Konish: Dark money – how the City abuses GRU ratepayers with “indirect transfers”
Letter to the editor
HB1645 provides for a City of Gainesville Charter Section 7.11 “cap” on the “Governmental Services Contribution (GSC)” – formerly known as the “General Fund Transfer (GFT).”
A precise methodology is mandated as of 7/1/23. Key terms such as “Flow of Funds” and “SLA (Service Level Agreement) losses” are clearly and broadly defined in Section 7.02.
The claimed FY24 GRU ratepayer-funded GSC of $15.3 million is grossly understated.
As always, the identified and seriously undercounted GRU “financial associations” with “governmental” entities involve a free-wheeling maze of open GRU financial wounds that continue to hemorrhage. There are eight formal SLAs (Service Level Agreements) and/or MOUs (Memorandum of Understanding). The City has breached one MOU dated 10/2022 for County FY24 streetlights ($1.1 million). There are more than 33 other “financial associations” with no written agreement regarding payment.
Of the $9.3 million in FY24 “cost allocations” paid from GRU to the City, on top of the direct $15.3 million GSC, $1.4 million is claimed to have been cut as of 2/1/24 ($180,000 monthly until 10/2024). I cannot find proof of any “full cost allocation plan (FCAP)” payment that was supposedly cut. This alleged cut was for GRU ratepayer funding for the following FY24 categories:
- Mayor and City Commissioner (and assistants) salary & benefits
- Clerk
- Auditor
- Equity & Inclusion
- Broadcasting
That leaves an additional $7.9 million for unspecified alleged City “services” provided to GRU intact for FY24. A current GRU FY24 budget getting such belated and paltry adjustments is a huge red flag. The independent auditor (costing $484,000 annually) does not mention this issue in the FY23 audit.
I have identified an additional and probably understated total of $6.8 million (detailed below) for:
- More GRU services either not billed to or underbilled to the City, and
- City services that neither can be nor are actually used.
FY24 “Agreed To” by GRU
Total Direct Governmental Services Contribution (GSC): $15.3 million
Total Indirect (GSC) “Unspecified City Services”: $7.9 million
GRU Services below actual cost (SLA Losses): $6.8 million, including:
- IT $3 million (undercharge)
- Streetlights (County $1.1 million, City $840,000 undercharge)
- Utility Tax Collection Fee (City $1.3 million, County/Local Option Unknown)
- *GRU.com ($218,000 not billed)
*GRUCom is losing money and paying $1.2 million of the GSC.
See State Auditor General Report January 2022, finding “3”.
City Services Overcharge to GRU Unknown include:
- City Attorney (Total $545,000)
- State Lobbyists ($42,000)
- CADET Program (No Cost Furnished)
- Sweetwater Branch Maintenance (No Cost Furnished)
- Low Income Energy Assistance Program (LEAP)
- Discounted Connection Fees for Small Houses (Eastman)
ConnectFree ($1.8 million uncommitted, revenue-neutral)
Total GSC FY24: AT LEAST $30 MILLION
*GRU GM stripped of all power 7/1/23 and cannot bind GRU to anything.
In an independent inquiry conducted early on and openly by GRU Authority Member James Coats, it was determined, again, that “indirect cost allocation worksheets” for GRU IT services provided to the City were intentionally falsified by the current GRU CEO/GM to the tune of an even much greater $3 million GRU undercharge in FY24. A $4.5 million GRU undercharge in FY23 for IT services alone provided by GRU to the City was also identified. This far exceeds the earlier undercharges identified by the Auditor General.
The total, actual, carefully defined and capped GRU GSC being paid by GRU to the City directly and indirectly is currently unknown. This is because SLA losses are unknown, among other matters.
Section 7.12 of the City Charter prohibits the GRU CEO/GM and the Authority from considering “social, political, or ideological interests” and requires protection of the “pecuniary” interests of the GRU ratepayers.
A FY24 GRU budget not in conformity with HB 1645 remains almost completely intact. GRU Authority Chair Craig Carter, GRU Authority Member Eric Lawson, GRU CEO/GM Tony Cunningham, and Gainesville Mayor Harvey Ward are happy to let this unsustainable and unlawful hemorrhaging of GRU ratepayer funds fester for years.
GRU SLA (Service Level Agreements) losses are in fact an additional, hidden, indirect GSC that is not reflected in the GRU Financial Statements. A fraud on GRU ratepayers and creditors occurs, and bond covenants are breached. Additional GRU debt downgrades are likely and will be costly. The Baker-Tilly GRU FY23 Audit Report ignores the work of the Auditor General completely.
Allowing GRU financial exploitation of GRU by the City to continue risks the tax-exempt status of GRU debt and further State of Florida intervention. The continued financial viability of GRU is likewise at risk.
Jim Konish, Gainesville
The opinions expressed by letter or opinion writers are their own and do not necessarily represent the views of AlachuaChronicle.com. Letters may be submitted to info@alachuachronicle.com and are published at the discretion of the editor.
Look the other way. We are not stealing over here.
Per the Auditor General report, the city attorney’s office is hopelessly conflicted as it regards advising GRU. This needs to end immediately.
