COMMENTARY

MARK SCHUMANN

Who let the dogs out?

From early on in yesterday’s City Council meeting, when FPL attorney Patrick Bryan claimed successful execution of the sales contract hinges on the FMPA “honoring” its commitments, until some two hours later, when Charlie Wilson wound down his pulpit-bounding performance, it was clear the strategy going forward is to attack the FMPA.

In truth, because the deal calls for Vero Beach’s FMPA power entitlements to be assigned to the OUC and then sold to FPL for three years, one of the biggest hurdles to the sale is a provision in the Internal Revenue Service tax code restricting the sale of electricity generated by power plants funded with tax-exempt bonds.

Listening to utility activist Glenn Heran, State Representative Debbie Mayfield and civic activist Charlie Wilson come before the Council and the television cameras to assault the FMPA, I could not help but wonder if they were there to assist FPL and the city’s transactional attorneys in creating a smoke screen to mask what is really wrong with the structure of the deal.

Beyond the need for IRS approval, the deal must also be cleared by FMPA’s bond counsel, as well as bond trustees representing bondholders, none of whom can give the sale their blessing, if their clients’ interests are not protected.

Igoe set out what he described as “differences of opinion” between himself and FMPA representatives on the interpretation of FMPA’s contracts.  For the most part, these yet-to-be-resolved questions have to do with getting Vero Beach out of the All Requirements Project before October 1, 2016.

When Vero Beach leaves the FMPA’s ARP, and at what price, is ultimately a side issue, if the IRS and bond trustees refuse to give the deal their blessing.  FMPA Assistant Director Mark McCain said as much yesterday. “If the IRS does not provide an affirmative opinion that assures the tax-exempt status of FMPA’s bonds, the rest of this is moot.”

I wonder now if FPL representatives and the city’s transactional attorneys have concluded the best approach is to make FMPA out to be the scapegoat, if and when the deal goes south.

In a presentation that sounded as much like an outline for a legal case as it did a report for the City Council, Igoe laced together one insinuation after another suggesting the real impediment to the deal is FMPA’s unwillingness to waive its contracts, or short of that, to interpret the agreements in a manner that would best serve Vero Beach.

Far less subtle were the seemingly coordinated attacks on the FMPA voiced by Mayfield, Heran and Wilson.

“They (the FMPA) have been in the process for the last seven years to kill the deal,” Mayfield said.

“The longer you drag this out the more it is going to cost, and that cost is no one’s fault except the FMPA’s fault,” she added.

Heran followed.  “I believe the delay rests solely with the very nature of the FMPA and municipal electric bureaucracies in the state of Florida.”

Heran then tagged out, as Wilson entered the ring.  “There is no impetus for FMPA to be fair.  The have never tried to be fair.  They will never be fair,” Wilson said.

“Very much like pharaoh and Moses, Moses did not get a chance to get his people out until pestilence rained upon the pharaoh for a long time,” Wilson added, as he endorsed Heran’s earlier call for a coordinated, statewide lobbying effort against the FMPA and municipal power.

Whatever else may have been going on in FMPA’s offices in Orlando yesterday, my hunch is that no one was shaking in their boots because of what was being said about them in Vero Beach by Mayfield, Heran, Wilson, or Igoe.

Any notion that Mayfield will be able to convince her fellow legislators in Tallahassee to dismantle public power in Florida is pure fantasy.  This past legislative session, Mayfield was not even able to get a hearing for her proposal to turn the municipal utility world upside down.

In reality, Mayfield, who occupies subsidized office space in City Hall, presented a bill masked as effort to address service territory issues throughout the state, when in reality it was nothing more than an attempt to help the County Commission poach the city’s south barrier island water and sewer customers.

Wilson’s suggestion that the sale can be pushed through by amending the City Charter to prohibit the city from operating a utility business, presumably any utility business, is completely void of logic.  Does the frequent bearer of unsought advice for the City Council and the County Commission, who will reveal no more than a post office box for his address, actually believe the federal tax code and long-standing legal protections for bond investors can and will be set aside to accommodate a “poison pill” provision in a city charter?  Should Wilson’s wacky idea gain traction, that will be further proof we are now dwelling on an island of insanity.

When Wilson wasn’t illuminating a path forward into quicksand, he joined Councilwoman Tracy Carroll, and members in the audience, including members of Taxpayers Association, who enjoyed at least a few “laugh-out-loud” moments, as they heckled Councilmen Jay Kramer and Richard Winger.  Though Mayor Craig Fletcher almost surely would not have tolerated the jeering if it had been directed at him, to let incivility have its day.

Should the Council choose to take the legal route, the “path forward” will be long and expensive for the city and its rate payers.

If and when the case is finally taken before a judge, or a panel of arbitrators, both sides will have an opportunity to present their interpretation of the facts.  When that day comes, don’t be surprised if a judge, or a panel of arbitrators reminds the city and its attorneys a deal is a deal, and a contract is a contract, and the law is the law.

Then and only then will the city and FPL get to work on a plan for the utility giant to take on the city’s 22,000 county customers.  A partial sale won’t be of as much benefit to the OUC.  Much worse, though, from the perspective of the Taxpayers Association and other limited government fundamentalists, a partial would leave the city with millions of dollars more in cash, and thus with less justification for slashing services.