JACKSONVILLE, Fla — The instructions were simple: Walk past the gate and into the courtyard, and leave the package at the front door.
The contents of the package were sensitive — sensitive enough that a lawyer from the powerhouse Florida law firm Foley & Lardner was instructed to deliver the package directly to the home of JEA chief executive officer Aaron Zahn.
If nothing else, this would make it much easier for the leader of Jacksonville’s largest government agency to keep the contents of the package a secret.
“Aaron was concerned about leaks,” Ryan Wannemacher, JEA’s former chief financial officer, told city attorneys in an under-oath interview conducted months later.
The package, according to an email exchange between JEA consultants, contained a draft version of what’s called an “invitation to negotiate” — in essence, the sales brochure Zahn would use to invite the largest companies in the world to compete to purchase JEA, Jacksonville’s century-old public electric, water and sewer utility, for billions of dollars in what would likely be the most complex transaction of its kind ever in the United States.
Delivery was set for July 13, 2019 — a period of time during which JEA officials were in a mad but secret rush on an effort to privatize the agency, a project that would eventually become the subject of at least three separate investigations, one of them by federal prosecutors, and ignite a public controversy that led to the ouster of Zahn and the entire executive team that worked with him. Toiling in the dark, Zahn and his team enlisted consultants, sometimes before they had even signed formal contracts, for the unsuccessful privatization effort, which by the end might cost ratepayers $13 million or more.
But that would all come later. In early July 2019, remarkably few people knew what Zahn was up to.
″(Zahn) was concerned that the longer we took, the more likely it was that, you know, somehow information would get out about the work we were doing and that, you know, you’d have public record requests and all of that,” Wannemacher said.
Staying out of the public eye, Zahn, along with a core group of JEA executives, lawyers and bankers, held offsite meetings at private offices and at pricey hotels and clubs — in one case at Club Continental in Orange Park, a luxury hotel with seven tennis courts and three pools — racking up expenses the city Inspector General is now reviewing. Sometimes they met out of town.
JEA officials also took measures that, intended or not, would keep documents and other information off the utility’s servers and, therefore, more discreet. They sometimes shipped physical documents rather than email them — as Zahn was having done July 13 for himself and two of his top officials — or walked sealed hard copies back and forth between JEA headquarters and the offices of a communications consultant just a block away. They uploaded documents to password-protected flash drives. They explored outsourcing payroll information to a private company to make compensation information for utility officials less visible and more cumbersome to obtain. Zahn also had erasable whiteboards installed in executive offices that were used often.
Federal investigators are, according to a subpoena, looking into whether JEA and city officials may have also communicated with one another using encrypted messaging apps that are designed to keep messages confidential. Zahn once told colleagues in a group chat one such app “works great,” and the utility’s chief operations officer received a verification code for another such service, according to phone records, which is usually a sign it has been downloaded.
Under Zahn, JEA repeatedly identified Florida’s open-government laws as impediments to doing business. During an offsite executive meeting at White Oak Conservation Center in Yulee in May 2018, Zahn, then new on the job, erupted at a utility lawyer who reminded him any notes taken at the meeting would be considered public records. It was an episode several in the room that day were able to recall more than a year later. ” ... it was uncomfortable for everyone,” a former senior executive told city lawyers.
This was an extraordinary way of doing business for a public agency, but nothing about what would happen at JEA over the next year was typical.
Over the past year, the Times-Union has interviewed dozens of people across city government and in the private sector who were involved in the now-canceled JEA sale process or who worked with Zahn in his role at JEA or in his previous jobs. The Times-Union has also reviewed tens of thousands of pages of documents, including bids from private companies, JEA legal and regulatory filings, financial data from investment banks, transcripts of sworn statements from senior executives, invoices charged by consultants, reimbursement reports for JEA’s senior executives, and utility emails. The Times-Union also recently obtained hundreds of pages of previously unreleased text messages between JEA executives and managers.
These documents and interviews paint a vivid portrait of Jacksonville’s largest agency at a critical time in its history — and in a moment of crisis.
They also tell a story about money and power.
Money: Who would get it. And power: Who would get to sell it.
***
Zahn’s tenure as JEA’s chief executive, which began in April 2018, is now the subject of multiple legal proceedings, investigations and controversies.
In January, the JEA board of directors fired Zahn after city attorneys concluded he “made numerous false and misleading statements to JEA’s board of directors about JEA’s financial performance and outlook, altered documents, provided false testimony under oath, failed to disclose conflicts of interest, and misused his public position.”
The rise and fall of Aaron Zahn tracks closely with the trajectory of his ultimately unsuccessful effort to sell JEA. The political fortunes of Jacksonville Mayor Lenny Curry, a Zahn ally who provided him political cover at key moments, are also tied to the JEA story. After Zahn’s downfall, Curry stepped into his shoes, becoming a full-throated supporter of selling JEA while trying to speed up the timeline for bidders to submit final offers to purchase JEA, a last-ditch effort to salvage the then-sputtering plan. It didn’t work, and now the actions of both appear to be of interest to federal prosecutors.
Zahn reached the apex of his power July 23, 2019 — nearly a year ago to the day — when, in the face of widespread public opposition, he convinced the JEA board of directors to unanimously do something no previous board had ever done: Allow the executives to put JEA up for sale. It was a watershed moment in the city’s history that could have dramatically altered Jacksonville’s government.
But the seeds of Zahn’s downfall, and that of his privatization project, were also planted at that July 23 meeting.
Some believe Zahn simply got greedy. Others believe in a more complex conspiracy that reaches into City Hall. Zahn’s defenders, and Zahn himself, believe he has been scapegoated for pursuing a politically unpopular policy decision. The public record provides reasons to believe all of those theories — or none of them.
“I think if you go back to a year ago as we all saw the attempt to sell JEA unfold, it just started to look bad and smell bad,” said City Councilman Rory Diamond, who has led a special committee investigating the sale effort. “People weren’t really sure what about it was exactly wrong, but they knew something wasn’t right.”
*****
In a remarkable turnabout, JEA is now suing its 40-year-old former CEO, accusing him of being “the principal architect and ringleader of perhaps the largest fraud in Jacksonville history” and arguing his employment contract entitling him to challenge his firing in arbitration is invalid.
Zahn has fired back that JEA is using “smoke and mirrors” to cancel out his legal employment contract. Zahn argues every decision he took was carefully vetted by government and private lawyers, and he has denied any allegations of wrongdoing.
JEA is engaging in a campaign to “villainize” as well as “disparage and bully” its former CEO “to exact political and public benefit” for JEA, the city, and government lawyers who worked with the utility throughout 2019, Zahn’s lawyers said in a response to JEA’s lawsuit.
Zahn’s lawyer, John Mullen of the Tampa firm Phelps Dunbar, turned down the newspaper’s request to interview Zahn, but Mullen provided answers to several individual questions as well as a 340-word statement he requested the newspaper to publish in full (it did not commit to doing so and is not). The statement says, in part, that Zahn “strongly rejects the entire premise, asserted by the Times-Union, that there was a ‘behind-the-scenes effort’ by Mr. Zahn and other JEA officials to privatize the utility.”
The statement says Zahn “attempted to use unparalleled transparency to lawfully and ethically improve JEA” and that “self-interested” media outlets and some city officials have ignored “numerous relevant, exculpatory facts and instead weave out-of-context draft documents, texts, and misguided innuendos into some type of conspiracy which never existed.”
