Case Background
On July 1, 2026,
Avalon Park Utilities, LLC (Avalon) filed an Application for Original
Certificate of Authorization for Water and Wastewater Service in Volusia County
(Application). Simultaneous with this
filing, Avalon filed a Motion to Bifurcate and for Temporary Rule Waiver
(Motion). The proposed service area consists of approximately 2,700 acres and
is located within the city limits of the City of Daytona Beach. The property
will be developed as a mixed-use development and is initially anticipated to contain
8,198 residential Equivalent Residential Connections (ERCs) and 715 commercial
ERCs. It is anticipated that the water, wastewater, and reuse/irrigation
services will be needed on or before August 31, 2028.
The property proposed to be served by Avalon is owned and
controlled by a limited liability company created on May 18, 2026. The sole shareholder of Avalon is Avalon Park
Group, a diversified family of companies engaged in master-plan community
development, technology, health care, and industrials.
In its Motion, Avalon has requested a temporary waiver of
portions of Rule 25-30.033, Florida Administrative Code (F.A.C.), that deal
with setting initial rates and providing certain information about the
facilities necessary to provide water and wastewater service to the proposed
service area. Avalon has also requested
that the initial rates and charges for water and wastewater service be
established after the certificates of authorization are granted, a process
referred to as bifurcation. The Commission
has 90 days to grant or deny the rule waiver pursuant to Section 120.542(8),
Florida Statutes (F.S.). Thus, the Commission has until September 29, 2026, to
rule on the requests for rule waiver.
On July 30,
2026, Avalon’s initial application was found to be deficient. Responses to the
identified deficiencies are due on or before August 28, 2026. On August 10,
2026, the City of Ormond Beach timely filed its comments objecting to Avalon’s
request for rule waivers and application for a certificate to provide water and
wastewater service in Volusia County.
This
recommendation is limited to the question of whether the requested rule waivers
should be granted. The question of whether certificates for water and
wastewater services should be granted will be determined at a later date.
The Commission
has jurisdiction pursuant to Sections 367.031, 367.045, 367.081, and 120.542,
F.S.
Discussion
of Issues
Issue 1:
Should Avalon Park Utilities LLC’s Motion for
Temporary Rule Waiver be granted?
Recommendation:
Avalon’s Motion for Temporary Rule Waiver should be
granted in part and denied in part.
Avalon’s request for temporarily waiving compliance with Rule
25-30.033(1)(j)2 and Rules 25-30.033(1)(m) through (1)(o), F.A.C., should be
denied. Avalon’s request for temporary waiver of Rules 25-30.033(1)(p) and
25-30.033(1)(q), F.A.C, should be granted.
(Brownless)
Staff Analysis:
I. Legal
Standard
Original
Certificates
Under Section 367.031, F.S., a utility
must obtain a certificate of authorization from the Commission prior to being
issued a permit by the Department of Environmental Protection for the
construction of a new water or wastewater facility or prior to being issued a
consumptive use or drilling permit by a water management district. Under
Section 367.045(1), F.S., a utility applying for an initial certificate of
authorization must provide information supporting the ability of the applicant
to provide service, the area and facilities involved, the need for service in
the area involved, and the existence or nonexistence of service from other
sources in or near the requested service area. The utility is also required to
file schedules showing all rates, classifications, and charges for the service
it proposes to provide. As discussed in greater detail below, Rule 25-30.033,
F.A.C., implements these statutes, requiring specific information supporting
the request for an original certificate and establishment of initial rates and
charges.
Rule
Waivers and Variances
Section
120.542, F.S., authorizes the Commission to grant variances or waivers to the
requirements of Commission rules where the person subject to said rules has
demonstrated that the underlying purpose of the statute has been or will be
achieved by some other means, and that strict application of the rules would
cause the person substantial hardship or would violate principles of fairness.
“Substantial hardship” as defined in this section means demonstrated economic,
technological, legal, or other hardship.
II. Avalon’s Motion for Temporary Rule Waiver
In its Motion Avalon has requested that it be allowed to
temporarily waive providing the documentation required by Rules
25-30.033(1)(j)2 and 25-30.033(1)(m) through (1)(q), F.A.C., until its
development plan is finalized in the next four to six months.
