This article was produced for ProPublica’s Local Reporting Network in partnership with the Sun Herald. Sign up for Dispatches to get stories like this one as soon as they are published.

 

by Anita Lee, Sun Herald

Nothing about the proposal to create a “town center” in the coastal bedroom community of Gautier, Mississippi, made sense to Becky Montgomery Jenner.

The mall that once functioned as the town’s community hub is literally a shell of its former self, with a rusting metal structure covering a concrete slab where shoppers once browsed. In its place the city wants to create a downtown where people can live, shop and dine.

No developers, banks or investors have signed on to the project. An advisory board that Jenner sits on voted 6-1 against recommending the project for economic development funding paid by the oil company BP following its massive oil spill in the nearby Gulf of Mexico.

State lawmakers put up $3.5 million anyway. Jenner couldn’t believe it.

“We’ve got this shopping center, defunct shopping center, in the middle of no-friggin’-where,” she said. Lawmakers “should look at which projects had the most viability, which projects had the greater return on the investment, which projects benefited the most people.”

The money that legislators sent to Gautier is part of a $750 million settlement paid by BP to compensate the state for the economic damage caused by the 2010 oil spill. Coastal Mississippi business leaders hoped the money would be used to transform the Gulf Coast economy, attracting new industries, creating jobs and lifting wages in communities dominated by low-paying service jobs.

But Mississippi’s Gulf Coast Restoration Fund is failing to meet any conventional measure of success for an economic development program, a joint investigation by the Sun Herald and ProPublica found.

Legislators put the power to spend the money in their own hands, and they’re doling it out without an overall plan. They’re using the cash to fill gaps in local government budgets and funding projects with few metrics for success. They’ve disregarded input of an advisory board made up of local business leaders, a committee lawmakers created when outlining how the money should be spent. In grant agreements, recipients have committed to creating few jobs, even fewer of them high-wage jobs.

Just 33 full-time equivalent jobs have been promised by the 24 projects for which Gulf Coast Restoration Fund grants have been finalized, according to grant agreements. Those projects have received $53.3 million — an average of $1.6 million per job. Economic development experts say that’s high.

“These are very legitimate questions of whether or not this money is really going to end up doing anything,” said advisory board chair Ashley Edwards, who is president and CEO of the Gulf Coast Business Council.

The city of Gautier put the grant toward the $5 million purchase of the mall property, where a songwriters’ museum is also planned. The grant agreement requires the city to complete some improvements to an adjacent park that the city considers part of the town center. The city says an amphitheater being built at the park will provide a stream of customers and revenue.

Several promising projects have gotten money from the Gulf Coast Restoration Fund, said Jamie Miller, chief operations officer at the Mississippi Development Authority, which handles economic development for the state.

But overall, the Gulf Coast Restoration Fund is being spent exactly as state Rep. Charles Busby worried it would be when lawmakers drafted the rules in 2018.

Back then, Busby said, he hoped the Legislature would rely on the Mississippi Development Authority to decide “how we could best utilize the money to do something that was truly transformational for the coast.

“With the system that we’re currently using, I just don’t see how that’s possible,” he said.

 

The Fight Over BP Damages, Spending
For three months after the Deepwater Horizon drilling platform exploded in April 2010, millions of barrels of oil spewed into the Gulf of Mexico, fouling the coastline from Texas to Florida.

Workers in protective boots took the place of sunbathers on Mississippi beaches, scooping dark patches of oil from the white sand. Offshore, vessels trolled for oil instead of fish.

Gulf Coast states settled lawsuits against the company in 2015. For two years, Mississippi leaders battled over who would control the settlement money and where it would go.

The Gulf Coast Business Council, which represents business interests along the coast, proposed legislation that would have placed the money in a trust overseen by an independent, appointed board that would have authority to seek expert advice. That’s similar to how Florida decided to handle the money.

There, most of the BP money recovered by the state goes to Triumph Gulf Coast, a nonprofit corporation. A seven-member board, appointed by state elected officials, approves projects for funding.

The nonprofit’s staff has vetted projects and positioned them for approval by the time they reach the board, said Triumph Gulf Coast economic advisor Rick Harper. “Our statute requires us to have performance metrics,” he said.

The BP money is meant to make up for “revenue the state of Florida didn’t receive when people couldn’t plan their beachfront wedding back in 2010 or ’11,” he said. “And so, it’s our responsibility to make sure there’s a good return on those investments.”

