“Absolutely yes”: Clemons’ GRU governance bill sails through House State Affairs Committee

BY JENNIFER CABRERA

TALLAHASSEE, Fla. – House Speaker Pro Tem Chuck Clemons’ local bill establishing a governor-appointed governing board for Gainesville Regional Utilities (GRU) sailed through the House State Affairs Committee today.

In introducing the bill, Clemons (R-Jonesville) pointed out that the bill passed through a local legislative delegation hearing by a vote of 4-1 and said that it maintains local control of GRU with appointments by the governor of five members who must reside in the GRU service area.

Committee questions

Rep. Anna Eskamani (D-Orlando) asked what interest the State has in oversight of GRU, and Clemons responded, “The State has compelling interest to make sure that a public utility doesn’t go broke.” She asked for the evidence that it’s going to go broke, and he responded, “Currently, this particular utility, Gainesville Regional Utilities, which has 800 wonderful employees that have provided more than 100 years of service to our community, has four times the level of debt… of comparable utilities of their size.”

Eskamani asked whether the utility had declared bankruptcy or whether there have been “rankings to push it in that direction, or is it paying off that debt in some sort of plan?” Clemons responded, “It’s paying off those debts by raising rates on the backs of the people in our community who can afford it the least. Their rates are from 25% higher than other utilities to 50% higher for small commercial users.”

Eskamani asked what actions the City of Gainesville has taken to try to address those rate hikes, and Clemons responded, “Well, for the last 20 years, relatively few. In the last ten years, that particular utility, through the Board of Directors that are current, which are the seven City Commissioners, have withdrawn $100 million more than the net earnings. And in the last four years, they’ve withdrawn $67 million more than their net earnings. This is a crisis. This bill will help to right the ship and provide stable leadership and separate the City Commissioners from the apparent conflict of interest that they’re currently undergoing.”

Eskamani asked whether any other municipal utility “fits under this proposal of a State-mandated board,” and Clemons responded, “There are 33 municipal utilities… six of those utilities are governed by a board such as this.”

Rep Joe Casello (D-Boynton Beach) asked if any other energy producers are interested in taking over GRU. Clemons responded that he had no knowledge of that, and “What I can assure you… is that this particular board will not have the authority to sell any assets of Gainesville Regional Utilities. That must come before a referendum of the voters of the City of Gainesville.”

Rep. Ashley Gantt (D-Miami) asked whether all members would be appointed by the governor “and if so, will there be an application process to pick from the pool?” Clemons said the governor would choose from a “variety of nominees that can come from anyone, including commissioners. They would have to fall within the categories: one person outside the City of Gainesville who is a user of the utility, one person who represents a commercial interest, and three of the five must have some area of expertise in energy, in accounting, in law, or in those sort of things.”

Gantt asked whether there is a mechanism for citizens to “have hearings or express concerns to the appointed board if need be?” Clemons said, “Yes.”

Eskamani asked whether the utility has ever missed a debt payment, and Clemons said he couldn’t speak to that.

Hinson’s first amendment

Chair Lawrence McClure (R-Dover) then took up the proposed amendments. Rep. Yvonne Hinson (D-Gainesville) introduced her first amendment by saying she gave an opportunity to the “many Gainesvillians in the audience” of the local legislative delegation hearing “to do an amendment of a shell bill that Rep. Clemons put forth at that delegation meeting… The only difference between the bill and the strike-all [amendment] asks for the board members to be elected, conducted by the Supervisor of Elections.”

Rep. Spencer Roach (R-North Fort Myers) said the amendment looked like it would wait until 2025 “to try to solve this problem. Why would you want to wait that long?” Hinson replied that “the strike-all says August 2024.” However, according to her amendment, that is the date of the election; the initial terms of office would start on January 1, 2025.

During public comment, Sarah Younger said that Hinson’s amendment preserves Home Rule, and Bobby Mermer said the amendment is a “pretty reasonable compromise.”

Hinson’s amendment was voted down by the committee.

Hinson’s second amendment

McClure then took up Hinson’s second amendment, which was based on the most recent version of the bill filed by Clemons. That amendment specifies that the Authority will not have the power of eminent domain “without the express validated agreement of the owners, which are the citizens of Gainesville.” It also specifies that the members of the Authority will not be paid a salary and caps their expenses, and Hinson said the amendment specifies that “the Authority will have no power to sell, transfer, or gift the GRU to another utility without the express and validated permission of their owners, the citizens of Gainesville.”

