Baton Rouge Business Report: Why are Louisiana coastal restoration projects bogged down?

RS CEO George Howard is quoted in this interesting article regarding the implementation of the new performance-based contracting model for coastal restoration projects in Louisiana.

coastal restoration

Why are Louisiana coastal restoration projects bogged down?

Baton Rouge Business Report

By Stephanie Riegel

Published November 7, 2019


In 2017, Louisiana lawmakers passed a bill that got little attention at the time but had the potential to make a big difference, long term, in getting coastal restoration projects done more quickly.

The legislation, dubbed Pay for Success by the Gov. John Bel Edwards administration, established the framework for an alternative delivery model for coastal restoration projects that enabled the state Coastal Protection and Restoration Authority to contract with the private sector to deliver a predetermined amount of restored marshland—and assume all the risk.

Under the model, known as performance-based contracting, the contractor finances the project and handles everything from acquiring land rights and securing permits to design, engineering and construction. The state doesn’t have to pay until a project is delivered, and even then it doesn’t have to remit the full amount until several years later, once the marsh had proven it is sustainable, hence the term “performance based.”

The bipartisan legislation was a rare win-win during an otherwise contentious legislative session, and was hailed by private sector contractors and environmental groups alike because it promised to put BP oil spill settlement dollars, already earmarked for the state and sitting in a trust fund in Washington, to work restoring the coast of a state that is losing a football field of coastline every 30 minutes.

But more than two years later, Pay for Success has yet to be implemented. Earlier this year, the CPRA issued its first RFP seeking a performance-based contractor for a marsh restoration project in the Barataria Basin in Plaquemines Parish. But in August, the agency threw out the four proposals that came back, saying they all were too expensive.

Contractors, who each spent hundreds of thousands of dollars acquiring the land rights needed to even bid on the project, are frustrated and raising questions about why an approach that seems like such an ideal solution has yet to be deployed.

CPRA officials acknowledge they, too are frustrated, and want to use this new tool in their tool box. But they say the numbers have to make sense, especially when funding is coming from a pot of money controlled—not so much by them—but by four separate federal agencies.

“It is a bureaucratic mess when you are talking about federal oil spill dollars,” CPRA Board Chair Chip Kline says. “But I would like to see, and I believe we will see, performance-based contracting be successful.”

Flexible and efficient

Performance-based contracting has been used specifically for marsh and wetland recreation projects in other states for years, most notably North Carolina, whose legislation was the template on which Louisiana’s was based.

Advocates of the approach say there are several advantages to performance- or outcome-based contracting over traditional design-bid-build. For one, private contractors—usually teams of engineering, dredging and environmental consulting firms—shoulder the upfront costs rather than the state.

This is important in Louisiana because while the state, on paper, has $7.2 billion in three different pots of BP oil spill money to spend on coastal restoration over the next 15 years, it doesn’t have all the cash on hand today. Even if it did, it can’t spend it without getting certain federal approvals.

coastal restoration

Perhaps more significantly, under performance-based contracting the contractor assumes a much greater share of the risk, essentially guaranteeing the work. The contractor doesn’t get paid until a project is completed and, even then, it may only end up getting 65% or 75% of what it’s owed. The rest comes several years later, after the restored marshland has stood the test of time.

The model is also more efficient because private contractors are motivated to work more quickly and have more flexibility than the state or the CPRA when it comes to acquiring land rights.

“The private sector can work with landowners in different ways than the government can,” says lobbyist Scott Kirkpatrick, who advocates for infrastructure funding. “They’re not hamstrung by as many regulations.”

Some even believe the private sector is more effective than the state in obtaining permits from the U.S. Army Corps of Engineers, which is frequently blamed for dragging its feet on coastal restoration projects.

But all those pros come with a con: They add to the cost of the project, and how could they not? If a contractor isn’t going to recoup his front-end costs for years and has to guarantee the work, that’s going to make the project more expensive.

