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 The Petitioners James I. McKee and James Cone are registered physical therapists licensed in Florida under Chapter 486, Florida Statutes. Petitioners McKee and Cone are engaged in the private practice of providing physical therapy services. Physical therapy is the treatment of injured or crippled individuals through physical agents such as heat, ultrasound and electrical stimulation treatments, and therapeutic exercise. Physical therapy patients are referred to private practitioners such as Petitioners by prescription from physicians. Petitioners, as a substantial part of their practices, treat workers who have been injured in job-related accidents and receive payment for their services from workers' compensation insurance carriers. Respondent is the state agency responsible for administering the workers' compensation program in Florida. Respondent has proposed Rules 38F- 7.01 through 38F-7.03 and 38F-7.10 through 38F-7.13 for adoption. These proposed rules constitute the proposed fee schedule for the workers' compensation program, and include a proposed fee schedule for physical therapy services. The proposed fee schedule was presented to the Respondent by a three- member panel consisting of the Secretary of Labor and Employment Security, the State Insurance Commissioner, and the State Medical Consultant of the Division of Workers' Compensation. Respondent's rules have not in the past included a fee schedule for physical therapy services provided by practitioners such as Petitioners McKee and Cone. Rather, such services have been compensated on the basis of a case- by-case determination of the charges that prevail in the same community for similar treatment of injured persons of like standard of living. The proposed fee schedule would set maximum limits for such fees. The proposed fee schedule would have applicability statewide. Different fee schedules for different geographic locations have not been proposed. Petitioners McKee and Cone presently charge higher fees for injured workers and receive more compensation than they would receive under the fee schedule set out in the proposed rules. Furthermore, prevailing fees charged by physical therapists are generally higher than the maximum fees set out in the proposed rules. There is a statistically significant difference in fees for physical therapy services that are charged in different areas of the state. Fees for services in Southeast Florida are uniformly higher than fees for the same services in other areas of the state. The three-member panel which proposed the fee schedule for physical therapy services considered the present fee schedule, which does not set maximum charges for physical therapy services; a schedule utilized under the medicare program for physical therapy services; and a schedule set out in a document prepared by the Florida Medical Association, Inc., entitled "1975 Florida Relative Value Studies." No consideration was given to setting different fees in different areas of the state. The medicare schedule considered by the panel sets different rates for different areas of the state. The panel utilized a schedule in the mid-range from the medicare schedule in arriving at its proposed schedule. Respondent promulgated an economic impact statement in support of the proposed rules. The economic impact statement does not contain any estimate of the economic impact of the proposed fee schedules upon physical therapists such as Petitioners . The panel which proposed the schedules did hear objections from various physical therapists, but did not change its proposed schedule in response. The proposed schedule has a significant economic impact upon physical therapists because there has not been a maximum fee schedule applied to physical therapists in the past. Furthermore, the schedule would allow less compensation to such therapists than has typically been allowed in the past.
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
The Issue The narrow issue is whether the City of Daytona Beach's (City's) Petition for Administrative Hearing (Petition) challenging certain special conditions in its water use permit was timely.
