Findings Of Fact The City has brought this action pursuant to Section 120.56, Florida Statutes, challenging Rules 17-50.015(2)(f) and 17-50.016(2)(f), Florida Administrative Code. Section 120.56(1), Florida Statutes, authorizes any person substantially affected by a rule to seek an administrative determination of the invalidity of the rule on the ground that the rule is an invalid exercise of delegated legislative authority. The Department has stipulated to the City's standing to maintain this action. 4. Rules 17-50.015(2)(f) and 17-50.016(2)(f) were adopted by the Department pursuant to Sections 403.061, 403.101, 403.1823, 403.1832, 403.1838 and 403.804, Florida Statutes. No disputed issues of material fact exist between the parties.
The Issue 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.
Findings Of Fact 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. Both Betmar and the City have the technical and financial ability to provide water and wastewater services in the proposed amended territory. 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. 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. 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. 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. Betmar anticipates a reduction in water and sewer rates if the extension is approved. 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. 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. 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. The agreement between the County and Betmar has not been approved by the Commission.
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. Accepted. See HO #2. 2. Accepted. See HO #1. 3. Accepted. See HO #3. 4. Accepted. See HO #11. 5. Accepted. See HO #4. 6. Accepted. See HO #9. 7. Accepted. See HO #11. 8. Accepted. See HO #13. 9. Accepted. See HO #14. 10. Accepted. See HO #9. 11. Accepted. See HO #9. 12. Accepted. See HO #11. 13. Accepted. Rejected. Improper legal conclusion. Accepted. See HO #5. Accepted. See HO #8. Accepted. See HO #14. Accepted. See HO #14. Accepted. Accepted. Accepted. Accepted. Accepted. See HO #15. Accepted. See HO #15. Accepted. See HO #16. Rejected. Improper legal conclusion. See HO #17. Accepted. See Preliminary Statement. Respondent's proposed findings of fact are addressed as follows: Accepted. See Preliminary Statement. Accepted. See Preliminary Statement. 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: 1. Accepted. See HO #2. 2. Accepted. See HO #12. 3. Accepted. See HO #12. 4. Accepted. See HO #3. 5. Accepted. See HO #11. 6. Accepted. See HO #4. 7. Accepted. See HO #12. 8. Accepted. See HO #9. 9. Accepted. See HO #9. 10. Accepted. See HO #9. 11. Accepted. See HO #5. 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
The Issue Whether Petitioner's application to increase its water and sewer rates to its customers in Palm Beach County should be granted; and Whether Petitioner failed to comply with Florida Public Service Commission Orders Nos. 0924 and 8382 directing Petitioner to comply with information submission requirements in connection with its application for rate increase. CONCLUSIONS and RECOMMENDATION Petitioner's rate increase request should he granted in accordance with the findings in this recommended order. Such rates are just, reasonable, not unjustly discriminatory and consistent with Section 367.081, Florida Statutes (Supp. 1980) Commission Orders No. 8924 and 0382 did not, by their terms, direct Petitioner to comply with minimum filing requirements by a date certain. Therefore, Petitioner's lengthy and unexcused delay in complying with such requirements does not constitute a violation of the Orders.
Findings Of Fact Background In May, 1978, Petitioner, Mangonia Park Utility Company ("UTILITY"), filed with the Respondent, Florida Public Service Commission ("COMMISSION"), applications to increase, on an interim basis, its sewer and water rates to its customers in Palm Beach County, Florida. By Order Nos. 8924 and 8382, issued on June 21 and July 7, 1978, respectively, the COMMISSION suspended the proposed rates, approved interim water and sewer rate increases, found that the UTILITY's application did not comply with the COMMISSION's minimum filing requirements, and acknowledged the UTILITY's statement that it would file an application which meets filing requirements by September 1, 1979. Between November, 1979, and April, 1980, the UTILITY supplied additional information but did not fully comply with the minimum filing requirements. On May 15, 1980, the COMMISSION issued an Order requiring the UTILITY to show cause why the interim rates should not be repealed and monetary penalties imposed for the UTILITY's alleged failure to comply with Order Nos. 8924 and 8382. The question of the UTILITY's compliance with those Orders was set to be heard in conjunction with its rate increase application. It was not until May 29, 1980 that the UTILITY submitted a completed application and complied with the minimum filing requirements. On November 5, 1980, the COMMISSION forwarded this case to the Division of Administrative Hearings for the assignment of a Hearing Officer to conduct a formal Section 120.57 hearing. This case was then set to be heard on January 21, 1981. At hearing, the UTILITY called Philip D. Mitchell and Boyd D. Ellis as its witnesses and offered Petitioner's Exhibits No. 1 through 6 into evidence. On February 16, 1981, the COMMISSION timely submitted its proposed findings of fact and conclusions of law. (Testimony of Willis, Ellis, P-2, R-1). II Rate Increase Application The UTILITY owns and operates water treatment facilities consisting of three wells, two pumps, a lime softening unit, and two storage tanks. Since April, 1979, the City of Riviera Beach has provided treatment to the UTILITY's sewage. The UTILITY's sewage facilities now consist of a master lift station, pumps, and sewage lines. The approved test period for this rate proceeding is the twelve months prior to June 30, 1979. During the test year, the UTILITY provided water service to 113 residential customers, 49 general service customers, and one multiple dwelling customer; it provided sewer service to 75 residential customers, 47 general service customers, and one multiple dwelling customer. As a result of its analysis of the UTILITY's application, together with its books and facilities, the COMMISSION proposed various adjustments, almost all of which were accepted and agreed to by the UTILITY. At hearing, issues involving the UTILITY's request for pro forma salary adjustments and recovery for income tax liability were eliminated when it withdrew its request. The only factual issue which remains concerning the requested rate increase is the useful life and depreciation rate which should be applied to the UTILITY's plant and equipment. Useful Life and Depreciation Rate The COMMISSION contends the standard 40-year useful life with a 2.5 percent depreciation rate is appropriate; the UTILITY contends that such a depreciation rate does not take into account changing technology and obsolescence, and that a 25 to 30-year useful life with a 3.3 to 4 percent depreciation rate is more appropriate. The UTILITY acknowledged that the determination of useful life of utility equipment required engineering judgment. However, it presented no testimony by a qualified engineer on the subject. Its evidence consisted solely of its accountant's long- standing "conceptual objection" to use of a 40-year useful life for utility plants. The only competent and credible evidence on the question was presented by the COMMISSION. Its