Discussion
of Issues
Issue 1:
Should the Commission propose the adoption of Rule
25-30.0115, F.A.C., Definition of Landlord and Tenant?
Recommendation:
Yes, the Commission should propose the adoption of
Rule 25-30.0115, F.A.C., as set forth in Attachment A. Additionally, the
Commission should certify the rule as a minor violation rule. (King, Guffey)
Staff Analysis:
Section 367.021(12), F.S., defines a utility
subject to the Commission’s jurisdiction as “every person, lessee, trustee, or
receiver owning, operating, managing, or controlling a system, or proposing
construction of a system, who is providing, or proposes to provide, water or
wastewater service to the public for compensation.” Section 367.022, F.S.,
provides exemptions from Commission regulation for a finite group of individuals
and entities. Section 367.022(5), F.S., contains an exemption for “[l]andlords
providing service to their tenants without specific compensation for the
service.” Staff is recommending that the Commission propose a new rule that
would define the terms “landlord” and “tenant,” as used in that exemption. As
set forth in Attachment A, staff’s recommended rule language reads as follows:
25-30.0115
Definition of Landlord and Tenant
As used in Section 367.022(5), F.S.:
(1)
“landlord” is the party who conveys a possessory interest in real property to a
tenant by way of a lease and who provides water and/or wastewater service to
the tenant at that property; and
(2)
“tenant” is the party to whom the possessory interest in real property is
conveyed by the landlord by way of a lease and who receives water and/or
wastewater service from the landlord at that property.
The recommended language is based on the plain and
ordinary meaning of landlord and tenant, and related terms, as defined by the
eleventh edition of Black’s Law Dictionary. Black’s Law Dictionary defines
landlord as “[s]omeone who rents a room, building, or piece of land to someone
else.” A lessor, which Black’s deems a synonym to landlord, is “[s]omeone who
conveys real or personal property by lease.” A tenant is “[s]omeone who holds
or possesses lands or tenements by any kind of right or title.” And a lessee is
“[s]omeone who has a possessory interest in real or personal property under a
lease.”
Finally, Black’s also defines a “landlord-tenant
relationship.” The relationship is created by lease, either express or implied,
and must include “a landlord’s reversion, a tenant’s estate, [and] transfer of
possession and control of the premises.” During the rulemaking process, staff
used the word “agreement” instead of “lease” in discussions of potential rule
language. However, staff recommends using “lease” instead of “agreement” because
the former is more precise.
The only addition staff made to these dictionary definitions
was a clause mandating that the landlord provide and the tenant receive the water
and wastewater services at the conveyed property. This requirement comports
with a plain reading of the text of Section 367.022(5), F.S., and the Legislature’s
declared intent of Commission regulation of water and wastewater utilities as
it appears in Section 367.011, F.S.
Staff’s recommended definitions of landlord and tenant are
also consistent with previous Commission practice. The
decision in Order No. PSC-92-0746-FOF-WU is on point. In that case, the Commission
denied Gem Estates’ request for an exemption from Commission jurisdiction under
Section 367.022(5), F.S., because the mobile home owners in Gem Estates owned
their own land. Because
the residents owned their lots, the subdivision owner was not a landlord.
Stakeholder Comments
Staff received comments from the Goss family, FMHA, and
OPC. OPC and the Goss family also submitted suggested changes to staff’s
recommended language. The Goss family and FMHA disagreed with staff’s
recommended language, and the Goss family’s suggested language is substantially
different from staff’s recommended language. OPC, on the other hand, generally
agreed with staff’s recommended language, but made one suggested change that
does not change the substance of staff’s recommended language.
The Goss family owns 27 mobile home parks in Florida,
including Palm Tree Acres. The crux of its argument is that staff’s definitions
of landlord and tenant are too narrow and ignore certain landlord-tenant
relationships recognized in Chapter 723, F.S. Consistent with its argument that
both mobile home park and mobile home subdivision owners should be considered
landlords, the Goss family suggests the following changes to staff’s recommended
language:
(1)
“landlord” is the party who conveys a possessory interest in, or access to, real property to a
tenant by way of agreement
between the two parties and who provides water and/or wastewater service to the
tenant as part of that conveyance at
that property; and
(2)
“tenant” is the party to whom the possessory interest in, or access to, real property is conveyed by the landlord and who
receives water and/or wastewater service from the landlord as part of that conveyance at that property.
