DATE:	January 28, 2010
TO:	Office of Commission Clerk (Cole)
FROM:	Division of Economic Regulation (Clapp, Kaproth) Office of the General Counsel (Klancke)
RE:	Docket No. 090493-WS – Application for transfer of majority organizational control of Parkland Utilities, Inc., holder of Certificate Nos. 242-W and 185-S in Broward and Palm Beach Counties, from National Development Corporation to East Coast Equity Management Corporation. Counties: Broward and Palm Beach
AGENDA:	02/09/10 – Regular Agenda – Interested Persons May Participate
COMMISSIONERS ASSIGNED:			All Commissioners
PREHEARING OFFICER:			Klement
CRITICAL DATES:			None
SPECIAL INSTRUCTIONS:			None
FILE NAME AND LOCATION:			S:\PSC\ECR\WP\090493.RCM.DOC

 

Case Background

Parkland Utilities, Inc. (Parkland or utility) is a Class B utility providing water service to approximately 805 water and 787 wastewater customers in Broward and Palm Beach Counties.  The utility’s service area is located in the South Florida Water Management District (SFWMD), and lies within a critical water supply problem area.  The utility’s 2008 annual report shows annual operating revenues of $308,099 and $507,246 and net operating losses of $52,394 and $10,328 for water and wastewater, respectively.

The Commission granted the utility Certificate Nos. 242-W and 185-S in 1976.[1]  Since then the Commission has approved one amendment to the utility’s service territory.[2]

On October 28, 2009, Ronald M. Nunes, Michael K. Bergen, and the East Coast Equity Management Corporation (ECEMC) (buyers) submitted an application for the transfer of majority organizational control of the utility from Seymour Baskin, Marvin Kamin, and James R. Allen (sellers).  On September 30, 2009, the sellers and the buyers entered into an agreement which provides that the buyers would purchase 100 percent of the 10,000 shares of common stock in the utility, with 522.4 shares to Mr. Bergen, 2,164.1 shares to Mr. Nunes, and 7,313.5 shares to ECEMC.  The closing took place on October 23, 2009, subject to Commission approval.

The purpose of this recommendation is to address the application for transfer of majority organizational control.  The Commission has jurisdiction to consider this matter pursuant to Section 367.071, Florida Statutes.

Discussion of Issues

Issue 1: 

 Should the transfer of majority organizational control be approved?

Recommendation: 

 Yes, the transfer of majority organizational control of Parkland Utilities, Inc., Certificate Nos. 242-W and 185-S, to Ronald M. Nunes, Michael K. Bergen, and the East Coast Equity Management Corporation is in the public interest and should be approved effective the date of the Commission vote.  The resultant order should serve as the utility’s water and wastewater certificates and should be retained by the utility.  The tariff pages reflecting the transfer should be effective for services provided or connections made on or after the stamped approval date on the tariff sheets.  (Clapp, Kaproth, Klancke)

Staff Analysis: 

 Pursuant to Section 367.071, Florida Statutes, on October 28, 2009, the buyers applied for a transfer of majority organizational control of Parkland as a result of the purchase of all of the corporation’s stock.  As stated in the case background, the agreement was executed and the closing occurred on October 23, 2009.  Pursuant to Section 367.071(1), Florida Statutes, the agreement for the transfer of majority organizational control was made contingent upon Commission approval.  

The application is in compliance with the governing statute, Section 367.071, Florida Statutes, and Rule 25-30.037(3), Florida Administrative Code, pertaining to an application for transfer of majority organizational control.  A description of the territory granted to Certificate Nos. 242-W and 185-S is appended to this memorandum as Attachment A.

The application contains proof of compliance with the noticing provisions set forth in Rule 25-30.030, Florida Administrative Code.  No objections to this application were received and the time for the filing of such objections has expired.  A copy of the warranty deed, in the name of Parkland Utilities, Inc., for the land on which the water treatment facilities are located was provided.

Staff has verified that the utility is current on filing its annual reports through 2008 and regulatory assessment fees (RAFs) through June 30, 2009.  The utility will continue to be responsible for filing annual reports and RAFs for 2009 and future years. 

The application contains a statement that the buyers performed a reasonable investigation of the utility system.  The utility has a water system with treatment facility; however, wastewater service is provided through a bulk arrangement with Broward County’s regional system.  Staff has confirmed with the Florida Department of Environmental Protection (DEP) that the utility’s wastewater collection system is currently in environmental compliance with DEP standards.  The Broward County Health Department has no outstanding notices of violation issued for the water system.  Staff has also confirmed with SFWMD that the utility is in good standing.

The utility was constructed in 1975 to serve a large residential housing development in north Broward County.  In 2001, the Commission approved an amendment to the utility’s service territory which granted it territory in Palm Beach County in Order No. PSC-01-0974-FOF-WS.  In the early 1980s, Mr. Nunes and Mr. Bergen were hired by the company that owned and operated the utility.  Mr. Nunes has a Class C water operator’s license and Mr. Bergen has a Class A license for both water and wastewater systems.  The utility’s current management and operations personnel will remain with the utility.  The buyers believe their knowledge and experience will allow them to maintain quality utility service for the utility’s customers.  In addition, the buyers provided a statement of intent to fulfill the commitments, obligations, and representations of the sellers with regard to utility matters.  The sellers are all retirement age and are interested in divesting the utility asset. 

