It’s been a while since we visited the goings on with the Gainesville City Commission’s biomess plant and the opposition to the plant. A lot has happened.
Maybe you really can’t fight city haul. In Gainesville, City Haul won’t ignore you or correct you, if they don’t agree with you. They will ruin you! Mr. Washington, please report to your assigned re-education facility!
Ray Washington has written a response back to the Gainesville Sun and sent us a copy. You can read it below.
GRU EMPLOYEES, GRU RATEPAYERS AND GAINESVILLE RESIDENTS DESERVE LEADERSHIP, NOT CHUTZPAH
Chutzpah is a Yiddish word for a certain type of “audacity.” GRU General Manager Robert Hunzinger has taken that type of audacity to a whole new level in his Gainesville Sun “Talking Back” opinion piece (“GRU critic gets his facts wrong again,” May 6, 2012.
Hunzinger starts out by attempting to have readers believe he is going to rebut my “article in the April 26 Gainesville Sun.” (My article – “GRU numbers add up to bad news for ratepayers” – first appeared in The Sun on April 28, not April 26 – but why should the general manager of the city’s utility concern himself with accuracy in numbers?)
First, Hunzinger asserts that many of the numbers and conclusions contained in my article “were wrong.” But he fails to demonstrate that a single number or conclusion was wrong, instead using misdirection to attempt to create the illusion he is actually refuting something. More about that later.
Next, he charges that “Time and time again we’ve seen Washington provide inaccurate information to the public and GRU customers.” But he fails to cite any instance in which I’ve provided inaccurate information. Instead, he resorts to asserts that I was “part of confidential settlement agreement with American Renewables,” which accusation he follows with an ad hominem attempt at misdirection, declaring “Washington has never stated publically how he benefited from this secret agreement.” More about that later.
Before discussing Hunzinger’s failure to actually rebut a single number or conclusion contained in my April 28 article – and before discussing Hunzinger’s attempt at ad hominem diversion – let’s focus first on those assertions in my article in my that Hunzinger did not dispute.
He did not dispute that nearly one-third of GRU’s electricity in the first three months of fiscal year 2012 was purchased from other utilities under existing Power Purchase Agreements –
including a GRU agreement with Progress Energy – under which GRU paid only $65 per megawatt hour for purchased electricity.
He did not dispute that GRU’s Progress Energy agreement will end in 2013, after which GRU will begin paying more than $130 per megawatt hour – more than twice as much – under an agreement with an out of state limited liability company recommended by a team appointed by Hunzinger, who signed the agreement, and then advised the city commission to approve it.
He did not dispute that since February 2003 GRU has added more than $1 billion in additional debt.
He did not dispute that rising customer payment obligations and rising GRU debt are part of the reason GRU officials in June will ask city commissioners to approve a plan that involves, among other things, refinancing some of GRU’s long term debt from fixed rates to variable rates, extending by years the repayment term of some GRU debt, and renegotiating or entering into new derivative interest-rate-swap contracts with JP Morgan Chase and Goldman Sachs.
He did not dispute his intent to attempt to use that refinance-payment-extension-derivative-interest-rate-swap plan to attempt to temporarily suppress customer electric bills rate hikes that will occur when the GREC wood-burning electricity plant comes on line in 2013.
He did not dispute that his proposed refinancing and derivatives plan is intended to allow GRU to reduce debt service payments in the year 2013 and for seven years thereafter, while increasing debt service by millions of dollars per year for 22 years, resulting in higher bills for GRU customers in the years 2021 to 2042.
What, then, did Hunzinger dispute, or imply he was disputing?
First, Hunzinger disputed my use of the word “scheme.” He argues that the proposed refinance-debt-extension-and-derivatives plan that GRU is peddling to the city commission is just a plain old “refinancing of outstanding debt” just like a refinancing of “your home mortgage at a lower rate.”
Maybe there are some people in Gainesville who convert their fixed rate home mortgages to variable rate mortgages, pay fees to high priced bond counsel, tax counsel and other advisers, then enter into risky contracts with Wall Street firms like JP Morgan Chase and Goldman Sachs and international bankers like Deutsche Bank (each of which charge initial fees and recurring fees) for derivative interest rate swaps that can could end up costing them tens of millions of dollars. I doubt it.
But the home refinance analogy has been used before by others. A Bloomberg News article points out similarities between high risk municipal refinancers and high risk home borrowers: “Ask a Nobel Prize-winning economist what’s the difference between the mayor of Baltimore losing taxpayer money with derivatives sold by Wall Street and millions of Americans defaulting on subprime loans and he’ll say there isn’t any: State and local governments are victims of opaque financing they don’t understand, the same way individuals go broke on borrowing at rates too good to be true.”(See http://www.bloomberg.com/news/2011-11-14/governments-using-swaps-emulate-subprime-victims-of-wall-street.html)
A simple “refinancing out of outstanding debt” or a “scheme”?
From my perspective, GRU’s plan is anything but simple. Hunzinger has presented nothing to show that it is not a “scheme,” defined by the Oxford Dictionaries as “a large-scale systematic plan or arrangement for attaining some particular object or putting a particular idea into effect.”
