89-002700 Rolling Acres Enterprises, City Of Brooksville, And Hernando County vs. Conrock Utility Co. Status: Closed Recommended Order on Wednesday, January 24, 1990.

Summary: Utility certification denied because can't certificate areas already served by othe utility;because such would be contrury to comprehensive plans and public interest.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ROLLING ACRES ENTERPRISES , )

CITY OF BROOKSVILLE, and )

HERNANDO COUNTY , )

)

Petitioners , )

)

vs. ) CASE NO. 89-2700

)

CONROCK UTILITY COMPANY , )

)

Respondent. )

________________________________)

RECOMMENDED ORDER

Pursuant to notice, this cause came on for formal hearing before P. Michael

Ruff, duly designated Hearing Officer, on September 13, 1989, in Brooksville,

Florida. The appearances were as follows:

APPEARANCES

For Petitioner , William B. Eppley, Esquire

City of Post Office Box 1478

Brooksville: Brooksville, Florida 34605

For Petitioner , Peyton B. Hyslop, Esquire

Hernando County : 10 North Brooksville Avenue

Brooksville, Florida 34601

For Respondent , James F. Pingel, Jr., Esquire

Conrock Utility 100 South Ashley Drive

Company: Suite 1400, Ashley Tower

Post Office 1050

Tampa, Florida 33601

For Intervenor , David C. Schwartz, Esquire

Florida Public 101 East Gaines Street

Service Commission : Fletcher Tower

Tallahassee, Florida 32399-0855

STATEMENT OF THE ISSUES

The issues to be adjudicated in this proceeding concern whether Conrock

Utility Company's application for a water certificate in Hernando County meets

the requirements of Sections 367.041 and 367.051, Florida Statutes, and,

therefore, whether it should be granted.

PRELIMINARY STATEMENT

Conrock Utility Company (Conrock) has filed a notice of intent to apply for

an original water certificate to provide service to an area in Hernando County

lying generally east of the City of Brooksville, pursuant to Section 367.041,

Florida Statutes. It has filed a formal application in addition to the notice

of intent seeking to serve the territory described therein. Pursuant to Section

367.051(2), Florida Statutes, the Petitioners, City of Brooksville and Hernando

County, as well as Rolling Acres Enterprises, have filed objections to Conrock's

notice, thus initiating this Chapter 120 proceeding.

The City of Brooksville objected to the notice of intent on the grounds

that the territory sought to be served by Conrock includes properties within the

City's "statutory service area;" that the application will promote urban sprawl;

that the application will involve a needless duplication of services; and that

the application will infringe on the City's ability to meet the financial

obligations under its water and sewer bond issue undertaken in June 1988.

Hernando County objected to the notice of intent on the grounds that a

grant of the certificate and the certificated territory would result in

competition with, and duplication of, the county and city's water systems and

may violate the comprehensive plan approved by the Department of Community

Affairs.

Rolling Acres Enterprises, a nearby utility, objected on the grounds that

it feared that its territory might be included in the territory sought to be

approved and franchised to Conrock in the future. Due to an agreement entered

into shortly prior to hearing, the grounds for Rolling Acres Enterprises'

objections to the notice were alleviated and it has voluntarily dismissed its

objection and petition.

The Florida Public Service Commission was granted authority to intervene in

this case. At hearing it developed that the Public Service Commission took the

position that the various requirements for the grant of a water and sewer

certificate embodied in Statutes 367.041 and 051, Florida Statutes, have not, or

may not, be met.

The cause came on for hearing as noticed. Conrock presented the testimony

of Mark Williams, President of the Conrock Corporation; Rod Pomp, a consulting

engineer; and Robert Green, also a consulting engineer. The City of Brooksville

presented the testimony of William Geiger, the City's Director of Development;

and Charles Arbuckle, the City's Director of Utilities and Sanitation. Hernando

County presented the testimony of Robert Holbach, engineer and coordinator for

the county's utilities department. The Public Service Commission presented no

witnesses, but conducted cross examination of other party witnesses and

introduced certain exhibits into evidence. Intervenors exhibits 1-5 were

admitted into evidence. The Petitioner City's exhibits 1-6 were admitted, as

well as Petitioner Rolling Acre's exhibit 1. Respondent Conrock's exhibits 1-8

were admitted with the exception of exhibit 7 which was not moved into evidence.

At the conclusion of the proceeding, the parties elected to obtain a

transcript and stipulated to a schedule for filing proposed findings of fact and

conclusions of law, waiving the requirements of Rule 5.402, Florida

Administrative Code. Those proposed findings of fact are addressed in this

recommended order and in the appendix attached hereto and incorporated by

reference herein.

FINDINGS OF FACT

1. Applications and notices of intent to apply for a water certificate for

a particular service area are required to be noticed in a newspaper of general

circulation in the service area involved. In this proceeding, an affidavit was

introduced from the "Sun Coast News," to the effect that Conrock had caused to

be published in that newspaper its notice of intent to apply for the water

certificate. That newspaper is published on Wednesdays and Saturdays in New

Port Richey, Pasco County, Florida. Conrock's proposed service area, or

territory, is in that portion of Hernando County lying east of the City of

Brooksville. This newspaper is a free publication and states on the front page

that it is circulated in Pasco and Hernando Counties. There is some testimony

to the effect that the newspaper is only circulated in that portion of Hernando

County lying westward of Brooksville near the Pasco County border, which is an

area removed from Conrock's proposed service territory. No evidence was

presented to the effect that that newspaper actually circulates in Conrock's

proposed service territory.

2. Rules 25-30.030(2)(f), 25-30.035(3)(f) and 25-30.035(3)(h), Florida

Administrative Code, require that the utility provide evidence that it owns the

land where the treatment facilities are to be located or provide a copy of an

agreement providing authority for the continuous use of the land involved in the

utility operations and that a system map of the proposed lines and facilities be

filed with the Commission.

3. It was not established that Conrock owns or has a written lease for the

land where the water facilities are proposed to be located. No actual lease has

been executed providing for long-term continuous use of the land. It is true,

however, that a verbal agreement exists with the Williams family members and/or

the Williams Family Trust, who own the land upon which the facilities would be

located, authorizing the use of the land for the proposed operations and

facilities. That unrebutted evidence does establish, therefore, that Conrock

has authorization to use the land where the water facilities, including the

wells, are, or will be located. Although there is no extant written agreement,

as yet, providing for the continuous use of the land involved, Conrock did

establish that such an agreement can be consummated in the near future based on

the verbal agreement it already has.

4. Conrock did place into evidence a territorial map of the proposed

service area. It did not, however, provide a system map or otherwise provide

concrete evidence of where distribution lines and other facilities would be

located for its proposed system. It submitted instead a "planning study"

directed to the question of whether a water utility is needed for the proposed

territorial area. It submitted no design specifications for the proposed system

into evidence however. Conrock has not filed any tariff rate schedules for any

water service it might conduct, if granted a certificate.

5. Concerning the question of the need for the proposed water service, it

was established by Conrock that 900 acres of the proposed service territory are

mainly owned by the Sumner A. Williams Family Trust (Family Trust).

Additionally, some small tracts are owned by S. A. Williams Corporation, a

related family corporation. The majority of the 900-acre tract is zoned

agricultural and the S.A.W. Corporation operates a construction/demolition

landfill on that property. There is no evidence that it contemplates a real

estate development on that 900-acre tract or other tracts in the area which

could be served by the proposed water utility. Neither is Conrock attempting

entry into the utility business in order to supply water to a development of the

above-named corporation or any related party, person or entity.

6. The proposed service area is rural in nature. The majority of people

living in the area live on tracts of land ranging from 1 to 200 acres in size.

