Herald-Leader Editorial

Failing infrastructure sets up lose-lose-lose

Cumberland marinas may be canaries in the climate-change mine

December 23, 2012 

When Lake Cumberland was built more than 60 years ago, the government compensated property owners whose homes and livelihoods were wiped out by the rising water.

When the government lowered the water by 40 feet six years ago to repair the leaking Wolf Creek Dam, some people again lost their livelihoods.

But this time there has been no compensation.

Five of the lake's 11 marinas have gone out of business or are in bankruptcy. A sixth is operating in the red.

A comparative analysis by the Kentucky Small Business Development Center concluded that lower water, not the economic downturn, delivered the "financial body blow."

The biggest losers have been marinas that were located on shallower tributaries and that were left high and dry when Cumberland was lowered. The negative impact has been less for marinas on the deeper main channel, some of which have gained business from their competitors' misfortunes.

The plight of a half-dozen marinas, their seasonal work forces and satellite businesses has attracted almost no attention outside of Kentucky.

It does raise some complicated questions, though, that will gain urgency as this nation's aging infrastructure continues to fail or require prolonged repair.

Factor in the expected rise in storms, droughts and sea level from climate change, and questions intensify about how to apportion risk and insure against it.

Taxpayers have a big stake. Consider: At Lake Cumberland, one federal agency, the U.S. Army Corps of Engineers, which owns the lake, has demanded that the marinas keep paying rent after abating the lease payments the first year of the drawdown.

Meanwhile, another federal agency, the Small Business Administration, declared the lower water levels a disaster and has backed loans to enable marinas to relocate to deeper water and survive the drop in customers and cash flow.

We hope we're wrong, but the most likely outcome is lose-lose-lose: The Corps will lose its rent revenues and the SBA will eat the loans as marinas and their owners go into bankruptcy or out of business.

There has to be a better way.

In the old days, Rep. Hal Rogers, R-Somerset, would have come to the rescue with a budgetary earmark. But in the current climate, the appropriations chairman has to worry more about the anti-spending Tea Party wing of his own party than constituents, even those who give to his campaigns and are hurting.

A few thoughts occur:

The Army Corps of Engineers is probably not the best agency to handle such sensitive economic and social questions, which are only going to get more complicated and common.

Early in the Cumberland process, the Corps sent mixed messages about how soon water levels might be restored as the dam repairs progressed.

This raised hopes among business owners that if they could just borrow enough to get through one or two bad seasons, they could hang on.

As far as we can tell, there's no hope for higher water until the project is completed in 2014.

Marina owners would have made different decisions if that had been made clear from the start.

The Corps of Engineers has formally committed to mitigating economic effects of the drawdown, yet has shown little concern — some would say, it's shown animosity — toward the businesses that are going under.

The total bill for the Wolf Creek Dam repair is expected to top a half billion dollars. In future such projects, the government should consider setting aside a small percentage of the funding to mitigate economic harm.

Also, businesses should be able to insure themselves against losses from government infrastructure failures and repairs.

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