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Jacksonville Police and Fire Pension Fund sees bounce in funding level, but extra contributions urged

Good news and bad news for those watching the trials and travails of Jacksonville’s Police and Fire Pension Fund.

The good news first: Per a recent actuarial report from the fund, 2017’s funded ratio is 47.60% compared to 43.02% last year (after reflecting all Actuarial Impact Statements).

This is the highest ratio since 2010.

The fund was bolstered by a bull market in investments, with “the total net investment return was 14.27% compared to the assumed annual investment return of 7.0%) and salary increases which were less than expected (6.3% actual versus 10% assumed for the year, including the 6.5% across‐the‐board salary increase given on October 1, 2017).”

The 68-page report notes that retirements, turnover, and new hires were above projections (decreasing the experience level on the force), and mortality levels underperformed expectations.

Now, the bad news: Despite these positive auguries, the PFPF still has qualms about the funding mechanism of what will be a continually growing pension liability — the 1/2 cent sales tax poised to kick in in 2031.

“We are unable to assess the risk that the timing and/or amount of future pension liability surtax proceeds may significantly deviate from the projections (due to legal challenges, economic hardships, or any other reason),” the report says, positing a potential solvency risk.

Another red flag: assets are exceeded by actuarial liability.

“It is important to note that the Fund’s assets are insufficient to cover the actuarial liabilities for inactive members. As of October 1, 2017, the market value of assets, net of reserves, is approximately $1.76 billion, and the actuarial liability for current inactive members is approximately $2.80 billion. Given the low funded ratio and the fact that the pension liability surtax revenues will not be received until more than 13 years from now, it is advisable to consider making contributions to the Fund in excess of the minimum required contribution shown in this report.”

The city of Jacksonville passed comprehensive pension reform in 2017.

Jacksonville closed entry to defined benefit plans to new hires, instead implementing a robust defined contribution scheme with 25 percent matches for defined contribution plans for police, fire, and correctional workers, and raises amounting to 20 percent over three years for public safety workers.

Pension reform was a necessity for the current year’s budget, reducing the pension contribution to $218 million from $360 million, and creating room for incumbent politicians to move forward with capital improvements and pay raises for all city employees.

There are, say some analysts, worries down the road.

Bloomberg Intelligence analyst Eric Kazatsky said Jacksonville “has been challenged by a steadily increasing fixed-cost ratio, which could put downward pressure on credit ratings and add to debt risk.”

Meanwhile, Jacksonville is considering the eventual impacts of selling JEA, the municipal utility, at least in part.

Jacksonville City Councilman Matt Schellenberg asserts that the time is right to sell the electrical portion to Florida Power and Light or Duke Energy.

Worth noting: while the total appraised value of JEA assets, at $5.3 billion, is well above the debt load of $4 billion, the electrical side is in worse fiscal shape than water and sewer.

The appraised value of the electrical holdings, per an internal JEA report, is just over $2.6 billion, against a $2.3 billion debt burden.

 Nonetheless, Schellenberg thinks the electrical side could fetch more than the appraised value on the open market, perhaps bringing in $4 billion.

That money, said Schellenberg, could pay down debt, address the $3.2 billion unfunded pension liability, or be used to defray losses in annual JEA contributions ($116.1 million currently) to the general fund.

Jacksonville City Councilman Danny Becton, who has been trying to get legislation through to earmark an additional city contribution to pension obligations, noted last year that the pension liability could reach $10 billion by 2031.

Total liability per this report: $3,692,694,731.

Even factoring in the weakening dollar, volatility in equity markets (the current “correction”) suggests that pension funds like Jacksonville may have a tougher time exceeding investment targets in 2018 than the previous year.

Rob Bradley panel rakes in $114k, leads Northeast Florida Senatorial committees

Working for Florida’s Families, the political committee of Senate Appropriations Chair Rob Bradley, raised more than $100,000 for the third straight month in January.

