A JEA board group approved a proposal Thursday to help the city pay down more than $1.6 billion in its public pension liability.
But once it passes the last utility hurdle in the next couple of weeks, the plan faces a stiff test from City Council members.
The city would get a $120 million one-time contribution from JEA to help pay down the unfunded liability owed to the police and fire members.
The utility would borrow the money, which along with $120 million borrowed by the city and about $60 million in pension funds, would be put toward the liability.
In return, JEA would get a reduction in its annual contribution to the city’s general fund starting in fiscal 2016-17. That contribution level would then be dictated by formula based on JEA’s revenue rather than an existing escalating payment scale.
That’s only if the JEA board of directors sends the proposal approved Thursday by the authority’s Finance & Audit Committee is approved by council.
The proposed partnership also includes a provision for JEA to have the option to establish an employee retirement plan separate from the city, authorization to retain in-house legal counsel or procure outside legal counsel and an increased role in city economic development.
After the committee’s action, JEA CEO Paul McElroy said the agreement was the result of 100 days of negotiation with the city administration and “it achieves our objectives.”
Chris Hand, Mayor Alvin Brown’s chief of staff, described the plan as “a good balance” and a way to enhance the partnership between the city and the not-for-profit community owned utility.
Under the existing agreement, JEA’s annual contribution to the general fund increases by $2.5 million each year. The payment has gone from about $88 million in 2006 to a projected $114 million in 2016-17.
Under the terms of the new agreement, the contribution would be nearly $112 million in 2016-17 and then decline $2.5 million each year.
Council would eventually — possibly as soon as 16 years based on JEA revenue increases over that period — have the authority to modify the agreement.
“That preserves the council’s role and improves JEA’s stability,” said Hand.
Ratification of the agreement with JEA by council would mean amending the city charter, which requires a two-thirds majority (13 of 19 council members) to vote in favor of the plan.
The utility’s board is expected to vote on the proposal Feb. 17; legislation could be introduced as soon as Feb. 24.