The people living in the proposed territory either have individual wells or

currently receive water service from the City of Brooksville or from Hernando

County. Both of those entities serve small subdivisions, or portions thereof,

lying wholly or in part in the proposed service territory of Conrock.

7. Conrock has not received any requests for water services from residents

in the proposed service territory. There is some evidence that discussions to

that effect may have occurred with an entity known as TBF Properties, lying

generally to the north of the proposed service territory. TBF Properties

apparently contemplates a real estate development on land it owns, which also

encompasses part of the Williams family property; some of which lies within the

proposed service territory. Plans for TBF's residential construction

development are not established in the evidence in this case however. There is

no evidence which shows when or on what schedule the construction of that

development might occur, nor whether it would actually seek service from Conrock

if that entity was granted a water certificate. TBF Properties is the only

entity or person in Conrock's proposed service territory that has expressed any

interest to the City of Brooksville concerning receiving water service from the

city. There have been no requests to the county for water service in the

proposed service territory, except by Budget Inn, a motel development.

8. The proposed service area includes a number of small subdivisions.

These subdivisions are Mundon Hill Farms, Eastside Estates, Cooper Terrace,

Country Oak Estates, Chris Morris Trailer Park, Potterfield Sunny Acres,

Gunderman Mobile Home Park, and Country Side Estates. Mundon Hill Farms is an

undeveloped subdivision. Eastside Estates and Cooper Terrace have limited

development and the Country Oak Estates consist of only three homes. The Chris

Morris Trailer Park has a small number of mobile homes but is not of a high

density. Potterfield Sunny Acres has six to eight homes. Gunderman Mobile Home

Park is a minor development. The Country Side Estates development has its own

independent water system. Some subdivisions in Conrock's proposed service area

already receive water service from the city or the county.

9. Conrock was incorporated in the past year and as yet has not had any

active business operations. It currently has no employees. Mark Williams, the

President of Conrock, manages the construction/demolition landfill operation

owned by the S.A.W. Corporation. The landfill business is the most closely

related business endeavor to a water utility business in the experience of Mr.

Williams, Conrock's president. If Conrock were granted a water certificate,

either Ms. Donna Martin or Mr. l d b e t h e o p e r a t i o u o w r  C h a r l e n s e L a m a t e D s

manager. Neither of these persons possesses any license or training authorizing

him or her to operate a water utility system. No evidence was presented as to

Ms. Martin's qualifications to operate a water utility system. Mr. DeLamater

manages a ranch at the present time and also works in a management capacity in

the landfill operation for the Williams family. There is no evidence that he

has received any training in the operation of a water utility. It is true,

however, that the representatives of the engineering and consulting firm

retained by Conrock, who testified in this case, do possess extensive water and

sewer design and operation expertise. The evidence does not reflect that those

entities or persons would be retained to help operate the utility, but Conrock

established that it will promptly retain operating personnel of adequate

training and experience to operate the water system should the certificate be

granted.

10. Conrock has not established what type of system it would install

should the certificate be granted, but a number of alternatives were examined

and treated in its feasibility study (in evidence). One alternative involves

the use of well fields alone, without treatment, storage or transmission lines.

In this connection, the feasibility study contains some indication that the

water quality available in the existing wells is such that no water treatment is

necessary. In any event, Conrock has not established of record in this case

what type of facilities it proposes to install in order to operate its proposed

water service. Further, that feasibility study, designed to show a need for the

proposed water service, is based upon the actual population, density and

occupancies in the homes and subdivisions of the proposed service territory,

even though those current residents and occupants have independent water

supplies at the present time, either through private wells or through service

provided by the City of Brooksville or Hernando County. Thus, the feasibility

study itself does not establish that the proposed service is actually needed.

11. Concerning the issue of the proposed facility's financial ability to

install and provide the service, it was shown that Conrock stock is jointly held

between the Williams family and the S.A.W. Corporation. The Conrock Corporation

itself has no assets. The president of Conrock owns 100 shares of the utility

corporation, but has not yet committed any personal funds to the venture. No

efforts, as yet, have been made to obtain bonds, loans or grants. In fact, the

first phase of the proposed project, which is expected to cost approximately

$400,000, can be provided in cash from funds presently held by the Williams

Family Trust and the S.A.W. Corporation. The various system alternatives

proposed in Conrock's feasibility study, in evidence, range in cost from

$728,200 to $5,963,100. Conrock has no assets and therefore no financial

statement as yet.

12. The financial statements of Mr. and Mrs. Sumner A. Williams, the

parents of Conrock's president, include approximately $3,069,907. This is the

corpus of the family trust mentioned above, and with other assets, amount to a

net worth for those individuals of approximately 5.8 million dollars. Mr.

Williams, Conrock's president, has an income interest in the family trust.

13. The financial statements of the S.A.W. Corporation indicate it has a

net worth of $1,588,739. The Family Trust financial statement shows a net worth

of $3,069,907 of which $1,444,165 consists of stock in the S.A.W. Corporation.

The Family Trust owns 90.9 percent of the S.A.W. Corporation stock. It is thus

a close-held corporation, not publicly traded and thus has no value independent

of the corporation's actual assets. In spite of the fact that Conrock, itself,

the corporate applicant herein, does not have assets or net worth directly

establishing its own financial responsibility and feasibility, in terms of

constructing and operating the proposed water service, the testimony of Mr.

Williams, its president, was unrefuted and does establish that sufficient funds

from family members and the trust are available to adequately accomplish the

proposed project.

14. Concerning the issue of competition with or duplication of other

systems, it was established that the City of Brooksville currently provides

water service to the Wesleyan Village, a subdivision within the Conrock proposed

service territory. The City has a major transmission line running from its

corporate limits out to the Wesleyan Village. The Wesleyan Village is receiving

adequate water service at the present time, although there is some evidence that

water pressure is not adequate for full fire flows. The City also has another

water main running from US 41 down Crum Road, which is in the proposed service

territory of Conrock. By agreement with Hernando County, a so-called

"interlocal agreement," the City of Brooksville is authorized to provide water

and sewer utility service in a 5-mile radius in Hernando County around the

incorporated area of Brooksville. This 5-mile radius includes much of the

proposed service territory of Conrock.

15. The City of Brooksville comprehensive plan, approved by the Florida

Department of Community Affairs, contains an established policy discouraging

"urban sprawl" or "leap frogging"; the placing of developments including

separate, privately owned water utilities in predominantly rural areas. It,

instead, favors the installation of subdivision developments in areas which can

be served by existing, more centralized, publicly owned water and sewer

utilities such as the City of Brooksville or Hernando County. Thus, the

installation of the separate, privately owned system in a rural area of the

county would serve to encourage urbanization away from area contiguous to the

municipality of Brooksville which is served, and legally authorized to be

served, by the City of Brooksville. Such a project would be in derogation of

the provisions of the approved comprehensive land use plan. Further, Conrock's

proposed system would be in partial competition with and duplication of the city

and county water systems in the proposed service territory.

16. The county provides some water service through its water and sewer

district system to some of the subdivisions and residents in the proposed

service territory of Conrock and much of Conrock's territory, as mentioned

above, lies within the 5-mile radius urban services area of Brooksville,

authorized to be served by the city and county interlocal agreement. Such

interlocal agreements, including this one, are contemplated and authorized by

the comprehensive plan approved by the Department of Community Affairs and the

city/county agreement involved in this proceeding was adopted in 1978 in

accordance with certain federal grant mandates in Title 201 of the Federal Safe

Water Drinking Act. In terms of present physical competition and duplication,

Conrock's proposed system would likely involve the running of water lines

parallel to and in duplication of the county's lines within the same

subdivision.

