Daily Record Financial News &
Tuesday, October 6, 2015
Vol. 102, No. 232 • One Section
35¢ www.jaxdailyrecord.com
JEA restructure could net $32M Former Brown chief of staff says report is ‘vindication’
By David Chapman Staff Writer
In February 2014, Mayor Alvin Brown pitched a pension reform plan. It was a plan to save $130 million in the short term and $2.75 billion over 35 years. It had JEA providing an extra $40 million each year, breaking its employees from the city’s pension plan in return. And it ultimately went
nowhere. City Council rejected it. JEA officials said the revenue wouldn’t allow it and the rating agencies would penalize the utility. A report distributed Monday paints a slightly different picture. Within JEA there “were likely savings to be had in excess of $32 million per year,” according to a study done by the MAEVA Group, which with Pew Charitable Trusts assisted the city with pension reform.
That money could be secured without sacrificing service, raising rates or negatively impacting JEA’s credit, the report said. It could be achieved through “major organizational restructuring.” “It would be surprising if a thorough restructuring of a utility like the JEA couldn’t achieve significant savings,” it said. Jonathan Trichter, a MAEVA principal, said restructuring in JEA’s case refers to a “deep look”
at operations, capital structure and management with a goal of reworking it to achieve maximum efficiencies. The study said the savings could be used to pay for pension costs. The utility would be more effective, although “organizational restructuring” wasn’t defined in the seven-page report. The savings would come from improvement in JEA electric’s operating margin, which has fallen to just below 20 percent
in the past two years while peer utilities like Florida Power & Light Co. and Tampa Electric Co. have stayed in the low 20 percent range. A 2 percentage point increase could net about $30 million. A 3 percentage increase could boost it to about $44 million. The report said it seems “implausible” that a restructuring project couldn’t improve the operating margins by at least JEA continued on Page A-4
Investors scooping up older complexes
Never too old for friendly competition
Contestants play a modified form of volleyball using a beach ball while seated during opening day of Forever Fit 50 & Beyond: Jacksonville Senior Games. The games continue through Saturday in several age categories. First- through fifth-place qualifiers advance to the Florida Senior Games State Championships.
Photo from the City of Jacksonville
River Oaks latest apartments to sell
Bistro, bar proposed for East Bay ‘Element’ slated for former Club TSI Discotheque site
By Max Marbut Staff Writer The Elbow, the entertainment and nightlife district Downtown along and near East Bay Street, might be trading a nightclub for a combination bistro, bar and lounge. A project to remodel the facade at 333 E. Bay St. and renovate the interior of the ground floor is on the agenda Thursday for the Downtown Development Review Board. The building is near the former Duval County Courthouse and Police Memorial Building. The site of Club TSI Discotheque,
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which recently closed, would be home to Element. According to the application for conceptual and final approval, developer Nightlife Innovations LLC plans to renovate the 4,500-square-foot first floor of the twostory building, including upgrading the electrical, plumbing and HVAC systems to comply with building and safety codes. The applicant, Jon Mroz, did not return phone calls for comment. The proposed floor plan shows 32 seats for dining inside, 48 outside on a patio behind the building and 27 seats along two bars in the club area.
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In addition, the existing brick storefront facade will be replaced with new windows, indirect lighting, signage and an awning. The second floor of the building is shown on the proposal as “future development.” In an affidavit submitted with the design review application, the building’s owner, Liberty Bay Inc. President Michael Basford, states Nightlife Innovations has signed a five-year lease for $9 a square foot, with monthly lease payments beginning Dec. 1. The staff recommendation for approval of the application points out the proposed improvements to the first-floor exterior Element
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Another mid-1970s apartment complex has sold, continuing the movement of older multifamily communities into the hands of new investors and the overall trend of sales where sellers profit and buyers position for the future. Beachwold Residential LLC of New York, N.Y., paid $12.44 million in late September for the 27-building River Oaks Apartments in North Jacksonville. That means the 288-unit project, built in 1975, sold for $43,194 a unit, a big increase over what the seller paid just last year. The seller, a group led by Varden Capital Properties LLC of New York, bought the property in May 2014 for $7.35 million, or $25,521 a unit. That’s a $17,673 gain per unit in just over a year. Brad Coe, director of multifamily investment services for Colliers International in Jacksonville, said he has seen three or four trades of “vintage ‘70s Coe properties,” along with many more newer properties. Coe expects up to 10 more area apartment community sales this year, in addition to the 26 deals so far in 2015. He’s aware of at least six more that are pending, “and it’s only early October.” “Generally what happens is the back end of November into December, you see a pretty solid number of trades based on yearend disposition requirements,” he said. The reason is simple: The sellers make money and the buyers expect to recoup and improve their investments. Coe explains the “opportunistic buy,” in which a buyer acquires a property and
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