FPL ties partial sale to full sale, wants 99-year lease on City property

As a condition of its offer, FPL is asking to lease a portion of the power plant site for 99 years. The previous purchase and sale agreement between the City and FPL, which expired Dec. 31, 2016, called for the company to lease the entire power plant site for just 5 years.
NEWS ANALYSIS

To sell Vero Electric on the terms proposed by FPL amounts to malicious obedience, for the sale many people think they want will not lead to the results they are expecting. Howle, Moss and Sykes know this, but they seemed determined to press ahead anyway. Quite simply, they do not represent the interests of the people of Vero Beach. Like so much of the false and misleading political advertising that has poisoned recent municipal elections, Howle, Moss and Sykes are bought and paid for by FPL.

MARK SCHUMANN

Florida Power and Light today unveiled an offer to acquire Vero Electric in a deal the company says is worth $185 million.

Of the $185 million, $108 million would be paid to the Florida Municipal Power Agency, $20 million to the Orlando Utilities Commission and $20.4 million would to go retire debt on the City’s electric utility. Of the remaining $36.6 million, $6.6 million would partially underwrite pension obligations to existing employees of Vero Electric. Another $10 million is earmarked as rent on City land FPL proposes to lease for 99 years, leaving the City with net proceeds of $20 million on the deal.

To put FPL’s offer in some historical context, in 2008 and 2009, when utility activists Glenn Heran and Steven Faherty first began building support of the power sale they projected the City would net, not $20 million, but closer to $180 million. Interest earnings on the sale proceeds, Heran and Faherty said, would offset the loss of more than $6 million in annual earnings off the utility. Without that annual transfer from the electric fund to the General Fund the City will need to raise taxes and/or cut services. When support first began to build for the sale, the rates differential between Vero Electric and FPL was some 30%. Today, the effective differential is closer to 7%.

A key component of FPL’s offer is a provision requiring the City to sell just the Indian River Shores portion of Vero Electric, if a sale of the full system cannot be completed. Many who support a sale of the full system have raised serious doubts about a partial sale. Such a carving up of Vero Electric, they say, may benefit Shores residents, but will lead to higher rates for the remaining customers, both those within the city and those located in the unincorporated areas of Indian River County.

Given the narrowing gap between FPL’s rates and those of Vero Electric, perhaps the best option for Shores residents, and likely for everyone, would be for the City to offer its Shores customers FPL rates.  Such a proposal has at least been casually raised by one former Council member. Shores residents would have the guarantee of more responsive service and the would have FPL rates , or Vero Electric’s rates, whichever are lower. The remaining customers of Vero Electric would be spared the higher costs that would result from contracting the system.

To put FPL’s proposal for a Shores partial sale in some political context, in the most recent municipal election, Laura Moss and Lange Sykes received nearly all of their financial support from Shores residents. The three Council members were also supported by a political action committee armed with $50,000 from FPL. In the 2016 municipal election, Harry Howle was also aided by significant support from FPL.  Given their close connection to Shores supporters and to FPL, some question whether Howle, Moss and Sykes can be counted on to negotiate the best deal possible for the people of Vero Beach.

Another key component of the deal is FPL’s request to lease the substation site on the northeast corner of Indian River Boulevard and 17th Street for 99 years. In 2010, Vero Beach voters approved a referendum allowing for the lease of the power plant site for the purpose of selling Vero Electric. At the time, though, the public was told FPL would want the land for no more than 5 years. Now FPL is asking to lease a portion of the power plant site, not for 5 years, but for 99 years; and a 99 year lease is tantamount to selling the property.

Councilman Richard Winger today said he considers the terms laid out in FPL’s letter of intent as a starting point for further negotiations. During last week’s Council meeting, though, Winger expressed concern that Howle, Moss and Sykes will accept FPL’s terms without first asking the Utilities and Finance Commissions to analyze the likely financial impact of the proposed deal.

At least since 2009, FPL has persistently cultivated relationships in Vero Beach, worked to persuade the public of the supposed benefits of a sale of Vero Electric, and, most importantly, has recruited and supported City Council candidates, such as Harry  Howle, Laura Moss and Lange Sykes, who will do the company’s bidding.

The promises Heran and Faherty made when first building support for the sale will never be realized. Rate savings will be far less than promised. Taxes will increase. Public services will be scaled back. Even with tax hikes and draconian spending cuts, the City will still be challenged to balance its budget.

To sell Vero Electric on the terms proposed by FPL amounts to malicious obedience, for the sale many people think they want will not lead to the results they are expecting. Howle, Moss and Sykes know this, but they seemed determined to press ahead anyway. Quite simply, thye do not represent the interests of the people of Vero Beach. Like so much of the false and misleading political advertising that has poisoned recent municipal elections, Howle, Moss and Sykes are bought and paid for by FPL.

 

 

 

2 comments

  1. The full text of FPL 15 page letter of intent is now posted following the story.

Comment - Please use your first and last name. Comments of up to 350 words are welcome.

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s