The Gainesville City Commission passed one item sent for approval by the Gainesville Regional Utilities Authority while deciding to punt until January for the second item, tightening the window utility staff has to finish the work.  

The authority voted last week to send both items to the city commission as both entities work through procedures given the new structure created by state legislation. Outside parties—like banks and the Alachua County Board of County Commissioners—are also looking at how to proceed and wanting assurances that transactions will work as planned.  

The two items on Thursday’s agenda dealt with giving assurances to outside parties who will need to enter contracts with Gainesville Regional Utilities (GRU) now controlled by the independent authority but still a department of the city.  

The first item added an Estoppel Agreement to the sale contract of GRU’s trunked radio system to Alachua County. The agreement, approved unanimously by the city commission, assures the county that the City Commission will not try to argue or reverse the sale of the system in the future.  

Before the Oct. 1 start of the authority, the city commission had previously voted to sell the radio system and agreed that the county was the better positioned entity to own it.  

However, city commissioners expressed concern about another item sent by the authority. The resolution asks the city commission to ratify that the current general manager/CEO position within GRU has the same powers that the city commission previously gave the general manager position when it directly controlled the utility.  

The resolution comes as GRU faces the expiration of its liquidity facilities in May 2024. The facilities serve as a backstop to $105 million in bonds that the utility has active.  

Michael Wiener, GRU’s bond counsel, had previously told the authority that banks and other financial institutions remain unsure of how to move forward with the utility since the new structure began. Because of this, the authority voted in November to move forward with bond validation—a legal finding that the authority has full ability to issue bonds for GRU.  

In the meantime, the liquidity facilities need to be renewed. Wiener and GRU staff said the resolution by the city commission would provide assurances that the authority and general manager can issue the debt for the utility. Then, the state legislation, authority and City Commission would all align on the point.  

The authority hasn’t committed to a plan for dealing with the expiring liquidity facilities. It could negotiate an extension with Barclays, who currently holds the contract, or try to issue a request for proposals to find a new institution to enter into a contract for the role. Either way, Wiener said the financial market wants stability.  

At the authority’s Nov. 1 meeting, Wiener said he’s never had so many people interested in GRU and its future actions. 

“All the banks that I work with, they want to know what I see,” Wiener said. “So, people are really watching this.”   

But city commissioners worried that they would enter a resolution without fully understanding the implications.  

Both commissioners Cynthia Chestnut and Casey Willits asked why no one had sat down with them individually to discuss the matter if it were so important and on a time crunch.  

Chestnut said she was quite insulted that no one that it significant enough to sit with the commissioners, who represent the people, to explain the item. Willits added that he was shocked by the fact. He said he didn’t realize the urgency since no one had expressed it.  

The item was placed on the agenda by the city attorney through normal procedures.  

Commissioner Bryan Eastman also questioned a second clause in the resolution that he said seems to give the authority broader power than given by House Bill 1645 that created the authority. He said he was extremely uncomfortable with the broad delegation of power in the resolution and worried about any precedent it set. 

The resolution was written by Wiener, and he said he wrote it to be strong enough to ease any concerns of financial institutions but certainly not to overstep the legislation that created the authority. The resolution was created to serve all future needs of the authority so that GRU staff didn’t need to return to the City Commission for future contracts.  

Chestnut said she wanted to see what was happening with GRU and to have staff return as needed.  

Mayor Harvey Ward said the item was as he expected. A one-time resolution by the City Commission that ratifies the powers of the authority under the charter and allows the utility and financial institutions to do the work necessary for GRU’s operation.  

Ward added that he didn’t think the city commission would want every debt issue to come before the commission, creating another layer of approval and worrying banks about the extra hurdle. He reminded the commissioners that the city’s bond rating is linked to that of GRU. If the utility sees a lower rating as a result of actions, the city’s rating will likely drop as well.  

“I think we’re going to end up in the same place [passing the resolution], and I would rather, if we’re going to end up in that place, do it sooner than later,” Ward said.  

Chestnut asked how much time the city commission had on the item. Mark Benton, GRU’s director of accounting and finance, said the utility would still have time if the resolution passed in early January. But the delay will leave little room for hiccups.  

Benton said the request for proposal process is typically 60 to 90 days plus time for notice. He said in the past, it would be enough time as banks were familiar with GRU and the structure. Now, the banks aren’t familiar, increasing chances that a wrinkle will appear. 

Eastman proposed the motion to table the item until January. The item passed 4-1 with Ward in dissent and commissioners Reina Saco and Desmon Duncan-Walker absent.  

After the vote, Eastman clarified again with Benton if GRU would have enough time, saying he didn’t want to put the utility staff in a tough spot.  

Benton said GRU doesn’t control all the factors about whether the process is smooth and quick. It must respond to the banks.  

“I can’t promise you that,” Benton said. “I can tell you that hopefully, if things go smoothly and we start in January, we can get it done. That’s the best that I can do.” 

City Attorney Daniel Nee added after the vote that he regretted if anything he said caused a hesitation by the commissioners. He said the city attorney’s office and GRU staff remain on the same page concerning the resolution. 

Willits asked about other options if the liquidity facilities expire. Benton highlighted a few, including GRU paying cash for the $105 million in bonds. He noted that that action would reduce the utilities’ cash on hand and “almost certainly” lead to a credit rate downgrade.  

While the city of Gainesville’s lawsuit concerning the creation of the authority has been settled, other lawsuits from citizen groups continue unresolved, adding to uncertainty for banks and even fellow governments like the county.