GRU Authority takes no action on fund transfer, votes to have joint meeting with City Commission

BY JENNIFER CABRERA

GAINESVILLE, Fla. – At their January 17 meeting, the GRU Authority decided against cutting the Government Services Contribution (GSC) to the City and instead voted to schedule a joint meeting with the City Commission for the purpose of asking the City to help reduce GRU’s debt.

GRU Authority Attorney Scott Walker said he believed the Authority has the ability to amend the budget previously set by the City Commission and reduce or eliminate the GSC. However, he said, the City could possibly retaliate by implementing a franchise fee that would have to be passed on to customers.

Chair Craig Carter said, “That’s the conversation that caused me to be cautious” when he voted to postpone an earlier agenda item that would have led to new expenditures to do a search for a new CEO/GM.

Member Robert Karow said the Authority has an obligation to reduce rates and reduce debt, and if the City decides to add a franchise fee to consumers’ bills, “the burden is on them… We can look in the mirror and say, ‘We did what we can do.'” He pointed out that the City collects the utility tax from each GRU bill.

Several alternatives were presented to the Authority:

1. Reduce the GSC by $7.8 million a year and use half to reduce rates and half to reduce debt;
2. Reduce the GSC completely and use half to reduce rates and half to reduce debt;
3. Reduce the GSC by various amounts and direct savings to different mixes of rate reduction and debt reduction.

Karow said he believed they should remove the GSC entirely and decide later how to distribute the savings. “We need to address our debt and our ratepayers. If they want to come back at us and try to reduce our efforts to help the ratepayers of GRU, then that’s their business,” he said.

Member Eric Lawson said GRU customers could end up paying more if the City implemented a franchise fee. 

Carter said it “sounds sexy” to eliminate the GSC, but “it’s already been reduced by $19 million.” He cautioned, “The City is going to find the money somewhere… I’m not prepared to vote for [a complete GSC reduction].”

Debbie Martinez said from the audience, “It sounds like extortion,” but Carter said he was just explaining the options.

First motion

Karow made a motion to reduce the GSC 100%. 

Member James Coats said he was “torn” because the utility does not have any “levers” to reduce debt. He predicted that Lawson and Carter would vote no, leading to the failure of the motion, and he said the Authority needed to reduce rates right away. 

Carter said that if the City had taken more money than GRU had made in profits, as has been stated in Tallahassee, he would like to get that back but added, “[The City has] the levers to get the money; our ratepayers are ultimately going to pay it.”

Lawson said the Authority now has the “stick-and-carrot” ability to sit down with the City and negotiate for the benefit of its customers.

Carter said, “[Eliminating the GSC] scares me because I don’t know what will happen.” He said people would consider Authority members to be heroes if they cut the transfer, but the citizens would end up paying the bill.

Coats said the City and commissioners have put out negative messaging: “When are they going to come up with solutions?” He said the Authority should give the City a deadline to come up with solutions “to help clean up their mess” and reduce the debt. Coats said that if the City is unwilling to help with debt reduction and rates, he would second Karow’s motion and support reducing the GSC completely.

Carter said he couldn’t vote to reduce it 100% or even by half, but he could support some reduction. He said the City should be looking at the Authority and thinking, “If there was a fifth member, we’d be down $15 million right now.”

Coats suggested a public meeting with all decision-makers, which could take all day, “and at the end of it, if we don’t get any levers pulled at all,” then the Authority would discuss cutting the GSC at their next meeting.

Karow’s motion failed for lack of a second.

Second motion

Coats made a motion to have a joint City/GRUA meeting within the next 45 days. Lawson seconded the motion.

During public comment, several people urged the Authority to cut the transfer, but most people praised the motion to have more conversations before making a decision.

Carter said, “If I knew for a fact that ratepayers wouldn’t end up paying for this… The very people we say we’re going to help will get hurt if we’re not careful… I just want to make sure that the City is not going to pull a lever that our ratepayers will pay… I want to reduce this as much as possible.”

The motion passed 3-1, with Karow in dissent.