Clemons’ local bill that would put a governor-appointed board over GRU moves forward

BY JENNIFER CABRERA

TALLAHASSEE, Fla. – In an Alachua County Legislative Delegation meeting today in Tallahassee, the delegation voted 4-1, with Rep. Yvonne Hinson in dissent, to move forward with a proposed local bill that would create a board appointed by the governor to govern Gainesville Regional Utilities (GRU).

In his opening remarks, Rep. Chuck Clemons, the sponsor of the local bill, compared the board to other statutorily-constructed boards such as Gainesville Alachua County Regional Airport Authority and the Children’s Trust Board. He said the legislature has authority under Article 3, Section 10 of the Florida Constitution to pass Special Acts by following a process that includes notice of the proposed law 30 days before it is filed. That notice was first published on March 9, so the actual bill will be filed on April 10. Notice is not required if the Special Act requires a successful referendum before becoming a law, but Clemons emphasized, “This is not a referendum.”

Clemons also said that public hearings are not required for Special Acts, but he thinks holding a hearing is a good practice. He continued, “What we have known is that the governance of GRU by the City [of Gainesville] has been in some sort of peril for several years, with a myriad of issues–we’re not here to place blame today on anyone; the delegation members have to manage the situation.” Reviewing the history, Clemons said that he and Senator Keith Perry had requested an audit of the City in 2019, and they only recently received the report of the audit, which was heard by the Joint Legislative Audit Committee (JLAC) on February 23.

“The legislature has the authority and retains the authority to represent the best interests of the citizens by deciding local issues by Special Act if we have to, and we would be derelict if we didn’t exercise our constitutional and statutory authority to correct, or help to correct, decade-long problems when they get worse by being ignored.”- Rep. Chuck Clemons

Clemons said, “I want to reiterate–we’re the state elected officials from Alachua County and its municipalities… We’re not outsiders… We’re observers, we’re residents, we’re taxpayers, and we’re elected officials for the State of Florida. The City of Gainesville and Alachua County are subdivisions of the State of Florida.” Clemons said the legislature has taken away the charter of two cities during his seven years as a representative. “So it’s not on an equal plane… The legislature has the authority and retains the authority to represent the best interests of the citizens by deciding local issues by Special Act if we have to, and we would be derelict if we didn’t exercise our constitutional and statutory authority to correct, or help to correct, decade-long problems when they get worse by being ignored.”

Clemons said there was a “strong likelihood that a new board appointed by the governor would be more responsive to GRU customers that reside outside of the city limits–currently 40% of all of the users of the utility do not have a voice.” He promised that the bill would require one member of the five-member board to be a GRU customer living outside the city limits; he also emphasized that this person would, therefore, “live locally.” 

Clemons said he hoped the Special Act would help reverse “the decline and the disastrous chart” the City is on. 

Provisions of the bill

The proposed bill will establish the powers and the duties of the board and set the term limits and qualifications of the members, who will have staggered terms. One member will be a residential customer “with substantial knowledge of GRU, its operations, and its history”; at least one member will be a private, non-governmental customer of GRU that consumes at least 10,000 kWh per month during each of the previous 12 months; three members will be “competent and knowledgeable” in one or more of a list of technical and financial fields. The board members will have no salaries. The bill will also provide a means for removing and suspending board members for cause and “provides for the continued service of GRU personnel.”

Mayor Harvey Ward

“Candidly, anyone who gets service from GRU has pretty direct access to the Gainesville City Commission. I don’t go to Publix or Lowe’s or church or to pick my kids up from school, without somebody talking to me about the job… We’re readily accessible, and I have never once said, in the checkout line of Publix, ‘Do you live in the city of Gainesville?’ when someone asks a question.” – Gainesville Mayor Harvey Ward

Clemons gave Gainesville Mayor Harvey Ward “the first bite at the apple” when the discussion moved to the public. Ward said he takes this “certainly in the terms as you’ve described it, an opportunity to help the people of Gainesville.” He said he wants GRU to continue to provide “great service, locally-owned, locally-controlled,” to its customers. He corrected Clemons, saying 31% of electric customers live outside the city limits; about 40% of gas customers live outside the city, 37% of water customers, and 36% of wastewater customers. Ward said, “Candidly, anyone who gets service from GRU has pretty direct access to the Gainesville City Commission. I don’t go to Publix or Lowe’s or church or to pick my kids up from school, without somebody talking to me about the job… We’re readily accessible, and I have never once said, in the checkout line of Publix, ‘Do you live in the city of Gainesville?’ when someone asks a question.” He said the City is working “assiduously” with JLAC to make “the bold moves that we expect to make for JLAC.”

