Middle Peninsula Planning District Commission
Feasibility Study to Incentivize Living Shoreline’s with a Revolving Loan Program
Project Description as Proposed:
On April 29, 2011 legislation was approved directing The Virginia Marine Resource Commission (VMRC), in cooperation with the Department of Conservation and Recreation and with technical assistance from the Virginia Institute of Marine Science (VIMS), to establish and implement a general permit regulation that authorizes and encourages the use of living shorelines as the preferred alternative for stabilizing tidal shorelines in the Commonwealth. “Living shoreline” means a shoreline management practice that provides erosion control and water quality benefits; protects, restores or enhances natural shoreline habitat; and maintains coastal processes through the strategic placement of plants, stone, sand fill, and other structural and organic materials.
VMRC, with assistance from VIMS, is developing a general permit which can expedite the permitting process as an incentive to encourage property owners to select the “preferred alternative” for stabilizing tidal shorelines in the Commonwealth. This proposal will serve as a feasibility study and offer a potential design for a publicly sponsored water quality improvement-living shoreline revolving loan construction program. The benefits of this program could include offering grants and loans at below market rates to encourage the financing of living shoreline projects to advance the Commonwealth’s water quality and coastal habitat goals. It is estimated that many of the existing shoreline stabilization projects are funded by constituents entering into a loan agreement with local and regional banks at prime plus some market rate. This project proposes to design a program that encourages and incentivizes the financing of living shoreline construction projects at a lower interest rate with more flexible loan terms than a traditional lending institution is willing to offer.
MPPDC has over a decade of revolving loan administration experience. Currently, MPPDC administers a water quality improvement septic repair program funded by the Virginia Resource Authority and the Department of Environmental Quality. Additionally, MPPDC staff administers a housing repair revolving loan program and a small business revolving loan program.
Under this proposal, a contractual partnership will be established with the National Sea Grant Law Center for a review and assessment of national level examples of revolving loan programs to promote living shorelines or similar coastal erosion control methods (source of funding, legal issues, programmatic issues, administration, marketing strategies, loan participation and loan default assessments and other lessons learned). The Center for Coastal Resource Management at the Virginia Institute of Marine Science will be contracted to assess the preferences of current and past permit holders to consider using a local revolving loan program to finance a living shoreline project if lending terms were more favorable than local and regional lending institutions could offer. The Center will help to characterize the likelihood of loan program participation by permit holders; provide example schedules of living shoreline project costs; and develop a report on the anticipated water quality benefit of living shorelines to the Middle Peninsula.
MPPDC staff will work with the Virginia Resource Authority, Department of Environmental Quality, Federal Agencies as well as legal counsel to explore an administrative program design and options for capitalizing of a revolving loan program within the Middle Peninsula. During the 2003 Session of the General Assembly, new code section §62.1-229.3 was further expanded to allow new activities of the Virginia Water Facilities Revolving Fund by allowing the State Water Control Board to authorize low interest loans from the Fund for acquisition of title or other rights to real property, when the Board was satisfied that the acquisition would protect or improve water quality and prevent pollution of state waters.
Lewie Lawrence; 804.758.2311, firstname.lastname@example.org
10/1/2012 - 9/30/2013; Project Completed
Final Product Received:
A Study to Determine the Efficacy of incentivizing the use of living shorelines in Virginia Through the Establishment of a Revolving Loan Fund Final Report (pdf)
Project Summary Provided by Grantee:
On April 29, 2011 the Commonwealth state legislature approved legislation to encourage the use of living shorelines as the preferred alternative for stabilizing tidal shorelines in the Commonwealth. The Virginia Marine Resources Commission, with assistance from the Virginia Institute of Marine Science, is developing a general permit which can expedite the permitting process to encourage property owners to select the “preferred alternative” for stabilizing tidal shorelines in the Commonwealth. “Living shoreline” means a shoreline management practice that provides erosion control and water quality benefits; protects, restores or enhances natural shoreline habitat; and maintains coastal processes through the strategic placement of plants, stone, sand fill, and other structural and organic materials.
This project looked at ways to encourage and incentivize the financing of living shoreline construction projects by offering a revolving loan program to finance such projects at lower interest rates and more flexible loan terms than traditional lending institution offerings. Under executed research services agreements dated 2/7/13 with the University of Mississippi, the National Sea Grant Law Center examined 17 revolving loan programs sponsored by federal, state, local and nongovernmental organizations and indentified 2 that could work as a model for a Virginia program. The Center for Coastal Resource Management at VIMS surveyed recent shoreline permit holders to determine why homeowners chose particular shoreline stabilization installations and, for those who did not choose a living shoreline installation, whether a low interest loan would have influenced their decisions. 48% indicated that the availability of low interest loans would or may have influenced their decision. MPPDC began discussions with staff from the Virginia Department of Environmental Quality, Virginia Clean Water Financing & Assistance Program to discuss using the Virginia Clean Water Revolving Loan program to fund a living shoreline revolving loan program. The reports provided by NSGLC, Incentivizing the Use of Living Shorelines in Virginia Through a Revolving Loan Fund, and VIMS, Living Shoreline Funding Questionnaire, have been assembled into a final report documenting their research and conclusions and will be posted on the MPPDC website – www.mppdc.com. MPPDC will present this final report to the Middle Peninsula Planning District Commission in November and, if the Commission approves, begin the process of working with the Virginia Clean Water Financing and Assistance Program to fund a Living Shorelines Revolving Loan Program to encourage Middle Peninsula waterfront homeowners to utilize living shoreline projects to stabilize their properties.
Disclaimer: This project summary provides the federal dollars initially awarded to the grantee. Due to underexpenditure or reprogramming of grant funds, this figure may change. For more information on the allocation of coastal grant funds, please contact Laura McKay, Virginia Coastal Program Manager, at 804.698.4323 or email: Laura.McKay@deq.virginia.gov
A more detailed Scope of Work for this project is available. Please direct your request for a copy to Virginia.Witmer@deq.virginia.gov