By Mike Mendenhall & Katie Garwood • Staff Writers
It could be two weeks before City Council has specialized legal representation to advise its members on JEA’s push toward a possible sale.
City Council President Scott Wilson said Tuesday the five local law firms that replied to the city’s search for a special counsel did not have the utility merger and acquisition expertise he considers necessary to advise Council on JEA’s invitation to negotiate.
In a telephone interview before Tuesday’s Council agenda meeting, Wilson said he and the city’s Office of General Counsel will broaden the search statewide to fulfill its stated scope of services.
That scope includes:
• Legal impact of the potential privatization of public utilities.
• Engagement of third-party consultants and experts to assist Council in its oversight function with regard to the potential privatization process.
• Attendance at public meetings.
The Jacksonville-area firms that submitted credentials by Wilson’s Oct. 25 deadline were Abel Bean Law; GrayRobinson; Smith Hulsey & Busey; The Cochran Firm; and Lippes Mathias Wexler Friedman.
The General Counsel’s office said in the scope documents that the hired firm will advise Council in corporate transactions, mergers and acquisitions; environmental and regulatory matters; labor and employment negotiations; procurement; and local government and legislative public policy.
The firm will coordinate with the General Counsel’s office and attorneys representing JEA.
The city did not release a request for proposals to seek qualified law firms. Wilson relied on suggestions from individual Council members and the General Counsel as well as distributing the scope of service document in Jacksonville’s legal community.
During the Council agenda meeting, Wilson told members he wanted to allow more candidates to apply and “enlist more folks to participate.” He said in the past, ads were placed in publications to solicit applications for open positions.
“I’m interested in finding the right person, not the quickest person,” Wilson said during the interview.
Council Vice President Tommy Hazouri said during the Council agenda meeting he “would like a number of them to look at and decide.”
JEA leaders say a sale could be the best option to solve projected declining energy sales and revenue.
To be accepted, all bids to buy the utility are required to include a minimum $3 billion cash payment to the city, among other benchmarks. Nine companies are negotiating bids with JEA officials as part of the utility’s Aug. 2 solicitation.
Jacksonville’s public energy and water utility hired two legal firms and two financial adviser firms in June and July that are working with the JEA board and senior management team on privatization.
Contracts with legal firms Foley & Lardner and Pillsbury Winthrop Shaw Pittman and financial firms Morgan Stanley & Co. and JPMorgan Securities show JEA will pay a combined $1.15 million base rate during its research into a possible sale.
The JPMorgan and Morgan Stanley fees will increase by $10.5 million, collectively, should their opinions lead to a “recapitalization transaction,” or sale of the public utility.
Wilson’s decision could delay a hire by two weeks, he said.
Some Council members think they’re already behind in hiring outside expertise.
Council member Brenda Priestly Jackson often points to JEA’s hire of Pillsbury in June, before the JEA board’s July 23 vote to explore possible privatization.
The engagement letter with Pillsbury from the Office of General Counsel is dated June 28, and the letter with Foley & Lardner is dated July 22.
JEA CEO Aaron Zahn said in an interview following the July board meeting that he did not complete work on possible privatization before the board’s vote to authorize the exploration of a sale.
He argues the hire of Foley & Lardner and Pilsbury were an extension of a standing procurement contract JEA had with the law firms through the Office of General Counsel.
Several Council members wanted to have their legal adviser in place by the next JEA fact-finding workshop — a series of 12 meetings led by Council member Michael Boylan to better understand the implications of a JEA privatization or other scenarios.
Wilson met with General Counsel Jason Gabriel and Carla Miller, director of the city’s Office of Ethics, after the Nov. 6 workshop to discuss the applicants.
At the time, Wilson hoped to file legislation to hire a firm by Tuesday’s Council meeting.
To have an attorney in place before the Council’s next fact-finding workshop, Wilson would have to call a special meeting to approve emergency legislation.
The workshop is scheduled from 11 a.m. to 1 p.m. Nov. 25 at City Hall.
Council approved a bill 15-3 on Oct. 22 setting aside $1.85 million to hire special legal counsel for its role in the potential sale of the city-owned utility.
Council members Aaron Bowman, Terrance Freeman and LeAnna Cumber voting against the appropriations bill.