Federal prosecutors will review failed effort to sell JEA

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The state prosecutor for the Jacksonville, Florida, area has turned an investigation into the failed attempt to privatize city-owned utility JEA over to federal prosecutors.

Melissa Nelson, elected state attorney for Florida’s Fourth Judicial Circuit, who opened an inquiry into the controversial privatization effort last year, commended her investigative team “for examining every item of information it received and discovered.”

“After thorough review, the state attorney’s office has determined that the appropriate venue to continue this investigation is the federal justice system,” Nelson said Monday. “We have referred our investigation to our federal partners, who will take the lead moving forward and have the full support of this office.”

Nelson did not name the federal agency that has agreed to continue the probe or what specific issues might lead to the filing of criminal charges. Her spokesman didn’t respond to a request for comment.

Several organizations in Jacksonville have called for state and federal investigations, alleging there were a number of improprieties in the handling of JEA’s effort to get bids for a possible sale.

The Jacksonville branch of the NAACP called for Congress to investigate the hiring of the utility’s former managing director, Aaron Zahn, the lack of transparency about the privatization effort and the part Mayor Lenny Curry and his administration may have played.

Curry appoints all seven members of JEA’s board of directors, who are confirmed by the City Council. Curry appointed Zahn, who had no utility experience, to the board in February 2018. Two months later, the board voted to make Zahn interim managing director, an appointment that became permanent in November 2018.

After questions were raised about an employee bonus pay plan linked to the sale of JEA and other issues, the board fired Zahn Dec. 19, and chief operating officer Melissa Dykes was named interim managing director. The board voted to stop the privatization process Dec. 24, and to release documents related to the potential sale.

On Monday, Dykes, who had once been the utility’s chief financial officer, said she will not apply to become JEA’s permanent manager.

“This was a difficult decision for me, but a necessary step towards ensuring a fresh start for all stakeholders and what is best for JEA,” Dykes said. “I remain committed to promoting a culture of employee safety, delivering operational excellence and rebuilding trust, while ensuring a smooth transition.”

Dykes said she won’t vie to become manager so “there will be no question that all decisions going forward will be with JEA and the community in mind, instead of through the lens of someone applying for a permanent position.”

In the last 20 years, Jacksonville officials have attempted to sell JEA at least three times.

In the wake of the recent controversy, a new advocacy group of local leaders have formed OurJax.com to promote transparency, integrity, accountability and local control in Jacksonville and its related governmental entities, according to the group’s website.

“We believe the citizens of Northeast Florida all deserve a full investigation of the recent efforts to sell JEA,” the website says. “Only after constant revelations by the local media exposed the self-dealing, secrecy and scandals involved in the sale process was an emergency Christmas Eve-morning meeting of the governing board of JEA held which ended the effort to sell JEA.”

The organization said its goal is to ensure that the end to the most recent attempt to sell JEA is not temporary, and that the best way to avoid future political pressure to sell JEA is “by conducting a thorough investigation to understand exactly what transpired.”

The group said it plans to post documents and other information about JEA on its website.

Mike Hightower, one of three directors of OurJax.com and a former JEA board member, couldn’t immediately be reached for comment.

JEA had $3.6 billion of outstanding electric and water revenue bonds outstanding as of Sept. 30, 2019, according to the comprehensive annual financial report posted on Municipal Securities Rulemaking Board’s EMMA filing system.

The CAFR contains a lengthy explanation and timeline of the privatization process, as well as other factors affecting JEA’s finances such as its agreement to buy power generated by two nuclear reactors under construction at Plant Vogtle in Georgia. JEA is contesting the legality of the power purchase agreement in Georgia federal court.

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