On the other hand, the longer the state waits to start restoring marshland, the more expensive the undertaking will be in the long run. A 2017 study by The Water Institute of the Gulf determined the cost to restore an acre of wetlands doubles over 20 years. So if the state can enlist the private sector to jump start projects now and pay the front-end costs, everyone is better off in the long run—at least in theory.

“The beauty of performance-based contracting is if we can find a way to get either private investments or other investments into the program so we can projects on the ground sooner rather than later that is a good thing,” Kline says.

Government mindset?

Earlier this year, the CPRA issued its first RFP under the performance-based contracting model to do a marsh restoration in a particularly vulnerable area of the Barataria Basin in Plaquemines Parish. The RFP challenged qualified responders to demonstrate their ability to restore as much new marshland as possible within the required area at a cost not to exceed $65 million.

After an initial round of procurement, four teams led by well-known firms eventually submitted proposals: Maryland-based Ecosystem Investment Partners, Dallas-based Ecological Service Partners, North Carolina’s Restoration Systems and Houston-based Resource Environmental Solutions. Though all four came in at $65 million or less, Restoration Systems received the highest score from the selection committee. It also had the second-lowest price—$64.7 million, or $92,500 per acre.

coastal restoration

All four proposals, however, were rejected on the grounds they were too expensive—not by the CPRA, but by the Trustee Implementation Group, or TIG, that oversees the particular pot of BP settlement dollars that is funding this project.

That pot is called the Natural Resource Damage Assessment, or NRDA, and will eventually total $5 billion. But the spending of NRDA dollars is tightly controlled. Though the CPRA has some authority over the money, it cannot act alone. Representatives from the National Oceanic and Atmospheric Administration, the Environmental Protection Agency, the U.S. Treasury Department and the U.S. Fish and Wildlife Service all have representatives on the TIG and they all have to give the green light to spending on projects as well.

Kline and others say they’re not completely convinced the TIG understands the long-term value in using performance-based contracting.

“I think there were concerns at the TIG level on the premium the state would have to pay to make this mechanism work under the initial RFP,” Kline says. “We know we are going to have to pay a premium to make this work up front but we have to justify the value of getting a project on the ground sooner rather than later and how does that equate to the number of dollars we want to pay?”

Restoration Systems CEO George Howard says the value comes not only having the private sector shoulder the front-end cost but also the performance guarantee that’s inherent in such contracts. He says when the TIG looked at Restoration Systems’ proposal—all the proposals, actually—it wasn’t factoring in the 20% premium that a five-year warranty on an expensive marsh restoration project costs.

He also believes, however, there’s a government mindset at play, one that is resistant to change and innovation.

“I think there is a certain amount of bureaucratic inertia at the federal level that is embedded in the processes that has grown around the NRDA funding mechanism,” he says. “There is a resistance to letting the private sector come in and do this in a turnkey manner.”

Take two

Despite the initial hiccups, CPRA officials say they remain committed to figuring out how to make performance-based contracting work. After the initial unsuccessful RFP, they invited all four teams to meet with them, one on one, and suggest ways the RFP could be modified so that prices can be lowered.

One suggestion on the table is to shorten the warranty required in the initial RFP from five years to three. Another suggestion is to remove from the RFP a clawback provision that would enable the CRPA to not only withhold payment from a contractor if a restoration project fails, but to also go after them for any payments that have been made in the event a project doesn’t “perform.”

“We said if you can do a three-year warranty with no clawbacks that would lower the cost a good bit,” Howard says. “The clawback is like a belt and suspenders approach.”

Kline says his agency is sincerely interested in trying to make something work and is mulling over numerous modifications. Howard and others are optimistic that a second RFP can be drafted in such a way that lessens their risk and, therefore, their proposed price tag.

If that happens, will the federal agencies controlling the purse strings be willing to go along?

“We feel very positive about dealing with the state,” Howard says. “We’re still concerned about the federal trustees and their general support for this project. We wish we could interact with the TIG directly. It seems to act like something of a star chamber.”

Small and bald: What a difference a decade makes!

