Federal government removes report on flooding and climate change

On January 22, 2019 the U.S. Department of Defense issued a startling report of findings of the impact of climate change on the nation’s military bases. The issuance of report is required by law as part of the government appropriations process. Especially significant to us was that this new report clearly and decisively confirmed that more severe recurring flooding is a greater problem on the mid-Atlantic region of the U.S. than previous reports predicted. (The report includes Virginia Navy facilities but apparently not Dover AFB that is closest to us across the Delaware Bay). In other words, our observations of more severe flooding are not ‘in our heads’, as some politicians contend, but are actually documented at most military bases across the country.

One of the most significant findings of the report was that frequent flooding is now an issue at 2/3 of the nation’s military bases and is already costing us more money and loss of use. The flooding impact now is at the level that was previously forecast for 2040. In other words, flooding is a more serious problem than earlier forecasts. This confirms our anecdotal observations on the Delaware Bay coastal shoreline.

In the past week other news reports said that the President’s office intends to hide or challenge this information by offering positions of power to a few people who oppose the prevailing scientific views on climate change. We would have dismissed this as the usual political bantering except that now the official government report now seems to be removed from the Department of Defense web site.

The report was originally published on the official government site at: https://media.defense.gov/2019/Jan/18/2002081124/-1/-1/1/https://media.defense.gov/2019/Jan/18/2002081124/-1/-1/1/FINAL-CLIMATE-REPORT.PDF. That repot has been removed.

An archived copy of the report is still available on a non-governmental archive site: https://www.documentcloud.org/documents/5689153-DoD-Final-Climate-Report.html. The archived report appears to be based on a scan, not a PDF document, so some features are lacking.

We join with scientists and other data-driven public policy decisions makers to denounce the hiding of facts and information for political purposes.

Social determinants of crowdfunded investment decisions

A new article published this week in the Journal of Business Finance and Accounting takes a step forward in the path that has been unfolding for those of us working at the intersection of community projects and private investments. The paper abstract says (emphasis added): “We investigate determinants of investment decisions in investment‐based (equity and bond) crowdfunding campaigns, using a novel investment‐, investor‐ and campaign‐level database, where equity refers to investments in entrepreneurial start‐ups and bonds to large real estate projects. We find that investors who have higher social interactions invest more. Social interactions are important in an equity crowdfunding context but do not affect participation in bond investments. This is consistent with the view that investors’ social networks help reduce information asymmetry. Women invest less in the riskiest (equity) investments but more in safer ones (bonds). These findings are better explained by differences in risk aversion than differences in overconfidence between men and women. Overall, the findings contribute to the understanding of how investment‐based crowdfunding can be a viable source of entrepreneurial finance and how entrepreneurs’ campaign decisions affect investor participation in this new form of entrepreneurial finance.”

What this means for us, simply, is that Baysave equity crowdfunding strategy should focus on men who are active is social media platforms or otherwise well-connected in their communities. Other lower risk debt-based projects like private mortgage might be more interesting to female and institutional investors.

This research finding appears to be consistent with earlier research and our own observations. Specifically, it addresses the ongoing conflict where the larger private investors want to discourage us from publicizing news of bayshore redevelopment while, in contrast, I see public media and social medial more frequently as a source of strength. Whenever publicly disclosed information is used against us in a marketing or legal situation, I hear a “told you so” from investors who prefer to remain private.

This is a useful reminder to us as we revise our 2018 strategic plan documents for 2019.

NJ sustainable seafood hits a snag

An adverse court decision yesterday poses a temporary setback to local small seafood businesses at the Delaware Bay. The ruling will be appealed and brought to the attention of local lawmakers.

crabs in basketBaysave, along with our partners, is involved in several projects to improve the financial and business security of the bayshore region’s watermen. We recognize that environmental sustainability goes hand-in-hand with economic sustainability of the local communities along the Delaware Bay. There must be a balance in considering the needs of all stakeholders. Imbalances historically lead to disaster in all types of ecosystems.

