BY MARK SCHUMANN

With yesterday’s overwhelming voter approval of the proposed asset purchase and sale agreement between the City of Vero Beach and Florida Power & Light, the city either moved one step closer to selling its electric system, or it inched a little further down an long, “arduous” path that may ultimately lead to a dead end.  Only time will tell.

As late as yesterday, Mayor Craig Fletcher insisted he is “70 percent” confident of closing the deal in early 2014.   Along with Fletcher, commenters on TCPalm.com last night who were repeating the mantra, “Sell it now!” clearly haven’t absorbed the reality that numerous and perhaps insurmountable hurdles lie ahead.

The only meaningful action possible now is for the city’s transactional attorneys to finally roll up their sleeves and get about work they should have completed months ago, namely determining if the city can sell its electric system to FPL in a way that will not jeopardize the Florida Municipal Power Agency’s credit rating or the tax-exempt status of its revenue bonds.

The Council majority of Fletcher, Tracy Carroll and Pilar Turner called for the referendum now, months before negotiations could be finalized, because they are planning on presenting the results to each of the 14 member cities of the FMPA’s All Requirements Project.

They, along with the city’s creative and expensive transactional attorneys, plan to argue that the wishes of Vero Beach voters should be seen as a compelling reason to grant Vero Beach the waiver it will need to close the deal with FPL before late 2016, never mind that consequence for the remaining All Requirements Project cities would be their assumption of Vero Beach’s contingent liabilities.

It will become clear soon enough that the city will remain a member of the FMPA’s All Requirements Project through September 30, 2016.  Unfortunately, anyone who believes the system can be sold “now” is going to be sorely disappointed.   Rates for Vero Electric’s 34,000 customers will rise for at least three more years, as the city tacks on mounding legal fees and capital costs to already high electric rates.

Though some will argue voters approved the contract unaware of the likely delays, I would prefer to believe a majority of voters supported the referendum fully aware of the short-term costs of not pursuing other options to reduce rates now.

Either voters approved the referendum with full knowledge of the hurdles ahead, or the public is easily duped.  The latter is an assessment I would prefer not to believe.

Beyond the issues raised by a three-year delay in the closing, the larger question is whether or not the deal can ever take place, given the FMPA’s legitimate interest in protecting its credit rating and the tax-exempt status of its revenue bonds.

As the city moves ahead in its discussions with the FMPA, it may have to renegotiate its power purchase agreements with the Orlando Utilities Commission.  Though the transactional attorneys have argued the referendum question specifically and exclusively addressed the city’s agreement with FPL, the side agreements with the OUC are, in fact, referenced in the sales contract.

It should be remembered that voters approved a sale under terms “substantially similar” to the agreement signed by the city and FPL two weeks ago.  As the transactional attorneys work to find a way over, under or around the FMPA issues, any substantial changes to the terms of those agreements may render the referendum null and void.

While there is hardly universal agreement on this interpretation of the scope of the referendum question, it is an issue that has potential litigation written all over it.  This is a chance the Council majority took when they scheduled a referendum before contract negotiations could be completed.

As much as the community would benefit from resolving this divisive issue now, the reality is it will take months, perhaps years, before it is known if the city will be able to sell Vero Electric to FPL.

Those who are celebrating the results of the referendum and believe they know how this will turn out are simply going to have to wait while the lawyer to their work.  Only time will tell.