RS has been in business since 1998 but our first mitigation bank, Bear Creek, was not planted until October, 2001. Very soon afterward Mrs. Howard became pregnant with our first child, our lovely daughter Georgia Gilmer Howard. Georgia is now eleven and going to Daniels Middle School in the fall.

I share this background because on our way to the beach this Easter we made a family pilgrimage to the Bear Creek Wetland Mitigation Bank — which straddles Highway 70 between Raleigh and the coast. The kids have become increasingly interested in mitigation and we get a kick out of visiting Bear Creek and the adjacent Sleepy Creek.

I took the opportunity to snap a photo of Georgia beneath the closing canopy of bottomland hardwoods planted the year before her birth. Below you can see that photo — and another one taken not long after she was born — where I am hoisting the child above the glory of the newly-watered-and-planted former cornfield and swamp-to-be.

I have also included a photo of her beautiful mom Pam holding baby “G.” Note in the background to the left of small bald Georgia is a small bald cypress — which becomes a mighty knee’ed swamp monster in the modern photo.

These photos demonstrate to me in their own special way that we are in this for the long haul, care for our banks long after regulatory “close-outs,” and take deep pride in the miraculous process of environmental restoration. As our colleagues and regulators join in Denver this week for the NMBC I hope everyone is taking similar pride is the obvious fruits of our long labors.

Perhaps I’ll post another one of her little brother Henry Howard at Sleepy Creek, both planted — 2005.

Drone’s Eye View

Photo was taken from approximately 500 vertical feet above ground level looking North Northwest upstream along the Cache La Poudre River (Colorado) and down on the 3-Bell conservation easement.

 

 

 

 

The bottom center of the photo clearly shows a healthy oxbow ecosystem dominated by sandbar willow and cottonwood galleries. Upstream are remnant oxbows which have been heavily degraded by human agricultural practices. Drone under control of Raymond Holz; still picture clipped from video.

 

RS Holiday Luncheon

RS Holiday Card

Helping Out Kids and the Swamp Merchant

Restoration Systems’ Rookie of the Year, Ray Holz, and his roomate buddy, Wes Aycock, made an extraordinarily generous contribution recently to my children’s school. Ray and Wes help us rock and mulch the playground area at Joyner Elementary here in Raleigh.

These young men, I am absolutely certain, had other opportunities to spend their time early that Saturday morning — like sleeping. But instead they helped our school grounds committee beautify this kid-trampled chase-and-tag tract (cattle “hoof shear” comes to mind).

Ray’s contribution to the project did not begin that day, however. For nearly a year Ray has worked with Meriwether Hill, our committee chair, preparing drawings and estimates for the school’s application to the City of Raleigh for funds to solve Joyner’s persistent stormwater problems. He is a NC State trained Landscape Architect and his work planning the project was instrumental in Joyner being awarded….nearly forty thousand dollars!

Over the next few months Joyner will transform the hydrology of the playground and other areas behind our school with thoughtfully designed stormwater conveyances and rain gardens, as well as eradicating invasive species and weeds (a Ray Holz specialty) at the school.

Seeing that Ray has no child at Joyner, cynics may guess he is simply sucking up to the boss. Cynics would be wrong. For one, how would they explain the assistance of his buddy, Wes? I don’t recall managing to drag a roomate out of bed in my twenties simply to help me curry favor at work.

Indeed, Wes, like Ray, is simply working for his passion — and the kids. Wes has a new company, Green Roots Environmental Design, specializing in all-native plant landscaping

The truth is that these two guys are just good eggs — eager to help do whatever they do well. Stories From The Field will follow the improvements out at Joyner Elementary; progress which is in large part thanks to these gentlemen.

Workshop – Implementing the Galveston Stream Tool

On October 26th a workshop will be held in Houston, Texas to discuss the Interim Stream Condition Assessment Standard Operating Procedure which was recently put on the street by the Galveston Corps District.   This workshop is free and open to the public so if you would like to attend please visit the webpage and RSVP.  The workshop is key to anyone working on projects that may impact streams within Galveston District.

