Editor’s Note: Richard Winger is a member of the Vero Beach City Council.
The Good news in my message today is that FP&L has submitted a document stating their intent to finalize a Purchase and Sale Agreement at Council’s only meeting in July on the 18th. Their document includes details of their “Due Diligence” for the Acquisition of our Electric Utility. The draft had been submitted and now they will finalize it.
This “Agreement” will be something determined by each party: FP&L’s part is the “Purchase” and the City’s part is the “Sale”. When does the City start to work on our “due diligence”? Surely it cannot be an Agreement when only one party to it has done “Due Diligence”.
This is where the Bad enters my message. Not only have we not done our due diligence, but we now learn the Orlando Utilities Commission (OUC) has just made it clear they find FP&L’s offer in the Letter of Intent for the Vero Beach exit unacceptable. This is the same situation we had in the prior contract which expired last December. At that time FP&L wanted to pass along $26,000,000 to the ratepayers, to be attached to their monthly bills, to accommodate OUC’s exit cost. If we are face with that again, power bills would likely increase over current Vero Beach rates, given the City has gone down 15% and FPL has gone up 10%. The differential has shrunk greatly.
More Bad News: The FP&L offer, as stated in their Letter of Intent on May16th, is $18.6 million less than it was three years ago. In March 2014 it was $203,600,000. Now their offer is $185,000,000.
This is despite the fact that in the interim we have commited/spent $23,000,000 to improve the transmission and distribution system. This is clearly of benefit to FP&L, making the system more valuable, yet their Initial offer does not reflect it. What the $185,000,000 should represent; though, is a starting point in negotiations.
When the best interests of the people of our City and every ratepayer of the Electric Utility is taken into consideration, it is the responsibility of each Member of our City Council to perform due diligence and to push to negotiate a better price. Since we cannot expect Council members to have a background in Utilities or Finance, we have Advisory Commissions to serve in that capacity. Where is the benefit of their experienced counsel now? It is past time to ask these Commissions to look at FP&L’s initial offer.
The Transactional Attorney was paid $500 an hour to receive an offer from FP&L but not to discuss it and not to negotiate it.
So we find ourselves now with no due diligence. No negotiations. No benefit of guidance of any kind – neither voluntary nor professional.
Have we reached the Ugly? The financial implications of a sale that does not reflect the true value of this asset will put the City into a very Ugly situation.
Our Budget meetings are July 10-12. To prepare, both Council and Staff must have an understanding of the funds required to provide for the services you want at a reasonable tax rate. This is not only for the coming year, but for a viable future. Failing that, services are in jeopardy and our tax rate will be reflective of it.
Do you want twice weekly garbage pick-up? Should residents and visitors have guarded beaches? Do we still provide recreational facilities for our children? Can our premier police protection be maintained? Can we provide more protection to the Lagoon such as storm-water management? Can we keep our parks for the enjoyment of our neighborhoods? Can we keep our roads repaired? These are critical matters which define our quality of life.
It is time to understand what can be restructured, without losing services and increasing tax rates. Then we must understand what the net proceeds of the sale will be. But before that we must do due diligence and NEGOTIATE a higher sales price based upon the greater value of the Utility now as compared to 2012 and 2014.
It is our obligation to have sufficient funds to endow our City with the proceeds from this sale. It will not happen if we do not prepare for it. Doing that now is not only imperative, but a Very Good Thing!
P.S. Please pass this message along to your friends and neighbors.