CONCLUSIONS OF LAW

17. The Division of Administrative Hearings has jurisdiction of the

subject matter of and the parties to this proceeding. Section 120.57(1),

Florida Statutes (1987). Section 367.051, Florida Statutes, provides as

follows:

(1) If, within 20 days following the of ficial date of

filing of the application, the Commission does not

receive written objection to the application, the

Commission may dispose of the application without

hearing. If the applicant is dissatisfied with the

disposition, he should be entitled to a proceeding

under s. 120.57.

(2) If, within 20 days following the official date of

filing, the Commission receives from the public counsel

or governmental agency, or from a utility or consumer

who would be substantially affected by the requested

certification, a written objection requesting a

proceeding pursuant to s. 120.57, the Commission shall

order such proceeding conducted in or near the

territory applied for, if feasible. Notwithstanding

the ability to object on any other ground, a county or

municipal government has standing to object on the

ground that the issuance of the certificate will

violate established local comprehensive plans developed

pursuant to ss. 163.3161 - 163.3211. If any consumer,

utility, or governmental agency or the public counsel

request a public hearing on the application, such

hearing shall, if feasible, be held in or near the

territory applied for; and the transcript of such

hearing and any material at or before the hearing shall

be considered as part of the record of the application

and any proceeding related thereto.

(3)(a) The Commission may grant a certificate, in whole

or in part or with modifications in the public

interest, but may in no event grant authority greater

than that requested in the application or amendments

thereto and noticed under s. 367.041, or it may deny a

certificate. The Commission shall not grant a

certificate for a proposed system, or for the extension

for an existing system, which will be in competition

with, or duplication of, any other system or portion of

a system, unless it first determines that such other

system or portion thereof is inadequate to meet the

reasonable needs of the public or that the person

operating the system is unable, refuses, or neglects to

provide reasonably adequate service.

(b) When granti ng a certificate, the Commission need

not consider whether the issuance of a certificate is

inconsistent with the local comprehensive plan of a

county or municipality unless an objection to the

certificate has been timely raised in an appropriate

motion or application. If such an objection has been

timely raised, the Commission shall consider, but not

be bound by, the local comprehensive plan of the county

or municipality.

18. Under the above-quoted authority therefore, the Commission must

consider the public interest in deciding whether to grant or deny a certificate.

Although the Commission is not bound by the provisions and mandates of the

comprehensive plan involved in deciding whether to grant or deny a certificate,

the consistency of the proposed utility service with the provisions of the

approved comprehensive plan involved is an important consideration and should be

persuasive in making the decision to grant or deny. In the instant case, the

proposed utility certificated territory and service involved was shown to be

contrary the comprehensive plan concerning the fact that the certificated

territory proposed would overlap that reserved to the municipality of

Brooksville by its agreement with Hernando County. That agreement is adopted as

part of the comprehensive plan of the City of Brooksville, in that the 5-mile

radius urban service area of the City of Brooksville encompasses the proposed

territory sought by Conrock or a large portion of it.

19. Further, the installation of the proposed system in the rural area

involved in Hernando County would be contrary to the principles adopted in the

comprehensive plan, and approved by the Department of Community Affairs, which

are designed to discourage and prevent urbanization and the proliferation of

privately owned, separate utility systems in rural areas. Thus, in this

context, the proposed certificated territory and the utility system contemplated

by Conrock would not be in the public interest.

20. Section 163.3161, Florida Statutes, embodies the purpose of the "Local

Government Comprehensive Planning and Land Development Regulation Act,"

including the prevention of overcrowding of land and avoidance of undue

concentration of population, as well as facilitating adequate and efficient

provision of water and sewer service. Sections 163.3164 and 163.3171 make it

clear that the provisions of the approved municipal comprehensive plan involved

encompass, in the definition of the "area of jurisdiction," the areas adjacent

to the incorporated boundaries of the City of Brooksville embodied in the

subject interlocal agreement (in evidence as Petitioner City of Brooksville's,

exhibit 6). That 5-mile radius area as referenced above, encompasses a large

portion of the territory sought be to certificated by Conrock.

21. Pursuant to the provisions of Chapter 163 and its statutorily

authorized interlocal agreement, the city has authority to regulate the

provision of utility service within the 5-mile urban service area, including the

requiring of central water and sewer systems for new urban developments, which

are designed to be compatible with future public utility systems, and regulating

land use density and extent which will control urban sprawl and avoid depletion

of the physical, social and fiscal resources of the city. The proposed utility

service and system which is the subject of this application has been shown to

promote "urban sprawl," which is to be discouraged under the provisions of the

city's comprehensive plan. It would unduly duplicate and be competitive with

the city's water and sewer utility service in the proposed service area and that

which is contemplated to be provided by the city and the county in accordance

with the approved comprehensive plan and interlocal agreement. Thus, the

proposed utility service is not established to be in the public interest in this

context as well.

22. In addition to the above considerations, Conrock did not provide

evidence to establish that it owns the land where the utility facilities would

be located or that it actually has an agreement providing for long-term

continuous control and use of the land involved, as required by Rule 25-

30.035(3)(f), Florida Administrative Code. Conrock, however, demonstrated

through testimony of its president, that it has verbal arrangements made to

entitle it to use the land owned by family members and/or the above-named trust.

The evidence adduced by Conrock leaves no doubt that it can secure the required

land dedicated to its proposed utility facilities in the event the certificate

is granted.

23. Rule 25-30.035(3)(h), Florida Administrative Code, provides that a

system map must be provided by the proposed utility depicting proposed

transmission and other lines and facilities. Conrock did not establish that it

has a system map of such proposed lines and facilities.

24. Section 367.041(2), Florida Statutes, and Rule 25-30.035(3)(g),

Florida Administrative Code, provides that the applicant for a utility

certificate must file tariff schedules showing the rates and charges it

contemplates charging customers for its services. Conrock did not file such a

tariff schedule showing rates and charges for its services with the Commission

nor introduce them into evidence in this proceeding.

25. Pursuant to Section 367.051(3)(a), Florida Statutes, a certificate

application cannot be granted for those areas which are currently being provided

water service by city or county governments. Conrock's certificate thus cannot

be granted so as to allow it to provide service for areas being provided water

service now by the City of Brooksville or Hernando County, since its system has

been shown to be, in those particulars, in competition with or in duplication of

the city's and county's water systems. Additionally, Conrock failed to show

that the other systems were inadequate to meet the reasonable needs of the

public. In this connection too, Conrock failed to establish that there was a

public need for the service in the territory involved. There was no showing

that existing customers are not presently being provided adequate service, and

other than projections of demand in the future embodied in Conrock's feasibility

study, there has been no showing that future customers in the territory involved

cannot be provided adequate service by the presently existing city and county

water facilities and reasonably anticipated extensions and augmentations

thereof. In this particular, it has been established that the City of

Brooksville presently has excess well and water production capacity which can

meet anticipated future demands in the territory involved.

26. Finally, Rule 25-30.035(k),(m) and (n), Florida Administrative Code,

mandates that the applicant for a certificate demonstrate its technical and

financial ability to install and operate the proposed water system. While it is

true that Conrock did not formally demonstrate its financial capability by

presentation of financial statements which demonstrate that it has ample

financial resources to construct and operate the proposed system, the testimony

of its president demonstrates that those financial resources are readily

available should the certificate be granted, as delineated in the above findings

of fact. If this were the only technical deficiency in the application and

service proposed by Conrock, it would not justify a denial of the application.

The same considerations are true for Conrock's present lack of technical

expertise in operating a water system. It is true that a certified operator is

not currently employed by Conrock and that its present employees do not have the

expertise necessary to safely and properly operate a water system. Conrock did

establish, however, that should a certificate be granted, it is financially and

otherwise capable of retaining a permanent, trained operator for the water

system. This, too, would not be a basis for denial of its certificate, were

that the only deficiency in Conrock's proposal.