Lawmakers in Louisiana and Alabama, which received $1 billion each from BP for economic damages, are using their settlements to fill budget holes, fund Medicaid and build roads and bridges. Mississippi House Speaker Philip Gunn said he insisted his state spend its share of BP money “in a way that would result in greater economic prosperity for the region.”

Lawmakers in Jackson decided they would choose how to spend $477 million over 15 years, but they created an advisory board to offer input from business leaders.

“We’re held accountable,” state Rep. John Read said in an interview, explaining why legislators decided to choose projects themselves. “It came down to this: How many votes did you get the last election?”

Each year, $30 million in BP money is earmarked for the six counties closest to the coast. That’s separate from BP money directed to environmental restoration and other purposes.

From the beginning, business leaders wanted to see the restoration fund used for “transformative” economic development in a region that has seen little in the way of new industries since casinos arrived in the 1990s.

Instead, the law outlines 15 priorities. Some are the sorts of things you’d expect to see in such a program, including job creation, measurable return on investment and projects that are “transformational for the future of the region.”

Other priorities in the law give legislators broad latitude to approve all sorts of proposals. For example, projects can enhance quality of life, which includes recreation, and can be supported by multiple public or private entities.

“This is a laundry list of economic development platitudes from 10,000 feet up that could be used to justify almost any use,” said Greg LeRoy, executive director of Good Jobs First, a nonprofit that advocates for accountability in economic development.

The Mississippi Development Authority accepts applications for funding. It scores them based on the priorities laid out in the law and passes them to the Gulf Coast Restoration Fund Advisory Board for input.

By the end of each year, the development authority is required to pass its recommendations, along with the advisory board’s input, on to the Legislature. State lawmakers representing the six South Mississippi counties meet privately to decide which projects to fund, not all of which have gone before the board.

The projects are voted on in the final frenetic days of the legislative session, when lawmakers meet late into the evening to divvy up money from various sources.

Coastal legislators said they consider the advisory board’s advice, but don’t feel compelled to follow it. In the restoration fund’s first year, 11 of the 26 projects funded by lawmakers didn’t go before the advisory board.

Former state Rep. Jim Simpson, who serves on the board, said the law gives legislators final say.

“They asked us for advice, but they didn’t give us a checkbook,” Simpson said. “And I’m not sure everybody on our committee understood the distance between our advice and the checkbook.”

$50 Million to Create Few Jobs on the Mississippi Coast

Before spending any money, economic development experts say, officials should decide how they’ll measure return on investment. Common metrics include jobs, tax revenue and private spending.

By any of these measures, the renovation of the historic Quarles House in Long Beach, Mississippi, built in the 1890s for the city’s first teacher, would not pass muster. The two-story clapboard house with a center gable sits in a modest neighborhood about a half-mile from the beach.

The building has been vacant since Hurricane Camille in 1969, said Carol Paola, a Long Beach teacher championing the project. Camille ripped off verandas that once graced the first and second floors. The house’s doors and windows are boarded up, but the interior is in remarkably good shape, she said.

The city hopes to turn the house into a venue for weddings and community events. State lawmakers approved $2 million for renovations.

The next step, as with all projects awarded BP economic development money, is a signed grant agreement between the development authority and the grant recipient. The agency requires certain paperwork first: a cost estimate, a budget, a timeline and, for government-sponsored projects, a resolution of support.

Grant applicants are supposed to submit supporting documents up front when applying for funds. But the Quarles House was one of the projects that bypassed the advisory board, and some documentation was missing. Almost two years after lawmakers awarded the money, the state is waiting on required paperwork from the city of Long Beach, no grant agreement has been signed, and the money is sitting unused in a state account.

The Legislature granted $2 million for renovations to the Quarles House in Long Beach, Mississippi. Two years later, the state is waiting on paperwork from the city to issue the grant. Credit:Hannah Ruhoff/Sun Herald
The payoff for the state’s investment, whenever it cuts the check? The city hopes to create one part-time job, according to its records. Meanwhile, Mayor George Bass said he hopes events at the historic home will bring in enough money to cover maintenance and insurance costs — the sort of collateral expense that development experts say local governments should avoid when using one-time funds for economic development projects.

Many of the projects that have gotten restoration fund money are like the Quarles House, with no way to judge return on investment. The majority of projects with grant agreements have no private funding, according to state records. And most of the grant agreements include no commitment to create jobs.

“Even the most lax economic development programs at least make a showing of ‘We care about the number of jobs,’” said Rachel Weber, a professor of urban planning and policy at the University of Illinois, Chicago. “So for every dollar coming out of this fund, how many jobs are the recipients claiming to make?”

