Case Background
Citra Highlands
Water System, LLC (Citra or
Utility) is located in Marion County, Florida. Based on its application, the Utility’s
proposed service territory consists of 217 lots in the Citra Highlands subdivision
(Citra Highlands) in Marion County (County). The Utility provides water service
to approximately 56 residential customers, consisting of single family homes
and mobile homes. There are 15 mobile homes in the proposed service territory
currently on private wells. The water system was put into service in the 1980s.
The owner of
Citra, Mr. Marshall Hash, first became involved with the Citra Highlands water
system in 2007. To the best of Mr. Hash’s knowledge, the following is the history
of the system prior to his involvement. The original developer installed the
water system to serve the developed lots (mobile homes) that wished to connect
to the system. Only some of the lots were connected to the system; the other
developed lots were served by private wells. A homeowners association (HOA) was
established to maintain the streets (only one of which was paved) and
covenants. Water service was included in the HOA fees.
Around 2002, a
new developer purchased lots at the other end of the subdivision and began
building homes, paving the streets, and installing utility connections. Again,
only some of the houses connected to the water system. By 2007, the original
HOA was in the process of dissolving amid various disagreements among the
residents. Of particular concern was that some residents who were connected to
the water system were not paying HOA fees, but were still receiving water
service. The new developer assumed control of the HOA, but did not want to
remain in control of the water system. In April 2008, Mr. Hash purchased the
water plant, the property on which the plant is located, and the water system assets
from the builder. He agreed to bill the water customers separately at rates set
by the HOA. Operation and maintenance (O&M) of the system was provided by a
third-party O&M company.
In 2011, the
O&M provider went out of business, and Mr. Hash took over that function as
well. Throughout his involvement with the water system, new homes were built
and connections were added to the water system.
On July 30,
2020, the Commission received a billing complaint from a Citra Highlands
resident who is a Citra customer. During
its investigation of the complaint, staff determined that Citra did not have a
certificate of authorization to provide water service and did not appear to be
exempt from the Commission’s jurisdiction pursuant to Section 367.022, Florida
Statutes (F.S.). Therefore, on October 30, 2020, Citra filed its application
for an original water certificate and for approval of initial rates and
charges. In its application, the Utility also requested approval for a pass-through
increase for regulatory assessment fees (RAFs). Staff found the application to be deficient and issued a deficiency
letter on November 30, 2020. The Utility cured the deficiencies on February 4,
2021.
Pursuant to Section 367.031, F.S., the
Commission shall grant or deny an application for a certificate of
authorization within 90 days after the official filing date of the completed
application. The application was deemed complete on February 4, 2021, which is
considered the official filing date. Therefore, consistent with Section
367.031, F.S., the Commission should vote on the instant application by May 5,
2021.
This recommendation addresses the
application for an original water certificate and the appropriate rates and
charges for the Utility. The Commission has jurisdiction pursuant to Sections
367.031 and 367.045, F.S.
Discussion
of Issues
Issue 1:
Should the application for a water certificate by Citra be approved?
Recommendation:
Yes.
Citra should be granted Certificate No. 679-W to serve the territory described in Attachment A, which
is appended to this recommendation, effective the date of the Commission’s
vote. The resultant order should serve as Citra’s water certificate and it
should be retained by the Utility. (M. Watts, Blocker)
Staff Analysis:
On
October 30, 2020, Citra filed its application for an original water certificate
in Marion County. Upon review, staff determined the original filing was
deficient and issued a deficiency letter on November 30, 2020. The Utility
cured the deficiencies on February 4, 2021, which is considered the official
filing date for the application. The Utility’s application is in compliance
with the governing statutes, Sections 367.031 and 367.045, F.S.
Notice
On February
4, 2021, Citra filed proof of compliance with the noticing provisions set forth
in Rule 25-30.030, Florida Administrative Code (F.A.C.). Rule 25-30.030(4)(h),
F.A.C., requires that the notice must contain a statement that objections must
be filed with the Commission no later than 30 days after the last date that the
notice was mailed or published. On January 7, 2021, the Utility mailed the
notice to its customers and landowners in the proposed service territory, as
well as to the governmental entities and utilities required by Rule
25-30.030(2), F.A.C. The notice was also published as required by Rule
25-30.030(5)(c), F.A.C. Therefore, the protest period expired on February 10,
2021. The Commission received two responses to the notice, one from Marion
County and one from a customer of the Utility.
On February
5, 2021, Marion County filed its response to the notice. In its response, the
County states that from its review of the statements made in the Utility’s
application, it believes that, as of 2008, the public water system was subject
to the Marion County Code of Ordinances (Code). The County explains that the
Code requires that a permit be obtained from the County for a public water
system. According to the County’s records, Citra never applied for or obtained
the required permit.
The County
acknowledges that upon issuance of a certificate by the Commission, Citra will
be exempt from the County’s regulation. However, the County requests that the
Commission require the Utility to obtain a permit from the County as a
pre-condition to granting Citra’s application for an original certificate. Of
particular interest to the County is obtaining and reviewing the system
information, including engineering drawings that would be required in a permit
application. With this information, the County would be in a better position to
serve should the system be abandoned at some point in the future and the County
appointed as receiver.
On March 3,
2021, staff met with Marion County Utilities staff via teleconference. The
County affirmed that it does not object to the issuance of a water certificate
to Citra, but merely wants the Commission to make obtaining a permit from the
County a pre-condition of granting a certificate of authorization. After
discussion with Commission staff regarding its rules, statutes, authority,
procedures and precedents, the County agreed that it should pursue enforcement
of its Code separately from the proceedings in the instant docket.
