DATE:	February 19, 2009
TO:	Office of Commission Clerk (Cole)
FROM:	Division of Economic Regulation (Clapp, Marsh) Office of the General Counsel (Bennett)
RE:	Docket No. 080610-WS – Application for transfer of water and wastewater utility assets of Ferncrest Utilities, Inc., in Broward County, to Tindall Hammock Irrigation and Soil Conservation District, and cancellation of Certificate Nos. 13‑W and 10-S. County: Broward
AGENDA:	03/03/09 – Regular Agenda – Interested Persons May Participate
COMMISSIONERS ASSIGNED:			All Commissioners
PREHEARING OFFICER:			Administrative
CRITICAL DATES:			None
SPECIAL INSTRUCTIONS:			None
FILE NAME AND LOCATION:			S:\PSC\ECR\WP\080610.RCM.DOC

 

 Case Background

Ferncrest Utilities, Inc. (Ferncrest or utility) is a Class B utility providing water and wastewater service to approximately 1,360 residential and 112 general service customers in Broward County.  The utility’s 2007 annual report indicates that the utility had gross revenue of $559,070 and $725,450 and net operating loss of $164,384 and $177,136 for water and wastewater, respectively.

The utility’s water and wastewater systems were originally issued Certificate Nos. 13-W and 10-S in 1971.[1]   The utility’s territory was amended once.[2]

On September 26, 2008, Ferncrest submitted an application for transfer of utility assets to Tindall Hammock Irrigation and Soil Conservation District (Tindall or buyer) and for cancellation of Certificate Nos. 13-W and 10-S.  The Commission has jurisdiction pursuant to Section 367.071, Florida Statutes (F.S.).

Discussion of Issues

Issue 1: 

 Should the transfer of Ferncrest Utilities, Inc.’s water and wastewater facilities to Tindall Hammock Irrigation and Soil Conservation District and the cancellation of Certificate Nos. 13-W and 10-S be approved?

Recommendation: 

 Yes.  The transfer of Ferncrest Utilities, Inc.’s water and wastewater facilities to Tindall Hammock Irrigation and Soil Conservation District should be approved as a matter of right pursuant to Section 367.071(4)(a), F.S., and Certificate Nos. 13-W and 10-S should be cancelled effective November 3, 2008.  (Clapp, Marsh, Bennett)

Staff Analysis: 

 On September 26, 2008, Ferncrest filed an application to transfer the utility’s service territory and facilities to Tindall pursuant to Section 367.071(4)(a), F.S., and Rule 25-30.037(4), Florida Administrative Code (F.A.C.), and for cancellation of Certificate Nos. 13-W and 10-S.  According to documents filed on November 10, 2008, the actual closing of the transfer took place on November 3, 2008.  Therefore, November 3, 2008, is the effective date of the transfer.

Section 367.071(4)(a), F.S., provides that “[t]he sale of (a utility’s) facilities, in whole or part, to a governmental authority shall be approved as a matter of right . . . .”  Section 1.01(8), F.S., defines governmental authority as a political subdivision and includes “counties, cities, towns, villages, special tax school districts, special road and bridge districts, and all other districts in this state.”  In 2003 and 2004, the Commission, in two different dockets, considered whether or not a transfer was to a “governmental authority” within the meaning of Section 367.071(4)(a), F.S.[3]  In both of those orders, the Commission acknowledged that the sale was to a governmental authority because that authority was an independent special district created and passed by a special act of the Florida legislature.

Tindall was also created by a special act of the Florida Legislature, Ch. 98-523, Laws of Florida, for purposes of draining, reclaiming, and conserving the lands in the district.  In 2008, the special act was amended by Ch. 08-293, Laws of Florida, to include the district’s authority to own, acquire, construct, operate, and improve water systems and sewer systems within the district.  Tindall’s elected board of supervisors also has the authority to impose taxes and issue bonds on behalf of the district.  Therefore, staff believes that Tindall is a governmental authority within the meaning of Section 367.071(4)(a), F.S.

Tindall and Ferncrest agreed to the transfer of the water and wastewater facilities.  Pursuant to Section 367.071(4)(a), F.S., the transfer of facilities to a governmental authority shall be approved as a matter of right.  As such, no notice of the transfer is required and no filing fees apply. 

The application contains a statement that the utility will transfer customer deposits plus any interest to the buyer.  The application also stated that the buyer obtained the utility’s most recent available income and expense statement, balance sheet, statement of rate base for regulatory purposes, and contributions-in-aid-of-construction.

In accordance with Rule 25-30.110, F.A.C., Ferncrest filed its annual reports for 2007 and prior years.  Pursuant to Rule 25-30.120, F.A.C., the utility’s RAFs for 2008 through the November 3, 2008, closing date, and all prior years have been paid.  Ferncrest is not required to file an annual report for the period of January 1, 2008, through November 3, 2008, because of its transfer to Tindall prior to the end of 2008.  All annual reports for prior years have been filed.

Based on the above, staff recommends that the transfer of Ferncrest Utilities, Inc.’s water and wastewater facilities to Tindall Hammock Irrigation and Soil Conservation District should be approved as a matter of right pursuant to Section 367.071(4)(a), F.S., and Certificate Nos. 13-W and 10-S should be cancelled effective November 3, 2008.

 

Issue 2: 

 Should this docket be closed?

Recommendation: 

 Yes.  Pursuant to Section 367.071(4)(a), F.S., approval of a transfer to a governmental authority is a matter of right.  As such, no further Commission action is necessary and this docket should be closed.  (Bennett)

Staff Analysis: 

 Pursuant to Section 367.071(4)(a), F.S., approval of a transfer to a governmental authority is a matter of right.  As such, no further Commission action is necessary and this docket should be closed.