Alabama Town Strikes Deal With BP Over Lost Revenue

September 30, 2011

The city of Orange Beach has reached a settlement with BP PLC over lost revenues stemming from last year’s Gulf oil spill, with the oil giant agreeing to pay $1.27 million for lodging and retail revenues the coastal town didn’t collect because tourists stopped visiting.

The Press-Register reported Wednesday the deal was struck after a year of negotiations.

Mayor Tony Kennon said the settlement would pay for lost lodging and retail revenues, along with some other “small claims.” He said the settlement was finally reached when BP agreed to pay an additional $300,000, but city leaders say they still believe they’re owed upwards of $6 million.

Kennon said the city would continue to fight for other forms of lost money using “whatever legal avenues we have to go through to go after that revenue.”

The city’s finance director, Clara Myers, said the settlement does not include lost franchise taxes, sewer fees, business licenses and building permits, particularly for multimillion-dollar projects that could have come to fruition but did not because of the oil spill.

“It takes some time to figure out what hasn’t come to town,” Myers said.

Officials in nearby Gulf Shores agreed to a $1.8 million settlement for 2010 lost revenue late last year.

BP has acknowledged working with the Pleasure Island towns on settlements, but the company has declined to discuss the deals.

Kennon said the Orange Beach agreement brings the city to a roughly 10 percent increase in lodging and retail revenue over 2009 figures.

“We used this summer as validation for our claim that we could have been up 15 (percent) to 20 percent in 2010, had it not been for the oil spill,” he said. “But the bottom line is we knew what was fair and we just stood by that number.”

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