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Carlos Alvarez, Esq. December 11, 2014 Page 3 Procedural History The Town is an incorporated Florida municipality of approximately 4,000 residents in Indian River County, Florida, and is a customer of the City's electric utility. The Town was established by Chapter 29163, Laws of Florida (1953). The City is an incorporated Florida municipality of approximately 15,000 residents in Indian River County, Florida, and operates a municipal electric utility that currently furnishes electric utility service to the Town and other customers located within and outside the City limits. The City was established by Chapter 14439, Laws of Florida(1929). The City owns and is responsible for operating a municipal electric utility system that serves approximately 34,000 customers, of which approximately 13,000 are located within the City and approximately 21,000 are located outside the City. Approximately 3,000 of the City's non-resident customers are in the Town. The Town and one of its residents initiated a lawsuit against the City on July 18, 2014 regarding the disputes summarized above and more fully described below. The Town's Complaint is attached as Exhibit B. Because the Town and the City are both political subdivisions subject to Chapter 164, Florida Statutes (the "Florida Governmental Conflict Resolution Act"), the Town initiated the statutorily mandated conflict resolution process and the court abated the lawsuit and administratively closed the case pending completion of the mandatory conflict resolution process. The County subsequently joined in the process as a primary conflicting party but has not intervened in, and therefore, is not a party to the lawsuit. The Parties have met in two conflict assessment meetings and a joint public meeting in an effort to define and resolve the issues in dispute.To date, ,%low the conflict has not been resolved. The Town hopes that the upcoming mediation enables the Parties to reach some resolution. If this mediation is unsuccessful, however, the Town will ask the court to remove the abatement and will resume the litigation initiated by the filing of the Town's Complaint. The Statutory Powers of the City and the Town The City has no inherent home rule power to provide extra-territorial electric service within the municipal boundaries of the Town. Art. VIII, 2(c), Fla. Const. ("Municipal annexation of unincorporated territory, merger of municipalities, and exercise of extra-territorial powers by municipalities shall be as provided by general or special law."); § 166.021(3)(a), Fla. Stat. (`The subjects of annexation, merger, and exercise of extraterritorial power ... require general or special law pursuant to s. 2(c),Art. VIII of the State Constitution."). There are no general or special laws, however, granting the City the power to provide extra-territorial electric service within the Town. In fact, the special law that creates the City only empowers the City to provide electric service to "the City and its inhabitants". Ch. 14439, § 40, Laws of Fla. (1929). In recent Florida Public Service Commission(`PSC")proceedings involving the County,to which the Town is not a party, the City has cited Section 180.02(2), Florida Statutes, for its right to extend and execute all of its corporate powers outside of its corporate limits. However, Section 180.02(2)further provides that "said corporate powers shall not extend or apply within the corporate limits of another municipality," such as the Town. Co l