Table of Contents
Case Background. 3
Discussion
of Issues. 8
Issue
1
Show Cause. 8
Recommendation. 8
Staff
Analysis. 8
I.
Show Cause Law.. 8
II. Analysis of Substantive Issues Relative to Show Cause. 10
1. Apparent Prior
Noncompliance with Section 367.031, F.S. 10
2. Section 367.022(5), F.S. – Landlord-Tenant
Exemption. 11
3. Legal Definition of Landlord-Tenant Relationship. 13
4. PSC’s Landlord-Tenant Exemption In Light Of Florida
Mobile Home Act 13
5. Constitutional Property Rights. 15
6. Determination of Willfulness. 15
III.
Conclusion. 16
Issue
2
Docket Closure. 19
Recommendation. 19
Staff
Analysis. 19
Case Background
Commission staff
opened the instant docket to initiate show cause proceedings against Palm Tree
Acres Mobile Home Park (Palm Tree Acres or Park or Utility) for apparent
violation of Section 367.031, Florida Statutes (F.S.), and Rule 25-30.033,
Florida Administrative Code (F.A.C.), for providing water and wastewater
service to the public for compensation without first obtaining a certificate of
authorization from the Florida Public Service Commission (Commission or PSC).
Palm Tree Acres is located in
Zephyrhills, Pasco County, Florida. The
Park is comprised of two types of residents: those who rent their lot from the
Park (renters) and those who own their lot (owners). There are approximately 244 total lots within
the Park; approximately 222 lots are leased by renters and approximately 22
lots are owned by owners. The Park has provided water and wastewater
service to both renters and owners for compensation through a monthly lot rent for
approximately 34 years. The Park is not
certificated to provide water or wastewater service and has never filed an
application for a certificate of authorization or for recognition of exempt
status under Section 367.022, F.S.
The renters’ lot rent includes a
single charge for rental of the lot, water and wastewater service, and
amenities (community center, pool, etc.); this charge is included as part of
the renters’ rental agreement. The
owners’ lot rent includes a single charge for water and wastewater service and
amenities (community center, pool, etc.).
This arrangement was contemplated by the restrictive covenants that ran
with the owners’ land, but, on December 8, 2016, a court ruled that these
covenants expired pursuant to the Marketable Record Title Act.
At some point, several owners
(Lot Owners) ceased paying for the amenities (community center, pool, etc.) and
requested that water and wastewater service be provided on a standalone basis. This dispute has been the subject of court
litigation between the Park and those Lot Owners for approximately four years.
In June 2017, the Lot Owners’ attorney requested that the
Commission assert jurisdiction over the Park as the Lot Owners believed the
Park was operating as an uncertificated utility by providing water and wastewater
service to non-tenant customers for compensation.
During preliminary discussions, the Park claimed exempt
status under the landlord-tenant exemption contained in Section 367.022(5),
F.S., as it asserted the Park maintained a landlord-tenant relationship with
the Lot Owners pursuant to Chapter 723, F.S. (Florida Mobile Home Act). The Park claimed that the lot rent charged to
the Lot Owners created such a tenancy relationship because the Lot Owners
“rent” access to the common areas of the Park.
Commission legal staff analyzed the Park’s claim and concluded that no
agreement exists between the Park and Lot Owners anymore and that Palm Tree
Acres does not qualify, and has never qualified, for exempt status under Section
367.022(5), F.S., or any other subsection of Section 367.022, F.S.
Staff delayed pursuing show cause action because the Park and
Lot Owners attempted to resolve their court litigation through mediation and
explore other means of maintaining service while attaining exempt status. These included, but were not limited to: (1)
negotiating an appropriate landlord-tenant agreement with the Lot Owners; (2)
creating a master homeowners’ association; (3) providing service to the Lot
Owners free of charge on a permanent basis; (4) creating a utility owned by the
Lot Owners; and (5) requesting that Pasco County provide service to the Lot
Owners.
On or about November 20, 2017, the Park and Lot Owners
engaged in mediation and allegedly discussed one or more of the above
options. On January 31, 2018, Commission
staff was notified that the Park and Lot Owners were unable to reach an
agreement and the mediation process ended in an impasse.
On February 23, 2018, staff held a noticed, informal meeting
with Palm Tree Acres and interested persons to review the status of the
discussion between Palm Tree Acres and the Lot Owners. Then, by certified letter, dated March 8,
2018, Commission staff notified Palm Tree Acres of its apparent violation of
Section 367.031, F.S., and Rule 25-30.033, F.A.C., for providing water and
wastewater service to the public for compensation without first obtaining a
certificate of authorization from the Commission.
Palm Tree Acres was informed in that letter that Section 367.161, F.S.,
provides:
(1) If
any utility, by any authorized officer, agent, or employee, knowingly refuses
to comply with, or willfully violates, any provision of this chapter or any
lawful rule or order of the commission, such utility shall incur a penalty for
each such offense of not more than $5,000, to be fixed, imposed, and collected
by the commission. However, any penalty assessed by the commission for a
violation of s. 367.111(2) shall be reduced by any penalty assessed by any
other state agency for the same violation. Each day that such refusal or
violation continues constitutes a separate offense. Each penalty shall be a
lien upon the real and personal property of the utility, enforceable by the
commission as statutory liens under chapter 85.
