JEA will move forward with its proposed Downtown high-rise headquarters while the city-owned energy and water utility considers a possible sale.
JEA Managing Director and CEO Aaron Zahn said Tuesday the utility would not opt out of its lease agreement with Ryan Companies US Inc., the Minneapolis-based company that proposes to develop the $72.2 million office tower.
The utility’s opt-out deadline is Wednesday. When it approved the lease with Ryan on June 25, the JEA board gave Zahn the authority to execute the clause or move forward with the headquarters.
After Tuesday’s board meeting, Zahn said the reason he asked Ryan to extend JEA’s lease exit clause from Sept. 30 to Oct. 23 was to ensure there were enough qualified bidders with the financial means to support the project.
“One of the things I wanted to make sure though is that we had enough market data that validated that the business was going to be on the sound financial footing for the next 10 years,” Zahn said. “I told them (Ryan), the reason we negotiated the original 30-day window was to get past the point where the board and the public were able to understand we had substantial respondents with the financial wherewithal and commitment to Downtown.”
Zahn had not informed Ryan officials of his decision to commit to the building before speaking with members of the media late Tuesday morning.
“Today we are grateful for the green light to move forward and continue to deliver on our commitment to JEA in designing and building their future headquarters,” Ryan Southeast Region President Doug Dieck said in a statement. “As I have said all along it is full steam ahead.”
Plans for the proposed nine-story, 200,000-square-foot structure could change. Zahn said Tuesday that JEA is doing additional work to ensure “efficient utilization of the space” in the building.
An Oct. 2 interoffice memo from Zahn to JEA board members says that work should be completed by mid-November.
Ryan received conceptual design approval from the Downtown Development Review Board on Sept. 19 for the proposed building at 325 W. Adams St.
Ryan must receive final DDRB approval before site work can begin, and any change to the project scope also would have to be approved.
The headquarters development includes a 313,000-square-foot, nine-story parking garage with 899 spaces and 8,500 square feet of ground-floor retail space. A 4,900-square-foot outdoor urban open space also is planned for the site.
Nine companies are in negotiations with JEA to potentially buy all or part of the utility.
The companies are:
• American Public Infrastructure LLC.
• American Water Works Co. Inc.
• Duke Energy Corp.
• Emera Inc.
• IFM Investors PTY Ltd.
• JEA Public Power Partners — a consortium of Bernhard Capital Partners, Emera Inc. and Suez SA.
• Macquarie Infrastructure and Real Assets Inc.
• NextEra Energy Inc.
JEA issued the invitation to negotiate Aug. 2, saying a sale could be the best option to solve projected declining energy sales and revenue.
A commitment to keeping employees and a physical office presence Downtown is one of the minimum requirements for the companies bidding on JEA. Other requirements include a minimum $3 billion cash payment to the city, $400 million in customer rebates and $132 million to extend pension protections for all full-time JEA workers employed at the time of the sale.
Zahn said Tuesday if JEA is acquired by one or more companies, the new business would not be able to terminate the lease agreement.
Any sale of JEA will have to be approved by the City Council and a Jacksonville voter referendum.