BY KENNETH DAIGE
Thoughts voters in the City of Vero Beach might want to keep in mind before deciding any action on a referendum to dispose of or not dispose of Veros electric system to FP&L.
The November 2010 city council adopted policy to sell to FP&L. Bids for the electric system were never advertised.
Now were told the city is disposing of the electric system not selling it. There is no monetary value placed on that disposal; its a give-away.
Vero electric employees were told theyd get the iron boot if not in favor of the sale. FP&L has not guaranteed jobs to ALL Vero electric employees; they may or may not be offered a two-year job (based on FP&L specs) elsewhere which includes moving. There is still question as to whether or not a private company can assume public employee pensions.
From the start FMPA should have been notified the city was planning to sell the power plant. Any procedures that needed to be followed should have been addressed at that time not at this late stage of the process. We do not know all the details and costs of exiting the FMPA contracts. There is still question as to whether or not a private company can benefit from tax credits given a public asset.
No value has been given to the current customer base. This growing customer base is a continuous source of revenue for FP&L. A customer base that the Public Service Commission approved to pay for nuclear power plant construction whether or not such nuclear plants are built; and money is not returned to the customer if such nuclear plants are not built.
The voter has few advocates working on their behalf. According to the last referendum this sale was not to occur unless in the best interest of the residents of Vero Beach.
Most on the city council are for the sale. FP&L drafted the Letter of Intent, all draft proposals, the Memorandum of Understanding and all other related documents. The city manager was hired to sell to FP&L. The Utility and Finance Commissions were selected based on their desire to sell to FP&L. The transactional attorneys have previously worked with FP&L and were hired to negotiate the sale. All negotiations weigh heavily in FP&Ls favor. The Public Service Commission generally rules in favor of FP&L not the customers.
All Vero electric ratepayers are paying higher electric rates for FP&L required repairs and upgrades to a power plant FP&L intends to tear down (and sell to another power provider?). FP&L benefits from selling power to other customers outside our territory; there should have been a partnering of costs Including the land FP&L needs for a substation; city residents dont need the substation, FP&L needs the substation to connect with barrier island customers.
Once contracts are signed with FP&L there is no exit clause – no turning back. The rate payers will be forever tied to FP&L unless FP&L-Nextera collapses or sells to another power provider.
It is too soon to vote on the lease, all possible contracts, disposition of all related electric assets, etc. There are too many questionable actions, unanswered questions, contingent liabilities, procedures and details to the disposition of the electric power plant, the transmission and distribution lines, the airport property, the gas rights, the fiber optics, the sub-station and everything else associated with the sale.
2012 Campaign promises said that the city council did what couldnt be done; only we were never told exactly what that was. It will take more than magic, campaign promises or wishful thinking to craft and negotiate a meaningful contract that spares the residents of Vero Beach any repercussions from any questionable decisions by their elected officials.
Indian River Guardian 
The real issue now is how many times do the voters need to tell their elected officials that they want to sell the city utility system. This issue has been the subject of intense focus for the last several political campaigns. Those who were in favor of the sale earned the votes of the citizens. One of the reasons that Mr. Daige is no longer an elected official is because he was on the wrong side of that specific issue.
In 2013 there is no level of government or corporation that can guarantee anyone a job. The fact that FP&L in its proposal has offered to retain as many COVB electrical system employees as possible is a rare benefit that is not often seen.
It is correct that the issue of funds being set aside for the possible building of another nuclear power plant is a consideration. However, this is not a negative as Mr. Daige implies. The issue is a source for future savings for all FP&L customers because it is highly unlikely that political, environmental and economic conditions will ever again be opportune to consider building another nuclear power plant in this nation. This means that there is potential for FP&L to reduce even further their low rates. The Public Service Commission could be appealed immediately after the sale to address the issue of suspending FP&L from using the ratepayers funds for some long range future possibliity. The Public Service Commisiosn is well aware that no new application for a nuclear power plant has been filed since the March 1979 Three Mile Island accident.
