Dear Ms. McGee:

          The Southern Environmental Law Center (“SELC”) would like to provide the following comments on the Draft Guidelines developed by the Department of Conservation and Recreation (“Department”) to implement the Community Flood Preparedness Fund (“Fund”).  SELC is a non-partisan, non-profit organization that works throughout Virginia to promote policies and laws that protect our environment, strengthen our communities, and improve our quality of life. This letter is intended to supplement the comments and recommendations included in the joint comment letter we signed onto dated January 27, 2021.

          At the outset of these comments, we would like to voice our appreciation for the significant effort Governor Northam and his administration have put into making Virginia more resilient to flooding.  As the Governor has noted, flooding is Virginia’s most common and costly natural disaster, and this statewide problem will only continue to grow as more extreme rainfall, sea-level rise, and other effects of climate change increasingly impact the Commonwealth’s communities and natural resources.^[i]  We are grateful the Administration has taken a number of significant steps to increase climate resiliency and begin to position Virginia as a national leader in addressing this growing threat.

          A significant step—and most relevant for these comments—was the Administration’s work during the General Assembly’s 2020 regular session to improve and advance House Bill 981, which permanently established the Fund as a revenue source for flood prevention and protection efforts and coastal resilience work in communities throughout the state.  As enacted, the Clean Energy and Community Flood Preparedness Act dedicates 45 percent of the revenues from Virginia’s participation in the Regional Greenhouse Gas Initiative to the Fund, providing a substantial and steady revenue stream for undertaking this crucial work.^[ii]

          In our view, the Fund and associated implementation program have the potential to become a national model for tackling flood risk and coastal resilience through cost-effective, nature-based solutions that can help address, rather than exacerbate, socioeconomic disparities.  Conversely, without the proper structures and incentive systems in place, the Fund runs the risk of over-promoting hard infrastructure approaches.  Hard infrastructure is not a suitable solution in every location, and these projects can be environmentally destructive and too frequently transfer flood risk and other damage from one area to another—often with harsh consequences for lower-income communities.  The Guidelines ultimately adopted by the Department will play a large role in determining where the Fund falls on this broad spectrum.

          We believe the Draft Guidelines presented to the public include some valuable signals of what the Administration intends the Fund to achieve.  For example, we are pleased to see that the five “Commonwealth Resilience Planning Principles” listed on page 2 reflect the five “Guiding Principles” from the Virginia Coastal Master Planning Framework released by the Governor’s Office last fall.^[iii] As the Draft Guidelines note, those principles can be applied to flood and climate resilience throughout the Commonwealth, and we believe they provide a solid foundation on which to implement the Fund. 

          However, we are surprised by the lack of information and detail included in the Draft Guidelines about how the application review and selection processes will be designed to reflect the five Resilience Planning Principles.  This point is particularly important in light of the fact that at least two of the Principles—prioritizing nature-based solutions and addressing socioeconomic inequities—are embedded as requirements of the Fund in its governing statute.^[iv]  It is therefore crucial that the Fund be implemented in a way that ensures it will achieve these requirements—and that the Guidelines chart a clear course for doing so.  In this key respect, we feel the Draft Guidelines fall short. 

          We note that the Draft Guidelines indicate the Department will issue a grant manual and the scoring criteria that will be used to evaluate grant and loan applications later this year.  Based on the lack of detail in the Draft Guidelines about the proposal review and scoring process, we assume the Department intends to include this crucial information as part of the forthcoming grant manual and scoring criteria.  If we are correct in that assumption, we believe it is essential that the public be provided a meaningful opportunity to provide input on the grant manual and scoring criteria, and that the Department considers that input, before those items are finalized. 

          Even if more detailed information will be provided in the draft grant manual and scoring criteria, key issues still need additional fleshing out in the Draft Guidelines because they are clearly intended to inform the development of the manual and criteria in the first place.^[v]  As such, we believe it is imperative that the finalized Guidelines go further in explaining how the program will be designed to ensure nature-based solutions and projects in low-income geographic areas are prioritized, as the statute requires.  We offer more specific comments and recommendations on these and related points below.