One sustainability initiative involves the need to bring local commercial crabbers access to wider markets and better product pricing. We initiated a number of projects: a shared use storage cooler, formation of a multi-state harvesters cooperative, and online lead generation systems to connect buyers and sellers through online and social media. In 2018 Baysave engaged two professional marketing firms and several volunteers to post social media messages across a broad multi-state network to promote crabbing. Direct-to-consumer sales result in significantly higher price to the crabber. Of course, this effort is not popular with seafood wholesalers, powerful regional businesses with a reputation of using ‘muscle’ to force the crabbers into submission. The wholesaler controls the volume of harvest, the price and often acts as banker for smaller crabbers. The local New Jersey crabbers compare their industry to the feudalistic systems of generations ago using them as indentured servants who never quite get out from under the control of their dealer.

In other states these independent seafood harvesters have increased sustainability by forming cooperatives. Baysave proposed this idea and received funding in 2018. Within days the wholesaler retaliated with a complaint. Fish and Wildlife demanded to see records of crabbers who provided crabs to us last fall. The state didn’t seem to recognize that we didn’t sell any crabs at all. Even though we explained that Baysave is an online lead generator for members of the cooperative, and not a party to any transaction involving crabs, Fish & Wildlife believes that current state law does not make a distinction. If we reveal the identities of the crabbers who participate in the cooperative, they would face retribution from other buyers. Past threats against the crabbers and co-operative members are well documented but not prosecuted.

The system of feeding sales leads to crabbers worked well until yesterday. Regional Court Justice ruled that the activity of Baysave’s volunteer controller falls under the definition of persons required to keep records. Novak admits to ordering and leaving cash at the marina in advance to pay for 4 to 5 bushels of crabs over the course of the season for personal consumption at barbecues but that he did not drive to NJ on weekends where the barbecues were rained out. He suggested that the crabbers attempt to resell the crabs to minimize the financial loss. He posted messages on social media offering the crabs that were available at the marina but had no involvement in either the buying or selling transactions.

A sign advertising crabs was posted at the marina, in fact has been posted for more than a decade, advertising crabs. Fish & Wildlife does not allege that Novak had any involvement in posting the sign but apparently the law enforcement officer feels that he should be responsible for the transactions that crabbers May have conducted for the crabs that he originally purchased for personal consumption. This legal issue has never before been raised for the many decades and millions of dollars that are caught, landed, and sold at Money Island. We suspect that Fish & Wildlife is acting to protect the large wholesalers at the detriment of independent crabbers who wish to advertise and sell their crabs. This posting of signs by crabbers at marinas is a common practice statewide. We are not aware that any of the other marinas that posted crabbers’ signs have ever been prosecuted.

Fish & Wildlife Division demanded records of these transactions if they occurred. Novak had no records and no information of whether transactions actually occurred. He called the people who he suspected might have bought or sold the crabs but all denied involvement. It seems clear that they are afraid of retaliation by the wholesaler if their name is reported. F&W issued a citation to Novak for his remote role in the cancelled crab deliveries but did not cite any parties on site in New Jersey.

Judge Van Embden ruled that Novak’s actions in advertising the crabs by sharing Facebook posts made him legally responsible for keeping records of the crabs despite not taking delivery of them and having no knowledge of the identities of the crabber(s) or details of possible transactions. Novak said that he intends to appeal the ruling based on both technical errors at trial and the merits of the case.

Representatives of the new seafood cooperative met with local legislators recently to discuss the need to prevent these restrictions on seafood marketing. We believe this court ruling may provide additional support for our request for legislative action.

Meanwhile, Baysave will resume discussions with our state legislators on the need to change the state law to protect off-site seafood sales lead generators. This will help our local crabbers who do not otherwise have access to the type of online marketing support that a cooperative can offer. The cooperative lead generation system is working well for crabbers in Delaware and Maryland. We think it is just a matter of time until New Jersey clarifies it’s applicable law. In the meanwhile, Baysave will focus only on out-of-state fisheries products and will not promote any New Jersey fisheries product.

