STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

GEORGE W. EAGER, AND CALUSA CAMP )

RESORT, a Florida Corporation, )

)

Petitioner, )

)

vs. ) CASE NO. 89-5620

) FLORIDA KEYS AQUEDUCT AUTHORITY, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, Claude B. Arrington, held a formal hearing in the above-styled case on May 16, 1990, in Tavernier, Florida.

APPEARANCES

For Petitioner: Gus H. Crowell, Esquire

Tittle & Tittle, P.A.

P.O. Drawer 535 Tavernier, Florida 33070

For Respondent: Floyd A. Hennen, Esquire

General Counsel

Florida Keys Aqueduct Authority 1100 Kennedy Drive

Key West, Florida 33041-1239 STATEMENT OF THE ISSUES

Whether the subject System Development Fees should be assessed.

PRELIMINARY STATEMENT

Petitioner, George W. Eager, is the owner of certain real property located in Key Largo, Florida, upon which a campground is operated. Petitioner, Calusa Camp Resort, Inc., a closely held corporation owned by Mr. Eager and other members of his family, is the corporate entity that operates the campground.

The campground accommodates every type of camping, ranging from camping in large recreational vehicles to camping in tents or sleeping bags. Water, electrical, and sewer hookups are available at each campsite. Bathrooms, showers, laundry facilities and a swimming pool are among the common facilities available to all campers. A marina and a grocery store are also located on the property.

In December 1974, Respondent enacted by rule a System Development Fee, which is an impact fee to be charged to new or existing customers who modify, add or construct facilities which impose a new potential demand on Respondent's water system. For single or multiple commercial units, the System Development

Fee is imposed on a per "unit" basis. The term "unit" is defined by a rule adopted by Respondent. Petitioners presently have a total of 376 campsites. The 279 campsites that were improved prior to December 1974 are not subject to the System Development Fee. At issue is whether Petitioners owe a system development fee for 97 campsites that were improved after 1974.

Petitioners contend that each individual campsites is not a "unit" as defined by Respondent, but that the collective campsites constitute one unit. Petitioners further contend that Respondent's imposition of impact fees in 1989 for the 97 new campsites is barred by the statute of limitations found in Section 95.11(3)(f), Florida Statutes. (Petitioners raised additional issues by the amendment to the petition which was deemed filed by Order entered March 29, 1990. These additional issues were withdrawn by Petitioners prior to the beginning of the hearing and, consequently, were not considered in this proceeding.)

Respondent contends that each of the campsites meets its definition of the term "unit" because each site has the capacity to have parked on it recreational vehicles in which persons could reside and use water from its water system.

Respondent contends that the statutes of limitation are not applicable to the imposition of a system development fee and, if they are applicable, the pertinent statute of limitation did not begin to run until 1989 when it conducted an on-site investigation of Petitioners' premises. Respondent contends that the statute of limitations does not bar this administrative proceeding.

At the formal hearing, Petitioners called four witnesses and introduced 11 documentary exhibits which were accepted into evidence. Respondent called four witnesses, one of whom was accepted as an expert witness in the fields of public utility economics, public utility accounting, and public utility rate making and impact fees. Respondent introduced 9 documentary exhibits which were accepted into evidence. A transcript of the proceedings was filed May 29, 1990. At the request of the parties, the time for filing post-hearing submissions was set for

15 days following the filing of the transcript. Consequently, the parties waived the requirement that a recommended order be rendered within thirty days after the transcript is filed. Rule 221-6.031, Florida Administrative Code. In addition to the proposed recommended orders, Respondent filed on June 21, 1990, "Respondent's Response to Petitioners' Proposed Findings of Fact and Conclusions of Law" and Petitioners filed on June 29, 1990, "Petitioners' Exceptions and Objections to the Respondent's Recommended Order". Since the rules do not contemplate these responses to the proposed recommended orders and because the responses were filed beyond the deadline established for the filing of post- hearing submittals, these responses were not considered by the undersigned in the preparation of this Recommended Order. Rulings on the parties' proposed findings of fact may be found in the Appendix to this Recommended Order.