Prioritizing Nature-Based Solutions and Projects in Low-Income Geographic Areas

          As outlined in the Draft Guidelines, section10.1-603.25(E) of the Code of Virginia requires that: (1) “No less than 25 percent of the moneys disbursed form the Fund each year shall be used for projects in low-income geographic areas,” and (2) “Priority shall be given to projects that implement community-scale hazard mitigation activities that use nature-based solutions to reduce flood risk.” We are glad to see that the broader themes underlying both of these requirements—promoting socioeconomic equity and prioritizing nature-based solutions—are reflected in the Draft Guidelines as Commonwealth Resilience Planning Principles, but we are concerned that neither of these themes is incorporated into the “Program Goal” for the Fund on pages 2-3 of the Draft Guidelines. 

          The Program Goal language is important because it establishes the vision for what the Fund will achieve.  As currently drafted, it speaks to how the Fund will prioritize projects that are in concert with floodplain management standards, local resilience plans, and the Virginia Coastal Resilience Master Plan, and it states that the Fund will empower communities to implement action-oriented approaches.  Nothing in the draft Program Goal statement captures the strong emphases that must be placed on nature-based solutions and socioeconomic equity.  We therefore strongly recommend revising the Program Goal to incorporate clear references to promoting nature-based resilience solutions and ensuring flood protection projects are advanced in Virginia in an equitable way.

1. Explaining How Nature-Based Solutions will be Prioritized

          In addition to explicitly referencing nature-based solutions and equity principles in the broader Program Goal, we believe the Guidelines need to include more detail on how these underlying statutory requirements will be achieved.  Turning first to nature-based solutions, we note that the “Project” subsection of the “Grants Applicability” category on page 4 states that “[c]onservation and restoration of floodplains, coastal barriers, and other natural capital” are among several types of projects that will be prioritized for funding.  But the most specific information the Draft Guidelines offer on how these and other nature-based solutions will be prioritized is a statement in the “Grant Award Criteria” subsection that indicates “[g]rants will prioritize green infrastructure and community scale projects through a sliding cost share.”

          A sliding cost share ratio that provides a higher percentage of project funding to nature-based solutions than other types of projects could certainly provide an incentive to localities to devise and submit applications for green infrastructure projects.  However, providing a higher cost share seems unlikely, by itself, to ensure that such projects comprise a major portion of the proposals the Department chooses to fund.  Without incorporating the prioritization of nature-based solutions into the grant scoring criteria through some form of a “bonus” for such projects, we are concerned that hard infrastructure projects like seawalls and bulkheads could still make up the majority of the proposals the Department decides to fund and/or devour the lion’s share of money in the Fund—even at a lower-cost share.

          We were encouraged to hear Deputy Secretary Saks acknowledge that the point system for scoring proposals would need to incentivize nature-based solutions during the January 15 online presentation of the Draft Guidelines.  This important point should be clearly articulated in the finalized Guidelines to ensure it is reflected in the forthcoming grant manual and scoring criteria and future versions thereof. 

          In addition, as a further means of promoting nature-based solutions, we support prioritizing land acquisition and land conservation projects focused on areas containing important natural resilience resources.  Such resources include not only existing wetlands and natural stream buffers, but also marsh migration corridors in coastal areas that will help ensure that key natural resilience systems can survive and continue to function effectively in the future.  We urge the Department to consider ways to prioritize such projects in the scoring criteria, and to also think of “land acquisition” in a broad context that includes the purchase of conservation easements that are often more affordable than fee simple acquisitions and, if intentionally structured to do so, can help facilitate voluntary strategic relocations.^[vi]  

