BY MARK SCHUMANN
City manager is asking the wrong question
Yesterday, City Manager Jim O’Connor tried to pass the budget hot potato to the Finance Commission, which deftly tossed it back to him. Next week O’Connor will hand the City Council the unpleasant task of figuring out how to do less with less. O’Connor is asking the wrong question, perhaps because he is assuming the community is willing to accept diminished city services in order to achieve lower electric rates.
The question to ask isn’t “How can we do less with less?” Courageous leadership that would maintain what is valuable and even vital to preserving the quality and character of our community would, instead, ask, “How, through a combination of tax increases and targeted spending cuts, can the city and its taxpayers be weaned from dependence on electric system revenue without letting our community become far less than we want it to be?”
Is no one in city leadership willing to level with the public that the promised savings in electric rates will at least partially have to be offset by tax increases? And why, instead, does it seem wise and prudent to some to take a meat axe to city services?
Shooting at a moving target
Listening to Finance Director Cindy Lawson explain to the Finance Commission how the various city departments will benefit if the expected proceeds from the sale of Vero Electric are used to pay off underfunded pension liabilities, I could not help but wonder if the city’s leaders are counting their chickens before they hatch.
The now widely held assumption is that, as a result of the sale, some $30 million in utility reserves will be available to restructure the city’s pension obligation. Building post-sale financial models on the assumption that pensions can be fully funded may prove to be nothing more than an exercise in wishful thinking.
For starters, the sale will likely not take place before late 2016, if it happens at all. Anyone who is not clear about that must have just arrived from another planet.
Second, resolving the city’s contractual obligations to the Florida Municipal Power Agency and its bondholders will the cost the city, perhaps dearly. Don’t be surprised if city leaders some day reveal that most if not all of the $30 million in reserve funds will have to be used to cover additional transaction costs.
With all the variables to be worked out as the city and Florida Power & Light seek approvals from the Federal Energy Regulatory Commission, the Department of Justice, the Florida Public Service Commission and the Florida Municipal Power Agency, trying to get a fix on what sale proceeds will eventually be available to the city is about a risky as going duck hunting with former Vice President Dick Cheney. Quite simply, Lawson is being asked to hit a moving target.
The cost of “liberating the waterfront”
The Finance Commission also received a brief update yesterday on discussions the city is having with FPL about the location of the new substation. “We’re working on it,” O’Connor said.
Well, there isn’t much to be worked out. If FPL wants to build their new substation and industrial complex on the corner of 17th Street and Indian River Boulevard that is how it’s going to be. Why? Because Councilmembers Craig Fletcher, Tracy Carroll and Pilar Turner stand ready to give FPL representatives whatever they want.
I continue to be amazed at the community’s willingness to tolerate a missing conversation about how much it is costing to achieve Turner’s objective of “liberating the waterfront.”
O’Connor insisted again yesterday that letting FPL have four acres of the 17-acre power plant site is not possible because doing so would require voter approval. Why not ask city voters if they would prefer to receive millions in additional sale proceeds and retain ownership of the former postal annex site, in exchange for letting FPL have four acres of the current power plant site? That would still leave 13 acres on the water available for public use.
The likely alternative, of course, is not a 17-acre park, but a commercial development just north of the bridge, complemented by the behemoth substation and staging facility FPL plans to build on the former postal annex site. This is a high price to pay to satisfy Turner’s desire to have a better view from her back patio.
Indian River Guardian 
Mark,
You forgot to mention in this article that the city manager works at the pleasure of the council and he has to please three votes to keep his job. Since he is a smart guy, he knows where the three votes are so, it appears he can play the game too.
The ‘sale’ was campaigned as if an on & off switch was the vote to change from Vero Electric to FPL – without any change in services and an infusion of cash into the local economy.
Inflamed emotions and self-interests ran the sale.
Reason, logic and compassion will be needed to bring common sense back to the table.
