The Status of the Port of Gulfport Restoration Program
Executive Summary
Introduction
The PEER Committee analyzed the status of the Port of Gulfport Restoration Program. The primary purpose of this review was to determine whether the program is on track to deliver the results agreed to in its grant agreement with the U. S. Department of Housing and Urban Development (HUD).
In making this determination, PEER sought to answer the following specific questions:
Background
State law authorizes the Mississippi Development Authority (MDA) and the Mississippi State Port Authority (MSPA) Board of Commissioners to govern the Port of Gulfport. The MSPA is responsible for daily operations, management, and infrastructure of the Port of Gulfport on behalf of MDA.
Prior to Hurricane Katrina, the Port of Gulfport reported having 2,058 permanent direct maritime jobs and handling approximately 2.4 million short tons of cargo (96% of which was foreign) annually. At that time, 67% of the port’s cargo was containerized.
In 2002, MSPA commissioned the JWD Group to develop a twenty-year Master/Vision Plan to help guide future development of the port. Among the projects included in the plan were: an eighty-four-acre expansion of the port’s footprint to facilitate and accommodate expected growth in its maritime business; development of terminals and berths to attract and accommodate the cruise ship industry; and expansion of the port’s non-maritime business, including gaming and hotels.
On August 29, 2005, Hurricane Katrina made landfall in Mississippi, bringing unprecedented destruction to the Gulf Coast region, including the Port of Gulfport. The hurricane significantly damaged the port and adversely affected its commercial activity, resulting in a significant decline in the number of permanent direct maritime jobs attributable to the port. In 2005, the port experienced an approximately 18% decline in its container traffic, resulting in a 2% decline in its share of total Gulf of Mexico foreign container traffic. The port had not regained its pre-Katrina share by 2011, the last full year of data available.
The port had already begun the expansion program noted above prior to Hurricane Katrina. As of January 31, 2013, the port had expended approximately $99.8 million in non-Port of Gulfport Restoration Program funds to complete capital projects to repair and improve the port and an additional $2.2 million on ongoing capital projects.
What is the Port of Gulfport Restoration Program?
In December 2007, MDA requested HUD to reprogram Community Development Block Grant Disaster Recovery funds in an amount not to exceed $600 million from Phase 1 of the Homeowners Assistance Program to a newly created Port of Gulfport Restoration Program. The stated purpose of the program was to provide funding to the Mississippi State Port Authority to facilitate the restoration of the port’s infrastructure and facilities, to provide for the long-term recovery of the port’s operating capacity, and to provide mitigation against future damage. MDA requested the reprogramming of CDBG Disaster Recovery funds on the grounds that restoration of the Port of Gulfport was crucial to the economy and long-term recovery of the state and to the Gulf Coast region in particular.
What were the requirements governing expenditure of Community Development Block Grant disaster recovery funds for the Port of Gulfport Restoration Program?
The port restoration program’s CDBG disaster recovery funds must be used for HUD-approved eligible activities related to disaster relief, long-term recovery, and restoration of infrastructure. Federal regulations require entities receiving CDBG funds for economic development purposes to create or retain a specified number of jobs for low- and moderate-income individuals in order to “ensure a minimal level of public benefit,” but in recognition of the disaster recovery conditions under which the funds were granted to Mississippi, HUD granted MDA a waiver that reduced the number of jobs that the program must create or retain.
Appendix B, page 58 of the report, summarizes the accountability requirements for CDBG funds.
What was the port’s plan for expenditure of the CDBG disaster recovery funds allocated to the Port of Gulfport Restoration Program?
The plan for the Port of Gulfport Restoration Program has evolved since its inception. The most recent changes, which include changing the elevation of the West Pier to fourteen feet and modifying the terminal layout to attract new tenants, were implemented to expedite program completion, thus hopefully attracting new tenants and creating or retaining new jobs more quickly. According to MSPA, the Port of Gulfport Restoration Program will be completed by December 15, 2015, and is estimated to cost approximately $569.3 million. Exhibit A below shows the program’s projected costs, by contract category, as of January 14, 2013.
How has the port expended CDBG funds to date?
As of January 14, 2013, four years into the Port of Gulfport Restoration Program and less than three years from the program’s targeted completion date of December 2015, MSPA had expended 15% of the approximately $567 million in available funds. Construction contracts accounted for approximately half of the $84 million in expenditures, while the remainder was used for construction management (27%), design and engineering (21%), and environmental and permitting (3%) contracts.
Exhibit A below shows the program’s total budgeted contract values and contract payments to date, by contract category, as of January 14, 2013. Appendix C, page 60 of the report, lists subcontract awards for the program’s projects.
Exhibit A: Port of Gulfport Restoration Program, Total Budgeted Contract Values and Contract Payments to Date for All Categories, as of January 14, 2013*
| Category | Projected Costs to Complete Projects |
Total Budgeted Contract Value |
Contract Payments | Contract Payments as a Percentage of Total Contract Payments |
| Program Management | $46,717,505.02 | $46,571,625.73 | $20,019,599.15 | 27% |
| Environmental and Permitting | 20,000,000.00 | 4,372,721.04 | 2,154,386.32 | 3% |
| Design and Engineering Services** | 27,150,000.00 | 35,150,142.06 | 7,843,210.04 | 21% |
| Construction | 475,484,683.41 | 84,166,908.37 | 54,463,946.62 | 49% |
| Total | $569,352,188.43 | $170,261,397.20 | $84,481,142.13 | 100% |
* Does not include $1,371,683.48 for administrative expenses.
** As discussed on pages 39 and 40 of the report, this category is not “over budget.”
SOURCE: MSPA Requests for Cash, 4/9/09 through 1/14/13.
What progress has been made toward achieving the program’s objectives of restoration, mitigation, and economic development?
According to the action plan submitted to HUD by the Mississippi Development Authority for the Port of Gulfport Restoration Program, the program had three primary objectives: restoration, mitigation, and economic development through the creation of new permanent maritime jobs. Regarding each of these objectives, PEER found the following: