A novel proposal from the Mayor’s Office to finance at least some part of the expected renovations on Jacksonville’s municipal stadium is raising doubts in the executive branch.
City Council President Ron Salem told Florida Politics on Saturday that he had serious questions about a move being explored by the Donna Deegan administration to borrow from the pension fund’s assets to fund the renovation costs that could approach a billion dollars.
“I am concerned that we are negotiating raises at the same time as this issue has surfaced. In addition, I want to understand the cost savings of borrowing from the pension fund vs borrowing the money in a traditional fashion. There is significant work that needs to be completed if this is truly an alternative,” the Republican At-Large Councilman said.
Salem said he had been briefed on the proposal by chief negotiator Mike Weinstein, who is handling talks with the Jacksonville Jaguars ahead of a deal being presented to the City Council this summer.
Randy White, the current Vice President who likely will lead the Council starting in July, has not been briefed by the administration. But the former Fire and Rescue Administrator is taking a wait and see approach as he researches the proposal, and is curious what the Police and Fire Pension Board thinks, as well as the Fraternal Order of Police and the Jacksonville Association of Fire Fighters.
Weinstein said this rate would be higher than that obtained by conventional financing through the bond market but would prevent the city from paying fees and other costs on the money shifted from the pension fund to the infrastructure project.
Weinstein discussed “the possibility if it becomes viable to have some of that, a small percentage of that invested in the city, which would be, instead of putting it into the land, instead of putting it into the stock market, they would put some of it and give it to the city.”
“The city would, in return, guarantee principle and interest at their AAA return target,” Weinstein said.
The agreement would also include an opportunity for the pension funds to “have a call on it, which means at any time they’re stressed for cash, they can call some of it back, which they’ll never be because they’ve got $5 billion in cash basically.”
“So they’ll be protected if they do this, they’ll meet their target, they’ll invest in the city, they’ll have the ability to call back if, if in fact, they get into a cash problem for the city, it will be a little bit more of an interest rate than we would get if we go to the bond market for this.”
“But if we go to the bond market, we have fees, and we have insurance, purchases to cover the bond, and what have you. So, we have to look at the gap between what we would guarantee to them as opposed to what we could get on the marketplace. Minus all of the fees that we also have to pay, but we’d be paying ourselves, we’d be basically helping the pension fund close quicker.”
Weinstein noted, regarding pension, that he expects the ½ penny sales tax currently allocated to Better Jacksonville Plan repayment to be shifted to paying down the city’s legacy defined benefit pension plan, closed in 2016, by Jan. 2027. That would shift $130 or $140 million a year into paying off that old debt, he said, fulfilling the pension reform agreement entered by the Lenny Curry administration.
If interest rates go down to favor borrowing from outside city funds, Jacksonville could issue its call and “put it in the financial marketplace,” Weinstein said.
This is a separate issue from labor negotiations that are ongoing with public safety unions currently, he argued, since the proposal has “zero connection” to employees and unions and since the police and fire negotiations are expected to be finished before stadium financing becomes an issue.
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