Jacksonville’s attorneys review status of JEA director’s firing


The fallout from JEA’s canceled privatization effort is far from over.

Several investigations are underway into the process that cost the utility owned by Jacksonville, Florida, about $10 million, as well as an inquiry into how former chief executive officer and managing director Aaron Zahn will be terminated.

Jacksonville’s deputy general counsel is investigating whether former JEA managing director Aaron Zahn should be terminated for cause.

JEA, at the request of a city attorney, postponed a special meeting that was scheduled Tuesday to discuss Zahn’s separation package.

The Office of General Counsel “has been diligently investigating whether cause exists to terminate Mr. Zahn’s employment,” Sean Granat, the city’s deputy general counsel, wrote Friday to April Green, chairwoman of JEA’s board of directors.

“We have conducted numerous interviews and reviewed thousands of documents; however, there are several critical interviews that still need to be conducted and additional documents that need to be reviewed in order to complete a fair, adequate, and thorough investigation,” Granat said, adding that his office should conclude its work in two weeks.

Zahn was terminated without cause Dec. 17 because of problems related to the potential privatization of the utility. Green had unsuccessfully argued that Zahn should be let go for cause saying she believed he misled utility officials.

The board of directors voted 5-1 to fire him without citing a reason, a move that could expose JEA to a payout of nearly $850,000 based on his employment contract. The board suspended Zahn and ordered staff to negotiate a lower severance package.

At the same time, Melissa Dykes, former chief operating officer, was named interim managing director. She was ordered to prepare a review of utility’s strategic planning process for the board’s Jan. 28 meeting.

The JEA board voted Dec. 24 to end the procurement process to determine if bidders were interested in buying the electric, water and sewer divisions of the utility. In the aftermath, investigations will take place to determine if the process was handled appropriately.

City Council President Scott Wilson said Friday that he will appoint a special committee to investigate the procedures used by JEA and a proposed controversial incentive pay plan some people compared to stock purchase options, according to the Jacksonville Daily Record.

Wilson expects to present his plan to the city council Jan. 14, the Daily Record said.

Several groups, including a business organization called the Jacksonville Civic Council, have requested that State Attorney Melissa Nelson investigate the procurement process used to get bids for the utility. Nelson said she is looking into the matter.

On Friday, JEA filed a notice with bondholders outlining the procurement process and its cancellation.

The notice also listed a series of “management changes,” including the Dec. 19 resignation of Lynne Rhode, vice president and chief legal officer, the Dec. 23 resignation of Sherry Hall, vice president and chief government affairs officer, and the Dec. 27 departure of Chief Financial Officer Ryan F. Wannemacher.

“Effective immediately JEA’s Treasurer, Joseph E. Orfano, is acting as JEA’s Interim Chief Financial Officer,” said the filing on the Municipal Securities Rulemaking Board’s EMMA filing system.

In a Dec. 30 column, Municipal Market Analytics partner Matt Fabian said “2020 will begin with a strong focus on public trust for the utility sector.”

Fabian said JEA’s privatization effort was canceled “amid waning public approval for the process,”

He also said it is one of several examples in the utility sector that “underscores the extent to which municipal lenders must process and syndicate political risk.”

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