Draft local bill would “send a clear message” that GRU Authority will continue to govern the utility

BY JENNIFER CABRERA

UPDATE: Rep. Johnson announced on January 8 that he will be asking the legislative delegation to table the bill at the January 9 Legislative Delegation Public Hearing. Click the link for more information.

GAINESVILLE, Fla. – State Representative Chad Johnson (R-22) has distributed a draft of a proposed local bill to be discussed at Thursday’s Legislative Delegation Public Hearing; Johnson wrote that the proposed legislation “unambiguously reinforces and echoes the autonomy of the Gainesville Regional Utility Authority as a legislatively created municipal agency of the City of Gainesville. In addition, it sends a clear message to all with whom GRU does business, that the Authority and GRU are autonomous and will continue in perpetuity to serve until such time as the Legislature chooses otherwise.”

Read the draft legislation here.

Bill clarifies the powers of the Authority

The draft bill gives the Authority the power to validate bonds, clarifies the Authority’s status as a separate legal entity, and states that it may sue or be sued “in its own name” and may enter into contracts and intergovernmental agreements “without limitation.” The utility would also be responsible for any damage claims in the future.

A note in the draft bill states that these changes allow the Authority to “engage in the issuance of its own bonding, free from the City, giving some assurances to bond rating agencies and investors. It establishes the point that the duties and responsibilities should not be construed as a limit to the scope of those others which were previously given to the Authority in all other sections.”

The Authority would be granted the power to “amend or supplement any existing agreements or resolutions entered into or adopted by the City” that are related to the utility system “without any approval or further action of the City.”

The bill changes the City’s charter to state that the Authority will “submit” its budget to the City Commission instead of “presenting” it, “in order to remove any inference that the City has some approval authority.”

A new section was added, stating that the City Commission “shall have no power or authority over the Gainesville Regional Utility or the Gainesville Regional Utility Authority, and all ordinances of the City of Gainesville that conflict with this act are hereby and henceforth repealed and inoperative.”

General Fund Transfer would include costs of Service-Level Agreements

The Government Services Contribution (also known as the General Fund Transfer) would be redefined to include any costs incurred by GRU resulting from any Service-Level Agreements with the City. According to a note in the draft bill, this was done “in order to codify that the funds transferred to the City from GRU do not only include the one-time annually budgeted GSC, but must also consider those agreements in which the City benefits financially from an agreement between the City and GRU, such as with IT or other joint SLAs.”

The definition of “flow of funds” is removed, and the bill provides that the GSC “may not exceed GRU’s profits after accounting for all necessary payments for operating the utility’s systems” instead of basing the cap on “net revenues less flow of funds.”

Miscellaneous changes

Among other changes, the bill changes the titles of those who serve on the Authority from “member” to “director”; the rationale is that those who served on the previous Utility Advisory Board were called “members,” but the term “directors” removes “any confusion that one might have in incorrectly believing that the Authority serves at the direction of the Commission.”

While the original bill specified that the Authority is free from the direction and control of the Gainesville City Commission, the proposed bill adds “other City Charter Officers” to the list of those who may not direct or control the Authority.

The prohibition on franchise, right-of-way, license, permit, or usage fees is changed from “unless allowed by general law” to “absent the formal consent of the majority of the Authority’s directors.” A note states that this “spell[s] out the prohibition” on these fees “to any court of law” to “avoid an instance where the City makes such an attempt.”

The original title “General Manager/GM” has been changed to “Chief Executive Officer/CEO” throughout the bill “in order to acknowledge the new and expanded role and remove any confusion”; the proposed bill also gives the CEO the ability to serve as the agent of the Authority in matters of property acquisition. The proposed bill gives the CEO the “exclusive authority to manage and operate GRU,” replacing language that gave the CEO the exclusive authority to “hire, transfer, promote, discipline, or terminate employees under his or her supervision and direction.” A note states that this would “remove any ambiguity as to the CEO’s authority.”

The draft bill clarifies that GRU has the ability to retain a Utilities Attorney, who will serve at the will of the CEO. This attorney will be able to “prosecute and defend all suits, complaints, and controversies… and shall review all contracts, bonds and other instruments… and shall endorse on each approval as to form and legality.”

The CEO would also be able to employ a Utilities Clerk to keep records and perform other duties; the clerk would serve at the will of the CEO.

Noting that “GRU’s official property records are much more thorough,” the bill specifies that utility systems, properties, and assets will be determined by GRU’s official records.

The original legislation that created the Authority specified, “In the event that any city charter provision, ordinance [or other City action]… conflicts with the provisions of this article, the provisions of this article shall govern.” The draft bill clarifies that this does not apply to financial agreements such as credit or liquidity facilities or interest rate hedge agreements. It further specifies that bondholders retain all rights and remedies despite the transfer of governance to the Authority; these agreements and obligations are delegated to the CEO and Chief Financial Officer of GRU without any further actions of the Authority or the City, and pre-existing contracts and obligations would be binding upon the Authority.

The act would take effect as soon as it is signed by the Governor.