(2) The
commission has the power to impose upon any entity that is subject to its
jurisdiction under this chapter and that is found to have refused to comply
with, or to have willfully violated, any lawful rule or order of the commission
or any provision of this chapter a penalty for each offense of not more than
$5,000, which penalty shall be fixed, imposed, and collected by the commission;
or the commission may, for any such violation, amend, suspend, or revoke any
certificate of authorization issued by it. Each day that such refusal or
violation continues constitutes a separate offense. Each penalty shall be a
lien upon the real and personal property of the entity, enforceable by the
commission as a statutory lien under chapter 85. The collected penalties shall
be deposited into the General Revenue Fund unallocated.
Commission staff’s letter put Palm Tree Acres on notice
that staff would open a docket to initiate a show cause proceeding if Palm Tree
Acres did not correct the violation by filing an application for original
certificates of authorization as an existing system requesting initial rates
and charges to provide water and wastewater services, pursuant to Rule
25-30.033, F.A.C., by April 9, 2018.
The Park provided its initial response on April 9, 2018, and
its supplemental response on April 30, 2018. On May 21, 2018, Commission staff issued a
follow-up data request to the Park. The Park provided its response on June 6,
2018. On November 21, 2018, the Park filed a letter
summarizing its positions and providing its interpretation of two recent orders
issued by the court presiding over the civil litigation involving the Park and
the Lot Owners.
In its responses, similar to the previously mentioned
preliminary discussions, Palm Tree Acres claimed exempt status under Section
367.022(5), F.S., as it asserted that the Park is a hybrid mobile home
park/mobile home subdivision and therefore had a landlord-tenant relationship
with the Lot Owners pursuant to the Florida Mobile Home Act. The Park claimed that the lot rent charged to
the Lot Owners created such a tenancy relationship under Section 723.002(2),
which provides the entities to which the Chapter applies, and Section 723.058,
F.S., which imparts that conditions of tenancy may exist between mobile home
subdivisions and owners of lots in a mobile home subdivision, because the Lot
Owners “rent” access to the common areas of the Park.
Palm Tree Acres provided that a circuit court has recently
found that those portions of the Florida Mobile Home Act that relate to mobile
home subdivisions apply to the relationship between the Park and the Lot Owners
by operation of Section 723.002(2), F.S. Accordingly, Palm Tree Acres asserted that
this tenancy relationship should qualify the Park for the Commission’s
landlord-tenant exemption under Section 367.022(5), F.S. Palm Tree Acres maintained that, although the
circuit court has made no finding on whether the Lot Owners are “tenants” for
purposes of the Commission’s landlord-tenant exemption, the court’s order
should be informative to the Commission as it did include a finding that a
“tenancy” exists between the Lot Owners and the Park. Furthermore, Palm Tree Acres provided that,
while the Legislature has not defined what constitutes a “landlord” or a
“tenant” for purposes of the Commission’s landlord-tenant exemption, it
likewise has given no indication that a tenancy under the Florida Mobile Home
Act would not qualify for the Commission’s exemption.
Additionally, the Park maintained that it meets the
dictionary definition of “landlord,” pursuant to its interpretation of the
definition provided in Black’s Law Dictionary (Fifth Edition). The Park presented the following definition:
Landlord.
He of whom lands or tenements are holden. He who, being the owner of an estate
in land, or a rental property, has leased it to another person, called a
“tenant.” Also, called “lessor.”
Applying this definition, the Park asserted that it holds
common areas, recreational facilities, roads, water and wastewater facilities,
and other amenities that were leased to the Lot Owners for a monthly rent, and
is, therefore, the landlord for the lot owner tenants of that “rental property.”
The Park also attempted to argue that it is not operating
under any regulatory compact with the State, has not been given any franchise
service area, and has no corresponding obligation to serve. Even so, the Park confirmed that it agreed to
continue providing the Lot Owners with use of the Park’s water and wastewater
facilities at no charge while the circuit court litigation is pending. The Park further stated that any payments
tendered by the Lot Owners will not be accepted or processed.
However, the Lot Owners’ attorney
subsequently provided information indicating that the Park no longer considers
the Lot Owners as tenants, yet has never directed the Lot Owners to stop
tendering payments, has never refused to accept payments from the Lot Owners,
has never returned any payments tendered by the Lot Owners, and has not
released the liens it placed against the Lot Owners’ property for nonpayment of
the full amount of monthly lot rent. Based on information received by
Commission staff, individual Lot Owners have been pursuing different routes
regarding payments for their water and wastewater service while the circuit
court litigation is pending; some have continued tendering payments of the
entire monthly lot rent under protest, some are only tendering payments of what
they estimate is the cost of their water and wastewater service, and some are
not tendering any payment at all.
