Alabama’s Gulf Coast Recovery Council is finally starting to iron out the processes it will use to disseminate the millions of dollars worth of recovery projects that will soon start flowing through the area, but around $56 million is already reserved exclusively for economic development.
The council, comprised of Gov. Robert Bentley, Alabama Port Authority CEO Jimmy Lyons, five local mayors and two county commissioners, is tasked with selecting projects submitted for RESTORE Act funding – civil penalties assessed against BP and Transocean after the Deepwater Horizon oil spill in 2010.
A total of 80 percent of the funds received have or eventually will move into the Gulf Coast Restoration Trust Fund. That fund is divided into five “buckets” — two of which are managed by the state recovery council.
“Bucket 1” is known as the direct component, which will ultimately receive 35 percent of any civil penalties. Alabama will see 7 percent of those funds.
In 2012, Transocean settled its civil lawsuit for a total of $800 million, resulting in the $44 million Alabama has in “Bucket 1” today. After the company’s next payment in March, that number will be closer to $56 million. During a closed meeting last week, the council decided the majority of those dollars would go toward economic development and comprehensive planning.
“A lot of environmental projects have been awarded through these other processes, Lyons said. “The decision was made by the council (unanimously) that this first tranche of ‘bucket 1’ projects would be dedicated for economic infrastructure and related planning projects.”
Lyons said the first “tranche” would use the $56 million from Transocean the council knows will be available in early 2015. However, exactly what projects will be funded remains to be announced.
The original RESTORE ACT legislation requires the council to submit a Multi-year Implementation Plan (MIP) for those projects, which then has to be approved by the U.S Department of the Treasury.
Eliska Morgan, the Executive Director of the GCRC, said the direct component has the broadest range of acceptable uses, and is most appropriate for economic development projects because the other fundings streams are more restrictive.
“Bucket 2,” — managed by the federal recovery council — can only fund environmental projects, and “Bucket 3” has a 25 percent limit on infrastructure projects, which will make those funds heavily favor projects that address ecological damage.
Those restrictions are why Morgan said “Bucket 1” would be the best suited to fund economic develop projects that have already been submitted to the Alabama Department of Conservation and Natural Resources’ online portal.
“We were damaged by the oil spill ecologically and economically, and [the council] felt those economic damages had not yet been addressed,” Morgan said. “There has already been $130 million of ecological projects funded through The Natural Resource Damage Assessment (NRDA) and the Gulf Environmental Benefit Fund.”
According to Morgan, the council has created a framework for creating its first MIP, which will be open for public comment through the council’s website until Jan. 18.
The final MIP will help guide what projects are selected for grant funding, and must be submitted to the U.S. Treasury — though there is no timeframe, as yet, on when the final MIP will be ready for submission. However, the Treasury’s regulations require that a draft MIP be released for a 45-day public comment period before being finalized.
The council also addressed projects that are broken down in in multiple phases for the first time, but Lyons, speaking for himself, said it would be hard to determine if funding a single phase of a submitted project is feasible until the state has a better idea of what money it will receive.
“We don’t have the big picture yet,” Lyons said. “$56 million is a lot of money, but relative to what’s ultimately come here, it’s a very small amount of money.”
Still other members, like Orange Beach Mayor Tony Kennon, said it would depend on the return on investment. He said he wouldn’t have a problem supporting a single phase of a project submission that was fiscally sound and could stand on its own.
Other notable developments:
• The council changed some bylaws to reflect changes in federal regulations finalized by the U.S. Treasury in September.
• The council voted to allowed Gov. Robert Bentley to participate and vote via proxy because of his inability to physically attend each meeting.
• The council established a rule requiring “requests to evaluate” a project for funding consideration have to be supported by four council members.