The future relationship between JEA and the City of Jacksonville will be the focus Thursday, when JEA’s Finance and Audit Committee meets to look over the most recent draft of a proposed interlocal agreement.
JEA's CEO Paul McElroy told WOKV he hopes to have an agreement the full board can approve this month, in order to keep them on a timeline to get the deal through the City Council on time. Several drafts have already bounced in between the City and JEA, however, and we'll see better on Thursday if a compromise has been reached.
JEA is standing by a five-point package, which it wants to see adopted in its entirety. Their analysis shows the proposal would not impact rates or the agency's credit rating.
The first point is key for JEA, which says its contribution rate to the City has ballooned past sales. Under their proposal, the minimum contribution to the City would decrease by $2.5 million per year for 5 years, level for 5 years, and then continue to fall until it meets standards based on sales.
While no agreement has been formally presented to City Council, several Council members have already voiced concern over altering the rates.
Under the ideal interlocal, JEA will take control of their General Employees Pension Plan, get their Legal Counsel and have other administrative changes, and get a commitment from the City to support economic growth and development- which could include natural gas and solar initiatives.
The fifth pillar is perhaps the most appealing to the City- a one-time, upfront payment of $120 million by JEA to the City. According to their analysis, this essentially offsets a chunk of the savings they will achieve over the life of the agreement.
JEA makes the offer at a time Jacksonville is working on a comprehensive Police and Fire Pension reform plan. They had to turn down involvement in a prior pension debt payment plan which would have seen them pay an annual $40 million contribution, because it would have negatively impacted their credit rating and rate payers. While the declined that plan, which was at the time endorsed by Jacksonville Mayor Alvin Brown, they noted a desire to help the City financially in other ways.
A version of the overall pension reform plan cleared the Council, saw some changes by the Police and Fire Pension Fund, and is now back at Council for consideration and possible approval. While it makes a commitment on paying down the City's $1.65 billion pension debt, it doesn't specifically say how. Jacksonville's City Council further passed an amendment requiring the funding line to be determined before the effects of the reform plan- and subsequent savings- can take effect.
While JEA says there are no strings attached with the $120 million, several civic leaders have come out with a plan- now supported by the Mayor- which would use the money and a matching sum from City refinanced debt, to make an upfront payment toward the pension debt. $61 million from the Fund would also be used. In total, it would increase the funded status of the debt, but would not yet reach the 80% funded status hoped.
DOCUMENT: Pension debt payment proposal
JEA has made it clear there will be no payment until an agreement is reached between the Committee, the JEA Board, the City Council and the Mayor. City Council President Clay Yarborough has appointed a special committee to examine the JEA agreement or draft agreement, and they will meet for the first time Tuesday.
I will be at Thursday's Finance and Audit Committee meeting, bringing you instant updates on Twitter (@NewsAndNom) and on 104.5FM.