By certified letter, dated July 26, 2018, the Commission’s
Office of the General Counsel notified Palm Tree Acres that Commission staff
opened a docket initiating a show cause proceeding for the Utility’s apparent
statute and rule violation.
On October 15, 2018, the Circuit Court of the Sixth Judicial
Circuit in and for Pasco County, Florida, issued its Order Granting Defendant’s
Motion for Partial Summary Judgment. In that order, the court found that, under
the narrow issue of property rights, Palm Tree Acres has a constitutional right
to refuse to use its property for the benefit of others, including the right to
discontinue providing water and sewer service to the Lot Owners but whether or
not to exercise that right is for the Park to decide. In other words, the court appeared to be
limiting its jurisdiction to a pure property rights matter. In so doing, the court acknowledged that
Section 367.165(1), F.S., does not authorize the court to prohibit termination
(or presumably order termination) of water and sewer service because that
authority lies exclusively with the Commission.
The Lot Owners are currently seeking appellate review of this order.
The court also issued its Order Granting in Part, Denying in
Part Plaintiffs’ Motion for Summary Judgment as to Count One on October 15,
2018. In that order, the court found that: (1) the Lot
Owners are not a “mobile home owner,” “mobile homeowner,” “home owner,” or
“homeowner” as defined in Section 723.003(11), F.S.; (2) Chapter 723, F.S.,
does not authorize Palm Tree Acres to impose any lien upon the Lot Owners’
property; (3) Chapter 723, F.S., does not authorize Palm Tree Acres to evict
the Lot Owners for failure to pay any “lot rental amount,” “maintenance fee,”
or other fees or charges; and (4) Palm Tree Acres and the Lot Owners are not
parties to a “mobile home lot rental agreement” as defined in Chapter
723.003(10), F.S. Furthermore, the court
also found that Palm Tree Acres is a “mobile home subdivision” as defined by
Section 723.003(14), F.S., and those portions of Chapter 723, F.S., that apply
to a mobile home subdivision apply to the relationship between Palm Tree Acres
and the Lot Owners. However, the court specifically made no
finding, adjudication, or declaration as to whether Palm Tree Acres is a
“landlord” or the Lot Owners are a “tenant” as those terms are used in Section
367.022(5), F.S., as the application of those terms under Chapter 367, F.S., is
exclusively within the jurisdiction of the Commission.
This recommendation addresses whether or not the
Commission should order Palm Tree Acres to show cause as to why it is not
obligated to submit the relevant fine and bring itself into compliance with the
Commission’s statutes and rules.
The Commission has jurisdiction over
this matter pursuant to Sections 367.011 and 367.161, F.S.
Discussion
of Issues
Issue 1:
Should Palm Tree Acres Mobile Home Park be ordered
to show cause in writing, within 21 days, as to why it (1) should not be fined
for providing water and wastewater service to the public for compensation
without first obtaining a certificate of authorization from the Commission, in
apparent violation of Section 367.031, Florida Statutes, and Rule 25-30.033,
Florida Administrative Code, and (2) should not bring itself into compliance
with the Commission’s statutes and rules?
Recommendation:
Yes. Palm
Tree Acres Mobile Home Park should be ordered to show cause in writing, within
21 days, as to why it (1) should not be fined in the amount of $5,000 for
providing water and wastewater service to the public for compensation without
first obtaining a certificate of authorization from the Commission, in apparent
violation of Section 367.031, Florida Statutes, and Rule 25-30.033, Florida Administrative
Code, and (2) should not bring itself into compliance with the Commission’s
statutes and rules. The show cause order
should incorporate the conditions as set forth in the staff analysis. (DuVal,
Nieves)
Staff Analysis:
I. Show Cause Law
Pursuant to Section 367.031, F.S., each utility subject to
the jurisdiction of the Commission must obtain from the Commission a
certificate of authorization to provide water and/or wastewater service. Pursuant to Rule 25-30.033, F.A.C., an
existing system seeking to establish initial rates and charges must file an
application for an original certificate in accordance with the procedure set
forth in that Rule. Section 367.022,
F.S., provides the scenarios in which an individual’s or entity’s activities
are not subject to regulation by the Commission as a utility. Specifically, Section 367.022(5), F.S., states
that “[l]andlords providing service to their tenants without specific
compensation for the service” are not subject to regulation by the Commission as
a utility.
Pursuant to Section 367.161, F.S., the Commission has the power
to impose upon any entity that is subject to its jurisdiction under this
chapter and that is found to have refused to comply with, or to have willfully
violated, any lawful rule or order of the Commission or any provision of this
chapter a penalty for each offense of not more than $5,000, for each such day a
violation continues, which penalty shall be fixed, imposed, and collected by
the commission; or the Commission may, for any such violation, amend, suspend,
or revoke any certificate of authorization issued by it.
When evaluating staff’s recommendation, a review of the
Commission’s authority regarding a utility’s alleged violations of Commission
rules, statutes, or orders is helpful.