27. In view of the above findings of fact and conclusions of law, it has

been established that Conrock has failed to adequately justify a granting of its

certificate in consideration of the statutory and regulatory framework provided

in the above-cited statutory provisions and related rules. In particular,

Conrock has failed to show that its proposal to provide water service in the

proposed territory involved would comport with the pubic interest, as that is

elucidated above. Accordingly, the requirements of the above authority not

having been met, it is concluded that the application of Conrock should be

denied.

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 the application of Conrock Utilities Corporation for a

water certificate authorizing it to operate a water utility in Hernando County,

Florida, as more particularly described herein, be denied.

DONE AND ENTERED in Tallahassee, Leon County, Florida, this __23rd__ day of

January 1990.

__________________________________

P. MICHAEL RUFF

Hearing Officer

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

[phone]

Filed with the Clerk of the

Division of Administrative Hearing

this __24th__ day of January 1990.

APPENDIX

Petitioners, City of Brooksville , Hernando County, and Hernando County Water and

Sewer District's proposed findings of fact.

1. Accepted.

2. Accepted.

3. Accepted.

4. Rejected as subordinate to the Hearing Officer's findings of

fact on the subject matter.

5. Rejected as subordinate to the Hearing Officer's findings

of fact on the subject matter.

6. Rejected as subordinate to the Hearing Officer's findings

of fact on the subject matter. Respondent's proposed

findings of fact.

1. Accepted.

2. Accepted.

3. Rejected as subordinate to the Hearing Officer's findings of

fact on this subject matter and as not entirely in accordance

with the preponderant weight of the evidence.

4. Accepted.

5. Accepted.

6. Rejected as subordinate to the Hearing Officer's findings of

fact on this subject matter and as not entirely in accordance

with the preponderant weight of the evidence.

Intervenor's proposed findings of fact.

1. Accepted.

2. Rejected as subordinate to the Hearing Officer's findings of

fact on this subject matter and not in itself materially

dispositive.

3. Accepted.

4. Accepted.

5. Accepted.

6. Accepted.

7. Accepted.

8. Accepted.

9. Accepted.

10. Accepted.

11. Accepted, but not in itself materially dispositive and

subordinate to the Hearing Officer's findings of fact on this

subject matter.

12. Accepted.

13. Accepted.

14. Rejected as subordinate to the Hearing Officer's findings of

fact on this subject matter and as not in itself materially

dispositive.

15. Accepted, but not in itself materially dispositive.

16. Accepted, but subordinate to the Hearing Officer's findings

of fact on this subject matter.

17. Accepted, but subordinate to the Hearing Officer's findings

of fact on this subject matter.

18. Accepted.

19. Accepted.

20. Accepted.

21. Accepted.

Copies furnished to:

William B. Eppley, Esquire

Post Office Box 1478

Brooksville, Florida 34605

Peyton B. Hyslop, Esquire

10 North Brooksville Avenue

Brooksville, Florida 34601

James F. Pingel, Jr., Esquire

100 South Ashley Drive

Suite 1400, Ashley Tower

Post Office 1050

Tampa, Florida 33601

David C. Schwartz, Esquire

Florida Public Service Commission

101 East Gaines Street

Tallahassee, Florida 32399-0855

Steve Tribble, Director

Records and Recording

Florida Public Service Commission

101 East Gaines Street

Tallahassee, Florida 32399-0850

David Swafford

Executive Director

Florida Public Service Commission

101 East Gaines Street

Tallahassee, Florida 32399-0850

Susan Clark, General Counsel

Florida Public Service Commission

101 East Gaines Street

Tallahassee, Florida 32399-0850

=================================================================

AGENCY FINAL ORDER

=================================================================

BEFORE THE FLORIDA PUBLIC SERVICE COMMISSION

In re : Objection to notice of DOCKET NO. 890459-WU

CONROCK UTILITY COMPANY of intent to ORDER NO. 22847

apply for a water certificate in ISSUED: 4/23/90

Hernando County DOAH CASE NO. 89-2700

____________________________________/

The following Commissioners participated in the

disposition of this matter:

MICHAEL McK. WILSON, Chairman

THOMAS M. BEARD

BETTY EASLEY

GERALD L. GUNTER

JOHN T. HERNDON

Pursuant to notice, an administrative hearing was held

before P. Michael Ruff, Hearing Officer with the Division of

Administrative Hearings, on September 13, 1989, in Brooksville,

Florida, in the above-captioned matter.

APPEARANCES

WILLIAM B. EPPLEY, Esquire

Post Office Box 1478

Brooksville, Florida 34605

On Behalf of the City of Brooksville

PEYTON B. HYSLOP, Esquire 

10 North Brooksville Avenue

Brooksville, Florida 34601

On Behalf of Hernando County

JAMES F. PINGEL, JR., Esquire

100 South Ashley Drive, Suite 1400,

Ashley Tower

Post Office Box 1050

Tampa, Florida 33601

On Behalf of Conrock Utility Company

DAVID C. SCHWARTZ, Esquire,

Florida Public Service Commission

101 East Gaines Street

Tallahassee, Florida 32399-0863

On Behalf of Commission Staff

The Hearing Officer's Recommended Order was entered on

January 24, 1990. Exceptions were filed by the Florida Public

Service Commission as Intervenor. After consideration of the

evidence, we now enter our order.

FINAL ORDER UPHOLDING OBJECTIONS AND DENYING CERTIFICATE BY THE COMMISSION:

BACKGROUND

The City of Brooksville, Hernando County and Rolling Acres Enterprises

timely protested Conrock Utility Company's (Conrock or utility) notice of intent

to seek a certificate pursuant to Section 367.041, Florida Statutes, to provide

water service. The Commission referred the matter to the Division of

Administrative Hearings for a formal hearing to be conducted pursuant to

Section 120.57(1), Florida Statutes. The full text of the Hearing Officer's

Recommended Order is set forth below.

STATEMENT OF THE ISSUES

The issues to be adjudicated in this proceeding concern whether Conrock

Utility Company's application for a water certificate in Hernando County meets

the requirements of Sections 367.041 and 367.051, Florida Statutes, and,

therefore, whether it should be granted.

PRELIMINARY STATEMENT

Conrock Utility Company (Conrock) has filed a notice of intent to apply for

an original water certificate to provide service to an area in Hernando County

lying generally east of the City of Brooksville, pursuant to Section 367.041,

Florida Statutes. It has filed a formal application in addition to the notice of

intent seeking to serve the territory described therein. Pursuant to Section

367.051(2), Florida Statutes, the Petitioners, City of Brooksville and Hernando

County, as well as Rolling Acres Enterprises, have filed objections to Conrock's

notice, thus initiating this Chapter 120 proceeding.

The City of Brooksville objected to the notice of intent on the grounds

that the territory sought to be served by Conrock includes properties within the

City's "statutory service area;" that the application will promote urban sprawl;

that the application will involve a needless duplication of services; and that

the application will infringe on the City's ability to meet the financial

obligations under its water and sewer bond issue undertaken in June 1988.

Hernando County objected to the notice of intent on the grounds that a

grant of the certificate and the certificated territory would result in

competition with, and duplication of, the county and city's water systems and

may violate the comprehensive plan approved by the Department of Community

Affairs.

Rolling Acres Enterprises, a nearby utility, objected on the grounds that

it feared that its territory might be included in the territory sought to be

approved and franchised to Conrock in the future. Due to an agreement entered

into shortly prior to hearing, the grounds for Rolling Acres Enterprises'

objections to the notice were alleviated and it has voluntarily dismissed its

objection and petition.

The Florida Public Service Commission was granted authority to intervene in

this case. At hearing it developed that the Public Service Commission took the

position that the various requirements for the grant of a water and sewer

certificate embodied in Statutes 367.041 and .051, Florida Statutes, have not,

or may not, be met.

