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Jax Daily Record Friday, Feb. 23, 201806:40 AM EST

Bills would allow voters to weigh-in on JEA sale; timing of steps toward possible privatization questioned

“I think it’s only appropriate that if City Council decides to get rid of it (JEA), voters should decide,” says council member John Crescimbeni.
by: David Cawton Associate Editor

The debate about privatizing JEA continued Thursday as City Council members offered ideas on how to proceed, while new concerns were raised about the city executive branch’s involvement with a potential sale of the public utility.

The public meeting led by council members John Crescimbeni and Garrett Dennis produced two draft bills that would provide an avenue for voters to weigh in on a sale.

“I think it’s only appropriate that if City Council decides to get rid of it (JEA), voters should decide,” said Crescimbeni.

Crescimbeni said he believes amending the city charter is the best way to address the issue.

His first bill would change language in the charter that regulates how JEA can sell its assets.

Currently, if more than 10 percent of the utility were to be sold, a supermajority of 13 of the 19 council members would need to vote in favor of it, according to an interpretation supported by the city’s general counsel.

The proposed amendment states that no council decision would take effect without referendum approval from voters.

The other bill would allow council to ask that question directly through a non-binding straw ballot in the Nov. 6 general election.

The yes-or-no question to voters: “Should the city of Jacksonville City Council call for a binding referendum to approve the terms and conditions of any City Council action approving the sale of more than 10 percent of JEA.”

Crescimbeni said introducing both bills at the same time was “purely strategic,” since altering the city’s charter takes longer than approving bills.  

To amend the charter, the city would first need to hold a public hearing after a 30-day public notice. Council would need to wait at least 60 days after a bill is introduced before it could take action.

The meeting also was attended by council President Anna Brosche and members Tommy Hazouri, Danny Becton, Joyce Morgan, Katrina Brown, Greg Anderson and Sam Newby.

Hazouri asked how the city defines what 10 percent of the utility represents.

A Feb. 14 report by consultant Public Financial Management said the city could net between $2.9 billion and $6.4 billion if JEA were sold.

Crescimbeni said a recent opinion from the city’s Office of General Counsel said that value comes from JEA’s most recent financial statements.

As of Sept. 30, JEA valued its assets about $8.2 billion, meaning $820 million of the utility could be sold before council had to step in.

“That’s not net worth,” Crescimbeni clarified.

Dennis said he would withdraw an ordinance he introduced Wednesday also calling for a straw ballot.

“I think we need to do something stronger, a little more binding, to let the citizens weigh in,” Dennis said in support of the new bills.

Brosche said she supports Crescimbeni’s ideas.

“I think he’s the master of charter amendments,” she said. “He has a lot of experience and clearly as you can tell, he’s done his homework.”

Timing of steps towards potential sale questioned

Council members also raised questions about when Mayor Lenny Curry and his executive staff began taking steps toward a potential JEA sale.

On Wednesday, Council Auditor Kyle Billy informed the full council he had uncovered a Dec. 20 Request for Proposals from Public Financial Management Inc., on behalf of the city’s Finance Department, seeking financial advisory services to help the city pursue “strategic initiative opportunities.”

Billy said he thought the move was “unusual” in that it seemed to circumvent the city’s procurement process.

JEA has retained Public Financial Management as a consultant since 2002. The firm wrote the  Feb. 14 report on the utility’s worth.

Crescimbeni said he was concerned about that process but clarified that he didn’t think anything illegal was occurring since the consultant was retained by JEA, an independent authority of the city.

“Because we have the ability to piggyback on other open contracts,” he said.

Brosche said the revelation was surprising and “it didn’t make sense that an RFP was not issued through the city’s procurement system.”

“It makes me raise questions about what other contracts the city has that we aren’t aware of, or were procured through means that we, or the general public, aren’t aware of,” she said.

Billy sent emails Wednesday to Chief Administrative Officer Sam Mousa and Chief Financial Officer Mike Weinstein describing how he found the RFP, his communications with Public Financial Management’s Orlando representative Jeremy Niedfeldt, and that city Procurement Chief Greg Pease told Billy he was not aware an RFP existed.

In separate responses, Mousa and Weinstein expressed their “disappointment” in Billy’s conclusion that “the RFP appears to request financial advisory services that would be needed to solicit bids to purchase JEA, evaluate those bids, assist city staff in negations and assist in bringing the transaction to a financial and commercial close.”

Dennis and Brosche offered support for the council auditor – Dennis during the meeting and Brosche after.

“He chased it down and provided the information that he gathered, which is exactly what he’s supposed to do,” Brosche said.

Mousa wrote Billy that the administration “has been approached by private equity providers and affiliated operating companies interested in either monetizing our city public infrastructure or entering into public/private partnerships for new city infrastructure” for the last two years.  

“I would have expected you reaching out to me or Mr. Weinstein if you had any questions or concerns before coming to such an erroneous conclusion,” Mousa wrote.

Niedfeldt, according Billy’s email, said the firm received seven responses to the RFP, including from Morgan Stanley and JP Morgan Chase and Co.

A representative from the mayor’s office said the RFP responses would not be used by the city for the sale of JEA.

Brosche said she found it interesting that the RFP requested investment banking and advisory services and that she had questions about it.

Thursday’s meeting was the first since the Feb. 14 joint meeting of council and the JEA board of directors when the report detailing the utility’s potential value was presented.

On Tuesday, the JEA board agreed it would begin holding workshops to explore a possible sale of the utility and Brosche announced she formed a council committee to do the same.

Crescimbeni will chair the committee, which includes Becton, Dennis, Morgan and Brosche.

Crescimbeni said he hoped to host the first meeting by Thursday afternoon.



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