The long-awaited contract for the sale of Vero electric to Florida Power and Light is now in the hands of the five people tasked with reviewing the more than 300 pages of documents and likely taking some sort of vote on them early next week.
The Vero Beach City Council is set to meet in special session Tuesday morning to consider the more than 300 pages of documents that began flowing into Vero Beach City Hall from the Carlton Fields law firm around 10:30 a.m. Wednesday and trickled in throughout the day as attachments to seven different emails.
City Clerk Tammy Bursick forwarded each batch out to the city council members as the documents arrived, plus more than one council member had asked for paper copies of everything, so those were processed all day as well to form the extensive backup for Tuesday’s meeting.
The Council review of the contract was originally scheduled to have taken place this past Tuesday, but a last-minute addition to the contract forced the one-week delay. Vero City Manager Jim O’Connor said that in the wake of Hurricane Irma and the subsequent no-name storm that flooded coastal areas, language was added to the contract to clarify procedures and responsibilities of FPL and the city while the contract is pending.
“Just working through the last-minute details such as if a storm hits within 60 days of closing or issues like this and definitions of terms,” O’Connor said.
FPL declined to elaborate on the need for the revisions. But O’Connor put a positive spin on the delay. “We feel this is actually going to bring us closure of the sale, so we want to get it right,” he said.
Indian River Shores Town Manager Robbie Stable also said that the way the delay was explained to Mayor Brian Barefoot when he was invited to attend the Oct. 24 meeting, “This will only make the contract more ironclad.”
The contract, which FPL had promised would contain “no surprises” and on its face appears to be what was expected, formally spells out the detail of the $185 million offer by FPL to purchase the entirety of the Vero electric system and its 34,000 customers.
The document consists of several parts, with a long list of definitions of terms used throughout, plus a two-page executive summary highlighting the financial big picture of the deal.
The main body of the contract mirrors closely FPL’s letter of intent, including recent changes reflecting FPL’s commitment to remove all electric utility infrastructure from the riverfront and to construct a state-of-the-art, storm-hardened substation diagonally on a portion of what’s known as the Old Postal Annex property on the southwest corner of 17th Street and Indian River Boulevard.
Rounding out the document would be numerous exhibits, more than 200 of pages of legal detail spelling out the engineering, regulatory, financial and operational logistics of turning over the system and its records from municipal ownership to the enormous investor-owned utility. Some of the documents detail lease agreements for city-owned land and facilities. There is also a 52-page separate contract detailing what a “partial sale” of just the Indian River Shores portion of Vero’s system would look like should the full sale not close by January 2019.
In anticipation of construction of the new substation, all work on decommissioning Vero’s Big Blue power plant ceased over the summer. FPL will lease the facility from the city until the new substation is operational and connections can be made to power down all the equipment on the plant site. Then FPL will complete the dismantling process at its own cost.
If everything shakes out as planned, the electric sale is projected to leave Vero Beach taxpayers with more than $36 million in cash after all current obligations are settled.
Out of the sale proceeds, Vero will place enough funds in escrow for principal, interest and fees to defease its outstanding $20.4 million in tax-free utility bonds once they are callable. This number is lower than initial estimates because the city will continue to make annual payments on the debt up to the closing date.
Another $108 million will go to the Florida Municipal Power Agency to compensate the remaining co-op members for any additional long-term risk arising out of Vero’s exit from the organization’s wholesale power projects.
When Vero signed on with FMPA, the city pledged its good credit as well as its utility revenues in perpetuity as collateral for some the agency’s financial obligations and the massive bond debt it floated to purchase and maintain its power generation holdings.
FMPA’s recalcitrance in negotiating a workable exit for Vero was one of the main factors that stymied a sale over the past eight years.
But consecutive years of lobbying by hired guns paid with county tax dollars, plus increasing efforts to regulate and scrutinize the FMPA’s operations and fiscal practices, combined with a scathing state audit and hearings in Tallahassee combined to help bring FMPA to the table.
The effort to “let Vero go” reached critical mass in 2016 when, through connections with state Senator Debbie Mayfield, Vero and Indian River Shores electric customers made an influential friend in powerhouse former lobbyist and Republican Senator Jack Latvala, who recently declared his candidacy for Governor.
Latvala has spoken out harshly against the FMPA and, where Mayfield lacks the political clout to push her failed bills through the legislature in Tallahassee, Latvala’s bite matches his bark.
Shortly after last November’s election ushered in Mayor Laura Moss and Councilman Lange who joined with Vice Mayor Harry Howle to form a 3-to-2 pro-sale majority on the City Council, the FMPA’s newly minted CEO Jacob Williams visited Vero.
Despite just arriving from the Midwest, Williams was able to read Florida politics well enough to know it was time to broker a deal and solve the FMPA’s Vero problem.
Moss and O’Connor have fostered a good working relationship with Williams and his upper echelon of attorneys and advisors who, once sworn enemies, have said they will work diligently on the Vero sale as long as they’re not distracted fending off assaults from Tallahassee.
On top of that massive six-figure payoff to the FMPA, Vero will pay $20 million in penalties to Orlando Utilities Commission to end its bulk power contract with OUC more than five years early.
OUC had wanted to invoke a higher $50 million penalty also contained in the contract, but FPL in a side deal put forth financial inducements tempting enough to get OUC to agree to accept the lower penalty. This big save in August by FPL allowed the deal to move forward without costly mediation and litigation.
FPL has also agreed to offer employment to all qualified Vero electric employees who seek jobs with the company during the transition period. There are still some union squabbles to be worked out with that arrangement, according to Teamsters leaders who represent Vero’s workers, as FPL employees belong to a different union. Some express concern that good-paying technical jobs that match Vero’s generous salaries may not be available on the Treasure Coast, necessitating the uprooting of families.
But on the flip-side, the sale will end the flagging morale which city officials say has plagued the utility since sale efforts began in earnest in 2011, making it tough to hire good workers.
Once approved by the Vero Beach City Council, the sale and purchase agreement must also be reviewed and signed-off on by the Florida Public Service Commission, the Federal Energy Regulatory Commission and the North American Electric Reliability Corporation.
In addition, the 19 stakeholder member cities of the FMPA must vote unanimously to allow Vero to exit the co-op, which will necessitate the execution of new membership pacts, sans Vero.
FPL and city officials hope all of this can be accomplished in time for a closing somewhere between October and December of 2018. Should there be a delay, some of the financial goalposts of the deal may need to be recalculated.
Most controversial provision in the contract provides that should the deal implode and not close, FPL will move ahead with a Plan B – a partial purchase of the Indian River Shores portion of the Vero utility for an agreed-upon price of $30 million for just less than 9 percent of Vero’s customer base.
