25-30.037. Application for Authority to Transfer

(1) This rule applies to any application for the transfer of an existing water or wastewater utility, regardless of whether service is currently being provided. The application for transfer may result in the transfer or cancellation of the seller’s existing certificate, amendment of the buyer’s existing certificate or granting of an original certificate to the buyer, or a transfer of majority organizational control of the utility.

(a) If a transfer occurs prior to Commission approval, the utility shall submit an application for authority to transfer no later than 90 days after the sale closing date.

(b) When a utility applies for any of the following transfer authorizations by the Commission, it shall provide its application as prescribed in the appropriate subsection below:

1. A transfer of a regulated utility to another regulated utility shall be pursuant to subsection (2) below;

2. A transfer of an exempt entity to a regulated utility shall be pursuant to subsection (3) below;

3. A transfer of a utility in a nonjurisdictional county to a regulated utility that results in a system whose service transverses county boundaries shall be pursuant to subsection (3) below;

4. A change of majority organizational control of a regulated utility shall be pursuant to subsection (4) below; or

5. A transfer of a regulated utility to an exempt entity other than a governmental authority shall be pursuant to subsection (5) below.

(c) Form PSC 1005 (12/15), entitled “Application for Transfer of Certificates or Facilities from a Regulated Utility to Another Regulated Utility,” which is incorporated by reference in this rule and which is available at http://www.flrules.org/Gateway/reference.asp?No=Ref-06242, Form PSC 1006 (12/15), entitled “Application for Transfer of an Exempt Entity to a Regulated Utility or Transfer of a Utility in a Non-jurisdictional County to a Regulated Utility That Results in a System Whose Service Transverses County Boundaries,” which is incorporated by reference in this rule and which is available at http://www.flrules.org/Gateway/reference.asp?No=Ref-06243, Form PSC 1007 (12/15), entitled “Application for a Transfer of Majority Organizational Control of a Regulated Utility,” which is incorporated by reference in this rule and which is available at http://www.flrules.org/Gateway/reference.asp?No=Ref-06244, and Form PSC 1008 (12/15), entitled “Application for Transfer of Facilities from a Regulated Utility to an Exempt Entity Other Than a Governmental Authority,” which is incorporated by reference in this rule and which is available at http://www.flrules.org/Gateway/reference.asp?No=Ref-06245, are example applications that may be completed by the applicant and filed with the Office of Commission Clerk to comply with subsection (2), (3), (4), or (5) below, respectively. These forms may also be obtained from the Commission’s website, www.floridapsc.com.

(2) Transfer of a regulated utility to another regulated utility. Each applicant for transfer of certificate of authorization, facilities or any portion thereof from a regulated utility to another regulated utility shall file with the Commission Clerk the information set forth in paragraphs (a) through (v) below.

(a) A filing fee pursuant to paragraph 25-30.020(2)(c), F.A.C.;

(b) Proof of noticing pursuant to Rule 25-30.030, F.A.C.;

(c) The certificated name, address, telephone number, certificate number(s), authorized representative, and, if available, email address and fax number of the utility/seller;

(d) The complete name, address, telephone number, Federal Employer Identification Number, authorized representative and, if available, email address and fax number of the buyer(s) and the new name of the utility if the buyer plans to operate under a different name;

(e) The name, address, telephone number, and if available, email address and fax number of the person in possession of the books and records when the application is filed;

(f) The nature of the buyer’s business organization, i.e., corporation, limited liability company, partnership, limited partnership, sole proprietorship, or association. The buyer must provide documentation from the Florida Department of State, Division of Corporations, showing:

1. The utility’s/buyer’s business name and registration/document number for the business, unless operating as a sole proprietor, and,

2. The utility’s/buyer’s fictitious name and registration number for the fictitious name, if operating under a fictitious name;

(g) The name(s), address(es) and percentage of ownership of each entity or person that owns or will own more than a 5 percent interest in the utility;

(h) The date and state of incorporation or organization of the buyer;

(i) A copy of the contract for sale and all auxiliary or supplemental agreements. If the sale, assignment, or transfer occurs prior to Commission approval, the contract shall include a provision stating that the contract is contingent upon Commission approval;

