Louisiana’s Coastal Protection and Restoration Authority is accepting ideas for inclusion in its updated $50 billion, 50-year Coastal Comprehensive Master Plan.
Proposals can be submitted through March 1, 2019, to the authority, which is in the preliminary stages of preparing the plan’s next five-year update in 2023.
The CPRA’s call for ideas comes as a September poll reveals coastal protection and restoration is a priority for Louisianans – especially, and expectedly, among coastal residents.
An Aug. 29 to Sept. 5 survey of 809 likely coastal voters by Rigamer + Pinsonat on behalf of Restore the Mississippi River Delta found widespread, bipartisan support – 91 percent – for the authority’s master plan, with 77 percent saying more money needs to be spent on coastal protection.
The authority’s fiscal 2019 budget, approved by legislators in May, outlines $644 million in planned work for the year with $566 million in anticipated revenues to pay for it.
Those revenues – primarily from the state’s 2010 BP/Horizon Oil Spill settlement, Gulf of Mexico Energy Security Act royalties and oil/gas taxes – are projected to increase to $914 million in fiscal 2020 and $826 million in fiscal 2021.
While annual revenues can vary with the energy market, one maxim about financing that remains invariable is a dollar today is worth more than a dollar tomorrow.
That is why the Environmental Defense Fund (EDF), a New York-based nonprofit with more than 2 million members, says the CPRA board must use its latent bonding capacity to secure more capital now to build more projects less expensively sooner rather than more expensively later.
The EDF is asking the authority's board to approve a proposed $40 million pilot project to restore up to 835 acres of Port Fourchon marsh using the nation’s first environmental impact bond (EIB) for wetland restoration.
The board, which would have to “authorize” CPRA’s bonding capacity for the first time since it was established in 2005, is expected to discuss EDF’s proposed bond by year’s end. Its next monthly meeting is scheduled for Oct 24 in Cameron.
In an August report and presentation to CPRA’s Governor’s advisory committee and financial working group, EDF said using EIBs would “help close the financing gap” between $50 billion in master plan projects and $9 to $12 billion in master plan funding.
It is vital Louisiana “get coastal resilience projects on the ground sooner” and, therefore, at a lower cost, EDF insists, claiming its proposed $40 million pilot project would cost at least $17.6 million more if delayed by a year.
The EDF maintains its pilot bond could provide a new financing option in the authority’s toolbox, noting almost a third of master plan projects are EIB-eligible.
EIBs are similar to traditional bonds with fixed interest rates and set terms, but come with a “pay-for-success” performance bonus payment after five years if projects perform to, or above, thresholds set for each – prospectively set, in this case, by the CPRA board.
The study was funded by NatureVest, the investing unit of The Nature Conservancy through its Conservation Investment Accelerator Grant fund. Along with EDF, it was co-authored by Quantified Ventures, a D.C.-based “impact investment” firm pioneering the EIB “pay-for-success” (PFS) financing model.
Quantified Ventures introduced the EIB PFS in 2016, a $25 million bond arranged by the Calvert Foundation and Goldman Sachs Urban Investment Group, for DC Water, the District of Columbia’s water utility. The bond’s up-front money is now creating urban green spaces where water is absorbed naturally, saving DC the cost of building sewer lines.
Quantified Ventures and EDF are also proposing EIB-funded pilot projects in Baltimore and Atlanta. While those proposals address urban flooding, the Port Fourchon proposal is for wetland restoration.
The study examined 31 coastal restoration projects before naming a Belle Pass-Golden Meadow Marsh site owned by Conoco/Phillips as ideal for the first EIB-financed wetland restoration project.
Port Fourchon has only one flood-prone road to the mainland, and its low-lying docks and buildings are vulnerable to storms. Yet, the Gulf oil port is vital not only to local communities and the state, but to the nation’s economy, the study maintains.
The proposed bond is a “straightforward two-tier environmental impact bond transaction with a $40-million investment” that, Qualified Ventures says, “could be structured to be financially attractive” enough so “impact investors would buy into it.”
Among other dedicated revenues, the bond would be secured by the $9.7 billion Louisiana will receive from BP over the next 15 years from its $20.8 billion settlement in 2016 – the largest environmental damage settlement in U.S. history – stemming from the 2010 Deepwater Horizon oil spill.
CPRA Board Chairman Johnny Bradberry, also Gov. John Bel Edwards’ executive assistant for coastal activities, said in August that EIBs are worth a look.
The bonds “provide the state of Louisiana with another outcome-based performance tool that can help us speed up coastal restoration while lowering costs and involving local partners in financing those efforts,” he said. “This approach to bonding shows that (the state) is looking to innovate on all sides of our business: the projects, the procurement and the financing.”