The utility’s rates and charges were originally established in 1976 pursuant to Order No. 7092.  A staff-assisted rate case and two limited proceeding dockets were subsequently processed for changes in water and wastewater rates.[3]  There have also been multiple price index and pass through applications processed for the utility.  Rule 25-9.044(1), Florida Administrative Code, provides that in the case of change of ownership or control of a utility, the rates, classifications, and regulations of the former owner must continue unless authorized to change by the Commission.  The new owner has not requested a change; therefore, the existing rates and charges shown on Attachment B should continue in effect. 

Based on the above, staff recommends that the application for transfer of majority organizational control of Parkland Utilities, Inc., Certificate Nos. 242-W and 185-S, to Ronald M. Nunes, Michael K. Bergen, and the East Coast Equity Management Corporation is in the public interest and should be approved effective the date of the Commission vote.  The resultant order should serve as the utility’s water and wastewater certificates and should be retained by the utility.  The tariff pages reflecting the transfer should be effective for services provided or connections made on or after the stamped approval date on the tariff sheets.

Issue 2: 

 Should this docket be closed?

Recommendation: 

 Yes, because no further action is necessary, this docket should be closed.  (Klancke)

Staff Analysis: 

 Because no further action is necessary, this docket should be closed.

Description of Service Area

Parkland Utilities, Inc.

Broward and Palm Beach Counties

 

 

In Section 2, Township 48 South, Range 41 East, Broward County:

 

The North half, less and except:

 

            the East 3/4 of the East half of the East half;

           

            that portion of the West half of the West half of the East half of the East half, lying and being north of the south line of the north 2123 feet; and,

           

            the East 1320 feet of the north 1320 feet (as measured along the north and east lines).

           

 

In Section 35, Township 47 South, Range 41 East, Broward County:

 

All of said Section 35, lying southerly of the Hillsboro Canal and State Road 827.

 

 

In Section 26, Township 47 South, Range 41 East, Palm Beach County:

 

All of said Section 26, lying southerly of the Hillsboro Canal and State Road 827

FLORIDA PUBLIC SERVICE COMMISSION

authorizes

Parkland Utilities, Inc.

pursuant to

Certificate Number 242-W

 

to provide water service in Broward and Palm Beach Counties in accordance with the provisions of Chapter 367, Florida Statutes, and the Rules, Regulations, and Orders of this Commission in the territory described by the Orders of this Commission.  This authorization shall remain in force and effect until superseded, suspended, cancelled or revoked by Order of this Commission.

 

Order Number                         Date Issued      Docket Number           Filing Type

 

7092                                         01/22/76         750640-W                   Original Certificate

 

PSC-01-0974-FOF-WS          04/20/01         001825-WS                 Amendment

 

*                                              *                      090493-WS                 Transfer of Majority

                                                                                                              Organizational Control

 

 

*Order Number and date to be provided at time of issuance.

FLORIDA PUBLIC SERVICE COMMISSION

authorizes

Parkland Utilities, Inc.

pursuant to

Certificate Number 185-S

 

to provide wastewater service in Broward and Palm Beach Counties in accordance with the provisions of Chapter 367, Florida Statutes, and the Rules, Regulations, and Orders of this Commission in the territory described by the Orders of this Commission.  This authorization shall remain in force and effect until superseded, suspended, cancelled or revoked by Order of this Commission.

 

Order Number                         Date Issued      Docket Number           Filing Type

 

7092                                         01/22/76         750641-S                    Original Certificate

 

PSC-01-0974-FOF-WS          04/20/01         001825-WS                 Amendment

 

*                                              *                      090493-WS                 Transfer of Majority

                                                                                                              Organizational Control

 

 

*Order Number and date to be provided at time of issuance.

 

 

Parkland Utilities, Inc.

Monthly Service Rates

 

Water

Residential and General Service

	Meter Size:
	5/8" x 3/4"	$   8.92
	3/4”	13.48
	1"	22.44
	1 ½”	44.93
	2"	71.85
	3"	143.74
	4”	224.64
	6”	449.27
	8”	718.83
	Charge Per 1,000 gallons	$2.65

Wastewater

	Meter Size:	Residential Service
	All Meter Sizes		$   13.19
	Charge per 1,000 Gallons (10,000 Gallon Cap)	$6.57
	Meter Size:	General Service
	5/8" x 3/4"	$      13.19
	3/4”	19.83
	1"	33.07
	1 ½”	66.20
	2"	105.89
	3"	211.78
	4”	330.91
	6”	661.75
	8”	1,058.89
	Charge per 1,000 gallons	$6.57

 

 

 

Miscellaneous Service Charges
		Water		Wastewater
	Initial Connection Fee	$15.00		$15.00
	Normal Reconnection Fee	15.00		15.00
	Violation Reconnection Fee	15.00		Actual Cost
	Premises Visit Fee (in lieu of disconnection)	10.00		15.00

 

Service Availability Charges
	Meter Installation Fee	Water	Wastewater
	5/8”x3/4” meter	$100.00	N/A
	1”	150.00
	1 1/2”	250.00
	2”	350.00
	3”	600.00
	Over 3”	Actual Cost
	Plant Capacity Charge
	Per residential ERC*	250.00	1,200.00
	All others – per gallon	0.7143	3.43

 

 *Water ERC = 350 GPD, Wastewater ERC = 350 GPD