There are so many unanswered questions. How is the voter expected to make an informed decision on this referendum? Why bring it up for a vote before we understand what the issues are, how much money will be lost or gained and how all of these factors will affect our City not only in the short run, but down the road.
One wonders what motivates a group of City Council members to plow ahead with this under these circumstances? Do they want to rush this through because they know that by doing so, the City residents who live on the island side of the City will vote as a block now, while the rest of the City, not understanding the significance of this vote, will not? Is this part of the plan on the part of some residents to dissolve the City and make it part of the county? There are signs that this is what some residents want, maybe even some of our elected City Council members.
Remember that one of our City Council members suggested that the City sell the water purification plant and the sewer plant to the county.
If that were to be done, what other functions would be left of for City?
If we sell all our income producing utilities, we are left with a Fire Department and a Police Department and other Departments that do not generate income for the City. They are cost centers for our City, not revenue centers.
We who live on the mainland within the City limits need to consider how our needs would be met if we no longer had a proper City. Are we seeing another example of the 2% making sure that they get what they want at the expense of the 98%? Think about it.
Susan Seidler seems to have misplaced worry. It is not the norm for any small local government to have revenue producing centers. The county does not have such a mechanism and it pays its bills the old fashiioned way with property taxes, license revenue and fees for some services.
The CIty Council for Vero Beach will be in a better position to pay its unfunded pension liabilties with the safe. Thus, there will be more money for both the police and fire departments than they now have.
First, unlike the Federal government, municipalities cannot tax and borrow endlessly. I asked the city manager of Sebastian recently if it had worked out for the city to sell its water and sewer utility to the county, or if Sebastian would be better off still owning its system? He said the answer to both questions was, “yes.” He went on to say that going forward, for small municipalities – such as Sebastian and Vero Beach – to survive financially, it will be “vital” that they own profitable utilities.
Second, it continues to amaze me how people can argue that Vero Beach voters have approved of a sale of the electric system, regardless of the terms. There are provisions in the proposed sales contract that make it less of a sale and more of a give-away.
Finally, I know you are eager to switch your water and sewer service from the city to the county. I would remind you, though, that there are two ways of becoming discontent. Not getting what you want is one. Getting what you want is the other. Though the city and county rate structures are, in total, neutral, the south barrier island’s high volume water users will pay more as county customers. Also, while the city’s water system is profitable, the county lost $3 million last year operating its water and sewer utility system.
Mark Schumann is correct that I and my neighbors that are a part of the Southbeach Property Owner Assn. are merely looking for the lowest rates possible on our utility bills. If the COVB rates could be less than FP&L, then there would never have been any public initiation of a plan to sell the utility. The same is true for water and sewage service.
In addition, some realtors have stated that the issue of the costs of power has a negative impact on the resale of property in this county. Thus, it is to the benefit of all residents of the county to seek the means necessary to have consistently low utility bills.
The less money that has to be paid for utility bills means more money in the pockets of our local businesses.
Transfer of ownership for all utility operations is a win-win for everyone.
You are attributing statements to me that I did not make.
There are many communities in Florida, such as Jacksonville, where their rate differential with FPL is NOT causing them to seek a sale of their system.
If what you say is true about the impact of utility rates on real estate sales, then why are prices rising on the island?
Finally, I fail to see how selling the city’s profitable water and sewer utility to the county, at anything less than a fair price, is a good deal for anyone. Again, the rate structures are revenue neutral. That last sentence in your post is simply not grounded in fact.
Jacksonville has not had the benefit of citizens who stepped up and spelled it out clearly that there is a disparity in rates between energy producers. The abesence of a movement for sale does not necessarily indicate satisfaction with the costs.
There does not appear to be any substantial increase in real estate prices on the island. There is still a great abundance of sales that have been sold at rock bottom prices. My claim about the high cost of COVB electrical costs being a impetus for purchasing a home serviced by FP&L is based on conversations that I have had with local real estate people.
A fair price for the water and sewer utililty is not particularly easy to quantify.