qualified engineer testified that he conducted an on-site independent study of the UTILITY plant and concluded that, in this instance, a 40-year useful life, with a 2.5 percent depreciation rate, was appropriate. In view of the foregoing, it is determined that a 40-year useful life, with a 2.5 percent depreciation rate, should be applied against the UTILITY's plant. (Testimony of Mitchell, Munt). Having thus determined the appropriate depreciation rate for use in this case, the parties have agreed to the following rate- making factors: Rate Base The adjusted test year rate base for the UTILITY's water system is $210,799; the rate base for its sewer system is $65,151. Both are calculated below: RATE BASE TEST YEAR ENDED 06/30/79 WATER SEWER Utility Plant in Service $ 386,611 $ 287,939 Plant Held For Future Use -0- (3,750) Acquisition Adjustment 18,990 -0- Accumulated Depreciation (42,485) (28,541) Amortization of Acquisition Adjustment (4,600) -0- Contribution in Aid of Construction (Net of Amort.) (154,349) (203,069) Working Capital Allowance 6,632 12,572 Income Tax Lag -0- -0- Rate Base 210,799 65,151 (Testimony of Willis, Mitchell, R-3) Net Operating Income The UTILITY's adjusted operating income for the test year - a $15,673 loss (water) and a $46,837 loss (sewer) - together with its rate of return, are depicted below: OPERATING STATEMENT TEST YEAR ENDED 06/30/79 WATER SEWER Operating Revenues $ 46,441 $ 60,192 Operating Expenses Operation 43,759 94,572 Maintenance 9,297 6,002 Depreciation (sic) 4,716 993 Amortization 541 -0- Taxes Other Than Income 3,801 5,462 Income Taxes -0- -0- Total Operating Expenses 62,114 107,029 Operating Income $(15,673) $(46,837) Rate of Return (7.44 perct) (Testimony of Willis, Mitchell, R-3) Capital Structure and Cost of Capital (71.89 perct) The UTILITY's capital structure, and weighted cost of capital, are as follows: COST OF CAPITAL COMPONENT RATIO COST RATE WEIGHTED COST Long-Term Debt Customer Deposits 99 perct 9.84 perct 1 perct 8.00 perct 9.74 perct .08 perct 100 perct 9.82 perct (Testimony of Mitchell, Clinger, R-5) Rate of Return Based on its cost of capital, the parties have agreed that percent constitutes a fair rate of return on the UTILITY's rate base. The UTILITY has a deficit in common stock equity; a return on negative investment is inappropriate. (Testimony of Mitchell, Clinger, (sic), R-5) Rate Structure The UTILITY's current water rates are conventionally structured using a minimum monthly charge which includes a minimum number of gallons and a one-step excess rate over that minimum; its residential and general service sewer rates are structured using a flat rate. The parties agree that the rates should be revised in accordance with what is known as the base facility charge (BFC) rate design. The purpose of this design is to recover the costs of providing service to each particular customer. Its monthly charges consists of two components: A base charge which covers expenses not related to actual water use, such as depreciation, billing and collecting, property taxes, debt interest, maintenance, etc., and a gallonage charge based on the allocated costs associated with pumping, treating and delivering the water to the customer. Sewer rates are similarly structured and directly related to actual water consumption. The BFC rate design structure equitably distributes the fixed and variable costs of providing service to customers and allows them to exercise greater control over the rates which they pay. In implementing the BFC rate design, the COMMISSION makes two specific recommendations which are not opposed by the UTILITY, are reasonable, and should be followed: (1) that public fire hydrants not be charged, and (2) that the monthly charge for private fire lines be one-third of the BFC charge for the particular sized connection. (Testimony of Taylor, R-4A) Required Revenue In order to be allowed the opportunity to earn a 9.82 percent return on its rate base, the UTILITY should file rates which generate annual gross revenue at $83,747 for the water system and $114,792 for the sewer system. This revenue should produce net operating revenue of $20,700 and $6,398, respectively. (Testimony of Mitchell, Willis, R-3) III Alleged Violation of Commission Order Nos. 8924 and 8382 The COMMISSION contends that the UTILITY violated Order Nos. 8924 and 8382 by its failure to comply with minimum filing requirements until May 29, 1980. For such violations, the COMMISSION seeks to impose a penalty of $200. The orders in question do not explicitly direct or order the UTILITY to file an application which complies with the minimum filing requirements by a date certain. Consequently, the UTILITY's lengthy and unexcused delay in complying with such requirements does not constitute a violation of or refusal to comply with the orders in question. (Testimony of Mitchell, Willis, R-1)
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following facts relevant to the four issues presented for determination are found: WORKING CAPITAL In calculating debt and equity costs for the petitioner, it is appropriate to use the parent company's capital structure. Here, forty percent (40 percent) of the parent's capital structure is equity and sixty percent (60 percent) is debt. In order to support its operating and/or construction activities, the petitioner receives advances from its parent company, Utilities, Inc., a Delaware corporation, or from its subsidiary, Water Service Corporation. The petitioner has treated these advances as part of its equity structure since there is a cost to these funds to petitioner, in substance if not in form. If these funds do have a specific, identifiable cost in the test year ending December 31, 1979, such as interest, they are properly includable as part of petitioner's equity structure. Pursuant to an Agreement between petitioner and its parent, the monetary advances by petitioner's parent company or its subsidiary to support petitioner's operating and/or construction activities will bear interest at the end of each calendar quarter at the rate of prime plus one quarter of one percent per annum on the average advances outstanding during the quarter. (Petitioner's Exhibit 10). This is a known and identifiable cost, and therefore the position taken by the petitioner regarding working capital allowance is correct. The proper amount attributable as "working capital allowance" is $54,699 for the water rate base and $28,179 for the sewer rate base for the test year ending December 31, 1979. UNCOLLECTIBLE REVENUES For the years 1977, 1978, 1979 and 1980, the petitioner's bad debt expense averaged 1.2 percent of its total revenues. (Petitioner's Exhibit 9). The petitioner proposes a pro forma bad debt expense contending that the number of people who do not pay their bills remains essentially constant and that as rates increase, the dollars increase in relationship to the rates. In other words, petitioner proposes that the annual expense for uncollectible accounts should be increased by the same percentage that the test year dollars uncollected from customers who did not pay their bills relates to the amount of dollars which would be collected under the increased rate. The respondent's witness felt there had been no proof of the direct relationship between the increase in uncollectible accounts. In designing rates for the future, the amount of the customer's consumption of utility services during the test year are employed on the assumption that past consumption will represent future consumption. ACCUMULATED DEPRECIATION The petitioner has