The first month of 2018 saw $114,050 of new money come into committee coffers off 37 contributions, bringing it up to $1.650 million raised, with roughly $795,000 on hand.

Among those who donated $5,000 and over in January: Florida CUPACJune Simpson, the wife of Tom Simpsonwho the U.K. Daily Mail calls a “pharmaceutical billionaire”; Florida Restaurant and Lodging AssociationChief Executive Officers of Management CompaniesUnited Health Group PACFloridian’s United for Our Children’s Future, a political committee seeded by Florida CrystalsFlorida Power & Light, U.S. Sugar, and Sheldon Adelson; shopping mall magnate Syd Ghermezian; and Comprehensive Health Management.

Bradley’s two Republican Senate colleagues from Northeast Florida saw quieter January committee fundraising.

Florida Conservative Alliance, the committee of Fernandina Beach Senator Aaron Bean, brought in $19,000 in January, pushing the total to $105,000 on hand. That number was paced by $5,000 contributions from Comcast and TECO Energy.

Sunshine State Conservatives, the primary committee of St. Johns County’s Travis Hutson, brought in just $6,500 in January; it has $105,000 on hand. Hutson’s secondary committee, First Coast Business Foundation, brought in no January money and has just under $9,000 on hand.

Congressional candidate Nancy Soderberg hires campaign manager, field director

While many of the headlines in Florida’s 6th Congressional District have revolved around internecine Republican warfare, Democratic frontrunner Nancy Soderberg is building her staff for the general election.

New to the team: Campaign Manager Alexa Sheryll and Field Director Kirsten Dillon.

Sheryll’s last major gig was in New York, where she ran the Suffolk County Coordinated Campaign, and where she also worked for Zephyr Teachout.

Dillon worked on the successful Virginia gubernatorial campaign of Ralph Northam, apt preparation for a run for an open seat in a district that is leaning less Republican as the campaign season goes on.

Soderberg, who was Ambassador to the United Nations during Bill Clinton’s presidency, has shown momentum since entering the race in Summer 2017. She raised $207,949 last quarter, putting her above the $544,000 mark. She has $376,000 cash on hand.

While this does not give Soderberg the total cash on hand lead (Republican John Ward has $644,216 on hand), Soderberg will have the resources to be competitive.

‘Legally defective & fatally misleading’ – ballot access DQ for Jax anti-LGBT rights group

Empower Jacksonville, a group seeking to allow referendums to change Jacksonville’s charter, received a major, perhaps fatal, setback Thursday from the city’s Office of General Counsel.

Empower Jacksonville, associated with the Liberty Counsel, wanted two ballot items voted on in August 2018.

The first: a referendum to change the city’s charter to allow citizens to challenge any law via referendum.

The second measure: a straw ballot on whether or not LGBT protections in the Human Rights Ordinance should be subject to a citizen referendum.

That play, audacious though it may have seemed, is now in grave peril.

Thursday, they got bad news from the Office of General Counsel: “This Office has reviewed the Supervisor’s Memorandum along with the provided materials and has determined that the proposed petition is legally defective and fatally misleading. It cannot be lawfully placed on the ballot.”

The objections of the OGC: “The initiative petition is not legally sufficient. The ballot Title and Summary do not comply with all requirements necessary to appear on the ballot. The General Counsel has the duty to prevent a legally defective petition from appearing on the ballot.”

The memo develops that case, asserting that the ballot item “unlawfully proposes to give the voters a referendum power not provided to them by law.”

The City Council, per the charter, has “legislative power and duties,” not a popular vote. Empower Jacksonville, via the referendum, seeks to negate the charter by giving it a super-legislative power.

“The voters become a super-legislative body with power to permanently withdraw substantive legislative power from the City Council. As noted below, the Mayor has no authority to veto ordinances adopted through the process created by the Proposed Amendment,” the memo asserts.

“The Title and Summary make no note of this extraordinary power. They do not note the creation of power untethered from any checks or balances. They do not in any way hint at, much less state, the chief purpose of the Proposed Amendment,” the memo continues.