FINDINGS OF FACT

1. Respondent is a state agency whose primary purpose is to provide an adequate supply of potable water to the Florida Keys. To this end, it has acquired or constructed well fields, treatment plants, transmission pipelines, pumping stations, distribution pipelines, and other related facilities. Because of its exaggerated linear service area of 130 miles, it incurs high capital and operating costs. Chapter 76-441, Laws of Florida, Respondent's enabling act, confers upon Respondent the authority to impose the subject System Development Fee.

2. Respondent imposed the subject System Development Fee, which is an impact fee, in December 1974. Respondent's Rule 48-3.002(1) expressed the purposes of the System Development Fee as follows:

   
   

   1. The System Development Fee is an impact fee charged to new and existing customers who modify, add or construct facilities which impose a potential increased demand on the water system. This fee is charged in order to equitably adjust the fiscal burden of a new pipeline and expanded or improved appurtenant facilities between existing customers and new water users. All system development fees are allocated to the direct and indirect costs of capital improvements made necessary by actual and expected increased demand on the water system.

      
      

3. The term "unit" is a commonly accepted concept in the public utility industry, and impact fees are often assessed on a per "unit" basis. Respondent's Rule 48-3.002(5)(b) provides for the assessment of the System

   Development Fee on a per unit basis and provides, in pertinent part, as follows:

   
   

   5. (b) Where the premises served consists of single or multiple commercial units, the System Development Fee shall be assessed based on each individual unit. In those cases where the individual unit will require a meter size that exceeds a 5/8" meter to properly support the unit, the System Development Fee shall be based on the meter size required to serve that unit,

   whether individually metered or not. ...

   
   

4. The term "unit", as used in Respondent's System Development Fee Rule is a technical term, but it is defined by Respondent's Rule 48-2.001(19) as follows:

   
   

   (19) "Unit" A unit is a commercial or residential module consisting of one or more rooms with either appurtenant or common bathroom facilities and used for a single commercial purpose or single residential use.

   
   

5. The number of units existing in a multiple unit service operation are to be determined in accordance with Rule 48-2.007(1)(c), which provides, in pertinent part, as follows:

   
   

   ... The number of units, whether residential or commercial, will normally be determined according to applicable city or county occupational licenses, building permits, or plans of the

   subject structure. In cases of discrepancy or inconsistency in definition, or interpretation, the following Florida Keys Aqueduct Authority definition will control: A unit is a commercial or residential module consisting of one or more rooms with either appurtenant or common bathroom facilities and used for a single commercial purpose or single residential purpose.

   
   

6. Respondent grandfathers in units that were in existence prior to December 1974 when the System Development Fee was first enacted. A System Development Fee is not imposed on any unit that was in existence prior to December 1974. Of the 376 improved campsites that presently exist at Petitioners' campground, 279 were improved prior to 1974. Consequently, only the 97 campsites improved after the enactment of the System Development Fee are at issue in this proceeding.

   
   

7. Respondent is concerned with the potential use of a unit because it must be prepared to respond to that potential use. Once a customer has paid the System Development Fee for a unit, the owner of the unit can transfer the unit without the purchaser having to pay an additional System Development Fee regardless of the use the purchaser intends to make of the unit.

   
   

8. Respondent has consistently applied the System Development Fee charges on a per unit basis for the purposes stated in its Rule 48-3.002(1). The per unit charge was $600 when first enacted in 1974, was increased to $1,500 in 1984, and was increased to its present level of $2,000 in 1986. A widely publicized amnesty program was in effect from August 1, 1984 through October 1, 1984, during which customers who had added units to their property without reporting same to Respondent could report the units during the amnesty program and pay the System Development Fee on an installment basis. Customers were advised that after the amnesty program closed, the System Development Fee would be based on rates in effect at the time an unreported unit was discovered, not at the rate the unreported unit was constructed. This policy serves to encourage Respondent's customers to promptly report newly added "units", and the policy produces fees commensurate with the expenses to be incurred by Respondent after it learns of the new units.

