GRU Authority votes to reduce payments to City, continue search for GM/CEO despite higher cost

BY JENNIFER CABRERA

GAINESVILLE, Fla. – At their January 17 meeting, the GRU Authority decided to reduce their payments to the City by $181k starting in February and continue a search for a new GM/CEO, even though the price came back $50,000 higher than the amount they had previously approved.

GM/CEO search price doubles

Member Eric Lawson, who had agreed to coordinate the search process for a new GM/CEO, said the board had approved $50,000 for the search, but the search firm they selected provided a quote of $90,000 plus $10,000 in travel costs. He said that if they hire a new GM/CEO, GRU would also need to pay about $25,000 in relocation costs, about $125,000 in severance for the current executive, and likely around $70,000 in accumulated paid time off, for a total of about $320,000. He said that they would also likely need to hire one or two more senior leaders, “similar to a football coach–a football coach is going to bring in their own team.” He said that could cost up to $80,000 for each senior executive, bringing the total to as much as $480,000.

Member Robert Karow favored continuing the search. Member James Coats said the board is “supposed to be saving money and budgeting,” and the availability of funds for the search would depend on whether they decided to cancel the General Services Contribution (GSC). He favored continuing the search if they had the funds and proposed tabling the issue until the GSC decision was made. 

Chair Craig Carter asked Lawson for his opinion, and Lawson said he preferred to wait at least a year to do a search. Lawson added, “I don’t see gross mismanagement of operations” and said he would like to give the GM/CEO some guidelines and pause the process for a year.

Carter said he could go either way, but the cost of the search was a “huge factor” for him. 

Karow made a motion to reconsider the topic at the end of the meeting, and Coats seconded the motion. The motion passed unanimously.

City Services Reduction

Carter led off the discussion of the next agenda item, payments that GRU makes to the City for various services, by saying he would like to “get the blessing” from the Authority to meet with the City’s Charter Officers. 

GRU GM/CEO Tony Cunningham showed a chart of services that he believed were not being provided or that were being minimally provided, and he suggested that GRU could reduce their payments to the City by $181k per month over the rest of the fiscal year, for a total of $1.4 million. Cunningham said the City claims that the payments are for services rendered two years ago, but “My perspective is that was a discussion then; we are in a new reality now… We’re not getting these services this year, we should not be paying for them this year.” Cunningham said his recommendation was to make the cut immediately, then adjust it if Carter met with the Charter Officers and learned that he had underestimated some services. 

Lawson said he had looked into the claim that GRU is paying for services from two years ago, and he said he believes it’s “simply a methodology for how they calculate the annual allocation. They look back two years; they say, ‘This is what our cost was two years ago, that’s what we’re going to allocate,’ and it’s a rolling process. What we pay for today are the services we get today. They just based it on two years ago as actuals.”

Carter was concerned that the City could also cut payments to GRU for services that GRU provides to the City. 

Coats made a motion to allow Carter and Cunningham to meet with the City’s Charter Officers and determine the amount of the reduction.

During public comment on the motion, City Manager Cynthia Curry said it’s difficult when the “budget is up-ended in the middle of a fiscal year” and supported the motion to have conversations before making cuts. She said Lawson was correct about what it meant to be “two years in arrears” because the last audited statement the City has is from FY22, “and so of course we’re in arrears in that respect.”

The motion to allow Carter and Cunningham to meet with the City’s Charter Officers passed unanimously.

Following the vote, there was a discussion about whether Coats had intended to split the motion or take the reduction in payments off the table. Karow asked, “What are we afraid of?” and Carter responded, “Well, permitting fees…”

Karow said, “I think we need to do what we think is appropriate… I don’t think we need to be necessarily so concerned with what the City… Are they concerned that the City are going to be the 600-pound gorilla and come back and try to do something? I just don’t think we ought to worry about it.”

Carter responded, “My only concern… [is], for every action, there could be a reaction.”

Coats said, “We’re here for a purpose… Someone’s got to rip the band-aid off in this thing, and if we’re concerned about $1.4 million, I can’t wait to hear the conversation about the General Services Contribution.”

Karow made a motion to accept Cunningham’s recommendation and reduce the payments by $181k per month and continue to evaluate the other financial relationships between GRU and the City. Coats seconded the motion. 

The motion was approved 3-1, with Lawson in dissent. 

General Services Contribution

The next agenda item, the General Services Contribution, was fully covered in this article; the 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.

Integrated Resource Plan

Cunningham had planned to split the discussion of the Integrated Resource Plan over two meetings, but given the length of the January 17 meeting, Carter proposed postponing the first piece to their next meeting, meaning both presentations would be made at the next meeting. Cunningham warned that the two presentations were both “fairly lengthy,” but no action would be required from the Authority. Coats made a motion to postpone the IRP discussion, and the motion passed.

GM/CEO search and “Co-CEOs”

The Authority then went back to the discussion about the GM/CEO search. Coats proposed an “out of the box” idea to have Cunningham and Chief Financial Office Claudia Rasnick be “Co-CEOs” of GRU. Coats said he still has “trust issues” with Cunningham, but he thought Cunningham “conducted himself amazingly well” when Coats previously made a motion to fire him, and “that means there’s hope for him.” He said he would trust Rasnick to “augment” the CEO, and if the Authority did that, they could stop searching for a new CEO. He added that if they did that, he would want to enter into consulting agreements with former CEOs and General Managers of utilities.

Karow thought the idea was interesting and said they could do that while conducting the search; Lawson said he didn’t like surprises and wanted time to consider the idea before making a decision. However, Lawson was interested in bringing in consultants. Carter said if they brought in consultants, he would prefer that they be from the private sector, not from other municipal utilities. However, he said he “couldn’t even dream of” having Co-CEOs.

Karow made a motion to move forward with the GM/CEO search and authorize spending the amount quoted by the search firm, and Coats seconded the motion.

Carter said he wasn’t happy about spending $100,000 on the search, but “when I say that we need this facility to start running like a company–I don’t know how we get there unless we find out by doing a search. And at the end of that search, with everything in place, if Tony’s our guy, then he’s our guy. I don’t ever see us getting behind him until we know that for sure.” The motion passed 3-1, with Lawson in dissent.