Deb Daige is wrong about the sale of COVB electric services to FP&L not being an infusion of cash into our local economy. Just the South Beach Property Owners alone will have a huge positive impact on the local economy once we are rid of the burden of exorbitantly high electric rates being paid to the city.
Steve Faherty who was one of the leaders in addressing the issue of the taxation without represent issue hs identifid that non-city user have paid $1,223 more since April 2011 because of not having FP&L rates.
Inflamed emotions and self-interest did not influence the sale. It was pure logic and basic math. It is common sense that no one should be paying more than necesary for a basic service such as electricity.
Both Bea Gardner and Pat Lavins a bit off in their estimations of how cash would flow into the Vero Beach economy. First it will be over many months or years, and will be hard to track as the economy changes and the populations of the affected areas change.
South Beach property owners are not a cohesive group, nor are
they of one mind. Also, the only overall governing organization and is the lose-jointed South Beach Property Owners with the only taxing authority being the County Commission. Most South Beach residents do no give a whit about what is going on in one of their neighboring associations. That is not to say that the right mix of issues and an energetic leader might give them more political clout.
We are only seeing a small flash of interest but are likely to see more when the City/County start fighting over the ownership of water and sewer infra-structure, taxing that will likely come when the County starts paying the City for infrastructure. It is one thing to throw all the gas stations, fast food stores, groceries etc., off the barrier island, It will be a bit different when they start carrying a direct load of street and right of way maintenance, water and sewer lines, etc. The County is likely to see them as just another cash cow. If the SBPOA is to have a future, it might be wise for their leadership to start looking at reorganizing in a manner that is not just a group of sub-divisions, but one with more clout and authority, That may be the only way to protect themselves when they can look at the county as the holder of all their taxes and their structural future.
It won’t be fun, and it won’t be cheaper!
Warren Winchester
William Winchester failed to give any evidence to support his assertion that “South Beach residents do not give a whit about what is going on in their neighboring assocations.” If that were true Steve Faherty and others would not have been successful in identifying that it is possible to get cheaper electrical rates. If the South Beach had the same rates as do the city property owners, the COVB leaders would not have had a reason to sign the sales agreement with FP&L.
The issue for the costs of the infrastructure for water and sewer is too far off in the future to worry about now.
The SBPO Association had sufficient clout to get the conversation going about the fact that home owners on barrier island have been subsidizing the city coffers for decades. It is important to remember that it is not only non-city electric users who are going to benefit from the sale of the COVB electrical rates. City property owners will also have more cash in their own personal bank accounts!
Speaking of not offering any evidence, most, if not all of the points you made in your earlier comment are unsubstantiated. What I found most puzzling was your suggesting that the federal government can and should pick up more of the cost of city government.
The only substantion that I can provide affirming that the residents in the south beach area care about their fellow citizens comes from fifteen years experience in living on the barrier island. It is important to remember that those who live on th barrier island first brought to light the disparity in electric costs. When Steve Faherty did the analysis and substantiated the high costs for electricity, he advocated that users have their costs reduced. He did not only advocate on behalf of the barrier island community. He presented a clear case that the city users could also have the opportunity for lower electricity costs. The South Beach community supported these efforts.
Those who live in the 32963 zip code have a huge inflow of money going into the U. S. Treasury and a low rate of return back to Indian River County. I see nothing wrong in making full use of existing Federal money to get more revenue into the city coffers. There is nothing puzzling about using Federal programs as they were intended to be used.
The potential reduction of electric rates for all in Indian River County has the potential to be a big boost to the revenues of the local business community. I am not able to boost mountains of documentation to support the claim. I am only using logic.
The COVB elected officals have known for years that the potential existed that the revenue from electrical service could be consider ably reduced. They also saw changes in the elected officials as the voters repeatedly voted for the candidates that advocated to do something about the high electric costs. Thus, the loss of this revenue should not have come as a big surprise and budget planning should have been done to accommodate a potential new reality.