Discussion
of Issues
Issue 1:
Should the Commission acknowledge the transfer of
MSKP Town & Country Utility, LLC to the Babcock Ranch Community Independent
Special District as a matter of right and cancel Certificate Nos. 613-W and
543-S effective December 15, 2016?
Recommendation:
Yes. MSKP Town and County Utility, LLC and the
Babcock Ranch Community Independent Special District have fully complied with
the requirements of Section 367.071(4)(a), F.S., and Rule 25-30.038, Florida
Administrative Code (F.A.C.), and therefore have met all of the requirements
for transfer as a matter of right. (Hill, Brownless)
Staff Analysis:
Section 367.071, F.S., states, in part:
(1) No utility
shall sell, assign, or transfer its certificate of authorization, facilities,
or any portion thereof, or majority organizational control, without
determination and approval of the commission that the proposed sale,
assignment, or transfer is in the public interest and that the buyer, assignee,
or transferee will fulfill the commitments, obligations, and representations of
the Utility. However, a sale, assignment, or transfer of its certificate of
authorization, facilities or any portion thereof, or majority organizational
control may occur prior to commission approval if the contract for sale,
assignment, or transfer is made contingent upon commission approval.
. . .
(3) An
application for proposed sale, assignment, or transfer shall be accompanied by
a fee as provided by s. 367.145. No fee is required to be paid by a
governmental authority that is the buyer, assignee, or transferee.
(4) An
application shall be disposed of as provided in s. 367.045, except that:
(a) The
sale of facilities, in whole or part, to a governmental authority shall be
approved as a matter of right; however, the governmental authority shall, prior
to taking any official action, obtain from the Utility or commission with
respect to the facilities to be sold the most recent available income and
expense statement, balance sheet, and statement of rate base for regulatory
purposes and contributions-in-aid-of-construction. Any request for rate relief
pending before the commission at the time of sale is deemed to have been
withdrawn. Interim rates, if previously approved by the commission, must be
discontinued, and any money collected pursuant to interim rate relief must be
refunded to the customers of the Utility with interest.
The District is a unit of special-purpose government,
created pursuant to Chapter 2007-306, Laws of Florida, as amended by Chapter
2016-257, Laws of Florida. Special districts are included in the definition of
“governmental authority” found in Section 1.01(8), F.S., and have been
recognized by the Commission as falling within Section 367.071(4)(a), F.S.
The District and MSKP entered into a Water and Sewer
System and Irrigation Quality Water System Lease/Option to Purchase Agreement
(Lease/Purchase Agreement) effective December 15, 2016. The Lease/Purchase
Agreement was approved by the District on December 15, 2016, by Resolution Nos.
2017-03 and 2017-04.
Babcock Ranch Irrigation, LLC, a non-regulated company, is
also a party to the Lease/Purchase Agreement and has been combined with MSKP to
form the District’s new water, sewer and irrigation water utility, Babcock
Ranch Water Utilities (Babcock Ranch).
On December 15, 2016, the District also approved Babcock
Ranch’s budget (Resolution No. 2017-06) and established Babcock Ranch’s
proprietary fund and receipts depository for the leased MSKP facilities
(Resolution No. 2017-05). Babcock Ranch’s rates and charges were approved by
the District on January 26, 2017, by Resolution No. 2017-08.
Pursuant to the Lease/Purchase Agreement MSKP will retain
legal title to the water and sewer assets until October 1, 2040.
Likewise, Babcock Ranch Irrigation, LLC will retain legal title to the
irrigation system assets until October 1, 2040. MSKP and Babcock Ranch
Irrigation, LLC have the right under the Lease/Purchase Agreement to sell the Utility
and irrigation assets to the District at any time before October of 2040.
The purchase price for Babcock Ranch is currently estimated at $287.4 million
in 2040.
Until the sale, the District is required to pay base rent which currently is
$23,107.75 per month for water, sewer and irrigation assets ($10,764.00 –
water, $9,866.67 – sewer and $2,477.08 – irrigation).
The District is solely responsible for the operation and
maintenance of the Utility at this time and has contracted with Fishkind &
Associates to provide billing, administrative and customer services. The
District has also contracted with MSKP to provide maintenance and operation
services for Babcock Ranch for which MSKP is paid “additional rent.”
Pursuant to Section 367.071(4)(a), F.S., and Rule
25-30.038(2)(e), F.A.C., MSKP has provided a copy of its most recent Annual
Report to the District. In accordance with Rule 25-30.038(2)(f), F.A.C., the
MSKP has stated that it does not hold any customer deposits. MSKP has paid its
outstanding regulatory assessment fees through December 15, 2016, and is not
required to file its 2016 Annual Report.
Based on the above, staff has concluded that MSKP and the
District have fully complied with the requirements of Section 367.071(4)(a),
F.S., and Rule 25-30.038, F.A.C., and recommends that the Commission
acknowledge the transfer of MSKP to the District as a matter of right and
cancel Certificate Nos. 613-W and 543-S effective December 15, 2016.
Issue 2:
Should this docket be closed?
Recommendation:
Yes. If the Commission approves staff’s
recommendation in Issue 1, no further action is required by the Commission, and
the docket should be closed upon the issuance of the final order. (Brownless)
Staff Analysis:
If the Commission approves staff’s recommendation in
Issue 1, no further action is required by the Commission, and the docket should
be closed upon the issuance of the final order.