On February
17, 2021, seven days after the expiration of the protest period, the Commission
received a response to the notice from a customer of the Utility. The customer
did not express an objection to the application for a certificate of
authorization, but rather an objection to a rate increase, which is not the
subject of the instant application. In early March, the Utility clarified this
distinction with the customer.
Land
Ownership and Service Territory
Citra
provided adequate service territory and system maps and a territory description
as required by Rule 25-30.034(1)(k), F.A.C. The legal description of the
service territory is appended to this recommendation as Attachment A. The application
contains warranty deeds for the land where the water treatment facilities are
located pursuant to Rule 25-30.034(1)(m), F.A.C.
Financial
and Technical Ability
Pursuant to
Rule 25-30.034(1)(i) and (j), F.A.C., the application contains statements describing
the technical and financial ability of the Utility to provide service to the
proposed service area. Citra’s application states that its parent company, Hash
Utilities, Inc. (Hash), acquired its first water system in 2004 and currently
owns ten public water systems in Citrus, Levy, and Marion Counties. The water
system in Levy County is regulated by the Commission.
Hash provides all meter reading, billing, collection, operation and maintenance,
sampling, and reporting to all regulatory agencies for all of its systems.
Chemical testing is done by Flowers Laboratory, and any engineering services
required are provided by a licensed professional engineer. Hash is a member of
the Florida Rural Water Association and the Sunshine 811 (“call before you
dig”) system. Also, the owners of Hash hold a Class “C” and “D” water
operator’s license, and a Class “D” wastewater operator license. Pursuant
to Rule 25-30.034(1)(i), F.A.C., the Utility provided statements describing its
financial and technical ability to provide service.[3]
Staff has reviewed the financial ability of the current owner and believes the
owner has documented adequate resources to support the Utility’s water
operations. Based on the above, Citra
has demonstrated the technical and financial ability to provide service to the existing service
territory.
Conclusion
Staff recommends that it is in the public interest to
grant Citra Certificate No. 679-W to serve the territory described in
Attachment A, effective the date of the Commission’s vote. The resultant order
should serve as Citra’s water certificate
and it should be retained by the Utility.
Issue 2:
What rates and charges should be approved for Citra?
Recommendation:
With the exception of the non-sufficient funds (NSF)
charge addressed in Issue 3, the Utility’s rates and charges that were in
effect at the time of its application for an original certificate, shown on
Schedule No. 1, should be approved. The rates and charges should be effective
for services rendered on or after the stamped approval date on the tariff pursuant
to Rule 25-30.475, F.A.C. Citra should be required to bill the approved rates
and charges until authorized to change them by this Commission in a subsequent
proceeding. (Sibley)
Staff Analysis:
Staff recommends that, with
the exception of the NSF charge addressed in Issue 3, the Utility’s rates and
charges that were in effect at the time of its application for an original
certificate, shown on Schedule No. 1, should be approved. The rates in the
schedule are monthly. However, the Utility bills on a bi-monthly basis. The
rates and charges should be effective for services rendered on or after the
stamped approval date on the tariff pursuant to Rule 25-30.475, F.A.C. Citra
should be required to bill the approved rates and charges until authorized to
change them by this Commission in a subsequent proceeding.
Issue 3:
Should Citra’s NSF charge be revised?
Recommendation:
Yes. The Utility’s NSF charge should be revised to reflect
the NSF charges currently set forth in Section 68.065, F.S. The NSF charges
should be effective on or after the stamped approval date on the tariff sheets
pursuant to Rule 25-30.475(1), F.A.C. Furthermore, the charges should not be
implemented until staff has approved the proposed customer notice and the
notice has been received by customers. The Utility should provide proof of the
date the notice was given within 10 days of the date of the notice. (Sibley)
Staff Analysis:
According to the Utility’s application, its existing NSF
charge is $30. Section 367.091, F.S., requires rates, charges, and customer
service policies to be approved by the Commission. The Commission has authority
to establish, increase, or change a rate or charge. Staff believes that Citra
should be authorized to collect NSF charges consistent with Section 68.065,
F.S., which allows for the assessment of charges for the collection of
worthless checks, drafts, or orders of payment. As currently set forth in
Section 68.065(2), F.S., the following NSF charges may be assessed:
1. $25, if the face value does not exceed
$50,
2. $30, if the face value exceeds $50 but
does not exceed $300,
3. $40, if the face value exceeds $300, or
4. five percent of the face amount of the
check, whichever is greater.
Approval of NSF charges is consistent with prior
Commission decisions.[4]
Furthermore, NSF charges place the cost on the cost causer, rather than
requiring that the costs associated with the return of the NSF checks be spread
across the general body of ratepayers. Staff recommends the Utility’s NSF
charge should be revised to reflect the NSF charges currently set forth in
Section 68.065, F.S. The NSF charges should be effective on or after the
stamped approval date on the tariff sheets pursuant to Rule 25-30.475(1),
F.A.C. Furthermore, the charges should not be implemented until staff has
approved the proposed customer notice and the notice has been received by
customers. The Utility should provide proof of the date the notice was given
within 10 days of the date of the notice.
Issue 4:
Should this docket be closed?
Recommendation:
No. If no person whose
substantial interests are affected by the proposed agency action on Issue 3 files
a protest within 21 days of the issuance of the order, a consummating order
should be issued. The docket should remain open for staff’s verification that
the revised tariff sheets and customer notice have been filed by the Utility
and approved by staff. Once these actions are complete, this docket should be
closed administratively. (Stiller)
Staff Analysis:
If no person whose substantial interests are
affected by the proposed agency action on Issue 3 files a protest within 21
days of the issuance of the order, a consummating order should be issued. The
docket should remain open for staff’s verification that the revised tariff
sheets and customer notice have been filed by the Utility and approved by
staff. Once these actions are complete, this docket should be closed
administratively.