Zahn and some former JEA executives maintain they engaged in a legitimate public policy exercise to figure out how to best transform the utility to adapt to the future, and they emphasize there was no preconceived notion privatization was the option they’d recommend.
And yet, Zahn was ready to recommend on July 23, 2019 that the JEA board of directors lay off nearly 600 employees if it didn’t give him permission to pursue privatization. JEA also devoted, far and away, the most money, time and manpower to restructuring proposals that would have privatized the utility.
Although Zahn has often been the focus of public scrutiny, the push to privatize JEA grew over time into a hydra-like boondoggle that touched dozens of well-known consultants, lawyers, city officials, beltway insiders and a handful of the nation’s largest companies — some just in it for the money, others for the political influence.
Even a partial list of controversies that accumulated during Zahn’s 14 months as CEO is dizzying:
— Perhaps the most dramatic and specific accusation is that Zahn created an opaque executive bonus scheme called a “performance unit plan,” ignored advice from outside lawyers that such a plan would not be allowed under state law, misled the board of directors about how much the bonus plan would cost, and ultimately crafted it in such a way that executives could have earned millions of dollars if JEA had been sold to a private buyer. It would take months for city auditors to figure out the lucrative nature of the plan, though once they did — in a report released in November — the revelations created a firestorm of public criticism.
JEA’s lawsuit against Zahn claims he alone could have earned as much as $26 million based on the way the bonus plan was written, a staggering sum for a public official.
Zahn’s ultimate aim, JEA says in its lawsuit, was to “sell JEA and loot it for millions of dollars in the process.”
The bonus plan has also gotten the attention of federal prosecutors and FBI agents. The U.S. Attorney’s Office issued JEA a grand jury subpoena in April that included a demand for numerous documents related to the bonus plan. It’s not clear what, exactly, prosecutors are investigating. In addition to the subpoena, they have conducted numerous interviews over the course of the past several months that have touched on multiple JEA issues.
Zahn has denied any wrongdoing related to the bonus plan and maintains it was vetted at every step by city and outside lawyers.
— City and outside attorneys have accused Zahn and his executive team of building a fraudulent case to justify selling JEA with deliberately skewed, overly pessimistic financial data. Zahn had argued a combination of industry forces would lead to a financial squeeze that would quickly require mass layoffs and dramatic rate increases — a trend one JEA board member called a “death spiral” — that privatization could head off.
But public power advocates scoffed at those claims, as have some former high-ranking JEA officials and industry experts. Companies bidding to purchase JEA also wanted to know more about Zahn’s projections. And in sworn testimony taken in the past month, two executives who worked under Zahn told attorneys investigating the sales controversy that some of the assumptions JEA used to justify privatization were “overly aggressive” or “extreme.”
Zahn’s lawyer said the scenarios he presented the JEA board were a “very real business response to market and corporate conditions which JEA faced.”
Daniel Nunn and Lee Wedekind, lawyers at the firm Nelson Mullins, which was hired to aid JEA’s legal proceedings against Zahn, concluded in a memo last year the skewed data and the bonus plan were part of a single scheme: ” ... there was a carefully orchestrated process under the guise of strategic planning to convince the board that JEA had to be sold, while simultaneously creating a (bonus plan) under which management would reap huge financial rewards from such a sale.”
— In some cases, the Times-Union found in its own examination of JEA’s claims, utility leaders aggressively and repeatedly pushed misleading information about JEA finances directly to city officials and ratepayers. In the middle of their efforts to justify privatization, for example, utility leaders often noted that over the past 10 years, “JEA raised customer rates by 71 percent.”
But that talking point failed to account for the fact that, overall, ratepayers’ bills have been trending down. JEA officials refused to consider the declining cost of fuel, which makes up a major portion of customers’ bills and is generally included in comparisons of rates among different utilities by the Florida Public Service Commission, the Florida Municipal Electric Association and — historically — by JEA itself.
The Times-Union also found that JEA’s annual filings to state regulators projected a more optimistic forecast over the next decade of flat-to-slightly-increased electric sales — contrary to the “death spiral” scenario senior executives had presented to the board of directors and the public of dramatically declining sales.
— The city’s Office of General Counsel has said Zahn’s senior executives approved no-bid contracts worth millions of dollars to privatization consultants in violation of JEA’s procurement rules. And consultant invoices reviewed by the Times-Union show Zahn began working on privatization with the investment banks JP Morgan and Morgan Stanley about a month before JEA actually hired them on contracts — which were also potentially worth millions of dollars.
In two cases, JEA officials also had notably close ties with privatization consultants. Zahn was college friends with the lead attorney at a New York law firm that billed JEA for about $5 million, much of which remains under review and hasn’t yet been paid. And Herschel Vinyard, JEA’s chief administrative officer, recommended hiring his previous employer, Foley & Lardner. Both firms played lead roles in the sales process.
— JEA grappled with a perception among some employees and outside observers that the fix was in for the utility to be sold to NextEra, the parent company of Florida Power & Light — the largest utility in the state and one of the most politically influential players in Tallahassee.
Nassau County Administrator Mike Mullin wrote in a January letter to a Jacksonville city attorney — which has never been previously reported — that during an August 2019 meeting about JEA’s service territory in the neighboring county, “it was disclosed by JEA representatives that Florida Power and Light would be the successful bidder of the main assets.”
Mullin’s recollection of the August meeting would be remarkable since JEA was in the middle of the highly regulated and secretive competitive bidding process. He did not return Times-Union phone calls to discuss his letter. A city lawyer, however, noted in a response letter to Mullins that Mullins was unable to recall the “identity or sex of the person who made” the statement during a phone call to discuss his letter. Calling it a “serious allegation,” the attorney recommended Mullins bring that information to law enforcement.
Zahn’s lawyer said he has no knowledge of Mullin’s letter or allegation.
— Federal prosecutors, too, appear interested in NextEra more than other companies that submitted bids to purchase JEA.
The grand jury subpoena served to JEA specifically demanded any records of communications with lobbyists who had any ties to NextEra prior to or during the sales process.
Records NextEra produced in response to a subpoena from a special City Council investigative committee showed the company hired two consultants with close ties to Jacksonville Mayor Lenny Curry: Tim Baker, who ran both of Curry’s mayoral campaigns and is a friend and adviser, and Sam Mousa, who served as Curry’s chief of staff until June 2019.
— A company run by those two consultants, Baker and Mousa, organized and attended a secret trip in October to Atlanta on a private plane to watch a playoff baseball game along with Zahn, Curry, his top administrator Brian Hughes, and City Council President Scott Wilson — after the competitive bidding process to purchase JEA had begun.
The former head of JEA’s procurement, who organized the sale effort under Zahn, has since told lawyers investigating JEA that Zahn’s appearance with Mousa and Baker at the baseball game held “at least an appearance of impropriety.”
Baker also sat in on several internal JEA meetings and provided political and strategic advice to JEA executives during the privatization effort, services Baker says he provided for free. Zahn, JEA officials have said, wanted to hire Baker as a consultant.
— Zahn’s political and social ties to the mayor dogged him throughout his tenure. And in turn, Curry’s repeated attempts since 2017 to distance himself from two separate efforts to privatize JEA have come under fire after, in both cases, evidence emerged his office was more involved than he had acknowledged.
Curry’s office refused to make the mayor or an official in his office available for an interview.
Zahn’s attorney did not comment on whether he has spoken with the FBI or U.S. Attorney’s Office, though he did say Zahn believes neither he nor anyone else at JEA during his tenure there committed a crime.
