You haven't written the equation from the source you give correctly, the $z_\infty$ and $z_r$ should swap.
Consider a free vortex flow, where fluid is draining through a hole in the base of an infinite reservoir. We will follow a streamline from a point far away from the hole, to a closer point.
By a continuity argument, the velocity at a distance $r$ from the hole is
$$
v=\frac{k}{r},
$$
where $k$ is a constant. This means that very far away from the hole we can say that the velocity is effectively equal to 0. Using Bernoulli along our streamline from a point at infinity to a closer point, we have
$$
\rho g z_\infty=\rho g z_r + \frac{\rho v^2}{2},
$$
where $z_\infty$ is the height of the free surface very far from the hole and $z_r$ is the height at a closer point. Substituting for $v$ using our first equation and rearranging, we find that
$$
z_\infty = z_r + \frac{k^2}{2gr^2}.
$$