Pace of Louisiana coastal restoration projects should quicken under bill passed by lawmakers (Greater Baton Rouge Business Report)


In a legislative session that has been marked by partisanship and deep disagreements over key issues, one little noticed piece of legislation that could have a significant impact on the future of coastal restoration projects quietly passed both chambers with bipartisan support.

House Bill 596 by Rep. Walt Leger, D-New Orleans, enables the state Coastal Protection and Restoration Authority to engage in an alternative delivery model for coastal restoration projects as a way to better leverage existing dollars and, therefore, get projects moving more quickly.

The model, which has been used successfully in other states, is a type of public private partnership that Gov. John Bel Edwards has called Pay for Success. It enables the state, through the CPRA, to contract with a single firm, or team of firms, to deliver a predetermined amount of restored marshland. The contractor will finance the entire project with funds from private investors and handle everything from acquiring land rights and permits to design, engineering to construction.

Part of the beauty of the new model is that the risk for the project transfers entirely from the state to the private sector. The state doesn’t have to pay for a project until it is delivered, and even then it doesn’t have to remit the full amount because the contract is “performance based.”

A newly created section of marshland, for instance, will have to stand the test of time and demonstrate its sustainability for several years before the state has to pay the balance of the bill.

The bill, approved by the Senate Tuesday, caps the size of projects that can utilize the Pay for Success model at $250 million.

The state’s updated Coastal Master Plan, recently approved by the Legislature, includes numerous marsh recreation projects at or below the $250 million level. But getting those projects from a plan on paper to design and construction is a lengthy and time consuming process because of the challenges with permitting, land rights acquisition and financing.

Advocates of Pay for Success say the public private partnership model is an effective way for the state to leverage the money it has today because it doesn’t pay for the projects until they’re completed.

They say it’s also more efficient than a traditional design-bid-build model because private contractors are theoretically more motivated to complete a project quickly and have more flexibility than the state or CPRA when it comes to acquiring land rights.

Pay for Success is also potentially less costly than bonding because of interest rates and also because the funding streams coming to the CPRA have so many strings attached.

“We’re optimistic this will help get some of these projects moving,” says Scott Kirkpatrick, who represents industry groups that lobbied for the legislation. “I know a number of companies that are eager to engage in this method and the CPRA is eager to put out a policy and see what kind of response it gets from the private sector.”

—Stephanie Riegel