The cause came on for hearing as noticed. Conrock presented the testimony

of Mark Williams, President of the Conrock Corporation; Rod Pomp, a consulting

engineer; and Robert Green, also a consulting engineer. The City of Brooksville

presented the testimony of William Geiger, the City's Director of Development;

and Charles Arbuckle, the City's Director of Utilities and Sanitation.

Hernando County presented the testimony of Robert Holbach, engineer and

coordinator for the county's utilities department. The Public Service

Commission presented no witnesses, but conducted cross examination of other

party witnesses and introduced certain exhibits into evidence. Intervenors

exhibits 1-5 were admitted into evidence. The Petitioner City's exhibits 1-6

were admitted, as well as Petitioner Rolling Acre's exhibit 1. Respondent

Conrock's exhibits 1-8 were admitted with the exception of exhibit 7 which was

not moved into evidence. At the conclusion of the proceeding, the parties

elected to obtain a transcript and stipulated to a schedule for filing proposed

findings of fact and conclusion of law, waiving the requirements of Rule 5.402,

Florida Administrative Code. Those proposed findings of fact are addressed in

this recommended order and in the appendix attached hereto and incorporated by

reference herein.

FINDINGS OF FACT

1. Applications and notices of intent to apply for a water certificate for

a particular service area are required to be noticed in a newspaper of general

circulation in the service area involved. In this proceeding, an affidavit was

introduced from the "Sun Coast News," to the effect that Conrock had caused to

be published in that newspaper its notice of intent to apply for the water

certificate. That newspaper is published on Wednesdays and Saturdays in New Port

Richey, Pasco County, Florida. Conrock's proposed service are, or territory, is

in that portion of Hernando County lying east of the City of Brooksville. This

newspaper is a free publication and states on the front page that it is

circulated in Pasco and Hernando Counties. There is some testimony to the

effect that the newspaper is only circulated in that portion of Hernando County

lying westward of Brooksville near the Pasco County border, which is an area

removed from Conrock's proposed service territory. No evidence was presented to

the effect that the newspaper actually circulates in Conrock's proposed service

territory.

2. Rules 25-30.030(2)(f), 25-30.035(3)(f) and N 25-30.035(3)(h), Florida

Administrative Code, require that the utility provide evidence that it owns the

land where the treatment facilities are to be located or provide a copy of an

agreement providing authority for the continuous use of the land involved in the

utility operations and that a system map of the proposed lines and facilities be

filed with the Commission.

3. It was not established that Conrock owns or has a written lease for the

land where the water facilities are proposed to be located. No actual lease has

been executed providing from long-term continuous tise of the land. It is true,

however, that a verbal agreement exists with the Williams family members and/or

the Williams Family Trust, who own the land upon which the facilities would be

located, authorizing the use of the land for the proposed operations and

facilities. That unrebutted evidence does establish, therefore, that Conrock has

authorization to use the land where the water facilities, including the wells,

are, or will be located. Although there is no extant written agreement, as yet,

providing for the continuous use of the land involved, Conrock did establish

that such an agreement can be consummated in the near future based on the verbal

agreement it already has.

4. Conrock did place into evidence a territorial map of the proposed

service area. It did not, however, provide a system map or otherwise provide

concrete evidence of where distribution lines and other facilities would be

located for its proposed system. It submitted instead a "planning study"

directed to the question of whethei~ a water utility is needed for the proposed

territorial area. It submitted no design specifications for the proposed system

into evidence however. Conrock has not filed any tariff rate schedules for any

water service it might conduct, if granted a certificate.

5. Concerning the question of the need for the proposed water service, it

was established by Conrock xthat 900 acres of the proposed service territory are

mainly owned by the Sumner A. Williams Family Trust (Family Trust).

Additionally, some small tracts are owned by S. A. Williams Corporation, a

related family corporation. The majority of the 900-acre tract is zoned

agricultural and the S.A.W. Corporation operates a construction/demolition

landfill on that property. There is no evidence that it contemplates a real

estate development on that 900-acre tract or other tracts in the area which

could be served by the proposed water utility. Neither is Conrock attempting

entry into the utility business in order to supply water to a development of the

above-named corporation or any related party, person or entity.

6. The proposed service area is rural in nature. The majority of people

living in the area live on tracts of land ranging from 1 to 200 acres in size.

The people living in the proposed territory either have individual wells or

currently receive water service from the City of Brooksville or from Hernando

County. Both of those entities serve small subdivisions, or portions thereof,

lying wholly or in part in the proposed service territory of Conrock.

7. Conrock has not received any requests for water services from residents

in the proposed service territory. There is some evidence that discussions to

that effect may have occurred with an entity know as TBF Properties, lying

generally to the north of the proposed service territory. TBF Properties

apparently contemplates a real estate development on land it owns, which also

encompasses part of the Williams family property; some of which lies within the

proposed service territory. Plans for TBF's residential construction development

are not established in the evidence in this case however. There is no evidence

which shows when or on what schedule the construction of that development might

occur, nor whether it would actually seek service from Conrock if that entity

was granted a water certificate. TBF Properties is the only entity or person in

Conrock's proposed service territory that has expressed any interest to the City

of Brooksville concerning receiving water service from the city. There have been

no requests to the county for water service in thexproposed service territory,

except by Budget Inn, a motel development.

8. The proposed service area includes a number of small subdivisions.

These subdivisions are Mundon Hill Farms, Eastside Estates, Cooper Terrace,

Country Oak Estates, Chris Morris Trailer Park, Potterfield Sunny Acres,

Gunderman Mobile Home Park, and Country Side Estates. Mundon Hill Farms is an

undeveloped subdivision. Eastside Estates and Cooper Terrace have limited

development and the Country Oak Estates consist of only three homes. The Chris

Morris Trailer Park has a small number of mobile homes but is not of a high

density. Potterfield Sunny Acres has six to eight homes. Gunderman Mobile Home

Park is a minor development. The Country Side Estates development has its own

independent water system. Some subdivisions in Conrock's proposed service area

already receive water service from the city or the county.

9. Conrock was incorporated in the past year and as yet has not had any

active business operations. It currently has no employees. Mark Williams, the

President of Conrock, manages the construction/demolition landfill operation

owned by the S.A.W. Corporation. The landfill business is the most closely

related business endeavor to a water utility business in the experience of Mr.

Williams, Conrock's president. If Conrock were granted a water certificate,

either Ms. Donna Martin or Mr. Charles DeLamater would be the operations

manager. Neither of these persons possesses any license or training authorizing

him or her to operate a water utility systeM. No evidence was presented as to

Ms. Martin's qualifications to operate a water utility system. Mr. DeLamater

manages a ranch at the present time and also works in a management capacity in

the landfill operation for the Williams family. There is no evidence that he

has received any training in the operation of a water utility. It is true,

however, that the representatives of the engineering and consulting firm

retained by Conrock, who testified in this case, do possess extensive water and

sewer design and operation expertise. The evidence does not reflect that those

entities or persons would be retained to help operate the utility, but Conrock

established that it will promptly retain operating personnel of adequate

training and experience to operate the water system should the certificate be

granted.

10. Conrock has not established what type of system it would install should

the certificate be granted, but a number of alternatives were examined and

treated in its feasibility study (in evidence). One alternative involves the

use of well fields alone, without treatment, storage or transmission lines. In

this connection, the feasibility study contains some indication that the water

treatment is necessary. In any event, Conrock has not established of record in

this case what type of facilities it proposes to install in order to operate its

proposed water service. Further, that feasibility study, designed to show a

need for the proposed water service, is based upon the actual population,

density and occupancies in the homes and subdivisions of the proposed service

territory, even though those current residents and occupants have independent

water supplies at the present time, either through private wells or through

service provided by the City of Brooksville or Hernando County. Thus, the

feasibility study itself does not establish that the proposed service is

actually needed.