I may indeed not have my facts grounded but I am only able to make an assessment based on the limited information that I have provided to me.
There are more than 50 municipally owned electric utilities in Florida. They are not all running to FPL begging to be acquired. Lake Worth is looking into its options, a possible sale being one of them, but only Vero Beach is on the block. Unlike you, who seem to be focused exclusively on rates, and are not concerned about other issues of taxes and services, many of the intelligent and well-informed citizens of these other cities see the cost-benefit equation differently from you.
Real estate prices are rising on the island – outside AND inside the city. I’ll leave it for you to determine what constitutes “substantial.”
Actually, the city’s water and sewer system was recently appraised by GAI Consulting for many millions of dollars more than the $20 million the county offered.
You facts may be limited, but more to the point, your perspective is restricted to that of a person who lives on the south barrier island, who enjoys much of what the city has to offer without having to pay taxes to support the city, and who has also bought into a narrative of how the poor peasants living on the north and south barrier island are being kept in abject poverty because of the city’s utility rates.
My husband and I pay county taxes and the substantially higher rates of the COVB utility system so I do not feel that we are not providing our fair share for the very limited services that the city provides to us.
The claim has not been made that we are living in abject poverty because of the city’s utility rates. However,we know that what we pay is in excess of what our friends who live on the northern portion of the barrier island pay for FP&L utility services.. The issue is one of basic fairness. Those of us who live in the southern portion of the barrier island are being victimized by taxation without representation. The COVB takes our money to provide electrical service but will not allow us to vote in the March referendum. If the shoe were on the other foot, you would be objecting to the fairness issue as well.
It is nothing more than common sense in this economic climate to want to reduce monthly expenses. It is the very reason that the issue of selling the COVB electrical service was raised by concerned residents in the first place. Those who purchased homes on the southern end of the barrier island never made a commitment to subsidize the COVB indefinitely. .
The bottom line is that the local businesses are the ones that suffer the most from the high utility costs paid to the COVB for electrical service. If the monthly checks for utilities were reduced, there would be more opportunity to patronize local businesses.
The issue of people enjoying the services that a city provides to those who do not live in the city is not unique to Florida. It is the very reason that are occasional efforts made to charge commuter taxes. These efforts generally fail.
I sense your great concern for the welfare of businesses in the city. That’s big of you to be concerned. Ironically, though, it is businesses owners, and the owners of the city’s more valuable residential properties, who will bear the brunt of the tax increases this sale will necessitate.
Again it is important to recognize that my husband and I are not alone in our belief that the sale of the COVB utility services is a basic fairness issue. The brunt of the financial burden on business owners and the city’s more valuable residential properties has been artifically low for decades because of the fact that non-residents have subsidized the tax base through the COVB utility costs.
In the mountains of paperwork that my husband and I signed when we purchased our modest small home we did not sign anything that would guarantee that the property taxes of our neighbors who live in the city would remain low for the life of our mortgage.
No one who lives on the southern end of the barrier island has asked the city residents to pay for us to keep our property taxes at their current rate. It is hard to have any empathy for the fact that there might be a possibility if the sale ever indeed occurs that sometime in the future the city residents might see a slight increase in their property taxes.
If the COVB were to lose its income generating utility services it would have to raise property taxes on all its residents disproportionately to compensate for the loss of revenues. Like many other cities around the country it would also be strongly motivated to charge fees for all the other services non-residents currently take for granted. These would probably include permits for on- and off-street parking (with large fines and towing fees for violators), beach access fees, economically viable rents for the Riverside Theatre and Art Museum, which in turn would raise their prices for all activities like exhibits, performances, art school classes and much more. Residents of COVB will be issued passes that would exempt them from fees. The cost of enforcement would also have to be built into these fees making them even more expensive.
No doubt the county would then be pressed by these same protesters to impose fees of its own in retaliation. And then another round of self-damaging proposals would be kicked off.