2. Ensuring Funds for Beneficial Projects in Low-Income Geographic Areas

          We believe the finalized Guidelines must also include more detail on how the program will ensure at least 25% of annual disbursements will be used for projects in low-income geographic areas, as required by statute.  The first bullet in the “Grant Award Criteria” subsection on page 5 mentions the requirement (though it should be revised to more accurately identify the 25% as a minimum requirement), but then explains that the Department will assess the fiscal capacity of the applying locality when it considers using a sliding scale based on fiscal health metrics to determine grant award amounts.  Importantly, the definition of “low-income geographic area” included in the statute refers not just to localities, but also to communities within localities, that have a median household income below a certain threshold.^[vii]  This aspect of the Draft Guidelines should therefore be tweaked to make clear that this sliding scale would consider not just the fiscal health of the applying locality, but also the community or communities that the project would benefit, where applicable.

          Further, as noted above with regard to nature-based solutions, using a sliding scale that funds a higher percentage of the project cost based on the fiscal health of the applying locality or the benefiting communities will not necessarily ensure that a sufficient number of proposals in low-income geographic areas will be selected for funding.  We urge you to consider providing some form of a bonus to such projects as part of the point system used to score applications, and a clear statement along those lines should be included in the finalized Guidelines to ensure it is considered during the development of the grant manual and scoring criteria.^[viii]  

          As a final comment in this section, we applaud your inclusion of an important point about equity in the discussion of the types of planning projects that will be prioritized on page 5 of the Draft Guidelines.  A bullet point in that section discusses how a priority will be placed on proposals that develop and implement strategies for outreach to communities that have been traditionally underserved or that are particularly vulnerable to flood risk to “allow for full discussion of options that respect community perspective.”  We strongly support prioritizing outreach efforts along these lines.  Further, we think it is crucial that the application review process ensures that the community (or communities) where a proposed project would be located or that would be impacted by the project have had a meaningful opportunity to learn about the project and its impacts, and are supportive of the application—particularly for projects proposed in “low-income geographic areas.”  Whether and how a particular project would benefit a community can involve a fair amount of subjectivity, and it is essential to include the perspective of the potentially impacted community in the decision-making process.

Use of Fund Resources for State-Level Studies and Needs

          During recent online presentations of the Draft Guidelines, it became clear that the Department envisions some portion of Fund resources being used for statewide studies and state agency staff positions that have a strong nexus to flood resilience.  The Draft Guidelines do not directly address the process that will be used to decide which of those state-level needs will receive allocations from the Fund, and what the allocation amounts will be.  Based on the fact that none of the entities eligible to apply for grants in the Draft Guidelines are state entities, it does not appear the Department necessarily envisions state agencies applying for grants from the Fund (and therefore such projects might not be subject to the same application review and selection processes).^[ix]  

          Although we support using some Fund resources to address key state-level needs that relate directly to flood and climate resilience, we believe it is important to ensure the transparency of those decisions.  We urge you to include a description of the process that will be used to consider and evaluate such projects and the amounts they will be awarded in the finalized Guidelines.  We also strongly recommend including a commitment to provide a report that lists the recipients and amounts of all disbursements made from the Fund for each funding cycle.

Fleshing Out the Processes for Obtaining Loans from the Fund

          Although section 10.1-603.25 of the Code of Virginia requires the Department to establish Fund guidelines regarding the distribution and prioritization of grants and loans, the Draft Guidelines are focused primarily on grants.  We understand that grants are likely to be a more attractive funding option for localities and other eligible entities, but ensuring the Fund program also includes a robust loan element will ensure that some of the Fund disbursements are replenished over time and thereby help expand its reach and effect.  We therefore urge you to provide sufficient detail on the loan application, evaluation, and repayment processes in the finalized Guidelines to enable both the Department and potential applicants to make informed decisions about how best to utilize Fund resources.  

          In closing, thank you for your consideration of these comments and for your work on this important issue.  Please do not hesitate to reach out to discuss any of these points as you continue working on the Guidelines, and we look forward to additional opportunities to provide input as the Fund program is developed.