[StBernard] Levee, coastal restoration financing mechanism being built

Westley Annis westley at da-parish.com
Tue Mar 16 07:59:40 EDT 2010


Levee, coastal restoration financing mechanism being built
By Mark Schleifstein, The Times-Picayune
March 15, 2010, 7:26PM
Louisiana officials on Monday took a small step toward issuing bonds to help
finance the state's share of levee and coastal restoration costs based on
money the state will receive from offshore oil production after 2016.

The state's Coastal Protection and Restoration Financing Corporation voted
to ask the State Bond Commission to review the way it will hire expert
contractors to handle the issuance of the bonds.

The hope is that the corporation will be able to hire those experts within
the next three months, which is when the federal Minerals Management Service
has told state officials it will have completed work on rules governing how
Louisiana, Alabama, Mississippi and Texas, as well as coastal counties and
parishes in those states, can use their share of money from oil, gas and
other energy production in federal waters in the Gulf of Mexico. A service
spokeswoman said the rules would be available for public comment late this
year or early next year.

Currently, the states are eligible for only a small amount of money,
originally estimated to be between $20 million and $40 million from 2007 to
2016, from two narrow strips of offshore waters sandwiched between Louisiana
and Florida.

But starting in 2017, the states will receive 30 percent of the money from
offshore energy operations, and the coastal county and parish governments
will receive 7.5 percent, based on a complicated formula measuring the
length of their coastlines and how far away the energy production is from
their coasts.

MMS officials estimate that will total $80 million and $150 million a year,
possibly rising to $300 million a year by 2025, said Chip Kline, an official
with the Governor's Office of Coastal Activities.

By issuing bonds based on that future revenue, the state could get its hands
on much-needed cash to build both levee and coastal restoration projects. An
amendment to the state Constitution approved in the aftermath of Hurricane
Katrina limits use of the offshore revenue to hurricane protection,
restoration and for infrastructure associated with both.

The money will include bonus payments from companies bidding on federal
leases, selected rental payments, royalties based on the production of
energy, and money from the sale of energy where a company gives the energy
-- usually oil or gas -- directly to the federal government.

However, if a company gives crude oil to the government for storage in the
Strategic Petroleum Reserve, it would not result in money going to the
states or local governments.

Future revenue also could be generated from alternative sources of energy,
such as wind, solar or wave power, from those federal waters, said Garret
Graves, a member of the corporation's board of directors and chairman of the
state's Coastal Protection and Restoration Authority.

Mark Schleifstein can be reached at mschleifstein at timespicayune.com or
504.826.3327



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