The suspicion Curry or his allies were pulling the strings to sell JEA has been durable. “I have a feeling until Aaron does something against the mayors desires it won’t change that easily,” a JEA communications manager privately mused to a colleague about the perceptions in the media and public about Zahn in a February 2019 text.
The ties between Curry and Zahn also appear to be of interest to federal prosecutors. The grand jury subpoena to JEA demands records of any contacts between Curry’s administration and JEA officials related to the CEO hiring process.
Asked if Zahn ever took directives from Curry, his office or his political consultant, Baker, or if they ever had input into the privatization process, Zahn’s attorney didn’t directly answer. He said Zahn “reported to the Board of Directors of JEA and took direction from the Board as provided in publicly-noticed and televised meetings of the JEA Board.”
****
The first time a consultant officially billed JEA for privatization services was in June 2019. But the effort to sell JEA has earlier origins, and the idea came much closer to fruition far earlier than has ever been publicly detailed.
Curry, the city’s Republican mayor, has long had an interest in privatizing the utility. “He’s a free market Republican. It’s consistent with his ideology,” one of his closest friends and advisers told a conservative publication in 2017.
Investors likewise were eyeing JEA as the utility industry was going through a period of consolidation. Twenty First Century Utilities, based in Washington D.C., met with Bill Gulliford when he served on City Council. Gulliford said he introduced the investment group to Mousa and Mike Weinstein, Curry’s chief financial officer.
“They were feeling their way around and didn’t get much into the way of specifics,” Gulliford said of Twenty First Century. “They just wanted to know if there was interest.”
At another point in Curry’s first term, Weinstein met with Chicago-based energy company Exelon about its interest in making an unsolicited bid to purchase JEA, according to lawyers at Smith Hulsey & Busey, who interviewed Weinstein under oath earlier this month as part of a City Council investigation into JEA.
Curry’s office has never disclosed that private meeting.
Weinstein met with Exelon representatives at the law office of Foley & Lardner — the firm later hired as a lead JEA privatization consultant. The meeting included Foley lawyer Herschel Vinyard, who later became JEA’s chief administrative officer under Zahn and one of the architects of the privatization effort.
Weinstein himself later became a consultant for one of the JEA bidders in 2019.
It’s not clear if Weinstein’s private meeting with Exelon was fruitful. But selling the utility became a topic of public discussion and controversy when JEA board member Tom Petway — one of Curry’s closest confidants and a top donor who has contributed hundreds of thousands of dollars to the mayor’s political causes — announced at his final board meeting in November 2017 that he believed JEA should consider privatization. Curry had appointed Petway to the JEA board shortly after his election. It was unlikely such a close adviser and ally would have made the announcement without Curry’s blessing.
Indeed, Curry supported an initial exploration of privatizing JEA near the end of 2017, an ultimately unsuccessful effort that bled into early 2018. Then-City Council President Anna Brosche — a political opponent of the mayor — publicly accused Curry of using this initial “exploration” of privatization as a chance to actually move the idea forward, an allegation Curry vehemently denied at the time.
At least publicly, the 2017 and 2018 sale effort amounted to little more than an evaluation of JEA’s potential sales price on the private market, detailed in a report by Public Financial Management Inc., a firm that worked for both City Hall and JEA.
That was supposed to be it: A book report.
But lawyers aiding a City Council investigation of JEA say they have found records showing this initial privatization discussion came much closer to a full-blown sales process than has previously been disclosed.
Representatives with Public Financial Management Inc. — the firm that was supposed to just do a book report — returned to JEA officials a copy of a non-disclosure agreement Feb. 2, 2018 signed by JP Morgan in connection with “a sale of all or a portion of its [JEA’s] assets,” according to a status report of the investigation attorneys sent the City Council.
Goldman Sachs signed a similar agreement days later.
Both investment banks then sent JEA recommendations for merger and acquisition attorneys.
Also in early February, according to Smith Hulsey lawyers, a JEA official signed a contract with a third-party vendor to create a virtual data room — something commonly used in private transactions to exchange financial and operational information with buyers — and the official gave Macquarie Infrastructure & Real Assets Inc., a potential buyer, access to the room. (That company would bid later in the 2019 sale effort initiated by Zahn.)
The 2018 sale “exploration” became embroiled in controversy, in large part because of the council president’s objections. Curry, facing re-election the following spring, eventually dropped interest in privatization for the time, and JEA closed its virtual data room.
Still, JEA employees were rattled, and then-JEA CEO Paul McElroy retired after the episode, later saying in an interview he could see where things were headed and he had no appetite to be involved.
Seeking to quell suspicion that selling JEA would come up again after his re-election the next year, Curry issued a written statement in April 2018: ”... I am choosing to state unequivocally that I will not submit any JEA privatization plan to the City Council.”
****
Enter Aaron Zahn.
Zahn, a competitive swimmer in college and an amateur runner, has close-cropped blond hair and, at 40, still possesses boyish features. He favors modern-cut business suits and tends to fidget on a tablet in long meetings.
People who have worked with him usually agree he is smart and makes a good first impression. Their opinions of Zahn often diverge wildly from there.
Nothing about the way he became JEA’s interim CEO in April 2018 was typical.
Zahn had never worked at JEA — multiple past CEOs were company men (always men) — nor had he ever worked at any utility of any size in the public or private sectors. A graduate of Yale with a degree in philosophy and psychology, Zahn lacked an academic background in engineering, mathematics or finance, though he had worked at several investment firms after graduating from college in 2001.
Nonetheless, Zahn’s trajectory at JEA was meteoric. Curry tapped Zahn for a vacant seat on the JEA board of directors in late 2017. After sitting in on a single meeting, in March 2018, Zahn abruptly resigned from the board to pursue the interim CEO position after McElroy announced his retirement.
The board selected Zahn to serve as interim CEO over the utility’s own chief financial officer, Melissa Dykes, who had already been serving as the interim chief executive officer (the first woman to hold the title in JEA’s history), and despite the fact that JEA had not been actively looking to replace Dykes as interim before Zahn made his unsolicited bid for the job.
Months later, the board chose Zahn as its permanent CEO over other applicants with extensive experience at public and private utilities, some larger than JEA.
It wasn’t just Zahn’s lack of experience and his rapid rise that made the board’s decision remarkable.
Zahn was not a well-known figure in the city’s political or business worlds, nor did the Minnesota native have extensive roots in Jacksonville. He bounced around jobs at financial services and investment firms in Charlotte, N.C., Chicago and New York before landing a role leading a small waste-water technology firm in Jacksonville — BCR Environmental — in 2009. He lived in Jacksonville Beach, which is outside JEA’s service territory. His phone number still has a Chicago area code.
This raised a natural question: How did Zahn rise to the top so quickly?
“He finds a way to get what he wants,” a representative with a national search firm wrote in notes taken during a background check on Zahn on behalf of JEA. The representative was calling people who had worked with or around Zahn in his previous jobs and recording their anonymous responses. It’s not clear the board ever reviewed those notes before selecting Zahn as the permanent CEO.
“Aaron is shrewd and the kind of guy you want on your team,” the reference continued. “He plays within the rules, but he knows the rules so well, then you might not see it coming. He is very good at boardroom back dealings.”
Other references offered only praise for Zahn’s intelligence and ability. “He’s a hard charging guy from Yale, a competitive swimmer,” one said. Another called him “brilliant.” Those compliments were tempered by less flattering appraisals. “He would be known as a litigious guy in water wastewater industry. He was quick to the draw on getting lawyers involved,” one said.