   
   

9. Petitioner George W. Eager is the owner of approximately 30 acres of real property located west of U.S. 1 at Key Largo, Florida. Mr. Eager purchased the subject property in 1969, sold it in 1974, and reacquired it in 1975 by a deed given in lieu of foreclosure. This property is located within the area served by Respondent. Petitioner Calusa Camp Resort, Inc., a closely held Florida corporation whose stock is owned by Mr. Eager and his two children, operates a campground on this real property. In addition to the 376 campsites, the campground contains a grocery store, a marina, laundry facilities, bathrooms and showers, a swimming pool, a sewage treatment plant, and a sewage pumping station. The marina was not in operation at the time of the formal hearing. Petitioners hold the two business licenses they are required to have by Monroe County. One business license is for the operation of the campground while the other one is for the operation of the grocery store. Petitioners secured all pertinent building permits during the course of the improvement of the campground.

10. Mr. Eager opened the campground in 1969, at which time he entered into a contract for services with Respondent. Mr. Eager constructed a private water system as part of the improvements to his real property. This private water system was connected to Respondent's water transmission system in 1969, and a one inch master meter was installed at that point of delivery. This one inch master meter has served Petitioners' property at all times pertinent to this proceeding.

    
    

11. Mr. Eager entered into a new contract for services with Respondent in 1975. This contract did not indicate that Mr. Eager's property was considered a multiple unit operation and it did not indicate in the space available the number of units to be served. By a provision in this contract, Respondent reserved the right to change its rules and regulations and the rates for use of water from time to time.

    
    

12. In 1976, Mr. Eager entered into another contract for services with Respondent for the provision of water to a swimming pool that he had constructed. This contract did not indicate that Mr. Eager's property was considered a multiple unit operation and it did not indicate in the space available the number of units to be served.

    
    

13. Of the thirty acres owned by Mr. Eager, approximately twenty acres are west of the access road that divides the property and approximately ten acres are east of the road. Prior to 1974, Mr. Eager developed 279 individual campsites on eighteen of the acres west of the access road. These campsites had water, electrical, and sewer hookups for recreational vehicles and could accommodate all types of camping. A grocery store, bathrooms and showers, laundry facilities, and recreational facilities were also located on these eighteen acres. The remaining two acres west of the access road were reserved as the site for the marina. Prior to 1974, the ten acres east of the access road was used for open camping, but individual campsites were not designated. Water was made available to the campers who used this area through approximately

    32 spigots spaced throughout the area and the other campground facilities were available to them. The ten-acre open area would accommodate up to 125 campsites.

    
    

14. Since the enactment of the Systems Development Fee, Petitioners converted the ten-acre open camping area into 97 campsites with each campsite having water, electrical, and sewer hookups. This development, completed in 1983, organized the camping in the ten-acre area, but it did not increase the number of potential campers in the ten-acre area over the 1974 level. This development did, however, change the type camping that could be accommodated in this area. Prior to the development, the area could not accommodate camping in large vehicles such as motorhomes and recreational vehicles. After the development, the campsites were improved to accommodate all types of camping.

    
    

15. None of the campsites are permanently improved with any structures or rooms and Petitioner does not rent campsites with accommodations on them. Persons renting the campsites provide their own method of camping, whether it be by car, truck, motorhome, travel trailer, tent, or otherwise.

