Resolution 1986-002 (CWS)
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April 22, 1986
RESOLUTION NO. CWS-86- 2
RESOLUTION BY THE BOARD OF COUNTY COMMISSIONERS
OF COLLIER COUN'rY, FLORIDA, EX-OFFICIO THE
GOVERNING BOARD OF THE COLLIER COUNTY WATER-
SEWER DISTRICT, PURSUANT TO SECTION 125.3401 AND
CHAPTER 153, PART II, FLORIDA STATUTES, FINDING
THAT THE ACQUISI'l'ION OF THE WATER AND SEWER
SYSTEMS OF EAST NAPLES WATER SYSTEMS, INC. IS IN
THE PUBLIC INTEREST.
WHEREAS, East Naples \olater Systems, Inc. and its predecessor
in interest, The Glades, Inc., hereinafter referred to as the
"Utility", has operated water and sewer utility systems within the
boundaries of the Collier C.ounty Water-Sewer District, hereinafter
referred to as the "Distric~", since the early 1970s; and
WHEREAS, the Utility has been recognized .by the Courts as
having a "de-facto franchise" for the areas in which it currently
provides service; aad
WHEREAS, the Utility hilS more than fifty percent (50%) excess
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capacity at its water and sewage treatment plants and has applied
to the Florida Public Service Commission for authorization to
utilize the excess sewage treatment capacity by serving areas
outside the "de-facto franchise" area; and
WHEREAS, the Florida Public Service Commission has pending
before it a recommendation from its staff to authorize the Utility
to greatly ex~and its service area beyond the boundaries of the
"de-facto franchise"; and
WHEREAS, such expansion would conflict with the plans of the
District to provide a regional sewage treatment system by frag-
ment:ing the service areas of the District, and reducing the
customer base and bonding capability of the District, thusly
jeopardizing the purposes fer which the District was created; and
WHEREAS, the District i.s desirous of utilizing the Utility's
excess capacity in furtherance of the District's plans; and
WHEREAS, the District and Collier County are engaged in a
series of lawsuits with Utility wherein it is alleged that certain
actions of the District and the County have confiscated the pro-
perty of the Utility and violated the civil rights of the Utility
April 22. 1986
and its officers and directors, among other allegations and claims
made by the Utility; and
WHEREAS, the Utility has objected and appealed to the Florida
Supreme Court validation of the County's water and sewer bonds;
and
WHEREAS, acquisition eof the Utility is the major part of the
settlement .of the various lawsuits brought by the Utility,
including the bond validation, and acquisition of the Utility and
settlement of the lawsuits is in the public interest; and
WHEREAS, acquisition l)f the Utility is consistent with the
Collier County Comprehensive Plan.
NOW THEREFORE, BE IT I~SOLVED BY THE BOARD OF COUNTY COMMIS-
SIONERS OF COLLIER COUNTY, FLORIDA, EX-OFFICIO THE GOVERNING BOARD
OF THE COLLIER COUNTY WATER-SEWER DISTRICT:
1. That certain agreement entitled "Agreement To Settle
Litigation Between East Naples Water Systems, Inc., The Glades,
Inc. , And Hubschman Associates, And The Board Of County
Commissioners Of Collier Co:)unty, Florida, Through Acquisition Of
Water And Sf_..~er Systems", hereinafter referred to as the
"Agreement", a copy of which is attached hereto and incorporated
by reference herein as Exhibit "A", is determined to be in the
public interest and is hereby approved; and the Chairman of the
County Commission is hereby authorized to execute said Agreement.
2. Pursuant to the provisions of Section 125.3401, Florida
Statutes (Chapter 84-84, La.ws of Florida), the following findings
are made with respect to the water and sewer systems which are the
subject of the Agreement.
A. The Utility's most recent available income and
expense statement was filed with the Florida Public Service
Commission as part of a pending rate case and is for a twelve
(12) month period ending on September 30, 1985. A copy of
the Utility's rate <:ase filing with the Florida Public
Service Commission, hereinafter referred to as the .PSC
Filing", is attached hereto and incorporated by reference
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April 22, 1986
herein as Exhibit "8". The Utility had a net operating loss
for the twelve (12) month period of app~oximately $192,530.00
and when adjusted for depreciation and taxes a net loss of
approximately $65,584.00. The Utility's income and expense
information, as contained i~ the PSC Filing, is summarized in
a memorandum from the Di~;trict' s Utilities Administration
Direct9r, a copy of which is attached hereto and incorporated
by reference herein as Exhibit "CR.
8. The mas t re,::en t avai lable balance sheet for the
Utility is contained in the PSC Filing and is also summarized
in Exhibit "C". The PSC Filing reflects total assets of
approximately $4,169,163.00 and total liabilities of
approximately $3,906,448.00. The PSC. Filing reflects
approximately $1,942,583.00 as contributions -in-aid-of-
construction and approximately $372,127.00 as related
accumulated depreciation.
C. The PSC Filing reflects that the Utility claims a
rate base of approximately $556,887.00 for the used and
useful water system and $974,162.00 for the useJ and useful
sewer system. On Marl::h 27, 1985, in CCURRB Case No. 84-1,
the Collier County Utility Rate and Regulation Board found
that the Utility had a rate base of $384,347.00 for the used
and useful water sys1~em and $706,205.00 for the used and
useful sewer system, for a twelve (12) month period ending
March 31, 1984. A copy of the CCURRB Rate Order is attached
hereto and incorporated by reference herein as Exhibit "D".
