[StBernard] Community Disaster Loan Program needs retooling

[Westley Annis]

COMMUNITY DISASTER LOAN PROGRAM NEEDS RETOOLING 

Baton Rouge - Governor Kathleen Babineaux Blanco and officials of the
Louisiana Department of Homeland Security and Emergency Preparedness today
applauded members of the states congressional delegation for introducing
legislation to correct problems with the Community Disaster Loan Act of
2005.

The legislation, recently passed by Congress and signed into law by
President Bush, provides operational funding to aid local municipal
governments that incurred significant loss in revenues due to Hurricanes
Katrina and Rita. However, the programs specifics raised serious concerns
among state and local leaders.

Under the revised Act, a longstanding provision was stripped from the law
that allowed for individual loans to be forgiven if the recipient
communities are so heavily impacted by the disaster that they are unable to
repay after three years.  Without this provision removed, the hardest-hit
parishes in Louisiana, who lost literally everything in these catastrophic
events, may be unable to accept the loans they so desperately need.  In
addition, the Act requires that the State co-sign the loans, or the parish
and local governments provide collateral for the loans.  In many cases,
local collateral no longer exists due to the magnitude of disaster losses.

            Governor Blanco and LOHSEP are working with the Louisiana
congressional delegation to correct these problems. In response to these
efforts, Senator Mary Landrieu and Senator David Vitter are cosponsoring a
Senate bill filed Monday. Rep. Charlie Melancon has also introduced a
similar bill in the U.S. House.  Melancon's bill is co-sponsored by
Louisiana Reps. Richard Baker, William Jefferson, Rodney Alexander, Bobby
Jindal and Charles Boustany.  The bill will permit the cancellation of
certain loans under the Robert T. Stafford Disaster Relief and Emergency
Assistance Act. Under the new bill, the loans given to stricken Louisiana
municipal and parish governments could be forgiven without repayment.

Our congressional delegation is working hard on behalf of our hard-hit
communities and parishes to get them the help they need and I applaud their
determination to enact this amendment to the Community Disaster Loan Act,
Governor Blanco said. This assistance will enable them to continue
providing critical services such as police and fire protection.  Passage of
this legislation is vital to restoring our communities and to continuing the
recovery process in Louisiana.

The following is excerpted from a FEMA fact sheet on the Community Disaster
Loan Program currently in place:

The Community Disaster Loan (CDL) Program provides operational funding to
help local governments that have incurred a significant loss in revenue, due
to a presidentially declared disaster, that has adversely affected their
ability to provide essential municipal services.

*	The CDL Act of 2005 authorized up to $1 billion in direct loans to
local governments.
*	Local governments must show a substantial loss (greater than 5%) of
tax and other revenues for the current or succeeding year as a result of a
major disaster.
*	The disaster must have adversely affected the level of essential
municipal services previously provided.
*	State law must not prohibit local governments from incurring
indebtedness resulting from a federal loan.
*	The loan amount cannot exceed the lesser of 25% of the applicants
operating budget for the fiscal year of the disaster, or a cumulative
estimated revenue loss for the fiscal year of the disaster and the
subsequent three fiscal years.
*	Capital outlays and debt service (interest and principal) for
capital items will be excluded in the calculation of the applicants
operating budget.
*	The term of the loan is five years, and can be extended to ten
years, with the applicant selecting the payment schedule.
*	The interest is the rate for five year maturities as determined by
the Secretary of the Treasury on the date the promissory note is executed.
(The rate was 4.33% at 10 a.m. on October 13, 2005.)  There are provisions
for unusual circumstances involving financial hardship which could reduce
the current rate to approximately 2.6875% (varies as determined by U.S.
Treasury rates).
*	FEMA will execute a promissory note to the applicant co-signed by
the state.  If the state cannot legally co-sign the note, the local
government must pledge collateral security.  Funds will be dispersed in
accordance with the terms of the note.  
*	Funds must be used to carry on existing local government functions
of a municipal operation character, or to expand such essential functions to
meet disaster-related needs.
*	FEMA will provide technical assistance to expedite the application
and approval process.

To begin the process, local governments should complete the Certification of
Eligibility for Community Disaster Loan form available at
http://www.ohsep.louisiana.gov  and submit it via mail or overnight delivery
to the Louisiana State Public Assistance Officer at 415 North 15th Street,
Baton Rouge, Louisiana  70802.  

DOCUMENTS/INFORMATION REQUIRED TO PROCESS CDL

1.	Current adopted operating budget
2.	Three most recent audited financial reports
3.	Revenue loss projections of major revenue sources for the current
fiscal year and the subsequent three fiscal years
4.	Pertinent state statutes, ordinances, or regulations which prescribe
the local governments system of budgeting, accounting, financial reporting,
including a description of each fund that is part of the operating budget
5.	Additional information as may be required by FEMA staff to determine
eligible loan amounts.

For more on the loan applications, contact Louisiana State Public Assistance
at (225) 379-4036.

POST OFFICE BOX 44217 BATON ROUGE, LOUISIANA 70804
TELEPHONE: (225) 925-7500 FAX: (225) 925-7501