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No end in sight for Vero utility disputes with the county and Indian River Shores

STORY BY LISA ZAHNER (Week of October 21, 2021)

The City of Vero Beach – once at odds with all of its neighbors over its electric utility rates – is embroiled in three separate disputes over its water-sewer utility, and none of these confrontations seems to have an easy resolution.

In fact, the opposing sides appear to be digging in their heels, meaning the disputes could result in costly, drawn-out litigation. That means the next iteration of the Vero City Council – with either one or two new members – will need to carry on the defense of the city’s water-sewer utility territory.

Last week, Vero and Indian River Shores’ negotiating teams met in an effort to resolve a federal antitrust lawsuit filed by the Shores, but the parties declared an impasse. Both sides stated their arguments in the strongest terms, with their positions as far apart as ever.

The Shores has asked the federal court to rule on whether or not a 1989 agreement between Vero and Indian River County setting each entity’s service territories violates federal antitrust law. Vero is claiming its territory is permanent, and was intended to be permanent by the parties that drafted and approved it in 1989. A permanent Vero service territory would give Indian River Shores no opportunity to seek a competitive alternative for an essential service.

Vero City Manager Monte Falls asked the Shores’ delegation headed by Town Manager Jim Harpring and outside legal counsel Bruce May of Holland and Knight, “What do you want?”

That question was a non-starter, as it’s clear the Shores wants a divorce from Vero’s utility system.  A separate civil dispute – town’s breach of contract lawsuit filed against Vero in state circuit court – makes that pretty clear.

Falls said Vero has never said Indian River County can’t serve the Shores, but that Vero must give its permission. Short of having the court nullify the 1989 territorial agreement, how many millions of dollars it might cost for the Shores to buy that permission to leave Vero’s system is unknown.

The next step in that dispute is a joint meeting of the elected officials from both the town and the city. The date of that meeting has not yet been set, but the parties have been using Indian River Charter High School as a neutral venue.

Meanwhile the Shores is eagerly awaiting the results of a study into whether or not it would be practical and economically possible to get water-sewer service from the county, or from another provider.

In response to a public records request, the town said it has received no interim reports, or even a timeline for the final report from its Tampa-based consultant, Arcadis. So far the town has paid $43,000 on the $121,000 job. Still pending are the major deliverables – the funding analysis, roadmap and final report, according to a Sept. 22 invoice.

Vero is also at odds with Indian River County. Earlier this month, Vero and Indian River County continued a series of talks that revolve around the same utility issue – whether or not Vero enjoys the right to a permanent water-sewer service territory which extends out from the city limits to include Indian River Shores and the unincorporated South barrier Island.

The top staffers from Vero and the county have met numerous times, and the two elected boards have met in joint session. No settlement agreement has been reached, because Vero has refused to entertain the county’s request for a predictable, phased-in rate scheme for unincorporated South Beach customers.

Vero city manager Falls has been adamant that the city “will no longer charge rates that do not reflect the cost of providing service,” and that Vero’s rates will not be tied to the rates of a different utility such as Indian River County Utilities.

On Oct. 5, the Vero Beach City Council unanimously approved two resolutions indicating Vero intends to stand its ground at all costs. The first resolution affirmed Vero’s permanent service territory and Vero’s intention to conduct a rate study and adjust rates in 2022. The second resolution affirmed that Vero “should not concede its ability to make rates” for customers within its service territory.

Since a previous county settlement proposal would temporarily control rates for South barrier island customers, Vero’s recent posture doubling down on its rate-making authority leaves little hope for the kind of compromise the county had hoped to achieve.