D. The physical condition of the Utility's water and
sewer systems is summarized in a memorandum from the
District's Utilities Enginee=ing Director, a copy of which is
attached hereto and incorporated by reference herein as
Exhibit "E". The memorandu~ states that the sewer system is
experiencing a problem with infiltration for which corrective
repairs will be necensary, and that the water system is
operating satisfactori.ly. The water plant has a total
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April 22, 1986
permitted capacity of 1.25 MGD (..>ith a capability to be
expanded in excess of 1.5 MGD), and the sewer plant has a
total permitted capacity of 1.5 MGD. Both plants have ~re
than fifty percent (50%) unused capacity.
E. It is recogni.zed that the Utility's sewage treablent
plant is the largest such privately owned and operated
facility within the boundaries of the District and has excess
capacity available which will enable the District to JIIOve
forward at an earlier date in the District I s plans for a
regional sewer system infrastructure. The pending action of
the Florida Public Service Commission regarding the Utility's
application for a greatly expended service area would
seriously conflict wi.~h the District's reglonal sewer plans.
This conflict would have great potential for additional
litigation between thE! District and the Utility, the cost and
outcome of which is uncertain. There presently exist seven
(7) different adversarial proceedings between the Utility and
the District pending before the Courts of the Twentieth
Judicial Circuit of Florida, the Florida Supreme Court, the
Florida Public Servi.::e Commission, and the United States
District of Florida. All of these proceedings would be
dismissed as part of the Agreement. Without regard to any
consideration of poten.tial liability or damages in any of the
pending proceedings, it remains difficult to quantify in
terms of dollars th,:! ultimate cost to the District of
defending these proceedings in terms of staff time, court and
related costs, and attorney's fees. In the past year the
District has incurred approximately $200,000.00 in costs and
attorney's fees in the proceedings.
The PSC Filing reflects that the Utility's original cost
for the water system is $1,379,635.00 and $2,937,278.00 J:or
the sewer system. A report prepared by the engineering J:irm
Wilson, Miller, Barton, SolI & Peek, Inc., for the Uti1i ty
states that the November, 1985 replacement value of the
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April 22, 1986
Utility's water and suwer systems, exclusive of any land or
depreciation, would be $8,902,000.00. A copy of said report
is attached hereto and incorporated by reference herein as
Exhibit "F".
In consideration of the foregoin~ factors, the purchase
price of five million two hundred thousand dollars
($5,209,000.00) and the System Development Fee Credits and
the other terms of th~ Agreement are reasonable and in the
public interest.
F. Purchase of the Utility by the County would have the
following impacts on the Utility's customers:
Positive
1. Improved opercltion, maintenance ana administration
of the water and sewer systems.
2. Elimination of Public Service Commission regulatory
fees.
3. Eventual connection to regional sewer system where
larger custome,r base would help hold down user rates
to reasonable levels.
Negative
No negative in~acts are foreseen.
G. Additional investment will be required to repair and
reconditi.on portions of the water and sewer systems which
have not received prc:Jper maintenance in the past. The
District must also con9truct additional sewer lines in order
to connect new customers to the sewage treatment plant and
fully utilize the excess capacity presently available. It is
the plan of the District to discontinue use of the present
sewage treatment plant within the next seven (7) years and to
connect all customers to a regional sewage treatment plant
owned and operated by the District. The District has the
financial resources and has made the financial commitment
through its wate~ and s~wer bond issue to make the additional
investments as may be n.ecessary.
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April 22, 1986
H. The alternatives to purchase by the District and
potential impact on the Utility's customers if the purchase
is not made are as follows:
1~ Continued lack of pr.oper operation, maintenance and
rehabilitation of the water and sewer systems.
2. Increased user rates resulting in part from
Utility's litigation expenses and rate case expenses
which are passed through to users as a cost of doing
business.
3. Exclusion of Utility's customers from District's
regional sewer system.
I. The District has the ability to provide and maintain
high-quality and cost-effective water and sewer services as
is summarized in a menorandum from the Distri<;;t' s Utilities
Operations Director, a copy of which is attached hereto and
incorporated by reference herein as Exhibit "G".
J.
The
Distri,::t was
originally
established by
referendum vote in 1969, pursuant to Chapter 153, Part II,
Florida Statutes, and validated by a special act of the
Legislature in 1978. The District has owned and operated a
sewage treatment plant: in Area "A" of the District since
1977. The regional sewage treatment plant for Area "An has a
rated capacity of 1.95 MGD. In 1985 the District acquired
and assumed operation of a .3 MGD sewage treatment plant
located in the Foxfire development to provide service in Area
"C" of the District.
In 1985 the District acquired and
assumed operation of a 1.5 MGD sewage treatment plant located
in the Lely development to provide service in Areas -C" and
-D" of the District. In 1984 the District began operation of
a regional water plant to serve Areas "C" and "D" of the
District. The regional water plant has a rated capacity of
4.0 MGD, with an eventual planned expansion of capacity to
16.0 MGD.
The financial ability and commitment of the District to
provide a regional watE!r system and a regional sewer system
is demonstrated by the District's action in seeking
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April 22, 1986
validation of eighty two million five hundred thousand
dollars ($82,500,000.00) in water and sewer revenue bonds.
Acquisition of the Utility will terminate the appeal filed by
the Utility against the bond validation and permit the
District to proceed with its plans for the regional water and
sewer systems, which will include intergration of the
Utility's systems with those of the District.
This Resolution adopted after motion, second and roll call
voted as follows:
Commissionel. Voss M:>t1oned and aye
Commissioner Iblland Seconded and aye
Commissioner Hasse Aye
Commissioner Goodnight Aye
Commissioner Pisto:c Aye
1986
BOARD OF COUNTY COMMISSIONERS
OF COLLIER COUNTY, FLORIDA, EX-
OFFICIO THE GOVERNING BOARD OF
THE COLLIER COUNTY WATER-SEWER
DISTRIC: () ~
By: L (;f. )if:~M
JOH A. PISTOR, Carman
and
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