Seth Johnson
The Gainesville Regional Utilities Authority (GRUA) voted on the trunked radio system and an upcoming bond validation process Wednesday during its second-ever meeting.
The meeting was livestreamed on YouTube following a request by the authority members at its first meeting.
The GRUA passed the agenda as presented but rejected a motion by Board Member James Coats to add a series of items to the agenda, including the general services contribution, an independent GRU attorney, General Manager CEO Tony Cunningham’s contract, and the September rate increases approved by the Gainesville City Commission.
“We need to discuss it today—we do,” Coats said. “We have to have the hard conversations because the governor trusts us enough to call our names and get up here.”
Coats said he would present on all the items to let the other board members know what he’d found before putting forward a single motion. His motion to amend the agenda failed for the lack of a seconder.
While the board rejected the agenda change, the members agreed to hold a workshop in two weeks. The workshop will allow the board members to discuss what they’ve found and might like to address in future meetings concerning the utility.
GRUA Chair Craig Carter said at the end of the meeting that the board does need to have a discussion on legal counsel. He said having City Attorney Daniel Nee, appointed by the City Commission, as the GRUA attorney could present a conflict of interest later—especially if the GRU Authority and commission ended on opposite sides of a legal issue.
“Quite frankly, I trust our attorney wholeheartedly. I’m not sure how you can serve two masters,” Carter said to Nee “I think that’s a burden on you, sir.”
Trunked radio system
The GRU Authority voted unanimously for staff to continue negotiations with Alachua County over the sale of the trunked radio system. GRU built the system in 1999 to coordinate radio communications for first responders.
However, the county said in 2021 that it would want to run the system. County control is the common practice throughout the state, and the system has cost GRU money.
A study estimated that operating the trunked radio system from around 2015 through 2021 would result in a $7 million loss to the utility.
In September, the Alachua County Board of County Commissioners and the Gainesville City Commission agreed to an extension to negotiations, with a Dec. 31 end date. The county has said they will build their own system if a deal isn’t reached by that date.
At Wednesday’s meeting, Carter said he hopes the county has some extra room if the GRUA Authority shows it’s willing to sell.
Alachua County Fire Chief Herold Theus said whether or not the county works with GRU into 2024 depends on the board. He noted that there have been several delays and extensions to date.
“We have some commissioners that are, sort of, at the end of their rope in these negotiations,” Theus said. “So, time is very important to us; time is of the essence.”
The purchase price is currently $8 million. The funds will be applied to the debt on GRU’s telecommunication department, staff said. Besides the price, GRU will also reduce operating expenses by around $1.4 million annually by selling the system.
Bond validation process
The GRU Authority voted unanimously to move forward with a bond validation process to confirm its legal right to issue bonds.
The end goal of the process is to obtain a court supported opinion that allows the authority to move forward with governing GRU without disruptions from additional lawsuits or challenges.
Several lawsuits remain pending regarding the validity of House Bill 1645 which established the GRU Authority and the validity of the members appointed to the authority.
GRU’s bond counsel, Michael Wiener, said he’s never had so many people interested in the utility and what might happen.
“All the banks that I work with, they want to know what I see,” Wiener said. “So, people are really watching this.”
In a June report, Standard & Poor’s Global Ratings kept GRU bond rating at an “A” level with a stable outlook. However, the report mentioned the uncertainty given the future, and now present, GRU Authority.
The report said GRU has little chance of improving its bond rating in the next two years because of high debt and rates. But, Standard & Poor’s said the rating could worsen depending on the actions of the controlling body.
Wiener said the bond market wants security and stability. The last year, he said, has been full of lawsuits, changes of authority and public debates on GRU’s debt. Receiving a bond validation would let GRU move forward with confidence that it can issue new debt and cover the debts already issued.
If the bond verification fails, Wiener said it could cost the utility millions. He said the utility will wait until the right moment to initiate the process—preparing the necessary documents in the meantime.
When the process starts though, Wiener said anyone could show up to oppose the bond verification. In the city of Gainesville lawsuit opposing the GRU Authority, the second count said that HB 1645 would impair bond resolution and that the authority would be unauthorized to issue and manage the bonds currently in place.
Because of the unknown number of opponents, Wiener said the cost of the verification process is uncertain. An initial estimate was between $50,000 and $200,000, but Wiener said the low number won’t be possible since it won’t be a simple validation.
Carter thanked Wiener for clarifying that the cost could exceed $200,000.
“I was under the impression we had a ceiling or at least close to a ceiling,” Carter said.
Thanks, Seth for another great article. I appreciate the clarification of the nature of a bond validation. As GRU enters new territory, it’s important that the public understands the process. I’ll stay tuned.
Why are all the people that caused GRU as well as the City of Gainesville’s financial demise and chaos want it to continue. Can they not see the New Governance Board is far superior in intellect and business skills than they ever could be. The very people that caused this dilemma is filing lawsuits and should be counter sued by GRU Customers to be held accountable and let this new regime try to salvage GRU . That 27% property tax hike is only the beginning . The audit coming the Gainesville Leaders that have a severe lacking of Business 101 are in for a real a dose of reality. Hopefully their obstinance will result in accountability by reimbursing GRU and its Customers for their failed leadership, financial decision’s, and management. Do they realize they managed to create Florida History by their politically driven agenda. No Utility in Florida has abused the Goose that laid the Golden Egg (GRU) like they have , and here we are with the consequences of Gainesville’s failed fired leadership.