STATE OF FLORIDA DIVISION OF ADMINISTRATIVE HEARINGS

BETMAR UTILITIES, INC., )

)

Petitioner, )

)

vs. ) CASE No. 91-1159

)

CITY OF ZEPHYRHILLS, )

)

Respondent, )

and )

) FLORIDA PUBLIC SERVICE COMMISSION, )

)

Intervenor. )

)

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, Veronica E. Donnelly, held a formal hearing in the above-styled case on May 9, 1991, in Dade City, Florida.

APPEARANCES

For Petitioner: Scott L. Knox, Esquire

28870 U.S. Highway 19 North

Suite 230

Clearwater, Florida 34621

For Respondent: Thomas P. McAlvanah, Esquire

37818 Highway 54 West

Zephyrhills, Florida 34248

For Intervenor: Robert J. Pierson, Esquire

101 East Gaines Street Tallahassee, Florida 32399-0863

STATEMENT OF THE ISSUES

Whether Betmar Utilities, Inc.'s application for an expansion of territory under its water and wastewater certificates in Pasco County should be approved by the Public Service Commission.

PRELIMINARY STATEMENT

On November 13, 1989, Betmar Utilities, Inc. (Betmar) filed an application with the Public Service Commission (Commission) for an expansion of territory serviced under its water and wastewater certificates in Pasco County, Florida. Betmar seeks to enlarge its certified service area to the north and south in an unincorporated portion of the county. Pasco County (County) and the City of

Zephyrhills (City) timely objected to the application, and requested a formal administrative hearing. The case was referred to the Division of Administrative Hearings (Division) by the Commission on February 26, 1990.

Jurisdiction was relinquished back to the Commission on November 8, 1990, based upon the assumption that the case had settled. When it was determined that settlement would not occur, the case was again referred to the Division on February 20, 1991. Final hearing was scheduled for May 9, 1991.

Prior to the commencement of the hearing, the Hearing Officer was advised that the County would not be participating in the proceeding. The case style was amended to reflect the County's removal as a Respondent. As a preliminary matter, the City announced that its objection to the extension application was limited to a territorial dispute regarding the property abutting Geiger Road which extends 330' south of the road.

As a preliminary matter, all parties agreed that the Commission rules with the revision date of February 1991 would be used in the Recommended Conclusions of Law as the April rule revisions were not available at hearing. It was further agreed that the statute in effect at the time the application was filed would be the controlling statutory law.

During the hearing, two witnesses were presented by Betmar and four exhibits were moved into evidence. The City submitted three exhibits, and applicable portions of the Pasco County Land Use Plan were admitted as Hearing Officer Exhibit #1. Leave to file the land use plan and the Tariff Sheet marked Petitioner's Exhibit #4 posthearing was granted by the Hearing Officer. These exhibits were filed May 20, 1991, and all exhibits were admitted without objection.

The transcript of the hearing was filed May 22, 1991. Proposed Recommended Orders were filed by all parties by June 3, 1991. Rulings on the proposed findings of fact are in the Appendix to the Recommended Order.

FINDINGS OF FACT

1. Betmar Utilities, Inc. is a private utility company who owns and holds Florida Public Service Commission Certificates Number 137W and No. 98S. These certificates grant Betmar the right to operate a water and wastewater system in a specified territory within an unincorporated area of Pasco County.

   
   

2. Betmar seeks an extension of its certified territory into the areas immediately to the north and south in an unincorporated area of the county. There is, or will be in the near future, a need for water and wastewater services in the proposed amended territory. An Application for Amendment of Territory was filed with the Commission to allow Betmar to service the area on November 13, 1989.

   
   

3. When Betmar noticed the City of its pending application, an objection was filed to the proposed expansion. The objection specifically relates to the property on the south side of Geiger Road, which extends 330 feet south of the roadway, and adjoins the City's boundaries.

   
   

4. Although the City does not currently provide services to this locale, it does own water and sewer lines on the northern side of Geiger Road in the Silver Oaks area. Other water and sewer lines in the City's system extend below

   the south side of Geiger Road at the far eastern portion of the area for which Betmar is seeking the extension of territory.

