The Town of Indian River Shores wants to renegotiate its water-sewer franchise terms with the City of Vero Beach in an effort to salvage the nearly half-century-old business relationship between the city and the town.
Whether Vero will agree to renegotiate, or whether more litigation lies ahead, remains to be seen. Vero had not responded to the Shores’ March 29 letter as of press time, as most local government functions shut down for the three-day Easter holiday weekend.
In October 2012, Indian River Shores executed a 15-year franchise agreement with Vero to replace the old 1987 agreement that was set to expire in 2017. The Shores’ motivation to ink a new deal five years before their old franchise agreement ran its course was Vero’s offer of cheaper rates, as then-Vero City Manager Jim O’Connor offered town customers rates tied to Indian River County Utilities’ rates.
Especially enticing was the county’s more affordable rate for reuse irrigation water, which meant Shores residential users, clubs and golf courses would pay about one-third of what they were accustomed to paying to keep the grass and landscaping lush and green.
After seven years abiding by the terms, a breach of contract dispute arose over county rates not matched by Vero. Indian River Shores sued and lost in both circuit and appeals court. An effort to convince the Florida Supreme Court to take up the case failed as well.
“The City of Vero Beach reneged on the contract’s key consideration: having rates equal to or better than the county posted rates. The courts that looked at the case apparently felt powerless to remedy this injustice under current Florida law,” said Shores Mayor Brian Foley.
The courts underscored state statutory provisions granting Vero the power to set its own municipal utility rates – seemingly negating the franchise terms promised to the Shores.
The 2012 contract, now set to expire on Oct. 1, 2027, seems to hold little value based upon the court’s interpretations. But it requires the Shores to give Vero at least five years’ notice if the Shores would not be re-upping the deal to 2042.
“Section 4 of the contract gives the Town the right to request renegotiation or termination of the contract. The Town’s letter requests the City of Vero Beach to renegotiate certain terms of the agreement, among other reasons, because of the COVB’s refusal to honor the original pricing terms. We are hopeful the COVB will proceed in good faith in discussions with the Town,” Foley said.
Vero’s staff and legal team have consistently stood behind the city’s “one rate” plan implemented in October 2023, imposing double-digit annual rate increases on all of the city’s water-sewer customers, including Indian River Shores, to pay for rising operational costs of the water plant, plus the construction of a new, state-of-the-art wastewater treatment and reclamation plant at the Vero Beach Regional Airport, which is expected to cost upwards of $100 million plus interest over 30 years.
“Indeed, it is hard to conceive what is left of the original contract if the COVB refuses to renegotiate the pricing terms in good faith. The town hopes that at the end of this process both parties can avoid further protracted legal proceedings concerning the town’s options under the contract,” Foley said.
