COMMENTARY

MARK SCHUMANN

The Vero Beach City Council heard yesterday from, Schef Wright, the new outside attorney working on the power sale. Wright was hired to hopefully clear a path forward where Florida Power & Light strategists and the transactional attorneys have failed.

Wright reported that he has met with FPL attorneys, with representatives of the Orlando Utilities Commission, with transactional attorneys John Igoe and Rick Miller, as well as with counsel for the Florida Municipal Power Agency.

In addition to the meetings he has held, there are a lot of documents to review, Wright said, and he is still working through them.

Wright underscored there are many challenges ahead in structuring a sale that will comply with Vero Beach’s contractual obligations and that could be approved by the 19 cities with whom Vero Beach participates in power supply projects.  Confirming what so-called “naysayers” have insisted for some time, Wright said any final agreement, assuming one can be reached, will also have to be approved by bond counsel, bond trustees, bond insurers, and various consultants.

Wright referenced a recent letter from the OUC to the FMPA detailing issues with the power transfer agreements and OUC’s bond covenants. He said he hopes to have a plan to address those issues by the end of May, adding that at that point he will seek a meeting with FMPA, OUC, and Vero Beach.

Again underscoring what “naysayers” have contended and reported for more than two years, Wright said that FMPA’s bond holders want every protection possible and that they will not assume any risk on Vero Beach’s behalf.

Wright said he has a commitment from the FMPA to work on amendments that could move the sale forward, but there are no guarantees those amendments will be acceptable to numerous third parties that must approve the deal.

FPL Vice President of External Affairs Amy Brunjes followed Wright. FPL has done everything in its power to close the deal, Brunjes said, including spending countless hours and resources to come up with “win/win” solutions for the FMPA.

Brunjes said FPL made a proposal to the FMPA which would in no way harm its members, but that FMPA is refusing to even meet with FPL representatives. In truth, by removing guarantees that FMPA members pay back their bonds, FPL’s proposals would put at risk FMPA’s bondholders.

Brunjes said that at this point it is up to the city to find a way to conclude the sale. If Wright can help the city resolve its contractual obligations to the FMPA, FPL is still a willing buyer, she said.

Brunjes reiterated that “motivated parties working in good faith” could get the deal done.  She did not explain how “motivated parties working in good faith” can erase signatures on the city’s exacting contracts with the FMPA.

Transaction attorney, John Igoe, then spoke. Revealing that he may not understand why conditions FPL placed on its $52-million offer to the FMPA were unacceptable, Igoe said he was “mystified” why that offer fell through.

Igoe said the conditions FPL put on the offer were “something we talked about all along.” Igoe did not explain that after the FMPA responded to FPL’s original offer, FPL put forward additional terms the FMPA would not accept, including bypassing the 19 cities that must approve the deal.

Igoe said he was surprised to learn of OUC’s issues concerning the transfer agreements. These significant issues, which threaten to sink the deal, appear to have surfaced after the FMPA was finally able to review the agreements.  At that point, the power transfer agreements had already been signed by FPL, the OUC and Vero Beach.

Councilmember Pilar Turner said she is being asked what the city has been doing to conclude the sale.  She asked Igoe to explain what has been accomplished thus far.

Igoe responded by saying he was aware of “attacks” by Inside Vero.  He admitted some mistake were made, such as stumbling on the private use tax issue before finally changing strategies, taking a back seat while FPL negotiated directly with FMPA, and not addressing upfront FMPA’s concerns about the power transfer agreements.

Igoe said he was under time constraints and had to get the contracts written, which raises the question of who gave Igoe deadlines.  Were those deadlines set by the former City Council majority of Tracy Carroll, Craig Fletcher and Pilar Turner, or was the timeline being dictated by FPL.

However Igoe choses to present the facts, the undeniable reality is that after billing the City some $1.5 million, he has not managed to “transact” the sale of the city’s power system to FPL.

Turner said she agrees things could have been done differently. Amazingly, she admitted she has always knew the contracts would have to be amended to address FMPA’s concerns, but that the city “ran out of time.” Again, Turner’s admission of a deadline begs the question of who thought it wise and necessary to place a contract in front of voters in March 2013, long before the deal was fully negotiated.

Mayor Richard Winger graciously said he believed Igoe and Miller had made some accomplishments, including agreements concerning rights-of-way, union employees, pension obligations, and the FAA. Igoe responded that he had worked on these issues, but that there was still work to be done on them.  Some outside observes would argue that what Igoe did was simply to pick the low lying fruit, while putting off the more daunting task of addressing the city’s FMPA contracts.

During public comment, civic activist Charlie Wilson said Indian River County Commission no longer has faith the City Council is committed to the sale.  Yesterday, the County Commission did, in fact, approve up to $100,000 to hire outside counsel to look for alternative ways tof forcing the city’s hand. Those options, Wilson said, include asking the Florida Public Service Commission to review the city’s service territory, pursuing a complaint Dr. Stephen Faherty filed with PSC, and litigating antitrust issues in court.

The County Commission latest plan for interjecting itself in the power sale will likely not be any more effective than its recent $75,000 lobbying effort.  Not one of the four utility bills proposed by State. Rep. Debbie Mayfield made it to the House and Senate floor for consideration.  All the Commission got for its money was a last minute, $200,000 budget appropriation to pay for a State Auditor General’s audit of the FMPA.

Though the FMPA is audited annually, and continue to receive positive reviews from independent credit rating agencies, Gov. Rick Scott must now decide whether to spend $200,000 of taxpayer money for an additional audit of the FMPA.

According to a high-level source in the Legislature, FPL actively supported imposing this additional audit of the FMPA.

As if a charter amendment can erase the city’s contractual obligations, Wilson called for a referendum on a resolution that Vero Beach not be permitted to operate an electric utility. As always, Mayor Winger thanks Wilson for his comments.

Utility activist, Glenn Heran, insisted the city is a “autonomous government,” and should be able to walk away from its contracts. In truth, the City Charter and the city’s code are all subordinate to Florida Statutes, the Constitution of the State of Florida,  and the United States Constitution.  Put simply, our is a nation of laws, in which contracts cannot be breached without consequence.

What’s next? The city’s new outside counsel appears capable of doing what can be done to move the sale forward, but while he is addressing hurdles long ignored, the fact is that high hurdles remain. When the dust finally settles, as it surely will, the city will be left with the task of finding other ways to lower rates.