JEA won't trigger a cancellation clause for lease agreement with Ryan Companies for a nine-story headquarters building in downtown. JEA says regardless of whether city remains owner of JEA, the headquarters building will fill a need.

The name that ends up hanging high on JEA's planned new headquarters building in downtown Jacksonville remains up in the air, but JEA gave the go-ahead Tuesday for work to continue toward a groundbreaking in early 2020 after the utility decided it won't use a cancellation clause to kill the building.

JEA selected the Ryan Companies in April to build a new headquarters that JEA would lease. JEA approved a lease agreement on June 25, but the following month, JEA raised the possibility of moving to leased space in the suburbs rather than downtown.

Ryan agreed to give JEA an opt-out provision while the utility was starting the first stage of seeking offers to privatize JEA. The cancellation clause originally ran through Sept. 30 and then got pushed back three more weeks to this Wednesday.

JEA CEO Aaron Zahn said Tuesday JEA will not exercise the cancellation clause. That means Ryan can move forward with finalizing design for a new, nine-story building with a nine-level, 850-space parking garage on a square-block site near the Duval County Courthouse.

"Today, we are grateful for the green light to move forward and continue to deliver on our commitment to JEA in designing and building their future headquarters," Doug Dieck, president of Ryan Companies' southeast region, said in a statement. " ... As I have said all along, it is full steam ahead — we are excited for the future. “

Zahn said regardless of what happens to JEA as a result of an ongoing process to consider privatization offers, which might result in a sale of JEA, the headquarters building will serve a need. He said it's the "right thing to do for JEA employees and customers and supports downtown development."

“The new headquarters will be capable of serving JEA as it exists today or in any other possible future state as a result of the current strategic planning process," Zahn said, referring to the utility's exploration of privatization.

He said JEA continues to analyze ways to shrink the size of the headquarters building while fitting the utility's needs. He said the the cost of the lease would be lower if the building's size is smaller.

"Our intent always has been to make the most efficient utilization of the space so we can preserve costs," he said.

JEA plans to vacate its aging headquarters on West Church Street and sell that building.

Whether it will be JEA or some other entity that pays the lease to Ryan at the new headquarters remains undetermined.

Last week, JEA announced that nine entities made the cut to enter negotiations about a privatization deal that could include the city selling the utility.

The publicly released names include NextEra Energy, which is the parent company of Public Power and Light, along with Duke Energy and Emera, which owns Tampa Electric and Peoples Gas.

Others are Macquarie Infrastructure and Real Assets Inc.; American Water Works Company Inc., also known as American Water; and JEA Public Power Partners, which is a consortium of Emera, Barnhard Capital Partners, and Suez.

American Public Infrastructure and IFM Investors Pty Ltd. also made the shortlist. A ninth identity told JEA it wants to remain anonymous.

All the shortlisted entities agreed they could meet a set of minimum requirements set by JEA. One of the requirements is a commitment to "new headquarters and employees in downtown Jacksonville."

J.P. Morgan Morgan Stanley investment bankers gave the JEA board an overview Tuesday about the next steps in the "invitation to negotiate" process. This month, the nine entities will have access to a trove of JEA data that they can use to refine their offers and submit revised replies at the end of November.

In December through January, JEA will meet with respondents for more discussions in closed-door sessions. In the period from January through March, each entity will submit a "best and final" offer. The JEA negotiation team will bring a recommendation to the JEA board.

The board will vote on the recommendation after comparing to other alternatives that would involve the city keeping ownership of JEA, turning it into a cooperative or having an initial public offering.

If the JEA board favors a change from city ownership, the City Council would decide whether it agrees if the privatization deal involves more than 10 percent of JEA's assets.

Approval by the City Council would result in a binding countywide referendum for Duval County voters, who would accept or reject a change in ownership of JEA.

City Council members are gearing up for a series of workshops that would delve into JEA's financial state and its future.

Zahn told City Council member Danny Becton, who is council's liaison to JEA, that he and JEA administrators would participate in that meeting. He said bankers advising the utility and McKinsey, the firm that worked with JEA on its strategic alternatives study, also would be available for questions from the council.

"We've heard that the community and City Council need additional information, and that's our job and we're committed to that," Zahn told Becton.

City Council member Randy DeFoor has said the council should swear in those who speak to council at the workshops.

"Put me under oath," DeFoor said at a meeting of council members last week. "There should be no issue. They should have no problem being put under oath."

Zahn said Tuesday that "seems like a silly suggestion. The implication of that is that I'm not actually telling the truth. We continue to provide facts."

City Council President Scott Wilson, who supports the workshops, said when a previous council committee on JEA tried to put speakers under oath, it creates an atmosphere that "really kind of scared people."

The JEA board also approved a 12-month performance review for Zahn at Tuesday's meeting that said he meets or exceeds expectations in various areas.

The board could adjust Zahn's salary based on that evaluation but decided to make no change in his employment agreement. The board just set a $520,000 annual salary for Zahn in July, the first adjustment to his salary since he was named CEO in November after serving as interim CEO.

David Bauerlein: (904) 359-4581