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Wastewater twist finds Vero seeking Shores’ support

STORY BY LISA ZAHNER (Week of August 3, 2023)

Vero Beach is seeking letters of support for its planned state-of-the-art wastewater treatment plant, but  the Town of Indian River Shores was probably the wrong place to go for a favor.

The Shores and Vero have been at odds for more than a decade over utility matters, but most recently the neighboring municipalities have battled in a breach of contract lawsuit over utility rates – a nasty and costly dispute which has run up the chain to appeals court.

Vero won the last three rounds – at circuit court, before the appeals court panel, which affirmed the lower court decision, and most recently when that same appeals court denied the town’s request for a rehearing, and clarification of its ruling. This month, the Shores’ legal team from the utilities division of the Holland and Knight law firm is expected to ask the Florida Supreme Court to take up the case.

Still, Vero Beach City Manager Monte Falls started began his letter to Shores Town Manager Jim Harpring, “In light of the Fourth District Court of Appeal’s denial for rehearing, the City of Vero Beach seeks to enlist the assistance of the Town of Indian River Shores in a matter of great importance to our community,” and Falls continues, explaining how the project is good for the Indian River Lagoon and for all of Indian River County’s residents.

“The city asks the town, and will be asking the county and other municipalities as well, to support our effort,” Falls said, noting that, should the town be amenable, he could furnish a draft letter of support that Vero could use to apply for presumably state grants. “Every dollar received will offset the cost of this essential project,” Falls said.

Harpring responded that “the residents of the Town of Indian River Shores are well known and ardent supporters of protection and preservation of the local environment we are blessed with in Indian River County. This has been clearly demonstrated through our own ordinances, intergovernmental cooperation, and private endeavors.

“However, as the Town continues to avail itself of all legal avenues of redress concerning the City’s assertion that it is not bound by the franchise agreement, it would be premature for the City to assume that litigation over these issues is concluded,” Harpring said.

At the crux of the dispute is a clause in the 2012 franchise agreement between Vero and the Shores whereby Vero promises to match Indian River County rates for Indian River Shores customers – a promise that Shores officials claim has been breached not once, but twice.

While the lawsuit over the first alleged breach of contract in 2019 involving reuse irrigation rates was being appealed, the Vero Beach City Council approved sweeping rate increases. The city charged Indian River Shores the new rates with double-digit hikes in January. In October a second round of rate hikes will kick in, then in January Vero customers’ monthly water-sewer bills will go up even more. The chief justification for those increased rates – apart from the higher cost of everything from chemicals to personnel – is the planned construction of the new wastewater treatment plant.

The city hasn’t even gone out to bid on the plant yet, but conservative estimates cite a price tag of around $82 million, plus $76 million in debt service for a total of $158 million to be funded by the ratepayers. If everything runs on time, the new plant may open by 2027 or 2028, and then the riverfront plant will be dismantled.

Indian River Shores is obligated to remain a customer of Vero Utilities until Oct. 1, 2027, as that represents the 15-year term of the town’s franchise agreement, with an option to renew. So the largest rate increases were front-loaded for 2023 through 2026 to get the most money from Indian River Shores ratepayers while they are still Vero customers. Unfortunately, this also placed a huge burden on residents and businesses inside the city limits, and on South Barrier Island residents on Vero’s system, instead of phasing-in the rate hikes over 10 or 15 years.

The town has until April 1 to formally notify Vero whether or not it has been able to strike a deal with Indian River County to be connected to the county’s system in 2027. If not, the Shores would need to renew its contract with Vero for another 15 years. Harpring wrote to the recently hired County Administrator John Titkanich last month to begin talks in earnest about a long-term solution. Harpring and Mayor Brian Foley had several meetings in 2022 with top county staffers Jason Brown and Dylan Reingold, but it’s time to start over with their successors.

Harpring offered a bit of background in his letter, “The Town has taken the position that the City has failed to honor its promises in the Franchise Agreement. More importantly, the Town has grave concerns over the City’s financial and administrative ability to service adequately the Town's residents at acceptable rates.”

He pointed out the town’s importance to the county’s bottom line, saying, “The Town of Indian River Shores accounts for between 12 percent and 12.5 percent of the ad valorem taxes paid to the County although the Town represents only 2.7 percent of the County's population. As County residents, it is reasonable for the Town to rely on the County to explore every avenue to offer water and wastewater services to the Town.

“It is also rational economic policy for the County to expand its utility customer base. In addition, County water services that are reliable and reasonable in cost promote higher property values thus ensuring higher tax revenues for the County,” Harpring said.