GRU Authority agrees to hire independent attorney, questions continued transfer payments to the City

BY JENNIFER CABRERA

GAINESVILLE, Fla. – At their December 14 meeting, the GRU Authority voted to pause audit work by the City Auditor and investigate options for meeting GRU’s audit responsibilities, tabled a decision on a new procurement policy, and authorized the Chair to negotiate a 3-month contract with Scott Walker to provide independent attorney services. Member Robert Karow also expressed a desire to discuss reducing the Government Services Contribution to the City of Gainesville as soon as possible.

Use of the City Auditor’s office

Gainesville Regional Utilities CEO Tony Cunningham told the Authority that he had asked the City Auditor to pause any audit issues they were working on because the audit plan had been directed and approved by the City Commission, not the Authority.

GRU Chief Financial Officer Claudia Rasnick explained that the City Auditor is a Charter Officer of the City of Gainesville who reports to the City Commission. She said the current audit plan calls for nine touchpoints involving GRU, those reports go to the City Commission, and GRU is billed for those services through cost allocation plans. She said staff’s recommendation was to officially pause the audit work while they research the best way for GRU to meet its audit responsibilities. The options included having an internal audit function, hiring an outside auditor, and contracting with the City Auditor to perform the work. Rasnick also said an internal control manager in her department has already started an audit plan.

Member Eric Lawson made a motion to approve staff’s recommendation to pause internal audit work performed by the City Auditor’s office and bring back a recommendation in the spring for which option to select. Members James Coats seconded the motion. 

After public comment, Coats asked Rasnick whether anyone in her office is qualified to step into an audit position, and Rasnick said there is someone in her office who used to work for the City Auditor’s office. 

The motion was approved unanimously.

Procurement policies to replace City’s policies that may violate HB 1645

The board then took up procurement policies; GRU currently falls under the City’s policies, so Rasnick wanted to figure out what the “bare minimum” would be until the Authority can develop its own policies. She reminded the Authority that under HB 1645, the Authority “shall consider only pecuniary factors and utility industry best practices” and said the City Commission had “layered on various ordinances” to their procurement policies for “social, political, ideological reasons, which is why we’re talking about these tonight because they would be essentially in violation of HB 1645, the new law.”

Rasnick said examples of these ordinances include the City’s living wage ordinance, local preference ordinance, Small Business Enterprise, employment of disadvantaged workers and apprentices, the upcoming Phase 2 of their Zero Waste Ordinance, and the anticipated completion of the Disparity Study. Rasnick said her staff was working on rewriting GRU’s procurement policy and would bring it back to the Authority in February. 

Chair Craig Carter said he agreed with paring the policy back to the state’s minimum requirements. He asked if the agenda item was strictly for information purposes, and Cunningham said staff was looking for a motion directing them to move forward with updating the procurement policy. 

Coats made a motion to approve the staff recommendation, and Member Robert Karow seconded the motion. 

During public comment, several people mentioned that they supported a veteran’s preference in awarding contracts. After public comment, Cunningham said that once the procurement policy is pared back to the minimum required by law, “we can put things back on… for any of those layers or other things that you, as the Authority, may want to have in our procurement policy.”

Coats amended his motion to add back in the veteran’s preference: “That’s just something that’s dear to me.” Carter said it was “obviously dear to me, also,” but the intention was to strip the policy back to the bare minimum.

Karow suggested that any changes over the bare minimum should be made after the board hires an attorney and should depend on the advice of that attorney about whether or not they can add those things under HB 1645. He said, “Trust me, I’m all about veterans, too, but I just think that we need to wait until we’ve got an attorney and we look at compliance with the statute.”

Coats changed his motion to table the procurement policy until they have an attorney, and Karow agreed. The motion passed unanimously.

Contract to hire interim independent attorney

The next agenda item was the hiring of an independent attorney, and Cunningham said staff had developed a draft contract to hire Scott Walker, and Walker’s firm, Folds Walker LLC, had requested some changes to the language. 

Carter said he had met with Walker and put a cap of $50,000 on legal services over the next three months, with services billed as line items. Carter said, “I’ve had a history with Mr. Walker as being extremely professional in the past, but… we need to go out and let some other attorneys have a bite at this [after the interim period] because there might be a better mousetrap for GRU.”

Walker said the contract is retainer-based, with a cap of $50,000, and it is typical of contracts his firm has with other local governments. Walker said the retainer-based contract gives local governments “certainty and budgeting.” He said his hourly rate is $400, so the contract provides over 120 hours of his time, but “I would submit to you that we are going to spend more than 120 hours. So we’re taking the risk that we’re going to expend more than 120 hours over the next three months… just on the issues that you’ve been talking about this evening.”

Walker said the contract was also “an interviewing process” as the Authority goes through a Request For Proposal to hire an independent attorney. Carter agreed that he saw it as “an interim situation until we fulfill our RFP.”

Coats made a motion to move forward with the RFP for a permanent attorney, and Karow seconded the motion. The motion passed unanimously.

Karow made a motion to authorize Carter to negotiate and sign a contract with the Folds Walker law firm. Coats seconded the motion. The motion passed unanimously.

Offsetting the contract by withholding money from the City

The other aspect of the discussion was whether to withhold money paid to the City for legal services to offset the cost of the contract. Karow said he thought they needed to do that, but he didn’t know how much GRU spends on legal services. Cunningham said GRU currently pays $114,546 for services from Nee’s office, but the scope of services for Folds Walker would not replace all the services provided by Nee’s office. He said the RFP could have a broader scope of services that could offset more of the cost.

Carter asked Nee whether he could help the Authority develop a formula, and Nee said he didn’t see any “true overlap in the scope of services here. There’s nothing changed about our opinion as to what our required role is… I know you don’t want to take on additional expenses, but maybe you’re in a position where you have to spend money to find money.” Carter said they might need to table the discussion until they have more information, and Karow agreed. 

Scenarios for utility rates and fund transfers to the City

During a discussion about various scenarios for utility rates and the transfer of funds to the City, Karow said he has “pretty strong feelings about the Government Services Contribution (GSC) and whether or not we even ought to be making it… What can we do about the contributions we’re making now?… We ought to talk about whether or not those contributions ought to be continued, and we may not agree that they should be dropped; we may agree on a different level. But we sure as heck ought to be talking about it.” Karow also wanted to take a closer look at billing for services between GRU and the City.

Carter said the Authority has the ability to alter the budget. Cunningham said the billing for services is scheduled to be discussed in February, and Karow responded, “The General Services Contribution… need[s] to be addressed. We’re spending money today on that, and we’ve not talked about it. That’s one of the things James [Coats] wanted to talk about a long time ago.”

Carter said any member can make a motion to put something on an agenda, but Karow did not make a motion.

Next meeting is today

The next GRU Authority meeting is today at 5:30 p.m. and can be viewed on the Authority’s YouTube channel.