Findings Of Fact Based on the evidence presented by the parties, the following findings of fact are made: Permit Number 2-127-0320 (Permit) was issued by the District on December 14, 1992, and was scheduled to expire on December 14, 1999, seven years later. The Permit authorized the City to withdraw 5,849 million gallons per year of groundwater from the Floridan aquifer for household, water utility, and essential uses. On August 28, 1998, the City filed an application to renew the Permit. In May 2004, the District approved the application, with certain modifications. To place this phase of the controversy in proper perspective, a review of the District's application review process is helpful. After an application for a consumptive water use permit is filed by an applicant, the District's Division of Water Use Regulation (Division) undertakes a preliminary review. If further information is needed to resolve the Division's concerns, the applicant is requested to submit additional information. A determination is then made as to whether the additional information provided by the applicant is deemed to be "sufficient" so as to render the application complete; if not, the Division staff (staff) often collects additional information on its own initiative to resolve any outstanding concerns. Once an application is deemed complete through responses from an applicant, or after additional information is obtained by the staff, the staff prepares and issues a document known as a Technical Staff Report (TSR), which represents the staff recommendation and the District's notice of intent to grant or deny the application. In some cases, however, a draft TSR, which contains the staff's preliminary recommendation, may be issued before the final TSR is prepared. After the TSR is prepared, the Division notifies the District's Division of Permit Data Services (Data Services) that a package of documents (known as the noticing package) consisting of the TSR, Written Notice of Intended Decision, and Notice of Rights should be sent to the applicant and other interested parties. This noticing package is generated through an automated system maintained by Data Services and offers substantially affected persons a point of entry to contest the proposed agency action. More than one TSR can be issued by the District while an application is pending. However, only one noticing package (which includes a point of entry) is sent to the applicant and interested persons. After a point of entry is offered, the TSR is placed on the agenda of the District's Governing Board, which may approve, approve with modification, or deny the application. In the rare case when the Governing Board reaches a decision which "substantially differs from the notice of District decision," a new point of entry is offered. After a TSR is issued, and a point of entry offered, but before the Governing Board considers the matter, an applicant may still submit new information to the staff in an effort to resolve any outstanding issues raised in the TSR. Indeed, in some cases, a "revised" TSR may be prepared, which reflects any changes brought about by the submission of new information, but a new point of entry is not offered (unless the changes in the revised TSR are substantial). When a revised TSR is prepared, it typically contains strike-throughs and underlines to reflect any changes made. In this case, a number of contentious issues arose between the City and the staff during the review process, particularly involving impacts to wetlands. Consequently, between December 1998 and September 2000, at least four requests for additional information were made by the staff. However, this information never fully resolved the issues to the staff's satisfaction. On July 11, 2003, the staff issued a draft TSR containing its preliminary conclusions, including one regarding the wetland impacts issue. Because the TSR was a "draft," it was not accompanied by a Written Notice of Intended Decision or Notice of Rights. At the request of the City, on October 3, 2003, a "primarily technical" meeting was held in Daytona Beach for the purpose of allowing the staff to give a presentation concerning its findings in the draft TSR. Several City staffers attended the meeting. No attorneys for either party were present. Mr. Dennis R. Colby, then the City's Manager of Water and Wastewater Utilities, and the person who signed the City's application, recalled that at the meeting Mr. Dwight T. Jenkins, Division Director and an attendee at the meeting, advised him that the City would "have its day in court" after the Governing Board voted on the permit application. Mr. Colby, who is not an attorney, says he understood this to mean that the City could request a hearing after the Governing Board voted on the City's application. He did not confirm this understanding with any other person, including anyone at the District or in the City Attorney's Office, nor did he raise the issue again. Another City staffer, Stan R. Lemke, City Public Works Director, attended the same meeting and recalled a slightly different version of events in which Mr. Jenkins allegedly said words to the effect that "if [the City] got to the Governing Board and [the City] didn't like the outcome," that it could then file a petition for a hearing. Mr. Jenkins "very clearly" recalled that he did not offer any procedural advice at that meeting and that all of his comments were directed to technical issues. Another District employee, James Hollingshead, who also attended the meeting, could not recall Mr. Jenkins giving any procedural advice of the type described by Mr. Colby or Mr. Lemke. The testimony of Mr. Jenkins is accepted as being the most credible on this issue because Mr. Jenkins is also an attorney and he "fully underst[ood] the ramifications that are associated with advising somebody regarding their legal rights." On January 26, 2004, the Division finalized its TSR on the City's application and alerted Data Services that a noticing package should be sent to the City and other interested persons. On January 29, 2004, Data Services issued a computer-generated package consisting of the TSR, Notice of Intended District