Talks on water-sewer consolidation moving slowly

VERO BEACH – The new Vero Beach City Council has said it wants to consolidate the city’s water and sewer services with those of Indian River County.

Indian River Shores Mayor Bill Kenyon has said even a Martian looking down on the local utility situation could clearly see Vero and the County need to “get together.”  

So, with everyone seemingly on the same page, why isn’t anything substantial happening?

Over the past six weeks, Vero, the County, the Shores and their legal and management staffs have been engaged in careful, calculated battle by letter. No one is meeting face-to-face, sitting down to look at numbers or plans.

Responses take weeks and often leave questions unanswered.

County Commission Chair Bob Solari said he recognizes that a possible consolidation of water-sewer systems is only one of many pressing issues members of the new Vero Council have had thrown at them since they took the oath of office.

“I know the council has a lot on its plate right now,” Solari said.

County Utilities Director Erik Olson said nearly three weeks ago that he expects to see a meeting with the Vero City Council “soon” to start pursuing the matter of consolidation.

Olson and his staff have a multimedia presentation packed up and ready to present to Vero.

The parallel plot line to consolidation is the Shores’ pending decision of which of the two entities to sign on with to supply it with water and sewer services for at least 30 years, and whether and how to sell the Town’s existing water and sewer assets.

To begin moving forward on this, the Shores had a workshop with all the parties present on Nov. 10. Since then, it’s been pretty anti-climactic.

Nov. 16 — Indian River Shores asks Indian River County to submit a proposal to serve the Shores’ customers.

Nov. 30 — County sends a letter to Vero asking for permission to negotiate with the Shores. County also offers — for the third time — to make a presentation to Vero about the merits of consolidation.

Dec. 7 — Indian River County responds to Shores, tells the Town to eliminate obstacles — including the conflict of interest presented by GAI Consultants representing both the Shores and the City of Vero Beach — and says if those items are addressed, the county would consider entering into negotiations with the Shores.

Dec. 7 — Vero drafts a somewhat vague response to County’s request for a waiver and sends it to City Council members for review. In this letter, penned by Interim City Manager Monte Falls, the city agrees to allow the County to formally talk to the Shores about providing water-sewer service.

The County also asked for a waiver to permit the Town to terminate its 30- year franchise agreement with Vero should the Shores and the County be able to strike a deal. It’s on that point where Vero’s response gets a little cryptic.

“If the Town determines that it would prefer for the County to be its utility provider before the City’s franchise expires, the City would be willing to engage in negotiations as to how best accomplish that,” Falls wrote.

When asked to clarify the City’s position with regard to early termination of the franchise, Mayor Jay Kramer said the Town would need to compensate Vero for some of the lost revenue, which would amount to about $3 million per year for the balance of the contract which expires in October 2016.

Falls’ letter does not address the offer to make a presentation to the Vero Beach City Council about consolidation. Water and Sewer Director Rob Bolton has been dead-set against having the County staff come to City Hall to share their data with the council.

Dec. 16 — Indian River Shores Town Manager confirms to the County that the Shores’ relationship with GAI consultants is being severed.

Dec. 18 — Falls states that consideration of the response to the County will be added to his matters on the Dec. 21 agenda, but it was not on the advertised agenda, so no backup on this was provided to the public.

During the new Vero Council’s organizational meeting, Vero Vice Mayor Pilar Turner was appointed by her peers as council liaison for water-sewer issues. Shortly after her election, Turner asked the staff for a 10-year pro forma analysis.

Public Resources Management Group had conducted a rate study for Vero Beach in 2009 and recommended exponential rate increases to meet the aging system’s revenue requirements.

The City Council, however, prior to the election, repealed those scheduled rate increases of about $13 million.

When asked for the financial analysis behind the decision to repeal, the city had no formal analysis, but said it had deferred some capital projects, delayed some debt payments and was hoping to build up cash to pay for projects instead of borrowing money.

Turner said the first data she received in response to her request to Vero Water and Sewer Director Rob Bolton came last Friday, when a spreadsheet was handed to the city’s Finance Committee.

Seeing that the numbers were vastly different than data presented by PRMG in 2009, Turner said she asked detail on how Bolton got from the PRMG numbers to his present numbers, and the justification for the changes.

“I sent a two-page memo back asking where do these numbers come from?” she said. “I wanted to know what were the assumptions about maintenance costs and the cost of chemicals and treatment and whether or not this took into consideration the 12 percent decrease in water use assumed by PRMG.”

Turner said it was also unclear what assumptions Bolton used for pension contributions and the cost of health benefits, as personnel costs are rolled into the line item of each department where the employee works, not listed as a separate line on the spreadsheet.

There was also no detail of which capital projects would be completed and which had been cut to save money. And most importantly to customers, nothing about where utility rates might go in the future.

“It’s been a logjam, it’s been very, very slow,” Turner said. “I can’t believe that they called a meeting of the Finance Committee and did not give them anything prior to the meeting. They said they finished it Thursday night and couldn’t give it to them beforehand.”

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