Resolution 2002-428
r 9E
RESOLUTION NO. 02 - ...fl8
A RESOLUTION OF COLLIER COUNTY, FLORIDA, DIRECTING AND
AUTHORIZING THAT NOTICE BE GIVEN IMMEDIATELY TO THE CITY
COUNCIL OF THE CITY OF GULF BREEZE, FLORIDA; TO THE CITY
COUNCIL OF THE CITY OF MILTON, FLORIDA; TO THE FLORIDA WATER
SERVICES AUTHORITY, TO ALLETE, INC., AND TO THE FLORIDA PUBLIC
SERVICE COMMISSION, THAT THE BOARD OF COUNTY COMMISSIONERS
OF COLLIER COUNTY HAS CONCERNS REGARDING THE PROPOSED
SALE OF WATER AND WASTEWATER SYSTEMS OWNED BY FLORIDA
WATER SERVICES, INC. TO THE FLORIDA WATER SERVICES AUTHORITY;
PROVIDING AN EFFECTIVE DATE
NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF COUNTY
COMMISSIONERS OF COLLIER COUNTY, FLORIDA, that:
SECTION 1. Expression of Concerns.
A. The Board of County Commissioners of Collier County, Florida (the
"Board") has recently become aware that the City of Gulf Breeze, Florida, ("Gulf
Breeze") and the City of Milton, Florida ("Milton") within a very short period of time have
agreed with Florida Water Services, Inc. ("FWS") and its parent corporation, Allete, Inc.
("Allete") - without any prior notice to, or consultation with, Collier County or the City of
Marco Island, or to the best of our knowledge with any other affected local governments
throughout Florida - to create by interlocal agreement pursuant to Section 163.01,
Florida Statutes, (the "Interlocal Act") a legal entity called the "Florida Water Services
Authority" ("FWSA") for the purpose of acquiring title to 152 water and/or wastewater
utility systems owned by Allete throughout Florida. One of these systems is located in
the City of Marco Island and one other system is located near the City of Marco Island,
but in unincorporated Collier County. These two (2) utility systems are regulated by the
Collier County Water-Wastewater Authority.
B. Allete, Gulf Breeze and Milton have apparently agreed to a transaction
(the "Transaction") which will, among other things, pay annually to Gulf Breeze two
percent (2%) of the annual gross revenues of all of the subject 152 systems throughout
Florida, and such annual payments will not in any event be less than 1.5 MILLION
DOLLARS ($1,500,000) each year. The Board understands that these added costs will
be passed on to the utility systems' customers. The Board has concerns whether these
added costs will be prudent, just and reasonable. Furthermore, the Board is concerned
that there are inherent conflicts of interest between Allete, Gulf Breeze and Milton and
the FWSA, which are likely to benefit them to the detriment of all current FWS
customers, including those in Collier County. First, the fact that the FWSA participants
are compensated as a percentage of customer annual gross revenues means that Gulf
Breeze and Milton will see financial advantage each time utility rates are increased.
Secondly, there is no advantage for Gulf Breeze to have pressed for a lower purchase
price since it separately receives income based on the gross amount of bonds issued in
connection with the purchase transaction. The higher the purchase price, the more
bond transaction income that flows to Gulf Breeze.
C. The Board has concerns that the creation of the FWSA and the proposed
Transaction appear to have been conducted in undue haste.
D. The Board has concerns whether it was possible for the City Council of the
City of Gulf Breeze and the City Council of the City of Milton, in such a short period of
time, to have conducted valid due diligence assessments of the physical condition of the
152 utility systems that are planned to be purchased by the FWSA, including, but not
limited to, the need for clearly necessary and very expensive capital improvements to
such systems in the foreseeable future. The Board has concerns whether the two cities
could lawfully base any decision to purchase these 152 systems without having first
rendered their own independent, objective analysis to determine the fair market value of
each of the 152 systems. Furthermore, the Board has concerns that the total purchase
price agreed to by FWSA of $507 million, which is $57 million in excess of the most
recent offer considered to be reasonable by the Florida Governmental Utility Authority
"" ~
' \
\ t.,~
I"~
9E
("FGUA"), will necessarily increase the likelihood of short-term rate increases, the
deferral of essential capital improvements, or both, merely so Allete may take from the
sale substantially more "contributed property" already paid for by the utility's customers
than would have been the case under the pending Florida Governmental Utility
Authority's offer to purchase.
E. The Board has concerns whether the creation of the FWSA to implement
the Transaction is in the public interest. FWSA's actions may be contrary to proper
public purposes and may be unconscionable, illegal, or both. The Board has concerns
whether the Transaction is authorized by law and the Florida Constitution.
F. The Board has concerns that the Transaction, as structured, may render
the subject 152 utility systems to be without any effective regulation if the Transaction
takes place, including with regard to rates, capital improvements, and quality of service.
The Board has concerns that if the Transaction takes place, whether these utility
systems will be without effective, objective, regulation that might be controlled by, or
unduly influenced by, the officers of these utility systems. The Board has concerns
whether the City Council of the City of Gulf Breeze and the City Council of the City of
Milton have sufficient time, sufficient ability or sufficient expertise to effectively regulate
and operate these 152 utility systems. Pursuant to Chapter 367, Florida Statutes, many
employees of the Florida Public Service Commission ("FPSC") have historically
expended innumerable hours regulating such of these 152 utility systems that are under
the FPSC's jurisdiction pursuant to Chapter 367, Florida Statutes. The systems that are
not regulated by the FPSC pursuant to Chapter 367, F.S., are regulated by five (5)
Florida counties, including the Collier County Water-Wastewater Authority with regard to
the two (2) systems located in Collier County. Apparently all such FPSC and Florida
county regulation is to be transferred to the FWSA. While there is a line of political
accountability for the actions of the FPSC running through the Governor and the Florida
legislature and for county utility regulation through the elected County Commissioners,
there will be no political accountability for the actions of the officials of City of Gulf
Breeze and the City of Milton or the board members and management of the FWSA
they appoint with regard to the customers of the 152 utility systems located in 27 other
Florida counties. The Board has concerns that such a lack of accountability may be
intolerable.
G. It appears that with regard to the utility systems that are under the FPSC's
Chapter 367, F. S., jurisdiction, the Transaction requires formal approval from the FPSC
pursuant to Section 367.071, Florida Statutes. The Board is interested in how the FPSC
will make its decisions with regard to the Transaction.
SECTION 2. Direction to Deliver Resolution.
The County Manager is hereby directed to immediately provide a certified copy of
this Resolution to the City Manager of the City of Gulf Breeze, to the City Manager of
the City of Milton, to the FWSA, to AIIete, and to the Florida Public Service Commission.
This Resolution is adopted after motion, second and majority vote favoring
adoption this ~ay of October 2002.
ATTEST, '.
/.~;g~t:e. L~~~.Ck, Clerk
<<~u .,:., ',,;;i::,~..~.. '..' ./ IJ
:~~_:~:.ey;~~~' ./
::' ' " . ',De I~f-.'Clerk
';>..Attest.. .~ .a.at......,
u~'efd~~rm
and legal sufficiency:
16~ Q.v\~
Thomas C. Palmer,
Assistant County Attorney
BOARD OF COUNTY COMMISSIONERS
COLLIER COUNTY, FLORIDA
/-"1
By:
Ja s N. Coletta, Chairman ...../~~
~::~
2