Decision, and Notice of Rights. The TSR recommended approval of Permit Application 8834 subject, however, to twenty-four special conditions, of which nine are opposed by the City. The Notice of Rights specifically advised the City that it was required to file a petition for administrative hearing, or a request for an extension of time to file a petition under Florida Administrative Code Rule 28-106.111(3), by February 26, 2004. The noticing package also indicated that the Governing Board would take final action on the application at a meeting to be held on February 10, 2004. Although the City has in-house counsel, and later hired outside counsel to represent it in this action, on its application filed with the District, the City listed Mr. Colby as its designated representative. (The City never advised the District that notices and other papers should be sent to anyone other than Mr. Colby.) Consistent with its practice of sending all noticing packages to the designated representative on an application, Data Services sent the noticing package to Mr. Colby by certified mail. The receipt (green card) indicates that the Notice of Rights (and other documents) was received by the City on January 30, 2004, as acknowledged by the signature of another City employee, Francis X. Bell, who is authorized by the City to sign the return receipt green cards. It is fair to infer from the evidence that Mr. Colby did not alert the City Attorney about the deadline provided in the Notice of Rights or seek legal advice on what steps the City should take. In fact, the evidence shows that it was not until at least March or more likely April 2004 that an attorney for the City became involved in this matter.1 On February 1, 2004, the District published a notice in The News Journal, a newspaper of general circulation in Volusia County, advising that a notice of intent regarding the City's application had been issued and that all petitions for administrative hearings must be filed within 21 days after publication of the notice, or within 26 days of the District depositing the Notice of Intent in the mail for those persons who receive actual notice. At the City's request, on February 3, 2004, City representatives again met with staff to discuss the pending case. Because the City was aware that the Governing Board intended to take final action on the City's application at its February 10 meeting, on February 4, 2004, Mr. Lemke sent a letter to Mr. Jenkins requesting that the District defer consideration of the application until a later date. More specifically, the letter stated in relevant part that I understand we are on the February 10, 2004 Agenda for discussion of our consumptive use permit. We believe additional discussion is warranted prior to proceeding. Please accept this as a formal request for an extension. * * * Our consultant recently hired a biologist to assist in the review of the wetlands information. His analysis resulted in a report on the wetland condition dated January 28, 2004. A copy of this report is enclosed for your review. It is our opinion following your review of the information presented our respective staffs should meet one more time to resolve our technical differences. Following this meeting, I believe we will be prepared to go before the Board for issuance of our consumptive use permit. We would like to request we be placed on the April Agenda to allow adequate time for comments. The letter did not request a hearing, request an extension of time to file a request for a hearing, or otherwise directly or indirectly respond to the Notice of Rights previously received by the City on January 30, 2004. Although the City suggests otherwise, a fair construction of the letter is that Mr. Lemke was simply asking that the City's application be placed on the April 2004 agenda, so that the staff could review the biologist's report prepared a few days earlier. In accordance with Mr. Lemke's request, Mr. Jenkins asked that the item be removed from the February 10, 2004, agenda and that it be rescheduled to the April 2004 meeting. On February 5, 2004, Mr. Witt, a hydrogeologist employed by the City since August 2003 as an outside consultant, also sent a letter to Mr. Jenkins labeled as a "Time Extension Request" in which, among other things, he requested on behalf of the City that the [District] postpone by two (2) months (i.e., time extension) their submittal of the staff report and permit for the governing board for approval. It is the City's desire to avoid having to file for an administrative hearing in order to have an impartial review. At hearing, Mr. Witt explained that he had been authorized by Mr. Lemke to send the letter. Also, while the letter did not specifically say so, Mr. Witt stated that it was intended to serve as a request for an extension of time to file a request for a hearing, and not simply to request a postponement of a decision by the Governing Board. Before drafting his letter, Mr. Witt did not consult with an attorney or read the Notice of Rights, the District's procedural rules, or the Uniform Rules of Procedure. According to Mr. Colby, Mr. Witt was authorized to "evaluate documents, report back to the [C]ity, and have communications with St. Johns, ask questions from St. Johns, [and] look at documents." It seems unlikely, however, that the City had authorized Mr. Witt, a hydrogeologist, to protect its legal rights, and it never advised the District that Mr. Witt was authorized to seek that type of relief. In any event, because Mr. Witt was in the process of preparing a report on wetlands impacts (which was completed on February 27, 2004), a fair construction of the letter is that Mr. Witt was merely seconding Mr. Lemke's request that the Governing Board take up the City's application at a later date so that the staff could consider the newly-prepared consultants' reports prior to a final decision being made. Mr. Jenkins did not treat either letter as a formal request for an extension of time to file a request for a hearing under Florida Administrative Code Rule 28-106.111(3) and therefore did not forward them to the District's Office of the General Counsel. Instead, he treated