   
   

5. In an interlocal agreement between the City and the County dated February 9, 1988, these governmental entities established designated service areas for water and wastewater services in this particular area of the county. The purpose of the agreement was to promote the economic delivery of services to citizens in the area, and to provide for the necessary long-range planning inherent in the provision of these services. Prior to the agreement, the County was authorized to provide the services to the areas for which an extension is sought by Betmar.

   
   

6. The service area boundaries delineated in the agreement were to be periodically reviewed in conjunction with the review of each party's respective comprehensive plans.

   
   

7. Pursuant to this agreement, the City and County determined that the City's Service Area Boundry would include the area south of Geiger Road that abuts Betmar's current service area.

   
   

8. The City and the County each relied upon this interlocal agreement in the creation of their respective comprehensive plans. However, no additional action has been taken by the City to service the area.

   
   

9. The City is not actually operating within the disputed area for a number of reasons. First of all, the City has adopted an ordinance which requires annexation of contiguous property as a condition of receiving its water and sewer services. The disputed portion of the proposed amended territory is not within the city limits and has not been annexed. Secondly, the City is not prepared to build utility lines to service the disputed proposed amended territory until the new bypass road along Geiger Road is built, and the proper right-of-way is obtained. At that time, the City would like to extend the Silver Oaks line under Geiger Road to the south, and the line along the eastern side of the disputed portion of territory to the west. These anticipated expansions correlate with the City's Service Area Boundry in the interlocal agreement which remains unchanged between the City and the County. A proposed service date was not provided by the City at the formal hearing.

   
   

10. The City seeks to control land use and development of property along the Geiger Road corridor though its ability to provide or withhold utility services.

    
    

11. Betmar also has water and sewer lines abutting or located on all properties described in its application for extension, including the area in controversy. These lines are currently active due to Betmar's water and sewer system which is in the center of the area targeted for expansion.

    
    

12. Both Betmar and the City have the technical and financial ability to provide water and wastewater services in the proposed amended territory.

    
    

13. Betmar has a tariff approved by the Commission which allows it to charge 110% of the cost of the extension of service from its existing lines to any property seeking service.

    
    

14. Owners of property abutting Geiger Road have contacted Betmar about the possibility of providing service. A formal request for service has been made by Jake Developers for service in that area.

15. Betmar's sewage collection facilities abutting the Geiger Road property are gravity lines. The City's sewage collection facilities in close proximity to the area are force mains.

    
    

16. Betmar does not charge impact fees for connection into its system. The City charges a water impact fee of $350.00 and a sewer impact fee of $1,278.00 for connection into its system.

    
    

17. Betmar anticipates a reduction in water and sewer rates if the extension is approved.

    
    

18. Betmar presented no evidence about plans for further financial investment which would enable the utility to provide service in the area for which the extension has been requested because Betmar believes further investment is unnecessary.

    
    

19. Betmar has an agreement with the County that states the County will provide bulk wastewater treatment to Betmar for the purpose of offering centralized wastewater services from the County's Southeast Subregional Wastewater Treatment Plant for a twenty-five year term.

    
    

20. The County has placed a possible qualification on the term of years in the agreement by inserting the following clause:

    
    

    ... its first responsibility is to the customers inside its own service limits and that it reserves the right to act in the best interest of those customers in all circumstances.

    
    

21. The agreement between the County and Betmar has not been approved by the Commission.

    
    

    CONCLUSIONS OF LAW

    
    

22. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter pursuant to Sections 367.045(4) and 120.57(1), Florida Statutes.

    
    

23. When a utility applies for an amended certificate of authorization from the Commission, it is required to provide all information required by rule or order of the Commission. Section 367.045(2), Florida Statutes.

    
    

24. Rule 25-30.036(d), Florida Administrative Code, requires a utility proposing to extend its service area to provide:

    
    

    [E]vidence that the utility owns the land upon which the utility treatment facilities that will serve the proposed territory are located or a copy of an agreement, such as a 99-year lease, which provides for the continued use of the land.

