City of Gainesville has major debt problems per FL Auditor General’s preliminary audit
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GAINESVILLE, Fla. (WCJB) - The City of Gainesville has major debt problems identified by the state Auditor General in a preliminary audit. Gainesville Regional Utilities(GRU) debt of $1.7 billion from fiscal year 2019-2020 was topic A of the report.
The 41-page letter to the City of Gainesville also states the debt to equity ratio is five times higher than Lakeland, Jacksonville, and Tallahassee.
From September 2017 through February 2020, GRU issued $954 million dollars in bonded debt.
“Now of course a lot of this comes from having to buy out the original contract of the biomass facility,” Gainesville City Commissioner David Arreola said.
Arreola said he believes lawmakers sent the auditor general on a wild goose chase.
“I think the Auditor General did a good job,” Arreola said. “I think the initial mission was a bit tainted with political conspiracy.”
The auditor suggests that the city reevaluate how much GRU spends on the general fund transfer.
GRU’s operating revenue is more than $410 million and the annual transfer is more than $36 million.
“So a lot of the issues are already being dealt with by the city so I want to rest people assured that we have a debt defeasance plan for GRU,” Arreola said. “We actually had a budget surplus this year so there’s also no concerns about the city’s finances as it were. We’ve already done a number of refinances where we’ve been able to get lower rates and actually be able to pay immediately some of that principle down and even save on some interest payments so even in the last few years we’ve been able to reduce some of that debt.”
The preliminary audit also said the City of Gainesville did not oversee or control the Reichert House Youth Academy operations effectively.
A city audit of the Reichert House started a chain of events that led to the firing of former city auditor Carlos Holt in June of 2019.
“I remember the Reichert House leaders being very forthright in what they were going to do differently,” Arreola said.
“The most important thing is going to be for the city commission to look over it like a fine tooth comb with every recommendation that management is responding with,” Arreola added.
City managers have 30 days to respond. They will send the response to the mayor and he will send it off.
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