https://www.jacksonville.com/story/news/local/2020/08/26/nextera-energy-parent-fpl-offered-11-billion-buy-jea/3443048001/
Death Spiral my ass.
Here it is from the Daily Record.
https://www.jaxdailyrecord.com/article/nextera-energy-bid-dollar11-05-billion-to-buy-jea
Any other similarly sized city in America, $6.5 billion (once outstanding debt is satisfied) is an incredibly tempting offer, and a possibility that's at least worth exploring or putting on the ballot. We've just go no track record whatsoever though of being able to properly steward public money. We'd squander it within a decade, and the have-nots would be left holding the bag.
We all know Curry would have immediately handed that bag to Khan and his buddies. All of a sudden the Shipyards + Convention Center + Lot J + Stadium Rebuild would cost $8 billion and require at least half of it in public money. The District would add a few zeroes, Curry would get the bright idea to buy the FBC complex and "prepare it for redevelopment."
And Northwest Jacksonville would still not have sewer lines.
On top of that, we'd be losing our public utility to people whose primary objective is profit, and our rates would quickly reflect their wish for a return on their investment.
Quote from: Ken_FSU on August 26, 2020, 04:33:48 PM
Any other similarly sized city in America, $6.5 billion (once outstanding debt is satisfied) is an incredibly tempting offer, and a possibility that's at least worth exploring or putting on the ballot. We've just go no track record whatsoever though of being able to properly steward public money. We'd squander it within a decade, and the have-nots would be left holding the bag.
That is an astronomical amount of money for a city to have in it's coffers. For comparison, if Jacksonville was a university, that amount alone would make it the 18th highest endowment in the US. Higher than Johns Hopkins, USC, Vandy, Dartmouth, NYU, Brown, and several other elite private schools. It would be more than the entire combined endowment's of the twelve universities that comprise the State University System of Florida.
Even COJ could not find a way to squander that type of money. I've said it before, but I think there is a good chance that it could have been a great deal for Jacksonville, but unfortunately due to complete political ineptness and greed, we never even got to properly evaluate it.
Quote from: marcuscnelson on August 26, 2020, 04:51:09 PM
On top of that, we'd be losing our public utility to people whose primary objective is profit, and our rates would quickly reflect their wish for a return on their investment.
For 1,000 KWH's the residential rates are:
FPL $99.66
JEA $108.50
That is including the franchise fees charged, so it should be an apples to apples comparison. As someone that has been serviced by both providers, I can comfortably say FPL is a million times better. FPL is also being much more proactive with storm hardening and burying power lines underground.
Also, in regards to profit...JEA is the same entity that tried to pull off the shady buyout deal. Do you really think the board and management team care about the people of Jacksonville?
Does anyone on here, a financial advisor type perhaps, have any idea how much of an annual revenue stream would be created by an $6.5 billion endowment? If the endowment would exceed the revenue stream, THAT money could go to infrastructure and economic development without negatively impacting anything else.
If you could get the endowment to fully replace the funds JEA was paying the city annually, that would be a pretty significant fact. The new owner would pay property taxes and a business license fee as well, so that would be significant new revenue too.
Of course, there would no doubt be much higher utility rates on the citizens too.
I believe related.....Chris Hong and Nate Monroe at the T-U have, "....Hooked a Biggun." Monroe's normal Thursday column won't be running tomorrow while they work on it.
Something tells me it's going to be worth the read:)
Quote from: CityLife on August 26, 2020, 05:08:36 PM
Even COJ could not find a way to squander that type of money.
Wanna bet?
Quote from: CityLife on August 26, 2020, 05:08:36 PM
Even COJ could not find a way to squander that type of money.
"Hold my Beer."
-Lenny Curry
Quote from: vicupstate on August 26, 2020, 05:31:12 PM
Does anyone on here, a financial advisor type perhaps, have any idea how much of an annual revenue stream would be created by an $6.5 billion endowment? If the endowment would exceed the revenue stream, THAT money could go to infrastructure and economic development without negatively impacting anything else.
If you could get the endowment to fully replace the funds JEA was paying the city annually, that would be a pretty significant fact. The new owner would pay property taxes and a business license fee as well, so that would be significant new revenue too.
Of course, there would no doubt be much higher utility rates on the citizens too.
It's all about the assumptions and management of the funds. If it was strictly treated as an endowment, traditionally, non-profits have siphoned off 5% annually of the balance at an annual snapshot date or of a multiyear average balance. With today's low interest rate environment, many have lowered that to 3%.
