Turner, Howle vote not to invite counteroffer
After hearing three hours of at times impassioned public comment, the Vero Beach City Council today declined to accept a $30 million offer from Florida Power & Light to buy the City’s approximately 3000 customers in the Town of Indian River Shores.
Staying with an estimate of approximately $47 million prepared by a team of consultants hired by the City, Mayor Jay Kramer, Vice Mayor Randy Old and Councilman Richard Winger rejected FPL’s proposal, but at the same time committed to approve the proposed partial sale at $47 million, if FPL and the Shores are willing to meet that number.
Following the Council vote, FPL vice president Pamela Rauch came to the podium to remind the Council that FPL’s offer was final and would expire on Aug. 25.
In making an original motion to accept FPL’s proposal, Councilwoman Pilar Turner said, “We have been given a reasonable offer that protects our customers, and that will return tranquility to our community.”
Though Turner was supported in her motion by Councilman Harry Howle, many who addressed the Council today, and three of her fellow Council members, disagreed with Turner on at least one, if not both points.
Winger said he felt he would be violating his fiduciary responsibility if he approved a sale at anything less than $47 million. That is the number consultants have said it will take to ensure the City’s taxpayer and remaining electric customers are not burdened with higher rates and higher taxes as a result of the sale.
Earlier in the meeting, Winger asked the City’s special utility counsel, Schef Wright, if he thought making a deal at $30 million would protect Vero Electric’s remaining customers from paying higher rates as a result of the sale. “No,” Wright answered.
Winger than asked Wight if he thought a sale at $47 million adequately protect the City, its taxpayers and electric customers. “Yes,” Wright replied.
Much of the early discussion and debate surrounded assumptions underlying the financial model the City’s consultants used to calculate a “break-even” price for the sale. Howle questioned whether the City’s concerns about potential future liabilities are realistic. “Have we ever had an instance when we have been responsible for contingent liabilities?,” he asked.
Wright explained to Howle that one such instance was when the City had to pay its 1.339 percent share in the total multi-million dollar cost of upgrades FPL made to its St. Lucie nuclear power plant.
In addressing the Council, Vero Beach resident Al Benkert said that if officials with FPL or the Shores were so inclined to minimize the City’s concerns about contingent liabilities, then perhaps they should assume those obligations as a part of any sale.
Benkert then asked for a show of hands of City Council members who have received significant campaign contributions for residents in the Shores. Kramer discouraged his fellow Council members from answer the question, but Benkert made his point. “People who have allegiances to FPL or to the Town of Indian River Shores should recuse themselves from voting on the sale,” he said.
Later in the meeting, former City Council member, Ken Daige, said “It doesn’t take rocket science to go through the campaign finance reports to find out who is supporting who.”
Daige asked the Council to respect the work of its consultants. “Please stand by your oath,” he said in concluding his remarks.
At one point, without indicating if the comment that following had just occurred to him, or whether it had been emailed or texted to him, Howle said, “This just came to me.” Howle then raised the prospect that if the Shores renewed its lawsuit against Vero Beach and was ultimately successful in court, the City would be forced to sell its Shores customers for much less than $30 million.
“I don’t agree with that,” Wright replied, pointing out that in already having dismissed its lawsuit “with prejudice” the Shores is prevented from again initiating litigation on the same grounds. Even if the Shores were to prevail in its current petition before the PSC, Wright said he thinks any so-called “forced” sale would still be based on the same professional estimates. “In my view, the City would be in exactly the same position we are today.” Wright said.
Howle also questioned the assumption of the City’s consultants that Vero Electric’s expenses will rise and average 3 percent a year over the next 30 years. Wright explained that the City’s number was based on an assumption of an average annual inflation rate of 2.5 percent (the same number used by FPL in its filing with the Florida Public Service Commission) and on projected customer growth of and average of .5 percent a year.
In laying out his company’s offer, FPL Vice President, Sam Forrest, said he believed the City’s team was underestimating the cost savings that would result from the sale. City Manager Jim O’Connor, and others, countered that Vero Electric already has a low employee-to-customer ratio. O’Connor said he just didn’t see an opportunity to reduce Vero Electric’s workforce by the 10 percent FPL has suggested would be possible.
Vero Beach resident Honey Minuse said, “The numbers aren’t working.” Minuse said she believe FPL was “doing the best the can,” but that the shifting more of the burden for fixed costs to Vero Electric’s remaining customers would not be “fair and just.” “Your responsible is to the people,” Minuse said.
South Beach Property Owners Association president, Miles Conway, said many south beach residents fear a partial sale for the Shores will, in the long run, make a full sell less likely, while also shifting more costs to South Beach residents.
Referring to the Utilities Commission’s vote last week to recommend accepting FPL $30 million offer, Finance Commission Chairman Peter Gorry pointed out that the UC is only responsible for three of the City’s five enterprise funds, and is not responsible for, or equipped to asses the overall impact of the sale on the City’s finances.
Gorry was clearly opposed to the Council accepting FPL’s offer without further study. “Due diligence done on the full sale was obviously flawed, because we don’t have an executable contract,” Gorry said, later adding, “I have some real reservations about the $30 million number, and I think we should do due diligence.”
It would seem it is now up to Shores and FPL officials to consider if an how they might meet Vero Beach’s $47 million asking price. Vice Mayor Gerry Weick, who at one point interjected himself into the Council’s deliberations, said the Shores would not consider helping FPL pay more than what has been offered.