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Jax Daily Record Wednesday, Dec. 9, 202007:30 PM EST

Council moves to institute JEA charter changes

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The 19-0 vote caps a yearlong effort to shield the utility from sale attempts and increase transparency. 
by: Mike Mendenhall Staff Writer

The Jacksonville City Council finalized broad changes Dec. 8 to JEA Article 21 in the city charter. 

The Council’s 19-0 vote approves rewrites to eight charter sections, adding protection from attempts to sell the city-owned utility and increasing transparency in the JEA’s procurement process, executive contracts and board appointments. 

Council member Michael Boylan

Council member Michael Boylan led the Article 21 rewrite with city Deputy General Counsel Lawsikia Hodges over a year. He chaired workshops that started in November 2019 as public pressure mounted against an attempt to sell JEA.

“It was my role to facilitate this work and to have each and every one of my colleagues offer some input — a lot of input in many instances,” Boylan said. 

The JEA charter changes are separate from Council’s special committee investigation into the JEA’s privatization effort. 

The committee is expected to produce a final report by Jan. 13. 

Ordinance 2020-0419 prohibits the sale, privatization or reorganization of JEA without approval from Council. 

The language adopted Dec. 8 states JEA “shall not directly or indirectly, through a consultant or advisor, explore, investigate or consummate a privatization or transfer” to another company or entity without Council action to amend the charter. 

This means it would take a supermajority vote of 13 of 19 Council members for JEA to explore selling more than 10% of its net capital assets.

Council and city attorneys also defined 10% of JEA. It will be derived from JEA’s net capital assets calculated using the audited financial returns from Sept. 30, 2020. They will also be recalculated every five years, according to the new language.

Council member Danny Becton said this “plugged two major leaks” in JEA’s governing document. 

The changes also codify a Nov. 3 voter referendum introduced by Council member Garrett Dennis that splits JEA board appointment power between city lawmakers and Jacksonville’s mayor.

Council will appoint four of the seven JEA directors — three through Council nominations and the fourth from applications to appoint a former JEA employee or union representative. The mayor will appoint three members.

It would take a two-thirds  — 13  — vote in Council to remove a board member, according to the new charter language. 

Transparency and CEO

The Council Auditor’s Office will play a larger role in oversight of JEA product and service development and asset sales. 

The utility will be required to send service contracts and business plans for new lines of service to the auditors at least 60 days before the JEA board votes. 

The utility will have to provide the auditor reports on disbursements for employee bonus programs, and JEA will have to acknowledge the Council Auditor’s request for information within two business days. 

JEA is required to provide auditors a reasonable time to send that information.

Council members took steps in the bill to avoid costly executive employment contracts like those given to JEA former Managing Director and CEO Aaron Zahn and his 14-member senior leadership team.

Zahn’s contract included a 12-month consulting agreement that entitled him to $634,000 if he was fired without cause. The 14 former executives had less lucrative consulting agreements.

The former JEA board voted Jan. 28 to fire Zahn with cause, stripping him of the consultant payout.

One charter change bars mandatory consulting agreements. The bill allows an employment contract only with the CEO/managing director. Other senior executives are covered by standard employment languages.

“The managing director shall have a fiduciary duty of loyalty, fidelity and allegiance to act at all-time in the best interests of JEA,” the charter changes state. 

All future JEA managing directors are required to have five years of executive-level experience in the utility industry.

St. Johns and Nassau counties

The boards of commissioners for St. Johns and Nassau counties asked Boylan and the Council to change language in the charter that said JEA is “for the benefit of the city of Jacksonville.” 

JEA provides water service to portions of both counties, and St. Johns County Attorney Patrick McCormick told the Council on Dec. 8 the attempt to sell Jacksonville’s utility “harmed the ratepayers” in those areas.

McCormick said commissioners from both counties also would like for one of JEA’s seven board positions rotate between St. Johns and Nassau counties. 

 “While we have customers in other cities and outlying areas, they are not owners of the entity. We are. We would politely disagree with the idea that we should include ratepayers as part of the mix in the beneficiary situation,” Boylan said. 

Council member Brenda Priestly Jackson lauded the changes as an example that the 19 members can come to a consensus on a comprehensive bill.

“I am really encouraged by the collaborative effort of the Council members,” she said. “Everybody brought their level of expertise and their positive energy for what they wanted to work on for this. It is my Christmas prayer that we may adopt that going forward in all things that we do.”

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