News Analysis
Whether Vero will win or lose the breach of contract lawsuit filed against it by the Town of Indian River Shores is still in the hands of the court, but the arguments made last week by Vero’s legal team might give pause to any entity contemplating doing business with the city.
In 2012, Indian River Shores was exactly where it is now – a few years short of the end of a water-sewer franchise agreement with its service provider, Vero Beach Utilities.
Then-Mayor Tom Cadden, like current Shores Mayor Brian Foley, was staring down a deadline to give Vero notice of termination of the franchise, and the town council was seeking the best value for Shores residents and club communities.
Both Indian River County Utilities and Vero Beach Utilities pitched for the Shores’ business – Vero News 32963 was there in the room for the presentations by both utilities. There wasn’t much daylight between the deals presented, except for reuse irrigation water rates.
Reuse water is wastewater treated enough to not be hazardous, but a nutrient-rich water source when sprinkled on lawns and golf courses.
Indian River Shores uses a tremendous amount of reuse irrigation water to keep the town green and beautiful. Vero’s reuse water rates were about three times what the county charged.
Then-Vero City Manager Jim O’Connor, a smart negotiator, thought of a way to knock the legs out from under the county’s proposal. He told Cadden and the rest of the Shores council that the town could have the best of both worlds – stick with Vero for service for 15 more years, and the city would match Indian River County Utilities rates for water, sewer and most importantly, for reuse irrigation water.
The deal he proposed would start immediately, instead of years down the road at the end of the franchise agreement.
How could the county beat that? The deal was signed in October 2012. Instead of letting the Shores’ franchise with Vero expire, the new agreement simply supplanted the old one, and was extended to 2027.
Vero and the Shores abided by the agreement for more than six years until the county decreased its reuse water rate from 67 cents per 1,000 gallons to 21 cents per 1,000 gallons in 2019.
Vero refused to give the Shores’ customers the 21-cent rate, and the current dispute arose.
In the hearing before Judge Janet Croom, a great many legal terms, case citations and quoting of Florida Statutes flew back and forth between Vero City Attorney John Turner and the Shores’ outside attorney Paul Berg.
Boiled down to its essence, Vero’s argument now is that it was illegal for the City of Vero Beach to enter into a franchise agreement that ties the rates of one customer class (i.e. the Shores) to a rate-making authority other than the City of Vero Beach (i.e. the county).
But there’s another part of Vero’s argument that’s the head scratcher: Vero is arguing that the town of Indian River Shores was legally bound – as an entity contracting with a municipal utility – to know that it was illegal for Vero to have proposed such an agreement.
So it’s all Indian River Shores’ fault for signing a contract with Vero that they should have known was illegal, this line of argument goes, and Vero can set whatever rates it wants.
Town Manager Jim Harpring said he heard from Town Attorney Pete Sweeney that it could take 30 to 90 days for Judge Croom to issue her ruling. If Vero wins, she will grant a summary judgment in the city’s favor. Or the case will move forward to trial.