Pursuant to Section 367.161(1), F.S., the Commission is
authorized to impose upon any entity subject to its jurisdiction a penalty of
not more than $5,000 for each such day a violation continues, if such entity is
found to have refused to comply with
or to have willfully violated
any lawful rule or order of the Commission, or any provision of Chapter 367,
F.S. Each day a violation continues is
treated as a separate offense. Each
penalty is a lien upon the real and personal property of the utility and is
enforceable by the Commission as a statutory lien. If a penalty is also assessed by another
state agency for the same violation, the Commission’s penalty will be reduced
by the amount of the other agency’s penalty.
As an alternative to the above remedies, Section 367.161(2), F.S.,
permits the Commission to amend, suspend, or revoke a utility’s certificate for
any such violation. Part of the
determination the Commission must make in evaluating whether to penalize a
utility is whether the utility willfully violated the rule, statute, or
order. Section 367.161, F.S., does not
define what it is to “willfully violate” a rule or order.
Willfulness is a question of fact.[14]
The plain meaning of “willful” typically applied by the Courts in the absence of a statutory definition, is
an act or omission that is done “voluntarily and intentionally” with specific
intent and “purpose to violate or disregard the requirements of the law.” Fugate at 76.
The procedure followed by the Commission in dockets such
as this is to consider the Commission staff’s recommendation and determine
whether or not the facts warrant requiring the utility to respond. If the Commission finds that the facts
warrant requiring the utility to respond, the Commission issues an Order to
Show Cause (show cause order). A show
cause order is considered an administrative complaint by the Commission against
the utility. If the Commission issues a
show cause order, the utility is required to file a written response, which
response must contain specific allegations of disputed fact. If there are no disputed factual issues, the
utility’s response should so indicate.
The response must be filed within 21 days of service of the show cause
order on the respondent.
In recommending a penalty, staff reviews prior Commission
orders. While Section 367.161, F.S., treats each day of each violation as a
separate offense with penalties of up to $5,000 per offense, staff believes
that the general purpose of the show cause penalties is to obtain compliance
with the Commission’s rules, statutes, and orders. If a utility has a pattern of noncompliance
with a particular rule or set of rules, staff believes that a higher penalty is
warranted. If the rule violation
adversely impacts the public health, safety, or welfare, staff believes that
the sanction should be the most severe.
The utility has two options if a show cause order is
issued. The utility may respond and request
a hearing pursuant to Sections 120.569 and 120.57, F.S. If the utility requests a hearing, a further
proceeding will be scheduled before the Commission makes a final determination
on the matter. Or, the utility may
respond to the show cause order by remitting the fine and bringing itself into
compliance with the Commission’s statutes and rules. If the utility pays the fine and brings
itself into compliance with the Commission’s statutes and rules, this show
cause matter is considered resolved, and the docket closed.
In the event the utility fails to
timely respond to the show cause order, the utility is deemed to have admitted
the factual allegations contained in the show cause order. The utility’s failure to timely respond is
also a waiver of its right to a hearing.
If the utility does not timely respond, a final order will be issued
imposing the sanctions set out in the show cause order.
II. Analysis of Substantive Issues Relative to
Show Cause
1. Apparent Prior Noncompliance with Section
367.031, F.S.
Palm Tree Acres began providing
utility services approximately 34 years ago.
Therefore, because the Park began providing utility services prior to
July 1, 1996, Section 367.031, F.S., obligated the Park to file an application
for a certificate of authorization or for recognition of its exempt status
under Section 367.022, F.S. Even though the Park may have believed it
qualified for exemption under Section 367.022(5), F.S., it failed to submit an
application to the Commission for recognition of its alleged exempt status, in
violation of Section 367.031, F.S.
Instead, Palm Tree Acres elected to continue providing water and
wastewater service to the Lot Owners for compensation under only its misplaced
understanding of the applicability of Section 367.022(5), F.S. Assuming facts identical to those at present,
had Palm Tree Acres properly submitted its required application for exempt
status at the time it began providing service, as required by law, Commission
staff would have evaluated the applicability of the exemption at that time and
presumably recommended that the Park submit an application for a certificate of
authorization to provide service and that the Lot Owners be included in the
utility’s service area approximately 34 years ago.
The Park now attempts to argue that it is not operating
under any regulatory compact with the State, has not been given any franchise
service area, and has no corresponding obligation to serve. However, this argument becomes circuitous as
it appears that the only reason why the Park was not given a franchise over the
service territory is because it did not comply with the law and properly submit
its application for exempt status. If
Palm Tree Acres had complied with the law as enacted at the time it began
providing utility services, the Commission would have likely authorized the
Park’s provision of water and wastewater service to an identified service area
(to include both the lot renters and Lot Owners) and the obligation to serve
would have been found.
Summary
Because Palm Tree Acres has been operating as a utility
subject to the Commission’s regulation since it began providing utility
services and has created a constructive service area to include the lot renters
and Lot Owners, it should be required to comply with Chapter 367, F.S., and
Chapter 25-30, F.A.C.
