Let’s get to the bottom line first: $3 billion to $6.4 billion.
That’s the potential sale price of JEA after subtracting debt and other expenses, reported longtime JEA consultants, Public Financial Management.
City leaders have a duty to fully explore this potentially historic sale.
Let’s look at a positive scenario.
• What if proceeds were used to extend water and sewer utilities throughout the county, broken promises made since consolidation about 50 years ago?
• What if proceeds were used to place large numbers of overhead power lines underground, thus protecting citizens from most outages?
• What if jobs of current JEA employees were protected?
• What if rates were protected from increases for a number of years?
• What if proceeds from the sale were placed in separate lockboxes to produce annual annuities so they could not be raided by future city leaders?
• What if a portion of the proceeds were used to pay down some of the city’s pension debt?
• What if sale conditions included a commitment to maintain cooperation with city government?
If these and other strings were attached to the sale, the price likely would be closer to $3 billion than $6.4 billion.
Nevertheless, this could be a game changer for the quality of life in Jacksonville.
A super majority of City Council members would be needed to approve such a sale, 13 of 19 members.
Thus, council and the city as a whole need to fully explore the pros and cons of such a sale. The review needs to be done with a sense of urgency. A straw vote in August could assess the public’s support of such a sale.
Wide support would be needed before proceeding, said Alan Howard, JEA’s board chairman.
There is no time to waste. The stock market seems to have peaked. JEA’s value may have peaked, as well.
While interest in the sale surprised many people, it’s more surprising that new conditions for selling JEA had not been brought up earlier.
JEA CEO Paul McElroy said that the subject of utility sales has been a major topic within the industry. In fact, Tampa Electric was sold for $10.4 billion in September of 2015.
While Tampa Electric has more customers than JEA, that $10 billion number should have led to these discussions years earlier.
Unfortunately, this process started with an open conflict between Mayor Lenny Curry and City Council President Anna Lopez Brosche.
Curry used arcane council rules to call a special City Council meeting Wednesday over Brosche’s objections.
When Howard asked Curry to say a few words, Brosche refused to recognize him. This was inexcusable.
Elected leaders need to put their feelings aside and act for the people.
On the subject of the sale, several City Council members were critical.
Council member Danny Becton said that a decision on selling the utility should have been made before the potential price was determined.
Council members have been deluged with criticism from JEA employees fearful of losing their jobs.
Council member Garrett Dennis said the process thus far has been a “complete disaster” and said he has no confidence in Howard as board chairman.
Local Democratic Party leaders were out in force to oppose a sale. The three-hour meeting was packed with JEA employees carrying signs opposing the sale. Discussions were so intense, there was no time for all of the City Council members to ask questions.
The irony here is that JEA is a potential target because it is performing so well, moving up to the top quartile in J.D. Power customer service ratings.
This is one of the changes since the last City Council auditor’s evaluation of a potential sale in 2012.
Other positive conditions for a sale:
• JEA’s cash flow and financial position are much better as debt has been retired.
• It’s located in a growing and attractive Florida market.
• With customers using less power, one of the best ways for utilities to grow is to merge. Recent consolidation of utilities means there are fewer acquisition targets.
• Interest rates are historically low, so investors are better positioned to add debt.
• The price-earnings ratios for mid-sized utilities like JEA are high.
Granted, the sale of a municipal utility of JEA’s size is rare and complex.
But to turn down a full analysis of a sale would be irresponsible.
Let’s get moving for the people of Jacksonville.