The rules that Avalon seeks to temporarily waive can be
divided into two groups: those concerning the facilities necessary to provide
the requested water and wastewater service, Rules 25-30.033(1)(j)2 and
25-30.033(1)(m) through (1)(o), F.A.C.,
and those related to setting initial rates and charges, Rules 25-30.033(1)(p)
and 25-30.033(1)(q), F.A.C.
Avalon argues that the information requested about the
proposed facilities required by Rules 25-30.033(1)(j)2 and 25-30.033(1)(m)
through (1)(o), F.A.C., cannot be developed before final plans for construction
are approved by DEP. Since Section
367.031, F.S., requires certificates from the Commission before DEP will issue
construction permits, Avalon argues that this inconsistency between the two
statutes requires a temporary waiver of these facilities rules until its plans
can be finalized. [Motion at s. 3]
Additionally, Avalon states that it will not have a “clear
picture” of what land will be needed and what treatment facilities will be
needed until “decisions are made about the appropriate method for obtaining
treated water and wastewater.” [Motion
at s. 3]
Avalon
states that at the time of filing it “knows of no plans by another utility to
timely and economically serve the proposed territory in Volusia County.”
[Motion at s. 20] Avalon further states that it has entered into a Planned
Development Agreement (PDA) with the City of Daytona Beach which states that
this development as proposed is consistent with the City’s Comprehensive Plan.
[Motion at s. 17] It is Avalon’s position that the PDA allows Avalon the
“options both to obtain bulk service, and the construction of its own source
and treatment facilities to provide service to the proposed territory.” [Motion
at s. 23] Avalon estimates that the information required by the rules of which
treatment option it will pursue will be available in the next four to six
months or by no later than February 2027. [Motion at s. 4]
Based on the
above, the substantial hardship Avalon alleges is its inability at this time to
develop a water and wastewater system plan. Without a plan that identifies the
facilities that will be built, the financial and land use information requested
cannot be provided. Without the financial information requested, initial rates
cannot be calculated.
Avalon
states that it can provide the financial information in January 2027, which is
approximately 19 months before initial water, wastewater and reuse/irrigation
services will be provided on August 31, 2028. [Motion at s. 5] That being the
case, Avalon argues that bifurcation of the certification from initial rate
setting in this instance does not harm the ratepayers and is consistent with
past Commission practice.
III. Response by City of Ormond Beach
The City of Ormond Beach (Ormond)
in its August 10, 2026, letter has objected to Avalon’s request to waive these
rules as well as Avalon’s request for issuance of certificates for water and
wastewater services. Ormond argues that it has the infrastructure and capacity
to provide bulk water and wastewater services for the vast majority of Avalon’s
service area. [Letter at page 4] Further, Ormond states that it has engaged in
the design, permitting, and construction of significant utility infrastructure
to meet the present and future phases of the Avalon project. [Letter at pages 5-6]
Additionally,
Ormond argues that it has a Wholesale Water and Wastewater Service Agreement
and Second Amended Water and Sewer Service Area Agreement with Daytona Beach to
provide bulk potable water and wastewater treatment service to Daytona Beach
for use within Ormond’s Wholesale Service Area. [Letter at page 5] Phase I of
the Avalon project is primarily within Ormond’s service area. Therefore, Ormond argues that Avalon must obtain
Ormond’s consent to operate a water and wastewater utility pursuant to these
interlocal agreements. Id. Ormond has not given its consent at this
time.
Finally,
Ormond states that there is both a state and federal lawsuit
involving the interpretation and validity of the Wholesale Water and Wastewater
Service Agreement and Second Amended Water and Sewer Service Area Agreement
relevant to this case. Interpretation of those agreements will determine what
type of water and wastewater facilities Avalon can build in its service area.
Based on the above, staff concludes that Ormond is arguing that the substantial
hardship raised by Avalon to support the rule waivers is easily curable and a
problem of Avalon’s own making.
IV. Analysis
Purpose of the Underlying Statutes
The purpose
of Section 367.031 and 367.045, F.S., is to ensure that a utility seeking an
original certificate has the financial and technical ability to provide
service, that there is a need for service in the proposed service area, to
determine the existence or nonexistence of service from other sources in
proximity to the proposed service area, and to establish initial rates and
charges.