11. Concerning the issue of the proposed facility's financial ability to

install and provide the service, it was shown that Conrock stock is jointly held

between the Williams family and the S.A.W. Corporation. The Conrock Corporation

itself has no assets. The president of Conrock owns 100 shares of the utility

corporation, but has not yet committed any personal funds to the venture. No

efforts, as yet, have been made to obtain bonds, loans or grants. In fact, the

first phase of the proposed project, which is expected to cost approximately

$400,000, can be provided in cash from funds presently held by the Williams

Family Trust and the S.A.W. Corporation. The various system alternatives

proposed in Conrock's feasibility study, in evidence, range in cost from

$728,200 to $5,963,100. Conrock has no assets and therefore no financial

statement as yet.

12. The financial statements of Mr. and Mrs. Sumner A. Williams, the

parents of Conrock's president, include approximately $3,069,907. This is the

corpus of the family trust mentioned above, and with other assets, amount to a

net worth for those individuals of approximately 5.8 million dollars. Mr.

Williams, Conrock's president, has an income interest in the family trust.

13. The financial statements of the S.A.W. Corporation indicate it has a

net worth of $1,588,739. The Family Trust financial statement shows a net worth

of $3,069,907 of which $1,444,165 consists of stock in the S.A.W. Corporation.

The Family Trust owns 90.0 percent of the S.A.W. Corporation stock. It is thus a

close-held corporation, not publicly traded and thus has no value independent of

the corporation's actual assets. In spite of the fact that Conrock, itself, the

corporate applicant herein, does not have assets or net worth directly

establishing its own financial responsibility and feasibility, in terms of

constructing and operating the proposed water service, the testimony of Mr.

Williams, its president, was unrefuted and does establish that sufficient funds

from family members and the trust are available to adequately accomplish the

proposed project. 14. Concerning the issue of competition with or duplication

of other systems, it was established that the City of Brooksville currently

provides water service to the Wesleyan Village, a subdivision within the Conrock

proposed service territory. The City has a major transmission line running from

its corporate limits out to the Wesleyan Village. The Wesleyan Village is

receiving adequate water service at the present time, although there is some

evidence that water pressure is not adequate for full fire flows. The City also

has another water main running from US 41 down Crum Road, which is in the

proposed service territory of Conrock. By agreement with Hernando County, a so-

called "interlocal agreement," the City of Brooksville is authorized to provide

water and sewer utility service in a 5-mile radius in Hernando County around the

incorporated area of Brooksville. This 5-mile radius includes much of the

proposed service territory of Conrock.

15. The City of Brooksville comprehensive plan, approved by the Florida

Department of Community Affairs, contains an established policy discouraging

"urban sprawl" or "leap frogging"; the placing of developments including

separate, privately owned water utilities in predominantly rural areA. It,

instead, favors the installation of subdivision developments in areas which can

be served by existing, more centralized, publicly owned water and sewer

utilities such as the City of Brooksvi1le or Hernando County. Thus, the

installation of the separate, privately owned system in a rural area of the

county would serve to encourage urbanization from are contiguous to the

municipality of Brooksville which is served, and legally authorized to be

served, by the City of Brooksville. Such a project would be in derogation of

the provisions of the approved comprehensive land use plan. Further, Conrock's

proposed system would be in partial competition with and duplication of the city

and county water systems in the proposed service territory.

16. The county provides some water service through its water and sewer

district system to some of the subdivisions and residents in the proposed

service territory of Conrock and much of Conrock's territory, as mentioned

above, lies within the 5 mile radius urban services area of Brooksville,

authorized to be served by the city and county interlocal agreement. Such

interlocal agreements, including this one, are contemplated and authorized by

the comprehensive plan approved by the Department of Community Affairs and the

city/county agreement involved in this proceeding was adopted in 1978 in

accordance with certain federal grant mandates in Title 201 of the Federal Safe

Water Drinking Act. In terms of present physical competition and duplication,

Conrock's proposed system would likely involve the running of water lines

parallel to and in duplication of the county's lines within the same

subdivision.

CONCLUSIONS OF LAW

1. The Division of Administrative Hearings has jurisdiction of the subject

matter of and the parties to this proceeding. Section 120.57(1), Florida

Statutes (1987). Section 367.051, Florida Statutes, provides as follows:

(1) If, within 20 days following the official

date of filing of the application, the Commission

does not receive written objection to the

application, the Commission may dispose

of the application without hearing. If the

applicant is dissatisified with the disposition,

he should be entitled to a proceeding under

s. 120.57. (2) If, within 20 days following

the official date of filing, the Commission receives

from the public counsel or governmental agency,

or from a utility or consumer who would be

substantially affected by the requested

certification, a written objection requesting a

proceeding pursuant to s. 120.57, the

commission shall order such

proceeding conducted in or near the territory

applied for, if feasible. Notwithstanding

the ability to object on any other ground,

a county or municipal government has

standing to object on the ground that the

issuance of the certificate will violate

established local comprehensive plans developed

pursuant to ss. 163.3151 - 163.3211. If any

consumer, utility, or governmental agency

or the public counsel request a public

hearing on the application, such hearing

shall, if feasible, be held in or near the

territory applied for; and the transcript

of such hearing and any material at or

before the hearing shall be considered as

part of the record of the application and

any proceeding related thereto.

(3)(a) The Commission may grant a

certificate, in whole or in part or with

modifications in the public interest, but

may in no event grant authority greater

than that requested in the application

or amendments thereto and noticed under

s. 367.041, or it may deny a certificate.

The Commission shall not grant a certificate

for a proposed system, or for the extension

for an existing system, which will be

in competition with, or duplication of,

any other system or portion of a system,

unless it first determines that such other

system or portion thereof is inadequate

to meet the reasonable needs of the public

or that the person operating the system

is unable, refuses, or neglects to provide

reasonably adequate service.

(b) When granting a certificate, the

Commission need not consider whether the

issuance of a certificate is inconsistent

with the local comprehensive plan of a

county or municipality unless an objection

to the certificate has been timely raised

in an appropriate motion or application.

If such an objection has been timely

raised, the Commission shall consider,

but not be bound by, the local comprehensive

plan of the county or municipality.

Under the above-quoted authority therefore, the Commission must consider

the public interest in deciding whether to grant or deny a certificate.

Although the Commission is not bound by the provisions and mandates of the

comprehensive plan involved in deciding whether to grant or deny a certificate,

the consistency of the proposed utility service with the provisions of the

approved comprehensive plan involved is an important consideration and should be

persuasive in making the decision to grant or deny. In the instant case, the

proposed utility certificated territory and service involved was shown to be

contrary to the provisions of the comprehensive plan concerning the fact that

the certificated territory proposed would overlap that reserved to the

municipality of Brooksville by its agreement with Hernando County. That

agreement is adopted as part of the comprehensive plan of the City of

Brooksville, in that the 5-mile radius urban service area of the City of

Brooksville encompasses the proposed territory sought by Conrock or a large

portion of it.

Further, the installation of the proposed system in the rural area involved

in Hernando County would be contrary to the principles adopted in the

comprehensive plan, and approved by the Department of Community Affairs, which

are designed to discourage and prevent urbanization and the proliferation of

privately owned, separate utility systems in rural areas. Thus, in this

context, the proposed certificated territory and the utility system contemplated

by Conrock would not be in the public interest. Section 163.3161, Florida

Statutes, embodies the purpose of the "Local Government Comprehensive Planning

and Land Development Regulation Act," including the prevention of overcrowding

of land and avoidance of undue concentration of population, as well as

facilitating adequate and efficient provision of water and sewer service.