Another issue: the “ballot summary fails to note that the Proposed Amendment substantially overstates the power to repeal ordinances by referendum vote.”

“The Summary fails to inform the voters that the Proposed Amendment will alter multiple functions of city government … The Summary fails to inform the voters that the Proposed Amendment substantially alters executive and legislative functions and powers of the City.”

The OGC memo concluded by saying the “Proposed Amendment effectively creates a new, supreme, fourth branch
of government — the citizenry — with authority to exercise the powers and perform the functions of the legislative and executive branches of the Consolidated Government.”

Moreover, the OGC opinion is binding for the Supervisor of Elections office, the memo adds, citing precedent and case-law.

And for the anti-HRO forces, it’s back to the drawing board.

One can expect the deep pockets of the Liberty Counsel to mount a challenge to this opinion, but one of the hallmarks of Jason Gabriel‘s tenure as General Counsel has been to assert the primacy of the office in matters including pension negotiations, and one can expect him to defend his office’s prerogatives here as much as needed.

Opponents of the HRO have fought Jacksonville in court, but have been rebuffed.

In December, the 4th Judicial Circuit granted Jacksonville’s motion to dismiss with prejudice a complaint for declaratory relief from the law.

Jacksonville to mull ‘lockbox’ for JEA sale proceeds

As Jacksonville considers the increasingly less hypothetical question of whether or not to sell its public utility, JEA, a bill (2018-101) filed this week would earmark any proceeds.

The bill, filed by Republican City Councilman Matt Schellenberg, would set up a restricted reserve account, which would require a two-thirds vote to access funds therein.

In a conversation Thursday afternoon, Schellenberg, who has been interested in exploring JEA’s market value for six years, asserted that this would create a “lockbox” for funds created by the sale of JEA or any of its constituent parts.

Schellenberg, the City Council liaison to JEA, believes that JEA’s electrical side probably has value to another company in the industry, such as Florida Power & Light or Duke Energy, and that the true value of the assets won’t be known until the deal is being considered on the open market.

Worth noting: while the total appraised value of JEA assets, at $5.3 billion, is well above the debt load of $4 billion, the electrical side is in worse fiscal shape than water and sewer.

The appraised value of the electrical holdings is just over $2.6 billion, against a $2.3 billion debt burden.

Nonetheless, Schellenberg thinks the electrical side could fetch more than the appraised value on the open market, perhaps bringing in $4 billion.

That money, said Schellenberg, could pay down debt, address the $3.2 billion unfunded pension liability, or be used to defray losses in annual JEA contributions ($116.1 million currently) to the general fund.

A second bill directed to JEA assets was also filed this week by a group of City Council members (Reggie GaffneyKatrina BrownGarrett DennisReggie Brown and Sam Newby).

2018-76 would obligate JEA to install sewer lines throughout pre-Consolidation areas of Jacksonville, many of which have waited for decades to be added to the city’s sewer system.

While there is currently a five-year, $30 million commitment to septic tank phaseout, the full project could eventually cost between $300 million and $1 billion.

Both of these bills will be officially introduced at Tuesday’s meeting, setting them up for committee hearings in March.

NPR host Al Letson blasts Congressional candidate Alvin Brown

The news never slows down in the Democratic primary battle in Florida’s 5th Congressional District.

Just one day after former Jacksonville Mayor Alvin Brown touted a swath of Jacksonville endorsements that included that of Lisa King, the chair of the Duval County Democrats, an NPR host from Jacksonville pilloried former Mayor Brown.

“For example: let’s say you are the first black mayor of a large southern city… all these hopes and dreams are pinned to you,” NPR host Al Letson Tweeted, “but you won’t stand for anything cause rich republicans put you in power… (American politics makes for strange bedfellows). All those hopes and dreams just flap in the wind.”

Brown’s ascension to the mayor’s office was fueled by traditionally Republican donors pivoting to him instead of the hard right Mike Hogan in 2011; once in office, Brown struck a deliberately non-partisan posture until the waning days of his re-election bid.

