A.G. Gancarski
A novel proposal from the Mayor’s Office to finance at least some part of the expected renovations on Jacksonville’s municipal stadium is raising doubts in the executive branch.
City Council President Ron Salem told Florida Politics on Saturday that he had serious questions about a move being explored by the Donna Deegan administration to borrow from the pension fund’s assets to fund the renovation costs that could approach a billion dollars.
“I am concerned that we are negotiating raises at the same time as this issue has surfaced. In addition, I want to understand the cost savings of borrowing from the pension fund vs borrowing the money in a traditional fashion. There is significant work that needs to be completed if this is truly an alternative,” the Republican At-Large Councilman said.
Salem said he had been briefed on the proposal by chief negotiator Mike Weinstein, who is handling talks with the Jacksonville Jaguars ahead of a deal being presented to the City Council this summer.
Randy White, the current Vice President who likely will lead the Council starting in July, has not been briefed by the administration. But the former Fire and Rescue Administrator is taking a wait and see approach as he researches the proposal, and is curious what the Police and Fire Pension Board thinks, as well as the Fraternal Order of Police and the Jacksonville Association of Fire Fighters.
Likewise, Finance Chair Nick Howland is learning about the executive branch’s intentions from reading the news. However, he is not completely skeptical of the unique funding scheme.
“I’m reading this report in the media just like everyone else and have plenty of questions. That said, my main concern is negotiating a deal that’s in the best interest of taxpayers and financing that deal in the most efficient manner possible. I will never support raising taxes for a stadium renovation, so alternative financing options are certainly worth exploring.”
Certainly, more City Council briefings will be happening soon.
If pensions are tapped, it will be at a good interest rate for the funds’ benefit, and ultimately the city’s, Weinstein said.
This rate would be higher than that obtained by conventional financing through the bond market but would prevent the city from paying fees and other costs on the money shifted from the pension fund to the infrastructure project.
“Instead of putting it into the land, instead of putting it into the stock market, they would put some of it and give it to the city. The city would, in return, guarantee principle and interest at their AAA return target,” Weinstein said.
The agreement would also include an opportunity for the pension funds to “have a call on it, which means at any time they’re stressed for cash, they can call some of it back, which they’ll never be because they’ve got $5 billion in cash basically.”
“So they’ll be protected if they do this, they’ll meet their target, they’ll invest in the city, they’ll have the ability to call back if, if in fact, they get into a cash problem for the city, it will be a little bit more of an interest rate than we would get if we go to the bond market for this.”
“But if we go to the bond market, we have fees, and we have insurance, purchases to cover the bond, and what have you. So, we have to look at the gap between what we would guarantee to them as opposed to what we could get on the marketplace. Minus all of the fees that we also have to pay, but we’d be paying ourselves, we’d be basically helping the pension fund close quicker.”
Weinstein noted, regarding pension, that he expects the ½ penny sales tax currently allocated to Better Jacksonville Plan repayment to be shifted to paying down the city’s legacy defined benefit pension plan, closed in 2016, by Jan. 2027. That would shift $130 or $140 million a year into paying off that old debt, he said, fulfilling the pension reform agreement entered by the Lenny Curry administration.
If interest rates go down to favor borrowing from outside city funds, Jacksonville could issue its call and “put it in the financial marketplace,” Weinstein said.
This is a separate issue from labor negotiations that are ongoing with public safety unions currently, he argued, since the proposal has “zero connection” to employees and unions and since the police and fire negotiations are expected to be finished before stadium financing becomes an issue.
9 comments
Earl Pitts "Sage Political Expert Emeritas" American
February 10, 2024 at 3:04 pm
Good afternoon Duvall Strong,
This is financial step #1 of the Kalafornication of Jacksonville.
DONT DO IT.
Earl Pitts American
MH/Duuuval
February 10, 2024 at 3:50 pm
The public wants to hear analysis and debate before the city gives away a fortune to a billionaire. Bring it!
It’s like being held hostage to the Jags fanatics who would give away the candy and the candy store for their Sunday gratification. eight or ten times a year.
Earl Pitts "Sage Political Expert Emeritas" American
February 10, 2024 at 4:16 pm
Thank you MH/Duuval for your full faith and confidence in ME, Earl Pitts American. Its great to know you have become a “Member In Good Standing” of the “Widely Popular” EARL PITTS AMERICAN FAN CLUB.
Welcome Aboard Newby!!!! EPA
let Khan do it
February 10, 2024 at 4:22 pm
take away their pensions, what a chance to take, they should be able to vote on this, the taxpayers should be able to vote, it is their money, how about this approach, sell the stadium to Khan for five dollars, let him put his own money up to renovate it…. whatttttttt
MH/Duuuval
February 10, 2024 at 5:09 pm
Be assured the police and fire pensions are safe and will continue to be safe. I can’s say as much for long-suffering taxpayers whose interests are forever being hijacked by very special interests.
No way
February 10, 2024 at 5:14 pm
It is not a public utility. It should be 100% private and taxed just like any other business. Government has no place holding taxpayers hostage. It should have nothing to do with city. The ethics of this are mind boggling. SK controls all the politicians in Jax because he pays their reelection campaign tickets. He owns them all. It’s sick.
Does anyone else wonder why the mayor’s office put this guy, their chief negotiator, out front to dangle this, (“we don’t know what the cost will be!” “The design isn’t finished until it’s finished”…) rather than owning it and presenting a unified front?
Jacksonville has a long history of selling the most trumped up idealized design at bottom barrel price tag, getting it approved, then change ordering its way to 2-3x the cost under executive purview without further oversight from council or accountability to taxpayers. Remember Veterans Memorial Arena (“the grow house” which is so poorly built performers bypass Jacksonville for St. Augustine Amphitheater), the COURTHOUSE… It’s a long list. Expect a lot of chicanery, lack of transparency, a fake price tag followed by a boondoggle with no accountability. All on taxpayers dime to make rich men richer. Because Jacksonville.
MH/Duuuval
February 10, 2024 at 10:05 pm
There are a few major league sports venues paid for entirely by team owners. But, most of the owners are greedy.
Khan, who seems like a decent guy personally, is today on paper worth $4 billion. He paid $770 million for the team in 2011. He can afford to pay for a new stadium..
John
February 11, 2024 at 2:36 pm
NO DO NOT DO IT ,THAT MY TAX DOLLAR !!!!!!!!
About 2 or 3 years ago they up sell tax 1/2 cent to pay for the pension
You don’t have the right to play with our tax dollars
I think the state attorney needs to step in
Duval turning to shicago
February 12, 2024 at 9:01 pm
Absolutely Not!
The city tried this once and failed to pay back, or acknowledge what they did. Instead placing blame on the people who protect this city for the issue that city officials created in first place.
If the jaguars want to fix a stadium ask the entitled players to front it.
JSO/JFRD men and women risk their lives and family lives day in and day out for over 20years for this pension. Leave it alone
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