A bigger question is how do you invest the money: In fixed income, the stock market, hedge funds, private equity, real estate, precious metals, venture capital, etc.? Most large university endowments will do some mix of all of these with a somewhat heavier weighting toward the more risky, but higher reward, investments. I don't know if the taxpayers could stomach that.
Keep in mind, if one skims off all the annual investment returns or more, the income created will get depreciated over time by inflation. At 3%, $6.5 billion yields $195 million a year. If no funds are added to the endowment via net investment gains or contributions, in 20 or 30 years that would have a lot less purchasing power than today. This is one reason why nonprofits must constantly work to add to their endowments.
Here's the thing: I truly believe there's more to this:
-NextEra on the surface is WAY higher than anyone else. When that happens it usually does NOT mean that they grossly overvalued JEA.
-What about the Project Vogtle liability, or other liabilities? I know they reported these liabilities would be on COJ.
If COJ got $11B free and clear (or was even under consideration for anything resembling this), there's no point to shroud this in secrecy. Everyone on earth would agree to this deal, because you'd have enough to put money in a trust to ensure rates stayed low, subsidize Low income households, etc.
There's more to this. Mark my words.
Quote from: Steve on August 26, 2020, 05:44:34 PM
"Hold my Beer."
-Lenny Curry
Great minds think alike!
Quote from: Steve on August 26, 2020, 05:50:02 PM
Here's the thing: I truly believe there's more to this:
-NextEra on the surface is WAY higher than anyone else. When that happens it usually does NOT mean that they grossly overvalued JEA.
-What about the Project Vogtle liability, or other liabilities? I know they reported these liabilities would be on COJ.
If COJ got $11B free and clear (or was even under consideration for anything resembling this), there's no point to shroud this in secrecy. Everyone on earth would agree to this deal, because you'd have enough to put money in a trust to ensure rates stayed low, subsidize Low income households, etc.
There's more to this. Mark my words.
Exactly. NextEra would have wanted that $11B back and then some, they're not fools. There's so much more we don't know yet.
Quote from: marcuscnelson on August 26, 2020, 05:54:53 PM
Quote from: Steve on August 26, 2020, 05:44:34 PM
"Hold my Beer."
-Lenny Curry
Great minds think alike!
Quote from: Steve on August 26, 2020, 05:50:02 PM
Here's the thing: I truly believe there's more to this:
-NextEra on the surface is WAY higher than anyone else. When that happens it usually does NOT mean that they grossly overvalued JEA.
-What about the Project Vogtle liability, or other liabilities? I know they reported these liabilities would be on COJ.
If COJ got $11B free and clear (or was even under consideration for anything resembling this), there's no point to shroud this in secrecy. Everyone on earth would agree to this deal, because you'd have enough to put money in a trust to ensure rates stayed low, subsidize Low income households, etc.
There's more to this. Mark my words.
Exactly. NextEra would have wanted that $11B back and then some, they're not fools. There's so much more we don't know yet.
Hong and Monroe's column runs online Friday and in print over the weekend they said. I think they put something together.
As Diamond noted in the article, don't forget to subtract paying off the Vogtle nuclear plant liability the City was going to keep from the $6.5 billion proceeds (after paying off JEA's debts). If one estimates this at around $3 billion or so (and counting), the City nets "only" about $3.5 billion. Subtract transaction costs for brokers, lawyers, etc. and the number drops some more.
Quote from: jaxlongtimer on August 26, 2020, 05:48:36 PM
Quote from: vicupstate on August 26, 2020, 05:31:12 PM
Does anyone on here, a financial advisor type perhaps, have any idea how much of an annual revenue stream would be created by an $6.5 billion endowment? If the endowment would exceed the revenue stream, THAT money could go to infrastructure and economic development without negatively impacting anything else.
If you could get the endowment to fully replace the funds JEA was paying the city annually, that would be a pretty significant fact. The new owner would pay property taxes and a business license fee as well, so that would be significant new revenue too.
Of course, there would no doubt be much higher utility rates on the citizens too.
It's all about the assumptions and management of the funds. If it was strictly treated as an endowment, traditionally, non-profits have siphoned off 5% annually of the balance at an annual snapshot date or of a multiyear average balance. With today's low interest rate environment, many have lowered that to 3%.
