City Commission approves another $250,000 in legal fees for GRU lawsuit

BY JENNIFER CABRERA

GAINESVILLE, Fla. – At their Special Meeting on September 14, the Gainesville City Commission authorized another $250,000 to pay a law firm representing the City in its lawsuit against the Governor regarding HB 1645, which turns over the management of Gainesville Regional Utilities (GRU) to a Governor-appointed board on October 1. GRU is currently governed by the Gainesville City Commission.

Commissioner Cynthia Chestnut made a motion to approve staff’s recommendation to authorize an additional $250,000 (the first $250,000 was authorized on June 22, with GRU reserves as the funding source), payable in response to monthly billing invoices from the Akerman firm. Commissioner Ed Book seconded the motion.

Commissioner Bryan Eastman said he “hated being in this position in which we are, you know, allocating funds for this… Our job is to represent our constituents here in the city of Gainesville, and our constituents have spoken in unequivocal terms that they are opposed to this takeover. They voted against it in 2018 by very large margins.” 

The 2018 referendum would have set up an independent board appointed by the City Commission to govern GRU; the bill was opposed by local Democrats, including former City Commissioner Susan Bottcher, who warned, “This is indeed a slippery slope to privatize our citizen owned utility. If the GRU Authority referendum passes, we’d be powerless to change that.”

Eastman: “It essentially eliminates the home rule that we’re granted under our constitution”

Eastman said that if the lawsuit fails, Gainesville would be “the first city in the history of the state of Florida that is half-controlled by the Governor of our state. And if that is possible, for the Governor to take over a portion of the city, it essentially eliminates the home rule that we’re granted under our constitution… And so I feel like we have to vote on this.” 

Eastman suggested taking the funds from General Government since “it would make more sense to have that evenly split.”

GRU General Manager Tony Cunningham said he did not think the funds should all come from the utility because “this is a City action and we have a cost allocation plan, that we allocate funds that the City Attorney uses, and I believe it should go through that cost allocation plan.”

Chestnut said, “I think that we have engaged an attorney, we’re halfway there. And I think we have an obligation to provide the funds for that attorney, who’s there defending us… I think that has to come from GRU; if the body decides to vote otherwise, I’ll go along with that.”

$219,135 billed so far, with another $150,000+ anticipated

In response to a question from Book, City Attorney Daniel Nee said the first billing for May and June was $121,130. He said the July billing came in at $98,005, for a total of $219,135. Nee anticipated that the August billing would be in the $70,000 range, which would exceed the $250,000 that was previously authorized. 

Nee said the City had a “productive” meeting with opposing counsel, and they agreed there are no material facts in dispute, which eliminates the need for extensive discovery and depositions; the judge has scheduled a hearing on September 22 to consider the legal issues. The City has already filed a motion for summary judgment, the State is due to file their motion for summary judgment by the end of today, and the City will respond to that next week. Nee said both parties hope the judge will issue a ruling before October 1.

Nee expects another bill in the $70-80,000 range for September, and then bills after that will depend on the judge’s ruling and whether an appeal is filed. 

Saco: “I really am not happy with the number”

Commissioner Reina Saco said that, despite understanding that “at a certain level of lawyering, this is the standard of the fee because so few people do it… I really am not happy with the number… I’m less than happy with the whole situation.” She asked how the cost allocation approach would break down the contributions of GRU and General Government.

Nee said that it’s usually clear which department is responsible for legal costs, but “this is a matter of governance of the City, meaning both General Government and the utility. It does appear to be focused on the utility, but it is an attack on the City. I keep harping on it over and over again: the utility isn’t separate from the City; it’s part of the City, just like all other departments are.”

Saco asked whether the funds could be pulled from City reserves instead of contingency, “given the extraordinary nature of where we find ourselves?”

City Manager Cynthia Curry said that since the bills are in the 2022-23 fiscal year, “I believe that we have flexibility with carry-forward… funds moving into fiscal 2024… It will lessen what goes into fund balance for ’24, but it is available.”

Saco confirmed with Curry that they can use that method for all bills through September 30, and then “we’d have to really come back for kind of a second discussion. And would you be comfortable, up to September 30, up to the amount of $250,000?” Curry said, “I would.”

Saco concluded that she was comfortable with General Government paying the second $250,000 because “what is happening is taking a valuable asset of the City, not just attacking GRU on its own… My preferred path would be using it from the General Government side to try to balance out the scales a little bit.”

Commissioner Casey Willits said, “I will say that my current preference–and it’s not a joke, I’m still serious–I still prefer that this comes from GRU, with the caveat that GRU temporarily suspends, for one year, natural gas appliance rebates as a direct way to find the $250,000. It does change some of their long-term plans… That is my real preference.”

However, Willits said that outside of that, he supported using FY23 funds that would normally go into fund balance at the end of the fiscal year.

Book said that since they already have bills exceeding the funds previously allocated, “we have to pay them.” He did not feel strongly about the source of those funds. 

Konish: “No chance for you to succeed”

During public comment, Jim Konish pointed to GRU’s high rates and high debt and said they should not spend “hundreds of thousands, if not millions, on a lawsuit that has no chance for you to succeed, and appeal would automatically pause the ruling. And they will appeal. They have infinite resources and have very good connections with the appellate courts that will get these cases. You end up in the Supreme Court, in DeSantis’ backyard… You act as if the utility belongs to the City Commission or to City Commissioners, and that is false. The utility belongs to the citizens, and our elected state officials have decided that this body is not qualified anymore to have anything whatsoever to do with the governance of GRU.”

Following public comment, Ward said he would “be comfortable either way; I do see some wisdom in spreading it a little bit back to the General Government.”

Eastman agreed that “it’s fairer this way.”

Funds will come from General Government

Chestnut modified her motion to take the funds from General Government, and Book agreed. 

Willits said he had thought about “where we go with this long-term, this lawsuit. Just because it gets expensive is not the best excuse to stop fighting for justice, because we’re talking about constitutional issues.” He said he would love it if other cities joined in the lawsuit but realized that was unrealistic. He said he supported the motion but that the “conversations will get harder and harder after October 1.”

Ward said the lawsuit is not just about whether the law is constitutional but “it’s a question of logistics and mechanics. How does this work–and it’s not clear how it works… It’s not [easy]. It’s not. It’s incredibly complex and complicated.”

Ward: Bill “leaves many questions to be answered”

Ward pointed out that the only way to set utility rates is to pass an ordinance, and the only body that can do that is the Gainesville City Commission. “But according to those same changes, we’re not supposed to have anything to do with it… This is a mechanical and logistical issue that, if we don’t get it worked out, leaves many questions to be answered about how we provide these lights that are on right now to all 100,000 or so customers… We were elected to make sure that the power stays on… The big issues really are big, they do matter, but the little issues are big, too, and that’s all wrapped up in this multi-point suit that we have filed, and that’s why we’re paying for it.”

The motion passed unanimously.