Letson then pointed out the attrition in African-American vote in 2015, along with Brown’s own demeanor, as a way of telling Brown that perhaps he shouldn’t run for Congress.

“You get voted out cause you didn’t do anything, you didn’t talk to your base, took for granted that blk ppl will carry you. And generally acted like the city owed you something. Maybe instead of standing up later for hirer office you should sit down,” Letson asserted.

“There is enough inertia in DC without you joining the party. if you show up to events for a photo op, but don’t roll up your sleeves when it’s time to put in work… maybe you should sit down,” Letson added.

Letson then finished off with a shot across the bow of Brown’s current messaging as a moderate Democrat, castigating the former mayor for his fecklessness on an LGBT rights ordinance that some say Brown squashed with behind the scenes influence.

“If you don’t have the stones to stand for basic human rights in city politics… I mean dude, BASIC HUMAN RIGHTS, like, employers can’t fire someone because they are gay… I mean that’s basic. If you [can’t] stand for it on a local level… Don’t stand for a national seat,” Letson asserted.

LGBT rights were codified in city ordinance soon after Brown left office.

Letson’s blast of Brown is the clearest crystallization yet of resistance to the former mayor’s political rebirth by progressives who remember those four years locally.

Brown, when running for re-election in 2015, was ambivalent about his Democratic Party connections.

The apogee of that ambivalence was when, after a debate with current Mayor Lenny Curry, Brown professed to be unaware of what Curry was talking about when he said that Brown was a 2012 delegate for President Barack Obama.

Brown was left without allies on the right and the left in the end. Hopes of bringing in former President Obama or First Lady Michelle Obama were dashed, and Gov. Rick Scott endorsed his friend Lenny Curry, neatly kneecapping years of co-branding between Mayor Brown and the Governor.

Brown’s reinvention comes at a time when he is running against a candidate, Al Lawson, who became nationally prominent in the last week for being the only Congressional Black Caucus member to applaud President Donald Trump during the State of the Union address.

Requests for comment from the Brown campaign were not immediately returned.

Congressional candidate Rontel Batie: ‘This race is far from over’

Rontel Batie is not the incumbent in the Democratic primary in Florida’s 5th Congressional District; that’s Al Lawson.

Nor is he the former mayor of the biggest city in the district: that’s Alvin Brown.

Nonetheless, Batie (who carried a meager $4,314 cash on hand out of 2017, compared to Lawson’s $100,531), asserts that “this race is far from over.”

In an email late Wednesday, Batie served up zingers about Lawson and Brown both.

“Al Lawson broke with the CBC and was seen cheering on President Trump during his State of the Union address. This was done in spite of Trump’s yearlong assault on black men who’ve used their platforms to protest injustice, like Jay-Z, Lavar Ball and NFL players who kneel during the anthem,” Batie wrote.

“Also, Alvin Brown, Jacksonville’s former Mayor who lost his reelection after being singled out for being one of the only Democrats in the country to refuse to support President Obama in 2012, (among many other political missteps), has entered the race,” Batie added.

Both of these assertions are questionable: Lawson tepidly applauded Trump saying that black unemployment was down, and Brown was an Obama re-election delegate.

Batie also served up two new endorsements.

Luis Zaldivar, the President of Northeast Florida Democratic Progressive Caucus, asserted that Batie “embodies the values that will move Duval County forward.”

Former Lake City Commissioner Glenel Bowden called Batie “the only progressive candidate in the race.”

Batie isn’t going away, and this occasions parallels to the 2016 race, where underfunded L.J. Holloway sheared votes from Lawson and Corrine Brown.

Lawson won the three way primary with just over 47 percent of the vote, with Brown coming in with 38 percent. Holloway, who had little fundraising momentum and few meaningful endorsements, was able to undercut Corrine Brown on the eastern side of the district.

Could history repeat in the 2018 primary?

