One day short of one year.
The City Council Special Committee on the JEA Agreement that first convened a year ago today adjourned for the last time Tuesday after approving amendments to the formula that determines how much of its revenue the utility contributes annually to the city general fund.
The agreement, now on its way to council committees, also sets up a new partnership between the city and JEA to eliminate septic tanks in environmentally-sensitive areas of Duval County.
Council Vice President Lori Boyer described the new agreement as some of the most important work done by city government in years.
“JEA touches everything,” she said of the publicly-owned sole provider of electric, water and sewer services. “It’s an essential service and they have an exclusive agreement.”
Under the five-year agreement, which must be approved by the full council after public hearings, JEA will contribute to the budget an amount calculated by multiplying 7.468 mills by the gross kilowatt-hours delivered each year to retail electric customers and to wholesale customers with contracts having an original term of more than one year.
In addition, JEA will contribute an amount determined by multiplying 389.2 mills by the number of kilo-gallons of water delivered annually to customers.
The agreement sets a minimum contribution of $114.19 million in fiscal year 2016-17 and increases the required minimum each year through 2020-21, when the minimum will be $120.01 million.
The ordinance authorizes council to renegotiate the formula after Oct. 1, 2020.
Boyer said the formula will “not tax JEA’s ability to perform business without raising rates.”
A new partnership is established between the city and JEA for sewer system expansion.
JEA will make a one-time contribution of $15 million for design and installation of new sewer service to be matched by the city.
Another issue negotiated was JEA’s transfer to the city of Basin Management Action Plan water quality credits.
Boyer said that will save the city about $2.5 million a year that can be used for other needs, such as drainage projects.
The agreement puts the city in third position in terms of revenue distribution, said JEA CEO Paul McElroy.
First, he said, is operations and maintenance to sustain the utility, followed debt service.
“To raise capital in the municipal bond market, you have to pledge revenue,” he said.
After the meeting adjourned, committee Chair Bill Gulliford said the next step is for JEA, the council and the mayor’s office to begin work on planning the sewer expansion project.
He’s concerned the estimated $300 million total project cost to eliminate existing septic tanks is growing as more homes are built in areas not served by sewer service.
Gulliford said he plans to invite developers to participate in the discussion.
He also said establishing the committee and beginning negotiations nearly one year ago made the process better for both parties.
“We got this thing going well in advance. We didn’t have a gun to our head,” said Gulliford.
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