JEA contract passes full Board

UPDATE: On Tuesday, 2/17, the full JEA Board voted unanimously to approve this proposal. It now heads to City Hall. A special City Council Committee appointed to deal with the JEA agreement has met once and plans a comprehensive review of all options, which could last several months.

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A big step forward for what could be the next contract between JEA and the City of Jacksonville.

JEA's Finance and Audit Committee unanimously approved an interlocal agreement during a special meeting today, signing on to a plan that brings JEA's annual contribution more in line with what comparable utilities pay while trying to help the City with some of its financial concerns and not impacting your rates.

It’s a tall order, and JEA’s CEO Paul McElroy says it’s been a “long and winding road” to hammer out the plan.

“Both parties have their mutual interests, and we sort of come out with a win-win,” McElroy tells WOKV.

The agreement, which got the Committee approval today, still includes the five pillars JEA hoped would be represented, but with a few changes.

The biggest addresses the contribution rate, which McElroy expects will be the main concern from the City Council. Under the initial draft, the amount would drop $2.5 million each of the next five years, plateau for five years, and then continue to drop until it falls in line with a rate that aligns with sales. The new plan says that if sales catch up to the contribution rate during the plateau phase, JEA agrees to pay the formula rate, which would be a higher contribution. That would also trigger a five year timeline for when the Council could reconsider the contribution rate, even if that is a shorter time frame than the 20 year length of the agreement.

McElroy says bringing the contribution rate in line is vital, because the current one is a threat to their credit rating and far outpaces other agencies.

“The level of our contribution has reached a point of concern,” he says.

To offset these long term savings, JEA is offering to pay the City a one-time lump sum $120 million at the start of the agreement. While JEA says there are no strings attached to the money, a proposal backed by the Mayor's Office seeks to use it for paying down the City's $1.65 billion Police and Fire Pension Fund pension debt.

DOCUMENT: Pension debt repayment proposal

The agreement would also allow JEA to set up a separate pension plan for its employees and hire a General Counsel, while still falling under the purview of the City’s Office of General Counsel.

Finally, while there are few specific commitments, the agreement would bind the City as an economic development partner. JEA would establish a liaison in the Office of Economic Development and be a part of discussions creating incentives for businesses looking to relocate to Jacksonville. The City, in turn, would agree to support JEA’s water management, solar energy and natural gas initiatives.

“This solidifies the real partnership,” McElroy says.

The full JEA Board will vote on this plan later this month, but Interim Chair Lisa Strange Weatherby expects there will be support.

“It’s beneficial to all parties, and that’s really what we’re looking for,” she says.

Over in City Hall, however, the complete support may be harder to come by. Jacksonville Mayor Alvin Brown supports this plan, according to his Chief of Staff Chris Hand. Hand tells WOKV the Mayor believes it’s “the closest thing to a win-win you will see in City government.”

Some Councilmen, however, are concerned.

“It’s a great deal for JEA, it’s not so great a deal for the City,” says Councilman Bill Gulliford.

Gulliford is chairing a special Council Committee appointed by Council President Clay Yarborough to examine the JEA interlocal agreement. The Committee meets for the first time next week, and Gulliford says they have a lot to dive in to.

“The idea of substantially declining revenues to the City, I think, doesn’t wash well,” Gulliford says.

He’s concerned that, while shaving a few million per year doesn’t seem like a lot of revenue to lose, it would compound and- toward the end of the agreement- be a big burden on the City. He also wants to look at whether there is a way to profit from some of the land and other resources the City has given JEA over the years.

That being said, Gulliford says he absolutely recognizes that the current contribution rate for JEA is unfair.

“I’m interested in fairness, but that goes both ways,” he says.

While JEA is hoping to see an agreement before the new Councilmen elected from the pending City elections take their seats, Gulliford says their review won’t have any specific timeline and will instead be a thorough and comprehensive examination.

Yarborough tells WOKV he’s happy to see a plan is moving forward and he looks forward to a full review.