JACKSONVILLE, Fla. – After weeks of back-and-forth between JEA and City Hall -- a new twist.
Council president Kevin Carrico is reviewing his options after Jacksonville’s Office of Inspector General (OIG) asked for council help reviewing allegations at JEA.
The Inspector General sent a memo to Carrico regarding claims that the city-owned utility JEA has millions of dollars in potential unpaid capacity fees.
“We’re going to look into this as council, whether that be a special investigative committee or other resources we have in our hands,” Carrico said.
The Council President said he plans to take a night to review his options and hopes to announce his decision on Wednesday.
“So we’ll see what what we can do as as a council to to go ahead and lend our assistance and make sure we get answers,” he said. “This is the people’s utility,”
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In a memo released Tuesday afternoon, the Inspector General requested that the City Auditor conduct a special limited-scope review to determine whether the fees exist and, if so, how much money JEA believes it is owed. The review could also determine whether private property owners may be required to pay the fees retroactively.
“Now that its on paper,” Council President Kevin Carrico said. “Now that its official. Its on me as the Council President to react and do something about it.”
The audit focuses on capacity fees, which utilities charge when a property first connects to water or sewer service. The fees are typically based on how much service a building is expected to use when it is constructed.
As Jacksonville has grown rapidly, questions have surfaced about whether some properties expanded their usage far beyond what was originally projected — without paying additional capacity fees.
“We in government need to make sure that we’re always correcting our processes and trying to make them as efficient as possible,” Jacksonville City Councilmember Jimmy Peluso said.
Peluso spoke with News4JAX shortly before the OIG released its memo announcing the investigation. The office says it requested the audit after hearing from multiple sources about the issue.
According to the memo, the City Auditor will examine whether the problem exists and determine its scope.
One city councilmember has claimed the total amount of unpaid capacity fees could reach $100 million.
Peluso said the investigation could help improve how the utility manages similar fees moving forward.
“This will hopefully lead to better processes that JEA can utilize to make sure this doesn’t happen,” Peluso said. “If there are actors whose fees aren’t exactly where they should be, we want to make sure user fees are being done accordingly.”
Dispute with Mayo Clinic
One of the largest disputes involves more than $12 million tied to the Mayo Clinic.
According to a legal memo, Mayo paid a capacity charge when it first connected to JEA’s system in 1995. That fee was based on projected water and sewer usage at the time.
Since then, the medical campus has expanded significantly, with development projects totaling more than $1 billion.
JEA claims the campus’s water usage eventually grew 380% higher than what was originally calculated.
However, attorneys for Mayo argue the utility did not discover the actual level of water use until 2022. They also say the clinic is exempt from additional capacity charges under a 1986 agreement.
Other properties may be involved
News4JAX has learned that several other private property owners are involved in similar disputes with JEA over capacity fees.
Last week, City Councilmember Rory Diamond posted on social media claiming the unpaid fees could total $100 million, calling the situation another JEA scandal.
Diamond did not return calls from News4JAX seeking comment.
City Councilmember Matt Carlucci said he sees the situation differently, describing it as a financial dispute rather than a scandal.
“I don’t believe this to be a scandal. And Rory Diamond has been calling everything a scandal, and every time he does, nothing turns out to be scandal, you know, and that’s, that’s the kind of politics we need to avoid. I, I don’t want to speak ill of my colleague, but I just, I just know that we’re, we’re moving into an election year. And when you move into an election year, then people say things to try to excite and to ignite the voters. That’s not what we need right now. ”
JEA released a statement which reads:
JEA strives to ensure that its rates and capacity fees charged for water and sewer service are applied in a fair and equitable manner for all customers. All new connections are charged an applicable water and sewer capacity fee for associated development. A program on how to properly track, identify and bill JEA customers for “additional” capacity fees due to customer growth and expansion is currently being developed by JEA. In the case of the Mayo Clinic expansion, the issue is not related to uncharged fees, but rather to determining what capacity and associated fees were previously paid for. As you are aware, Mayo Clinic has been an important part of the community since the 1980s and JEA did not acquire the City water/wastewater utility services until the mid-1990s. As a result, identifying the terms and payments that were originally established has proven challenging. JEA is continuing to work collaboratively with Mayo Clinic to review the historical records and reach a fair and reasonable resolution.
Resolutions with customers or the implementation of a program on the billing and collection of additional capacity fees will have no impact on JEA’s bond commitments. We are aware and welcome the audit and are actively working on a solution.
JEA Spokesperson