Crowdfunding for scientific and environmental projects

Since 2015, public media in Australia has covered the gradual transition of funding for scientific and environmental project to social media. ABC and NBC networks produced updates this week. ABC writes:

“The competition for research funding is driving some Australian scientists to crowdfunding. It can take up to a year for academics to find out if they’ve been successful in getting government grants. It’s highly competitive with the success rate for the Australian Research Council usually about 18 percent. But going cap in hand to the public, via the internet, isn’t a sure thing either.”

Crowdfunding has the potential of being faster than the grant process. But it has its own challenges. Baysave is also learning about crowdfunding; we’ve had some success and some learning experiences that were not immediately successful. In the long run, I suspect that both methods must be used in tandem for smooth operation in today’s environment.

 

Environmental Justice for Money Island NJ

Following are proposed comments to the executive order:

Executive Order No. 23 signed by Governor Phillip D. Murphy on April 20, 2018 recognized that, historically, New Jersey’s low-income communities have been disproportionately affected by environmental degradation that often leads to other serious problems beyond environmental issues, including housing challenges.

The NJDEP issued an Environmental Justice Draft Plan in January 2019 (hereafter “Plan”) and invited public comment on that plan to implement environmental justice policies in the state. This comment is submitted during the 60-day public comment period to receive input on the proposal.

The U.S. Environmental Protection Agency (EPA) defines environmental justice as “the fair treatment and meaningful involvement of all people regardless of race, color, national origin, or income with respect to the development, implementation, and enforcement of environmental laws, regulations, and policies.” The EPA has further explained that:

“Fair treatment” means that no group of people should bear a disproportionate share of the negative environmental consequences resulting from industrial, governmental and commercial operations or policies.

Money Island, Downe Township, Cumberland County

The small rural community known as Money Island New Jersey, is the smallest of five communities that make up Downe Township. We are located on the southwestern tip of the state, in rural Cumberland County that has historically been denied fair treatment with regard to environmental justice. The residents of this community are typically low income individuals who have not had access to meaningful involvement with respect to the implementation and enforcement of environmental laws, regulations and policies. As a result, the community has born a disproportionate share of the negative consequences resulting from governmental operations and policies.

MRI Score and its implication

The New Jersey Department of Community Affairs utilizes a Municipal Revitalization Index (MRI) scoring system referred to in the Plan. Our local municipality Downe Township has a 2017 MRI Distress Score of 43.7, ranking it as #63 of the 565 municipalities (11th percentile most at risk) ranked by highest to lowest overall risk. Downe Township ranks as the #36 lowest per capita income municipality in the state (6th percentile lowest income). The data shows that our community falls within the category of those facing a disproportionately high burden of the issues related to environmental justice. Specifically, we recognize that our higher exposure to risks combined with our local lack of financial resources to deal with these risks exacerbates and compounds the problem.  Anecdotally, I frequently speak with NJDEP officials in informal settings who acknowledge this disproportionate burden and the need to address it, yet I am not aware of any actual progress by the Department in doing so.

Lack of affordable housing

Lack of affordable housing in environmental justice communities is identified as one of the challenges recognized in the Plan. Our community has experienced rapid devaluation of properties due to the combination of environmental stress, lack of government responsiveness and lack of financial resources to address the problems. My own house went from a certified appraised value of $186,000 in 2006 to $5,000 in 2017. That’s a 97% devaluation. At the same time, we were hit with the massive costs of storm repair, including Sandy recovery, increased insurance and taxes and a lack of available programs to provide housing rehabilitation funding.

Lack of engagement by NJDEP

The Plan seeks better community engagement by state agencies. In 2014 then State Senator Van Drew wrote a letter (copy attached) to former NJDEP Commissioner Martin documenting the difficulties I had establishing communication and engagement with the Department with regard to the planned sustainable redevelopment of Money Island.