requested an adjustment in its depreciation rate from 2.0 to 2.86 percent, based on all facilities other than general plant. The respondent has concurred with this requested increase to 2.86 percent, but would apply that depreciation rate to the beginning of the 1979 test year, thereby treating the difference as a deduction in rate base. If the adjusted rate is applied to the expense side, it must also be applied to the investment side, according to respondent's accounting analyst. The petitioner feels that the depreciation expense should be treated as a reduction in rate base only to the extent that it has been allowed in previous rates and collected from the customers. The increased expense will not be collected until the year 1981. The effect of charging the increased depreciation back to the 1979 test year would mean a $9,732 reduction in the water rate base and an $8,540 reduction in the sewer rate base. RATE OF RETURN The petitioner and the respondent agree that petitioner's capital structure is composed of forty percent equity and sixty percent debt capital, and that the cost of debt is 9.63 percent, for a weighted cost of 5.78 percent. The petitioner feels that the appropriate return to be placed on equity capital is 19.63 percent, for a weighted cost of 7.89 percent and an overall 13.63 percent return on rate base. The respondent would place the cost rate for equity at 16 percent, for a weighted cost of 6.40 percent and an overall 12.18 percent return on rate base. The petitioner utilized three methods of calculation to arrive at its proposed rate of return on equity capital, and then averaged the three results. One such method was to create a hypothetical Ba rating and then add a risk factor of 4 percent, resulting in a cost of equity of 20.7 percent. A second method, utilizing a combination of dividend yield on listed water companies and a growth factor, resulted in a cost of equity capital of 18.72 percent. The third approach involved the addition of the 4 percent risk factor of equity over debt to the average yield outstanding for various water companies, resulting in a return of 18.4 percent, Considering an attrition allowance on equity capital of 1.2 percent, a 14.7 percent overall rate of return would be within the bounds of a reasonable rate of return. Utilizing a comparable earnings analysis of nonregulated and regulated utilities, including electric, gas and telephone as well as water and sewer utilities, and taking dividend yield rates and adding growth rates, respondent's financial analyst computed the reasonable range of the cost of equity for the Florida water and sewer industry to be between 14.25 and 16.25 percent. With the equity ratio being 40 percent, respondent's witness recommended a 16 percent return on equity, with permission to fluctuate plus or minus one percent. PUBLIC TESTIMONY Members of the public who testified at the hearing were concerned with increased charges for water and sewer service since many of them were on fixed and limited incomes. While one witness complained of mosquito larvae in a dish of water left over a weekend for a dog, other witnesses opined that they had received good service from the petitioner.
Conclusions In consideration of the above and the entire record, we make the following findings of fact and conclusions of law: Utilities, Inc. of Florida is a public utility subject to the jurisdiction of this Commission. The value of the Utility's rate base devoted to public service on which it is entitled to earn a fair return is $589,663 for its water division and $427,422 for its sewer division. The Company's adjusted net operating income for the test year was $18,847 and $24,405 for its water and sewer divisions, respectively. A range of 15 percent to 17 percent constitutes a fair and reasonable return on equity for Utilities, Inc. of Florida with rates to be set at the mid- point of 16 percent which gives an overall rate of return of 12.18 percent. The rates collected on an interim basis pursuant to Order Nos. 9446 and 9559 were lawful, just and reasonable and the revenues received thereunder should be retained by the Company. That the revised rates, as authorized herein constitute just, reasonable compensatory and not unfairly discriminatory rates within the meaning of Chapter 367, Florida Statutes. The use of a base facility charge rate structure eliminates discrimination against seasonal customers and encourages conservation and is appropriate for use in this docket. NOW, THEREFORE, IN CONSIDERATION THEREOF, it is ORDERED by the Florida Public Service Commission that each and every finding of fact and conclusion of law as expressed herein is approved. It is further ORDERED that Utilities, Inc. of Florida is hereby authorized to file rate schedules consistent herewith designed to generate gross annual revenues of $350,316 for the water system and $206,865 for the sewer system, which represent increases over the test year revenues of $85,007 and $41,335, respectively. It is further ORDERED that Utilities, Inc. of Florida will make refunds to its water customers consistent with the discussion in the body of this order. It is further ORDERED that the rates approved as a result of this Order shall be effective for consumption after the date of this order, but no bills will be rendered thereunder until after the filing and approval of revised tariff pages appropriate with this Order. It is further ORDERED that the Company include in each bill during the first billing cycle during which this increase is effective a bill stuffer explaining the nature of the increase, average level of increase, a summary of the tariff changes, and the reasons therefor. Said bill stuffer shall be submitted to the Commission's Water and Sewer Department for approval prior to implementation. By Order of the Florida Public Service Commission this 9th day of June , 1981. (SEAL) HDB Steve Tribble COMMISSION CLERK
Recommendation Based upon the findings of fact and conclusions of law recited herein, it is RECOMMENDED that the petitioner's application for a rate increase be granted as requested except for adjustments made for uncollectible debts or accounts. Respectfully submitted and entered this 5th day of March, 1981. DIANE D. TREMOR, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 5th day of March, 1981. COPIES FURNISHED: R.M.C. Rose Myers, Kaplan, Levinson, Kevin and Richards Suite 103 1020 East Lafayette Street Tallahassee, Florida 32301 Harry D. Boswell Staff Counsel Florida Public Service Commission 101 East Gaines Street Tallahassee, Florida 32301 Steve Tribble, Clerk Public Service Commission 101 East Gaines Street Tallahassee, Florida 32301 ================================================================= AGENCY FINAL ORDER ================================================================= BEFORE THE FLORIDA PUBLIC SERVICE COMMISSION In re: Application of UTILITIES, DOAH CASE NO. 80-1893 INC. OF FLORIDA for an increase DOCKET NO. 800395-WS(CR) in water and sewer rates in ORDER NO. 10049 Seminole and Orange Counties, ISSUED: 6-9-81 Florida. / The following Commissioners participated in the disposition of this matter: JOSEPH P. CRESSE, Chairman GERALD L. GUNTER JOHN R. MARKS, III KATIE NICHOLS Pursuant to notice, an administrative hearing was held before Diane D. Tremor, Hearing Officer with the Division of Administrative Hearings, on January 20, 1981, in Maitland, Florida. The Hearing Officer's Recommended Order was entered on March 5, 1981, and oral argument was held on May 11, 1981, on exceptions filed by the Commission staff. We now enter our order.