The Florida Mobile Home Act
The Goss family’s suggested language, which is based
mainly on Chapter 723 of the Florida Statutes, is substantially different from
staff’s recommended language. Specifically, the Goss family argues that Chapter
723, also known as the Florida Mobile Home Act, labels mobile home subdivision
owners as landlords and labels owners of lots in that subdivision as tenants. Therefore,
the Goss family argues the Commission should likewise recognize mobile home
subdivision owners as landlords in interpreting the exemption in Section
367.022(5), F.S. FMHA echoed this argument in its post-workshop comments, but
it did not suggest specific rule language.
The Goss family supports this argument with the example of
Palm Tree Acres, which is both a mobile home park and a mobile home subdivision
regulated under Chapter 723. The Goss family argues that Palm Tree Acres is a
landlord in its capacity as a mobile home subdivision because even though it
does not rent the lot owners their lots, it is renting the lot owners access to
and use of common amenities in the park/subdivision. This argument trades on a
conflation of two terms of property law: license and lease.
A tenant under a lease is one who has been given a
possession of land which is “exclusive even of the landlord except as the lease
permits his entry, and saving always the landlord’s right to enter to demand
rent or to make repairs.” A licensee is one who has a “mere permission to use
land, dominion over it remaining in the owner and no interest in or exclusive
possession of it being given” to the occupant.
Turner v. Fla. State
Fair Auth., 974 So. 2d 470, 473–74 (Fla. 2d DCA 2008) (quoting Seabloom v. Krier, 219 Minn. 362, 18
N.W.2d 88, 91 (1945)); License,
Black’s Law Dictionary (11th ed. 2019). Staff believes that by granting lot
owners access to and use of a park’s
common areas, a mobile home subdivision owner creates a licensor-licensee
relationship rather than a landlord-tenant relationship. See Napoleon v. Glass, 229 So. 2d 883, 885 (Fla. 3d DCA
1969).
To conform the Commission’s definitions of landlord and
tenant to the Goss family’s interpretation of Chapter 723, F.S., the Goss
family’s suggested rule language, unlike staff’s recommended language, does not
include the phrase “at the property.” Instead, the Goss family suggests that the
definitions require that the provision water and wastewater services be part of
the conveyance to the lot owners of access to or use of other property and
services.
However, the landlord/tenant exemption makes little sense
if the water and wastewater services are not provided at the leased property.
In Section 367.011(3), F.S., the Legislature specifically declared that
Commission regulation of water and wastewater utilities is predicated on
concerns about public health, safety, and welfare. Such concerns arise in the
context of public utilities because the service is essential and the customer
only has one choice of provider at any given location. But a tenant purchasing
water and wastewater services from his or her landlord for delivery at the real
property conveyed by the parties’ lease has the ability to switch utilities by
moving at the end of the lease. Landowners lack this ability because to move
they would have to sell their property, presumably at a significant loss if the
sole utility provides subpar services, charges excessive rates, or disconnects
service to the property.
Additionally, staff disagrees with the broader arguments
of the Goss family and FMHA that Chapter 723 defines mobile home subdivision
owners as landlords and the owners of lots mobile home subdivisions as tenants.
Chapter 723 is aimed primarily at regulating the relationship between a mobile
home park owner and a mobile home owner who rents a lot from the park. See § 723.004, F.S. (finding there
are factors unique to the relationship between a mobile home park owner and one
who rents a lot from a mobile home park owner). Given the plain and ordinary
definition of a landlord-tenant relationship is based on the conveyance of a
possessory interest in real property, it should be no surprise that those terms
would appear in statutes primarily regulating a relationship in which one
person—a mobile home park owner—conveys a possessory interest in real property
to another—a mobile home owner. The Goss family appears to argue that because
Section 723.002(2), F.S., applies 8 of Chapter 723’s almost 70 sections to
mobile home subdivision owners and owners of lots in mobile home subdivisions,
that somehow a landlord-tenant relationship is created between the subdivision
owner and the lot owner. However, none of those 8 sections create a landlord-tenant
relationship between mobile home subdivision owners and lot owners.
