Appeals court hearing extends utilities conflict

The Town of Indian River Shores will get another opportunity in April to make its case that Vero Beach breached a 2012 utility franchise agreement by not matching Indian River County Utilities’ reuse irrigation water rates as promised in a 15-year contract.

Circuit Court Judge Janet Croom ruled in favor of Vero last year, saying the city had not run afoul of the utility contract and was protected by state law, but Shores officials disagreed, so they appealed the case to the next higher state court, the Fourth District Court of Appeals.

The matter before the panel of appeals judges will be whether Vero violated the 2012 franchise agreement when it kept Indian River Shores’ reuse irrigation water rates the same after Indian River County Utilities reduced its reuse irrigation water rates significantly in 2019.

To thwart an effort by Indian River County Utilities to take Indian River Shores’ utility business away from Vero, the city originally undercut the county’s proposal for the Shores’ business by agreeing to match published county rates for Indian River Shores customers for the term of the franchise agreement.

The Shores argues that the court should uphold the franchise agreement to the letter. But Croom ruled that Vero had the power to set its own rates, based upon its costs of providing the service.

Each side already filed its best arguments in writing, but the appellate court will hear 15 minutes from Vero and 15 minutes from Indian River Shores at 10:30 a.m. on April 4 at the appeals courthouse in West Palm Beach.

Most of the circuit court hearings in this 2020 case were conducted by Zoom under temporary COVID-19 civil court protocols, but the oral arguments before the appeals court will be in person.

Shores Town Manager Jim Harpring said he was pleased that the appeals court scheduled oral arguments, as it could have simply handed down a written order affirming Croom’s ruling.

Vero Beach City Manager Monte Falls said of the court date, “It’s my understanding that they’re not compelled to hear oral arguments, and that the town requested oral arguments to be heard and we’re not opposed to that.”

Falls said the pending appeal has not stalled the implementation of Vero’s “One Rate” plan which shifts all water-sewer customers to one uniform rate, regardless of whether they live inside the city, outside the city on the South barrier island or in the Town of Indian River Shores.

“The new rate increase took effect the first of January based upon the rate schedule developed by our consultant,” Falls said.

Vero water-sewer customers saw their rates go up by about 15 percent last month, with another 15 percent rate increase scheduled for Oct. 1, and a third double-digit rate hike slated for Oct. 1, 2025.

The city did carve out an exception for Indian River Shores’ customers reuse irrigation water rates, keeping those flat while the appeal is pending.

The lawsuit from 2020 being appealed now does not directly address whether the new set of rate increases that Vero imposed upon Shores customers in January violate the 2012 franchise agreement. That could be a different legal battle altogether.

Shores Councilman Bob Auwaerter, who serves as the town’s representative on Vero’s Utility Commission, said the breach of contract case to be argued in April has broad implications way beyond a squabble between Vero and Indian River Shores.

“The reality is that if the appeals court affirms this ruling it blows up every utility franchise agreement between two government entities and says utility franchise agreements are not worth the paper they’re written on,” Auwaerter said.

Auwaerter said Vero’s argument that the Town of Indian River Shores should have known that Vero was not going to be able to match county rates long-term is “absurd.”

“We’ll have to see how it goes. I’m glad it’s moving along – that’s for sure,” Auwaerter said.

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