Findings Of Fact Although numerous customers were present, four of them testified at the hearing. No service quality problems were described with regard to either water or sewer service. Indeed, several of the customers described water quality as being good or excellent. The primary concern of the customers was the magnitude of the proposed rate increase, although a number of then opined that some increase in rates may he necessary. Expert engineering witnesses presented by both the Comission and the Petitioner established that the Utility has not been cited by any local, state or federal agency for health or environmentally related violations. No corrective orders are in force either by the Department of Environmental Regulation, the Lee County Health Department, or the Public Service Commission. The water and sewer treatment exceeds all governmental quality standards extant. In order to enhance service quality, the company has constructed a one million gallon ground storage tank and has installed an additional high-service pump. All parties agree that the cost of these improvements should be added to the Utility's rate base for purposes of this proceeding. Rate Base The Utility propounded evidence alleging its proper water rate base to be $1,872,470.00 and the appropriate sewer rate base to be $1,917,931.00. In arriving at the Utility's net investment in property used in the public service (rate base), it is necessary to calculate the amount of contributions-in-aid-of-construction, which serve to decrease the Utility's investment. Normally, where there has been a previous rate case for a utility in which the utility's net investment would have been determined by the Commission, the calculation of the utility investment in a current rate case is generally competed by adding additions to plant-in-service and subtracting additional contributions-in-aid-of construction in order to arrive at the current net "return yielding" investment. In the instant proceeding, however, Lehigh has elected to take issue with the amount of contributions-in-aid-of-construction (CIAC) previously determined by the Commission in the last rate case. In that last case (Docket No. R-73384-WS), the amount of CIAC was determined by multiplying water connections by $350.00 and sewer connections by $400.00. (See Exhibits 10, 19 and 20) The Utility in the prior proceeding agreed with that method of calculation and, further, two land sales contracts in evidence show that a charge of $750.00 for "sales price of water and sewer" to purchasers of houses in the service area has been imposed by the Utility or its predecessor, Lehigh Corporation (development company), when the Utility was merely a division of the development company. Notwithstanding that prior position, the Utility in this proceeding has elected to attempt to prove its level of CIAC ab initio and has conducted a "Special CIAC Study" in an attempt to show that the amount of contributions is now substantially less than the amount it and the Commission agreed to be applicable in the last rate proceeding and that which the Commission maintains is germane to this proceeding. The Utility thus is alleging that the appropriate charge per connection for CIAC is $650.00 for a water and sewer connection as opposed to the Commission's contention that the figure should be $750.00 per connection. Although a developer's agreement with an affiliated company shows a water and sewer connection charge of $650.00, the testimony of a senior officer of the Utility establishes that there were a total of 1,308 such contracts indicating a sales price for water and sewer service of $750.00. The Utility contends that only $650.00 of the $750.00 charge in question was actually transferred to the utility company and that, therefore, the $650.00 is the appropriate amount to attribute to CIAC. There is no question, however, that with regard to these 1,308 land sales contracts, that $750.00 was actually collected from the lot purchasers involved as the sales price of water and sewer service. Thus, the actual amount of CIAC paid by those 1,308 customers was $750.00 each, for a total of $981,000.00 for water and sever service and that figure represents in its entirety contributions-in-aid-of-construction. The contracts for which the customers involved paid $750.00 for water and sewer service, were entered into in the latter 1960's and early 1970's. Prior to that time, the same type of contracts carried an amount of $650.00 for water and sewer and following the period of time when the fee was $750.00, the line item in the contract was changed so that there was no longer any separate item providing for "sales price of water and sewer." The water and sewer charge was thereafter included in the amount charged for "sales price of improvements." Thus, contrary to the position of Lehigh, because of the segregation of the items in the purchase price shown in these land sales contracts into separate figures for price and for the sales price of water and sewer service, there have been shown to be definite, proven amounts of contributions-in-aid-of-construction supported by company records. The remaining portion of the contributions attributable to the Utility and not represented by these contracts were contributed in the sum of $650.00 per connection, with which figure both parties agree. An additional issue regarding contributions and the "Special CIAC Study" concerns contributions recorded as income from the inception of the Utility operation until November 30, 1964. As demonstrated by Exhibit 12, the amount of contributions recorded as income equals $756,656.00. The Utility's own "Special CIAC Study" refers to contributions recorded as income and Lehigh received sums of money for the availability of water and sewer service in the early 1960's which it treated as income. During the early 1960's when the Utility was regulated by Lee County, the Lee County regulatory board allowed it and other water and sewer utilities to receive and record service availability fees as revenue. This was done in order to enhance the apparent financial posture of the utilities and therefore improve their credit status as an aid to financing improvements. There is no question that those fees during this time period were paid into the Utility or its predecessor for water and sewer service availability and hence should properly be accounted for as CIAC. It might be argued, as the Utility does, that if Lehigh declared the contributions it received to be revenues with the Internal Revenue Service, then the benefit of those contributions or the amount of revenue they represent to the Utility would be reduced by the amount of the resulting income tax, and that if they are now determined to be contributions instead of revenue that an additional detriment to the Utility would occur by the reduction by that amount of its rate base and, therefore, its dollar return. It should be pointed out, however, that because of the tax advantages of the Utility's demonstrated operating loss carry-overs and investment tax credits, as well as accelerated depreciation, all of which tax advantages this Utility has been able to employ, no actual income tax has been paid on such "revenue." Further, Lehigh is depreciating this $756,655.00 in assets in its returns to the Internal Revenue Service and is thereby recovering the costs of the assets. If the Utility is permitted to treat them for regulatory rate-making purposes as revenue instead of CIAC, then the effect would be to maintain rate base and return at a correspondingly higher level than if these amounts are determined to be CIAC, which would reduce rate base and thereby the net investment upon which a return could be earned for regulatory purposes. Thus, the appropriate amount of contributions-in-aid-of-construction for the water