It is telling that the Goss family relies mainly on
Section 723.058(3), F.S., to support its argument that Chapter 723 labels
mobile home subdivision owners as landlords. That section provides that
No mobile home owner, owner of a lot in a mobile home
subdivision, or purchaser of an existing mobile home located within a park or
mobile home subdivision, as a condition of tenancy, or to qualify for tenancy,
or to obtain approval for tenancy in a mobile home park or mobile home
subdivision, shall be required to enter into, extend, or renew a resale
agreement.
At best, Section 723.058(3), F.S., uses the terms “lot
owner” and “tenancy” in the same sentence. However, nowhere does Section
723.058(3), F.S., define a lot owner as a tenant or a subdivision owner as a
landlord. The term “tenancy” is used, not as a term of art, but colloquially as
a term to describe one’s ability to take up residence in the park/subdivision. In
short, the section prohibits a mobile home park or subdivision owner from
conditioning one’s ability to reside in the park or subdivision on the
execution of a resale agreement. Using Section 723.058(3), F.S., to imply that
the entire chapter is intended to create a landlord-tenant relationship between
a mobile home subdivision owner and a lot owner is not supported by the law.
Additionally, staff believes it is outside the scope of
the Commission’s statutory authority to interpret Section 367.022(5), F.S., in
a way that goes beyond the plain and ordinary meaning of the terms used by the Legislature
in that section. Nothing in Chapters 723 or 367 indicate that the Commission
should refer to Chapter 723 in defining terms used in Section 367.022(5), F.S. Moreover,
as discussed above, the Commission has consistently used the plain and ordinary
meaning of the terms “landlord” and “tenant” when applying Section 367.022(5),
F.S.
The Cost of Regulation
The Goss family and FMHA’s second argument is that
regulating mobile home subdivisions as utilities will saddle the subdivision’s
residents with much higher costs for water and wastewater services; therefore,
the Commission should interpret “landlord” and “tenant” in a way that avoids
imposing these costs. In a May 4, 2018 letter to the Commission’s General
Counsel, FMHA argued that staff’s interpretation of Section 367.022(5), F.S.,
would subject “many of its member[]” parks and subdivisions to costly
regulation. But in its post-workshop comments, FMHA stated that it could
identify few parks and subdivisions, if any, that would be subject to
regulation under staff’s recommended rule.
The Goss family again turned to Palm Tree Acres as an
example of these increased costs. It presented analysis showing that Palm Tree
Acres’ 19 lot owners would pay approximately $469 per month for water and
wastewater services if Palm Tree Acres was regulated by the Commission.
However, it appears that the analysis allocates regulatory costs to only those
19 customers, even though the utility currently has 244 customers. If the
analysis had properly allocated those costs to all 244 customers, the monthly
cost for those 19 customers would likely be considerably lower.
Staff has considered the stakeholder comments regarding
the alleged increased costs of regulation, but finds them unpersuasive. First,
as explained above, staff’s recommended language is consistent with previous
Commission practice. The scope of the Commission’s jurisdiction remains
unchanged, which means the rule would not bring any entities under the
Commission’s jurisdiction that were not previously subject to its jurisdiction.
Second, as explained above, the Goss family’s suggested
changes are not consistent with the plain and ordinary meaning of the terms
landlord and tenant. Staff recommends definitions that hew to the plain and
ordinary definitions of those words as found in Black’s Law Dictionary for two
reasons. One, Florida courts have developed well-established law guiding
statutory interpretation that is based on using the plain and ordinary meaning
of words as discerned by dictionaries. W.
Fla. Reg’l Med. Ctr., Inc. v. See, 79 So. 3d 1, 8–9 (Fla. 2012). Two, the
Commission’s interpretation of statutes is no longer afforded deference when
reviewed by courts. Art. V, § 21, Fla. Const.; Citizens v. Brown, 269 So. 3d 498, 504 (Fla. 2019). Therefore, if a
court was asked to review the Commission’s interpretation of Section
367.022(5), F.S., as embodied in Rule 25-30.0115, F.A.C., the validity of the
Commission’s interpretation would depend almost completely on whether its
interpretation conformed to the well-established rules of statutory
interpretation used by courts. See W.