In 2017 I requested alternative dispute resolution to help address these issues of lack of engagement. NJDEP declined to participate in alternate dispute resolution to the surprise of the officials who run that program. I can’t think of a more pronounced example of lack of engagement of NJDEP than this. These examples, combined with my many other experiences, add up to a pattern of deliberate intent to disengage from the community’s efforts to address compliance and sustainability challenges.

Capacity building assistance for communities

The Plan seeks to improve capacity building assistance for communities. Please consider that our community have been lobbying the NJDEP for more than a decade on basic issues like the need for water and sewer infrastructure, telephone and internet and more sustainable roadways. I see nothing to indicate that NJDEP intends to build the capacity in our community.

Goals of Environmental Justice Plan

The 2nd, 3rd and 4th stated goals of the Plan are  “2. State agencies will routinely consider environmental justice impacts of their programs when developing and implementing program plans, regulations and policies”, 3. “State agencies will work together, through an inter-agency environmental council and cross agency workgroups, to develop and carry out targeted action plans to address environmental justice challenges and to leverage opportunities for improving conditions in environmental justice communities”, and “4. State agencies will coordinate their activities to provide effective communication and collaboration with environmental justice communities”.

Unfortunately, my experiences indicate exactly the opposite history:

  1. A) The NJDEP’s actions have not considered environmental justice impact. Most recently, for example, the Department’s use of NJ Attorney General Grewal’s Office to prosecute those who are recovering from Sandy and financially unable to rebuild quickly caused a number of small businesses to close or move out of the state. The state admits, for example, that Baysave’s contributors have made significant contributions to the recovery, sustainability and compliance efforts of this community yet seems to have o qualms in suing the company and its volunteers.
  2. B) My experience is that one office of NJDEP does not know what the other offices are doing. Often Department officials disagree and contradict each other As a practical matter, it has been impossible to confirm a statement made by one NJDEP official. In one instance, a NJDEP official and the local code enforcement officer told me that no permit was needed to repair a bulkhead. When the repair was complete another NJDEP official issued a violation notice for not having a permit. Then I applied for a Zane exemption after two officials said it would be granted. One gave verbal assurance that my application was approved but never sent written verification. When I followed up
  3. C) At a recent on-site meeting at Money Island with high level NJDEP officials they plainly stated that they see a lack of coordination among agencies and departments and admitted that the end result – and its impact on me – is nonsensical.

Suggestions

The Plan makes recommendations for each department or agency within NJDEP that include:

“Identification of existing programs that have a significant impact on environmental justice communities.” – In our community of Money Island, the program that would make the most immediate impact is approval of the NJ SeaGrant pump up station application. I have submitted this application four different times: 2013, 2014, 2015 and 2017. At first our engineer said we were making progress but now I’m told that the application is blocked by an unnamed person at NJDEP. Improved wastewater handling for the boats and marina is critical to our community. I urge the Department to identify the person blocking this critical infrastructure application and have them speak with me and our engineers.

“Identification of opportunities to improve engagement and collaboration with environmental justice communities and to improve conditions in those communities”.  – We see a plain and easy opportunity to improve engagement and collaboration with simple common-sense steps:

