Gainesville City Commission Adds New GRU Debt
BY JENNIFER CABRERA with WILBUR HOLLOWAY/MARCH 29, 2019
The March 21 Gainesville City Commission meeting attracted a number of people who were opposed to their main agenda item – issuing Series C bonds to improve GRU’s cash flow – but their comments were ultimately ineffective.
The evening portion of the meeting began with a comment by Commissioner Gail Johnson, who said she had been approached by a citizen between the afternoon and evening sessions. This citizen asked what she had eaten for dinner, and Ms. Johnson took the opportunity to talk about what she described as an “escalation… of underlying simmering rage from a few people.” She went on to say that “depending on what happens in these chambers over the next few weeks, I will be asking our city attorney, I will be consulting with our Office of Equal Opportunity, and I will be talking with our city manager about things that have happened in this chamber and continue to happen that are deeply, deeply concerning.” She didn’t say what would happen when she did all those things, but she made it clear that this was a threat. Gigi Simmons described her dinner at Mac’s Drive Thru, and Harvey Ward said he had eaten a Nutri-Grain bar.
As Debbie Martinez pointed out later during citizen comment, these comments were disingenuous and appeared to be deliberately so. Nathan Skop has been giving citizen comment about their city-provided dinners for some time, so the commissioners know that the question about dinner was specifically about the menu provided by the city and paid for by voters. However, they pretended that it was a personal question about their personal meal choices. The commissioners also talked about how it was fair for the city to provide meals while they were at work, but, as was later mentioned during citizen comment, it is not at all usual for companies to pay for workers’ meals during their work day.
The commission went on to consider the bonds. Ed Bielarski presented the “GRU at a Crossroads” slide (I apologize for the blurry photo – it’s a screenshot from the video) and pointed to the first line, which shows the projected shortfall in coming years. These new bonds allow GRU to restructure its debt to reduce the payments in the near term while adding to the debt and increasing the payback period.
Bielarski introduced Mark Benton, who said the bonds would provide approximately $10M in new money proceeds to fund capital projects and $57M to “refund certain maturities of currently outstanding variable rate bonds.” The debt payments will continue until 2047. The money saved in the short term will be put into the rate stabilization fund. Benton said the transaction will generate about $33.5M more in principle and interest than they would have under the existing debt. He also pointed out that this is variable-rate debt, which incurs a risk.
Mary Alford, chair of the GRU Utility Advisory Board, presented the reasoning of the board when they voted for the bond issue, although she herself did not vote for it. She said they had been told that the ratings companies hadn’t changed their ratings, so they gave their blessing. She said that the information about the change of ratings by Fitch (from AA- to A+, a downgrade, which will cost the city additional money in interest payments) was emailed to them around 10AM on the morning of their meeting, but the board members work during the day, so they hadn’t had an opportunity to review the report before their meeting.
During citizen comment, Ms. Alford presented the dissenting view, speaking for herself and one other member of the board. She said that since the economy is good now, GRU should be paying down debt and preparing for possibly worse times ahead.
Every citizen who made a comment except one was against the bond issue. The video is here, and the comments start around the 6-hour mark. It is well worth watching. Mark Goldstein, former mayor of Gainesville, suggested transferring less money from GRU to the city (current Mayor Lauren Poe later pointed out that, as shown in the above slide, the plan reduces the transfer by $6M starting in FY20). Wilbur Holloway said the new debt was to “prop up profligate city spending.” Jo Beatty (I apologize for any incorrect spelling of names) said, “Stop going forward with your pet projects and what you think you need to do and spend money on to save the world and get back to basics. If you cut the budget, you can cut some of the transfer… The face that you don’t understand why the meals are an issue says a lot.”
The issuance of the Series C bonds passed unanimously.