Fla. Reg’l Med. Ctr., 79 So. 3d at 8–9.
The Commission’s rules are designed to implement the
purposes of statutes. Many of those statutes contain broad policy goals that afford
the Commission discretion in crafting programs to achieve those purposes. But
Section 367.022, F.S., is different. It prescribes the Commission’s
jurisdiction in clear and definite terms. It does not give the Commission
discretion to decide the limits of its jurisdiction. When the terms of a
statute are plain and unambiguous, changing that plain meaning is solely within
the purview of the Legislature.
Written or Oral Agreements
OPC largely agreed with staff’s proposed rule language. It
did, however, suggest the following change: “(1) ‘landlord’ is the party who
conveys a possessory interest in real property to a tenant by way of agreement,
either written or oral, and who provides water and/or wastewater service to
the tenant at that property . . . .”
OPC’s concern is that, in the absence of its suggested
addition, a landlord-tenant relationship could be limited based on whether the lease
is written or oral. Staff recommends the Commission determine that this
clarification is unnecessary. A lease of real property can be made orally or
in writing, and the current language incorporates both.
Minor Violation Rules Certification
Pursuant to Section 120.695, F.S., beginning July 1, 2017,
for each rule filed for adoption, the agency head must certify whether any part
of the rule is designated as a rule the violation of which would be a minor
violation. Under Section 120.695(2)(b), F.S., a violation of a rule is minor if
it does not result in economic or physical harm to a person or adversely affect
the public health, safety, or welfare or create a significant threat of such
harm. Rule 25-30.0115, F.A.C., will be a minor violation rule. The rule is
purely informational; therefore, a violation will not result in economic or
physical harm to a person or an adverse effect on the public health, safety, or
welfare or create a significant threat of such harm. Therefore, for the
purposes of filing the rule for adoption with the Department of State, staff
recommends that the Commission certify proposed Rule 25-30.0115, F.A.C., as a
minor violation rule.
Statement of Estimated Regulatory Costs
Pursuant to Section 120.54(3)(b)1.,
F.S., agencies are encouraged to prepare a statement of estimated regulatory
costs (SERC) before the adoption, amendment, or repeal of any rule. A SERC was
prepared for this rulemaking and is appended as Attachment B. As required by
Section 120.541(2)(a)1., F.S., the SERC analysis includes whether the rule is likely
to have an adverse impact on economic growth, private sector job creation or
employment, or private sector investment in excess of $1 million in the
aggregate within 5 years after implementation. The adoption of this rule will
not cause any of the impact/cost criteria to be exceeded.
The SERC
concludes that the rule will not likely increase, directly or indirectly,
regulatory costs in excess of $200,000 in the aggregate in Florida within 1
year after implementation. Further, the SERC concludes that the rule will not
likely increase regulatory costs, including any transactional costs or have an
adverse impact on business competitiveness, productivity, or innovation in
excess of $1 million in the aggregate within 5 years of implementation. Thus,
the rule does not require legislative ratification, pursuant to Section
120.541(3), F.S.
In addition, the SERC states that the rule would have no
impact on small businesses, would have no implementation or enforcement cost on
the Commission or any other state and local government entity, and would have
no impact on small cities or small counties. The SERC states that there will be
no transactional costs likely to be incurred by individuals and entities
required to comply with the requirements.
Conclusion
The Commission should propose the adoption of Rule
25-30.0115, F.A.C., as set forth in Attachment A. Additionally, the Commission
should certify the rule as a minor violation rule.
Issue 2:
Should this docket be closed?
Recommendation:
Yes. If no requests for hearing or comments are
filed, the rule should be filed with the Department of State, and the docket
should be closed. (King)
Staff Analysis:
If no requests for hearing or comments are filed,
the rule should be filed with the Department of State, and the docket should be
closed.
