Officials address Vero Beach Mayor’s concerns over water-sewer financials

VERO BEACH — In response to allegations by Vero Beach Mayor Jay Kramer that the County water and sewer utility is in the red, top leaders from the Indian River County government came out in force Tuesday night to offer up proof that it’s more than solvent and to open up talks about potential regionalization of utility servicesl.

Commissioner Bob Solari, a former Vero Beach councilman, said he was speaking to address the fact that he’d “heard the Mayor express a fear the County might be coming over here tonight to sell the City some snake oil.” Commissioners Solari and Peter O’Bryan attended the meeting, accompanied by County Administrator Joe Baird, Budget Director Jason Brown, Utility Director Erik Olson and utility planner Mike Hotchkiss.

Solari, Brown and Olson spoke from the podium and laid out the water and sewer utility’s financial position, capacity, logistical structure and debt.

Mayor Kramer had stated publicly and to the media that he thought the reason why the County was pushing for a consolidation of water, sewer and reuse water services was because the county needs Vero Beach to “bail the county out.”

Kramer based this on what he saw to be a loss of $11 million in the utility last year. But the enterprise fund actually made a profit and added $3 million to cash reserves.

The difference was explained in $14 million of depreciation incurred on paper because the County has invested $104 million in capital improvements, repair and renewal projects over the past four years.

Solari called for “open and contentious debate.”

He outlined the history of the issue, from the County’s point of view, and said that he’d tried for nearly two years to get an audience with the Vero Beach City Council to open up discussions about how Vero Beach and the County might work together to keep costs and rates down for all the utility customers in Vero, the County and the Town of Indian River Shores.

Solari said he was rebuffed by the previous City Council and that Vero Beach was not willing to hear what the County had to say.

“It ought to be discussed because it is my belief that in about 10 years city water and sewer rates will be somewhere between 50 percent and 100 percent higher than the County rates,” Solari said, citing Vero Beach’s own rate study performed by Public Resources Management Group in the summer of 2009.

Last fall the City Council voted to disregard PRMG’s recommendations and repeal about $13 million in scheduled rate increases. The long-term consequences of this for the utility are still unknown, as data is being collected at the request of Vice Mayor Pilar Turner.

Brown presented the balance sheet of the water and sewer utility and talked about the cash position.

Olson talked about the County’s capacity to serve Vero Beach customers and explained that capacity has already been built into the system for every property owner or developer who has paid utility impact fees.

This was meant to address concerns that the county does not have adequate capacity to serve both Vero customers and potential development coming down the pike once the real estate market rebounds.

Olson also explained the connectivity of the County system and a couple of ways that regionalization might work.

“If nothing else comes out of this, it will pique some curiosity, pique some questions over the next few weeks,” Olson said.

After the lengthy presentation, the Vero Beach City Council did not ask questions or discuss the topic, as the city is still in the process of completing a financial analysis of its own water and sewer system and does not have complete data for comparison purposes just yet.

Vice Mayor Turner has been working for more than three months to get solid historical data and rate projections from Water and Sewer Director Rob Bolton and now-retired Finance Director Steve Maillet and she’s called the process a “logjam,” though some progress has been made recently.

No action was requested or taken based upon the information from the County. It is expected that water-sewer issues will be the topic of a City Council workshop sometime in the near future.

County residents on the South Barrier Island and in the mainland county contiguous to the City of Vero Beach are under a franchise agreement to be served by Vero until March 2017 and the Board of County Commissioners must give notice by March 2012 of its intent to either exit the franchise or renew it.

Indian River Shores residents are under contract to be serviced by Vero until Oct. 31, 2016 and the Shores Town Council must give notice by October 2011 as to its intentions.

Indian River Shores Town Manager Richard Jefferson, as well as Shores Mayor Bill Kenyon and Councilwoman Frances Atchison were in attendance at Tuesday’s meeting. The Shores has been in negotiations with both Vero and the County to determine which way it will go in 2016 when the franchise agreement expires.

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