VERO BEACH — Electric system appraisers GAI Consultants and the transactional attorney for the City of Vero Beach brought the Vero Beach City Council up to date Thursday on the status of a possible sale of the utility to Florida Power and Light.
GAI’s Gerry Hartman went over his team’s 300-plus page appraisal of the city’s electric system section by section, explaining in detail how they arrived at the valuation of $184.9 million.
He praised members of the City Council for their time and attention to this important issue, saying he felt like they had not only read the material given to them, but that they digested it and asked lots of questions.
“Everyone on the City Council has taken this very seriously,” Hartman said.
Then Hartman explained that the number is only an appraisal of the system, which means that number is “The value to the marketplace in the owner’s hands,” the owner being the City of Vero Beach. Hartman said the fair market value of the system, or any offer that might be made to purchase it is a totally different matter.
The FPL Letter of Intent, what would come together in the transaction and the appraisal are, “Three different things,” Hartman said.
The steps GAI and its subcontractors took to do the appraisal, Hartman said, included looking at a huge number of documents, collecting data, doing an inspection of the power plant and utility assets, completing a functional analysis and looking at the intangibles involved in the operation of the utility.
There are nine separate contracts that Vero must either terminate or work through prior to handing the electric utility over to FPL. The law firm of Edwards Angell Palmer and Dodge is working on those aspects of the transaction.
Attorney Richard Miller said Thursday that his team has met either in person or by telephone with the Orlando Utilities Commission and the Florida Municipal Power Agency and that negotiations are moving along.
“Dealings with OUC were cordial, they were open,” Miller said.
Miller said the city can now expect a penalty of $20 million or less to exit the 20-year OUC contract, not the $85 million figure obtained by GAI Consultants a few months ago.
“I think they (OUC) were embarrassed a little by their previous prognostication of the damages and the public aspect of that,” Miller said. “They (OUC) want to be made as whole as possible.”
The city’s agreement with FMPA commits Vero to be part of a cooperative power-buying arrangement for the next 50 years or more.
“The dealings with the FMPA, they have been a little more guarded,” Miller said.
“But at the end of the conversation, they said we are willing to work with you and with OUC,” he said. “Overall that conversation was good, but it’s really just a start.”
Miller said he does not expect to get a written offer from FPL prior to the November election and that concluding a sale would take about two years past that point.
When asked to describe where FPL is in the process, Miller said, “I think they are trying to get a framework of an agreement.”
The Vero Beach City Council meets next at 9:30 a.m. Tuesday for a special call meeting to review GAI Consultants’ appraisal of the city’s water-sewer system and to look at GAI’s recommendations to realize efficiencies in the system. Then the regular meeting of the Vero Beach City Council will be at 6 p.m. Tuesday.
