Commission votes to make offer on biomass plant
Published: Thursday, October 17, 2013 at 11:38 p.m.
Last Modified: Friday, October 18, 2013 at 12:05 a.m.
Late Thursday night, the City Commission narrowly voted to make a $400 million non-binding offer to purchase Gainesville's new biomass plant.
The vote passed 4-3 with Thomas Hawkins, Yvonne Hinson-Rawls, Lauren Poe and Randy Wells in the majority and Susan Bottcher, Mayor Ed Braddy and Todd Chase in dissent.
"We are not obligating ourselves to purchase this plant at this point," Poe said.
Once the city makes an offer, Gainesville Renewable Energy Center is contractually bound to negotiate in good faith on a potential deal.
GREC informed the city in August it planned to either draw tax equity investors or sell the plant outright. That opened a 60-day window for the city to make an offer. That window expires on Oct. 22.
The voting majority said they felt the purchase could bring savings over the current 30-year contract to purchase power from the plant, which carries about $103 million in annual costs. The majority of the projected savings would come through lower fixed operating costs and because the plant would be off the property tax rolls. Under the current arrangement with GREC operating the plant, the city would pay GREC to run the plant and thus would end up subsidizing GREC's tax payments.
Some $10 million in projected property taxes would be collected through Gainesville Regional Utilities and its electric customers under the current contract.
Braddy said he did not feel deliberations focused enough on the risks of ownership.
Some $400 million more in debt, uncertain interest rates, a potential debt downgrade and ongoing complaints over noise and dust now are part of the risks.
GRU staff said those issues would have to be reviewed in detail during a due diligence period.
There was significant public comment, all in opposition to making an offer and having GRU staff conduct negotiations. Several speakers pointed to terms they saw as unfavorable in the current contract approved in 2009.
"The public doesn't trust the negotiations that have taken place so far," local attorney Ray Washington said. "Why would we trust more negotiations?"
Hinson-Rawls said during her time in office she had heard "gloom and doom" from the public over the terms of the contract and their negative financial impacts on the city. She said purchasing the plant would get the city out of the contract through purchasing the plant and "now nobody wants to do it."