    
    

16. In 1983, Petitioners requested that the size of the water meter serving his property be increased from one inch to two inches. At that time, Respondent's staff suspected that Petitioners may have modified the campgrounds so as to have triggered the System Development Fee. Consequently, Mary Castellano, Respondent's Policy & Procedure Coordinator wrote a letter of

    inquiry to Petitioners' attorney. This letter, dated May 2, 1983, provided, in pertinent part, as follows:

    
    

    The material submitted by you last March 2, 1983, has been reviewed. Although a planned layout of the campground was provided from 1969 showing a plan to develop 279 camp and trailer spaces, what is required, prior to approval of a change to a larger meter, is some type of proof showing the number of camp and trailer spaces in existence and actually served prior to June 13, 1974, and certification regarding the actual number of camp and trailer spaces in existence today. If those two numbers are the same, no system development fee will be assessed and Mr. Eager's request for a 2" meter will be honored upon payment of additional deposit, new service charge and tapping fee.

    However, if there were less camp and trailer spaces in 1974 actually in existence then than there are at the present time, then additional system development fees will be assessed on a per space basis for the difference.

    
    

17. Ms. Castellano's letter of May 2, 1983, accurately stated Respondent's interpretation of its rule imposing the System Development Fee. The information requested by this letter was not forthcoming, and Petitioners did not pursue the request to change the master meter from one inch to two inch again until 1989. Respondent's staff did not pursue whether Petitioners owed a System Development Fee until the issue was again raised in 1989.

    
    

18. The water bills sent by Respondent to Petitioners up until April 1989 reflected that Petitioners had been classified as a "single unit commercial" account. In April 1989, the billing reflected that Petitioners were classified as a "multiple unit commercial" account.

    
    

19. Because Petitioners' private water system is located on private property, Respondent's staff could not discover any undeclared units except by conducting an appropriate inspection. In 1989 Respondent's staff conducted such an inspection of Petitioners' campground and determined that Petitioners had added 97 campsites, that each campsite was a "unit" within the meaning of Respondent's rules, and that a system development fee of $2,000 was due for each site. This was the first time that Respondent had inspected the property and was the first time that Respondent knew that Petitioners had improved the 97 campsites. Respondent does not routinely inspect all private water systems or keep an up-to-date count of all units within its service area because of the costs of gathering such information.

    
    

20. On April 26, 1989, Mary Castellano, who was still employed by Respondent, but whose title had been changed to Director of Policy Administration, wrote Petitioners a letter which provided, in pertinent part, as follows:

    1. Of the 376 spaces/units currently existing, the Authority accepts the documentation submitted to establish that 279 spaces/units existed prior to June 1974, for which no System Development Fees are due. However, the following fees are assessed and due for the remaining 97 spaces/units:

       System Development Fee

       ($2,000 x 97 Units) $194,000.00

       Deposit

       ($75 x 97 Units) 7,275.00

       Service Charge

       ($15 x 97 Units) 1,455.00

       $202,730.00*

       *Plus Tapping Fee

       * * *

       4. The Authority will require the execution of a Restrictive Covenant since a potential for future expansion exists.

       
       

21. Petitioners thereafter filed a timely request for formal hearing after Respondent's Board of Directors upheld the assessment of the System Development Fee at a duly called meeting.

    
    

    CONCLUSIONS OF LAW

    
    

22. The Division of Administrative Hearings has jurisdiction over the subject matter of and the parties to this proceeding. Section 120.57(1), Florida Statutes.

    
    

23. Petitioners' contention that the provisions of Section 95.11(3)(f), Florida Statutes, act to bar the imposition of the subject impact fee is rejected for two reasons. The first reason is that the statute bars "[a]n action founded on a statutory liability" that was not commenced within four years of the accrual of the cause of action. The term "action" as used in Section 95.11(3)(f), Florida Statutes, is defined by Section 95.011, Florida Statutes as being a "civil action or proceeding". The assessment of an impact fee by an agency and the ensuing administrative hearing pursuant to Section 120.57(1), Florida Statutes, are not "civil actions or proceedings" within the meaning of Section 95.11(3)(f), Florida Statutes, and are not "actions" barred by that statute of limitation. The second reason that this statute of limitation does not bar this proceeding is that the running of the statute did not begin in 1983 as contended by Petitioners. In 1983, Respondent's staff had a well-founded suspicion that Petitioners had added additional campsites to the campgrounds, but it was not until 1989 that an inspection occurred which gave it knowledge that such addition had in fact occurred. The statute of limitation, if it were applicable, would not have begun to run until the inspection in 1989 when Respondent discovered that the 97 campsites had been added. See Section 95.031, Florida Statutes.