Batie is in the race through August, and it’s entirely possible that Lawson could again win the nomination with less than 50 percent of the vote, via a spoiler candidate who doesn’t do enough to win, but who does enough to ensure the Jacksonville candidate can’t.

Jacksonville ‘Talleyrand Connector’ money slides into Senate budget

It appears that Jacksonville may get state money for a priority project after all, money it has pursued since 2016.

On Wednesday, Sen. Aaron Bean got $1 million into the Senate budget for the Talleyrand Connector,

This project was originally pitched as a $50 million ask from the state ahead of the 2017 Legislative Session.

Back then, the project was pitched as a way of knocking down Hart Bridge offramps that were installed when Jacksonville’s waterfront was industrialized, and routing traffic onto the underused Bay Street.

Members of the Duval Delegation didn’t carry the ask as an appropriations request, which left the Lenny Curry administration adjusting expectations and rationales for the project.

By 2017, when the Jacksonville City Council approved a design criteria project to examine the project, the new rationale had more to do with port traffic than access to the sports complex; to improve freight traffic to the port, a rationale not mentioned in 2016, via Talleyrand Avenue.

This design criteria project includes a survey of the current conditions, preliminary design alignments (such as lane location and speed rates), and other such basic criteria.

The project was a prerequisite to a federal infrastructure grant of $25 million (via the Department of Transportation’s Infrastructure for Rebuilding America program), with $12.5 million from the state of Florida in matching money and $12.5 million from the city.

The federal money has yet to be doled out, though letters of support have been crafted by Florida’s two U.S. Senators, Rep. John Rutherford, and other stakeholders, and Mayor Curry has also made his case personally in Washington.

By the time Curry went last fall to make the case, he used an FDOT study to contend that port traffic would benefit most, with the Bay Street traffic routed by the Sports Complex and future “entertainment zone” just being “gravy.”

The $1 million Bean got put into the budget, of course, is just a fraction of the $12.5 million Jacksonville ask. But it’s a placeholder amount, and budget conferencing could make it more — or less — in the end.

“It will be a conference issue – rules say it has to be in either the Senate or House budget to become a conference issue.   $1M is all I was able to muster today.  It is a start and hopefully not the final number,” Bean said.

Bean getting the $1 million in the budget is important, as there was no House appropriations request for the money. Even if just $1 million is budgeted, it still potentially opens the door for future state appropriations to cover the balance.

The project has been a first-term infrastructural priority of Mayor Curry, who was in Tallahassee last week.

On that trip, Curry discussed removing regulatory impediments to Downtown Jacksonville development with Gov. Rick Scott; he also met with area legislators and statewide powerbrokers.

From the Senate, he met with Aaron Bean, Senate Minority Leader Designate Audrey GibsonTravis Hutson and Appropriations Chairman Rob Bradley, along with Wilton Simpson.

Curry also met with House Speaker Richard Corcoran, in addition to meeting with regional representatives Travis Cummings, Jason FischerClay Yarborough, and Tracie Davis.

JEA draft valuation report lays out benefits of sale

Public Financial Management is developing a valuation report for JEA, and a draft released to media makes the case that Jacksonville’s utility may have a “new answer to the old question of whether the city should sell JEA.”

The most telling paragraph in the 25-page draft of the potential sale comes at its close.

“In the past, it could be expected that the sale of JEA would not produce enough proceeds to satisfy JEA’s liabilities and still leave sufficient net proceeds to compensate the City for future economic and qualitative differences under a new ownership structure.

”Because of recent changes to the utility market and to JEA, those old expectation[s] are no longer valid. A more thorough, updated valuation of JEA, and perhaps an exploratory sale process could lead to a new answer to the old question of whether the City should sell JEA.”

Indeed, the report makes it clear that JEA can see a way forward to what, the report concedes, could be among the “largest and most complex” transactions in the history of municipal utility markets.

“While local control and presence are appealing, there is also a fundamental question of whether it is prudent for the City to remain in the utility business. It is a business that is changing rapidly due to technology and market forces. It may be more prudent to leave this business to larger, more nimble companies that have the ability to absorb risk and uncertainty.”

