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DHS secretary proposes forgiving post-Katrina, Rita loans

WASHINGTON — Department of Homeland Security Secretary Janet Napolitano, acting on her recent trip to the Gulf Coast, proposed Monday that $1.27 billion in post-Katrina and Rita community disaster loans be forgiven.

"Tremendous progress has been made to help the Gulf Coast region recover, but it is abundantly clear that communities are struggling to meet the challenges faced by the economy and the remaining challenges posed by Hurricanes Rita and Katrina," said Napolitano.

The former Arizona governor is asking for comments on an amendment to FEMA's Special Community Disaster Loan regulations to include loan forgiveness procedures and requirements. FEMA is part of DHS. The proposed regulation would enable communities to apply for loan cancellations.

"We look forward to hearing feedback on this proposal in order to maintain essential municipal services following hurricanes Katrina and Rita," said Napolitano. "With this effort, we are closer to helping our Gulf Coast communities rebuild, recover and get back on their feet."

Rep. Gene Taylor, D-Bay St. Louis, said, "I know that several of our cities, counties, and school districts are still far below the revenues they had before the storm. They desperately need to have their loans forgiven. I thank Secretary Napolitano for taking this action and I am especially grateful to House Majority Whip Jim Clyburn for making Katrina loan forgiveness a priority when the Democrats took control of Congress in 2007."

Sen. Mary Landrieu, D-La., who has been highly critical of FEMA, said, "The federal government enacted a double standard when it prohibited Katrina and Rita-affected areas along the Gulf Coast from being eligible for Community Disaster Loan forgiveness."

Landrieu continued, "FEMA failed to correct this mistake under the previous administration for nearly two years. I commend Secretary Napolitano and the new administration for addressing special CDL forgiveness right out of the gate."

The proposed regulation allows forgiveness of all or part of a special CDL if local government revenues following a disaster are insufficient to meet the operating budget for the local government.

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FEMA is seeking comments from government officials and the public on the proposed forgiveness procedures. Comments should be submitted under docket ID FEMA-2005-0051 at www.regulations.gov. Comments may also be submitted to FEMA-RULES@dhs.gov or by mail to FEMA’s Office of Chief Counsel, Room 835, 500 C Street, SW, Washington, D.C. 20472

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