Nate Monroe: At a luxury resort, a crucial meeting of JEA minds
COMMENTARY | In early July 2019, then-JEA CEO Aaron Zahn convened a battalion of lawyers, investment bankers, consultants and utility officials for a three-day series of meetings at Club Continental in Orange Park, a luxury hotel on the banks of the St. Johns River about a 20-minute drive outside Jacksonville.
In one of the hotel’s private meeting rooms, and over three catered meals, including mid-afternoon snacks and iced tea — services that cost JEA more than $11,000 — the gathered officials talked about a plan that would consume many of their lives for the next year, though not for the reasons they could have imagined at the time.
This would not be the first time Zahn and his lieutenants talked about the controversial idea of privatizing the city-owned utility, but it was nonetheless a remarkable series of meetings.
Zahn, still a new CEO at the time, had been telling employees in meetings throughout the spring and summer, designed to allay internal fears, that he was not installed to sell JEA. “I am not trying to slap a for-sale sign on JEA,” he told one group.
And yet there he was, from July 10-12, with 20 to 30 people in a private room at a luxury hotel on the outskirts of town, talking about doing just that.
Accounts vary about some of what happened over those three mid-summer days at Club Continental, but hours of sworn interviews with many of the officials who attended have made it increasingly clear this was a crucial moment in what would become the failed privatization effort — a point of no return and the first, and perhaps only, time all of the key players would meet face-to-face.
This retreat was the first time many JEA officials and consultants said they had learned about what would prove to be the most explosive topic discussed over those three days, and has since become among a series of topics the FBI and U.S. Attorney’s Office are investigating: A new bonus plan Zahn wanted that, it became clear much later, could have paid out in excess of $1 billion, much of which was likely to have gone to the executives.
It was also a time in which any one of the officials or consultants involved could have spoken up about concerns they might have been harboring about what they were doing.
For starters, despite the large presence of law firms, bankers and other consultants, none of them had actually been hired yet to work on privatization — because the JEA board of directors wouldn’t vote to actually authorize any of this work for another two weeks. In fact, JEA leaders were supposed to be operating under a resolution the board passed in May 2018 that forbid them from taking any action on privatization without explicit approval from the board. It was a clear order, and the former board member who introduced it, Husein Cumber, said months later he was “appalled and disappointed that this direction by the Board was ignored by the CEO.”
But they worked away for three days anyway, some under contracts with JEA for other services. One firm, Foley & Lardner, was formally hired about two weeks later, and its contract was simply made retroactive to July 1. The group included people who had a keen understanding of how public procurement and public policy are supposed to work — including a former City Council president, who worked at Foley, no less — but there was also the potential for lucrative fees, particularly on the back end of a transaction.
It could have also occurred to someone, a JEA official perhaps, to ask why they were meeting offsite at a luxury hotel instead of a conference room in the utility’s headquarters downtown. There are hotels downtown for people who traveled. A few meetings shouldn’t cost a public agency $11,000.
It might have even been prudent to ask Zahn why they were there at all, considering he and the utility’s communications team had spent the better part of a year combating public perception this very thing was going to happen under his tenure.
No one appears to have done so.
One former JEA executive — Herschel Vinyard — does claim to have voiced objections to the controversial bonus plan. “I fairly vigorously told Mr. Zahn that I thought it was a bad idea,” Vinyard told lawyers this summer in a sworn interview.
But Vinyard’s objections didn’t seem to matter, and later in the month, the JEA board — under false impressions provided by JEA executives about the nature and cost of the plan — gave the legal authorization needed for utility leaders to implement it.
Notably, the Club Continental meeting included Tim Baker, a well-known political consultant who was also at the time a consultant under contract with Florida Power & Light, a subsidiary of NextEra — one of the companies that would submit an $11 billion bid the following month to acquire JEA (some participants have claimed they didn’t know about Baker’s contractual relationship at the time of the Club Continental meeting).
Baker canceled his FPL contract on July 1 with an effective date of July 31, according to City Council attorneys who have reviewed the termination notice, meaning these meetings overlapped with his contract term. Baker refused to turn over his actual contract, however, so it’s not clear what the scope of services were he was providing to FPL as a consultant — a vague term that can encompass a lot of potential work.
Baker’s business partner, former mayoral chief administrative officer Sam Mousa, signed a consulting contract with FPL on July 23 — the day the JEA board of directors authorized utility leaders to pursue selling the agency — which included “advocacy for passage or defeat of legislation and projects that are relevant to the client, and engage with members of the community on client’s behalf.” Mousa also won a no-bid contract to serve as a special advisor to the mayor that became effective in September (it has since expired).
Baker was not paid by JEA to attend the Club Continental meeting, and he and Mousa have insisted they did nothing wrong. And to be clear, the formal procurement process to sell JEA did not begin until August.
Yet the fact remains a consultant to a future bidder (one who was widely expected to bid, at that) was in the room for at least part of the three-day retreat, when JEA and its financial and legal consultants discussed their privatization plans in-depth — information that was non-public and known to few people outside that hotel at that time.
It’s not clear if Baker’s status as an informal adviser to Zahn on privatization-related issues pre-dated Club Continental. Lawyers investigating the failed privatization effort on behalf of the City Council said this week in a written update that during a recent interview they conducted, Baker “confirmed he consulted with (JEA executives) during the term of his contract with FPL.” JEA has previously told the Times-Union that Zahn had unsuccessfully advocated for the utility to hire Baker, though it’s not clear for what role, and Baker has said they agreed not to pursue that.
Some of the participants at Club Continental recall that Baker gave a presentation to the group.
“He gave a view of the community through a pollster’s eyes,” Kerri Stewart, a former JEA executive, told lawyers in a sworn statement over the summer. “This is what the community thinks about utilities. This is how the community thinks about government. This is how the community thinks about governments with large amounts of money. This is — he just gave an overview of the political landscape of Duval County.”
Kevin Hyde, a lawyer at Foley & Lardner, one of the firms that represented JEA, also recalled Baker at the Club Continental meeting, but he said he neither remembered Baker making any comments nor did he know Baker had a contractual relationship with FPL. Had he known it, he told City Council attorneys it “would raise questions to me, yes.”
“Whether I would have directly confronted Tim with that, I — I — I don’t know,” he said. “We’re not close in any sense, but if I were asked the question of what do you think about that, yeah, then I would have raised it with him.”
Nate Monroe’s City column appears every Thursday and Sunday.