Howle’s Press Journal guest column simplistic, misleading

COMMENTARY

“The people of Vero Beach must decide for themselves if Howle is lying to them. At the very least, he is, intentionally or otherwise, misleading them into believing that what good for Indian River Shores is necessarily good for the taxpayers of Vero Beach.”

“If the customers of Vero Electric are not to be hung out to dry, it is critical that the Council first determine under what terms a sale of the remainder of the system could be possible.  To take this so-called “first step” without fully understanding what the next step will be is nothing short of foolish.”

MARK SCHUMANN

Harry Howle
Harry Howle

In 2015, when he won a seat on the Vero Beach City Council, Harry Howle promised the voters of Vero Beach he had a solid, five-point plan for selling Vero Electric to Florida Power and Light. More than a year has passed since Howle took an oath to serve the best interests of the City of Vero Beach and its residents, and yet he has not followed through on a single one of the five steps he once claimed were necessary to sell the system.

Instead of fulfilling his promise to bring rate relief to the people of Vero Beach and to all 34,000 customers of Vero Electric, Howle now claims selling just the Indian River Shores portion of the system is “an important first step.” (Howle offers no explanation for why selling off the Shores portion of the system now will in any way improve the prospects for selling the remainder of the system.)

What makes this “first step” so important?  As puppets of the Indian River Shores Town Council, Howle, and two new members of the Vero Beach Council, Laura Moss and Lange Sykes, have made it clear they intend to give Shores leaders what they want, regardless of the likely negative impacts on the taxpayers of Vero Beach and the customers of Vero Electric.

In the original purchase and sale agreement negotiated in 2013, FPL offered $111 million in cash for Vero Electric. If FPL now pays $30 million for the Shores portion of the system, will the company then offer $81 million for the remainder of Vero Electric? If it takes more than $81 million to pay another municipal utility to assume Vero Beach’s obligations to the Florida Municipal Power Agency, then Howle, Moss and Sykes are going to be hard pressed to sell the remainder of the system, despite the promises they are now making. If the customers of Vero Electric are not to be hung out to dry, it is critical that the Council first determine under what terms a sale of the remainder of the system could be possible.  To take this so-called “first step” without fully understanding what the next step will be is nothing short of foolish.

In a guest column published in the Press Journal Jan. 3, Howle claimed selling the Shores portion of the electric system to FPL for $30 million will improve the profitability of Vero Electric. Howle is either ignoring or glossing over the fact that the sale will take several years to complete, that maintenance, capital improvements, fixed costs and most other operating expenses will not go down proportionately, that Vero Electric’s bond debt cannot be paid off immediately, that the Shores customers, while they represent 8.7 percent of Vero Electric’s power consumption, also represent far more than 8.7 percent of the system’s revenue, that the sale will mean a loss of some $600,000 to the City’s General Fund, and that Vero Beach is sure to net less than $30 million from the deal. (Expect FPL to alter the terms of its initial offer, and not to the benefit of Vero Beach.)

For all of these reasons, a team of five independent utility experts hired by the City concluded it will take $47 million, not $30 million, to insure the proposed partial sale does not lead to higher taxes and higher electric rates.  When the work of these independent experts was first presented to the Council, City Staff concurred in the conclusions. Now Staff is under pressure to pretend $30 million is a great deal for the City, when in fact they know Howle, Moss and Sykes are simply catering to the wishes of the Indian River Shores Town Council.

Howle is careful to avoid discussing the fact that Vero Electric’s Shores customers, because they are high-volume users, contribute significantly more than 8.7 percent of the system’s total revenue. Assuming the number is close to $10 million, the City will save $6 million by not having to buy wholesale power to sell to the Shores.  But what about the other $4 million?  Given that all other electric system expenses will not go down anywhere near $4 million if the Shores customers are sold, the difference will have to be made up in rate increases for the remaining customers.

Well, there is another option. Vero Beach could simply stop earning a return on its investment in Vero Electric. Rather than earning 6 percent on the electric system’s revenue, and using that money to help pay for municipal services such a police protection, guarded beaches, subsidized land leases for the Vero Beach Museum of Art and the Riverside Theatre, and other services enjoyed by Shores residents, Vero Beach could instead significantly raise taxes, or drastically cut services by laying off personnel. (Eighty percent of General Fund expenses are in salaries and benefits.)