2. Section 367.022(5),
F.S. – Landlord-Tenant Exemption
A review of past Commission orders shows that landlords
providing water and/or wastewater service to tenants are exempt from regulation
if they provide service without a specific charge identified within the
tenants’ rent or maintenance agreement. The
orders further indicate that a mobile home park or subdivision that provides
service to Lot Owners for compensation cannot qualify for the landlord-tenant
exemption and is subject to Commission regulation.
Order No. PSC-92-0746-FOF-WU
In Order No. PSC-92-0746-FOF-WU, the Commission considered
Gem Estates Water System’s (Gem Estates’) application for exempt status under
the landlord-tenant exemption. Gem
Estates was owned and operated by the owners of Gem Estates Mobile Home
Village, a mobile home subdivision, for the purpose of providing water service
to the lot owner residents of the mobile home subdivision. In that case, the Commission found that
“[b]ecause the mobile home owners own their own land, the utility's owners are
not landlords.”[16] Therefore, “[i]f the utility's owners are
not the landlords for the customers served by Gem Estates, the landlord-tenant
exemption cannot apply.”[17] In its subsequent order granting Gem Estates
a certificate to provide water service, the Commission noted that since the
park’s inception, the residents paid for water service, street lighting,
recreational facilities, and upkeep of the common areas through a “composite
annual fee.”[18] Notably, Gem Estates remained under the
Commission’s jurisdiction until the Commission approved the utility’s transfer
to the homeowner’s association, comprised of all of the subdivision’s lot
owners as members, as it qualified for exemption under Chapter 367.022(7),
F.S., as a nonprofit association providing water service solely to its members
who own and control the association.
Similar to the residents of Gem Estates Mobile Home
Village, the Lot Owners within Palm Tree Acres own their own land within a
mobile home subdivision and paid a monthly fee to the Park for water and
wastewater service and other amenities.
Applying the same rationale as provided by the Commission in the
above-referenced order, Palm Tree Acres is not the landlord for the Lot Owners
and the landlord-tenant exemption cannot apply.
Order No. 23150
In Order No. 23150, the Commission found that a
maintenance agreement between Florilow, Inc. (a mobile home and recreational
vehicle park) and its 99-year lessees that included a fee to cover maintenance
of the park's sewage plant, water system, roads, taxes, and garbage service did
not subject the utility to regulation because it did not identify a specific
charge for such water and wastewater service. The Commission specifically stated: “We
believe that this interpretation is consistent with the protection inherent in
the landlord-tenant exemption; if a tenant is dissatisfied with a maintenance
agreement, as with a rental agreement, he or she can move to another residence.
We also believe that the 99-year lessees discussed herein are adequately
protected under Chapter 723, Florida Statutes.” [22]
The Lot Owners within Palm Tree Acres paid a monthly fee
similar to the maintenance fee paid by Florilow’s 99-year lessees. However, a distinction may be drawn because
Palm Tree Acres’ Lot Owners own their land outright and are not a party to any
type of rental agreement. Therefore, it
appears that the inherent protection provided in the landlord-tenant exemption
does not apply to the Lot Owners because they have no agreement with the Park
and cannot simply move to another residence if they are dissatisfied with their
monthly fee charged by Palm Tree Acres.
Furthermore, because the Lot Owners cannot claim protection under all
provisions of Chapter 723, F.S., it appears that the Lot Owners may not have
adequate protection under Chapter 723, F.S., comparable to that of their
neighboring lot renters within the Park.
Order No. 24806
In Order No. 24806, the Commission found that Oak Leafe
Wastewater Treatment Plant was subject to the Commission’s jurisdiction because
Oak Leafe would not be providing service strictly to tenants because some of
the residents would own their lots.[23] In reaching this conclusion, the Commission
applied the definition of “tenant” as provided by Section 83.43(4), F.S.
(Landlord and Tenant, Part II Residential Tenancies).
Palm Tree Acres argues that Order No. 24806 is not
applicable to Palm Tree Acres because Oak Leafe was not a mobile home park or
subdivision. As such, Palm Tree Acres maintains
it is inappropriate for Commission staff to apply the definition of “tenant” as
provided by Section 83.43(4), F.S., when examining the Commission’s
landlord-tenant exemption. However, the
other orders discussed above provide the Commission’s interpretation of a
landlord-tenant relationship for purposes of Chapter 367, F.S., and do not
contain any references to Chapter 83, F.S. Accordingly, the Commission need not consider the
definition of “tenant” as provided by Section 83.43(4), F.S., to reach the
conclusion that Palm Tree Acres does not qualify for exempt status under
Section 367.022(5), F.S.
Summary
Because the Lot Owners own their land, Palm Tree Acres is
not the landlord of those Lot Owners for purposes of Chapter 367, F.S. Moreover, the Lot Owners appear to lack the
protection inherent in the Commission’s landlord-tenant exemption. As such, Palm Tree Acres should be required to
comply with Chapter 367, F.S., and Chapter 25-30, F.A.C.