Conflicted? City Attorney is getting $500,000+, it’s pretty clear who’s buttering his bread and the conflict is how much he’s making for the “work” he’s supposedly performing.
Depends on whose definition of work your inferring.
I’m glad we have ONE lawyer on our side. Thank you, Mr. Konish. We may need you again in the future, if the City defaults.
Thanks for shining a little light on the darkness in City Hall. Perhaps that’s the reason for Ward and Co’s favorite books are cookbooks.
Even easier to understand why City audits have proven to be difficult to perform and auditors even more difficult to keep employed.
The cheating has been going on so long that it is a way of life.
Maybe the Governor will explain it to them.
All this appears to be just fine with certain members serving on the GRU Authority and the GRU GM/CEO.
On this Thursday’s City Commission agenda, the City will give away $1.9 million of GRU County GRU ratepayer connection surcharge money to favored developers building “affordable housing” within the City limits in flagrant violation of HB 1645.
If the city and GRU have attorneys on staff, then why in green acres do they spend millions each year on ‘outside legal fees.’
Oh that’s it, city & GRU solicitors are not qualified to handle the specialized litigation that cost tax payers millions each year.
The writer is a past candidate for the G’ville city commission who lost by about 4-1 votes. One wonders if he was on the commission if he would still have favored giving away the power of the owners of GRU – the voters – to decide it’s direction and operation. Did he run on the promise of giving away the power of Gainesville citizens to the state GOP in Tallahassee? That idea was not approved by voters, but by the GOP state House rep in Newberry backed by the GOP state senator from Gainesville who gets elected because his seat is gerrymandered to represent Ocala, Marion County, and Levy county, but very little of Gainesville and Alachua County. (Perry also received $100k in dark illegal money from FPL in his 2018 campaign, so his allegiance is clear).
In short Konish is on the side of the carpet baggers who oppose the citizens of Gainesville and it’s voters. He cannot be trusted to have Gainesville’s interests in mind on this or other issues.
Not one word to dispute the accuracy of Mr. Konish’s statements.
Steve, I do not know the details of GRU’s finances. I do know the history of this takeover by the state GOP of the property of the citizens of Gainesville and Kornish’s history as a disgruntled gadfly who, like Perry and Clemons would never be elected by those citizens.
The fact that Mr. Konish was not elected by the city voters has no bearing on whether views on GRU’s condition and the actions the city with regard to its management are accurate.
That is correct. HIs actions since then – including his earlier position that the legality of the “authority” didn’t matter – demonstrate his disloyalty to the voters who’s support he sought and to the city of Gainesville. He is not worthy of trust.
It seems just about all his claims recently involve verifiable facts. The cost to GRU of the various SLAs needs to be sorted out so everyone has the same set of facts for determining GRU’s actual debt carrying capacity.
I, for one, am interested in learning why the city of Alachua gets power from GRU but seems to have some of the lowest rates in the state.
True enough for those with the energy to get in the weeds to verify his claims. That of course would not necessarily mean one would agree with what he thinks they should mean or who should have the power to implement future action (he is clearly opposed to the citizens of Gainesville exercising control over the utility they own). We do know for instance that GRU’s credit rating was higher than FPLs when the state took it over, an event which led to it’s immediate lowering.
Jizz Breath, you said it all when you wrote, ” I do not know the details of GRU’s finances.” Since you already admitted you don’t know the details then please just shut that pie hole in the middle of your face. My name is DJ Jizz Drinker and I don’t know the details, but I will still commit anyway just to please the voices in my head, blah, blah, blah.
Jennifer, do have any standards for posters, or is indecency like this – and unfortunately not uncommon among your regulars – welcome?
Oh Jazzercise why must you cry. I do think it is funny that you admit to not knowing what you are talking about, yet you keep puking up the same old talking points.
It’s telling that instead of addressing ANY of the valid and concerning points raised by Mr Konish, the post immediately falls back to a wide litany of logical fallacies: ad hominem attacks, red herrings, equivocations, appeals to hypocrisy, straw men, and more.
All noise, no signal. Wonder why?
All my comments – if that is what you are addressing are facts about the writer and his past and none of them suggest he has the interests of the citizens of Gainesville at heart.
I doubt any of you know all the details of what he writes or have the patience to learn them – nor do I – but apparently are willing to suck them all up as the pure truth. Hey, your choice. Even true data can be spun and Konish’s agenda should lead to hesitation to accept his.
If Dem politicians understood finance, they wouldn’t be Dems.
Yeah, like it helps to have a president who’s declared bankruptcy so many times, he’s an expert.
I pledge the following to “jazzman”: I will never again read any of your redundant pointless opinions again. I will simply give you a thumbs down because you are “jazzman”.
Your loss James., but I understand the truth often hurts.
Maybe all the GRU Management and Staff staffers City Commissioners and City Staff , as well as the current GRU Advisory Board speak to the public about what they know about this summary report. Now to do the right thing or later under oath.
Recall reading a note in one of the State Auditor’s reports about the city commission trying to dump several millions worth of indirect costs over on GRU’s side of the fence with Bielarski pushing back. That signaled to me then that the commission was making unrecognized transfers of money from GRU as well as wondering if that was one of the areas of conflict that got Bielarski fired.