91-001159 Betmar Utilities vs. City Of Zephyrhills Status: Closed Recommended Order on Tuesday, July 16, 1991.

Summary: Lack of certainty in lease with county for wastewater treatment facilities failed to meet rule requirement for long term control of facility.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

BETMAR UTILITIES, INC., )

)

Petitioner, )

)

vs. ) CASE No. 91-1159

)

CITY OF ZEPHYRHILLS, )

)

Respondent, )

and )

)

FLORIDA PUBLIC SERVICE COMMISSION, )

)

Intervenor. )

)

___________________________________)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly

designated Hearing Officer, Veronica E. Donnelly, held a formal hearing in the

above-styled case on May 9, 1991, in Dade City, Florida.

APPEARANCES

For Petitioner: Scott L. Knox, Esquire

28870 U.S. Highway 19 North

Suite 230

Clearwater, Florida 34621

For Respondent: Thomas P. McAlvanah, Esquire

37818 Highway 54 West

Zephyrhills, Florida 34248

For Intervenor: Robert J. Pierson, Esquire

101 East Gaines Street

Tallahassee, Florida 32399-0863

STATEMENT OF THE ISSUES

Whether Betmar Utilities, Inc.'s application for an expansion of territory

under its water and wastewater certificates in Pasco County should be approved

by the Public Service Commission.

PRELIMINARY STATEMENT

On November 13, 1989, Betmar Utilities, Inc. ( Betmar) filed an application

with the Public Service Commission (Commission) for an expansion of territory

serviced under its water and wastewater certificates in Pasco County, Florida.

Betmar seeks to enlarge its certified service area to the north and south in an

unincorporated portion of the county. Pasco County (County) and the City of

Zephyrhills (City) timely objected to the application, and requested a formal

administrative hearing. The case was referred to the Division of Administrative

Hearings (Division) by the Commission on February 26, 1990.

Jurisdiction was relinquished back to the Commission on November 8, 1990,

based upon the assumption that the case had settled. When it was determined

that settlement would not occur, the case was again referred to the Division on

February 20, 1991. Final hearing was scheduled for May 9, 1991.

Prior to the commencement of the hearing, the Hearing Officer was advised

that the County would not be participating in the proceeding. The case style

was amended to reflect the County's removal as a Respondent. As a preliminary

matter, the City announced that its objection to the extension application was

limited to a territorial dispute regarding the property abutting Geiger Road

which extends 330' south of the road.

As a preliminary matter, all parties agreed that the Commission rules with

the revision date of February 1991 would be used in the Recommended Conclusions

of Law as the April rule revisions were not available at hearing. It was

further agreed that the statute in effect at the time the application was filed

would be the controlling statutory law.

During the hearing, two witnesses were presented by Betmar and four

exhibits were moved into evidence. The City submitted three exhibits, and

applicable portions of the Pasco County Land Use Plan were admitted as Hearing

Officer Exhibit #1. Leave to file the land use plan and the Tariff Sheet marked

Petitioner's Exhibit #4 posthearing was granted by the Hearing Officer. These

exhibits were filed May 20, 1991, and all exhibits were admitted without

objection.

The transcript of the hearing was filed May 22, 1991. Proposed Recommended

Orders were filed by all parties by June 3, 1991. Rulings on the proposed

findings of fact are in the Appendix to the Recommended Order.

FINDINGS OF FACT

1. Betmar Utilities, Inc. is a private utility company who owns and holds

Florida Public Service Commission Certificates Number 137W and No. 98S. These

certificates grant Betmar the right to operate a water and wastewater system in

a specified territory within an unincorporated area of Pasco County.

2. Betmar seeks an extension of its certified territory into the areas

immediately to the north and south in an unincorporated area of the county.

There is, or will be in the near future, a need for water and wastewater

services in the proposed amended territory. An Application for Amendment of

Territory was filed with the Commission to allow Betmar to service the area on

November 13, 1989.

3. When Betmar noticed the City of its pending application, an objection

was filed to the proposed expansion. The objection specifically relates to the

property on the south side of Geiger Road, which extends 330 feet south of the

roadway, and adjoins the City's boundaries.

4. Although the City does not currently provide services to this locale,

it does own water and sewer lines on the northern side of Geiger Road in the

Silver Oaks area. Other water and sewer lines in the City's system extend below

the south side of Geiger Road at the far eastern portion of the area for which

Betmar is seeking the extension of territory.