A bigger question is how do you invest the money: In fixed income, the stock market, hedge funds, private equity, real estate, precious metals, venture capital, etc.? Most large university endowments will do some mix of all of these with a somewhat heavier weighting toward the more risky, but higher reward, investments. I don't know if the taxpayers could stomach that.
Keep in mind, if one skims off all the annual investment returns or more, the income created will get depreciated over time by inflation. At 3%, $6.5 billion yields $195 million a year. If no funds are added to the endowment via net investment gains or contributions, in 20 or 30 years that would have a lot less purchasing power than today. This is one reason why nonprofits must constantly work to add to their endowments.
Good post. Yeah, I believe 3-5% annual growth is the normal assumption for endowments as well as municipal general funds. Most municipal reserves and endowments do not pull out all of the yearly returns and choose to re-invest a significant portion of gains. So ideally Jax would have pulled out a large chunk for CIP and operating expenses, but continued growing the reserves to keep the fund sustainable.
I'm curious what having a large sum of money could have saved the City in long term pension liabilities or other debts. The latest I can find online is the city pays $260 million a year in annual payments to pension funds from the general fund. The better play might be paying off the unfunded pension liability upfront (I believe around $3 billion) and not having to hemorrhage a ton of money from the general fund yearly.
IF the numbers thrown out are anywhere close to accurate, it would have been interesting to see some of the different options the City would have had to play with.
Quote from: jaxlongtimer on August 26, 2020, 06:22:57 PM
As Diamond noted in the article, don't forget to subtract paying off the Vogtle nuclear plant liability the City was going to keep from the $6.5 billion proceeds (after paying off JEA's debts). If one estimates this at around $3 billion or so (and counting), the City nets "only" about $3.5 billion. Subtract transaction costs for brokers, lawyers, etc. and the number drops some more.
Also don't forget the one thing Curry said he'd do with the money was pay off all city debt, which is about $2B. Now we're to a little over $1B.
See how quickly $11B goes away?
Per Monroe, the NextEra deal would have potentially paid out over ONE BILLION DOLLARS to JEA execs.
Quote from: CityLife on August 26, 2020, 05:08:36 PM
Quote from: Ken_FSU on August 26, 2020, 04:33:48 PM
Any other similarly sized city in America, $6.5 billion (once outstanding debt is satisfied) is an incredibly tempting offer, and a possibility that's at least worth exploring or putting on the ballot. We've just go no track record whatsoever though of being able to properly steward public money. We'd squander it within a decade, and the have-nots would be left holding the bag.
That is an astronomical amount of money for a city to have in it's coffers. For comparison, if Jacksonville was a university, that amount alone would make it the 18th highest endowment in the US. Higher than Johns Hopkins, USC, Vandy, Dartmouth, NYU, Brown, and several other elite private schools. It would be more than the entire combined endowment's of the twelve universities that comprise the State University System of Florida.
Even COJ could not find a way to squander that type of money. I've said it before, but I think there is a good chance that it could have been a great deal for Jacksonville, but unfortunately due to complete political ineptness and greed, we never even got to properly evaluate it.
And still almost $2 billion less than the net worth of a guy who can't throw a few million in to the Hart Bridge ramp project to make his entertainment complex more accessible.
Quote from: Ken_FSU on August 26, 2020, 07:56:29 PM
Per Monroe, the NextEra deal would have potentially paid out over ONE BILLION DOLLARS to JEA execs.
Wow. that's crazy. Talk about being way too greedy.
Lessee... 1 billion dollars divided by how many JEA billed customers? Might've been a nice little nest egg...
Nate Monroe drops another JEA shoe today:
https://www.jacksonville.com/story/news/columns/nate-monroe/2020/08/28/bonus-caused-internal-jea-rift/5644470002/ (https://www.jacksonville.com/story/news/columns/nate-monroe/2020/08/28/bonus-caused-internal-jea-rift/5644470002/)
$1.1 billion payout to Zahn and friends, lawyers knew plan was not legal but tried to reclassify it to sneak it through at JEA's request, memos show Curry behind the sale of JEA come hell or high water, legal advice ignored, Baker, Mousa and Hughes conflicts of interest, efforts to hide from public records and much more! A scandal that keeps on giving. Looking forward to some indictments.
Quote from: BridgeTroll on August 27, 2020, 08:23:56 AM
Lessee... 1 billion dollars divided by how many JEA billed customers? Might've been a nice little nest egg...
Not really. JEA has 450k electric customers. Unless you call $2000 a nice nest egg...
