Okaloosa County BOCC — October 6, 2015 — RESTORE Funds Distribution Acceleration Letter — reading text

Board of County Commissioners State of Florida October 6, 2015 Senator Bill Nelson Senator Marco Rubio Representative Jeff Miller (D-1) Representative Gwen Graham (D-2) Representative Ted Yoho (D-3) Representative Richard Nugent (D-11) Representative Gus Biliarakis (D-12) Representative David Jolly (D-13) Representative Kathy Castor (D-14) Representative Vern Buchanan (D-16) Representative Tom Rooney (D-17) Representative Curt Clawson (D-19) Representative Mario Diaz-Balart (D-25) Representative Carlos Curbelo (D-26) Re: Acceleration Options for RESTORE Funds Distribution Dear Florida Delegation Members: On July 2, 2015, the conceptual settlement for the BP Deepwater Horizon litigation was announced outlining a path to its conclusion and distribution of funds. A major part of this settlement will finalize claims related to the Clean Water Act and distribute funds pursuant to the Resources and Ecosystems Sustainability, Tourist Opportunities, and Revived Economies of the Gulf Coast States Act of 2012 (“RESTORE Act”). As part of the announcement, a process was also outlined whereby public comment on the settlement would be sought. As a core matter in the settlement, we believe the goal of all parties should be to effectively distribute funds in such a manner as to expedite recovery of the environment and economy of the Gulf of Mexico. The availability of bonding or a similar mechanism to allow counties and states the option to accelerate access to their share of funds as defined in the settlement agreement would provide flexibility to distribute funds quickly and efficiently to those who will lead recovery efforts. We write in advance of that public comment process to address three fundamental concerns: 1. If the Direct Impact and Spill Impact Component funds are divided equally under their respective payouts over 15 years, then each year would include a similar or level amount available for distribution and expenditure. Due to project priorities or phasing needs, there may be a need to exceed a “level” amount of funds in any given year or increase early year over later year distributions. 302 N. Wilson St 1250 N. Eglin Pkwy, Suite 101 Crestview, FL 32536 Shalimar, FL 32579 (850) 689-5030 • Fax: 689-5059 (850) 651-7105 • Fax: 651-7142 2. Government recipients of funds are currently in the process of developing policies and procedures to receive, allocate and report on settlement funds. This process mirrors typical federal grant procedures and can be complex requiring vast amounts of administrative resources and funds. If the projects can be accelerated, the duration and amount of these administrative costs could be reduced, making more funds available for projects rather than spent on administration. 3. If a local government can finalize its RESTORE projects more quickly than 15 years, the settlement process should provide for that. Again, this would reduce administrative costs resulting in more beneficial use of funds. In many cases it is likely that earlier implementation of environmental and economic restoration projects will accelerate and compound benefits over time. Whatever costs that may be incurred due to acceleration of the funding should be measured against the Gulf environmental and economic benefits realized from earlier start dates. The Need for Flexibility in Settlement Distributions Local governments receiving RESTORE Act Direct Component, and other entities receiving Spill Impact Component funds, need flexibility to be able to implement projects according to local priorities and scheduling considerations. Local governments could utilize alternatives to allow for that flexibility which may include a mechanism to borrow against future settlement funds that will be received by the local government. Research shows that several alternatives could serve as a model for this flexibility such as: • Grant Anticipation Revenue Vehicle (“GARVEE”)-like bonds; • Grant Anticipation Notes (“GANs”); and • Other “conduit” sources of financing or pooled programs. Further details regarding these tools can be found attached to this correspondence. While additional research will likely be required to determine whether any of the mechanisms referenced herein could be utilized similarly in the context of RESTORE implementation, they do serve as examples of where this flexibility has been afforded previously in the federal grant context. To implement these types of tools, there will need to be a clear way interest on financing can be treated in any of these repayment mechanisms, as well as the need to address any tax exemption impacts. Fundamentally, specific legal authority will likely be needed to expend settlement funds for debt services under these types of mechanisms. Finally, assignment provisions in Treasury and Council Financial Assistance Standard Terms and Conditions may need to be reviewed to assure they do not prohibit the use of these strategies to advance funds. Reducing Administration in the Settlement Process Government recipients of funds are currently in the process of developing policies and procedures to receive, allocate and report on settlement funds. As stated above, this process mirrors typical federal grant procedures requiring administrative resources and funds. Therefore, if a local government can finalize its RESTORE projects more quickly than 15 years, the settlement process should provide for that, which would reduce administrative costs. One way to address this issue is to establish program and/or project thresholds that would provide for shorter duration in funds distribution based on a set of standards. For instance, if a project can be implemented over a shorter timeframe, but it requires higher funding in early years, then perhaps a standard can be established that allows funds to be released for that project at the level needed over a 2 or 3 year timeframe. Also, a local government that does not receive a high amount of settlement funds should not be required to keep a program for place for 15 years if they can spend their funds more efficiently over a shorter timeframe. An example may be that for total payouts under a certain dollar amount, the distribution is over 5 years instead of 15. The goal is to implement a transparent, compliant program, but one that is efficient and can provide the funds for projects when and at the level they are needed. We bring these issues to your attention because they are being discussed both in the context of the Direct Component and the Spill Impact Component by numerous stakeholders. We feel that including these types of concepts in the settlement discussions is important because there may be more specific legal authority needed to implement them. These issues are important to consider because addressing them means a more efficient program that does not needlessly waste precious settlement dollars on administration and allows for levels of funding commensurate with the need to cost-effectively implement these important projects. The ecosystems and the economy of the Gulf have been suffering for five years and we have to look for creative solutions to restore that damage sooner rather than later. It is our sincere hope that we can move quickly to implement projects so that our environmental and economies can recover from this tragedy. We appreciate your consideration of these issues. Sincerely, Nathan D. Boyles Chairman