Waiver of Rules Requiring
Facilities Information
Avalon has
stated that it will have the information necessary to provide the detailed
financial and technical information required by Rules 25-30.033(1)(j)2 and
25-30.033(1)(m) through (1)(o), F.A.C., within four to six months or no later
than February 2027. The facilities and land necessary to provide a distribution
system for water service and/or collection system for wastewater service are
significantly less expensive than providing those facilities in addition to
constructing water and wastewater treatment facilities. Given the fact that
there are two outstanding court cases involving the validity and/or
applicability of the Wholesale Water and Wastewater Service Agreement and
Second Amended Water and Sewer Service Area Agreement it seems improbable that
Avalon will be able to provide a final, viable plan for service to the proposed
service area by February 2027. Without
knowing if wholesale water and wastewater treatment must be purchased by Avalon
from Ormond to serve the project, the information required by the
facility-related rules can’t be provided.
Without having information regarding the system map, a description of
the capacities of the proposed lines and treatment facilities, or proof of
continued access to the land,
there is a lack of support for Avalon’s application. In other words, it appears
less that a rule waiver is needed, than Avalon’s application may be premature.
Since the
information for which waiver is requested is an essential part of deciding
whether a certificate application should be granted, staff does not believe
Avalon has demonstrated that the underlying purpose of Sections 367.031 and
367.045, F.S., will be met by temporarily waiving Rules 25-30.033(1)(j)2 and
25-30.033(1)(m) through (1)(q), F.A.C.
Substantial
Hardship
Waiver
of Rules Requiring Facilities Information
By asking
for a waiver of Rules 25-30.033(1)(j)2 and 25-30.033(1)(m) through (1)(q),
F.A.C., Avalon is essentially asking the Commission to continue this
certification case indefinitely until it can provide the information needed to
support its request for an original certificate. Due to the litigation discussed above, where
the bulk provider of water and wastewater service is to be determined, Avalon
cannot control the outcome of the litigation, nor can it predict the timeframe
in which the litigation will be resolved.
Unlike the waiver cases cited by Avalon, this is not simply a case where
the utility does not have the blessing of DEP for its proposed facilities, this
is an instance in which Avalon does not even know what facilities it wishes to,
or can legally build. Further, since Avalon does not anticipate providing
service to its proposed service area before August 31, 2028, there is more than
sufficient time for Avalon to resolve the Ormond/Daytona Beach service issues
before pursuing certification.
In support
of its request to waive these rules, Avalon relies on three decisions where the
Commission bifurcated application for an original certificate from setting
initial rates: North Sumter Utility Company, LLC, issued February 11, 2002;
Central Sumter Utility Company, LLC, issued August 18, 2005; and South
Sumter Utility Company, LLC, issued February 24, 2017. These proceedings are not applicable here. In
each of these cases the utility provided detailed information regarding the type
of water and wastewater systems that it proposed to construct. Also, in each there were no objections to
certification. Here Ormond Beach has objected and stated that it can, and will,
provide water and wastewater services to the proposed Avalon Phase I
development.
For these
reasons, staff recommends that Avalon’s request to waive Rules 25-30.033(1)(j)2
and 25-30.033(1)(m) through (1)(o), F.A.C., requiring facilities information
should be denied.
Waiver
of Rules Relating to Initial Rates and Charges
With regard
to waiving Rules 25-30.033(1)(p) and (q), F.A.C., delaying establishing rates
until the certificate is issued does not affect the Commission’s ability to
determine whether Avalon has the technical and financial ability to provide
service or whether there is a need for service in the proposed territory.
Therefore, staff believes that the requirements of Section 367.045, F.S., can
be met and the public interest can be served by temporarily waiving compliance
with these rules. Therefore, staff recommends that Rules 25-30.033(1)(p) and
(q), F.A.C., be temporarily waived and that the certificate and rate making
proceedings be bifurcated.
Conclusion
For the reasons stated above, Avalon’s Motion should be
granted in part and denied in part.
Staff recommends that Avalon’s request to temporarily waive compliance
with Rules 25-30.033(1)(j)2, and 25-30.033(1)(m) through (1)(o), F.A.C., should
be denied and its request to temporarily waive Rules 25-30.033(1)(p) and (q),
F.A.C., should be granted.
Issue 2:
Should this docket be closed?
Recommendation:
No. This
docket should remain open pending resolution of whether water and wastewater
certificates of service should be granted and the setting of initial rates and
charges. (Brownless)
Staff Analysis:
No. This
docket should remain open pending resolution of whether water and wastewater
certificates of service should be granted and the setting of initial rates and
charges.
