The GRU Takeover Bill is signed: here's what comes next

Ron Desantis just signed a bill that steals the city's utilities from it, giving it to the Governor. What that means and where we go from here.

At 4:56 today Gov. DeSantis signed HB 1645, the “GRU Takeover” bill. The bill will officially become law on July 1st, and the takeover of Gainesville’s utilities by the State of Florida will take place.

Now we go through the long and arduous process of implementing it. What this means, where we go from here, and how this will work is still very much a work in progress, but we know a few things.

What the GRU Takeover bill actually does

On July 1st a new chapter in our charter, Chapter 7, will be created that creates and regulates a new entity called the “Gainesville Regional Utilities Authority”. This Authority will be a five-member board appointed by the Governor that has “broad authority” over the utilities of the City of Gainesville. It is free from “direction or control” of the people chosen locally as their “legislative body”, the Gainesville City Commission. It is a “unit” of the City of Gainesville, so this board will be acting as part and parcel of our city government.

The Governor has 120 days to issue solicitations for the GRU Authority, solicitations will be open for at least 30 days, then he has 60 days to select the board members. In total, that process puts us into March of 2024 if the full timelines are held. The board will be seated on October 4, 2023.

Much like the sloppiness in the timelines you see above, the bill is vague, contradictory, and poorly written. So what else it does remains to be seen. Can the Authority set budgets? Can they change ordinances? Can they issue bonds? Can they negotiate salaries?

Some of these are clearer than others. Florida law gives much of these powers to the elected officials of the municipality. How the charter interacts with other parts of Florida law we don’t know, because nothing like this has ever happened before and there is nothing similar to it anywhere in the United States.

An unprecedented attack on local government

This is historic, no board like this exists anywhere in the United States. There are many municipally owned utilities with independent boards, all are appointed by their city commissioners. There are even temporary takeovers of utilities, like in Flint, Michigan, that exist under very specific circumstances and are only setup on a temporary basis.

What Chuck Clemons passed is much more than that. Rep. Clemons, in a bill filed late - week 6 of the 9-week session - without even a community meeting in Gainesville, as arguably he is required to be by Florida House rules, is stealing a $2 billion utility from the people of Gainesville. It’s doing this through the worst possible outcome: the state is simply moving in, doing what it wants, and we pay the bills.

He did this through every loophole he could find. HB 1645 was passed as a “local bill”, which was designed to allow local representatives to work with local cities to pass legislation for their specific needs. These are generally banal bills that everyone agrees on, but he weaponized the process. He filed it through a strange loophole where he didn’t have to “file” on the first day of session - as all bills are required to - he could secretly file it and then reveal it late in session. He kept it off as a referendum - which House rules generally require for changes to City Charters.

And the bill in the end was - purely and simply - an unprecedented attack on cities and democracy itself. The definitive book on municipal law is “McQuillan’s Law of Municipal Corporations” from 1911. It has been cited in over 80 Florida Attorney General Opinions and numerous Florida Supreme Court Cases. McQuillan doesn’t mince words when it comes to the constitutionality of states appointing the officers of a local government:

Each state Constitution doubtless means that every part of the state is to be under some system of localized authority emanating from the people thereof. This is no mere political theory but appears in the Constitution as the foundation of all our polity. There is no middle ground. A city has no constitutional safeguards for its people or it has the right to have all its officers appointed at home. Unless this power is exclusive the state may manage all city affairs by its own functionaries. 

The doctrine is elementary that all corporation officers must derive office from the corporation. This has been from time immemorial settled law. One undoubted right of the people is to choose directly or indirectly under the forms and restrictions prescribed by the legislature for reasons of general state policy the officers of local administration and the board that is to make the local laws. Thus, laws consolidating the sewer, water and street commissions into one board and designating certain persons as commissioners to hold for the first year are in violation of the Constitution of New York which requires officers of cities towns and villages whose election or appointment is not otherwise provided for in the Constitution to be elected by the electors or appointed by such authorities thereof as the legislature shall designate.

Likewise a provision of a city charter empowering the governor to appoint a commission having jurisdiction over the police fire health and street departments of the city was held unconstitutional by the Texas Criminal Court of Appeals.

As McQuillan makes clear, the entire concept of democratically elected government is the people decide who represents them. This has been settled law “since time immemorial”.

To steal local governance from the residents of Gainesville, without a referendum, without a meeting, without even the courtesy of working with our staff to lessen the impacts of a poorly written piece of legislation, is reckless - and an assault on the basics of a functional democracy.

The people don’t want this

It’s worth always remembering that Chuck Clemons already lost this battle, and it wasn’t close. In 2018 Chuck Clemons and Keith Perry tried to pass a different GRU Authority. That one was a little different, it would have been appointed by the Gainesville City Commission, and it went to the ballot for a vote, but it was the same thing in principle. In that campaign the Republican Party of Florida spent upwards of a million dollars in absurd ads claiming things like GRU rates are going up to pay for an ice skating rink that, of course, didn’t exist.

In the end the residents of Gainesville saw through what Former GRU General Manager Ed Bielarski correctly called “propaganda” and rejected the GRU Authority by enormous margins. The end result was 60% of the residents rejected the GRU Authority, and the issue mostly died.

So we were all taken by surprise when Rep. Clemons released a bill midway through session that was exactly the same bill that the people already rejected, but instead of the City Commission it would be appointed by the Governor. 