Zahn’s tenure leading BCR suffered a few public setbacks with cities it signed on as customers for its waste-water technology, episodes that left some public officials and residents bitter even years after.
There might have been turmoil within BCR as well. Late last year, John Semanik, a major investor in BCR, told the Times-Union Zahn “wrecked” the company and that he was “terminated,” a characterization Zahn disputes and that contradicts the statements the company made at the time and since that the parting was mutual. “You can’t trust him. He’s truly dangerous to anyone who employs him, as he was for BCR,” Semanik said.
For some of Zahn’s tenure leading BCR, his father, Frederick, was the company’s chief financial officer.
Non-disclosure agreements have prevented several people the Times-Union has contacted since 2018 from talking about their experiences with Zahn during his time at BCR. Those NDAs also prevented the executive search firm JEA hired from learning more about him in the course of reference checks, notes show.
Regardless, Zahn built key relationships during his time at BCR. He met JEA officials over the years as part of his efforts to land work with the utility for BCR (those efforts were never successful). And he befriended Deno Hicks, a former BCR executive and well-connected local lobbyist who represented the firm. The two later became business partners. Zahn served on a Rick Scott transition team committee after his 2010 election as Florida governor. “He is REALLY good at Florida politics,” another reference told JEA’s executive search firm.
Zahn also built relationships through the local chapter of the Young Presidents Organization, a network for youthful corporate leaders that touts itself as “fostering a safe haven of trust, respect and confidentiality for our community.” Zahn served as a board member and membership chair of the local YPO chapter through August 2019. JEA paid for Zahn’s $8,000-plus membership dues to the organization while he was CEO.
Near the end of Zahn’s tenure as CEO, at least three members of JEA’s board of directors listed membership in YPO, all of whom are well-known in the local business world: Dane Grey, Camille-Lee Johnson and Henry Brown — who is currently the chairman of JAX Chamber.
Zahn also became part of a larger social circle of young business leaders who were taking on increasingly prominent roles in civic life.
That group included Ricky Caplin, CEO of The HCI Group and a member of a private business club called the Civic Council, which weighs in on city policy issues. Zahn would lean on these relationships when JEA was struggling with the public optics of privatization. Caplin’s name, for example, appeared in a favorable Times-Union op-ed praising the process JEA was using to explore privatization. The piece, which included significant input from JEA officials, parroted Zahn’s rhetoric about the gloomy future facing JEA and the need for change, and it lamented that the sales process was “being done in the public eye, where reason and emotion often collide.”
Most crucially, Zahn also befriended Lenny Curry, who became Jacksonville mayor in 2015. Zahn and businesses he was affiliated with contributed $11,500 to Curry’s first campaign.
After his election, Curry tapped Zahn to serve on a mayoral transition committee focused on infrastructure. “I think that gained notice, and at times I’d get calls around policy matters relative to, you know, water and other things ....,” Zahn told city attorneys in a sworn statement in January.
Zahn’s family also began attending the same Methodist church in the San Marco neighborhood that Curry’s family attends, about a 30-minute drive from Zahn’s home at the beach. “Obviously exchanged pleasantries and that at church, but nothing more from a professional manner,” Zahn said.
Outside the context of the sworn interview, Zahn has repeatedly told people he and Curry were close friends. Curry has denied that, but the two did attend an Atlanta Braves baseball game together in October 2019, along with Curry’s chief administrative officer, Brian Hughes, City Council President Scott Wilson, and Baker and Mousa — the two consultants NextEra identified as among those it hired for help on JEA privatization issues. Curry’s office called it a “personal trip.” Baker and Mousa, who started a consulting company together, organized the trip.
Curry has denied he played any role in Zahn’s selection as the permanent CEO in November 2018 by the board of directors, but Zahn’s affiliation with the mayor was the one clear, major distinction he held over the other finalists for the JEA CEO position who had extensive experience in the world of public and private utilities.
That Zahn was virtually guaranteed to get the permanent CEO job — despite the presence of more traditionally qualified candidates — was something at least a few JEA officials believed themselves.
Jon Kendrick, JEA’s former human resources vice president, who was not yet hired when Zahn got the permanent job, recalled in a sworn interview with attorneys last month that his predecessor believed “it was going to be Aaron’s job, regardless, so the (hiring) process didn’t really matter ...”
Kendrick, who memorialized the private conversation in hand-written notes, said his predecessor, Angie Hiers, also said at one point Zahn “was not asked anything” in what was supposed to be an interview with a JEA board member.
“I think he was interviewed, but she felt it wasn’t a meaningful interview,” Kendrick recalled. (Hiers, contacted by the Times-Union, confirmed the conversation with Kendrick took place.)
“She said the papers are true, and what she was referring to was just some of the stories about the hiring process for the CEO; that it just wasn’t a good process,” he said.
Kendrick also recalled being told some of the outside candidates for the CEO position “were told” to drop out of consideration for the job.
In at least one case, the political alliance between Curry and Zahn helped silence a critic of Zahn’s hiring.
Matt Schellenberg, then a Jacksonville City Council member and JEA’s liaison, had voiced concerns about the integrity of the hiring process. Although he was a Republican who was mostly aligned with Curry and was even supportive of the concept of privatizing JEA, he was concerned that Curry had arranged for Zahn, a utility neophyte, to lead what he described as the “city’s most valuable asset.”
Schellenberg reached out to JEA board members to speak with them about how they would pick a new leader. He never heard back from them but was instead contacted by Mousa, who was at the time Curry’s chief administrative officer. Mousa wanted to meet with Schellenberg at City Hall.
When Schellenberg walked into a meeting room in the mayor’s office, he said, Mousa began yelling so loud people outside the closed doors could hear him.
“He was saying, ‘This is not your job. Stop interfering,’” Schellenerg said.
Schellenberg said Mousa threatened to take away funding from projects in his Mandarin district. He said neither Mousa nor Jordan Elsbury, another Curry aide in the room, ever explicitly said Zahn was their preferred candidate, although he left the meeting with that impression.
“That was the implication,” he said.
The Times-Union reached out to all the JEA board members who voted for Zahn, and they either didn’t respond, couldn’t be reached or didn’t want to talk about the role the mayor’s office played, though some — like former board member Fred Newbill — have previously denied the mayor’s office told him who to select as CEO.
*****
Zahn clashed immediately with the existing group of utility executives when he took over in April 2018 as interim CEO. Many of them had worked at JEA for years, or for decades, and some were groomed for higher positions or recruited directly by Paul McElroy, Zahn’s predecessor.
″ ... (Zahn) saw us as a bureaucratic government entity, and we saw ourselves as a very well-run company ran by people who knew what they were doing. And so a lot of the friction arose around those types of personality conflicts,” Kerri Stewart, JEA’s chief customer officer, told city attorneys in a sworn statement of Zahn’s early days.
Zahn was particularly perplexed by JEA’s historical institutional pride in its status as a not-for-profit.
Zahn had the finance department create a new set of financial books with measurements often kept by private-sector companies — like earnings before interest, taxes, and amortization — but unheard of for a government agency (JEA, for example, doesn’t pay taxes). This new set of accounting data — the existence of which was not widely known within JEA — was called the “golden book.”
Notes taken during a private offsite executive meeting in May 2018, shortly after Zahn took over, show the group had conversations about factors that limited JEA’s effectiveness. One was public record and Sunshine laws. Another: “Not profit focused.”