    
    

25. In this case, Betmar has an agreement with the County, who currently has jurisdiction to service the area in controversy. The agreement states the county will provide bulk wastewater treatment to Betmar in the area for a

    twenty-five year term, subject to the County's need to use its Southeast Subregional Wastewater Treatment Plant for customers within its own service area. When this agreement was placed into evidence instead of a deed or a long- term lease as required by rule, a legal issue arose as to whether Betmar's request for an amended certificate of authorization is materially deficient under the statutory and regulatory framework.

    
    

26. During a cursory review of the pending amendment application, it appears that there would be numerous public benefits if Betmar were to obtain the amended certificate and expand its territory to all of the requested area. The County has no objection, and the City is unable to act ultra vires in the area due to its ordinance which prevents the provision of City utilities in an unincorporated area. Further scrutiny reveals the amendment application is materially deficient in that the required ownership or long-term 99-year lease regarding utility treatment facilities is nonexistent. Even the proposed twenty-five year permitted use agreement regarding the treatment facilities contains conditions subsequent that severely limit the County's obligations under the agreement. As a matter of law, the agreement lacks the certainty required by Rule 25-30.036, Florida Administrative Code.

    
    

27. The applicant has the burden to prove that his request for the amendment is in the public interest. Although the proposed amendment application contains numerous public benefits, it is contrary to the public interest to cause future Betmar customers to rely on a wastewater treatment agreement that lacks certainty. The conditions subsequent, which are out of Betmar's control, make the proposed agreement with the County unreliable, even for the proposed twenty-five year term.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED:

The Commission should deny Betmar's application for an amendment to its certified territory in Pasco County as the applicant has failed to provide that it will be allowed the continued use of the County's Southeast Subregional Wastewater Treatment Plant for the twenty-five year term set forth in the agreement presented at hearing.

DONE and ENTERED this 16th day of July, 1991, in Tallahassee, Leon County, Florida.

VERONICA E. DONNELLY

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904)488-9675

Filed with the Clerk of the

Division of Administrative Hearings this 16th day of July 1991.

APPENDIX TO RECOMMENDED ORDER

Petitioner's proposed findings of fact are addressed as follows:

1. Rejected. Improper legal conclusion.

2. Accepted. See HO #5.

3. Accepted. See HO #8.

4. Accepted. See HO #14.

5. Accepted. See HO #14.

6. Accepted.

7. Accepted.

8. Accepted.

9. Accepted.

10. Accepted. See HO #15.

11. Accepted. See HO #15.

12. Accepted. See HO #16.

13. Rejected. Improper legal conclusion. See HO #17.

14. Accepted. See Preliminary Statement.

Respondent's proposed findings of fact are addressed as follows:

1. Accepted. See Preliminary Statement.

2. Accepted. See Preliminary Statement.

3. Accepted that an interlocal agreement between City and county existed. See HO #5. The rest of the paragraph is rejected as legal argument.

Intervenor's proposed findings of fact are addressed as follows:

COPIES FURNISHED:

Scott L. Knox, Esquire 28870 U.S. Highway 19 North

Suite 230

Clearwater, Florida 34621

Thomas P. McAlvanah, Esquire 37818 Highway 54 West

Zephyrhills, Florida 34248

Robert J. Pierson, Esquire Florida Public Service Commission

101 East Gaines Street Tallahassee, Florida 32399-0863

David Swafford, Executive Director Florida Public Service Commission

106 Fletcher Building

101 East Gaines Street Tallahassee, Florida 32399-0850

Steve Tribble, Director Records and Recording

Florida Public Service Commission

101 East Gaines Street Tallahassee, Florida 32399

Susan Clark, General Counsel Florida Public Service Commission

212 Fletcher Building

101 East Gaines Street Tallahassee, Florida

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this Recommended Order. All agencies allow each party at least 10 days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should contact the agency that will issue the final order in this case concerning agency rules on the deadline for filing exceptions to this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the final order in this case.

Docket for Case No: 91-001159

Orders for Case No: 91-001159