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Monday, April 15, 2024

GRU remodels Gainesville services relationships, still split on GSC

GRU increases charges for IT and network services, cuts affordable housing program

In its Feb. 6 meeting, the Gainesville Finance Committee worked to revise the city’s budget to make up for the $1.4 million in payments withheld by the Gainesville Regional Utilities Authority. Its proposal, which the City Commission will discuss Feb. 15, makes up the difference by dipping into contingency funds for designated programs such as at-risk youth and gun violence prevention.

GRU continued to add to the city’s budget-balancing burden in its Wednesday meeting. Although failing again to cut the $15.3 million Government Services Contribution, the board moved to remodel some of its relationships with the general government. These include charging the city upwards of $218,000 for network connectivity services, ending the Connect Free program and offering increased prices for IT services.

“We don’t have wiggle room,” Commissioner Bryan Eastman wrote in a blog about the issue. “We gave GRU $19 million per year last year, so something has to go.”

GRU Chair Craig Carter emphasized these changes aren’t meant to hurt anyone. 

“We’re just trying to figure out where we’re at, get our line in the sand and run this utility as a business moving forward,” he said.

General government relationships 

In a presentation to the board, GRU General Manager Tony Cunningham recommended a continued examination of the authority’s relationship with the general government. This discussion is continued from the last meeting when the board agreed to cease $1.4 million in payments to the city for unused services. 

Under the microscope were relationships involving IT services, network connectivity, the Connect Free program and streetlight payments in unincorporated areas. 

Cunningham said GRU has undercharged for IT services provided to the general government, namely Microsoft licensing, data centers and servers. Even though the authority raised the cost for these services from $1.4 million to $2.9 million last year, Cunningham said this is still not enough. His recommendation is to offer the city two options, to continue paying $2.9 million for reduced levels of service, or $5.8 million for full service. 

He admits there is a risk involved with further price raises, as the city could instead choose to outsource these services. 

“If they do walk away, we’re not going to be able to reduce our expenses by [$2.9 million],” he said. “That will ultimately have an impact on our revenue.”

This is similar to the city’s network relationship with GRU. Cunningham said GRU has never been paid in full for the fiber optic connectivity it supplies to city government. He recommended GRU collect $218,000 for these services.

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He also advocated disbanding the Connect Free program, the city's largest affordable housing program. The funds are collected by GRU through a 25% surcharge to anyone connecting to wastewater or water lines outside the city of Gainesville. According to Commissioner Bryan Eastman, these funds have been used to build over 400 homes and secure nearly $100 million in outside state, federal, and private sector investment. 

Ending the program would have no financial impact on GRU. However, Cunningham said that the program breaks the obligation GRU has under House Bill 1645, the law that created the authority, to financially benefit its customers. 

Many argued against this point, pointing out that the majority of surcharge payments come from large developers.

“I think you'd have a hard time arguing that a program that takes a little bit of money from developers, puts it into benefiting ratepayers and citizens doesn't solely further the financial benefit of the customers and the utility.” said James Ingle, a Gainesville resident and president of IBEW Local Union 1205, Gainesville’s electrical workers union.

Cunningham also recommended the city resume responsibility for county streetlight payments. For over 50 years, Gainesville has paid for the operation of streetlights in Alachua County’s unincorporated areas. Historically, the city footed this bill. However, in 2023 the responsibility shifted solely to GRU, which is now set to pay $1.1 million in fiscal year 2025. 

However, the board dropped this part of his recommendation, wanting a better picture from the county of how this relationship is structured.

The remaining three recommendations passed unanimously. 

Escrowing the Government Service Contribution 

Even though the board is set to meet with the City Commission to discuss the GSC, vice chair James Coats believes GRU should take immediate action. 

“What we have is a patient that is bleeding up,” he said about GRUs finances. “To me, an internal GRU escrow gives us a vehicle to put a tourniquet on while the professionals have an opportunity to create a true solution.”

His proposition would halt the $15.3 million payment to the city, and give the authority more bargaining power at the board’s meeting with the city.

Board member Robery Karow said he supported Coat’s position, believing that payment of the GSC shouldn’t be allowed under House Bill 1645. 

Karow made a motion to entirely cut the funds, seconded by Coats. However, it failed 2-2, with Board Member Eric Lawson and Chair Carter opposed. They believed that more time is needed to make a decision.

“Let’s not do it because we’re proud to do it. Let’s not do it because it sounds sexy. Let’s do it because it’s a business move,” Carter said. 

Without a fifth member, it seems the board will remain divided. 

GRU will have its next regular meeting Mar. 6. The joint meeting with the City Commission has yet to be announced as of Thursday afternoon. 

You can contact Henry DeAngelis at hdeangelis@alligator.org. Follow him on X @Hadeangelis.

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Henry DeAngelis

Henry DeAngelis is a third-year journalism major and the City and County Commission reporter for the Alligator. In his free time, you can find him on the basketball court or deep in a good book.


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