Another emerging theme introduced at the May 2018 meeting that would take center stage a year later was that local government constraints outlined in state statutes and the city charter were hindering JEA’s success. The meeting minutes also show “profits” listed under a section titled, “things that are never discussed openly but need to be discussed.”
This not-so-subtle insistence on new language to describe JEA’s mission played a significant role in shaping how Zahn would guide the utility toward privatization over the next year, a kind of self-fulfilling logic: The only way to make a nonprofit effectively act like a for-profit company is to transform it into a for-profit company. Zahn, a Wall Street Journal reader (JEA paid for a subscription) who is fond of quoting the libertarian novelist Ayn Rand, also imbued this rhetoric with a political edge: Freeing JEA of “government constraints” might appeal more readily to the city’s right-leaning voters, or sound more palatable than “privatizing” a nonprofit utility, and it was language Curry, the city’s Republican mayor, echoed.
In fact, once the privatization push had begun in earnest, executives tended to avoid terms like “sale” and “privatization” altogether and favored muddled euphemisms like “recapitalization” that few ratepayers would intuitively understand. That would become a key part of JEA’s communications strategy.
These changes at first rankled his colleagues, but over time they came to — at least outwardly — parrot Zahn’s language in conversations with one another and in remarks with lower-level managers and employees, and in public appearances.
This created considerable internal cognitive dissonance: At the same time Zahn was refocusing JEA’s mission toward a for-profit vision, he was also highly sensitive to accusations he was a mayoral plant put in place to sell JEA.
“This idea that somehow the mayor shows up and says, ‘we sold JEA,’ that is absolutely false, and that is not what I’m trying to do,” Zahn told a group of employees at a videotaped meeting in June 2019.
“I am not trying to slap a for-sale sign on JEA.”
In time, Zahn would also turn his attention to executive compensation. This, too, was something he wanted to turn into the more lucrative packages found in the private sector. Vinyard, one of JEA’s top executives, often referred internally to the bonus scheme that would ignite controversy months later as a “unicorn” — a statement about how unusual it was for such a plan to exist in government.
″ ... he was proud of the fact that it might be something new and exciting,” Kendrick, JEA’s former HR chief, recalled of a conversation he had with Zahn about the bonus plan.
At the May 2018 private meeting, executives also had “significant discussion around the ability for the media and community to misinterpret (the) minutes.” Suspicion of the media and public would become another defining characteristic of Zahn’s JEA. To wit: Although it’s not reflected in the meeting minutes, it was at the May 2018 meeting that Zahn blew up in anger at JEA’s then-general counsel, Jody Brooks, when she reminded him the meeting minutes would, in fact, become public records.
It was around this same time, in the spring of 2018, that Zahn told at least two employees in separate one-on-one conversations in his office the utility would be privatized, according to the recollections of the two employees who spoke directly with him. Their recollections are striking given Zahn’s repeated denials that he wanted to privatize the agency.
One of the employees was Melissa Charleroy, Zahn’s former executive assistant, who relayed the anecdote in an interview with a Times-Union columnist last year.
Another employee, who didn’t wish to be named, recalled expressing relief during a conversation in Zahn’s 16th-floor office after Curry had sworn off privatization. “Just because the mayor says he’s not personally pursuing the sale of JEA, that doesn’t mean it’s not happening,” the employee recalled Zahn responding.
Then, the employee said, Zahn winked.
*****
Over time, Zahn won the loyalty of JEA’s senior executives. He bought them lunch. He paid for drinks at happy hour. He took three executives on a retreat to Charleston, S.C. with their spouses, a trip that cost JEA more than $4,000.
Zahn also spent money on leadership coaching services, in one case paying $5,500 to a company called Leadership Surge for an executive retreat and workshop, according to JEA purchasing records. He spent at least another $29,000 to the same company for services for more of the utility’s workforce.
“He spent money like water,” Charleroy, his former executive assistant, who booked some of Zahn’s pricey outings, said in an interview last year.
And yet some of his executive peers as well as rank-and-file employees also knew Zahn to be choleric, imperious, arrogant and at times immature.
One employee who worked frequently with Zahn said he developed a “cringe-worthy” habit of playing — out loud — “All I Do Is Win” by DJ Khaled for others to hear when he got his way on something.
Charleroy, who left JEA in December 2018, described the work environment as “flat-out toxic” and said Zahn frequently used obscenities.
“Really??????? Is he a f***ing moron? What does he think public board meetings are?” Zahn texted a colleague, who didn’t respond, on Oct. 3. (The context makes it unclear who he’s referring to, though it might have been a Times-Union journalist.)
In Zahn’s under-oath interview in January, a city lawyer told Zahn, “it’s my understanding that you were dropping F bombs and MF’er bombs all over the 16th floor” when he got upset at a subordinate’s performance at a City Council hearing.
“That’s not true,” Zahn said.
Kendrick, the HR chief who took notes of a conversation he had with his predecessor, Angie Hiers, recalled that Hiers had a sharply negative opinion of Zahn. (Kendrick began in April 2019, and Hiers retired earlier in the year).
“Aaron not a nice person ... ” Kendrick’s notes of his conversation say. He also scribbled down the words “caution” and “toxic environment.”
Hiers, who is back at JEA as a special assistant to interim CEO Paul McElroy on human resources, said in a brief interview she did have this conversation with Kendrick, though she reiterated it was a private conversation and not a job interview (Kendrick never interviewed with Hiers for the job), and she didn’t know why Kendrick took notes of it.
The two have known each other for decades — before Kendrick’s latest stint as the HR chief he had previously worked at JEA under Hiers — and for his part, Kendrick told attorneys if he had known his notes were still in a file in his JEA office he would have removed them because he considers them to be personal.
Hiers said she was trying to be “very candid” with Kendrick about why she was leaving.
Hiers said there were two incidents in particular she had in mind when describing Zahn’s behavior to Kendrick: His eruption at Brooks, the JEA general counsel, at the May 2018 offsite meeting, and the interaction city lawyers questioned Zahn about — his alleged anger over an employee’s performance at a City Council hearing and subsequent conversation with that employee.
“I had never ever ever in my days seen a person who is supposedly the CEO and leading the team behave that way,” Hiers said.
Kendrick and other executives told city attorneys they never or only rarely viewed Zahn engaging in inappropriate behavior.
“He could be abrupt, but he treated me courteously,” Kendrick said. “I know there was talk — and I can’t refer to a specific conversation — that he had mellowed somewhat. So I may have seen a different Aaron Zahn than Angie did.”
Zahn’s attorney said attempting to “extrapolate a single episode out of context into a general description of Mr.Zahn’s performance as a CEO does not meet any test of logic or journalistic integrity.” He didn’t comment further on Zahn’s behavior as CEO.
*****
Zahn always struggled mightily to win over JEA’s rank-and-file workforce. In early 2019, he came up with the idea of handing out special “challenge coins” to employees and delivering what became known as the “frog presentation,” which he delivered on a kind of internal roadshow to speak directly with employees.
Premised on the parable of a frog not realizing it’s sitting in a pot in boiling water, Zahn wanted employees to understand the risks he believed were facing JEA in the near future: Take no action and get boiled like the frog. He also hoped to assuage fears within JEA that he was there to once again put it out for sale.
Early reviews were not favorable.
“Did you see his presentation? Omg ... I can’t even,” a communications manager texted his boss in February 2019.
“Not compelling. Disjointed. No beginning or end,” his boss, JEA executive Kerri Stewart, responded.
“I have to tell you about the frog picture he put in and the cartoon. It’s wild,” the manager said.