system as of the closing date of March 31, 1979, equals $1,057,000.00. The amount of contributions-in-aid-of-construction attributable to the sewer system as of that date equals $1,389,977.00. (Net of amortization). The detailed calculations and adjustments supportive of the above findings with regard to rate base are attached hereto and incorporated by reference herein as Schedules I, II and II. The first issue to be concerned with in calculating the operating expense basis for the revenue requirement is the cost of the above-referenced CIAC study. The Utility prepared this special CIAC study because of its fear that, in view of the Commission's decision in Tamarac Utilities, Inc. v. Hawkins, 354 So.2d 437, that it would not otherwise be able to meet its burden of proof on the issue of contributions and therefore would suffer a dismissal of the petition. In the Tamarac case, the Public Service Commission auditors encountered numerous problems resulting from a lack of primary data supporting the amount of contributions and the Commission issued an order allowing the Utility to provide clarifying evidence. When the Utility failed to satisfactorily perform this task, it ultimately suffered a dismissal of its petition and a refund of monies collected under interim rates. In this case, however, it has been demonstrated that there is no dearth of primary data or books and record supportive of the level of CIAC; nor has an order been issued requiring this Utility to provide such clarification or a "study" of its CIAC. Moreover, in the case of this utility, a previous rate case has been finalized wherein it was found by the Commission that there was a definite, specific level of contributions which were also consistent with those alleged by the petitioner in that proceeding. Thus, there is adequate primary data upon which a determination of CIAC can be computed in this proceeding without resort to a "Special CIAC Study" and the additional increment of rate case expense it represents. It should be further noted that even if the instant case involved a "Tamarac situation" where financial books and records were not adequate to properly document contributions-in-aid-of-construction that, in that event, if a CIAC study were made, then the proper rate-making treatment would be to amortize tile cost of that study over several years, since it is a large, nonrecurring expense in the Utility's operation, as opposed to allowing the entire expense to be written off (and charged to the customers through rates) based upon one year. The Utility has alleged that certain additional pro-forma adjustments to various expense items should be accomplished in order to arrive at the appropriate revenue which will support an adequate rate of return. Thus, the increased costs alleged for purchases of lime, chlorine and gasoline, depicted in the attached schedules incorporated herein, were undisputed, agreed to, are reasonable and therefore should be accepted. The alleged pro-forma cost for payroll is a mere estimate and not supported by competent, substantial evidence. Additionally, it was established by the Commission's accounting witness that certain rate case expenses arose from a prior rate case and therefore should be removed from consideration in arriving at revenue requirements for purposes of this proceeding. This adjustment was not contested, nor were similar adjustments to remove depreciation expense on construction work in progress, to remove depreciation expense on the contributed property, to remove unsupported property taxes, and to remove property tax as an expense and depreciation expense attributable to non-used and useful portions of the Utility's invested plant. None of these adjustments were disputed by the Utility. They are appropriate and reasonable and should be adopted. The Utility has also requested allowance of a $55.00 annual fire hydrant charge and a $10.00 charge for the initial commencement of service. The Utility submitted evidence (Exhibits 6 and 7) supportive of the actual number of water and sewer connections made during the test years as well as the costs upon which the initial commencement of service charge requested is based. The Commission did not dispute, therefore, the requested $10.00 charge for initial commencement of service and, inasmuch as the current $25.00 annual fire hydrant charge was established in the late 1960's and was shown to be no longer sufficient to cover costs, the Commission also did not dispute the increase in the annual fire hydrant charge from $25.00 to $55.00, which accordingly should be increased. Cost of Capital The Utility has requested a rate of return of 11.76 percent which includes an attrition allowance of .78 percent. There is no dispute as to the debt-equity ratios in the capital structure of the Utility. The common stock equity represents approximately 49.57 percent of the total capitalization. Long-term debt makes up 35.96 percent of capital and cost-free capital items make up 14.47 percent. The cost rate of the equity in the capital structure was established by the Commission's financial expert witness to be 14.5 percent or the midpoint in a range for companies and utility companies possessing a similar degree of risk to equity investors of 13.5 percent to 15.5 percent. The 14.5 percent cost of equity figure represents an accurate assessment of the opportunity costs of equity capital for such a company. The imbedded cost of long-term debt is 8.3 percent, which is a very advantageous rate to be enjoyed by such a company in today's money market and reflects a high degree of management efficiency on the part of the operation and management personnel of the petitioner. These two items, when combined with a zero cost factor shown to be appropriate for the cost-free capital items, results in a calculated rate of return of 10.35 percent, which does not take into account an attrition allowance due to inflation. The Utility advocated an attrition allowance equal to 10 percent of the weighted cost of equity capital to help offset the erosion in earnings caused by inflation. There can be little doubt that attrition of earnings due to significant inflation in costs of operation experienced by such companies is a very real factor. However, this record contains no substantial and competent evidence to demonstrate whether the utility wants coverage of capital attrition or attrition of its ability to cover operation and maintenance expenses nor which could justify the alleged 10 percent factor or any other quantification of attrition of earnings which may be experienced. Thus in the absence of a definitive establishment of the appropriate attrition factor, a cost of equity and a corresponding return on rate base in the midpoint of the range found above is appropriate. Thus, the proper return on rate base for this Utility has been shown to be 10.35 percent, which is within the range 9.85 percent to 10.84 percent. A summary of the cost of capital structure and weighted cost of capital calculation is depicted as follows: CALENDAR YEAR 1979 COMMON STOCK EQUITY RATIO 49.57 COST RATE 14.5 WEIGHTED COST 7.19 LONG TERM DEBT 35.96 8.8 3.16 COST FREE 14.47 -0- -0- 10.35 Floor CSE at 13.5 9.85 Ceiling CSE at 15.5 10.34 In summary, the required operating revenue for the Utility's water system should be $658,451.00 which results in an operating income of $211,407.00. The sewer system requires an annual, gross operating revenue of $475,629.00 in order to obtain a return or operating income of $130,017.00. The operating expenses and adjustments supportive of these figures are depicted in more detail in Schedules IV, V and VI attached hereto and incorporated by reference herein. The sewer revenue requirement found herein is less than the interim revenues authorized for sewer service, thus a refund is in order.