The $1.6 million average cost per job is driven up largely by the number of government projects that are not expected to create any jobs, according to an analysis by the Sun Herald and ProPublica. Not counting those projects, just seven grant agreements have been signed with private and nonprofit entities. Those projects, which have received about $10.9 million, promise 26 jobs — about $421,000 per job.

That’s “far too high for Mississippi taxpayers to ever come close to breaking even,” said LeRoy, of Good Jobs First.

He said his organization has long advocated for a cap of $35,000 per job. A 2016 Good Jobs First study found that at least 19 states imposed some dollars-per-job caps, and that “the caps are quite low, seldom exceeding four figures.”

In Florida, the average cost per job for public infrastructure projects between 2018 and 2021 was $36,391, Harper said. Those are jobs promised in grant agreements and funded through the state’s BP-funded economic development program.

Some project applications in Mississippi promise lots of jobs, but those figures don’t make it into grant agreements, which is the mechanism the development authority uses to hold grant recipients accountable. An initial application by the city of Diamondhead for improvements to a commercial district, for example, said the project would create 596 jobs, but under its grant agreement the city isn’t required to create any.

Much of the BP economic development money is going to local governments, and Miller, the development authority’s chief operations officer, said the agency can’t hold government bodies responsible for ensuring that private businesses eventually create those jobs.

That’s not an issue in Florida, where public infrastructure projects get BP money only if they commit to creating new jobs. Triumph Gulf Coast works with economic development officials in eight counties along the Florida panhandle to identify public projects that will attract private companies offering jobs.

For an industrial park in Florida’s Santa Rosa County, county commissioners guaranteed 454 new jobs that would pay at least 15% above the prevailing county wage, said Harper, the adviser with Triumph. The jobs must be created no later than February 2027, five years after Triumph agreed to fund the project, or the county must return some of the $15.4 million grant to the state.

In Mississippi, job creation goals are far more modest — when they exist. The Walter Anderson Museum of Art in Ocean Springs, for example, promised to create two jobs in exchange for a grant of about $750,000, for one of two projects at the museum recommended by the advisory board. Julian Rankin, the museum’s executive director, said the museum has met that commitment.

State Rep. Manly Barton, a member of the House appropriations committee, said those projects often improve the quality of life.

“I’m not trying to defend it one way or the other,” Barton said. “Sometimes, it is community development, as opposed to economic development. But I think one kind of goes hand in hand with the other.”

That’s how state Rep. Richard Bennett defended the funding for the Quarles House: an investment in “quality of life” for weddings, receptions and student banquets. “In Long Beach right now,” he said, “there’s nowhere in the city we can do those things.”

Even if the renovation goes forward, the building will be able to handle only small events, because it doesn’t have a catering kitchen or much room for parking. Another venue with a professional kitchen, located on prime beachfront property about 6 miles away in Gulfport, hasn’t lived up to its promise as a wedding venue.

While several legislators believe downtown projects will draw new residents and increase tax revenue, the jobs described in those proposals include retail and restaurant work, which traditionally pay low wages. For May 2021, food service and sales were among the top three occupations across three coastal counties.

Mississippi has long been starved for high-paying jobs, historically ranking last among states for median household income. The average hourly wage for the three coastal counties was 20% below the national average in May 2021, according to the Bureau of Labor Statistics.

“Job growth has not been terrible,” said William Fruth, president of Policom, a research company that ranks the economic strength of communities, “but the wages in the area are terrible.”

Several projects funded with BP money directly advance the kinds of innovation and technology that outside experts say lead to higher-wage jobs. But only one stipulates an average wage: $50,000 a year for four jobs at Mississippi State University’s Cyber Center, which plans to train military and other personnel in cybersecurity.

John Hairston, CEO of Hancock Whitney, which operates banks along the Gulf Coast, said he’s looked to see if the state has publicized outcomes for the investments made with the BP money. He hasn’t found any sign that it has.

“In my adult lifetime, I don’t recall ever seeing that sort of opportunity,” Hairston said. “Every nickel spent on anything that doesn’t create direct, trackable jobs or tax revenue is a missed opportunity.”

No Plan for Spending BP Money
Many of the projects that have received restoration fund grants are the sorts of things you’d see in a local government budget or a state bond or transportation bill: $2.1 million for a levee to protect 200 homes in a Gulfport subdivision. Nearly $500,000 to upgrade a crumbling roadway in George County. Another $1.9 million for Friendship Park in Picayune.