Zahn also talked often in company-wide settings about the need for employees to share innovative ideas. In what was perhaps a presumptuous move when he was still only the interim CEO, Zahn had JEA shell out more than $300,000 to pay for a conference centered around infrastructure innovation that featured speakers from around the country. Zahn, sporting a wireless mic and a business suit (no tie), also gave a talk on stage during the conference to a crowd made up almost entirely of JEA employees about his vision for the future of the utility (JEA employees were paid to attend; some said they were forced to be there).
These efforts failed to convert many employees into believers.
And in time Zahn and the executive team also grew increasingly frustrated and suspicious of the leadership of various unions that represent JEA employees — who were consistent opponents of privatization. “I’m killing myself talking to employees and getting them to be calm and see that (we’re) being transparent. And the unions are just driving up fear,” one executive texted June 20, 2019.
JEA’s workforce, however, is no monolith, and there were employees who wanted to give Zahn a chance.
“I never saw the yelling and screaming that I heard about. I never saw any of that until that incident in the elevator,” said Jason Baber, an electrical engineer at JEA.
The incident in the elevator: Before he went public with plans to privatize JEA, Zahn created an initiative that allowed employees to submit innovative ideas — voted on by the whole company and presented to the board. This was a time when Zahn was working hard to power through employees’ suspicions he was a mayoral plant to sell JEA and instead convince them he was there for the long haul. The initiative was one of several efforts Zahn made to win them over.
Baber, who had enjoyed a few of Zahn’s company-wide book recommendations, believed in some of what he had been hearing about JEA’s future since Zahn came on board. And it turned out one of Baber’s ideas was accepted and on its way to moving forward — then came the news of a possible sale.
When it became clear privatization was on a fast train, Baber wrote a frustrated email saying he no longer wanted his idea to move forward. He copied everyone in the chain of command, including Zahn.
About a month later, Baber was leaving the building when he encountered Zahn in the elevator. ”(Zahn) said, ‘Hey, I got your email. I was very disappointed in the way you handled it,’” Baber recalled. “I said, ‘Well, I could say the same thing about you.’”
Baber got written up for his interaction with Zahn that day. The story quickly spread among JEA’s workforce.
“So he did have some vindictive tendencies,” Baber said. “That was when I saw it, when everything started crumbling.”
*****
JEA, the companies that bid to purchase JEA, and the numerous consultants hired to usher the transaction through, have produced tens of thousands of documents, and dozens of people have been interviewed, some more than once, by multiple lawyers who are now scrutinizing the sale effort.
And yet there remain huge, remarkable gaps in what is known about the internal deliberations that ultimately led to the July 23, 2019 meeting of the JEA board of directors. Some of the most controversial elements of the sale process — like the bonus plan, as well as a series of lucrative, unusual employment contracts for executives — seem to have simply popped into existence, with no one willing to claim responsibility for their creation. Even some of the executives remain unsure what had been happening while they were there.
July 23, 2019 was the official start date of the second, Zahn-driven push to privatize JEA. That day, the board signed off on a series of high-stakes measures, with billions of dollars on the line.
The board:
—Officially authorized JEA’s executives to explore privatizing the utility (though public records make it clear they had already been making significant progress on this effort at least a month before getting permission from the board).
—Approved a series of permanent employment contracts for Zahn and the rest of the executive team that included unusual provisions providing them with post-employment consulting payments if they were ever terminated without cause, terms that were worth hundreds of thousands of dollars. Historically, only JEA’s CEO had an employment contract that needed approval by the board.
—Approved accelerated pension payments and retention bonuses for JEA’s workforce (and executives) in the event JEA were sold to a private buyer.
—Approved the controversial bonus scheme. At the time, executives represented to the board the cost of the plan was only projected to be about $3.4 million. The plan functioned like a quasi-stock purchase plan. All employees would have the option of purchasing phantom “units” for $10 each. If JEA met certain financial growth benchmarks, the value of those units would increase. Executives also told the board the city’s Office of General Counsel had signed off on the legality of the plan, a statement one board member testified later was a major consideration in her decision to support the plan.
The City Council Auditor would later find, however, the cost of the plan was actually uncapped and could easily reach into the hundreds of millions of dollars in payouts to employees if JEA were sold to a private buyer. And records released months later showed that while all employees might be eligible to purchase units, the amount of units available to purchase would increase with an employee’s rank — with far and away the most going to the senior executives at JEA.
A document dated June 2019 from Morgan Stanley — one month before Zahn asked the board’s permission to explore selling JEA — outlined the potential value of JEA on the private market and the net proceeds that would go to City Hall in a sale, the major element necessary for Zahn and his colleagues to figure out how much the bonus plan would be worth. The document showed JEA landing City Hall net proceeds in the $6 billion range, meaning the bonus plan would have, as the auditor cautioned, ballooned to be worth hundreds of millions of dollars. Most of that would have likely gone to the dozen executives.
Zahn has repeatedly denied any wrongdoing related to the bonus plan.
In addition, the city’s Office of General Counsel later said it never signed off on the legality of the plan.
Together, all the measures the board approved July 23 amounted to the largest change to Jacksonville’s government in a half-century.
But the origin of much of this work remains a mystery. Even as his rhetoric had long telegraphed his interest in a sale, it’s not clear when Zahn decided to pursue privatization or approached the firms that would eventually serve as consultants. The records available shed little light on these origins. Some firms simply started doing work for JEA, even without signed contracts, including JP Morgan and Morgan Stanley.
Records show they were involved in the privatization project weeks before the July 23 board meeting, but Zahn wouldn’t sign consulting contracts with the banks until July 24.
The executive employment contracts remain another hazy issue. JEA now claims in its lawsuit against Zahn that he “used JEA’s own law firms—Pillsbury and Foley & Lardner—to craft employee-friendly terms for his benefit and to JEA’s detriment.” The permanent CEO contract for Zahn included a retroactive pay increase, which provided him a lump sum payment of $115,000, something he didn’t disclose to the board or public the day of the July 23 vote. JEA’s attorneys claim the retroactive pay increase is illegal.
As for the rest of the executive contracts, several executives have testified they were simply told one day they were getting them. Those contracts mirrored many of the provisions in Zahn’s contract. The contracts all contained elements — like a clause that allows executives to challenge their termination through arbitration rather than the courts, as Zahn is currently attempting — that city lawyers believe are unenforceable and contrary to state law.
And several executives have told City Council investigators the controversial bonus plan simply appeared one day. “The (bonus plan) was the biggest mystery that, quite honestly, a lot of us wanted to know more about,” Shawn Eads, JEA’s former technology chief, said under oath.
Kendrick, the former HR chief, did not help create the bonus plan and, like Eads, recalled having big questions about it. Similarly, JEA did not loop in its head of human resources when drafting the dozen executive contracts that the board approved July 23.
Kendrick was “told, here it is, you know, sign it. Almost as a condition of employment. It was never stated that boldly, but, you know ...”
JEA’s upper ranks seemed satisfied with the outcome of the July 23 meeting. Zahn and his team met at Volstead, a speakeasy-style bar downtown frequented by city officials, after work that day. Zahn said he left the celebration “quite early” and covered some of the tab.
*****
Another topic that remains fuzzy: What role did the mayor play?
Curry’s office has portrayed Zahn’s JEA as acting independently, though Curry became an important cheerleader of Zahn’s efforts.
Records and interviews suggest Zahn was in close contact with Curry, his aides and his political consultant, Tim Baker, throughout the 2019 sale effort, and they point to more involvement than Curry has previously acknowledged.