Sections 163.3164 and 163.3171 make it clear that the provisions of the approved

municipal comprehensive plan involved encompass, in the definition of the "area

of jurisdiction," the areas adjacent to the incorporated boundaries of the City

of Brooksville embodied in the subject interlocal agreement (in evidence as

Petitioner City of Brooksville's, exhibit 6. That 5-mile radius area as

referenced above, encompasses a large portion of the territory sought to be

certificated by Conrock.

Pursuant to the provisions of Chapter 163 and its statutorily authorized

interlocal agreement, the city has authority to regulate the provision of

utility service within the 5-mile urban service area, including the requiring of

central water and sewer systems for new urban developments, which are designed

to be compatible with future public utility systems, and regulating land use

density and extent which will control urban sprawl and avoid depletion of the

physical, social and fiscal resources of the city. The proposed utility service

and system which is the subject of this application has been shown to promote

"urban sprawl," which is to be discouraged under the provisions of the city's

comprehensive plan. It would unduly duplicate and be competitive with the

city's water and sewer utility service in the proposed service area and that

which is contemplated to be provided by the city and the county in accordance

with the approved comprehensive plan and interlocal agreement. Thus, the

proposed utility service is not established to be in the public interest in the

context as well.

In addition to the above consideration, Conrock did not provide evidence to

establish that it owns the land where the utility facilities would be located or

that it actually has an agreement providing for long-term continuous control and

use of the land involved, as required by Rule 25-30.035(3)(f), Florida

Administrative Code. Conrock, however, demonstrated through testimony of its

president, that it has verbal arrangements made to entitle it to use the land

owned by family members and/or the above-named trust. The evidence adduced by

Conrock leaves no doubt that it can secure the required land dedicated to its

proposed utility facilities in the event the certificate is granted.

Rule 25-30.035(3)(h), Florida Administrative Code, provides that a system

map must be provided by the proposed utility depicting proposed transmission and

other lines and facilities. Conrock did not establish that it has a system map

of such proposed lines and facilities. Section 367.041(2), Florida Statutes, and

Rule 25-30.035(3)(g), Florida Administrative Code, provides that the applicant

for a utility certificate must file tariff schedules showing the rates and

charges it contemplates charging customers for its services. Conrock did not

file such a tariff schedule showing rates and charges for its services with the

Commission nor introduce them into evidence in this proceeding.

Pursuant to Section 367.051(3)(a), Florida Statutes, a certificate

application cannot be granted for those area which are currently being provided

water service by city or county governments. Conrock's certificate thus cannot

be granted so as to allow it to provide service for areas being provided water

service now by the City of Brooksville or Hernando County, since its system has

been shown to be, in those particulars, in competition with or in duplication of

the city's and county's water systems. Additionally, Conrock failed to show

that the other systems were inadequate to meet the reasonable needs of the

public. In this connection too, Conrock failed to establish that there was a

public need for the service in the territory involved. There was no showing that

existing customers are not presently being provided adequate service, and other

than projections of demand in the future embodied in Conrock's feasibility

study, there has been no showing that future customers in the territory involved

cannot be provided adequate service by the presently existing city and county

water facilities and reasonably anticipated pipes and augmentations thereof. In

this particular, it has been established that the City of Brooksville presently

has excess well and water production capacity which can meet anticipated future

demands in the territory involved.

Finally, Rule 25-30.035(k),(m) and (n), Florida Administrative Code,

mandates that the applicant for a certificate demonstrate its technical and

financial ability to install and operate the proposed water system. While it is

true that Conrock did not formally demonstrate its financial capability by

presentation of financial statements which demonstrate that it has ample

financial resources to construct and operate the proposed system, the testimony

of its president demonstrates that those financial resources are readily

available should the certificate be granted, as delineated in the above findings

of fact. If this were the only technical deficiency in the application and

service proposed by Conrock, it would not justify a denial of the application.

The same considerations are true for Conrock's present lack of technical

expertise in operating a water system. It is true that a certified operator is

not currently employed by Conrock and that its present employees do not have the

expertise necessary to safely and properly operate a water system. Conrock did

establish, however, that should a certificate be granted, it is financially and

otherwise capable of retaining a permanent, trained operator for the water

system. This too, would not be a basis for denial of its certificate, were that

the only deficiency in Conrock' s proposal.

In view of the above findings of fact and conclusions of law, it has been

established that Conrock has failed to adequately justify a granting of its

certificate in consideration of the statutory and regulatory framework provided

in the above-cited statutory provisions and related rules. In particular,

Conrock has failed to show that its proposal to provide water service in the

proposed territory involved would comport with the pubic [sic] interest, as that

is elucidated above. Accordingly, the requirements of the above authority not

having been met, it is concluded that the application of Conrock should be

denied.

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 the application of Conrock Utilities Corporation for a

water certificate authorizing it to operate a water utility in Hernando County,

Florida, as more particularly described herein, be denied. As previously

indicated, Exceptions were filed by the Florida Public Service Commission as

Intervenor. The Exceptions were to Finding of Fact No. 12, and the Conclusions

of Law relating to the Hearing Officer's conclusions that Conrock complied with

Rules 25-30.035(3)(f), (k), (m), and (n), Florida Administrative Code; that

Conrock possesses the technical ability to operate a water utility; and that the

Local Government Comprehensive Plan should be persuasive in the Commission's

decision to grant or deny a certificate application. We agree with all of the

Exceptions and willdiscuss our rationale below. As indicated in the Exceptions,

the Hearing Officer, foundthat Conrock's president has an income interest in the

family trust. A review of the record does not show that finding to besupported

by competent, substantial evidence. The record, at page 54 of the transcript,

shows that the utility president's father has an income interest in the trust.

When asked if other people share an income interest in the trust, the utility

president responded at pages 54 and 55 of the transcript, as follows:

Okay. This trust, if I remember right,

deals with what my grandmother set up

when she passed on. And the way

it works is, it goes to -- I don't

know if it goes to my children and

it passes down from generation to

generation once the preceding

generation has passed on.

Thus, there is no evidence explicitly showing that the utility president himself

has an income interest in the trust.

Therefore, upon consideration and review of the complete record, we find

that Finding of Fact No. 12 is not supported by competent, substantial evidence

in the record and thus we must reject it. However, we also find that Findings

of Fact Nos. 1-11 and 13-16 are supported by competent substantial evidence and

thus we will adopt them. While we accept and adopt the Hearing Officer's

ultimate cnclusion that the application of Conrock be denied, we cannotaccept

the subordinate conclusions. We must reject thesubordinate conclusions because

they are based on the Hearing Officer's incorrect interpretation of Sections

367.041, and .051, Florida Statutes and Rule 25-30.035, Florida Administrative

Code. A. Compliance with Rule 25-30.035(3)(f) Rule 25-30.035(3)(f), Florida

Administrative Code, states that the utility shall provide:

Evidence that the utility owns the land where

the utility treatment facilities are

located or a copy of the agreement which

provided for the continuous use of the land.

In Finding of Fact No. 3, the Hearing Officer specifically found that

Conrock did not establish that it owns or has awritten lease for the land where

the water facilities areproposed to be located. However, based upon the

testimony of Conrock's president that a verbal agreement exists, the Hearing

Officer found that Conrock established that a written agreement can be

consummated in the near future. Hence, in his Conclusions of Law, the Hearing

Officer suggests that Conrock complied with Rule 25-30.035(3)(f), Florida

Administrative Code, as it proved that it can secure the required land dedicated

to its proposed facilities in the event the certificate is granted.

The Hearing Officer misinterprets the Rule as requiring amere technical

filing, as opposed to setting forth aprecondition to receiving a certificate.