Ward said he is only one vote on the City Commission but expects that the General Fund Transfer (GFT) from GRU to General Government this year will be no more than one-third “of what it has been in past years. I might not even vote for that much.” He said the City is working on a formula for the GFT that will resemble a franchise fee paid by an investor-owned utility. “I would happily work with you all to place a good formula in our Charter to say, ‘The transfer may not exceed this.'” Ward said residents should be able “to come to someone who they can hire or fire the following November. I think that’s important.” City Commissioners serve four-year terms, with a two-term limit. Ward said, “The people are in charge of the board. The people get to pick who runs it.” He said the uncertainty of this bill makes it difficult for the City Commission and City and GRU staff to make long-term decisions.

In response to a question from Clemons, Ward said the GFT last year was “likely” more than the profit of the utility. Ward said he voted “two and a half years ago, maybe three years ago, to start plowing [the GFT] down by $2 million a year; that’s not enough.” He later said he “signed off on that in ’19 or ’20.” However, the City Commission took that vote in July of 2021, with the cuts beginning in Fiscal Year 2022. The current year’s budget reflects the second reduction under that resolution. 

“The idea that you would take one dollar more than the profits of the GRU, one dollar, is wrong… Let’s get it down to zero excess over the profits of the GRU. That I haven’t heard from you yet.” – Rep. Mike Caruso, Co-Chair of JLAC

Rep. Mike Caruso, who is not a member of the local delegation but chairs JLAC, said Ward “indicated that it’s locally-controlled, locally-owned, and decisions are locally made, but 40% of the GRU’s customers don’t own it, don’t control it, and don’t get to decide what decisions are made. They get no say in that. And so I think that comment is just off-base.” He repeated a finding from the Auditor General’s report, that the City took $68 million more than its earnings from GRU over the past four years: “The idea that you would take one dollar more than the profits of the GRU, one dollar, is wrong… Let’s get it down to zero excess over the profits of the GRU. That I haven’t heard from you yet.”

Ward said his intent is for the transfer this year to be “probably south of $10 million; it’s currently $34 [million]. Those are the kind of bold moves that I am interested in. I can’t speak for the other six members of the City Commission… I’m willing to entertain zero.” 

Ward again said he wanted to work with JLAC on a formula for GFT to go in the City Charter, but Caruso said they didn’t need a “fancy formula”–it should be limited to the profits of GRU.

Hinson proposed that the legislature consider annexing the people who receive services from GRU into the City of Gainesville “or allow the 40% to have a referendum about staying or leaving… Because they can leave, too. They have options.” She also asked whether GRU could sell GRUCom; Ward said that the Charter requires a voter referendum to sell “any substantial business unit of the utility.” 

Public comment

During public comment, six people spoke in support of the local bill, while 13 people opposed it, with another two people indicating their opposition without speaking.

Jim Konish said that it will take 40-60 years to pay down GRU’s $1.7 billion debt, even if the City takes “no GFT at all.” 

Senator Tracie Davis, who is a member of JLAC, admitted near the end of her statement that she misunderstood which bill was being discussed; she thought she was speaking to SB1380, which would place municipal utilities that serve customers outside the municipal boundary under the authority of the Public Service Commission; she criticized SB1380 as a “one-size-fits-all” measure. She said her electric service is from JEA, which is the largest municipal utility in Florida. JEA is governed by a seven-member Board of Directors appointed by the Mayor and confirmed by the City Council. The Board of Directors appoints a CEO who then selects the top tier of management. 