them as requests to defer consideration of the application by the Governing Board until a later date. This action was consistent with the language in the two letters. It also comports with testimony by Mr. Colby and Mr. Lemke that they were under the impression, albeit incorrect, that it was not necessary to file a request for a hearing until after the Governing Board voted on the City's application. Finally, although it would seem logical to do so if the two letters were intended to be requests for an extension of time to file a petition, neither Mr. Lemke or Mr. Witt made any follow- up inquiry to determine if their "requests" for an extension of time had been granted, and if so, the new date for filing a petition. On March 3, 2004, Mr. Lemke sent a letter to a District hydrologist, James Hollingshead, in which he indicated that the City agreed with all twenty-four conditions in the Permit except conditions 2, 3, 6, 10, 12-14, 19, and 24. As to those conditions, Mr. Lemke proposed suggested changes. The letter did not request a hearing, but did indicate that the City looked "forward to a meeting with the District staff prior to the April Board meeting." The letter also included Mr. Witt's report completed a few days earlier. After receiving Mr. Witt's report (and the earlier report by the City's biologist), the staff undertook another review of the application in light of the new information in the reports. On March 25, 2004, Mr. Hollingshead telephoned Mr. Lemke and advised that the staff had conducted an additional field investigation and that its analysis would not be completed for two more weeks. As a consequence, the staff was requesting that the TSR dated January 26, 2004, be taken up at the Governing Board's May 2004 meeting, and not in April, as originally planned. On April 14, 2004, Mr. Hollingshead e-mailed Mr. Lemke and advised him that the staff had completed its review of Mr. Witt's report and that except for certain "date changes" in the permit conditions, it did not intend to change its recommended agency action. At the request of the City, on April 20, 2004, another meeting was held with the staff. Mr. James Thurrott, who is the City's Assistant Manager for Water and Streets, attended the meeting and says he recalled Mr. Jenkins advising that the City could either mediate the dispute or have "an administrative hearing once the governing board took an action." Mr. Witt, who also attended that meeting, recalled that Mr. Jenkins described the point of entry process and that the Governing Board "preferred it be done before the [B]oard meeting, but it could be done after the [B]oard meeting." (Mr. Witt's recollection of this conversation was somewhat confusing, for he first indicated that the meeting occurred in October 2003 and then later stated it was February 2004. More than likely, however, Mr. Witt was referring to the meeting held on April 20, 2004, since Mr. Witt recalled that the City's outside counsel was also present at the meeting.) Again, Mr. Jenkins denied giving procedural, as opposed to technical, advice to the City and says he referred any legal questions to the City's outside counsel, who by then was participating in the case and attended this meeting. This version of the events is accepted as being more credible, particularly since counsel for the City was present. On April 26, 2004, the Division prepared another TSR incorporating certain changes to the conditions suggested by the City. Due to inadvertence and miscommunication, Data Services generated a second noticing package on April 29, 2004, containing not only the new TSR, but also another Notice of Intended Decision (Second Notice) and Notice of Rights. While no changes were made to conditions 2, 3, 6, 10, and 19, certain changes (presumably suggested by the City) were made to the other disputed conditions. These changes, however, were not so substantial as to warrant the issuance of another point of entry (even though one was erroneously sent by Data Services). The second package was sent by certified mail to Mr. Colby and was received by the City on April 30, 2004. The return receipt indicates that Francis X. Bell again signed the green card on behalf of the City. At the City's request, on May 3, 2004, the City and staff held another meeting to discuss the proposed permit conditions and wetlands mitigation projects. On May 5, 2004, Mr. Lemke sent a letter to Mr. Jenkins in which he indicated that, based on discussions at the May 3 meeting, the City was offering additional suggestions regarding conditions 3, 6, and 14. He also discussed several points of agreement that were reached at the meeting on other issues. On May 6, 2004, the Division issued a Revised TSR which incorporated the changes previously made in the April 26, 2004, TSR. (The Revised TSR contains strike-throughs and underlines reflecting the changes made in the April 26, 2004, TSR. Whether further changes were made as a result of Mr. Lemke's letter of May 3 is not of record.) Because the changes were not substantial, a new point of entry was not offered the City. On May 11, 2004, the Governing Board approved the issuance of the Permit, as recommended in the Revised TSR. On May 21, 2004, the City filed its Petition requesting a formal hearing and asking that the District modify the Permit issued on May 11, 2004, "as proposed in [its letters dated] March 3, 2004, and May 5, 2004." Thus, the City was challenging special conditions 2, 3, 6, 10, 12-14, 19, and 24. The Petition indicated that it was being filed in response to the point of entry received by the City on April 30, 2004. Not surprisingly, it made no reference to the first point of entry received by the City on January 30, 2004. After the Petition was referred to DOAH, the District filed its Renewed Motion.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the St. Johns River Water Management District enter a final order dismissing the City of Daytona Beach's Petition as being untimely. DONE AND RECOMMENDED this 29th day of September, 2004, in Tallahassee, Leon County, Florida. S DONALD R. ALEXANDER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 29th day of September, 2004.