The Mississippi Development Authority scored those projects no higher than 6 out of 45. None were recommended by the advisory board. Legislators funded them anyway.

Although they offered explanations for many of the projects, several legislators acknowledged there isn’t an overall plan guiding their decisions. They said they spread money across their districts and turn to the fund when they can’t find money elsewhere.

Barton said the levee was funded because it would receive matching dollars from the federal government. “They weren’t going to get the money from anywhere else,” he said.

Timothy Bartik, senior economist at the W.E. Upjohn Institute for Employment Research in Kalamazoo, Michigan, reviewed a list of approved projects and the jobs promised, if any.

“I would say it’s a more speculative economic development impact,” he said, “in the sense that who knows exactly how much these infrastructure projects improve amenities and improve quality of life in a way that will attract people and jobs.”

An economic development strategy “is meaningless if what you say is ‘We’re gonna do everything,’” Bartik said. “Because you can’t do everything. You have a limited amount of money. And so you need to prioritize.”

The development authority has suggested a change to the system: The second year of the grant program, it asked lawmakers to send the money straight to the agency so it could select proposals. An agency official said in a letter to lawmakers this would enable the agency to fund projects that deliver “an appropriate return” on the state’s investment.

The Legislature rejected the suggestion.

Without a plan to guide their actions, lawmakers have responded to requests like the one that came from the head of George County’s health system. Greg Havard, CEO of the George Regional Health System, went directly to legislators to secure a $1 million grant to expand its cafeteria. In exchange, the hospital promised to create four jobs.

Havard said the expansion is a boost to the economy of the rural county on the Alabama state line. More importantly, he said, the expanded cafeteria gives families a place to talk, and it’s easier to feed residents and staff.

Edwards, the advisory board chair, questioned the investment. “I’m sure that was a real need for them,” he said. But what is the return on investment, he asked, for a hospital cafeteria renovation in George County?

Havard said the cafeteria has four full-time employees and two part-time ones, including a few involved in food preparation and a clerk, and it has exceeded revenue expectations. The return on investment might be small, he said, but the project will pay for itself “in just a few short years.”

Edwards chose his words carefully when talking about how legislators are running the program. “They want to do everything they can to bring the bacon back home to their constituents,” he said. “We’re not in opposition to that.

“I just think that we would prefer to have a more comprehensive, more thoughtful strategy and shared vision around how to get the most bang for our buck.”

How Long Will It Take to Transform South Mississippi’s Economy?
This spring, a state income tax cut consumed much of the Legislature’s attention, making for some long nights at the close of the session. Many days, 80-year-old House Appropriations Chair John Read left the ornate Capitol building after midnight as talks wound down and the Senate and House settled on appropriations, including projects the Gulf Coast Restoration Fund would cover.

Jenner, one of the advisory board members, has complained to legislators about their approval of projects that haven’t been vetted by the board. This year, the Legislature selected only one project without an application: the third phase of the Cyber Center, spearheaded by Mississippi State University.

While it’s the Legislature’s prerogative to approve projects that bypass the board, Sen. Brice Wiggins said, “I think we recognize that that’s not the best approach.”

Nonetheless, this year the Legislature again funded several government proposals with few, if any, job projections. A public safety complex for the city of Bay St. Louis received $1 million; its application says no jobs will be created. The restoration of the Long Beach harbor will cost $1 million and would create one job, according to its application.

Read believes a number of projects the Legislature approved, including the Cyber Center, show potential for transforming the economy. He said he thinks it’s a good sign that none of the projects approved so far have “tanked.”

“To me, ‘transformative’ is how many people are going to be working down the road, and I think that’s going to have to come with time,” he said.

And that’s once the checks have gone out. About $99.2 million out of $112.5 million granted over the first three years of the program hadn’t been spent as of June 15, according to the development authority. Almost half of the 44 projects funded in 2020 and 2021 still await grant agreements as of June 15.

Several advisory board members said they want to take a more targeted approach in upcoming years.

Edwards would like to see local governments band together to propose projects with regional scope, with more backed by private investment and outcomes measured in terms of jobs with good pay.

Advisory committee member Moses Feagin, who also serves as the chief financial officer at Mississippi Power, said he would prefer that the state hold on to its money and let the fund accumulate for a large private manufacturing or business prospect that would lift wages across the region.

Feagin said he usually rejects local government projects that could secure funding elsewhere. If lawmakers award $2 million here and $3 million there, he said, “Realistically, you ask yourself, what difference is that going to make?”