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Agenda 09/22/2015 Item #16A20 9/22/2015 16.A.20. EXECUTIVE SUMMARY Recommendation to adopt a resolution decreasing the regulatory assessment fee from three percent to two percent of gross revenues for nonexempt privately owned water and wastewater systems subject to local regulation, effective December 1, 2015, as approved by the Board of County Commissioners in the fiscal year 2016 budget and as approved by the Collier County Water and Wastewater Authority. OBJECTIVE: To reduce the existing Regulatory Assessment Fee ("RAF") of private water and wastewater utilities subject to local regulation from 3%to 2%,effective December 1, 2015. CONSIDERATIONS: Utilities regulated by Collier County include Ave Maria Utility Company, North Marco Utility, Orange Tree Utility Company, and the Florida Governmental Utility Authority,pursuant to an Interlocal Agreement. Fee History—With the recommencement of Collier County regulating privately held and investor owned water and wastewater utilities in 1996, the County initially collected regulatory assessment fees from utilities at the rate of 41/2% of each utility's gross revenues—the same rate charged by the Florida Public Service Commission during the period of 1986 through 1995. On October 1, 1997, the Board of County Commissioners(Board) decreased the fee from 41/2%to 3%, on October 1, 1998, the Board decreased the fee from 3%to 11/2%, on October 1, 2003, the Board increased the fee from 11/2 %to 2%, and on March 1, 2009, the Board increased the fee from 2% to 3%. Since the Board assumed the regulatory oversight of these utilities in 1996, reductions of the original fee charged by the Florida Public Service Commission (PSC) have resulted a savings of$5.7 million to consumers over the last eighteen years (FY98 through FY15) while allowing the County to exercise its home rule authority by offering local regulatory representation and rate oversight. County regulatory revenues generated by these fees have historically paralleled staff expenditures related to the regulatory process, while maintaining sufficient reserves to fund specialized legal, engineering and rate consultants. During the past several years, revenues have increased while costs have remained steady, resulting in an increase in the reserve balance from approximately $500,000 in FY09 to a budgeted $985,800 in FY16. FY16 Budget — On May 13, 2015, the proposed FY16 regulatory budget (Fund 669) and staffs recommendation to decrease the regulatory fee was presented to the Collier County Water & Wastewater Authority. The proposed decrease of the RAF from 3% to 2% would allow for increased savings to privately held utility customers and equates to a full 2.5% points below the PSC`s 41/2%. The Authority unanimously recommended Board approval of the decrease in the regulatory fee. The decrease in the RAF to 2% would result in a decrease in annual revenues of approximately $100,000. To offset the loss in revenue, one full-time staff position has been moved out of the Fund (669) in FY16, reducing the fully weighted payroll costs by $175,000. The movement of the FTE out of the fund would still provide adequate staff to support the Utility Regulation function. It is desirable to maintain the integrity of the Reserves to prepare for expected rate cases, some requiring the hiring of outside rate consultants and legal staff to handle additional duties. With the strong reserve level coupled with the lowering of payroll costs, the Fund (669) is sufficiently funded to handle a reduction of the RAF from 3% to 2%. This recommended decrease requires a public hearing before the Packet Page-983- 9/22/2015 16.A.20. Board sixty days prior to the effective date of the adjustment of the fee, pursuant to Ordinance No. 96-6, as amended. FISCAL IMPACT: County regulatory oversight of privately held and investor owned water and wastewater utilities has no impact on the General Fund. The decrease of the regulatory assessment fee from 3% to 2% is expected to decrease annual revenues to the Utility Regulation Trust Fund (669) by approximately $100,000, but will be offset by moving one full-time position to a different fund. LEGAL CONSIDERATIONS: This item is approved as to form and legality, and requires majority vote for Board approval.