    
    

24. Respondont's authority to impose the subject System Development Fee, conferred upon it by its enabling legislation, is not at issue in this proceeding. Likewise, the amount of the fee currently being imposed by Respondent has not been shown to be unreasonable and the reasonableness of that fee is not at issue.

25. Petitioner has challenged Respondent's policy of imposing the System Development Fee based on the rate in effect at the time the impact is discovered as opposed to the rate in effect at the time the impact was constructed. In rate setting, an agency is given wide discretion, and it is Petitioners' burden as the party attacking that exercise of discretion to establish that Respondent has exceeded its discretion. This is a heavy burden, particularly where Respondent's policy serves to encourage its customers to promptly report newly added "units" and where the policy produces fees commensurate with the expenses to be incurred by Respondent after it learns of the new units. Agrico Chemical Co. U. State Department of Environmental Regulation, 365 So.2d 759 (Fla. 1st DCA 1978) cert. den., 376 So.2d 74 (Fla. 1979), Grove Isle, Ltd. U. State, Department of Environmental Regulation, 454 So.2d 571 (Fla. 1st DCA 1984). Petitioners have failed to establish that Respondent exceeded its discretion in adopting this policy. Consequently, if a fee is to be imposed, the fee should be based on the schedule in effect at the time the additional campsites were discovered.

    
    

26. The campsites, the marina, the grocery store, the bathroom and bathing facilities, the swimming pool, and the laundry are all served through the master meter at the point of delivery between Respondent's public water system and Petitioners' private water system. Consequently, Petitioners should be classified as a "multiple unit/commercial" customer within the meaning of Rule 48-2.002(5).

    
    

27. Petitioners argue that the campsites do not individually meet the Respondent's definition of the term "unit" because the campsites are collectively used for one commercial purpose. Petitioners also contend that the individual campsites do not meet the definition of the term "unit" because the campsites do not consist of "one or more rooms". Both of these arguments should be rejected. Petitioners improved this property so that individual campsites could be rented to campers in recreational vehicles, motorhomes, and campers. Each campsite is a separate and distinct "module" that Petitioners offers to the public for rent, just as the owner of a motel offers each room in the motel for rent. It is concluded that each campsite is "used for a single commercial purpose" within the meaning of Respondent's definition of the term "unit". Petitioners' argument to the contrary should be rejected.

    
    

28. Petitioners' contention that the individual campsites do not meet the definition of the term "unit" because the campsites do not consist of "one or more rooms" should also be rejected. Petitioners' argument that the `1one or more rooms" requirement can only be satisfied by permanent improvements is a possible interpretation of the definition. However, there is no requirement in the definition that the "one or more rooms" be a permanent improvement or that the "one or more rooms" be provided by the owner of the real property. Respondent's construction of the definition is that the "one or more rooms" requirement is satisfied when the camper who rents the campsite moves his recreational vehicle onto the campsite. Respondent's interpretation of the term "unit" is a permissible construction of that term that is consistent with the purpose of the impact fee, with the uses Petitioners are making of their property, and with Respondent's interpretation and application of the impact fee since its inception.

    
    

29. Great deference is given to an agency's interpretation of its rules and regulations. An agency's interpretation of its own rules will not be overturned even if such interpretation is not the sole possible interpretation, the most logical interpretation, or the most desirable interpretation. An

agency's interpretation of its rules will not be overturned unless the interpretation is clearly erroneous. See, Health Quest Corporation, et al. v. Department of Health and Rehabilitative Services and Arbor Health Care Co., et al., 11 FALR 5427 (1989), and ABC Liquors, Inc. v. Department of Business Regulation, 397 So.2d 696 (Fla. 1st DCA 1981); Department of Insurance v.