There will be three topics discussed during this workshop-

  • Jayson Hudson and Dwayne Johnson (USACE) will present on the Stream Condition Assessment SOP and how it should be implemented.
  • Lee Forbes (KBR) will discuss stream restoration techniques and present local project examples.
  • And RS’s very own Travis Hamrick will discuss our newest stream bank servicing the Houston Metro area- The Katy Prairie Stream Mitigation Bank.

 

We expect this workshop to be well attended (100+ people responded on the first day) so please RSVP to insure that there is enough room for everyone. See you there!

Buddy Study: Dr. Riggsbee in Science again

Stories is bursting with pride at the continuing accomplishments of Adam Riggsbee.

Adam worked at RS for a couple of years after getting his PhD at Carolina where his subject of study was dam removal. During that time Adam and his academic collaborator Todd BenDor had the bright idea (along with your’s truly) of surveying mitigation providers in 2009 following publication of the new Federal Mitigation Rule.

What we discovered was that mitigation banking “post-rule” is still a spooky business proposition. As detailed in Adam’s journal article below, and further reported this week in Science, 75% of participants believe the mitigation Rule did not lessen the financial risk of commercial compensatory mitigation.

Moreover, more than half reported that fundamental aspects of the regulation were essentially being ignored, such as the clear-cut preference for banked mitigation over Do-It-Yourself or Fee Program mitigation.

While disappointed with the results, I was not surprised. We had just returned from this year’s 2011 National Mitigation and Conservation Banking Conference in Baltimore. As in 2009, much gnashing of teeth and pulling of hair was evident among the participants over Rule compliance issues. If anything the angst was more intense than when the study was performed.

As a “Silver Back” in the mitigation business, however, I was less worried and more comfortably numb. Mitigation banking is simply not for the faint of heart or impatient. It is a long-term proposition likely to yield its reward only over great spans of time (under hypoxic conditions and at great pressure).

To use a trite but nonetheless apt phrase, commercial mitigation is not a revolution — but an evolution. Regulatory thickets can be pruned here and there and encouraged to grow healthy, but bush-hoggers need not apply as mitigation bankers

Which brings me back to Adam Riggsbee. After his stint at RS, Adam and his loyal side-kick (the westerly named) Matt Jessee moseyed on down to Austin, Texas and opened their own swamp and creek shop, Riverbank Ecosystems.

I was a bit concerned for the young fellers.

How could someone as steeped in the perils of commercial mitigation as Adam Riggsbee possibly put his young family and best friend on the firing line in the Lone Star state? It has worked for us thus far at RS — but we got lucky — and nearly had our clocks cleaned at several points. What if these guys were cut down by the real world challenges of swamp swamping for profit?

Not a chance. Adam has approached the challenge of professional mitigation provision just right. He is cultivating a winning mix of hard science and good business as a corporate strategy at Riverbank Ecosystems.

As far as I can tell, there is no one else in the business who is publishing at a high level on mitigation while simultaneously negotiating land options on valuable Central Texas ranches. Adam is the best of both worlds in mitigation: A publishing businessman.

As Dr. Riggsbee joked this morning, it is now “official.” It takes longer to produce revenue from mitigation than it does to publish on the subject in a top journal.

Welcome to the rodeo, kid.

“Science” Editor’s Choice “A survey of entrepreneurial risk in stream and compensatory mitigation markets”

A survey of entrepreneurial risk in stream and compensatory mitigation markets

Paul Howard Company launches dredge Noble Warrior in defense of our coastlines

The Paul Howard Construction Company, owned by the brother of the Swamp Merchant, recently launched a new boat designed to engage in the difficult and tricky work of coastal dredging — particularly coastal marsh restoration.

Swamp Brother’s craft, the Noble Warrior, was set a-sail in the bonny port of Beaufort, North Carolina, along with her loyal boat, Noble Tender.  They join a sister ship in-operation, dredge Noble Spirit.

NOBLE WARRIOR

It is exciting to see my brother engage in this new venture. The family tradition of water-related heavy construction is old. The Paul Howard Company, and it’s predecessor firms, Paul N. Howard Company, Howard International, and the Howard Management Group, date to the early 1920’s. The company’s North Carolina construction license is #80. There are very few contractors large or small on earth with the track-record of successful projects this organization enjoys.

