Mayor Shares Possible JEA Partnership On Pension Reform

[Metro Jacksonville]

Mayor Shares Possible JEA Partnership On Pension Reform



According to a COJ press release, Mayor Alvin Brown offered new details on Tuesday that show how Jacksonville’s community-owned utility, JEA, could partner with the City to reduce the $1.7 billion unfunded liability of the Police and Fire Pension Fund (PFPF) without the need for a utility rate increase.

Read More: http://www.metrojacksonville.com/article/2014-feb-mayor-shares-possible-jea-partnership-on-pension-reform

[urbanlibertarian]

Will this mean that JEA customers will forego future rate reductions to prevent property tax increases?

[icarus]

“If the City cannot adequately provide those services, it affects everyone in our community – including JEA.  Its employees and ratepayers are the same citizens and taxpayers who receive quality police and fire services, visit parks and libraries, use senior centers, benefit from Jacksonville Children’s Commission programs and enjoy the economic benefits of companies moving to Jacksonville or expanding their operations here.” Mayor Brown

One can hope that sufficient savings can be found in JEA operations not to warrant rate hikes and that natural gas prices remain low but I would not be looking for any rate decrease.

Look at it in a positive note. This is a tax being spread across all the utility customers rather just the property owners.

[icarus]

You mean the interest rate set at the public sale of JEA's bonds and the public and private investors who purchased the bonds in the public market?

Or, are you referring to something else?

[icarus]

Unfortunately, Stephen, neither, COJ or JEA, sets the rates on their bonds. The rates and specifically the yields are set by the market. 

undeniably, the JEA, with the full participation of COJ, racked up a lot of debt in the past decades ... more so than almost any other similar utility as noted in the credit rating agencies analysis of JEA.

The only solution to that problem is to pay off the debt which JEA has been doing, see the reference in the article posted.  As JEA improves its balance sheet, operating margins and debt loads, its credit rating will increase and consequently, the interest cost on any future bonds will be reduced by the market as an acknowledgement of that.

The only thing we can hope for is like I said no rate increase with the imposition of a new tax.  Any rate reduction the JEA customers would have conceivably hoped for will instead be pledged to reduce the City's pension obligations.

[fieldafm]

This is literally the most sensible thing a mayor has done in 10 years.

Taking money from fuel reserve accounts and counting on JEA outperforming their projections?  That's a sensible way to solve the City's pension problems?

Will this mean that JEA customers will forego future rate reductions to prevent property tax increases?

In the case of fuel reserves, yes.
If that should go in the pocket of someone else, then that money should go back to customers in the form of rebates and/or rate freezes.  Talk about regressive taxation policy.

[Tacachale]

Wow, I thought this was a bad idea before he'd revealed all the bad details. Leave it to Alvin Brown to find a way to outdo himself.

[Josh]

Wow, I thought this was a bad idea before he'd revealed all the bad details. Leave it to Alvin Brown to find a way to outdo himself.

How about this?

http://members.jacksonville.com/news/metro/2014-02-18/story/jea-board-member-says-mayor-alvin-browns-office-pressured-him-approve

Bower told his other board members that he refused to guarantee a yes vote, and he said Ronnie Belton, the city’s chief financial officer, told him he should resign. Bower refused to resign.

“I was told I should resign,” Bower said. “I’m not going to be anybody’s puppet.”

Bower, who is up for another term to the board, said his reappointment was deferred after his conversation with the Brown’s administration.

[Tacachale]

^The hits just keep on coming!

[duvaldude08]

Somebody  please wake me up when Alvin Brown's term is over. 

[carpnter]

It becomes more and more obvious that the mayor is simply the wrong man for the job.  Hogan probably wouldn't have been any better, but it is pretty sad when we have to pick which we think will be the best selection from two bad choices.  Hopefully we will get a decent challenger who actually has the capability to run this city.

[Charles Hunter]

Basing "savings" the Mayor could then use to reduce the pension debt on "better than projected growth" could be a recipe for - if not disaster - rate increases. 

· Revenue growth above projections in our growing community: While JEA has forecast based on rating agency advice, the latest report from the U.S. Department of Energy projects that electricity consumption nationwide will grow about 1 percent per year – 28 percent by 2040. A one percent increase in JEA’s business would translate into $18 million in increased revenue per year.

A few years ago, JEA had to raise water/sewer rates because growth did not meat expectations.  Nationwide trends may not apply here.

[icarus]

"I have concerns about unintended consequences," said Former Councilwoman Gwen Yates, a member of the (pension reform) task force. "I keep hearing words like 'likely' and 'unlikely' and 'could' and 'may.'"

http://www.bizjournals.com/jacksonville/news/2014/02/18/as-mayor-alvin-brown-pushes-jea.html

[icarus]

The bondholders will just have to scale back their expectations.  Thats really all that happens.

Thanks. Its been a long day and you made me smile, well chuckle really.

[Josh]

I wish my creditors would scale back their expectations.