Let’s move on to Hunzinger’s other purported rebuttals.
Second, Hunzinger appears to dispute my statement that “At the end of fiscal 2011, GRU’s outstanding debt still stood at more than $1 billion.”
Hunzinger asserts: “GRU’s outstanding long-term bond debt as of October 2011 is $932 million.”
But Hunzinger’s assertion is more of a sleight of hand than a real refutation. GRU’s “Outstanding Debt” at the end of fiscal 2011 was clearly reported on page 7 of GRU’s fiscal year 2011 financial statement as $1,025,180,000, not $932 million. Hunzinger’s sleight of hand is his substitution of the phrase”outstanding long-term bond debt” for my phrase “outstanding debt.” Hunzinger by this subterfuge is able to ignore tens of millions of dollars of commercial paper debt GRU was obligated to pay at the end of fiscal 2011. Debt is debt. Sleight of hand is sleight of hand.
Third, Hunzinger appears to dispute my statement “GRU’s debt service in fiscal 2011 amounted to nearly $100 million,” and my statement “GRU’s debt service for fiscal 2012 will be nearly $150 million.”
He writes: “GRU’s debt service expense was $70.3 million in 2011 and is expected to be $71.4 million in 2012, not the number Washington reported.”
But Hunzinger knows that page 15 of GRU’s fiscal 2011 financial statement clearly recites “interest repayments on long term debt” and “principal repayments on long term debt” that totaled $97,945,622 at the end of fiscal 2011.
And Hunzinger also is well aware that his own Chief Financial Officer has confirmed this number. He is aware that at the April 19, 2012 Gainesville City Commission meeting in which commissioner Todd Chase asked” “The way I read it, there’s basically $98 million last year — we spent $98 million in principal and interest . . . that’s what we’re paying on our debt?” And he is aware that GRU CFO Jennifer Hunt answered Chase, “Yes, those were our principal and interest obligations.”
(See transcript of April 19, 2012 city commission meeting at http://gainesville.granicus.com/TranscriptViewer.php?view_id=5&clip_id=1447)
Hunzinger also knows that page 32 of GRU’s fiscal 2011 financial statement clearly states that GRU’s anticipated “Debt Service requirements (principal and interest) on long term debt” for fiscal 2012 was listed as $148,823,386, not the $71.4 million Hunzinger claims.
How to account for Hunzinger’s alleged refutation? Notice is substitution of the term “debt service expense” for the term I actually used, which was “debt service.”
“Debt service is the amount you pay on a loan in principal and interest, over a period of time, usually a year.” (See http://biztaxlaw.about.com/od/glossaryd/g/debtservice.htm)
“Debt service expense is the other category, which covers the interest on the debt service.” (See www.justelementary.com/definition-of-ebitda)
Debt service is debt service. Sleight of hand is sleight of hand.
Thus ended Hunzinger’s pseudo-rebuttals. Everything else in Hunzinger’s opinion piece are truisms, tautologies and bromides –attempts at misdirection and spin that have nothing to do with anything I wrote in my April 28 Sun article.
Having failed to rebut anything he implied he would rebut, Hunzinger concluded his opinion piece with what comes close to being the height of Huzingerian Chutzpah, writing:
“When it comes to financial reporting, GRU employees must be factual, accurate and honest. Washington has demonstrated time and again that he has no such obligation.”
As insulting and absurd as Hunzinger’s parting shot may be, it wasn’t the actual height of Hunzingerian Chutzpah.
For that, let’s return to his his accusation that I was “part of confidential settlement agreement with American Renewables,” which he followed with the ad hominem: “Washington has never stated publically how he benefited from this secret agreement.”
Hunzinger is well aware: (1) that I was not a party to any settlement agreement with American Renewables but, rather, was an attorney who, along with a team of attorneys, represented a group of public spirited citizens who opposed a largely secret deal that Hunzinger himself had signed with the out-of-state limited liability company, GREC, (2) that Hunzinger himself had agreed to a recommendation by a committee he appointed that prohibited the public for more than 30 years from knowing about important parts of the GRU-GREC deal, including what the deal would cost, (3) that my clients for their own reasons settled their challenges with GREC in return for the public being able to access to previously secret parts of GRU-GREC agreement that otherwise would have been kept from them for at three decades, and in return for increased monitoring and environmental protection, among other things, and (4) that my former clients have expressed a willingness and desire to have all aspects of their settlement made public, while GREC has refused.
For reasons known only to Hunzinger, he has squandered the opportunity given to him by The Sun to address serious issues of great importance to this community, attempted to misdirect readers from the facts, and engaged in ad hominem nonsense that he knew to be false. This reflects poorly on Hunzinger, and on his leadership of an organization that employs and serves many outstanding residents of this community. Instead of leadership, he has chosen Chutzpah.
There are serious issues about this community’s energy future that Hunzinger in his role as general manager of our municipal utility could address forthrightly and honestly. GRU employees, Gainesville residents and GRU customers deserve better.