It seems to me that the City and County residents would be much better served by insisting that Council Members and Commissioners be required to perform their duties without waste, favor, cronyism or pocket-lining. – George Baczynski
Remember the Cleveland Muny Light in the 1970’s
“I believe in municipal ownership of waterworks, of parks, of schools. I believe in the municipal ownership of these monopolies because if you do not own them they in turn will own you. They will rule your politics, corrupt your institutions and finally destroy your liberties.” ~ Cleveland Mayor Tom L. Johnson
“Those who cannot remember the past are condemned to repeat it.” ~ George Santayana
Pat Lavins is someone who I hold in high regard. She has frequently contributed excellent letters to the Press Journal. So I don’t understand her narrow position on this issue.
This sale makes no sense for our financially struggling City. It is step one toward its the dismantling.
The estimates of what the City would gain have ranged from Zero to $4 million. The City gets about $4 million yearly from Vero Electric, so for one year of income we would be selling a facility that earns us $4 mil./year. Over the next 10 years that would be a loss of at least $36 million.
When Pat Lavins spoke of the unfunded pension funds as one of her arguments, I learned that the pension funds had not been funded for several years. Cutting the City’s income by almost half will not help the City fund its pension funds. The income that we get from the City’s property tax (which we pay on top of the county property tax) is expected to be little more than $4.1 million according to the Press Journal on 11/14/12.
There are many ways to raise money for the City. One thing is for sure and that is that our city needs income. We certainly should not sell our electric utility that helps to fund our city and we must fund the pension plans. That is contractual.
As Mark Schumann clearly points out, it will be mostly on the backs of our businesses and our wealthier citizens to make up for the $4 million that we will be loosing by selling our plant. Remember that the value of property on the island far exceeds the value of property on the mainland and that includes island businesses.
Excellent post Michael. Thank you.
Have you ever visited any of our great cities such as NYC, Boston, Chicago or Washington DC? There is no FREE parking except on the outskirts. You have to find a meter (or risk an expensive tow and fine) or use EXPENSIVE parking lots. C.O.V.B. could raise money that way.
Try playing tennis on a public court and you will find that you need a PERMIT from the city. Go to a public beach and there are PARKING FEES and BEACH PERMITS from the city. Go to a museum and there are expensive PARKING FEES. There is a CITY SALES TAX. Many of the things that we take for granted here are expensive in other cities. These fees feed the city coffers.
Here is an example –
The City of Huntsville administers the following local taxes:
Sales Tax
Consumer’s Use Tax
Rental Tax
Lodgings Tax
Gasoline Tax
Liquor Tax
Tobacco Tax
Wine Tax
If you value the place you live in, don’t force your City to initiate these kinds of measures by selling it’s major income producer for the promise of temporarily lowering your electrical rates. That saving will be overshadowed by near doubling the City’s property tax that we pay on top of our County property tax. Our City collects about $4 million a year in property tax and about $4 million a year from the electric plant. To replace that loss of income we would need to begin charging for many of the things that we now enjoy for free as well as nearly doubling our property taxes.
Just a reminder, the services that we expect and want from our City,are not free. You get what you pay for and we pay for them through our taxes and our income producing utilities
As someon who was born and raised in Washington, D. C. I can attest to the fact that it is not factually true about having to pay to park in D. C. The only areas of the city where parking is at a premium are in the downtown area where the government facilities are located. Those ho make D. C. their home can and do park in the residential parts of the city for free.
We in Indian RIver county already have many of the fees identified in the listing of costs in Huntsville.
No one involved in the negotiations about the possible sale of the utility has made the assertion that COVB property taxes could “double..”
Reminder: The services that residents of Vero Beach have received for years have been subsidized by non-city residents having to pay greater costs than necessary for their electrical serice.
It is important to remember that it is the COVB residents who will also benefit from lower utility costs. The savings from your electric bills will be beneficial in paying for any increase in property taxes in the future.
Additionally the sale of the utility would allow the elected officials to cover the shortfall on the pensions that were not fully funded. If the utility sale does not go through, the residents of the COVB would still be liable for the pension payments and it is highly probable that taxes will increase in order to meet that obligation.