Southeast Volusia Hospital District, 438 So.2d 815 (Fla. 1983). Petitioners have failed to establish that Respondent has clearly erred in the interpretation or application of its rules and regulations.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that Respondent enter a final order which upholds the

assessment against Petitioners of the System Development Fee based on the

improvement of the 97 campsites since 1974.

DONE AND ENTERED this 30th day of July, 1990, in Tallahassee, Leon County, Florida.

CLAUDE B. ARRINGTON

Hearing Officer

The DeSoto Building 1230 Apalachee Parkway

Tallahassee, Florida 32399-1550 904/488-9675

Filed with the Clerk of the Division of Administrative Hearings this 30th day of July, 1990.

COPIES FURNISHED:

Gus H. Crowell, Esquire Tittle & Tittle, P.A.

P. O. Drawer 535 Tavernier, Florida 33070

Floyd A. Hennen, Esquire Florida Keys Aqueduct Authority Post Office Box 1239

Key West, Florida 33040

Patty Woodworth, Director Planning & Budgeting

Executive Office of the Governor The Capitol, PL-05

Tallahassee, Florida 32399-0001

APPENDIX TO THE RECOMMENDED ORDER IN CASE NO. 89-5620

The following rulings are made on the proposed findings of fact submitted by Petitioner:

1. The proposed findings of fact in paragraph 1 as being subordinate to the findings made or as being unnecessary to the conclusions reached.

2. The proposed findings of fact in paragraphs 2-10, 12, 14, and 18-21 are adopted in material part by the Recommended Order.

3. The proposed findings of fact in paragraph 11 are adopted in part by the Recommended Order and are rejected in part as being unsubstantiated by the evidence. While it was established that one corporation operated the campground, it was not established that no additional business purpose exists at the property. The property contains, in addition to the subject campsites, a grocery store, a marina, laundry facilities, and a sewage pumping station that is available to non-campers.

4. The proposed findings of fact in paragraph 13 are rejected as being conclusions of law.

5. The proposed findings of fact in paragraphs 15 and 16 are rejected as being subordinate to the findings made.

6. The proposed findings of fact in paragraphs 17 and 23 are rejected as being unnecessary to the conclusions reached.

7. The findings of fact contained in the first three sentences of paragraph 23 are adopted in material part. The findings of fact contained in the final sentence of paragraph 23 are rejected as being unsubstantiated by the evidence.

The following rulings are made on the proposed findings of fact submitted on behalf of Respondent. The paragraphs contained in the findings of fact section of Respondent's Proposed Recommended Order have been numbered 1-13 for convenience.

1. The proposed findings of fact in paragraphs 1, 3, 6, 7, 12, and 13 are adopted in material part by the Recommended Order.

2. The proposed findings of fact in paragraph 2 are adopted in part by the Recommended Order and are rejected in part as being unnecessary to the conclusions reached. The examples given by Respondent were not incorporated as a finding of fact because the examples used are not analogous to the facts of this case.

3. The proposed findings of fact in paragraph 4 are rejected as being unnecessary to the conclusions reached.

4. The proposed findings of fact in paragraph 5 are adopted in part by the Recommended Order and are rejected in part as being unnecessary to the conclusions reached.

5. The proposed findings of fact in paragraph 8 are adopted in part by of the Recommended Order and are rejected in part as being unnecessary to the conclusions reached.

6. The proposed findings of fact in paragraph 9 are rejected as being recitation of testimony or as being subordinate to the findings made.

7. The proposed findings of fact in paragraph 10 are adopted in part by the Recommended Order and are rejected in part as being recitation of testimony or as being unnecessary to the conclusions reached.

8. The proposed findings of fact in paragraph 11 are adopted in material part by the Recommended Order with the exception of the findings of fact contained in the final sentence of the paragraph, which are rejected as being unnecessary to the conclusions reached.

Docket for Case No: 89-005620

Orders for Case No: 89-005620