There is significant work that needs to be completed if this is truly an alternative.
The executive branch is becoming skeptical of a novel plan from the Mayor’s Office to pay at least a portion of the anticipated upgrades on Jacksonville’s municipal stadium.
The president of the city council, Ron Salem, expressed grave concerns to Florida Politics on Saturday on a proposal being considered by the Donna Deegan administration to take out a loan against the assets of the pension fund in order to pay for the potentially billion-dollar renovations.
The fact that we are discussing raises at the same time as this problem has come to light worries me. Furthermore, I’d like to know how much cheaper borrowing from the pension fund is than borrowing the money the old-fashioned way. If this is genuinely an option, a lot more work needs to be done, according to the Republican at-large council member.
Chief negotiator Mike Weinstein, who is in charge of negotiations with the Jacksonville Jaguars in anticipation of a deal being offered to the City Council this summer, reportedly informed Salem on the plan.
The administration has not told Vice President Randy White, who will probably take over as Council head in July. The former Fire and Rescue Administrator, however, is researching the concept and waiting to see what the Police and Fire Pension Board, the Jacksonville Association of Fire Fighters, and the Fraternal Order of Police say.
Similarly, Finance Chair Nick Howland is scanning the news to find out what the executive branch is planning to do. He is not entirely dubious of the novel finance plan, though.
Like everyone else, I’m reading this media article and have a lot of questions. Having said that, my top priorities are reaching an agreement that benefits taxpayers and funding it as profitably as feasible. It is definitely worthwhile to look into alternative financing options because I will never support raising taxes for stadium renovations.
There will undoubtedly be additional City Council briefings in the near future.
According to Weinstein, if pensions are drawn upon, it will be done so at a favorable interest rate for the benefit of the funds and eventually the city.
Although this rate would be more than what would be achieved through traditional bond financing, it would spare the city from having to pay fees and other expenses on the funds that were transferred from the pension fund to the infrastructure project.
“They would deposit some of it and donate it to the city instead of investing it into the land or the stock market. According to Weinstein, the city would guarantee principle and interest at their AAA return target in exchange.
A call option, or the ability to “call back” some of the pension funds’ cash reserves at any moment when they’re short on funds—which they never will be because they essentially have $5 billion in cash—would also be included in the deal.
“Therefore, even though the interest rate will be slightly higher than what we would receive if we go to the bond market for this, they will be protected if they do this, they will meet their target, they will invest in the city, and they will have the ability to call back if, in fact, they get into a cash problem for the city.”
“However, there are costs associated with going to the bond market, including insurance, bond purchases, and other expenses. We must thus consider the difference between what we could obtain on the market and what we would guarantee to them. By paying ourselves instead of all the additional expenses, we would essentially be assisting the pension fund in closing more quickly.
Regarding pensions, Weinstein stated that by January 2027, he anticipates the ½ penny sales tax that is presently used to repay the Better Jacksonville Plan will be transferred to the city’s historical defined benefit pension plan, which was shut down in 2016. He claimed that doing so would meet the pension reform deal that the Lenny Curry administration had entered into by diverting $130 to $140 million annually toward the repayment of that previous obligation.
According to Weinstein, Jacksonville may issue its call and “put it in the financial marketplace” if interest rates decline to make borrowing from outside city sources more attractive.
He contended that since the plan has “zero connection” to workers and unions and that the police and fire talks are anticipated to be concluded before stadium funding becomes a problem, this is a distinct matter from the labor talks that are now taking place with public safety unions.
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