The Gainesville City Commission and Gainesville Regional Utilities Authority discussed the power district and general services contribution at a joint meeting on Wednesday.
The meeting marks the first time the past and present decisionmakers of Gainesville Regional Utilities (GRU) have met since the authority assumed control in October 2023.
The authority asked for the meeting in January as both entities have started grappling with how the new governance structure will work. Wednesday’s meeting only had two discussion items and included no votes.
On the power district, the authority has followed a similar path to the City Commission last year, planning to sell the 24-acre property near Depot Park that has sat vacant for years. Scott Walker, attorney for the authority, said he believes the sale of the power district would require a sign-off by the City Commission.
He said the document would probably look similar to the Estoppel Agreement added to the sale of the trunked radio system. Even though the authority voted on the sale of the system, the buyer asked for the City Commission to sign the agreement as insurance that the city wouldn’t object to the sale in the future.
“As far as the authority, our goal is to put it up and sell it,” Authority Chair Craig Carter said. “We can’t wait another 13 years. Let’s get it on the tax roll.”
On the general services contribution (GSC) item, Mayor Harvey Ward said the City Commission has no decision to make but could listen and give input.
The GSC is a transfer of money from GRU to the city of Gainesville’s general government side. In the past, that transfer rose to as high as $38 million per year and funded around 25% of the general government budget.
Following pressure by the state Legislature, the City Commission approved a formula to calculate the GSC each year—instead of an arbitrary amount not linked to any metrics. That formula cut the transfer to $15.3 million.
Since the GRU Authority took control in October 2023, members have discussed further cutting the transfer to reduce debt and stabilize rates.
GRU currently has $1.8 billion in debt, and Carter said he thinks the debt level is triple what a healthy amount would be.
At the start of the discussion, Ward said the city currently provides highly-rated services to its citizens and those who enter the city. But major budget changes, like an elimination of the general services contribution, would impact those services.
Carter said the authority must analyze all contracts between the city and GRU before moving forward with the new organizational structure.
“We’re partners with you,” Carter said. “We gotta figure out how to go forward, and until we get everything in writing, I don’t think we can go forward because we’re always going to be looking at ‘What was that deal 32 years ago.'”
Carter highlighted the difficult finances GRU is facing. He said the utility currently sells two tiers of electricity at 40% less than the actual cost of production.
Commissioner Ed Book referenced past GRU staff presentations showing that a complete elimination of the GSC, or even a reduction, wouldn’t significantly impact the utility’s capitalization rate.
GRU set a target of lowering the rate from 87% to 70% over the next decade. With the current transfer, the rate is predicted to hit 71%. Under a halved GSC, the rate would hit 69%, and under an eliminated GSC, the rate would hit 67%.
Book said the lower two percentages don’t amount to any real saving from reduced rates, according to GRU data, but would result in severely hamstrung city services.
Commissioner Bryan Eastman said GRU’s money transfer as a percentage of revenue is lower than that at other cities like Tallahassee, Orlando and Lakeland.
The GRU Authority has twice voted on motions to eliminate the transfer entirely. Both votes ended in a 2-2 tie, meaning the issue is unlikely to be settled until Gov. Ron DeSantis appoints a fifth member to the authority.
Commissioner Casey Willits said the authority should look at spreading out the debt plan over time instead of trying to pay everything off quickly and burdening the current residents. Future residents will move into Gainesville in 10 or 20 years and use the generation assets, he said, and they should have a share in paying off the debt.
Carter said the authority wouldn’t be able to pay off the debt in five years or a short timeframe because of how large it is. Citizens wouldn’t be able to handle the load.
He said the authority has been forced to look at a 50-year timeframe because of the fiscal situation.
The joint meeting ended after about an hour and 15 minutes.
The truth about the disaster Gainesville’s incompetent government put the utility in is coming home to roost. The citizens of Gainesville elected kindergarten level commissioners who financially wrecked the electrical system. Now reap what you sow.
Wait just a darn minute! I thought this new Commission had a magic decoder ring and would make that debt magically disappear AND reduce rates, all at the same time!!! Well, that’s the snake oil that was sole, wasn’t it? Actually, it was just something that could be done to continue poking the blueberry that’s Gainesville, swimming in a cranberry bog.
It is interesting that some people supported the idea of the authority with the expectation that their energy costs would be reduced. In fact, the authority has said several times that rates cannot go down and staff has said it is likely that rates will go up in the future. Even more, to make up for lost funds, the city needed to raise taxes and fire 125 staff who were providing service to Gainesville. Nothing that was expected from the authority appears to be coming to pass.
It is a delusion to think that rates will go down. GRU is saddled with massive debt. The reason the City Commission was removed from control of the GRU was that they had managed GRU into great financial difficulty and had proven incapable and unwillingly to manage the GRU in a competent and professional manner.
The prior actions of your city government created this mess. There aren’t going to be any rate decreases. Let’s hope it is not too late to avoid bankruptcy.
If this upsets you blame your fellow citizens who time after time elected your city disastrous leadership.
Understand that your rates will have to pay both the current cost of utility operation and the old massive debt created by the actions of your incompetent elected officials who managed the GRU into a financial disaster saddled with unsustainable borrowed money.