Charleroy, Zahn’s former executive assistant, has said she was responsible for organizing and scheduling all of the former CEO’s business schedule and even huge parts of his personal life. The one exception: When he’d meet with Curry’s administration. Zahn was at City Hall “all the time,” she said.
Another former JEA official — retired senior executive Mike Hightower — told the Times-Union last year Zahn was frequently working on “political issues” with Baker and Brian Hughes, Curry’s chief administrative officer and a former business partner with Baker. (A city spokeswoman has said Hughes never worked on “political issues” with Zahn and Baker.)
After Zahn was fired from JEA, the utility said in a statement Baker was among the consultants Zahn personally expressed interest in hiring, though it never happened. Zahn did insist, however, that Baker attend several closed-door meetings with JEA to provide advice related to the sales effort.
Baker has said he was never paid for this and described the meetings as informal briefings. He attended them in his capacity as a political consultant, not a Curry adviser, he has said.
NextEra identified Baker as one of the consultants it had hired for privatization issues in a response to a City Council subpoena for records, but Baker has said he was only paid to perform “community relations” services and didn’t perform any work related to privatizing JEA. He said he ended the contract at the end of July 2019, before the official competitive bidding process for JEA began.
Still, Baker’s current business partner, Sam Mousa — the mayor’s former chief administrative officer — was another consultant NextEra identified as one it had hired for privatization issues. Baker and Mousa own a consulting company together, in addition to their own separate businesses, and Mousa held a consulting contract with the mayor’s office during much of the time the competitive bidding process for JEA played out last year. That contract has since expired.
Curry has said no one lobbied him on JEA privatization issues.
Mousa’s lawyer told city attorneys last month he has provided information to a grand jury but did not elaborate further. A lawyer representing Mousa has told the Times-Union he believes he’s done nothing wrong.
Baker said he had no comment for this story.
Text messages show JEA officials kept Baker in the loop.
“Can you print off one copy of each and deliver a package to Tim Baker on your way back over here?” Kerri Stewart, JEA’s chief customer officer, texted a colleague the day before the board’s consequential July 23 meeting.
“Documents are in a sealed envelope in his chair in his office,” the colleague responded about 30 minutes later.
Stewart, in response to written questions, said Baker “asked for a copy of the board packet,” which is what the text related to. Lawyers aiding the City Council investigation said Baker had also provided JEA’s chief operations office comments to incorporate into the package board members would receive for the July 23 meeting. JEA didn’t release the contents of the board packet to the media or public prior to the meeting.
“Stand down on letter. Will call in a bit,” Baker texted Stewart on Dec. 11.
“Ok,” Stewart responded.
A Curry aide also told Stewart to not publish the letter.
Stewart said the reference was about a letter being drafted for Zahn to provide during a City Council hearing on the controversial bonus plan, organized by City Council members Ron Salem and Rory Diamond. Stewart said she reached out to Baker and Brian Hughes, Curry’s chief administrative officer, “at Aaron’s request.”
“Tim was to help edit it ... and presumably Aaron wanted his opinion on the wording. Brian was then (chief administrative officer) for Mayor Curry and was notified because of the political nature of the letter,” she said.
Stewart said it was not typical for her to receive and follow orders from Curry’s officials.
Zahn’s attorney said he had no knowledge of the texts or that Baker or Curry officials were providing a JEA employee directives.
The City Council’s lawyers noted the Dec. 11 text and an additional Dec. 5 text from Baker to Stewart were both sent on days JEA’s negotiating team had met with NextEra.
*****
Zahn’s privatization effort had one potent advantage — one strategic insight — going for it: Everyone was going to get paid.
Under the minimum requirements JEA created for bidders to meet, ratepayers would get rebates — $350 per account and up to $1,400 for customers with electric, water, sewer and irrigation accounts. Front-line employees and managers were in line to receive accelerated pension benefits and retention payments that were equal to a year’s pay. Top executives, who would also receive those retention payments, had their bonus plan. A small army of lobbyists, bankers and lawyers representing JEA and the bidders would make millions in fees. The legally required voter referendum to approve a transaction would put money in the pockets of political consultants. The mayor would get his windfall of at least $3 billion in net proceeds to City Hall, and City Council members would be enticed to vote for a deal with money for pet projects and district improvements.
Zahn has said the accusations against him — that he sought to “loot” JEA in the process of a sale — require one to ignore the “oversight mechanisms” in place that would have fallen outside his direct control, like City Council approval and a voter referendum, that were necessary to actually privatize JEA.
But Zahn’s position afforded him considerable power to frame the debate that was to take place if the JEA board had approved a buyer. Consider the choice that voters would have faced: Approve privatization and receive a rebate, or vote against it and get nothing. Zahn and his team built the customer rebates into the minimum bidding requirements.
Another example: JEA executives had also included a requirement that any buyer offer a minimum three-year period of “guaranteed base rate stability.” Although the utility was quick to publicly correct media reports it deemed inaccurate, JEA officials said nothing when several local media outlets reported this requirement to be the equivalent of a rate “freeze.” And the prospect of higher rates in the near future if JEA stayed government-owned was framed as the stick to the carrot that privatization offered (rebates) — an essential part of the “death spiral” narrative.
“If you are going to have a transformation of JEA ... then you need to have some remarkable results,” Zahn told Times-Union news partner First Coast News on July 30, 2019. “Being able to deliver our customers $400 million in rebates ... while also providing rate stability ...”
In reality, according to documents obtained after the sale process had been canceled, JEA would have allowed a buyer to increase rates up to a specified maximum for each of the three years. “I would characterize those rates as a cap, as a max level,” JEA’s former finance chief told a bidder during one of several closed-door negotiation sessions, according to a transcript.
Despite these advantages, the sales effort collapsed.
Internal correspondence shows a JEA communications effort that failed on almost every front: Officials were rarely happy with local news stories on the sales effort. Some made Zahn apoplectic. “Either we find a way to get our voice back. Or I’m going to find a different team to get the voice out,” he texted colleagues Oct. 12 after publication of a Times-Union story he believed to be inaccurate. (The Times-Union stood by the story.)
Executives misread their own employees, many of whom had lost total faith in the 16th floor bosses, another source of frustration. Executives began closely tracking social media, especially for any employees who criticized JEA. “Who is pianobug,” Dkyes, JEA’s COO, asked a colleague, referencing a person who comments frequently on twitter under an anonymous handle.
They also suspected JEA employees were “leaking” information to reporters. “The leaks are worse than the White House,” a communications manager observed.
And many civic leaders — whom JEA executives placed a special emphasis on courting — ultimately turned on the effort. JEA officials were rarely able to find widely trusted community figures willing to write favorable op-eds in their defense.
Zahn came to resent the increasingly vocal criticism rising from employees, voters and politicians. After a September op-ed in which former Mayor Jake Godbold referred to Zahn as a “huckster,” the CEO lamented to his colleagues, “I guess the only thing people have left is personal character assassination.”
Zahn complained more than once about what he perceived to be personal attacks on his character, but he was also ready to use JEA’s institutional resources to criticize others. At one point he floated the possibility of having JEA publish satirical pieces mocking what he thought were unfair criticisms of him and the utility by the Times-Union: “insane CEO tries to find a way to connect with his employees to navigate hard times and build morale,” he suggested for the first article.
“Think ‘onion,’” he said, referencing a satirical publication that mocks current events and politicians. “But this time onion is on media.”
