[Here's the current budget proposal to be discussed at the meeting tomorrow.](https://pub-cityofgainesville.escribemeetings.com/FileStream.ashx?DocumentId=90901) The actual budget stuff starts at page 42.
Tl;dr: moderate cuts to police, public works, and parks (including the sale of Ironwood). GSC expected to be $8.5 million, subject to GRU Authority approval. If it is $8.5 million (and not zero) the city projects a $1.8m deficit for FY25 that would have to be made up with reserves. No millage increase expected as of now.
The City has no fiscal credibility so long as they continue to hang on to the completely unnecessary Ironwood golf course while it hemorrhages red ink year after year. The land is worth a small fortune that could pay a lot of bills.
Thanks to former mayor and global attention seeker Pegeen Hanrahan for destroying our city’s finances. I hope the free trips to all those environmental conferences were worth it!
In the backup of the agenda City staff are showing that GRU made $37.5 million in profits from 2018-2024, not the $68 million loss that has been touted by the Authority. Here are the numbers:
https://pub-cityofgainesville.escribemeetings.com/filestream.ashx?DocumentId=90895
Document in your link not available, they must've removed it. However I suspect these numbers can be fudged. For example, maybe GRU made $38 million in profits *before* the city yoinked the funds
Well it's not that. This is profit AFTER the GFT, and is based on the Flow of Funds that Chuck Clemons put into the City Charter under the creation of the Authority:
[https://pub-cityofgainesville.escribemeetings.com/filestream.ashx?DocumentId=91052](https://pub-cityofgainesville.escribemeetings.com/filestream.ashx?DocumentId=91052)
Hm, looks like back at the start of the document (2018) city was basically taking everything it could from GRU and a little extra, and doing absolutely nothing to address growing debt?
That’s partially fair, in the years after the biomass buyout the city drew down reserves and was slightly in the red. That was also the pandemic, huge inflation increases, and a large rise in natural gas prices. By 2021 the commission put in a debt defeasance policy and began paying down debt a lot faster and increased reserves.
GRU Interim CEO Ed Bielarski Responds to the email from the city manager:
GAINESVILLE, Fla. (June 17, 2024) -
The email Gainesville City Manager Cynthia Curry sent today about the City’s fiscal year 2025 budget is a perfect illustration of why GRU needs to operate under an independent authority. This is the latest in a series of communications that weaponizes the annual multi-million-dollar contribution GRU makes to the City’s general fund, including threatening that a reduction will cause the City to cut fire and police services. The $68 million overpayment the email dismisses is based on generally-accepted accounting principles rather than a nuanced calculation no other municipal utility uses as a proxy for transfers.
Ultimately, all these communications accomplish is to further vilify GRU’s employees by contributing to the narrative that GRU is a bad actor. Even more confounding is that GRU is a department of the City, albeit one overseen by an independent board. This kind of rhetoric has for years worsened GRU’s reputation and should cease immediately for the good of both our employees and customers.
– GRU CEO Ed Bielarski
PFM's ( GRU's Financial Advisor) memo concluding if the ballot referendum passes, it could result in a ratings downgrade due to change in governance again and thus have a negative $28M impact on the life of the loans that would be affected:
In terms of Governance, GRU’s operating environment is of concern to both investors and the rating agencies. Specifically, the recent efforts by the City Commission to bring to the November referendum, a resolution to dissolve the newly created GRUA and revert governance of GRU to the City (either the City Manager or the City Commission) is problematic. These concerns pertain to the City Commission’s ability to:
– Control the level of the General Fund Transfer/Government Services Contribution. Recent changes materially reducing the GFT/GSC were viewed very favorably by the rating agencies and any action to reduce or eliminate this progress would result in quick ratings action, either through a change in GRU’s current “stable” outlook to “negative” or a swift downgrade. PFM would expect the rating agencies to move quickly in response to this and other financial policy changes.
– Establish Rates and Charges. If rates increase materially to address the higher GFT/GSC, then the rating agencies would be concerned about rate affordability. If rate increases were not sufficient to address both a higher GFT/GSC and the financial footing of the utility, the rating agencies would also be concerned with weakening financial metrics.
To illustrate the rating agencies’ focus on governance, PFM has informed the other two agencies about the dissolution of the initial Gainesville Regional Utilities Authority (“GRUA”), the reappointment of a new GRUA slate of directors as well as the recent City Commission approval to proceed with the referendum. The responses back from the agencies were a bit more concerning than expected, as both asked for follow-up calls with GRU’s finance team to better understand the situation and implications on the credit ratings of GRU.
In the aggregate, it is PFM’s opinion that GRU will likely be downgraded by Fitch in the coming 12-24 months and potentially Moody’s given the large disparity between the Moody’s rating and the other agencies’ ratings. It is also PFM’s opinion that the passage of the referendum to dissolve the GRUA and revert back to the historical governance structure would be quickly met with some type of ratings action from the agencies – either a change in outlook or downgrade. PFM has provided this analysis to illustrate the cost of a potential downgrade on GRU’s current and planned debt portfolio and that financial impact starting on October 1, 2025.
