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Deal locks in South Beach residents to Vero utility services for 30 years

STORY BY RAY MCNULTY (Week of January 26, 2023)

South barrier island residents who live outside the Vero Beach city limits are now locked into receiving their water, wastewater and reclaimed water services from Vero for at least the next 30 years, paying the same rates as island customers who live in the city.

On the same Tuesday morning the City Council voted unanimously to adopt the new franchise agreement – which includes a 15-year renewal clause triggered by the written consent of both parties – the County Commission engaged in a sometimes-testy debate before voting 3-2 to approve the new contract.

Commissioners Joe Flescher and Deryl Loar dissented, saying there was no reason to rush into an agreement of that length, especially one that lacks rate certainty. In fact, Loar attempted to derail discussion of the topic, making a motion to table it. Flescher seconded the motion. But the other three commissioners voted against them.

“I would say the rush is that we’ve been operating without an agreement for five years,” Commissioner Susan Adams said, adding that negotiations between the city and county had been ongoing for “at least six years,” and that it was “irresponsible” to not address the proposal recommended by the staffs of both local governments.  “We need to close this out and move on.”

Vero Beach has been providing those services to residents of the unincorporated county on the barrier island south of Castaway Cove since the 1950s, City Manager Monte Falls said.  However, the parties have been operating without a contract since 2017, when the previous 30-year franchise agreement expired.

At the commission meeting, County Attorney Dylan Reingold provided a detailed explanation of the agreement, which he said gave neither side everything it wanted. The county didn’t get the “phase-in” of city rates – which are higher than county rates – for its residents covered by the agreement, but the city agreed to not impose any surcharges on its outside-the-city customers – something it statutorily could do – and provide the same level of service it offers city residents.

The county also retained its ability to discuss with Indian River Shores officials the feasibility of providing water, wastewater and re-use water to the town, which is currently engaged in a legal battle with the city over rate increases.

In the new agreement, however, the county recognizes as permanent the 1989 Territorial Agreement that identifies the unincorporated south barrier island and aforementioned mainland parcels as part of the city’s water and sewer services area.

That means the county may not replace the city as the provider of those services through the duration of the agreement. Reingold said Florida statutes, too, appear to preclude the county from doing so, and that it’s likely the city would go to court to challenge any such attempt.

Even if the county could overcome those legal hurdles, Reingold said, it would need to build water and sewer lines from the mainland – across a wide section of the Indian River Lagoon – to the south barrier island.

Any such project would require a “significant financial commitment” by both the county and south barrier island residents who would bear most of the costs, he added.

“With all that in mind: Understanding the statutory limitations on the county, the potential lawsuit that could ensue based upon the 1989 Territorial Agreement and the limitations in our ability to even get to the south barrier island,” Reingold told the commissioners, “I thought this was an important agreement to put in place to resolve our issues with the city.”

He said the city likely would pursue statutory and legal remedies to protect its service territories in the unincorporated county if the commission rejected the agreement.  “If we don’t get this done,” Reingold said, “I don’t know how the city of Vero Beach will react.”

Commission Chairman Joe Earman, along with commissioners Adams and Laura Moss, embraced the proposed agreement, with Moss saying, “This is a long time coming. It’s a very equitable solution.”

Earman, however, didn’t commit until Interim County Administrator Mike Zito confirmed that it would be “extremely difficult” for the county to “physically, logistically and operationally” provide water and sewer services to the south barrier island.

He also checked with Reingold to make sure the agreement didn’t “in any way interfere with the legal issues” between the city and Indian River Shores.

Three Shores officials – Mayor Brian Foley, Councilman Bob Auwaerter and Town Manager Jim Harpring – addressed the commissioners during the meeting’s public-comment segment, urging the county to delay action on the proposed agreement.

The Shores officials, citing their ongoing legal clash over water and sewer rates the city charges town residents, questioned whether the city could be trusted to abide by the agreement, which places no restriction on future rate increases. “The commission will be abandoning south barrier island residents by allowing city to charge whatever the city wants to charge,” said Harpring, who lives in that area.

Foley said the city “reneged” on its franchise agreement with the town, then warned commissioners: “Be cautious about who you deal with.”

The Shores officials said the town was willing to pay for a study to determine the feasibility of the county providing service to the south barrier island, if the commissioners postponed the vote.

The “follow-up” study would be an addendum to the Shores’ already-completed study of the feasibility of the county’s ability to provide water and sewer services to the town.

South barrier island resident Doug Demuth, who said he was speaking on behalf of a coalition of property-owners’ associations that represent more than 1,600 homeowners in that area, also asked the commission to table its vote on the agreement.

He said the county should form a committee of staffers and residents to further investigate the agreement and explore other options. He expressed concern that the city would raise rates to cover any costs above the estimated $82 million it plans to spend to build a new wastewater treatment plant at the airport.

He also suggested the agreement be reduced to 10 years to provide recourse if south barrier island residents are unhappy with the city’s service or rates.

“It’s 30 years of subjugation,” DeMuth said, calling the city’s rate increases “predatory” and describing the agreement as “egregious.”

Flescher employed even more dramatic rhetoric in emphasizing the importance of issue and urging the other commissioners to postpone taking action on the agreement, so they could seek more input – specifically, from the follow-up feasibility study offered by the town.

“Without water,” he said, “we all die.”

Flescher argued there were too many unknowns in the agreement, warning that it could be in place for 45 years and saying the commission has an obligation to not rush to judgment.

“How irresponsible do we want to be?” he asked.

Adams wasn’t moved. “We’ve been trying to come to a franchise agreement for at least five years,” she said. “There was plenty of opportunity for input. At some point, you have to have closure.”

Still, before voting against the proposed agreement, Loar said, “I can’t do 30 years.”

Both Adams and Moss, however, countered attacks on the length of the agreement, saying 30 years is not unusual for a contract that will require the city to invest in maintaining, replacing and possibly expanding its water and sewer infrastructure.