During public comment, Sarah Younger said, “I urge you to vote for this amendment. It is highly likely that this utility will come up for sale; we have interests that have shown already interest in our utility. This is an attempt to rob us of our asset that is owned by the people of Gainesville, not the State government.” Bobby Mermer said, “So this is the very least you can do, this is still a board appointed by the governor, who, you know, we didn’t vote for in Gainesville, but at the very least, you can make absolutely sure that they can’t sell our public utility.”

In closing, Hinson said, “I was a Gainesville City Commissioner in 2012-2015, and I have witnessed an aggressive pursuit of GRU by legislators since that time. Its genesis did not begin today. I personally traveled here twice during that time to testify in takeover legislation. The picture being painted of its bleakness is just messaging. It’s messaging to make it look like they’re that deep in debt. They have a plan already to crawl out, they have met with JLAC. JLAC has given them an opportunity to crawl out of this debt and to make a plan. Let’s give Gainesville a plan to keep their utility.”

Hinson’s second amendment was voted down by the committee.

Public testimony on Clemons’ bill

In public testimony on the bill, Mermer urged the committee to vote no, “and remember, unintended consequences. This is a conservative-majority committee, in a conservative-majority legislature. As conservatives, you should be scared of unintended consequences. Do you want another JEA? This is the way to get another JEA. Vote no.”

David Hastings said the bill “presents a large amount of uncertainty and the possibility of huge pitfalls.” Jeffrey Shapiro warned that “negative economic impacts on residents may be tremendous but are not represented in the economic impact analysis. Expecting five unpaid state appointees to meet only monthly, no defined local government connections, is untenable.”

Younger said GRU “reflects a tradition of local freedoms and Home Rule.” Susan Bottcher said, “GRU is financially strong and stable. Fitch, Standard and Poor, and Moody’s have given them the grades of A+, A, and AA3, respectively, which means they possess superior intrinsic financial strength, very predictable stable operating environment, and obligations subject to very low credit risks. The other problem with this bill is that it absolutely removes the voice of all GRU ratepayers, not just the ones who live in the city limits. So that’s why we wanted to provide elections, so that everybody could have a voice in the governance of our municipal utility.”

Nancy Deren said, “This legislation is supposedly to address utility debt burdens on the City and its ratepayers; it does not. Assertion that there will be no economic impact is not supported by the facts presented by the attorneys and bond counsel opinions regarding both the 2017 and current versions of the bill. Rating agencies want to see transparency, predictability, and consistency. Part of the reason we have investment-grade ratings with a stable lookout is a long history of City governance consistent, and a sudden change to an autonomous Authority with no history will ruin our bond rating.”

Gainesville Mayor Harvey Ward complained that he and others had to come 150 miles to speak about the bill and said that “the City of Gainesville Commission has already taken bold and drastic action as requested and directed by JLAC. We have instituted a formula for our utility transfer, we have cut it by more than half, and I would love to talk with individual members of the committee as this moves forward, and I would love for some of you all to join us this Friday evening as we have a hearing in Gainesville.”

A joint City Commission/Utility Advisory Board meeting will be held at 6 p.m. on Friday, April 21.

Jay Rosenbeck said, “Customers don’t pay rates; customers pay bills–that is the application of a rate to their usage. Gainesville actually has very low bills in comparison to all of the [investor-owned utilities] in the state. Gainesville bills in 2021, the last year for which full data was available, were $103 on average for residential customers, compared to $125 for FPL, $143 for Duke, and $135 for TECO.”

Janice Garry said, “HB 1645 usurps the will of voters by an authoritarian state government.” She said the bill would affect GRU’s bond ratings and the financial stability of Gainesville.

Jenn Powell said, “This bill contains no protections for GRU workers. This bill will allow an unelected and unaccountable board virtually unlimited power to destroy the hard-won wages and benefits we fought for, with zero recourse for them. If this legislation is really interested in saving GRU, they will get the University of Florida to pay their fair share.”

Closing and vote

In closing, Clemons said he needed to respond to “so much disinformation” and said, “The Charter prohibits City Commissioners or any others from disposing of, agreeing to dispose of, in whole or in part, the City’s electric or water production. It cannot sell GRU with this new board… We want to make sure this is good for the next hundred years, and the only thing we are doing is taking away the checkbook from the seven City Commissioners and the previous City Commissioners, who have put Gainesville Regional Utilities in this position.”

The bill passed through the committee on a vote of 14-5, with Rep Mike Caruso, the Co-Chair of JLAC, voting, “Absolutely yes.”