The sale of JEA, per the report, “very likely, in whole or in part, can produce substantial up-front net proceeds to the City – even after all of JEA’s liabilities have been accounted for. Current market conditions can be expected to provide for a greater net value of JEA to the City than at any time in the past.”

Among the challenges: contractual arrangements, including service and property deals; continuity of operations; commitment to the process, working through the sale, and securing regulatory permissions.

While the JEA Contribution of $116.6 million per year would be in doubt, incoming revenue could be created by doubling the franchise fee to 6 percent and imposing property taxes on the private owner/operator, the report says.

“Should a private entity take the place of JEA, the taxable assessed value of property in Duval County could increase by approximately 10% (the addition of ~$5bn net capital assets on the City’s ~$50bn taxable base). Based on current millage rates, this increase in assessed value will equate to approximately $101 million of additional property taxes receipts, of which $63.5 million would go the City of Jacksonville General Fund.”

Jacksonville City Council members were “blindsided” by explorations of the sale as recently as Tuesday, even as Mayor Lenny Curry‘s office has been open to this exploration since it was pitched by outgoing board chair and Curry supporter Tom Petway in November.

As of the end of September 2017, JEA had $4 billion in debt, and $5.3 billion in capital assets, per the study.

That $1.3 billion difference represents roughly what Jacksonville’s general fund budget, $1.27 billion in the current fiscal year, is.

Audrey Gibson questions job growth fund after big Jacksonville spend

Senate Minority Leader-Designate Audrey Gibson, a Jacksonville Democrat, extensively questioned Gov. Rick Scott‘s job growth fund Wednesday on the Senate floor.

The Governor and Republican lawmakers want to see another $85 million appropriated to the fund in the next budget.

Gibson’s hard stand against the spend is notable, as Scott chose Jacksonville on Wednesday to message on the fund, spotlighting a $6 million spend on a long-awaited road at Cecil Commerce Center as the showcase project of the press event in the notoriously friendly media market for the Governor.

Gibson questioned the mechanics of the fund in an extended dialogue with TED Appropriations Chair Wilton Simpson, including the executive branch deciding on these appropriations, and what happens with the fund once the next Governor takes office.

“I’d love to have $85 million worth of projects to take back to my district,” Gibson said to Simpson. “I’m sure you would too. Maybe you do, I’ll have to check.”

“When we ask for projects for our districts, there is a high level of accountability,” Gibson continued. “There’s an expectation that by times certain, the expenditures will be made … and if it’s not utilized, it’s returned back.”

The $85 million job growth grant fund, Gibson added, “should be ours to decide what happens in our districts, but we relinquished control to the Governor’s office.”

“Why are we not holding the administration to the same standard with our money that [our projects] are held to.”

Simpson defended the projects as having a regional impact and getting “the most bang for our buck.” Gibson noted that Jacksonville is “getting about 10 percent of the money” in the fund.

In conversation Wednesday afternoon, Gibson discussed the limitations of the fund.

“We know our districts better than [the Governor],” Gibson said, noting that the fund doesn’t seem to have guidelines for spending, leading to decisions that “start to look political,” with the Governor “playing Santa Claus.”

Gibson had asked in October if there would be preference to “depressed or deprived” areas, asserting that she was concerned after a committee meeting with Department of Economic Opportunity head Cissy Proctor that “what could be done won’t reach the people who really need it.”

Gibson noted that City of Jacksonville proposals, which included the Cecil Field road and Imeson industrial park, are not in her district. And she believes the money could have gone farther helping small and medium-sized businesses.

Gibson is facing a primary challenge from Jacksonville City Councilman Reggie Brown, who he has yet to file, but confirmed his intent to run last week.

Brown believes that Gibson’s tenure is one of missed opportunities. He texted: “I am running [because] I believe I can bring more state $ to North Florida and the time to do it is now!”

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