5. In an interlocal agreement between the City and the County dated

February 9, 1988, these governmental entities established designated service

areas for water and wastewater services in this particular area of the county.

The purpose of the agreement was to promote the economic delivery of services to

citizens in the area, and to provide for the necessary long-range planning

inherent in the provision of these services. Prior to the agreement, the County

was authorized to provide the services to the areas for which an extension is

sought by Betmar.

6. The service area boundaries delineated in the agreement were to be

periodically reviewed in conjunction with the review of each party's respective

comprehensive plans.

7. Pursuant to this agreement, the City and County determined that the

City's Service Area Boundry would include the area south of Geiger Road that

abuts Betmar's current service area.

8. The City and the County each relied upon this interlocal agreement in

the creation of their respective comprehensive plans. However, no additional

action has been taken by the City to service the area.

9. The City is not actually operating within the disputed area for a

number of reasons. First of all, the City has adopted an ordinance which

requires annexation of contiguous property as a condition of receiving its water

and sewer services. The disputed portion of the proposed amended territory is

not within the city limits and has not been annexed. Secondly, the City is not

prepared to build utility lines to service the disputed proposed amended

territory until the new bypass road along Geiger Road is built, and the proper

right-of-way is obtained. At that time, the City would like to extend the

Silver Oaks line under Geiger Road to the south, and the line along the eastern

side of the disputed portion of territory to the west. These anticipated

expansions correlate with the City's Service Area Boundry in the interlocal

agreement which remains unchanged between the City and the County. A proposed

service date was not provided by the City at the formal hearing.

10. The City seeks to control land use and development of property along

the Geiger Road corridor though its ability to provide or withhold utility

services.

11. Betmar also has water and sewer lines abutting or located on all

properties described in its application for extension, including the area in

controversy. These lines are currently active due to Betmar's water and sewer

system which is in the center of the area targeted for expansion.

12. Both Betmar and the City have the technical and financial ability to

provide water and wastewater services in the proposed amended territory.

13. Betmar has a tariff approved by the Commission which allows it to

charge 110% of the cost of the extension of service from its existing lines to

any property seeking service.

14. Owners of property abutting Geiger Road have contacted Betmar about the

possibility of providing service. A formal request for service has been made by

Jake Developers for service in that area.

15. Betmar's sewage collection facilities abutting the Geiger Road property

are gravity lines. The City's sewage collection facilities in close proximity

to the area are force mains.

16. Betmar does not charge impact fees for connection into its system. The

City charges a water impact fee of $350.00 and a sewer impact fee of $1,278.00

for connection into its system.

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

extension is approved.

18. Betmar presented no evidence about plans for further financial

investment which would enable the utility to provide service in the area for

which the extension has been requested because Betmar believes further

investment is unnecessary.

19. Betmar has an agreement with the County that states the County will

provide bulk wastewater treatment to Betmar for the purpose of offering

centralized wastewater services from the County's Southeast Subregional

Wastewater Treatment Plant for a twenty-five year term.

20. The County has placed a possible qualification on the term of years in

the agreement by inserting the following clause:

... its first responsibility is to the

customers inside its own service limits and

that it reserves the right to act in the best

interest of those customers in all

circumstances.

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

the Commission.

CONCLUSIONS OF LAW

22. The Division of Administrative Hearings has jurisdiction over the

parties and the subject matter pursuant to Sections 367.045(4) and 120.57(1),

Florida Statutes.

23. When a utility applies for an amended certificate of authorization

from the Commission, it is required to provide all information required by rule

or order of the Commission. Section 367.045(2), Florida Statutes.

24. Rule 25-30.036(d), Florida Administrative Code, requires a utility

proposing to extend its service area to provide:

[E] vidence that the utility owns the land

upon which the utility treatment facilities

that will serve the proposed territory are

located or a copy of an agreement, such as a

99-year lease, which provides for the

continued use of the land.

25. In this case, Betmar has an agreement with the County, who currently

has jurisdiction to service the area in controversy. The agreement states the

county will provide bulk wastewater treatment to Betmar in the area for a

twenty-five year term, subject to the County's need to use its Southeast

Subregional Wastewater Treatment Plant for customers within its own service

area. When this agreement was placed into evidence instead of a deed or a long-

term lease as required by rule, a legal issue arose as to whether Betmar's

request for an amended certificate of authorization is materially deficient

under the statutory and regulatory framework.

