[StBernard] Easing storm-grant rule blocked

[Westley Annis]

Republican objection puts bill on hold 
 
Friday, March 30, 2007 
 
By Bill Walsh
 
WASHINGTON -- An anonymous Republican senator blocked bipartisan legislation
Thursday designed to take Louisiana and Mississippi homeowners off the hook
by voiding a rule that forces them to use hurricane rebuilding grants to
immediately pay off government rebuilding loans. 
 
Senate Majority Leader Harry Reid, D-Nev., attempted to fast-track the
legislation before lawmakers left Thursday for a two-week April recess. But
Republicans objected, effectively shelving it until senators return April
10. 
 
The objection was lodged by Republican Leader Sen. Mitch McConnell, R-Ky.,
on behalf of an unnamed colleague. Under Senate rules, members can place an
anonymous hold on legislation that would otherwise be waved through
unanimously. 
 
Sen. Mary Landrieu, D-La., proposed the legislation in response to growing
complaints in the two states hardest hit by Hurricane Katrina over federal
regulations that force them to use one source of federal financial aid to
pay off another. 
 
"If this bill doesn't move, many of these people will have to file for
bankruptcy," Landrieu said. "I'm asking for fairness, not charity." 
 
More than 80,000 people along the Gulf Coast received low-interest loans
from the Small Business Administration to help them rebuild homes and
businesses damaged in Hurricane Katrina. Subsequently, many also received
grants from Mississippi's Homeowners Grant program or Louisiana's Road Home
program. 
 
But citing a Stafford Act prohibition on "duplicative benefits," the SBA
began notifying some grant recipients in Louisiana and Mississippi that they
had to use the grant money to pay off all or some of their SBA loans. 
 
The requirement has left many recipients, who were counting on both sources
of financing, scrambling for cash or downsizing their rebuilding plans. 
 
Landrieu's bill, which is co-sponsored by Sens. David Vitter, R-La., and
Trent Lott, R-Miss., would allow people who receive rebuilding grants to use
them for construction without having to pay off their SBA loans right away.
The bill doesn't cancel the loan obligation. Recipients would still have to
pay it off over the life of the loan, usually 30 years. 
 
"I'm not asking for loan forgiveness," Landrieu said. "But let's give them a
fighting chance." 
Although SBA loans would still have to be repaid, the Congressional Budget
Office estimated that the bill would cost more than $200 million over the
next two years, possibly prompting objections from Republican budget hawks.
It's also possible that the Bush administration, which supports the SBA
interpretation, asked a friendly Republican senator to place a hold on the
bill. 
 
A similar measure is moving the House. It was contained in an SBA disaster
loan reform bill that passed the Small Business Committee on March 15.