Findings Of Fact On or about February 5, 1990, Respondent and his wife filed with the Department an application for an onsite sewage disposal system construction permit attendant to a residence which they proposed to construct on Lot 7 of Block 15 in Breezeswept Beach Estates on Ramrod Key, in Monroe County, Florida. That application sought the Department's approval for the construction of a standard septic tank. The Department advised Respondent that he could not place a standard septic tank on that property. Accordingly, on approximately March 6, 1990, Respondent amended his application, this time seeking approval for the construction of an aerobic treatment unit. Respondent obtained final installation approval for his aerobic treatment unit from the Department on December 4, 1991. By letter dated August 3, 1992, the Department advised Respondent that changes in the law made by the 1991 Legislature which became effective on July 1, 1991, established the requirement for yearly operating permits for aerobic treatment units. That letter enclosed an application form for obtaining the operating permit and gave instructions on where to mail the completed application. Respondent did not submit an application for the operating permit and pay the fee in response to that letter. On July 30, 1993, the Department sent Respondent its Notice of Intended Action advising Respondent that his failure to pay the operating permit fee and obtain the permit within 14 days of receipt of that Notice would result in the imposition of an administrative fine. Thereafter, Respondent requested this formal proceeding. Respondent has, to date, failed to obtain an operating permit for any year and has not paid the fees associated with an operating permit.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered: Requiring Respondent to pay the fee and obtain an annual operating permit for his aerobic treatment unit forthwith; Advising Respondent that his failure to comply by a date certain will result in the imposition of an administrative fine; and Fining Respondent in the amount of $155 a day commencing the day after the deadline contained in the Final Order and continuing every day thereafter until Respondent complies with the law. DONE and ENTERED this 6th day of April, 1994, at Tallahassee, Florida. LINDA M. RIGOT 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 6th day of April, 1994. APPENDIX TO RECOMMENDED ORDER, CASE NO. 93-6180 Petitioner's proposed findings of fact numbered 1, 3, and 6-8 have been adopted either verbatim or in substance in this Recommended Order. Petitioner's proposed finding of fact numbered 2 has been rejected as being irrelevant to the issues under consideration in this cause. Petitioner's proposed findings of fact numbered 4 and 5 have been rejected as not constituting findings of fact but rather as constituting argument of counsel, conclusions of law, or recitation of the testimony. Respondent's proposed findings of fact numbered 1 and 4 have been adopted either verbatim or in substance in this Recommended Order. Respondent's proposed findings of fact numbered 2, 3, 8, and 12 have been rejected as being irrelevant to the issues under consideration in this cause. Respondent's proposed findings of fact numbered 5-7 and 9-11 have been rejected as not constituting findings of fact but rather as constituting argument of counsel, conclusions of law, or recitation of the testimony. COPIES FURNISHED: Carmen D. Frick, Esquire Department of Health and Rehabilitative Services District Legal Counsel 401 N.W. 2nd Avenue, N-1014 Miami, Florida 33128 John E. Davis 824 Seabreeze Drive Ruskin, Florida 33570 Robert L. Powell, Agency Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Kim Tucker, General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700
Findings Of Fact 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. 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: 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. 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, 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. ... The term "unit", as used by Respondent is a technical term that 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. The number of units existing in a structure containing multiple units should 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. Respondent is concerned with the potential use of a unit because its system must be designed by its engineers and constructed to respond to that potential use. The actual water consumption of any particular unit is not a primary consideration in determining the engineering requirements of Respondent's water system. 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 "unit", as used by Respondent, provides a reasonable basis for Respondent to impose its System Development Fees. 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 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. On April 11, 1978, Robert Ford, as owner, submitted an application for water services with Respondent for residential premises located at 1024 Eaton Street, Key West, Florida. The application, which was accepted by Respondent on April 11, 1978, contained the following provision: "Where System Development Charges are applied, all conditions apply as authorized in the Customer Service Policy Booklet". Petitioner changed the use of this property from residential to commercial during the time he owned the property. At the time he bought the property in 1975, it was a large, single family residence containing eight bedrooms. Mr. Ford changed the use of the property from a residence that housed a single family to a guest house that rented its rooms on a daily or weekly basis to tourists or other members of the public. He added four bedrooms to the eight bedrooms that existed when he purchased the premises so that a total of twelve guest rooms were available to rent. There were no substantial changes made to the plumbing system; no bathrooms were added and no water pipes were enlarged. No structural changes, other than the changing of the locks on the doors, were made by Mr. Ford to the eight bedrooms that existed when he purchased the property. There was no evidence that actual water consumption for the premises had increased because of the change in usage. Respondent first learned in the changes Mr. Ford made to the premises at 1024 Eaton Street in 1989. Thereafter, Respondent issued the subject System Development Charge based on its determination that Petitioner had added 11 units to the one existing unit, for a total of 12 units. The assessment was based on the rate of $2,000 per unit, the rate in effect at the time the changes were discovered. Petitioner agreed to pay the System Development Fee for the four bedrooms that he added to the residence. Petitioner did not contest the reasonableness of the fee currently being charged by Respondent ($2,000 per unit), but he did challenge the imposition of the current rate to the changes he made to the premises located at 1024 Eaton Street because those changes predated 1986, when the $2,000 per unit rate went into effect.
