GAINESVILLE, Fla. (WCJB) – We may have our first indication of how the market may react to the change in power over Gainesville Regional Utilities.
Moody’s Investors Service issued what they call a “comment” on the impact of a state-appointed board for GRU. The firm expressed concern the change would lead to “potentially cutting financial transfers to the city and hurting its credit quality.”
The announcement does not change the city’s credit rating at this time.
The comment is a reaction to a bill on the governor’s desk that would shift control of the utility from the Gainesville City Commission to a five-member state-appointed board. Lawmakers cited GRU’s high debt burden as the justification for the legislation.
The utility annually transfers tens of millions of dollars to the city budget. City leaders are already working on cutting the budget transfer by millions of dollars to help shore up GRU’s financial ledger.
After the release of the Moody comment, Gainesville City Commissioner Bryan Eastman posted the following on Facebook:
”The GRU Takeover Bill just resulted in a negative credit watch for the City of Gainesville from Moody’s, just as we warned it would. It hasn’t even been signed yet. This is just the start of the financial impact this reckless bill will have on our community.”
Rep. Chuck Clemons of Newberry responded to the report with the following statement:
“Moody’s assessment today makes it clear that the impediment to a strong utility has been the City of Gainesville’s mismanagement of the system. Lower transfers to the City of Gainesville equals a stronger utility and Governance Authority who is not conflicted about funding pet projects and living within their means. When the dust settles, the long-term benefits will be felt by the City, the utility and, most importantly, the ratepayers who have thus far shouldered the financial transfer burden with highest rates in the state.”
“The City of Gainesville would face these credit uncertainties with or without a new GRU governing board because they have already committed to a major reduction in the transfer to the city’s general fund.”