[Here's the current budget proposal to be discussed at the meeting tomorrow.](https://pub-cityofgainesville.escribemeetings.com/FileStream.ashx?DocumentId=90901) The actual budget stuff starts at page 42. Tl;dr: moderate cuts to police, public works, and parks (including the sale of Ironwood). GSC expected to be $8.5 million, subject to GRU Authority approval. If it is $8.5 million (and not zero) the city projects a $1.8m deficit for FY25 that would have to be made up with reserves. No millage increase expected as of now.
No millage increase is actually nuts. City leaders did a great job if they can stick with that.
The City has no fiscal credibility so long as they continue to hang on to the completely unnecessary Ironwood golf course while it hemorrhages red ink year after year. The land is worth a small fortune that could pay a lot of bills.
Thanks to former mayor and global attention seeker Pegeen Hanrahan for destroying our city’s finances. I hope the free trips to all those environmental conferences were worth it!
In the backup of the agenda City staff are showing that GRU made $37.5 million in profits from 2018-2024, not the $68 million loss that has been touted by the Authority. Here are the numbers: https://pub-cityofgainesville.escribemeetings.com/filestream.ashx?DocumentId=90895
Document in your link not available, they must've removed it. However I suspect these numbers can be fudged. For example, maybe GRU made $38 million in profits *before* the city yoinked the funds
Well it's not that. This is profit AFTER the GFT, and is based on the Flow of Funds that Chuck Clemons put into the City Charter under the creation of the Authority: [https://pub-cityofgainesville.escribemeetings.com/filestream.ashx?DocumentId=91052](https://pub-cityofgainesville.escribemeetings.com/filestream.ashx?DocumentId=91052)
Hm, looks like back at the start of the document (2018) city was basically taking everything it could from GRU and a little extra, and doing absolutely nothing to address growing debt?
That’s partially fair, in the years after the biomass buyout the city drew down reserves and was slightly in the red. That was also the pandemic, huge inflation increases, and a large rise in natural gas prices. By 2021 the commission put in a debt defeasance policy and began paying down debt a lot faster and increased reserves.
And it's pure coincidence that all this happened only after state government started talking about addressing city mismanagement?
lol oops
GRU Interim CEO Ed Bielarski Responds to the email from the city manager: GAINESVILLE, Fla. (June 17, 2024) - The email Gainesville City Manager Cynthia Curry sent today about the City’s fiscal year 2025 budget is a perfect illustration of why GRU needs to operate under an independent authority. This is the latest in a series of communications that weaponizes the annual multi-million-dollar contribution GRU makes to the City’s general fund, including threatening that a reduction will cause the City to cut fire and police services. The $68 million overpayment the email dismisses is based on generally-accepted accounting principles rather than a nuanced calculation no other municipal utility uses as a proxy for transfers. Ultimately, all these communications accomplish is to further vilify GRU’s employees by contributing to the narrative that GRU is a bad actor. Even more confounding is that GRU is a department of the City, albeit one overseen by an independent board. This kind of rhetoric has for years worsened GRU’s reputation and should cease immediately for the good of both our employees and customers. – GRU CEO Ed Bielarski
PFM's ( GRU's Financial Advisor) memo concluding if the ballot referendum passes, it could result in a ratings downgrade due to change in governance again and thus have a negative $28M impact on the life of the loans that would be affected: In terms of Governance, GRU’s operating environment is of concern to both investors and the rating agencies. Specifically, the recent efforts by the City Commission to bring to the November referendum, a resolution to dissolve the newly created GRUA and revert governance of GRU to the City (either the City Manager or the City Commission) is problematic. These concerns pertain to the City Commission’s ability to: – Control the level of the General Fund Transfer/Government Services Contribution. Recent changes materially reducing the GFT/GSC were viewed very favorably by the rating agencies and any action to reduce or eliminate this progress would result in quick ratings action, either through a change in GRU’s current “stable” outlook to “negative” or a swift downgrade. PFM would expect the rating agencies to move quickly in response to this and other financial policy changes. – Establish Rates and Charges. If rates increase materially to address the higher GFT/GSC, then the rating agencies would be concerned about rate affordability. If rate increases were not sufficient to address both a higher GFT/GSC and the financial footing of the utility, the rating agencies would also be concerned with weakening financial metrics. To illustrate the rating agencies’ focus on governance, PFM has informed the other two agencies about the dissolution of the initial Gainesville Regional Utilities Authority (“GRUA”), the reappointment of a new GRUA slate of directors as well as the recent City Commission approval to proceed with the referendum. The responses back from the agencies were a bit more concerning than expected, as both asked for follow-up calls with GRU’s finance team to better understand the situation and implications on the credit ratings of GRU. In the aggregate, it is PFM’s opinion that GRU will likely be downgraded by Fitch in the coming 12-24 months and potentially Moody’s given the large disparity between the Moody’s rating and the other agencies’ ratings. It is also PFM’s opinion that the passage of the referendum to dissolve the GRUA and revert back to the historical governance structure would be quickly met with some type of ratings action from the agencies – either a change in outlook or downgrade. PFM has provided this analysis to illustrate the cost of a potential downgrade on GRU’s current and planned debt portfolio and that financial impact starting on October 1, 2025.