Recommendation In consideration of the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the application of Lehigh Utilities, Inc. be granted in part, and that the Utility be authorized to receive a gross annual water revenue of $658,451.00 and gross annual sewer revenue of $475,629.00 to be achieved by rates filed with and approved by the Public Service Commission. It is further RECOMMENDED that the Utility be required to file revised tariff pages containing rates designed to produce annual revenues in the above amounts. It is further RECOMMENDED that the Utility be required to refund the interim sewer revenues previously authorized in this proceeding which exceed those sewer revenues determined to be appropriate herein. It is further RECOMMENDED that the above refunds be accomplished within ninety (90) days. This Recommended Order entered this 13th day of October, 1980, in Tallahassee, Florida. P. MICHAEL RUFF Hearing Officer Division of Administrative Hearings 101 Collins Building Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 13th day of October, 1980. COPIES FURNISHED: R. M. C. Rose, Esquire 1020 East Lafayette Street Tallahassee, Florida 32301 William H. Harrold, Esquire 101 East Gaines Street Tallahassee, Florida 32301
Findings Of Fact Application 7500165 requested average withdrawal of water of 1,804,750 gallons per day from 4 wells located about a mile east of Highway 41 and a mile north of Apollo Beach. The four wells would be for irrigation of tomato crops on total acreage of 4 acres located in Hillsborough County (Exhibit 1, Testimony of Elsberry and Boatwright). Notice of hearing as to the application was published in a newspaper of general circulation in accordance with statute and rule (Exhibit 3). A letter of objection from Joseph S. Benham, Apollo Beach, Florida, dated November 19, 1975 was submitted to the Water Management District, wherein he expressed concern regarding water shortages and, although he does not seek to totally deny the application, is of the belief that the district must insure sufficient controls and management of irrigation activities so that resources are not wasted, water runoff to drainage ditches is eliminated and renewed justification is given each year for the withdrawal (Exhibit 2). A representative of the District staff established that there would be no violation of statutory or regulatory requirement for issuance of a consumptive water use permit in this case except as to the fact that potentiometric level of the applicant's property would be lowered below sea level as a result of withdrawal. It was agreed at the hearing that a period of thirty days should be granted both parties to formulate a stipulation as to control of runoff. An unsigned stipulation was received from the Water Management District by the hearing officer on March 1, 1976, which provided that the permit would be granted with the following stipulations: Runoff from the property will be limited to 25 percent of the quantity pumped and by December 31, 1980 shall be reduced to 16.5 percent of the quantity pumped. The District may at its own expense install metering devices for the purpose of monitoring runoff. The permittee will be notified in advance of such action. The Permit will expire on December 31, 1980. (Testimony of Boatwright, Exhibit 4).
Recommendation That application 8500165 submitted by Elsberry and Elsberry, Inc. Route 2, Box 70 Ruskin, Florida, for a consumptive water use permit be granted with the conditions as follow: Runoff from the property will be limited to 25 percent of the quantity pumped and by December 31, 1980 shall be reduced to 16.5 percent of the quantity pumped. The District may at its own expenseinstall metering devices for the purpose of monitoring runoff. The permittee will be notified in advance of such action. The Permit will expire on December 31, 1980. That the Board grant an exception to the provision of Rule 16J- 2.11(4)(e), F.A.C., for good cause shown. DONE and ENTERED this 15th day of March, 1976, in Tallahassee, Florida. THOMAS C. OLDHAM Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Jay T. Ahern, Esquire Southwest Florida Water Management District Post Office Box 457 Brooksville, Florida 33512 Elsberry & Elsberry, Inc. Route 2, Box 70 Ruskin, Florida
Findings Of Fact The Petitioner is a wholly owned subsidiary of Queens Cove Properties, Inc. Mr. Alex B. Cardenas is president of the parent development company as well as the utility. The water system was constructed for the sole purpose of providing water to purchasers of lots in the Queens Cove subdivision. However, the Petitioner obtained certification as a public utility to serve the general area in the belief that it was required to do so. See Section 367.031, Florida Statutes. Lots in this subdivision have sold for $15,000 to $24,000, which includes undifferentiated amounts for availability of water service. The water service is part of a "bundle of rights" which the purchaser obtains with his lot. (e.g. bridge, roads, underground utilities). In addition, existing lot owners have purchased the "bundle of rights" separately from their land (where Queens Cove was not the original property seller) at prices ranging from $4,000 to $8,000. Again, the charge for water service availability was not differentiated from other rights. At the time of the second hearing, the utility had 45 connections--42 single family residences, one developer's office, one model home, and an irrigation outlet. Ten customers testified (five by adoption) at these hearings as to service problems. The water treatment plant is of the reverse osmosis type. This system is complex and costly to maintain, but is useful where as here the raw water contains a high level of natural impurities. The utility has not properly maintained this system and water taste, smell and clarity are generally poor. The customers also experience frequent periods of very low water pressure. Furthermore, they are unable to contact the utility when outages occur after business hours since there is no emergency phone number provided. The testimony of a Department of Environmental Regulation (DER) representative also established that chlorine residuals are not properly maintained and a high coliform reading in June, 1980, will require monitoring by DER. Thus, overall service is