(j) The buyer must provide the following documentation of the terms of the transfer:

1. The date the closing occurred or will occur;

2. The purchase price and terms of payment;

3. A list of and the dollar amount of the assets purchased and liabilities assumed or not assumed, including those of nonregulated operations or entities;

4. A description of all consideration between the parties, including promised salaries, retainer fees, stock, stock options, and assumption of obligations;

5. Provisions for the disposition, where applicable, of customer deposits and interest thereon, guaranteed revenue contracts, developer agreements, customer advances, debt of the utility, and leases;

6. A statement that the buyer will fulfill the commitments, obligations and representations of the seller with regard to utility matters;

7. A statement that the buyer has or will obtain the books and records of the seller, including all supporting documentation for rate base additions since the last time rate base was established for the utility;

8. A statement that the utility’s books and records will be maintained using the 1996 National Association of Regulatory Utilities Commissioners (NARUC) Uniform System of Accounts (USOA), incorporated by reference in Rule 25-30.115, F.A.C.; and,

9. A statement that the utility’s books and records will be maintained at the utility’s office(s) within Florida, or that the utility will comply with the requirements of paragraphs 25-30.110(1)(b) and (c), F.A.C., regarding maintenance of utility records at another location or out-of-state. If the records will be maintained at the utility’s office(s), the statement should include the location where the utility intends to maintain the books and records;

(k) A statement explaining why the transfer is in the public interest;

(l) To demonstrate the financial ability of the buyer to maintain and operate the acquired utility, the buyer shall provide:

1. A detailed financial statement (balance sheet and income statement), audited if available, of the financial condition of the applicant, that shows all assets and liabilities of every kind and character. The financial statements shall be for the preceding calendar or fiscal year. The financial statement shall be prepared in accordance with Rule 25-30.115, F.A.C.  If available, a statement of the sources and uses of funds shall also be provided; and,

2. A list of all entities, including affiliates, upon which the buyer is relying to provide funding to the utility and an explanation of the manner and amount of such funding. The list need not include any person or entity holding less than 5 percent ownership interest in the utility. The applicant shall provide copies of any financial agreements between the listed entities and the utility and proof of the listed entities’ ability to provide funding, such as financial statements;

(m) To demonstrate the technical ability of the buyer to provide service, the buyer shall provide:

1. An explanation of the buyer’s experience in the water or wastewater industry; and,

2. The buyer’s plans for ensuring continued operation of the utility, such as retaining the existing plant operator(s) and office personnel, or contracting with outside entities;

(n) A legal description of the proposed service area in the format prescribed in Rule 25-30.029, F.A.C.;

(o) The proposed net book value of the system as of the date of the proposed transfer, and a statement setting out the reasons for the inclusion of an acquisition adjustment, if one is requested. If rate base has been established by this Commission, provide the docket and the order number. In addition, provide a schedule of all subsequent changes to rate base;

(p) A statement from the buyer that it has obtained or will obtain copies of all of the federal income tax returns of the seller from the date the utility was first established or the rate base was last established by the Commission, whichever is later. If the tax returns have not been obtained, provide a description of the steps taken to obtain the tax returns;

(q) A statement from the buyer that after reasonable investigation, the system being acquired appears to be in satisfactory condition and in compliance with all applicable standards set by the Department of Environmental Protection (DEP) or, if the system is in need of repair or improvement, has any outstanding Notice of Violation of any standard set by the DEP or any outstanding consent orders with the DEP, the buyer shall provide a description of the repairs or improvements that have been identified, the governmental authority that required the repairs or improvements, if applicable, the approximate cost to complete the repairs or improvements, and any agreements between the seller and buyer regarding who will be responsible for any identified repairs or improvements;

(r) The applicant shall provide the following documents:

1. A copy of the utility’s current permits from the DEP and the water management district;

2. A copy of the most recent DEP and/or county health department sanitary survey, compliance inspection report, and secondary standards drinking water report;

3. A copy of all of the utility’s correspondence with the DEP, county health department, and water management district, including consent orders and warning letters, and the utility’s responses to the same, for the past five years; and,

4. A copy of all customer complaints that the utility has received regarding DEP secondary water quality standards during the past five years;