Rule 25-30.035(3),018 Florida Administrative Code, implements Section

367.041,Florida Statutes, which states:

Each applicant for a certificate shall:

(1) Provide information required by, rule

or order of the commission, which may

include a detailed inquiry into the

ability of the applicant to provide

service, the territory and facilities

involved, the need for service in the

territory involved, and the existence

or nonexistence of service from other

sources within geographical proximity

to the territory applied for; Rule

25-30.035(3), Florida Administrative

Code, states: In addition to meeting

the requirements of Section 367.041,

F.S., the utility shall provide:

(Emphasis Supplied). Conrock's failure

to comply with subparagraph (f) of

the above-cited rule is a material

deficiency in its application. Therefore,

the Hearing Officer erred in his

interpretation ofthe rule in concluding

that Rule 25-30.035(3)(f), Florida

Administrative Code, can be met after

Conrock has obtained a certificate.

B. Compliance with Rules 25-30.035(3)(k)(m) & (n) Subparagraphs (k), (m),

and (n) of Rule 25-30.035(3),Florida Administrative Code, embody requirements to

show the financial ability of the applicant to own and operate a utility.

Subparagraphs (k) and (m) of the above-cited rule require financial statements

of the applicant. The applicant in this case is Conrock, not its owners or

potential principal funders. The Hearing Officer found, in Finding of Fact No.

13, that Conrock does not have assets or independent worth establishingits

financial responsibility. In his Conclusions of Law, theHearing Officer stated

that Conrock did not formallydemonstrate its financial capability by

presentation offinancial statements. Based on the foregoing, Conrock did not

prove that it independently has the financial ability to own and operate a water

utility, pursuant to subparagraphs (k) and (m) of Rule 25-30.035, Florida

Administrative Code. Therefore, Conrock relies on the net worth of its potential

principal funders in its attempt to establish financial ability. Rule 25-

30.035(3)(n), Florida Administrative Code,requires the applicant to provide:

A statement listing those providing the

principal funding to the utility, along

with their financial statement and copies

of any financial agreements.

Conrock did not provide copies of any financial agreements committing funds

to the utility. In Finding of Fact No. 11, the Hearing Officer found that the

president of Conrock has notcommitted any personal funds to the project, and

that no efforts have been made to obtain bonds, loans, or grants. However, in

his Conclusions of Law, the Hearing Officer found that the testimony of the

president demonstrates that ample financial resources are readily available

should the certificate be granted and that such a technical deficiency would not

justify a denial of the application.

The Hearing Officer's conclusion that Conrock proved its financial ability

is also based on the erroneous finding of w o t n e d i s e r p e h t n t h t ) 2 1 . o N ( t c a f  a s

an income interest in thetrust, as discussed earlier. Based on the above, the

Hearing Officer's conclusion of l i e d w i p t R u l e s 2 h m o c  l a w t h a t C o n r o c k 5 -

30.035(k), (m), and (n), Florida Administrative Code, thereby proving its

financial ability to construct and operate a water utility, is erroneous.

Failure to prove that the utility is financially capable, coupled with the

failure to provide commitments, or at least testimony, from the principal

funders, is not a mere technical deficiency that may be cured after certificate

is granted. It is another material deficiency. Again, theHearing Officer erred

in his interpretation of the rule. The requirements of Rule 25-30.035(3),

Florida Administrative Code, must be met before a certificate can be granted.

C. Technical Ability of Applicant to Operate a Water Utility

The Hearing Officer, in his Conclusions of Law, indicates that Conrock's

present lack of technical expertise in operating a water system is a mere

technical deficiency in the application. The Hearing Officer stated: Conrock

did establish, however, that should a certificate be granted, it is financially

and otherwise capable of retaining a permanent, trained operator for the water

systeM. The Hearing Officer errs by finding that Conrock's financial ability,

which was not sufficiently demonstrated, provides that applicant with the

technical ability to operate a water utility.

D. Significance of the Local Government Comprehensive Plan

Section 367.051(3)(b), Florida Statutes, states : When granting a

certificate, the commission need not consider whether the issuance of the

certificate is inconsistent with the local comprehensive plan of a county or

municipality unless an objection to the certificate has been timely raised in an

appropriate motion or application. If such an objection has been timely raised,

the commission shall consider, but not be bound by, the local comprehensive plan

of the county or municipality. The Hearing Officer, in his Conclusions of Law,

goes a step further by declaring: the consistency of the proposed utility

service with the provisions of the approved comprehensive plan involved is an

important consideration and should be persuasive in making the decision to grant

or deny. Adopting this conclusion of law would be inconsistent with Sections

367.041(1) and .051(3)(b), Florida Statutes. In determining whether it is in

the public interest to grant acertificate, the Commission looks primarily to the

applicant'sfinancial and technical ability to provide the service, the

availability of service from other providers, and need forservice, as set forth

in Section 367.041, Florida Statutes, and Rule 25-30.035, Florida Administrative

Code. The Commission also considers the local comprehensive plan when a county

or city objects to the certification of the applicant, pursuant to Section

367.051(3)(b), Florida Statutes. As interpreted by the Hearing Officer, the

approved comprehensive plan, would be persuasive in determining the need for

service in the locationwhere the certificate was requested.

The Commission is not bound, however, to enforce alocality's comprehensive

plan. Section 367.051(3)(b), Florida Statutes. Further, the authority given to

local governments in Chapter 163, cited by the Hearing Officer, does not

override this Commission's exclusive jurisdiction as set forth in Sections

367.011(2) and (4), Florida Statutes, as there is noexpress override of Chapter

367 in Chapter 163. The Commissionhas no authority to administer or enforce

Chapter 163. Accordingly, this conclusion, that the comprehensive planshould be

persuasive, cannot be accepted. However, the Hearing Officer's ultimate

conclusion, that the application should bedenied, is adopted. The objections to

the notice of intent are thereby upheld.

Since this docket was opened to resolve the objections tothe notice of

intent and those objections have been disposed ofherein, there is no further

action to be taken in this docket. Accordingly, this docket may be closed.

Based on the foregoing, it is

ORDERED by the Florida Public Service Commission that the objections of the

City of Brooksville and Hernando County are hereby upheld. It is further

ORDERED that the application of Conrock Utility Companyfor a certificate to

provide water service is hereby denied. It is further

ORDERED that the Hearing Officer's Recommended Order is hereby adopted with

the modifications that Finding of Fact No. 12 and the subordinate Conclusions of

Law are rejected as set forth in the body of this Order. It is further

ORDERED that this docket is hereby closed.

By ORDER of the Florida Public Service Commission this 23rd day of APRIL,

1990.

___________________________

STEVE TRIBBLE, Director

Division of Records and

Reporting

(SEAL) NSD

NOTICE OF FURTHER PROCEEDINGS OR JUDICIAL REVIEW

The Florida Public Service Commission is required bySection 120.59(4), Florida

Statutes, to notify parties of any administrative hearing or judicial review of

Commission orders that is available under Sections 120.57 or 120.68, Florida

Statutes, as well as the procedures and time limits that apply. This notice

should not be construed to mean all requests for an administrative hearing or

judicial review will be granted or result in the relief sought. Any party

adversely affected by the Commission's finalaction in this matter may request :

1) reconsideration of thedecision by filing a motion for reconsideration with

the Director, Division of Records and Reporting within fifteen (15) days of the

issuance of this order in the form prescribed by Rule 25-22.060, Florida

Administrative Code; or 2) judicial review by the Florida Supreme Court in the

case of an electric, gas or telephone utility or the First District Court of

Appealin the case of a water or sewer utility by filing a notice ofappeal with

the Director, Division of Records and Reporting and filing a copy of the notice

of appeal and the filing fee withthe appropriate court. This filing must be

completed within thirty (30) days after the issuance of this order, pursuant to

Rule 9.110, Florida Rules of Appellate Procedure. The notice of appeal must be

in the form specified in Rule 9.900(a), Florida Rules of Appellate Procedure.