Quote from: acme54321 on August 28, 2020, 10:01:33 PM
Quote from: BridgeTroll on August 27, 2020, 08:23:56 AM
Lessee... 1 billion dollars divided by how many JEA billed customers? Might've been a nice little nest egg...
Not really. JEA has 450k electric customers. Unless you call $2000 a nice nest egg...
True. I do however trust what I might do with that money versus what the city would do with it...
Quote from: BridgeTroll on August 29, 2020, 08:10:49 AM
Quote from: acme54321 on August 28, 2020, 10:01:33 PM
Quote from: BridgeTroll on August 27, 2020, 08:23:56 AM
Lessee... 1 billion dollars divided by how many JEA billed customers? Might've been a nice little nest egg...
Not really. JEA has 450k electric customers. Unless you call $2000 a nice nest egg...
True. I do however trust what I might do with that money versus what the city would do with it...
Agreed! Scandal aside, there is an argument to made to sell JEA but it is dependent on what the city is going to do with the funds.
So what's the over under on anyone seeing jail time?
Quote from: JaxAvondale on August 29, 2020, 12:20:29 PM
Quote from: BridgeTroll on August 29, 2020, 08:10:49 AM
Quote from: acme54321 on August 28, 2020, 10:01:33 PM
Quote from: BridgeTroll on August 27, 2020, 08:23:56 AM
Lessee... 1 billion dollars divided by how many JEA billed customers? Might've been a nice little nest egg...
Not really. JEA has 450k electric customers. Unless you call $2000 a nice nest egg...
True. I do however trust what I might do with that money versus what the city would do with it...
Agreed! Scandal aside, there is an argument to made to sell JEA but it is dependent on what the city is going to do with the funds.
I agree. When the conversation first started I was actually open to it. Not a chance now.
Quote from: blizz01 on August 29, 2020, 02:39:22 PM
So what's the over under on anyone seeing jail time?
I bet they can nail Zahn. To me there's a few groups:
JEA executives: I think they'll get them
JEA Board: I think they weasel out of it. The key thing here is there's proof that the executives lied to the board, which may give them an out.
Baker and Mousa: Doubt it.
Brian Hughes: Doubt it even though there's no way he didn't know the details.
Curry: see Hughes.
What's the over under that Curry's Lot J/Shipyards plans were totally dependent on having money to spend from the sell of JEA?
Quote from: thelakelander on August 29, 2020, 04:47:53 PM
What's the over under that Curry's Lot J/Shipyards plans were totally dependent on having money to spend from the sell of JEA?
I'd think basically guaranteed. If NextEra's proposal reached his desk, he must have been salivating over the idea of a multibillion-dollar slush fund to build Downtown 2: Jaguars Boogaloo, and with it secure his future political prospects.
Quote from: thelakelander on August 29, 2020, 04:47:53 PM
What's the over under that Curry's Lot J/Shipyards plans were totally dependent on having money to spend from the sell of JEA?
If Downtown was really "movin' on up" as some in this City would have you believe (haha), the City wouldn't have to offer ridiculous incentives to get these projects going. Let's just put the money in public infrastructure and some historic preservation, create a holistic vision and zoning plan for Downtown that we actually stick to over many decades and the rest would likely take care of itself.
On top of everything else, Khan has insured these properties he plans to develop are already in some of the most favored tax-break zones ever created. They were "designed" to incentivize people like him to do these developments and that should be more than enough. If the City has to further subsidize them to any significant degree, they are just not sustainable in all likelihood. (See Adams Mark/Hyatt Hotel, Sax Seafood, Heckscher Drive Restaurant, the predecessor to River City Brewing, Brown's BBQ, Round #1 and #2 of the Shipyards, and many more).
Quote from: thelakelander on August 29, 2020, 04:47:53 PM
What's the over under that Curry's Lot J/Shipyards plans were totally dependent on having money to spend from the sell of JEA?
About the same as if Alabama played Miami in Tuscaloosa!
Quote from: Steve on August 29, 2020, 02:49:16 PM
Quote from: JaxAvondale on August 29, 2020, 12:20:29 PM
Agreed! Scandal aside, there is an argument to made to sell JEA but it is dependent on what the city is going to do with the funds.
I agree. When the conversation first started I was actually open to it. Not a chance now.
The TU Editorial Board seems to agree with you.
https://www.jacksonville.com/story/opinion/editorials/2020/08/28/editorial-jacksonville-and-state-examples-show-importance-open-government/5654121002/