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 Petitioner of the System Development Fee based on 11 additional units at the rate of $2,000 per unit. DONE AND ENTERED this 1st day of February, 1991, 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 1st day of February, 1991. APPENDIX TO RECOMMENDED ORDER The following rulings are made on the proposed findings of fact submitted by Petitioner: The proposed findings of fact in paragraph 1-4 and 7-10 are adopted in material part by the Recommended Order. The proposed findings of fact in paragraph 5 are rejected as being unsubstantiated by the evidence since four bedrooms were added to the premises. The proposed findings of fact in paragraph 6 are adopted in part by the Recommended Order. The proposed findings of fact relating to occupancy levels are rejected as being unsubstantiated by the evidence. The proposed findings of fact in paragraphs 12-14 and 16-17 are rejected as being unsubstantiated by the evidence and because of the failure to provide pertinent citations to the record as required by Rule 22I-6.031(3), Florida Administrative Code. The proposed findings of fact in paragraph 15 are rejected as being unnecessary to the conclusions reached, but are treated as a preliminary matter. The respective paragraphs in the Findings of Fact section of Respondent's Proposed Recommended Order were not numbered. For ease of reference, these paragraphs have been numbered 1-10 sequentially. The following rulings are made on the proposed findings of fact submitted on behalf of Respondent. The proposed findings of fact in paragraphs 1, 7 and 10 are adopted in material part by the Recommended Order. The proposed findings of fact in paragraph 2 are adopted in part by the Recommended Order. The proposed findings of fact in the fifth and sixth sentences of paragraph 2 are rejected as being unnecessary to the conclusions reached. The proposed findings of fact in paragraph 3 are rejected as being unnecessary to the conclusions reached. The proposed findings of fact in paragraphs 4 and 9 are rejected as being subordinate to the findings made. The proposed findings of fact in paragraph 5 are adopted in part by the Recommended Order. The proposed findings of fact in the second sentence of paragraph 5 are rejected as being subordinate to the findings made. The proposed findings of fact in paragraph 6 are rejected as being unsubstantiated by the evidence. The proposed findings of fact in paragraph 8 are rejected as being an incomplete statement. COPIES FURNISHED: Joseph Galetti, Esquire 616 Whitehead Street Key West, Florida 33040 Robert T. Feldman, Esquire Feldman and Koenig, P.A. 417 Eaton Street Key West, Florida 33040 Floyd A. Hennen, Esquire General Counsel Florida Keys Aqueduct Authority 1100 Kennedy Drive Key West, Florida 33041-1239 Douglas M. Cook, Director Planning & Budgeting Executive Office of the Governor The Capitol Tallahassee, Florida 32399-0001
Findings Of Fact Floralino Properties, Inc. is a small utility providing water and sewer service in Pasco County. During the period May 30, 1978 until March 12, 1979, it purchased a substantial portion of its water from the Pasco Water Authority, Inc. (PWA) for resale to its customers. In order to recoup the costs of those purchases, the Public Service Commission authorized the utility to assess a surcharge upon each customer's bill. (See Order No. 7494). However, because the surcharge exceeded the actual charges for water purchased, the utility was required to escrow all excess revenues. Respondent failed to do so thereby precipitating the issuance of Order No. 9320. A subsequent Commission audit reflected the excess revenues to be $2,228.05. Prior to the hearing, but after the issuance of Order No. 9320, the respondent escrowed the funds in a Pinellas County bank. The utility now agrees to make an appropriate refund with interest within 30 days to all customers who received service during the period in question.