26. During a cursory review of the pending amendment application, it

appears that there would be numerous public benefits if Betmar were to obtain

the amended certificate and expand its territory to all of the requested area.

The County has no objection, and the City is unable to act ultra vires in the

area due to its ordinance which prevents the provision of City utilities in an

unincorporated area. Further scrutiny reveals the amendment application is

materially deficient in that the required ownership or long-term 99-year lease

regarding utility treatment facilities is nonexistent. Even the proposed

twenty-five year permitted use agreement regarding the treatment facilities

contains conditions subsequent that severely limit the County's obligations

under the agreement. As a matter of law, the agreement lacks the certainty

required by Rule 25-30.036, Florida Administrative Code.

27. The applicant has the burden to prove that his request for the

amendment is in the public interest. Although the proposed amendment

application contains numerous public benefits, it is contrary to the public

interest to cause future Betmar customers to rely on a wastewater treatment

agreement that lacks certainty. The conditions subsequent, which are out of

Betmar's control, make the proposed agreement with the County unreliable, even

for the proposed twenty-five year term.

RECOMMENDATION

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

RECOMMENDED:

The Commission should deny Betmar's application for an amendment to its

certified territory in Pasco County as the applicant has failed to provide that

it will be allowed the continued use of the County's Southeast Subregional

Wastewater Treatment Plant for the twenty-five year term set forth in the

agreement presented at hearing.

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

Florida.

_____________________________

VERONICA E. DONNELLY

Hearing Officer

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

[phone]

Filed with the Clerk of the

Division of Administrative Hearings

this 16th day of July 1991.

APPENDIX TO RECOMMENDED ORDER

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

1. Accepted. See HO #2.

2. Accepted. See HO #1.

3. Accepted. See HO #3.

4. Accepted. See HO #11.

5. Accepted. See HO #4.

6. Accepted. See HO #9.

7. Accepted. See HO #11.

8. Accepted. See HO #13.

9. Accepted. See HO #14.

10. Accepted. See HO #9.

11. Accepted. See HO #9.

12. Accepted. See HO #11.

13. Accepted.

14. Rejected. Improper legal conclusion.

15. Accepted. See HO #5.

16. Accepted. See HO #8.

17. Accepted. See HO #14.

18. Accepted. See HO #14.

19. Accepted.

20. Accepted.

21. Accepted.

22. Accepted.

23. Accepted. See HO #15.

24. Accepted. See HO #15.

25. Accepted. See HO #16.

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

27. Accepted. See Preliminary Statement.

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

1. Accepted. See Preliminary Statement.

2. Accepted. See Preliminary Statement.

3. Accepted that an interlocal agreement between City and county existed. See

HO #5. The rest of the paragraph is rejected as legal argument.

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

1. Accepted. See HO #2.

2. Accepted. See HO #12.

3. Accepted. See HO #12.

4. Accepted. See HO #3.

5. Accepted. See HO #11.

6. Accepted. See HO #4.

7. Accepted. See HO #12.

8. Accepted. See HO #9.

9. Accepted. See HO #9.

10. Accepted. See HO #9.

11. Accepted. See HO #5.

COPIES FURNISHED:

Scott L. Knox, Esquire

28870 U.S. Highway 19 North

Suite 230

Clearwater, Florida 34621

Thomas P. McAlvanah, Esquire

37818 Highway 54 West

Zephyrhills, Florida 34248

Robert J. Pierson, Esquire

Florida Public Service Commission

101 East Gaines Street

Tallahassee, Florida 32399-0863

David Swafford, Executive Director

Florida Public Service Commission

106 Fletcher Building

101 East Gaines Street

Tallahassee, Florida 32399-0850

Steve Tribble, Director

Records and Recording

Florida Public Service Commission

101 East Gaines Street

Tallahassee, Florida 32399

Susan Clark, General Counsel

Florida Public Service Commission

212 Fletcher Building

101 East Gaines Street

Tallahassee, Florida

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this Recommended

Order. All agencies allow each party at least 10 days in which to submit

written exceptions. Some agencies allow a larger period within which to submit

written exceptions. You should contact the agency that will issue the final

order in this case concerning agency rules on the deadline for filing exceptions

to this Recommended Order. Any exceptions to this Recommended Order should be

filed with the agency that will issue the final order in this case.