The people of Vero Beach must decide for themselves if Howle is lying to them. At the very least, he is, intentionally or otherwise, misleading them into believing that what good for Indian River Shores is necessarily good for the taxpayers of Vero Beach.

5 comments

  1. Now Staff is under pressure to pretend $30 million is a great deal for the City, when in fact they know Howle, Moss and Sykes are simply catering to the wishes of the Indian River Shores Town Council.
    Staff should read JFK’s best selling book “PROFILES IN COURAGE”.

  2. Jim, “Profiles” is a important book and a valuable read. Your comment reminded me of a time some 24 years ago, when I bought 40 copies and sent one to each member of the Florida Senate. Today, as I wrote the sentence you quoted in your comment, I thought of former City Manager John Little. Mr. Little may not have always been right, but he was always clear and outspoken about what he believed to the best policy or course of action for the City. If and when Mr. Little thought the Council was about to make a mistake, he was brave and bold enough to tell them so. Unfortunately, the three members of the current Council majority are too small, to petty, too insecure to receive without retribution advice contrary to their own thinking.

  3. Thomas, FPL’s persistant attempts to acquire Vero Electric, in whole or in part, is an important story because of the implications it has on City finances. When the power sale was first proposed, Glenn Heran and Steven Faherty, and then others, argued that the savings on electric rates would more than offset the tax increase that would be needed to make up for the loss of the annual transfer to the City’s General Fund of some $5 million to $6 million dollars. (Well, in truth, they put forward that rational only after it became obvious that their promise of a net gain to the City of some $150 million was pure fantasy.)

    In the fall of 2013, when it appeared to then Council members Tracy Carroll, Craig Fletcher and Pilar Turner that a sale could be concluded the following spring, their approached to dealing with the inevitable loss of revenue from the Electric Utility was not to raise taxes an offsetting amount, but to make drastic cuts in municipal services. Current Council members Harry Howle and Lange Sykes contend the City should further cut expenses, even without the prospect of a sale in the next year or two. What kind of cuts, then, do you think they will propose when the Council is looking at the loss of $5 million to the General Fund? The power sale’s strongest proponents are also limited government fanatics. They intend to use the sale as an excuse for gutting municipal services.

    Ultimately, what some of them want is unified local government, where a County Commission owned and controlled by builders and developers can clear the way for higher density development within what is now the city limits of Vero Beach. You may find it “exhausting” to follow this story, but it is important to continue to report on it. Certainly those who would willingly sacrifice the quality of life in Vero Beach for financial gain are not exhausted. For them this is a treasure hunt, and they are not going to rest until they have opened the treasure chest. On the island, there are those who would like to see a separate municipality for the barrier island, something like the Town of Palm Beach. Nothing would serve this aim better than to put the City of Vero Beach in financial distress.

    That is why, following a sale of Vero Electric, they will move to force Vero Beach to sell its profitable, well-managed water and sewer utility to the County. Thomas, your bloq, Vero Communique’, when it is not praising Laura Moss, carries stories such as the current one on media trends, and features photographs from around the world. If you want to make a positive difference for the people of Vero Beach, do some serious reporting about what is about to happen to the community. For example, the developer-friendly County Commission, tired of maintaining the recreation fields across the street from Vero Beach High School, is seeking from the City a re-zoning for those fields so they can be sold to commercial developers. Thomas, there is something very special about Vero Beach and Indian River County, and I can tell you that something special is not Bob Solari and his developer-owned buddies on the County Commission. And that something special is not the members of the City Council who are looking for an excuse to gut municipal services.

  4. Last year I sat down with then Mayor Jay Kramer and ask him to explain the Vero Electric issue to me. Over lunch Jay, who at first helped broker and supported the sale of IRS power to FPL changed his vote when the numbers came back as you have shown them here. As a duly appointed representative of the people of the City of Vero Beach he had no choice but to reject the deal and he was pilloried for it in the press which is heavily influenced by big money interests. I clearly understood Jay’s rock and a hard place position and wondered why he was creamed for just doing the job he was elected to do. The sale is not a done deal yet but when it happens city dwellers will pay the price.

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