Council Deadlocks Over $5.8M Hurricane Sally Relief; Awards Port Base Bid After Amendment

The City Council on Jan. 15 faced sharp criticism from residents and council members over roughly $5.8 million in Hurricane Sally disaster-recovery funds that, residents said, had not been deployed to repair privately owned homes as intended.

Betsy McDonald, the city’s housing director, told the council the department administers countywide Section 8 and several housing programs and outlined prior accomplishments, but acknowledged staff turnover and delays in standing up the CDBG-DR program.

"There are people still reeling from that damage and still time to make it right by putting your time and energy into sorting out a plan to distribute those funds," said Deshaun Mackenzie during public comment. Multiple speakers described families displaced for months after Hurricane Sally and urged the council not to reallocate the funds to port or downtown infrastructure.

Councilman Baer reviewed the grant timeline and said the city accepted the state contract but never submitted required implementation plans and budgets to the Department of Commerce and HUD after staffing changes, leaving the city unable to begin awarding projects. City staff said Department of Commerce guidance narrowed options: either reallocate the funds to already-approved Hurricane Sally CDBG-DR projects within the city or return the funds.

Council members debated options and the risks of returning money to the grantor. Vice President Breyer and others argued the optics of moving funds away from homeowners were poor and urged a workshop to explore alternatives; some council members said they feared losing the funds if no action were taken. The council attempted to pass a supplemental budget resolution to reallocate the $5.8 million to port infrastructure and other approved projects; after a recall and re-vote the measure failed 3–4.

Separately, the council considered the Port Pensacola road-and-rail rehabilitation award. Staff asked the council to approve a $10,069,512 base bid and four alternates that together would raise the total to $12,019,512 if the CDBG reallocation were approved. Because the reallocation failed, council members amended the contract award to remove the four alternates and then unanimously approved the base bid to C.W. Roberts Contracting Inc. (vote 7–0). Port staff said delaying the base bid could imperil other port funding and the broader construction schedule tied to federal deadlines.

What happens next: Council directed staff to organize a workshop within two weeks to analyze options, timelines and whether the city can partner with the county or hire consultants to meet grant requirements; staff also will supply the implementation steps and feasibility analysis for using any portion of the funds for housing repairs.