Click the photo above to learn more of the history of Paul Howard Co.

RS is proud to share a little DNA with PHCC.  And seeing as how RS plans to move a few million yards of dirt ourselves — it is even possible our path cross the Howard company’s in the “Bayous to Be” of south Louisiana.

Laissez les bon temps rouler!

The Noble Warrior Specs:

18″ x 16″ Cutter Suction Dredge and Idler Barge

State of the art dredge built to be truckable, versatile and maximize production. Less than 1 year old. Low hours

General Conditions:
Digging Depth 34′ @ 60 deg. Can be easily lengthened
Ladder Length 40′
Total Weight Est 220,000 lb
Hull Depth 5′
Mean Draft 40″
Hull:
Center Section 53’x10’x5′
SidePonttons 6’x75’x5′
Overall Main Dredge 22’x90’x5′
Hull Thickness 1/4″ skin
Watertight Bulkheads Avg. every 10′

NOBLE TENDER

Idler Barge

Carridge Spud 40’x5’x12′
Spacer 40’x’4X12
Dredge Pump:
Pearce
Suction 18″
Dischage 16″
Impellar Diameter 40″
Cutter:
Vosta Basket Style 58″ Replaceable teeth
Drive Planetarty gearbox with water lubricated cuttless bearings
Torque 300,000 ib-in 200 HP
Speed 0-25 RPM
Power
Dredge Pump Cat C-32 1125 HP
Auxilliary Cat C-11 420 HP
Winches: Pullmaster M18
Swing Winch (2 Ea) 18,000 lb
Ladder Winch 18,000 lb
Spud Winches ( 2 Ea) 18,000 lb
Spuds ( 2 Ea)
40′ Round 1/2″ Wall
Hydraulic System
Valves Electr-proportional
Pumps Geartek gear pumps
Motors Geartek gear motors
Contamination Protection Pre strainers and10 Micron filters
System Releif All circuits set at 2500 psi
Operator Cab 8×10 Air Conditoned

NOBLE WARRIOR CUTTER HEAD

Misc.

Aluminum Speed Rail for entire dredge perimeter
Special ergonomic operator seat with integrated joystick controls
Heatshrunk electrial connections and elctrical grease on connections
Three job cranes for service of pump, spuds and misc.
Inside of all hull sectons painted
Penberthy pump primer
Heavy duty service water pump
Serive boat docking station
20′ shipping Container ( Shop and Spare Parts)
Berthhold Mass Flow density meter
Computer automated swing controls
Computer automated production and data logging
Also Available
Booster Pump ( Brand New) 16x18x46
(Zero Hours) Cat C-32 1125 HP

Dredge Tender Tug Boat (Brand New) 20 hours
Twin Screw JohnDeer 400 HP

Two service fuel barges

10,000 L.F. of 20″ SDR 17 pipe used on one job pumping silt

NOBLE WARRIOR


NOBLE SPIRIT



RS People: Dave Schiller's "Emeritus" Dinner

RS had a fine celebration the other night for one of our favorite people, Dave Schiller. Dave has worked at RS since 2003 (which blows my mind). He is still working at RS. Harder than ever, in fact. But Dave has a little more flexibility now — if he chooses — to spend more time with his new house, young wife, Cocker Spaniels — and shotguns.

Dave loves shotguns.  John Preyer came to know Dave through shotgun talk when Dave worked for NCDOT, after Dave worked for Progress Energy and the U.S. Army (Nam). John surprised Dave with a company gift at the party: A Merkel shotgun. I don’t know the model but Dave could tell you what Merkel it is just by glancing at it.

Dave then played the most clever practical joke I have ever seen later that night at dinner.  As a result of another company gag, Dave was actually paying for his own Emeritus Dinner. Not the shotgun mind you — but Dave was picking up the entire tab at 18 Seaboard. (What? You thought RS paid for this wonderful meal in the midst of this recession?)

So here is what Dave did.

To be continued…