3. Legal Definition of
Landlord-Tenant Relationship
Black’s Law Dictionary (Tenth
Edition) defines “landlord-tenant relationship” as “[t]he legal relationship
between the lessor and lessee of real estate.”
A “lessor” is defined as “[s]omeone who conveys real or personal property
by lease” and a “lessee” is “[s]omeone who has a possessory interest in real or
personal property under a lease.” A
“possessory interest” is defined as “[t]he present right to control property,
including the right to exclude others, by a person who is not necessarily the
owner” and “[a] present or future right to the exclusive use and possession of
property.” “Tenancy” is defined as
“[t]he possession or occupancy of land under a lease; a leasehold interest in
real estate” and “occupancy” is defined as “[t]he act, state, or condition of
holding, possessing, or residing in or on something; actual possession,
residence, or tenancy, especially of a dwelling or land.” Further, a “common area” is defined as “[t]he
realty that all tenants may use though the landlord retains control over and responsibility
for it” and “land” is defined as “[a]n estate or interest in real property.”
Based on the above definitions, it appears that the Park’s
assertion that a landlord-tenant relationship exists between it and the Lot
Owners based on the “lease” for the common areas is unsubstantiated. If the Park’s argument were true, the Lot
Owners, as lessees of the common areas, would maintain a possessory interest in
the common areas and would have the right to exclude others’ use of those
areas. Based on the facts provided by
the Park, it appears that the Lot Owners do not have such a possessory right
with regard to the common areas.
Additionally, based on the facts provided, it appears that the Lot
Owners do not hold, possess, or reside in or on the common areas; therefore,
they do not occupy them under a tenancy.
Furthermore, the definition of a common area implies that its use is an
added benefit resulting from a landlord-tenant relationship, not that a
landlord-tenant relationship is created through the use of common areas.
Summary
It appears that the legal definition of a “landlord-tenant
relationship” supports a finding that Palm Tree Acres is not a landlord for the
Lot Owners and should be required to comply with Chapter 367, F.S., and Chapter
25-30, F.A.C.
4. PSC’s Landlord-Tenant
Exemption In Light Of Florida Mobile Home Act
Based on the Circuit Court of the Sixth Judicial Circuit in
and for Pasco County’s recent order, certain provisions of the Florida Mobile
Home Act apply to the relationship between Palm Tree Acres and the Lot
Owners. However, the Department of
Business and Professional Regulation’s jurisdiction over Palm Tree Acres as a
mobile home subdivision remains unclear. Nonetheless, a review of past Commission orders
shows that the Commission maintains exclusive and superseding jurisdiction over
matters related to the provision of utility services when a question arises
pertaining to the appropriate application of Chapter 367, F.S., in conjunction
with Chapter 723, F.S.
Order No. PSC-99-1228-PAA-WS
In Order No. PSC-99-1228-PAA-WS, the Commission briefly
referenced the relationship between Chapter 723, F.S., and the PSC’s
jurisdiction. In that docket, the utility was concerned
with how to adjust its rates to cover RAFs while still complying with the
mobile home park agreements under Chapter 723, F.S. The Commission noted that the owner was
informed (presumably by Commission staff) that Section 367.011, F.S., provides
the Commission with exclusive jurisdiction over utilities with regard to
service, authority, and rates, and that the Commission's authority supersedes
all other laws, agreements, and contracts with regard to jurisdiction over
utilities.
The same response can be applied to Palm Tree Acres. The Park believes that a tenancy relationship
is created with the Lot Owners under Chapter 723, F.S., and argues that this
qualifies as a landlord-tenant relationship under Chapter 367, F.S. Additionally, the circuit court has recently found
that the relationship between the Park and the Lot Owners is subject to those
portions of Chapter 723, F.S., that apply to mobile home subdivisions. However, even if Palm Tree Acres is considered
a mobile home subdivision as defined by Section 723.003(14), F.S., Chapter 723,
F.S., does not impute any enforceable authority of the Department of Business
and Professional Regulation over a mobile home subdivision relative to the
provision of water and wastewater service.
Neither does it purport to preempt the Commission’s ability to interpret
the applicability of the landlord-tenant exemption under Section 367.022(5),
F.S. To the contrary, the Commission
maintains exclusive and superseding jurisdiction over utilities and its
interpretation of its landlord-tenant exemption is controlling. Therefore, even if the relationship between
the Park and the Lot Owners qualifies as a landlord-tenant relationship for
purposes of Chapter 723, F.S., the Commission can find that the relationship
does not meet the standards of a landlord-tenant arrangement as contemplated by
Chapter 367, F.S.