—SRT GROWTH MANAGEMENT IMPACT: There are no growth management impacts associated with this Executive Summary. RECOMMENDATION: That the Board adopts the accompanying resolution to decrease the Regulatory Assessment Fee from 3% to 2%, effective December 1, 2015, thereby authorizing the Collier County Water and Wastewater Authority to adjust water and/or wastewater rates of regulated utilities, as appropriate. Prepared By: Kenneth Kovensky,Director, Operations &Regulatory Management Division, Growth Management Department Attachment: Resolution Packet Page -984- 9/22/2015 16.A.20. COLLIER COUNTY Board of County Commissioners Item Number: 16.16.A.16.A.20. Item Summary: Recommendation to adopt a resolution decreasing the regulatory assessment fee from three percent to two percent of gross revenues for nonexempt privately owned water and wastewater systems subject to local regulation, effective December 1, 2015, as approved by the Board of County Commissioners in the fiscal year 2016 budget and as approved by the Collier County Water and Wastewater Authority. Meeting Date: 9/22/2015 Prepared By Name: PuigJudy Title: Operations Analyst, Growth Management Department 8/25/2015 2:29:11 PM Submitted by Title: Division Director-Operations Support. Growth Management Department Name: KovenskyKenneth 8/25/2015 2:29:12 PM Approved By Name: Puigiudy Title: Operations Analyst. Growth Management Department Date: 9/8/2015 1:08:39 PM Name: Frenchiames Title: Deputy Department Head-GMD, Growth Management Department Date: 9/8/2015 5:24:31 PM Name: MarcellaJeanne Title: Executive Secretary, Growth Management Department Date: 9/9/2015 9:19:05 AM Name: TeachScott Title: Deputy County Attorney. County Attorney Packet Page -985- 9/22/2015 16.A.20. Date: 9/9/2015 1:05:40 PM Name: IsacksonMark Title: Division Director-Corp Fin &Mgmt Svc, Office of Management&Budget Date: 9/9/2015 3:38:54 PM Name: KlatzkowJeff Title: County Attorney, Date: 9/10/2015 8:34:12 AM Name: CasalanguidaNick Title: Deputy County Manager, County Managers Office Date: 9/12/2015 2:20:41 PM Packet Page -986- 9/22/2015 16.A.20. RESOLUTION NO.2015- A RESOLUTION OF THE BOARD OF COUNTY COMMISSIONERS OF COLLIER COUNTY, FLORIDA, PURSUANT TO SECTION 1-12(E), COLLIER COUNTY ORDINANCE NO. 96-6, AS AMENDED, ESTABLISHING THE REGULATORY ASSESSMENT FEE OF 2.00 PERCENT OF GROSS REVENUES FOR NONEXEMPT PRIVATELY OWNED WATER AND WASTEWATER UTILITIES SUBJECT TO THE REGULATORY ASSESSMENT FEE PURSUANT TO ORDINANCE 96-6, AS AMENDED,AS WELL AS ALL OTHER WATER AND WASTEWATER UTILITIES BOUND BY INTERLOCAL AGREEMENT FOR REGULATORY OVERSIGHT; DIRECTING THE COLLIER COUNTY WATER AND WASTEWATER AUTHORITY TO ADJUST WATER AND/OR WASTEWATER RATES OF SAID UTILITIES, AS APPROPRIATE. WHEREAS, Resolution No. 96-104 excluded Collier County from the provisions of Chapter 367, Florida Statutes, thereby assuming certain subject matter jurisdiction over privately owned nonexempt water and wastewater utilities operating in unincorporated areas of Collier County;and WHEREAS, Ordinance No. 96-6, as amended, established the Collier County Water and Wastewater Authority (the "Authority") and its specific powers and duties; and WHEREAS, Section 1-12 (E), Ordinance No. 96-6, as amended, provides for the Board of County Commissioners(the"Board") to determine the amount of the regulatory assessment fee from time to time after public hearing, but not to become effective earlier than sixty(60)days after adoption of each such implementing Resolution; and WHEREAS, on May 13, 2015, staff recommended an adjustment of the regulatory assessment fee from 3.00 percent to 2.00 percent to the Authority; and the Authority unanimously recommended approval of the decrease in regulatory fee to the Board; and WHEREAS, the Board indicated its concurrence with the staff recommendation to adjust the fee; and WHEREAS, pursuant to Ordinance No. 96-6, as amended, only the Board may adjust regulatory assessment fees after a duly advertised public hearing; and WHEREAS, the Authority is authorized to adjust water and wastewater rate tariffs of nonexempt privately owned water and wastewater utilities under its jurisdiction to reflect each change in regulatory assessment fees authorized by the BOARD. Packet Page-987- 9/22/2015 16.A.20. NOW, THEREFORE, BE IT RESOLVED by the Beard of County Ccaimissioners of Collier County,Florida that 1. The regulatory assessment fee is hereby established at 2.00 percent, effective December 1, 2015, of gross revenues for all non-exempt privately owned water and wastewater utilities subject to the regulatory assessment fee pursuant to Ordinance 96-6, as amended, as well as all other water and wastewater utilities bound by interlocal agreement for regulatory oversight. 2. The Collier County Water and Wastewater Authority shall adjust the water and wastewater tariffs of all utilities subject to the regulatory assessment fee to reflect the decrease in the regulatory assessment fee. This Resolution adopted this day of , 2015 after motion, second,and majority vote favoring adoption. ATTEST: DWIGHT E.BROCK,Clerk BOARD OF COUNTY COMMISSIONERS COLLIER COUNTY,FLORIDA BY: By: Deputy Clerk TIM NANCE,CHAIRMAN Approved as to form and legality: By:<#R.Teach, Deputy County Attorney 2 Packet Page -988-