Mississippi business leaders say oil spill blow may last years

Biloxi Sun HeraldJuly 7, 2010 

GULFPORT, Miss. — The economic effects of the Gulf oil spill are seeping into businesses across South Mississippi and will be felt for years, professionals told BP on Wednesday.

Clay Wagner, senior vice president at Hancock Bank, said after a hurricane he can see what businesses aren’t coming back and plan for that loss. Wagner said he doesn’t know what to expect from the oil spill.

“Our losses are down the road,” he told the BP representatives who met with the business community during an “Economic Vibe” sponsored by the Mississippi Coast Chamber of Commerce at the Knight Nonprofit Center. When the owners of fishing boats, seafood-processing plants and hotels can no longer pay their loans, Wagner said, they will turn over their properties to the bank, which typically will be sold for less than is owed.

Hancock Bank offices stretch from Texas to Florida — the same area affected by the oil. “Our entire footprint is going to get hurt,” he said.

Bryan Skeen, manager of BP’s Biloxi claims office, said BP is compensating businesses losing revenue from the oil spill so they can make their loan payments, and hiring commercial fishermen for the Vessels of Opportunity program.

Cities are also feeling the effects of the oil spill. Ocean Springs Alderman Matt McDonnell said property values are falling across the region, and cities will be faced with raising taxes or cutting services and jobs.

“It’s something all the municipalities are looking at very closely,” he said.

Much of cities’ debt service is tied to revenues. In Ocean Springs, he said, the 2 percent food and beverage tax pays for emergency and recreational facilities, and the $37 million the school district borrowed build a new school is tied to property taxes.

Donna Sanford, who is working with BP to coordinate claims in Mississippi, said municipalities can claim the costs of response and oil removal and lost revenue.

McDonnell asked if the revenue reimbursement is at last year’s recession levels and Skeen said cities are being asked for documentation from both 2008 and 2009.

Skeen’s office in Biloxi has 18 claims processors and sees more than 100 people a day.

“We’ll address every claim that’s filed,” he said. But some losses reach beyond the categories BP has set up to pay claims under the Oil Pollution Act.

Inquiries for quotes on golf packages are down 25 percent, said Kevin Drum, executive director of Mississippi Gulf Coast Golf Association, which promotes golf tourism in the three Coast counties.

“We were going to get back to pre-Katrina numbers this year,” he said. Instead he’s seeing far fewer than the normal 30 to 50 requests a day for quotes on golf packages; some days he gets none. The loss to area golf courses, hotels and restaurants will be $12 million if the industry waits until spring to file claims for lost business, he told the BP representatives. But with a few hundred thousand dollars, Drum said he can take preemptive steps to bring golfers to South Mississippi.

He thinks most of the existing customers will return, in part to support the Coast golf courses. It’s the new business he’s worried about.

“They’re going to go somewhere else and they’re not going to come back,” he said.

Others who attended the Economic Vibe asked about compensation for casino workers who are losing pay and tips. Skeen said close to 100 casino workers have filed claims but their requests are on hold. “We have not decided yet how to pay these,” he said.

BP spokeswoman Margaret Laney said in Mississippi more than 10,000 claims have been filed and $15.2 million paid. She said there are opportunities for small vendors and suppliers to work with BP procurement personnel and for residents to work in the cleanup.

“We’re encouraging our contractors to hire Mississippi employees,” she said.

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