Clemons pointed out that a “well-run utility” typically has about 60% equity and 40% debt, while GRU has about 14% equity and 86% debt, and asked if that information had surprised her. She said, “Yes… Don’t be afraid of a board, because that’s what we have in Jacksonville. We have an appointed board.” She said the headlines about JEA being sold did not come from the board, “so don’t be afraid of a board; don’t be afraid of your board controlling your municipal electric. It works.”

Hinson said, “I am afraid” and asked Davis about the federal indictments of JEA executives: “How was that resolved, and how can that possibly be a replica of success?”

Davis said that “was a behind-the-scenes, orchestrated event by the Mayor at the time” and that they resolved it with a ballot referendum that said JEA could not be sold without a vote of the people.

Former Gainesville City Commissioner Helen Warren said, “That purchase of the biomass plant was the best thing we did. I am upset with seeing some of the things that are going on here in Tallahassee that are distractions of the real problem, and that is that we are in a climate emergency, and what are you guys doing to help us with our infrastructure needed there?”

Susan Bottcher suggested that since GRU customers outside the city limits are complaining about taxation without representation, “what you could do, is you could put an amendment on this bill that would address– it’s Florida Statute 171.0413, Annexation Procedures. Right now, the only way for properties to be annexed into the city is through voluntary annexation or through a voter referendum. So I would suggest that you change this to automatically annex anyone who is in the GRU service area into the city limits. This would give them a voice because they’d be City residents and would be able to vote in City elections. It would remove the GRU surcharge; their utility bills would automatically go down, as soon as they’re in the city limits. It would increase our tax base because right now, in the City of Gainesville, 60% of the properties are off the tax rolls… That’s why the GFT is so important.” She said “to really make this annexation amendment powerful,” the legislature should give the people who would be annexed a vote on Clemons’ bill in a referendum.

Delegation debate

Following public comment, Clemons made a motion to move forward with the local bill. The bill will be officially filed on April 10, and then there will be one or two committee meetings at which members of the public can speak; the bill can be amended at that time. A vote will then be taken on the House floor, then it will go to the governor for his signature. 

Hinson said she wanted to reiterate that JLAC and the City have made an agreement with a timeline through October 1, “and I think we owe Floridians, our citizens, our commissioners, our elected officials, GRU, the opportunity to fulfill the request of JLAC. Without doing that, I think we’re not operating in good faith.”

“I don’t know that an independent board will save GRU, I really don’t… The debt, it is unsustainable. I don’t know that this will solve the problem, but I do know that we’ve got to try something.” – Sen. Keith Perry

Perry said he expected another ratings downgrade for GRU, “and I expect the reason we’re not on junk bond status right now is because the City Commission continues to raise rates and pay off that debt.” He said he thought GRU went “sideways” when the City Commission decided to enter into Power Purchase Agreements instead of building plants. He pointed out that an Integrated Resource Plan published by GRU in 2019 projects an increase in debt regardless of whether the utility aggressively pursues renewable energy or not. Perry said, “I don’t know that an independent board will save GRU, I really don’t… The debt, it is unsustainable. I don’t know that this will solve the problem, but I do know that we’ve got to try something… This is an untenable direction that we’re going… It will change the power structure; I ask my colleagues to vote in support of this.”

“There has been outcry over GRU for many years… and the response is continued transfers; a huge, expensive solar contract that’s being negotiated with the rates redacted; and the situation is not improving, and I look forward to exploring solutions. I think this could be a viable solution.” – Sen. Jennifer Bradley

Senator Jennifer Bradley reminded everyone that “We’re at the beginning of a process… As the bill moves through, there will be a committee meeting. There are other opportunities to be heard as we go through this process. There has been outcry over GRU for many years… and the response is continued transfers; a huge, expensive solar contract that’s being negotiated with the rates redacted; and the situation is not improving, and I look forward to exploring solutions. I think this could be a viable solution.”

Clemons closed by saying, “This is not about the JLAC… This is about the long-term stability of the people’s utility.” He said that although everyone has strong feelings, people should “allow this process to work… It’s going to be probably amended.” He said he looked forward to working with everyone “to make sure that 30 years from now, Gainesville Regional Utilities is still owned by the people it serves.”

The delegation voted 4-1 to move forward with the bill, with Rep. Hinson in dissent.

The City of Gainesville issued a press release urging citizens to oppose the bill.