A friend sent me an interesting PowerPoint this morning. I can’t say I agree with all the conclusions — particularly Slide 42 where NO negatives are identified with Fee Programs — but I am sympathetic with the authors. Louisiana is indeed woefully under-served by mitigation banks and professional delivery systems. The banks that are available seem (how can I put this delicately) kind of “old school.” Most of them, but not all, seem to be ad-hoc affairs where an enthusiastic landowner plopped down a bank at the best place — for him — land he owned. In short, the banks seem to be located on available land — not ideal land.
I contend the state of Louisiana won’t do much better job than the private sector if they follow the traditional fee program path. Fee Programs tend to get wrapped around the axle on certain matters, such as inappropriate government established “static” pricing of the mitigation credit, and the inablity of state employees to properly “wheel and deal” in the assemblage of the appropriate real estate. The sad truth is, fee programs often end up over-or-under pricing their wares, and\or siting their project on state property or donated land — neither of which is ideal.
What to do? If one must — simply must — establish a state clearing house for mitigation, the actual projects should be purchased\funded using the same model the North Carolina fee program operates: Full Delivery. Full Delivery mitigation projects are contracted “turn-key” restoration projects purchased to fulfill mitigaiton obligations, like those generated by a fee program.
Full Delivery operates under a “two-envelope” bid system whereby a sealed technical proposal and a sealed cost proposal are solicited from qualified vendors to be opened at a date certain. Full Delivery providers, such as Restoration Systems, respond to these bid advertisements with the following:
- A Land Contract allowing the provider to “close” the necessary real estate (fee-simple or easement) if the bid is awarded.
- A conceptual plan for the restoration of the subject property.
- A justification of the project goals and location in light of state and federal planning efforts.
- A commitment to obtain an A+ rated Surety Bond to guarantee success of the project.
- A flat, not to exceed, per unit and total price.
- Several dozen other commitments and determinations.
Above is a typical Request for Proposals from the North Carolina Ecosystem Enhancement Program
The technical envelope is opened first and the project is reviewed by state personnel from a quality standpoint alone, including a team visit to the site with the provider. If the state wants, it can kick out any site it does not like at this stage — no questions asked. Those that pass muster, however, are given a “technical score” that adjusts the final price so that higher quality project can have some chance of beating lower priced project.
Finally, those projects passing technical review and receiving scores have their “cost envelopes” opened. The per unit cost is then modified by the technical score, and awards are made. I should stress that even AFTER the technical and cost proposals are opened and approved, the state can still reject any or all all bids without explanation, if doing so is deemed in the interest of the state. The entire cost to the state of generating dozens of qualified proposals for “turn-key” project under the Full Delivery is $0. Yet the state is provided with multiple optinos for restoration at a price certain, with no chace of cost over-run.
Pretty cool, huh? Literally hundreds of projects and dozens of firms have been funded in this manner by North Carolina, to the tune of several hundred million dollars. Billions of dollars are to be spent in Louisiana for compensatory mitigation of civil projects, such as state and federal levee construction, and relatively little thought has gone into best way to contract for the work. This system works quite well and should, in my humble opinion, serve as the basis for the acquisition of mitigation and coastal protection projects in the Pelican State.