unsatisfactory and must be improved before the Petitioner is allowed to receive a return on its investment. See Section 367.081(2), Florida Statutes, which requires the Commission to consider service in setting rates. Profits earned by a utility with service deficiencies such as these would normally be placed in escrow until the problems were corrected. Here, however, the utility does not seek to earn a return on its investment, but only to break even. In addition, there was no competent, substantial evidence adduced by either Petitioner or Respondent to demonstrate what the utility's investment is. Therefore, rate base cannot be determined in this proceeding, and consequently no return can be established. Appendix one hereto details Petitioner's test year expenses as set out in its rate application, with adjustments to correct erroneous entries and to delete or reduce expenses which were not shown to be reasonable and prudent. No controversy exists with the exception of allowances for plant manager compensation, office rent and rate case expense. The Petitioner's request for an annual manager's salary of $20,000 was not supported by the evidence. No salary is currently paid for this function, nor is a plant manager as such required or utilized. Rather, the limited functions of a plant manager can be handled by one of the full time maintenance or administrative employees. This procedure is consistent with management practices in other small, developer-owned water utilities. Such delegation does not, however, relieve the owner from his duty to hire qualified personnel and provide adequate resources. A separate allowance for office rent is not justified. The Petitioner has no office in the immediate area but uses the owner-developer's office in Stuart. There is no need for a separate office under the present organizational structure, and therefore no expense for this item should be authorized. Evidence on rate case expense (attorney and accountant fees) was submitted by post-hearing pleadings pursuant to agreement of the parties. The Petitioner seeks $9,702 rate case expense, amortized over three years, or $3,234 annually. The Respondent proposes to allow $6,000 amortized over five years, or $1,200 annually. As with other expenses, the amount authorized will be paid by customers and any portion disallowed will be borne by the owner of the utility. The rate case expense sought here is $215 per customer, which far exceeds the average water/sewer utility rate case expense of $6.92 per customer. A substantial portion of these expenses were incurred as a result of Petitioner's failure to keep adequate records and its initial decision to proceed without counsel. Therefore, the reduction of authorized expenses to $6,000 proposed by Respondent is appropriate. However, Petitioner's proposed three-year amortization period better represents industry experience and is consistent with current Commission policy. Therefore, the rate case expense authorized is $6,000 amortized over three years, or $2,000 annually. The Petitioner currently bills its customers on a monthly basis using a minimum gallonage charge. This rate design neither encourages conservation of water nor accurately reflects the cost of providing service. Therefore, the utility should be required to adopt the base facility charge rate structure. This charge includes a fixed amount for the customer's share of the utility's fixed costs, as well as a gallonage charge to represent the variable expenses associated with water consumption. Petitioner requested authority to increase its tap-in or meter installation fee from $100 to $200. This increase was authorized on an interim (escrow) basis by Order 9140. The utility has now withdrawn its request for the increase and should return the escrowed amounts to all customers who have paid the $200. In addition, Petitioner should be required to pay interest on customer deposits at the rate of 6 percent prior to July 1, 1980, and 8 percent after that date. See Section 25-10.72, Florida Administrative Code. Since no interest on deposits has ever been paid, the credit must be retroactive to the date of each customer's deposit. Proposed findings of fact were submitted by the Petitioner and the Public Service Commission. To the extent these proposed findings have not been adopted herein or are inconsistent with the above findings, they have been specifically rejected as irrelevant or not supported by the evidence.
Recommendation Based on tide foregoing findings of fact and conclusions of law, it is RECOMMENDED that the petition of Island Services, Inc. be granted in part, and that Petitioner be authorized to file new rates structured on the base facility charge concept, designed to generate gross water revenue of $12,823 annually, based on the average number of customers served during the test year. It is further RECOMMENDED that Petitioner be required to refund $100 to all customers who have paid the interim $200 water connection charge and that its tariff be amended to show that $100 is the authorized charge for this service. It is further RECOMMENDED that Petitioner pay interest on deposits at the annual rate of 6 percent through June 30, 1980, and at 8 percent thereafter, with such payments retroactive to the dates of deposit. DONE and ORDERED this 6th day of August, 1980, in Tallahassee, Florida. R. T. CARPENTER, Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675 COPIES FURNISHED: R. M. C. Rose, Esquire 1020 East Lafayette Street Tallahassee, Florida 32301 Marta M. Crowley, Esquire Florida Public Service Commission Fletcher Building, 101 E. Gaines St. Tallahassee, Florida 32301 Douglas E. Gonano, Esquire Citizens Federal Building Suite 200 1600 South Federal Highway Fort Pierce, Florida 33450
The Issue The issue for consideration in the proceeding concerns whether the Petitioner is entitled to an on-site sewage disposal system permit ("OSDS") authorizing installation of an on-site sewage disposal system for property the Petitioner owns near the Suwannee River in Gilchrist County, Florida, in consideration of the relevant provisions of Section 381.272, Florida Statutes, and Chapter 10D-6, Florida Administrative Code, and whether the Petitioner should be entitled to pursue a variance from the permitting statute and rules embodied in that chapter of the code.
