Editor’s note: This article was first published in July, 2013. With the pending sale of Vero Electric, City leaders are now looking for ways of making up for more than $5 million in lost revenue from the electric utility. Though the City’s water and sewer system contributes to the General Fund to help pay for municipal services — such as police protection — the utility could be sold to raise money short-term to avoid the need to increase taxes or cut municipal services.
Opponents of selling the water and sewer system argue that the short-term gain would not justify the long-term cost of giving up what has been a profitable, and arguably a well-run utility offering competitive rates and quality service. Proponents of selling the City’s water and sewer system argue that government should not be in the utility business. Ironically, the propose turning the City’s system over to County government.
Now that a contract has been signed with Florida Power & Light for the sale of Vero Electric, advocates of limited government, including City Councilwoman Pilar Turner, Taxpayers Association President Glenn Heran and utility activist Dr. Stephen Faherty, contend the city should hand its waters and sewer system over to the county and get out of the utility business altogether.
Just two years ago, the County offered the city $20 million for its water and sewer system, but because the utility is valued at $70 million to $80 million, the County’s off was not well received.
Now serving 22,435 customers in the city, Indian River Shores and the south barrier island, the city’s water and sewer system is generating a 30 percent operating profit of $5 million on $16.6 million in revenue, while charging rates that are competitive with the County.
Currently, the water and sewer system contributes $1.2 million to the city’s general fund, helping to pay for police protection, parks maintenance, recreation programs and other city services.
Assuming the sale of Vero Electric to FPL can be concluded, the water and sewer system’s contribution to the general fund will become even more important to the city’s financial viability, especially given the current aversion to raising taxes.
When the County made its bid for the city’s Indian River Shores customers last year, the city agreed to match County rates. That move has led to increased revenues for the city, further debunking the claim that the city’s rates are not competitive.
At the persistent urging of Commissioner Bob Solari, the County now has its sights set on the 3,000 customers the city serves on the south barrier island. For the County to take on service to the area, though, would require million of dollars in public investment, with no tangible benefit to customers.
As it did with its Indian River Shores customers, the city has offered to charge its south barrier island residents County rates, if County rates is what they want. City Manager Jim O’Connor estimates the “offer” would actually benefit the city to the tune of some $170,000 a year, still more indication the County’s rates are not lower than the city’s.
Some who are pushing for the city sell its profitable water and sewer system to the County want to see the waterfront site where the sewage treatment plant is located made available for commercial development.
Concern for the Lagoon is another argument made for relocating the treatment plant off the waterfront. That argument doesn’t hold water, so to speak, because the city’s system, unlike the County’s, is completely self-contained, meaning there are no discharges into drainage canals or the Lagoon.
In 2011 the city began using a new $11 million, 2800-foot deep injection well, where it disposes of all the discharges from is sewage treatment and water treatment plants. In contrast, the County’s brine water and treated sewage is filtered through marshes before draining into the Lagoon.
Arguably, for the County to begin treating water and sewage for the city’s customers would only serve to increasing the risk to the Lagoon.
For the estimated $25 million it would cost to relocate the sewage treatment plant from the riverfront to property near the airport, there would be no economic benefit to the city’s customers, who would ultimately be the ones picking up the tab through higher rates.
Spending $25 million to make the city’s riverfront property available for commercial development seems to some a questionable investment.