Awards to private interests continues to vex

 

 

The board of Triumph Gulf Coast, Inc., emerged from last week’s meeting in Niceville still debating the issue of whether awards could be offered to private entities.

The board’s attorney took a layered view and his opinion casts projects involving Eastern Shipbuilding with shades of doubt.

Yes, the legislation that established Triumph Gulf Coast, which is charged with awarding more than $1 billion in eight Northwest Florida counties over the next 15 years, provides the flexibility for awards to private companies.

However, amendments approved, unanimously, in 2017, as well as comments from legislative leaders indicated that such awards would not be received positively in Tallahassee, including by the state Auditor General.

“While there is a liberal manner in which to interpret the statute to allow the Board to develop and create a mechanism to fund private economic development projects, the risk of an adverse opinion from the Auditor General or difference of opinion with the Legislature suggest the Board should proceed with extreme caution in doing so,” wrote the board’s General Counsel Scott Remington.

The board took no formal action regarding Remington’s 14-page opinion during last week’s meeting in Niceville.

Jason Shoaf, Gulf County’s represenatative on the board, said the board would be looking at such proposals on a “case-by-case” basis.

Board comments, Shoaf added, indicated that members would be willing to risk the wrath of lawmakers or an audit provided proposals would lead to “truly transformational development, in the number of jobs, etc.” as the legislation has emphasized.

During last week’s meeting, the Triumph board approved moving into the final stages of a $10 million award to the Port of Panama City.

On file, the board already has full project applications totaling more than $300 million, equal to the first year allocation for Triumph funding and already in the bank.

The General Counsel’s opinion was specifically sought regarding a proposal from Eastern Shipbuilding for $20 million to facilitate expansion of its Bay County facilities.

Eastern submitted the pre-application for that proposal and board members have debated it, including seeking opinions from leaders in the Florida Senate and House of Representatives, since February.

The Bay County proposal is subtly different than a proposal to construct a dry dock as part of Eastern’s expansion into Gulf County.

The dry dock proposal was submitted by the Board of County Commissioners with Eastern playing the private company role in a public-private partnership, which the General Counsel’s opinion indicated remained eligible, with caveats, for a Triumph award.

Under the general terms, the county would own the dry dock and lease it to Eastern, though county officials have stated that ownership of the dry dock remains fluid depending on total Eastern contribution.

Eastern, they added, is likely to own a stake in the dry dock.

The public-private partnership, which Eastern brought to the BOCC under a state statute, is seeking some $28 million in Triumph funds and its pre-application was approved.

However, no formal application is currently on file with Triumph for either Bay or Gulf County projects.

At the time the Eastern project was presented to the BOCC, the timeline (operational in Gulf County sometime between summer 2019 and summer 2020) was entirely dependent on Triumph funding, according to the attorney representing the company.

The Eastern project is the BOCC’s top priority; the board and both cities approved making it the county’s sole authorized project.

The BOCC has already entered into a $400,000-plus contract for engineering oversight services on the construction of the dry dock.

The final paragraph of Remington’s legal opinion appeared to speak directly to consideration of a project such as the dry dock.

Remington pondered what restrictions or conditions should be applied to “awards to private entities or awards to public entities for construction of facilities, improvements, or acquisitioni of personal property or other services which will be located, in-whole or in-part, on private property?”

If the board should decide to make an award … as part of a public-private partnership, “the Board should use strict scrutiny to ensure the program or project proposed serves a broader public purpose and squarely and fully meets the statutory requirements for recovery” (from the 2010 Deepwater Horizon oil spill.

In addition, the Triumph board should consider requiring a “significant private sector match” for any public-private partnership.

Further, ‘”claw back” provisions should be in place to ensure private sector partners meet or exceed “the obligations undertaken for the public good.”

Remington’s research found that while the initial 2013 Triumph legislation provided the board with broad powers regarding awards, one the region’s House delegation believes remained, changes in 2017 to eligible awards worked to exclude most, if not all, private projects.

Further, the criteria for prioritizing projects was amended, four of the five areas specific to private economic development projects.

“These deletions make clear that the Legislature intended to curtail or severely limit the eligibility of private corporations to receive funds from Triumph,” Remington wrote, while adding that as “partner” remained in the legislation which leaves open the possibility of a private entity as a partner in a public-private partnership.

Those, Remington added, should be reviewed on a “case by case basis.”

Remington also cited the comments from House and Senate leaders and lawmakers about the intent that Triumph dollars not turn into a form of “corporate welfare.”