Findings Of Fact The Petitioner owns certain real property located in Gilchrist County, Florida on the east bank of the Suwannee River, adjoining the river. The property is more particularly described as Lot 9, Block B, Two River Estates. The property was purchased on January 3, 1985 and was platted as a subdivision on January 5, 1959. The lot in question upon which the OSDS would be installed should a permit be granted, is approximately one acre in size. On April 30, 1990, the Petitioner made application for an OSDS seeking authorization to install such a conventional septic tank and drain-field system for disposing and treating household sewage effluent on the subject property. The system would be designed to serve a single-family residence, containing approximately two bedrooms, and approximately 1,200 heated and cooled square feet of living space. Upon making application, the Petitioner was informed that he would have to obtain a surveyed elevation of his property, as well as the ten-year flood elevation for his property for the river mile of the Suwannee River at which his property is located. The Petitioner consequently retained Herbert H. Raker, a registered land surveyor, who surveyed the elevation for his property. Mr. Raker established a bench mark elevation of 29.24 feet above mean sea level ("MSL"). The site of the proposed OSDS installation on that lot has an elevation at the surface grade of 28.5 feet. The subsurface of the lot at the installation site is characterized by appropriate, "slight-limited" soil extending 72 inches below the surface grade of the lot. The wet season water table is 68 inches below the surface grade of the lot. Consequently, there is more than adequate slight-limited soil to handle disposal and treatment of the sewage effluent from a single-family residence, such as is proposed, since the wet season water table is 68 inches below the surface of the property. Thus, a more than adequate treatment space and appropriate soil beneath the bottom surface of any proposed drain field to be installed at the site would exist so as to comply with the pertinent rules cited herein. The problem with a grant of the subject permit consists only of the fact that the property lies beneath the ten-year flood elevation, that is, it is approximately 1.5 feet beneath that elevation. The Suwannee River Water Management District report submitted to the Respondent agency by the Petitioner in the application process for the OSDS permit (in evidence) reveals that the ten-year flood elevation for the property in question is 30 feet above MSL. The soils prevailing at the proposed installation site, the great depth of the wet season water table, and the fact that the lot is approximately one acre in size and above the minimum size requirements for the installation of an OSDS, all militate in favor of a grant of the permit, except for the basis for its denial initially, that is, that it is simply beneath the ten-year flood elevation for purposes of the prohibition contained in Rule 10D-6.047, Florida Administrative Code. Although located within the ten-year flood elevation, the site is not located within the regulatory flood way so that if a mounded system or other raised OSDS alternative system were proposed and installed, an engineer's certification would not be required regarding the issue of raising the base flood level by the deposition of fill at the installation site for purposes of Rule 10D-6.047(6), Florida Administrative Code. There is no central water system available to the property; however, although there was conflicting testimony about the distance the proposed installation site would be from a neighbor's potable water well, the testimony of the Petitioner is accepted as being most certain in establishing that more than the required distance from that potable water well exists between it and the proposed septic tank and drain-field installation site, since the Petitioner established that approximately 110 feet is the actual separation distance. The Petitioner purchased the property to construct a single-family residence for himself and his family. He expended a substantial sum of money for the property and is unable to use it for its intended purpose without the subject permit or at least a variance so as to authorize him to install an OSDS. The Petitioner offered no concrete proposals or plans for an alternative system which might reasonably accomplish treatment and disposal of the sewage effluent in question without harm to ground or surface waters or the public health. No substantial proof was offered of a system which would either dispose of and treat the effluent at a location above the ten-year flood elevation or, if still below it, would adequately treat and dispose of the effluent sewage to safeguard the public health and the ground or surface waters involved, such that its existence slightly beneath the ten-year flood elevation would only be a "minor deviation" from that portion of the permitting rules. In point of fact, it would seem that a mounded system would be feasible on a lot this size, especially in view of the fact that the bottom surface of the proposed drain-field trenches or absorption beds would only have to be raised slightly over 1.5 feet from the surface grade of the subject lot and installation site in order to comply with the ten-year flood elevation parameter, which was the only basis for denial of this permit application. No proof was offered concerning how such a mounded system would be designed, installed and otherwise accomplished, however. Upon denying the initial application for the OSDS permit, the Respondent advised the Petitioner that he should pursue a formal administrative hearing process rather than make application for a variance and proceed through the internal variance board mechanism operated by the department in order to obtain a variance from the requirements of Rule 10D-06.47(6), Florida Administrative Code. The Respondent advised the Petitioner of this because the subject property was located within the ten-year flood elevation of the Suwannee River; and as the Respondent interpreted the Governor's Executive Order Number 90-14, which incorporated by reference the "Suwannee River Task Force Report" commissioned by the Governor, the Order absolutely prohibited the granting of any variances authorizing installation of OSDS's beneath the ten-year flood elevation of the Suwannee River or the granting of any OSDS permits themselves authorizing such installations.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, and the pleadings and arguments of the parties, it is therefore, RECOMMENDED that a Final Order be entered denying the Petitioner's application for an OSDS permit. DONE AND ENTERED this 5th day of March, 1991, in Tallahassee, Leon County, Florida. P. MICHAEL RUFF Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 5th day of March, 1991. APPENDIX TO RECOMMENDED ORDER The Petitioner did not file a Proposed Recommended Order. Respondent's Proposed Findings of Fact 1-10. Adopted. COPIES FURNISHED: Sam Power, Agency Clerk Department of HRS 1323 Winewood Boulevard Tallahassee, FL 32399-0700 Linda K. Harris, Esq. General Counsel Department of HRS 1323 Winewood Boulevard Tallahassee, FL 32399-0700 John Gary Wilson P.O. Box 2061 Lake City, FL 32055 Frances S. Childers, Esq. Department of HRS 1000 N.E. 16th Avenue Gainesville, FL 32609
Recommendation That pursuant to Article 12.1.2, General Conditions of the Contract for construction of State Project Number HSMB-6115, Drivers License facility, Hillsborough County, Florida, a change order be approved and issued increasing the total contract sum in the amount of $6,788.00 as authorized under Paragraph 8.5 of the aforesaid contract. DONE AND ENTERED this 7th day of April 1976 in Tallahassee, Florida. THOMAS C. OLDHAM Hearing Officer Division of Administrative Hearings 530 Collins Building Tallahassee, Florida 32301 (904) 488-9675 COPIES FURNISHED: May Jo Carpenter, Esquire Assistant Attorney General Department of Legal Affairs The Capitol Tallahassee, Florida Stephen C. Cheeseman, Esquire Gordon and Maney 2919 First Financial Tower Tampa, Florida
