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Attorney May said the Town has a responsibility to its constituents and wants to be in control of its public utility destination. He pointed out that the contracts the City had entered into in the past have essentially stripped away the authority of the City to set its rates. Mediator Alvarez recapped if FPL was to purchase the City's electric system, the rates would not be set by the Town. He added if there was an authority in terms of a settlement, if the authority was in the limits of customers presently being served by the City, how the Town would feel being a minority, even though the citizens outside of the City would be the majority. Attorney May said to have a full and fair Authority, you must have full and total control over the financial and physical operations of the utility, as well as the composition of the Board which would consist of proportionate representation elected from ratepayers residing outside the City. The City needs some Funding from the Electric Utility Business to Fund its own General Revenue Mediator Alvarez recapped the problem was that the City needs to fund its own general revenue and asked what would happen if the Town and County succeeded in going with a different utility provider, and the City was left with these obligations to serve only the City residents. City Manager Jim O'Connor replied there was an analysis done and property taxes would be impacted substantially as well as an increase in the electric rates. He did not anticipate any declaratory bankruptcy, because it was just one business unit of the City that had no real impact on the City's operation; however, the City may raise taxes or lower the services provided. Commissioner O'Bryan stated the Town does not have electric, water, and wastewater utilities to transfer to their general fund, so they provide a level of services to their residents based upon the taxes they collect. The Mediator called for a recess at 11:20 a.m. and reconvened the meeting at 11:40 a.m., with all parties present Mediator Alvarez wanted to discuss potential solutions and asked the parties for potential solutions and interests and referred to the Town. He asked if Attorney May wanted to share his thoughts on a potential solution. Attorney May referred back to the rates, and going forward he felt there was an impression that a regulator in Tallahassee, or a judge, would be making the decision as to whether the City rates were reasonable or prudent. The Town believed what was reasonable and prudent was a decision from a juror residing in Indian River County (IRC) who had paid what the Town believes to be excessive and high rates, and moving forward it would be the juror in Town of Indian River Shores - City of Vero Beach - Indian River County Electric Utilities Mediation December 17, 2014 Page 6