  1. Answer our repeated calls, emails and letters sent by my and the mayor of our municipality asking for clarification and direction on critical compliance and permitting issues. We can’t move forward without the Department’s input.
  2. When and if Commissioner McCabe visits Money Island again, I would welcome the opportunity for a casual discussion. I understand that she came and went this fall without speaking with any of us on site. I have met individually with many other higher level NJDEP officers here. Elected officials ranging from Senator Booker, former representative LoBiondo, former state Senator VanDrew, current state Senator  Andrzejczak, Assemblyman Land, several former Assemblymen, our County Freeholders and our Mayor have all been involved in advising, planning and implementation of our community’s sustainable future. We are grateful that all of these leaders have taken the time to visit and advise us on the steps to help secure the future of our community. Yet I feel that top-down leadership from within NJDEP is still lacking on the specific Environmental Justice issues that we discuss.
  3. Deal with us directly rather than through the Attorney General’s office. Suing modest income residents like me and taking away valuable time and financial resources in the legal system simply because we can’t get permits issued fast enough to satisfy the state is despicable behavior in itself. The wasted time and money takes away valuable resources that would otherwise go toward our community’s compliance and redevelopment. But more importantly, it is counterproductive to achieving our common goals. It is the very opposite of Environmental Justice! We all want full compliance and a sustainable community as soon as possible. But the Department’s willingness to sue us with its virtually unlimited budget for lawyers and prosecution – scared away all of the interested and willing sources of redevelopment funding in our community. In short, the state’s shortsighted plan of taking legal action rather than work with us shot the state in the foot. I urge the Department to settle its legal actions against us and resume problem-solving through normal process of community planning meetings, application reviews and candid discussion.

I would welcome the opportunity to discuss or provide more information on any of these points. Thank you for the opportunity to allow me to submit these comments.

 

Tony Novak, controller

Baysave Association

PO Box 333

Money Island NJ 08345

(856) 447-3576

 

Update on local ‘listening session’ and comments on NJ Environmental Justice Draft Plan

Last month the New Jersey Department of Environmental Protection (NJDEP) announced a series of meetings it calls “listening sessions” to its recently published “Environmental Justice Draft Plan”. The purpose is to talk public comments and respond to those comments in a thoughtful organized process with the end results published in official state records.

Some local government officials who regularly battle with NJDEP call these “feel good bullshitting sessions”. They may be right. Even so, I think that participation in the process is important. The tension between NJDEP and its rural southwest communities cannot be overstated; the NJDEP is viewed by many as a step below the Jersey Devil for the Department’s history of corruption, bribery and slighting of rural communities.

The local meeting planned last week in Bridgeton was cancelled due to threatening weather. No rescheduled date has been announced. There is an alternate way to submit public comments. Written comments may be submitted through email until Friday, March 22 to eo23@dep.nj.gov.

I recommend that anyone with interest in NJ environmental issues may want to read the plan and take advantage of this opportunity to offer feedback. I expect that my strongly worded feedback will be published separately here on this blog in the next several postings.

300 word summary of Baysave

We were asked to provide a 300 word summary of Baysave as part of the on-boarding process for a community project. Here it is so far (revisions are likely):


The professionally written version:

BaySave is a 501(c)(3) nonprofit association formed in 2010 and based at Money Island, Cumberland County, New Jersey. Past projects include living shoreline stabilization, oyster shell recycling, marina repair and management, crowdfunding, educational programming, and community seafood events. Baysave was cited by the NJ Department of Environmental Protection for exemplary dune grass replanting projects.

Baysave is registered as a New Jersey charity with a mission of advocacy, stabilization, restoration, and sustainable economic redevelopment of the Delaware Bay and communities along its shoreline. Baysave operates in Delaware, New Jersey, and Pennsylvania with some programs reaching Maryland, New York City, and Virginia. Our unique value is in making measurable progress toward common goals by bringing together recreational users, environmentalists, commercial watermen, elected officials, and community leaders. This allows us to combine the resources of diverse stakeholders in government, industry, nonprofit, and education.

In 2018 Baysave received funding from the NJ Community Capital THRIVE Grant for the redevelopment of the local recreational crabbing industry to provide infrastructure, marketing innovation, and an organizational framework to operate as a cooperative with greater autonomy and opportunities. Those efforts continue into 2019.

Our 2019 priorities are: 1) influencing New Jersey legislation and regulations associated with sustainability, fisheries and aquaculture management, 2) transitioning local commercial and recreational marinas into compliance with existing state regulations, and 3) expanding funding sources to meet the remaining unmet requirements for existing partially-funded projects.

