Even as they head to mediation, the distance between the opposing positions of the City of Vero Beach and the Town of Indian River Shores in their dispute over reuse irrigation water rates seems to have widened.
Vero officials are essentially asking for a do-over, seeking to impose new rates and new customer classes onto a seven-year-old franchise agreement with Indian River Shores because Vero can’t cover its costs under the terms it agreed to in 2012.
At the same time, Shores officials assert that Vero needs to stick to the 2012 franchise agreement and match Indian River County Utilities rates like the city promised – even if the city negotiated a bad deal.
The franchise in dispute was agreed to when the Shores had competing offers on the table to provide the town with reuse irrigation water from both Vero Beach and Indian River County.
Shores officials were leaning toward leaving Vero Beach Utilities and going with Indian River County Utilities, but in some 11th-hour horse trading, Vero neutralized its competition be offering to match Indian River County rates.
Vero did not have distinct “customer classes” for reuse water and Shores customers were charged the county rate of 67 cents per 1,000 gallons of the treated wastewater used for watering grass and golf courses.
At the time, it was widely reported that Vero was taking a risky gamble by chaining itself to county rates. There was speculation that the county might reduce its rates just to squeeze the city, since city-county relations at the time were openly hostile on a variety of utility issues.
As it happened, the county held its reuse water rate steady at 67 cents until last year. Then in November 2018, the Board of County Commissioners voted to reduce the rate to 21 cents as of Jan. 1.
Indian River Shores then demanded that Vero match the new, lower rate in accordance with the franchise agreement.
Vero refused, instead hiring a consultant to conduct a study to establish various reuse customer classes and rates to charge going forward.
“Currently your existing rate of 67 cents does not generate enough revenue to cover your costs,” consultant Mike Rocca told the Vero City Council on July 16. Rocca added that the existing shortfall is about $240,000 per year – a deficit that Vero’s other utility customers wind up subsidizing.
Reuse water rates for the Shores that would cover Vero’s costs could be 72 cents to $1.24 per 1,000 gallons – significantly higher than 67 cents, never mind the 21 cents the county is now charging.
Vero now wants to “reclassify” ratepayers, applying new customer classes and higher rates to the 2012 Shores franchise agreement.
Indian River Shores has put the city on notice it thinks Vero is in breach of its franchise agreement.
When two local governments have a dispute that could end up in court, the parties are required to enter into mediation in hopes of saving taxpayer dollars. Also, the franchise agreement itself prescribes mediation to settle a contract dispute.
Louis B. “Buck” Vocelle, attorney for the Shores, said Monday that he’s “waiting to hear back from the city” as to a final selection of a mediator and the timeframe for mediation.
City attorney John Turner said on Monday, “We are currently working on scheduling with all the parties. There is nothing to share at this time.”