Recommendation Based upon the foregoing findings of fact and conclusions of law, the Hearing Officer recommends that respondent be found guilty of violating Order No. 7494, dated November 2, 1976; that a fine of $250 be imposed upon respondent; that respondent make an appropriate refund of $2,228.05 with 6 percent interest to those customers entitled to such refund within 30 days; and that a final report setting forth the disposition of such monies be submitted to the Public Service Commission within 90 days. DONE AND ENTERED this 22nd day of August, 1980, in Tallahassee, Florida. DONALD R. ALEXANDER Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675 COPIES FURNISHED: M. Robert Christ, Esquire 101 East Gaines Street Tallahassee, Florida 33542 Floralino Properties, Inc. 2320 East Bay Drive Clearwater, Florida 33516 Steve Tribble Commission Clerk 101 East Gaines Street Tallahassee, Florida 32301 Herman B. Blumenthal, III, Esquire 10401 Seminole Boulevard (Alt. 19) Seminole, Florida 33542
The Issue Whether the permit sought by Petitioner should be issued.
Findings Of Fact Petitioner initially filed a permit application with Respondent on March 17, 1997. The required application fee did not accompany the application. The submittal, in accordance with Respondent’s office procedure, was date-stamped at that time but in the absence of the application fee and proper signatories, was not viewed as an application ready for review. The initial permit application had been hand-delivered by Petitioner’s employee, date-stamped and perused by Respondent’s employee, and returned to Petitioner’s employee upon observing the absence of the application fee. On August 29, 1997, Petitioner again submitted the application to Respondent’s offices. This time, the application was appropriately signed and accompanied by a check for the appropriate application fee. Following the August 29, 1997, submittal, Petitioner stopped payment on the check for application fees. However, the review process had begun on the application. By letter dated September 26, 1997, Respondent’s representative requested additional information of Petitioner. There was no response to the request. The permit application fee remained unpaid at the time of final hearing.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Department of Environmental Protection enter a final order DENYING Petitioner’s application for the requested permit. DONE AND ENTERED this 10th day of November, 1999, in Tallahassee, Leon County, Florida. DON W. DAVIS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 10th day of November, 1999. COPIES FURNISHED: O. C. Allen, Jr., Qualified Representative Environmental Waste Recyclers, Inc. Post Office Box 10572 Tallahassee, Florida 32302 Martha L. Nebelsiek, Esquire Department of Environmental Protection Douglas Building, Mail Station 35 3900 Commonwealth Boulevard Tallahassee, Florida 32399-3000 Kathy Carter, Agency Clerk Department of Environmental Protection Douglas Building, Mail Station 35 3900 Commonwealth Boulevard Tallahassee, Florida 32399-3000 Teri Donaldson, General Counsel Department of Environmental Protection Douglas Building, Mail Station 35 3900 Commonwealth Boulevard Tallahassee, Florida 32399-3000 David B. Struhs, Secretary Department of Environmental Protection Doulgas Building, Mail Station 35 3900 Commonwealth Boulevard Tallahassee, Florida 32399-3000
Findings Of Fact 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. 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: 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. 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. ... 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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: 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. 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.
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: The proposed findings of fact in paragraph 1 as being subordinate to the findings made or as being unnecessary to the conclusions reached. The proposed findings of fact in paragraphs 2-10, 12, 14, and 18-21 are adopted in material part by the Recommended Order. 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. The proposed findings of fact in paragraph 13 are rejected as being conclusions of law. The proposed findings of fact in paragraphs 15 and 16 are rejected as being subordinate to the findings made. The proposed findings of fact in paragraphs 17 and 23 are rejected as being unnecessary to the conclusions reached. 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. The proposed findings of fact in paragraphs 1, 3, 6, 7, 12, and 13 are adopted in material part by the Recommended Order. 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. The proposed findings of fact in paragraph 4 are rejected as being unnecessary to the conclusions reached. 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. 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. The proposed findings of fact in paragraph 9 are rejected as being recitation of testimony or as being subordinate to the findings made. 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. 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.
