BY MARK SCHUMANN

VERO BEACH – At Councilman Richard Winger’s request, Rick Miller, an attorney representing the city in its negotiations to sell the electric system, appeared before the City Council last night to answer questions about the status of negotiations with the Florida Municipal Power Association.

Among other questions, Winger asked for a report on a meeting Miller and his associates, John Igoe, had in Orlando last Tuesday with representatives of the FMPA.  It was the first face-to-face meeting in more than a year between the city’s transactional attorneys and representatives of the FMPA.

Because the city has long-term contractual obligations as a member of the FMPA, the failure to resolve any one of four key issues could delay the sale until late 2016, or perhaps make it impossible for the city to sell its electric system under the terms being proposed by Florida Power & Light and the city’s transactional attorneys.

“This is going to be tough,” Miller said, characterizing the process as “arduous.”

City Manager Jim O’Connor’s recently estimated the chances of successful negotiations at 60 percent, underscoring Miller’s assessment.

Miller explained that in taking the position the city should be free to leave the FMPA’s All Requirements Project before late 2016, his firm argued that technically Vero Beach is not selling its electric system, but is rather “abandoning” it.  This reasoning, Miller said, was a “thoughtful interpretation of the contract.”

“It was worth a try,” Miller said.

The FMPA’s legal counsel, however, did not accept the argument set out by Miller and Igoe in an eight-page memo written a few days in advance of last week’s meeting in Orlando.  Rather, Miller said, the FMPA’s representatives are holding to a “strict construction of the agreement.”

As a result of the latest discussions with the FMPA, it appears clear the city will now be required to seek approval from each of its18 members of the All Requirements Project, if it is to withdraw from the group before Sept. 30, 2016.  Should any one of the member city’s balk at letting Vero Beach out of its contingent liabilities early, the deal with FPL cannot close before late 2016.

As last week’s Finance Commission meeting, several commissioners raised questions about what a delayed closing beyond Jan. 2014 will cost the city, given the structure of the proposed purchase and sale agreement.

Their concerns included the fixed $54 million price the city will be committed to pay the Orlando Utilities Commission to assume its FMPA obligations and to cancel a separate wholesale power agreement, an additional $20.3 million the city will be obligated to spend on capital improvements in 2014, 2015 and 2016, the cost to the city of the pension obligations for any Vero Electric employees who retire after Jan. 1, 2014 and before the sale finally closes, and mounting legal bills, now at more than $750,000.

Beyond the issues Miller’s firm is seeking to resolve regarding the city’s membership in the All Requirements Project, he explained the FMPA has two additional concerns with the power transfer agreements negotiated between the Orlando Utilities Commission, Florida Power & Light and the city.  As structured, those agreements may jeopardize the tax-exempt status of FMPA bonds, and may impact the organizations bond rating.

According to Miller, a conference call with the FMPA’s bond trustees and bond counsel is schedule for later this week.  “There is reason for optimism,” he said, even raising the prospect of arbitration.