Where went the $90 million pot of gold at the end of the rainbow?

COMMENTARY

MARK SCHUMANN

In advance of the 2009 Vero Beach City Council election, candidate Charlie Wilson told voters the city would have $90 million to put in the bank from the sale of Vero Electric.  Wilson’s claim now appear to be off by at least $90 million.

Based on Florida Power & Light’s cash offer of $111.5 million, Finance Commission Chairman Peter Gorry first estimated the city could expect to net no more than $3 million to $4 million on the sale of its 33,000-customer electric system.  Gorry’s projection assumed a January 1, 2014 closing, since that was the official position of the City Council at the time, and was calculated before the city and FPL agreed to a purchase and sale contract allowing for a closing as late as Dec. 31, 2016.

With the closing delayed at least beyond the end of the next fiscal year, and with the costs for legal fees, additional insurance and pension obligations likely to rise, Gorry now says all bets are off on whether the city will have any money left to put in the bank after the pipers have been paid.

Charlie Wilson stands with Councilwoman Pilar Turner and the contract signing ceremony for the purchase and sale agreement between the city and FPL.
Charlie Wilson stands with Councilwoman Pilar Turner at the contract signing ceremony for the purchase and sale agreement between the city and FPL.

This “zero sum” scenario stands in stark contrast to what Vero Beach voters were told in 2009 by then City Council candidate Charlie Wilson, who received the most votes in the 2009 Council election. Wilson, along with Brian Heady, won the election in 2009 on a presumed mandate to get the city out of the power business.  Once in office, Heady and Wilson, with support from Kevin Sawnick, quickly moved to open discussions with FPL.

A month after taking office, Wilson lost his Council seat when Judge Paul Kanarek ruled that Wilson had not met the residency requirements to run for a seat on the Vero Beach City Council. By that point, though, FPL had already taken a permanent seat at the negotiating table.

Though he served as a City Councilman for just one month, Wilson participated in a 3-2 Council vote that could prove to be one of the most momentous Council decisions in the history of the city.  Now that it is clear Wilson’s calculation did not account for the cost of the city extricating itself from long-term commitments to the Florida Municipal Power Agency and the Orlando Utilities Corporation, and now that it is known there will be no $90 million pot of gold at the end of the rainbow, it seems reasonable to wonder where the city would be today if all the numbers had been on the table in advance of the 2009 Council election.

If voters had not gone to the polls in 2009 believing the city would benefit from some $5.6 million in investment earning on $90 million in proceeds from the sale of Vero Electric, proceeds which will never materialize, would the city now be considering selling Crestlawn Cemetery, or laying off its animal control officer, or going yet another year without offering raises, or letting grass in parks and roadways go unkept.  In the words of City Manager Jim O’Connor, would we be trading a Macy’s heritage for a Walmart future?

So, what exactly were voters told before they went to the polls in the fall of 2009 in support of Wilson?

Essentially, Wilson said the city could expect to net $90 million from selling Vero Electric.  He said the investment earnings on the $90 million would “yield us the same amount of money that is being transferred from the power plant to the general fund.”

What follows is the unabridged answer Wilson gave VeroNews.com/Vero Beach 32963 reporter Mary Beth McDonald, when she asked him about a possible sale of Vero Electric.

McDonald:  Charlie, a lot of people feel that the City of Vero Beach should not be in the power business any longer.  How do you feel about that?

Candidate Wilson:  Well, first of all, thank you Mary Beth for allowing me to be here and to answer these questions.  That’s an important question, and it’s very easy.  If the City of  Vero Beach cannot be competitive in the power business, it needs to be out of the power business.  And, frankly, there is a way to do that.  I have a plan that will allow us to leave the power business without increasing taxes and can reduce your rate by up to 30 percent.  Now, one would say, “How can you possibly do such a thing?”

Here’s the simple answer to a very complex question.  What we have is the power plant is worth about $150 million dollars, a pretty substantial amount of money.  We owe about $60 million dollars. What I suggest and what my plan is, it will take a period of about a year, is to sell the power plant to Florida Power & Light, take the $150 million dollars, pay off all the debt, which is $60 million dollars. 

That leaves us $90 million left. We can invest that $90 million in secure things like government bonds, and that will yield us the same about of money that is being transferred from the power plant to the general fund.  So, it will not be necessary to replace that amount with property taxes.  And then we can lower everybody’s rate to Florida Power & Light’s rate, which is about 30 percent less than we are paying right now.

3 comments

  1. Government bonds are secure? Maybe so, but in the current climate they will also cost you money, or net a possible gain of less than .5%, hardly tempting or job saving.

  2. Louis Yavash — Is it possible to believe anything Charlie Wilson has to say with regard to the sale of FP&l ?

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