Does Jacksonville's Charter allow the city's public energy and water utility to sell itself?
That was the overarching question Wednesday during the first of 14 fact-finding workshops in the City Council’s independent inquiry into the possible sale of JEA.
JEA is entered into private negotiations with nine companies after releasing an invitation to negotiate Aug. 2. Utility officials say they're considering possible privatization to address declining revenue and energy sales.
City General Counsel Jason Gabriel spoke before 18 Council members at the workshop, explaining the powers JEA and the city's independent authorities have in relation to Council as granted by the city Charter.
Council member Randy DeFoor, a critic of JEA’s transparency during its privatization process, told Gabriel she does not see a place in the Charter that allows the utility to sell itself.
JEA is using is procurement code to solicit bids for a possible sale.
She cited Charter Article 21, section 21.04(p) that states JEA is not authorized to “transfer any function or operation which comprises more than 10 percent of the total of the utilities systems by sale, lease or otherwise to any other utility, public or private without approval of council.”
“A procurement process is acquisition of goods and services. I've never seen a procurement process used to sell oneself. Can you tell me how that's possible legally?” DeFoor asked.
Gabriel disagreed with DeFoor's interpretation.
“It's possible, legally,” Gabriel said. “I don't know how to help you with that basic understanding of the law. It can certainly use the procurement process to sell itself. I guess one could argue it's a more objective and more above-board way to objectively look at what may be out there.”
But Gabriel also said Wednesday that JEA could not use the 10% provision to sell itself piecemeal.
“All roads lead to the City Council,” Gabriel said in explaining members' power in the possible sale.
The JEA board will vote on one of the private company's bids by March. According to the Charter, it will then go to Council and, if approved, to a voter referendum.
The Council has additional power over JEA.
In an Oct. 7 memo sent to Council member Brenda Priestly Jackson, the Office of General Counsel wrote that Council can dissolve JEA in its current form and restructure the utility with a two-thirds vote to change the Charter.
“The City Council has unique authority over JEA. Namely, City Council, via supermajority vote, has the authority in its sole discretion to modify all or a portion of JEA’s powers. Thus, City Council could eliminate JEA and have its duties taken over by a newly created city department, if it desired,” the memo said.
Council also could change the Charter to require JEA use the city's procurement division. It also could require any future effort to consider privatization to have Council approval.
At the Wednesday workshop, Gabriel said the Charter does not allow City Council to interfere with an ongoing, “valid” procurement process.
Council member Michael Boylan said in an interview Monday that the workshops could result in proposed changes to the JEA Charter. He clarified Wednesday that Charter changes are not “top of mind” for him.
Joyce Morgan, who represents District 1, was the only Council member not at the workshop.
Special counsel
At the workshop, Council President Scott Wilson said he will begin vetting the five law firms who have applied to advise the Council on the JEA sale process.
He said he will review the applicants with Gabriel and Carla Miller, the city’s ethics director.
Wilson said he hopes to file emergency legislation by Tuesday's Council meeting that would authorize the hire.
The Council has set aside $1.85 million to hire special legal counsel to advise members on their role in the potential sale of the city-owned utility.
JEA has contracted legal firms Foley & Lardner LLP and Pillsbury Winthrop Shaw Pittman LLP and financial firms Morgan Stanley & Co. LLC and JP Morgan Securities LLC for a combined $1.15 million base rate to help the utility's board research a sale.
Charter history
Circuit Judge Charles "Chuck" Arnold, who had a 44-year legal career in Duval County and Florida, was asked to provide Council background on the Charter's creation and the 1968 city-county consolidation.
He addressed DeFoor's complaint that Council has been kept “completely in the dark” on legal opinions JEA has received from its outside counsel.
Arnold said that in his opinion, JEA is “still subservient” to the Council.
“Those lawyers over there that they (JEA officials) hired — every one of those people should be representing the City Council as well. Everything they tell the JEA they should tell you,” Arnold said. “Every opinion they have, you should call them in front of City Council and ask them, 'how come this is your opinion.'”
The Civic Council
After sending a letter Tuesday to Wilson and Council members refuting JEA's claims of a financial “death spiral,” Jacksonville Civic Council CEO Jeanne Miller spoke Wednesday about the nonprofit’s independent assessment of JEA's privatization process.
In the letter, the Civic Council's 10-member executive committee unanimously agreed that JEA is “facing headwinds that can be overcome with innovative solutions.”
The Civic Council, which is a member dues-funded organization of 80-plus CEOs in Northeast Florida, took the position that “the urgency around the issue of a possible sale is nonexistent and should not be used to propel a flawed process forward.”
Miller said Wednesday that a $3 billion minimum bid requirement could be the reason for the utility's haste.
“It appears the primary motivation in all this is funds for the city,” Miller said. “And if that is correct, and the city needs $3 billion, then the primary questions here is how much money does the city need? What do we need it for? And then lay out a plan to get that.”
Council's next JEA workshop is scheduled for Nov. 25 at City Hall.