Order No. PSC-99-0266-FOF-WS
In Order No. PSC-99-0266-FOF-WS, the Commission found that
“for Chapter 723, Florida Statutes, to have any effect on the Commission's
determination of appropriate rates and regulatory assessment fees, the
Legislature would have to have enacted it after Chapter 367, Florida Statutes
with ‘express reference’ to superseding Chapter 367, Florida Statutes.” [26]
Applying this same rationale, for Chapter 723, F.S., to
have any effect on the determination of a utility’s exemption, the Legislature
would have to have enacted language with express reference to superseding
Chapter 367, F.S. Chapter 723, F.S., was
enacted after Section 367.022, F.S., and does not contain an express reference
indicating that any sections of Chapter 723, F.S., supersede any sections of
Chapter 367, F.S., neither was Chapter 367, F.S., amended to reflect that the
landlord-tenant exemption should be read in conjunction with Chapter 723, F.S. Accordingly, any interpretation of the
meaning of a landlord-tenant relationship under Chapter 723, F.S., need not
influence the Commission’s interpretation of its exemption statutes.
Summary
Pursuant to Sections 367.011(2) and (4), F.S., the Commission
maintains exclusive and superseding jurisdiction over water and wastewater
utilities with regard to authority, service, and rates, its interpretation of
its landlord-tenant exemption is controlling. As such, based on the Commission’s prior orders
that include its interpretation of its landlord-tenant exemption, Palm Tree
Acres should be required to comply with Chapter 367, F.S., and Chapter 25-30,
F.A.C.
5. Constitutional
Property Rights
As provided in the Case Background, the Circuit Court of
the Sixth Judicial Circuit in and for Pasco County, Florida, recently found
that under the narrow issue of property rights, Palm Tree Acres has a
constitutional right to refuse to use its property for the benefit of others,
including the right to discontinue providing water and sewer service to the Lot
Owners but whether or not to exercise that right is for the Park to decide. However, in so doing, the court acknowledged
that Section 367.165(1), F.S., does not authorize the court to prohibit
termination (or presumably order termination) of water and sewer service
because that authority lies exclusively with the Commission.
Clearly, Palm Tree Acres’ constitutional property rights
are outside of the Commission’s jurisdiction.
However, Section 367.011, F.S., imparts that the Commission shall have
exclusive jurisdiction over each water and wastewater utility with respect to
its authority, service, and rates, recognizing that vested rights other than
procedural rights or benefits cannot be impaired or taken away. Therefore, the Commission retains the ability
to assert its jurisdiction to ensure that a utility continues to provide
service to any person reasonably entitled to such service and/or ensure that
termination of such service is properly executed absent any infringement of a
utility’s vested rights. Furthermore,
the Commission has previously noted its ability to conduct a proceeding
concerning the question of whether or not a utility must provide service.
Summary
Once the Park began providing water and wastewater service
to the Lot Owners, it became subject to the Commission’s regulation and assumed
an obligation to maintain service to those customers. If Palm Tree Acres wishes to exercise the
aforementioned declared constitutional right, it should do so in compliance
with the Commission’s controlling laws. Any
finding that Palm Tree Acres must continue to provide service to the Lot Owners
would presumably not infringe upon the Park’s constitutional rights, as the
Park would need to fulfill its duty to serve by identifying methods to maintain
such service without using the property in question.
6. Determination of Willfulness
As previously mentioned, for purposes of this
recommendation the definition of a willful violation is an act or omission that is done “voluntarily
and intentionally” with specific intent and “purpose to violate or disregard
the requirements of the law.” Fugate at
76.
Prior to
Commission staff’s analysis of this situation, Palm Tree Acres appears to have
acknowledged that its provision of water and wastewater services to the Lot
Owners has caused it to operate in violation of the Commission’s statutes, but
also appears to have indicated that it does not intend to obtain a certificate
of authorization to provide water and wastewater service. Since that time, Commission staff relayed its
analysis and opinion that Palm Tree Acres does not and has never qualified for
the Commission’s landlord-tenant exemption, culminating in staff’s issuance of
its Notice of Apparent Violation. To
date, Palm Tree Acres has not submitted its application for certificates
of authorization to provide water and wastewater services. Although the Park communicated to Commission staff that it intended to provide
water and wastewater services to the Lot Owners at no charge while the circuit
court litigation is pending, it has apparently provided subsequent statements
to the Court that the Lot Owners know, or should know, that the Park is not
offering its services “on a free or gratuitous basis” and “will offer their services
to each [Lot Owner] only on a package basis.”
Additionally, the Park appears to still
be providing water and wastewater service for compensation to individuals who
own their lots within the Park (these individuals are apparently not a part of
the group of Lot Owners who have requested water and wastewater service on a
standalone basis). Staff notes that such offered and/or provided
service still does not allow the Park to qualify for the Commission’s
landlord-tenant exemption as it is the exact activity that prompted staff’s
Notice of Apparent Violation.
Summary
Due to the
Park’s past acknowledgement of its status in violation of the Commission’s
statutes and its apparent intent to potentially resume charging the Lot Owners
for water and wastewater services, Palm Tree Acres should be found to be in
willful violation of Section 367.031, F.S., and Rule 25-30.033, F.A.C.
III. Conclusion
Ultimately, the Lot Owners no longer have an agreement with
the Park for “lot rent” or for use of the common areas; therefore, no
landlord-tenant relationship, as previously defined by the Park, can currently
exist. Moreover, based on the
Commission’s past interpretation of Section 367.022(5), F.S., which is also
supported by the legal definition of a “landlord-tenant relationship,” the Park
does not qualify for the Commission’s landlord-tenant exemption because the Lot
Owners own their land and appear to lack the protection inherent in the exemption.