JEA never went forward with Zahn’s idea.
Communications managers were given a difficult, almost contradictory task: They were to defend privatization without acknowledging JEA was attempting to privatize. They were to defend JEA’s efforts to be transparent while JEA leaders embarked on a competitive bidding process that shielded from public view an enormous amount of information, including who the bidders were and what they were bidding, and that would have permitted a negotiating team to strike a deal behind closed doors.
In November, after City Council auditors had detailed the bonus scheme that had infuriated city officials, the communications team then had to defend a plan few of them knew anything about and that even executives had harbored private doubts over.
*****
Through all of this, Zahn held together the support of his board of directors until early December — when cracks began showing in the face of a growing storm of outside criticism.
That was when JEA and a negotiating team of city officials — whom Curry offered up to JEA after utility officials were deemed to have potential conflicts of interest by the city’s ethics director — planned to embark to Atlanta for several days of negotiating meetings with the bidders.
After so much criticism about JEA’s lack of transparency, the trip out of town to quite literally speak with bidders at an undisclosed location behind closed doors was too much. JEA board chairwoman April Green demanded Zahn not make the trip.
“She was in a hysteric moment worried about public perception,” Zahn told city attorneys in January. “I mean, it was hysteric. It was not a rational conversation.” (Green didn’t respond to a request for comment.)
The souring of that relationship was a crucial development in hastening Zahn’s exit from the agency.
Zahn went to Atlanta over Green’s demands and paid his own fare — he needed Green’s approval if JEA were to pay for it.
By the time he returned to Jacksonville, on Dec. 12, two City Council members were preparing to hold a hearing to get to the bottom of the bonus scheme, scheduled for Dec. 16. There, multiple city officials torched Zahn and his team and accused them of committing, at minimum, “legal theft.” Another JEA board member, Kelly Flanagan, defected at that hearing as well, telling City Council members she would not have approved the bonus scheme July 23 if its true cost and legally unvetted nature had been disclosed at the time.
Kendrick, the HR chief, told attorneys that when Zahn and the former CFO, Ryan Wannemacher, denied knowing who came up with the bonus plan concept at the council hearing, “that seemed very odd to me.” He agreed with an assessment it was misleading for them to deny it because he believes Zahn came up with the idea. Kendrick also said he believed Zahn had some notion of what the bonus plan would have paid out. “I would think they’d have some idea what it would be ...” he said.
There is a photo of Zahn walking out of that council hearing droop-faced, eyes pointed down, a backpack slung over his right shoulder and his button-up shirt popped open at the neck. He appeared scolded. It was the public nadir for a youthful CEO who, just months before, played “All I Do Is Win” for his colleagues often enough to drive them crazy.
It was also his final appearance at a public meeting.
The next day, Dec. 17, the JEA board, in his absence, placed Zahn on administrative leave while city attorneys investigated whether cause existed to fire him. “At the time, we believed he was the man for the job,” Green said after the meeting. “We have learned he is not that person. I apologize for that.”
It was the beginning of a reckoning that would eventually consume every high-level decision maker involved in the privatization effort: The entire board of directors resigned and was replaced, and every executive that worked with Zahn is now gone.
*****
As controversy around Zahn and privatization mounted in mid-December, Curry, the mayor, made a final maneuver to save the competitive bidding process: He publicly called for the negotiation team to wrap up the closed-door talks by the end of January and present the JEA board of directors with a slate of the best final bids. Negotiators had originally planned on wrapping up talks in February.
This represented a major escalation of Curry’s support for privatization. This time, Curry was directly inserting himself into the fray.
Behind closed doors, however, the negotiators had already decided on this accelerated timeline. It’s not clear whether this was mere coincidence -- city and JEA officials, including Curry’s administration, were not supposed to communicate with the negotiators -- or if it involved some coordination with Curry’s administration.
Stephanie Burch, Curry’s deputy chief administrative officer who was serving as the lead JEA negotiator, was unable to explain to the City Council’s attorneys how Curry came to settle on the end-of-January time frame just days after her team had settled on the same.
In either case, her justification and Curry’s for accelerating the timeline were the same: ”... it was very clear at the time that things were falling apart with the (negotiation) process, so the sooner we could complete it the better off we were all going to be,” Burch told negotiators.
Zahn had said the sped up timeline was done to increase transparency around the process, but Burch seemed dismissive of that explanation. “I know Aaron was the first one to bring that up,” she told attorneys. “So if I repeated it after him, it was, you know, just trying to stay consistent with our comments with all the bidders.”
Several bidders expressed concern that submitting final bids by January was too soon and that it would effectively disqualify some of them from competing. In the end, though, it was all moot. Just before Christmas, Curry called for JEA to pull the plug on privatization.
It wasn’t the merits of privatization that hastened the end of the effort. It had simply been overtaken by events — by scandals over secrecy, executive pay and Zahn’s leadership — and left in its wake are separate investigations by federal prosecutors, the City Council and the city Inspector General, all of which are ongoing.
Zahn left behind an agency with lower credit ratings and massive bills from consultant charges, some of which city lawyers later came to believe were excessive or inappropriate.
Zahn, who has not hesitated to take fights to court, is set to vigorously defend his reputation. He, too, has soured on JEA, and on some of the people he worked closest with — though for vastly different reasons than many others.
“You guys just want me dead. I get it,” Zahn told his former right-hand official, Dykes, in a text message in February before she was terminated by the board. “Please stop bringing my family into this mess and I’ll leave.”
Asked to clarify the text to Dykes, Zahn’s attorney said his “wife and family have been wrongfully targeted by the Times-Union and some malicious members of the community.” He did not cite a story or any other instance in which the newspaper or anyone else has targeted Zahn’s family.
Dykes, in her final JEA board meeting in April, said she had cooperated with the FBI and U.S. Attorney’s Office, though she didn’t specify on what topics.
As new leadership at JEA began scrutinizing the remaining executives, Zahn has tried to stay in touch. In June, he reached out to Shawn Eads, JEA’s former technology chief who was at the time put on administrative leave along with the rest of the executives, to wish him a happy Father’s Day. ” ... sorry for how they’re treating you,” Zahn added.
Then, Eads told attorneys in an interview, Zahn texted him something strange: “Who is John Galt?”
Eads said the reference was lost on him. John Galt, the fictional hero of Ayn Rand’s political novel “Atlas Shrugged,” is a philosopher who becomes an outlaw after rebelling against a repressive government.
Zahn’s precipitous fall from grace was as astonishing and sudden as his rise from obscurity. And no matter how it ends, Zahn is central to the JEA story and JEA is central to his story, though he once envisioned this symbiosis turning out markedly different for both.
The controversy has also taken a toll on Curry’s reputation with voters. Public opinion surveys show his favorability ratings have flip-flopped: He is now more unpopular than he is popular.
The federal investigation is the most ominous cloud to darken Curry’s administration. That prosecutors are scrutinizing JEA officials and efforts that Curry was linked to could mushroom into damaging optics regardless of whether administration officials are ever accused of wrongdoing.
The alliance between Curry and Zahn has also left a potent cynicism about the future from within JEA’s large workforce, which has endured two rounds of privatization efforts that reduced employees to bystanders as their careers fell into an uncertain void.
“Most of the employees still don’t trust anything that’s happening because Curry’s still in office,” said Baber, the JEA electrical engineer who Zahn had written up. “A lot of people hold him as much, or probably more, responsible for everything than Zahn.”
“Zahn was just the guy he put in place to do it.”