And the response was swift. Unlike in 2018, when a small cadre of business groups were in favor of an independent GRU board, not one single organization has come out in support of Chuck Clemons bill. Not one local elected official, or even prior local elected official, has supported this.

But the opposition has been huge. Crowds of people drove to Tallahassee at every hearing to speak in opposition. The League of Women Voters, the NAACP, The Sierra Club, and CWA, the union for GRU employees, did press conferences assailing the bill and speaking against it. Hundreds of emails were sent to state legislators.

Everyone was ignored.

Gainesville Regional Utilities was just starting to get its groove back

The most frustrating thing about all of this is that we were finally getting GRU to a better place. Previously, GRU had the highest rates in Florida, our GRU General Manager was spending more time fighting with our state legislative delegation than running the utility, debt was stubbornly high with no plan to pay it down, and there was a frequent threat of bond rating decreases.

But our “investment grade” bond ratings have remained steady for years now. Our city has reduced GRU debt by $233 million since 2017. We just approved a bold plan to significantly reduce GRU debt, putting our general funds transfer at a fraction of what it used to be and by far the smallest of our peers in Florida. Our former GRU General Manager was let go, and our new manager, Tony Cunningham, is a firm and steady hand whose focus is on the well-functioning of our utilities, not politics.

And importantly, GRU rates are dropping rapidly. In April GRU dropped the fuel adjustment by $15, and on Monday GRU announced another $15 drop in July. Currently GRU is the 7th priced electric utility company, lower than almost every private utility in Florida. These price decreases couldn’t have come at a better time: as we go into the summer older AC’s start cranking on and the sudden flux of GRU bills can really hurt.

That isn’t to say GRU doesn’t have issues and headwinds, it does, but the slow process of fixing and rebuilding was coming to fruition. Then Rep. Clemons came in with a wrecking ball….

The residents of Gainesville are paying for state mistakes

It didn’t have to be like this. The City of Gainesville tried to work with Rep. Clemons, to come up with a structure that would work. Our city lobbyist reached out to him to try to come to a middle ground, nothing. Multiple City Commissioners and City staff reached out to him to try to work with him, nothing. The mayor sent an open letter to Rep. Clemons pleading to work with us to come up with a structure of governance that won’t hurt the City and GRU. Nothing. GRU’s bond counsel sent a memo advising Rep. Clemons to change specific portions of the bill that will hurt GRU’s bonds. He ignored them all.

Why did he ignore these pleas? It’s hard to say. It’s clear that if the end goal was privatization of our electricity, water and wastewater that chaos would help. In the midst of chaos selling off our water, wastewater, and electric utility to Florida Power & Light might bail us out, or so Clemons believes.

However, it’s also clear that Chuck Clemons has a history of ignoring GRU rate payers, to his own detriment. Chuck Clemons brief stint in local government was as a Democrat on the Alachua County Commission in the late 90’s. He spent most of that time trying to impose a 6% tax on GRU bills called a “Privilege Fee” that, like this takeover, was unprecedented and had never been done before. It was incredibly unpopular, and he stuck by it all the way to the Florida Supreme Court, who ruled this an “unconstitutional tax”. Chuck didn’t run for reelection to the County, and many editorials at the time cited this unpopular legislation as a key reason. Chuck Clemons truly was “trying to use GRU like a piggy bank” to pay for his spending, so much so that the Florida Supreme Court had to step in.

Whether it’s tone deafness to GRU rate payers or giveaways to his donors, the result is that we’re already paying the price. Before the bill was passed Moody’s put the city’s bond ratings on “negative watch”. A week ago one of our banks for bond swaps refused to close, citing the GRU Authority bill. GRU finance staff scrambled to find a backup, and that backup cost the city an additional $3 million over 3 years. That’s $3 million that is coming out of the pockets of our rate payers.

On top of that our city is going through massive budget cuts. We are cutting $19 million from our budget at the direction of the state through a process that Chuck Clemons demanded. It is resulting in layoffs, cuts to core services, and elimination of programs.

Where do we go from here?

The most important thing in all of this is the ratepayers of our community, the functioning of our city government, and the health of Gainesville Regional Utilities. Chapter 7, the GRU Authority, is in our charter. It’s our city’s responsibility to shepherd it through and ensure this new “GRU Authority” has the tools it needs to run the utility. If we don’t it won’t matter one bit to Chuck Clemons, who lives in Newberry. But it will matter to our employees, our bond holders, and the residents of our community.

So our city will be doing what we can to legislate this in the spirit of what our charter states and the bill was written: splitting our city government in two. Staff has already been working on setting up service level agreements, reviewing ordinances, and preparing to make changes that gives the Authority the flexibility they need while protecting City Government from any chaos this new structure may bring.

But make no mistake, we are not going to let this Authority come in and sell off our utility, as most people believe is a major goal of this legislation. We aren’t going to let them take out debt and hurt our residents. We aren’t going to let them hurt the workers of GRU or their pensions.

We will work to make your voice heard. We will work to put guardrails in for ethics and corruption which is an all-too-common result of state boards like this. We will be taking this to court, because it’s clearly unconstitutional.

We’ll do that because the residents of our community made it very clear where they stand on this when they voted in huge margins against this in 2018. I know this state takeover of our city will not stand forever, and we will come out the other side.

Because the reality is our utility - and our city - are strong. We’ve made it through hardships before - elections, hurricanes, recessions. This will be no different, but it’s going to be a hard few years.