(s) Documentation of the utility’s right to access and continued use of the land upon which the utility treatment facilities are located. Documentation of continued use shall be in the form of a recorded warranty deed, recorded quit claim deed accompanied by title insurance, recorded lease such as a 99-year lease, or recorded easement. The applicant may submit an unrecorded copy of the instrument granting the utility’s right to access and continued use of the land upon which the utility treatment facilities are or will be located, provided that the applicant files a recorded copy within the time required in the order granting the transfer;

(t) A statement regarding the disposition of outstanding regulatory assessment fees, fines, or refunds owed and which entity will be responsible for paying regulatory assessment fees and filing the annual report for the year of the transfer and subsequent years;

(u) Tariff sheets reflecting any changes resulting from the transfer. Form PSC 1010 (12/15), entitled “Water Tariff” and Form PSC 1011 (12/15), entitled “Wastewater Tariff,” which are incorporated by reference in Rule 25-30.033, F.A.C., are example tariffs that may be completed by the applicant and included in the application. These forms are also available on the Commission’s website, www.floridapsc.com; and,

(v) If the buyer owns other water or wastewater utilities that are regulated by the Commission, provide a schedule reflecting any economies of scale that are anticipated to be achieved within the next three years and the effect on rates for existing customers served by both the utility being purchased and the buyer’s other utilities.

(3) Transfer of an exempt entity to a regulated utility, or transfer of a utility in a nonjurisdictional county to a regulated utility that results in a system whose service transverses county boundaries. Each applicant shall file with the Commission the information set forth in paragraphs (a) through (f) below.

(a) A combined filing fee pursuant to paragraphs 25-30.020(2)(b) and (c), F.A.C.;

(b) Proof of noticing pursuant to Rule 25-30.030, F.A.C.;

(c) The requirements of paragraphs (2)(c), (d), (e), (f), (g), (h), (i), (j), (k), (l), (m), (n), (o), (p), (q), (r), (s), (t), (u), and (v) above;

(d) The requirements of paragraphs 25-30.036(2)(h) and (i), F.A.C.;

(e) An explanation of when and under what authority the current rates and charges of the exempt entity or utility in a nonjurisdictional county were established, if applicable; and,

(f) An explanation of how the seller is either exempt pursuant to Section 367.022, F.S., or is a utility in a nonjurisdictional county.

(4) A transfer of majority organizational control of a regulated utility. Each applicant for a transfer of majority organizational control shall file with the Commission the information set forth in paragraphs (a) through (d) below.

(a) A filing fee pursuant to paragraph 25-30.020(2)(c), F.A.C.;

(b) Proof of noticing pursuant to Rule 25-30.030, F.A.C.;

(c) The requirements of paragraphs (2)(c), (d), (f), (i), (j), (k), (l), (m), (q), (t) and (u) above; and,

(d) A description of the ownership transfer, including the date the transfer occurred or will occur and a description of the resulting ownership interests in the utility.

(5) A transfer of a regulated utility to an exempt entity other than a governmental authority. Each applicant for a transfer of ownership of a regulated utility to an exempt entity other than a governmental authority shall file with the Commission Clerk the information set forth in paragraphs (a) through (e) below.

(a) A filing fee pursuant to paragraph 25-30.020(2)(c), F.A.C.;

(b) Proof of noticing pursuant to Rule 25-30.030, F.A.C.;

(c) The requirements of paragraphs (2)(c), (d), (k), (l), (m), and (r) above;

(d) Documentation of the following terms of the transfer:

1. A copy of the contract for sale and all auxiliary or supplemental agreements. If the sale, assignment, or transfer occurs prior to Commission approval, the contract shall include a provision stating that the contract is contingent upon Commission approval;

2. The closing date;

3. A statement regarding the disposition of customer deposits and interest thereon; and,

4. A statement regarding the disposition of any outstanding regulatory assessment fees, fines, refunds, or annual reports; and,

(e) An explanation of how the buyer is exempt pursuant to Section 367.022, F.S.

Rulemaking Authority 367.121, 367.1213, 350.127(2) FS. Law Implemented 367.071, 367.1213 FS. History–New 1-27-91, Amended 11-30-93, 1-4-16.