The agenda of the February 10 Plaquemines Parish Government (PPG) council meeting was unusually packed. With the previous council meeting being cut short due to many council members and officials in the administration off in Washington, DC to lobby for funding, all the deferred ordinances and resolutions were taken up at the February 10 meeting. Most of the ordinances and resolutions voted on at the meeting were routine measures—approving permits, selling unneeded property, zoning changes, etc.—but the council did take up and voted down one resolution that addressed a crucially important issue for Plaquemines Parish.
This resolution would have given “preliminary approval to the issuance of” up to $50 million in “Hurricane Recovery Revenue Notes.” In other words, if passed the resolution would have allowed parish president Kirk Lepine and his administration to send an application to the Louisiana State Bond Commission to see if Plaquemines qualified for these “Revenue Notes.”
Though this resolution was introduced by district 9 council member and council chairman Mark “Hobbo” Cognevich, it was a really a want of Lepine and his administration. If passed, this resolution would have meant PPG would be seeking approval on a $50 million loan to pay off expenses related to the Hurricane Ida recovery effort.
This resolution was so important to Lepine that the parish president even sent out a letter to council members February 9 explaining its importance. Essentially, his letter explained that Ida ``pummeled” the parish and that expenses from the necessary recovery effort were so costly PPG did not have the funds to pay for all of it with the cash they have within the budget.
It should be noted that most—if not all—of these emergency expenses are either 100 percent or 90 percent reimbursable (depending on when the expenses were executed) through FEMA. But the dismally slow pace of the reimbursement process often prevents parish governments from getting their reimbursement money for weeks, months, or (in worst case scenarios) years after the hurricane event. This can leave PPG unable to pay contractors that they hired to assist in recovery efforts as the parish government simply does not have the money. This point was repeated, multiple times, by Lepine and members of his administration throughout the meeting.
“FEMA is going to reimburse us, but, again, when are they going to reimburse us, that is the question,” Lepine said, explaining that, currently, PPG has about $4.6 million “invoices received and on hold” (not getting paid). “Everyone gets this misconception that [FEMA] pays and then we take care of the bills. That’s not how it works. It puts us in a cash crunch. Everyday we’re in a cash crunch. And there’s future projects that may be slowed because of this.”
“This is about paying [contractors] when we needed [them] right away,” he added. “It’s on FEMA, but, again, I have to pay the [contractors] so I can get reimbursed.”
This is not an uncommon occurrence after hurricanes nor is it unique to Plaquemines. Parish governments throughout south Louisiana often find themselves in this situation: forced to expend an overwhelming amount of money to fight the disaster and implement a recovery effort. Further, taking out loans to ensure contractors get paid for the work they do in a timely manner and to address lingering issues from hurricanes is also not unusual.
According to Lepine and the administration, the parish government makes the hurricane related expenses and then sends those costs into FEMA for reimbursement. If all the rules and regulations are followed, which Lepine said they were, then reimbursement is mostly likely assured. The problem is that FEMA takes a long time to process those expenses and send reimbursements. Local governments that don’t often have extensive amounts of cash on hand can be left without a way to pay for their recovery efforts.
Loans like these “Revenue Notes” are used to pay for the necessary debris removal, levees repairs, pump station repairs, general infrastructure repairs, and other expenses taken on as a result of hurricane damage. The debt is paid off through the “slow trickle” of FEMA reimbursements. Meaning, technically, the vast majority of the hurricane recovery costs are not taken on by PPG.
In fact, PPG has already “applied for and been preliminarily FEMA approved” for a $5 million community disaster loan— which “like past loans may be forgiven.”
Due to the nature of the process and history of FEMA being reluctant to give out reimbursements after hurricanes, however, this can be stressful on local government officials who can never be assured that they’ll actually receive reimbursements.
“The $50 million number is an eye-catching number. [However], we got to that by the estimates that were prepared by the administration and the FEMA consultants as to how much [PPG would expend on recovery costs],” Jason Akers with Foley & Judell, the company that handles PPG’s bonds, stated, adding that the vast majority of what the parish expends will eventually be reimbursed by FEMA. “Those reimbursements are going to take a while to come in. So, we wanted to just provide you with an opportunity to consider an option that would give you the funding necessary to ensure those recovery efforts continued. “
Akers explained that PPG is looking at around $48 million in total hurricane related expenditures and around $46 million of that will be reimbursed.
“That money is going to come in a trickle over several months,” he added.
Despite this plea from the administration and even though this resolution was just to allow for an application to be sent to the State Bond Commission (there would be a “final approval” by the council before any debt was incurred), council members were hesitant to approve this resolution.
Council members worried about the size of the loan itself, whether the work that was being done would actually be reimbursed, and wondered whether it would be more prudent to just wait for the reimbursement from FEMA.
“To come up here and ask to borrow $50 million when [it's possible] you may not have the money, I think you need to reevaluate where we’re at and stop some of this work,” district 5 council member Benny Rousselle stated.
The resolution would ultimately fail by a four to five vote.
Voting in favor were district 2 council member Beau Black, district 3 council member Corey Arborugh, district 4 council member Stuart Guey, and district 6 council member Trudy Newberry.
Voting against were district 1 council member John Barthelemy, Rousselle, district 7 council member Carlton LaFrance, district 8 council member Richie Blink, and Cognevich.
Without this loan, the PPG administration will have to work to pay these contractors to the best of their ability and hope reimbursements come down quicker than expected. Though Lepine and his administration have pursued programs through FEMA and the state of Louisiana that supposedly “expedite” the process, it is still anticipated that reimbursements will come through slowly over a long period of time.