Although the court recently found that Palm Tree Acres
possesses a constitutional right to refuse to use its property for the benefit
of others, terminating the Lot Owners’ utility services would essentially be the
Park’s attempt to continue to avoid regulation by improperly abandoning a
portion of its customers. Palm Tree
Acres has been operating as a utility subject to the Commission’s regulation for
over 30 years and has created a constructive service area to include the
renters and owners; thereby assuming the duty to serve those customers. As such, the Park should be required to bring
itself into compliance with Section 367.031, F.S., and Rule 25-30.033, F.A.C.,
by submitting an application for certificates of authorization to provide water
and wastewater services. Furthermore, Palm
Tree Acres should be cautioned that improper termination of the Lot Owners’
utility services may be a violation of Section 367.111, F.S., for failure to
provide service to its constructive service area, and Rule 25-30.320, F.A.C.,
for improperly refusing or discontinuing service to customers that may lead to
staff’s initiation of further show cause proceedings.
By
knowingly failing to comply with the provisions of Section 367.031, F.S., and
Rule 25-30.033, F.A.C., the Commission should find that Palm Tree Acres’ acts
were “willful” in the sense intended by Section 367.161, F.S., and contemplated
by Fugate. Therefore, staff
recommends that Palm Tree Acres be ordered to show cause in writing, within 21
days, as to why it should not be fined in the amount of $5,000 for providing
water and wastewater service to the public for compensation without first
obtaining a certificate of authorization from the Commission and why it should
not bring itself into compliance with the Commission’s statutes and rules. Staff
recommends that the show cause order incorporate the following conditions:
1.
This show cause order is an administrative complaint by
the Florida Public Service Commission, as petitioner, against Palm Tree Acres
Mobile Home Park, as respondent.
2.
Palm Tree Acres shall respond to the show cause order
within 21 days of service on the Utility, and the response shall reference
Docket No. 20180142-WS, Initiation of
show cause proceedings against Palm Tree Acres Mobile Home Park, in Pasco
County, for noncompliance with Section 367.031, F.S., and Rule 25-30.033,
F.A.C.
3.
Palm Tree Acres has the right to request a hearing to
be conducted in accordance with Sections 120.569 and 120.57, F.S., and to be
represented by counsel or other qualified representative.
4.
Requests for hearing shall comply with Rule
28-106.2015, F.A.C.
5.
Palm Tree Acres’ response to the show cause order shall
identify those material facts that are in dispute. If there are none, the petition must so
indicate.
6.
If Palm Tree Acres files a timely written response and
makes a request for a hearing pursuant to Sections 120.569 and 120.57, F.S., a
further proceeding will be scheduled before a final determination of this
matter is made.
7.
A failure to file a timely written response to the show
cause order will constitute an admission of the facts herein alleged and a
waiver of the right to a hearing on this issue.
8.
In the event that Palm Tree Acres fails to file a
timely response to the show cause order, the fine will be deemed assessed and a
final order will be issued.
9.
If Palm Tree Acres responds to the show cause order by
remitting the fine and submitting its application for certificates of
authorization to provide water and wastewater services, this show cause matter
will be considered resolved, and the docket closed.
Furthermore, the Utility should be warned and put on
notice that continued failure to comply with Commission orders, rules, or
statutes will again subject the Utility to show cause proceedings and fines of
up to $5,000 per day per violation for each day the violation continues, as set
forth in Section 367.161, F.S.
Issue 2:
Should this docket be closed?
Recommendation:
If the Commission approves Issue 1 and Palm Tree
Acres timely responds in writing to the Order to Show Cause, this docket should
remain open to allow for the appropriate processing of the response. If the
Commission approves Issue 1 and Palm Tree Acres responds to the Order to Show
Cause by remitting the fine and submitting its application for certificates of
authorization to provide water and wastewater services, this show cause matter
will be considered resolved, and the docket should be closed administratively.
If the Commission approves Issue 1 and Palm Tree Acres does not remit payment
and submit its application, or does not respond to the Order to Show Cause,
this docket should remain open to allow the Commission to pursue further enforcement
action and collection of the amount owed by the Utility. (DuVal, Nieves)
Staff Analysis:
If the Commission approves Issue 1 and Palm Tree
Acres timely responds in writing to the Order to Show Cause, this docket should
remain open to allow for the appropriate processing of the response. If the
Commission approves Issue 1 and Palm Tree Acres responds to the Order to Show
Cause by remitting the fine and submitting its application for certificates of
authorization to provide water and wastewater services, this show cause matter
will be considered resolved, and the docket should be closed administratively.
If the Commission approves Issue 1 and Palm Tree Acres does not remit payment and
submit its application, or does not respond to the Order to Show Cause, this
docket should remain open to allow the Commission to pursue further enforcement
action and collection of the amount owed by the Utility.
