes to people who live outside the city, and conversely, what those outside city customers’ rights are to see if they can get a better deal with another service provider.

“For several reasons, the Town was surprised and troubled by the County’s apparent willingness to agree with the City that the service agreement between the City and County dated August 18, 1989 (the “Market Allocation Agreement”) is still in effect and will continue into Perpetuity,” wrote May, who heads up the utilities division of the Holland and Knight law firm.

If the county concedes that Vero’s territory is permanent, May said that would have “significant long-term, unintended ramifications for the County and its residents, including the Town.”

“The County’s own outside legal counsel and its own County Attorney have previously advised the County that the Market Allocation Agreement clearly does not operate into perpetuity and should not be interpreted to do so,” May said.

“Based on the longstanding advice of the County’s own attorneys, this sudden newly proposed interpretation of the Market Allocation Agreement as permanent would violate other bargained-for contractual rights secured by the County’s franchise agreements on behalf of its residents, and on which residents like the Town have relied.”

Indian River Shores officials have argued that Vero having a permanent utility service territory goes against the tenets of antitrust law designed to protect consumers against price fixing and monopolies.

The town has sued Vero for breach of contract over a rate dispute and is investigating other water-sewer service providers.

A coalition of South Beach residents have told the county commissioners that they want a greater say in determining where their strip of barrier island will get its utility service, if not from Vero. May urged the county not to choke off its constituents’ pursuit of options for utility service.

“We do not believe the County should accept the City’s invitation to a per se antitrust conspiracy, especially since the County’s residents are consumers harmed by the anticompetitive conduct,” May said at the conclusion of the letter to County Attorney Dylan Reingold.

“The Town remains committed to protecting its residents and feels obligated to raise these issues in light of the resolution that was discussed by the City and County at the meeting on June 24, 2021.

“The County has previously expressed a desire to have clarity and to secure a definitive resolution to the issues, risks and legal implications raised by the Market Allocation Agreement. It is the Town’s intention to seek guidance from the Federal Trade Commission or the Antitrust Division of the U.S. Department of Justice and we trust that the County would want to join with us,” May said.

As of Monday afternoon, Vero City Attorney John Turner said he had not received a draft of the agreement the county proposed. Anything agreed to in a meeting of staff and attorneys would need to be voted on and approved in a public meeting by both the Vero Beach City Council and the Indian River Board of County Commissioners.