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Friday, April 12, 2024

GRU and Gainesville City Commission hold first-ever joint meeting

Potential cuts to the $15 million Government Service Contribution and power district sale headline agenda

The Gainesville Regional Utility Authority and the Gainesville City Commission met together at city hall Wednesday afternoon to discuss the power district and the Government Services Contribution. This meeting is the first time the two have met since the authority was formed in October 2023. 

GRU proposed the meeting in January to discuss ways to reduce its debt without cutting the GSC. However, its agenda was broadened to include the power district and any other relationships the two wished to discuss. The meeting ended with no votes, and no action taken. 

Wednesday’s discussions started with the power district, the 24-acre plot of GRU-owned land near Depot Park. Having gone unused for years, the city was in the process of selling the land when it lost control of the utility in October 2023. Now, the authority is hoping to sell the land itself to raise capital.

“We can’t wait another 13 years. Let’s get it on the tax roll.” said Authority Chair Craig Carter.

Scott Walker, attorney for the authority, believes the sale would require a sign-off, to assure buyers the commission won’t dispute it in the future. The commission signed a similar agreement when GRU sold its trunked radio system to Alachua County in December 2023. 

In the same way GRU hopes to raise money from the power district, it hopes the recaptured GSC funds can provide money to use toward reducing its debt. 

The GSC is one of the many pre-authority relationships with the city that GRU is evaluating. Clarity and communication between the two is necessary for either to move forward in this new governmental configuration, Carter said.

“We’re partners with you,” Carter said. “We got to 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 GRU’s mounting financial concerns as catalysts for conversations about the GSC. The utility’s $1.8 billion debt is three times what it should be, he said, and noted it currently sells electricity for 40% cheaper than what it costs to make. 

“If we were to adjust our rates where they needed to be, we would all be shot tomorrow,” he said. 

However, commissioners argued what GRU gains by cutting the GSC is far outweighed by what the city loses. 

Commissioner Ed Book referenced a slideshow GRU presented at its Jan. 16 meeting. In it, GRU staff illustrated the financial impact halving or cutting the GSC would have on GRU’s debt-to-capitalization ratio, a percentage illustrating a business’s total debt against its total capital. 

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The ratio is currently at 87%, which the utility hopes to lower to 70% in the next decade. Keeping the transfer as is, the ratio is predicted to hit 71% by 2033, according to GRU data. Under a halved GSC, the ratio would hit 69% and 67% with an eliminated GSC.  

Book said these numbers show the $15.3 million per year gained from cutting the GSC would barely make a dent in GRU’s debt.

On the other hand, cutting the GSC would severely hinder the city’s ability to fund key services. In 2023, when the GSC was reduced by $19 million, the city laid off 125 employees and cut the budgets of more than half its departments. City Manager Cynthia Curry has already warned that any changes to the GSC would lead to more severe cuts, impacting the police and fire departments.

“I see that as really, really impacting customers and ratepayers across the city in all services, no matter our mutual contracts,” Book said. 

Commissioner Bryan Eastman argued the city is giving GRU a good deal with its GSC. According to his estimates, GRU would pay upwards of $60 million in traditional property tax and said GRU’s current money transfer as a percentage of revenue is far lower than comparable transfers in Tallahassee, Orlando and Lakeland. 

Commissioner Casey Willits said the authority should try to find a way to better spread out the debt reduction plan. He argued future residents who move into Gainesville in 10 or 20 years and use GRU assets should also contribute to resolving its debt.  

Carter agreed, and said the authority has been forced to take long-term solutions due to the enormity of its financial burden. 

“We’re going have to start having to pay a little bit now,” he said. “We’re looking at all options. That’s what a business does.”

GRU will meet again regularly March 6, and the city commission will meet March 7. 

You can contact Henry 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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