Baysave is proud to be a member of the Millville Chamber of Commerce and the Vineland Chamber of Commerce. We are grateful to have received assistance from the Marine Trades Association of New Jersey, the NJ League of Municipalities, and the NJ Society of Certified Public Accountants. We have also been offered a site license for long term projects to a coalition of environmental groups led by The Nature Conservancy.

 


 

BaySave is a 501(c)(3) nonprofit association formed in 2010 and based at Money Island, Cumberland County, New Jersey. Baysave is registered as a New Jersey charity with a mission of advocacy, stabilization, restoration and sustainable economic redevelopment on the Delaware Bay and communities along its shoreline. Baysave operates in Delaware, New Jersey and Pennsylvania with some programs occasionally connecting to Maryland, New York City and Virginia. Our unique value is in the ability to combine the resources of diverse stakeholders in government, industry, nonprofit and education in making specific progress toward common goals by bringing together recreational users, environmentalists, commercial watermen, elected officials and community leaders.

Past projects include living shoreline stabilization, oyster shell recycling, marina repair and management, crowdfunding, educational programming and community seafood events. Baysave was cited by the NJ Department of Environmental Protection for exemplary dune grass replanting projects.

In 2018 Baysave received funding from the NJ Community Capital TRIVE Grant for the redevelopment of the local recreational crabbing industry to provide infrastructure, marketing innovation and an organizational framework to operate as a cooperative with greater autonomy and opportunities. Those efforts continue into 2019.

Our 2019 priorities are: 1) influencing New Jersey legislation and regulations associated with sustainability, fisheries and aquaculture management, 2) transitioning local commercial and recreational marinas to comply with existing state regulations, and 3) expanding funding sources to meet the remaining unmet requirements for existing partially-funded projects.

Baysave is pleased to be a member of the Millville Chamber of Commerce and the Vineland Chamber of Commerce. We are pleased to have received assistance from the Marine Trades Association of New Jersey, the NJ League of Municipalities and the NJ Society of Certified Public Accountants and offers a site license for long term projects to a coalition of environmental groups led by The Nature Conservancy.


The website is www.Baysave.org. Contact controller Tony Novak at 856-447-3576 or tnovak@baysave.org for more information.

Qualified Opportunity Zones vs. Qualified Small Business Stock at the bayshore

Community redevelopment or industry revitalization plans historically rely heavily on tax incentives to attract investment. Our local fisheries and aquaculture industries are likely to require large commitments of investment capital over the coming decades. A government program that abates taxes or exempts gains from taxation can make a project significantly more interesting to investors. Such programs can exist at the local, county, state and federal government level. This blog post focuses on the two most prominent options available at the federal level for the revitalization of the New Jersey bayshore. This blog does not attempt to explain each option, but rather focuses on the differences between them and briefly lists how I see each of them contributing to the bayshore community’s long term revitalization.

The first federal incentive programs are the Qualified Opportunity Zone authorized as part of the Tax Cuts and Jobs Act. This program is geographically restricted to a few blocks in downtown Millville and large parts of Bridgeton. Advisers see this program as most attractive to larger investors.  This program could primarily help us with commercial real estate projects in those locations, especially equipment manufacturing and seafood processing, and aquaculture equipment financing for the region. This is the investment format being considered by some institutional investors. More information is available on this new web site.

The second program is Qualified Small Business Stock. This has been around longer as Section 1202 of the Internal Revenue Code but its attractiveness is strengthened by a series of recent tax changes. Investments may provide immediate tax benefits. The long term attraction is that smaller investors can achieve tax-free gains of up to $10 million (or more) by committing to the investment for at least five years. This is the business format that will be used by Nantuxent Corporation for the revitalization of commercial fishing and aquaculture at Money Island.

There are risks with either program. The first risk is that the investment may not achieve the gains expected. The investments could lose money. The second is that the investment might not be liquid at the time the investor wants to cash in. The third risk is that the expected tax result may not be achieved either because tax laws change or because the management of the investment did not meet the legal requirements of the incentive program.

I am happy to discuss how either option might fit into your investment plans.