FEMA forgives $33M in disaster loans

By April Siese
Contributing Writer

Over $33 million in Special Community Disaster Loans in St. Tammany and St. Bernard Parishes have been forgiven by FEMA. Thanks to a provision in the Homeland Security Appropriations Act for the 2013 Fiscal Year written by Senator Mary Landrieu, a $4.6 million loan to the St. Bernard Parish School District and a $28.7 million loan to Slidell Memorial Hospital have both been cancelled.

The cancellations were announced by FEMA February 19. Previous SCDL loan forgiveness requirements were far more restrictive and required the calculation of a local government’s operating budget deficit over a five year period, with ambiguous language being applied to general funds. Many of those previous provisions and requirements were tacked onto emergency spending bills in 2005.

According to FEMA, the new provisions and guidelines “require FEMA to exclude revenues in the General Fund that are dedicated, by law, to be disbursed to special districts or other purposes. FEMA would also be required to count disaster-related capital expenses not covered by insurance or other federal proceeds, debt-servicing expenses and sick/leave pay as a ‘disaster-related expense of a municipal operating character.’”

Local governments will now have until April 30, 2014 to submit revised cancellation applications regarding Special Community Disaster Loans. FEMA will also now be required to issue a decision on such applications and resolve all appeals by April 30, 2015.

Slidell Memorial Hospital CEO Bill Davis, whose facility is now debt-free from FEMA, sees the loan cancellations as a major victory for the hospital, which relied heavily on SCDL funds following the aftermath of Hurricane Katrina.

“The Hurricane Katrina Special Community Disaster Loan (SCDL) has been a huge shadow hanging over SMH, the Slidell community’s hospital. The SCDL was a life line to insuring SMH could continue to meet the needs of the community after Hurricane Katrina when we suffered major losses and property damage which were only partially covered by insurance,” Davis said.

“All along we felt like we had a strong case for the SCDL forgiveness, but FEMA always seemed to have barriers to that result. I cannot thank Senator Landrieu and her staff enough for staying the course to fight for the fulfillment of the congressional intent of the Stafford Act. It took legislation and a lot of pushing for FEMA to act, but Senator Landrieu got it done.”

St. Bernard Parish School District Superintendent Doris Voitier echoed Davis’ praise, saying that it helps the district look towards the future. “This certainly gives us the ability to move forward with some additional programs and instructional opportunities for our children that might otherwise not be possible. The hard work and dedication of Senator Mary Landrieu on our behalf has paid off, and we are grateful for her continuing efforts over the past several years to ensure that our school district was able to receive adequate recovery assistance and disaster aid,” Voitier said.

Senator Landrieu suggested a similar provision in 2007 which resulted in the elimination of nearly 60 percent of Louisiana SCDL loans. Additional efforts were struck down in 2012 and stripped from disaster relief package bills in 2013, making the passing of this provision a major victory for Landrieu.

The two most recent cancellations puts the total amount of forgiven loans at $228 million for Southeast Louisiana alone. Landrieu said in a statement that the St. Bernard and St. Tammany Parish loan cancellations “join a long list of Louisiana disaster loans that have been forgiven in recent months.”

“After more than eight years of persistence and with the support of local leaders in St. Tammany and St. Bernard, we changed the law to create a commonsense formula that rightly canceled over $33 million in loans…” Landrieu said in a statement. The statement continued to say, “These parishes can now invest in providing our children with an excellent education and residents with high-quality health care.”

While the most recent loan cancellations suggest additional cancellations to come, many Louisiana residents are skeptical of what will happen next and if the new guidelines and provisions are truly more fair. Says Orleans Parish resident J. Alfred Potter, “While it’s nice that St. Tammany and St. Bernard had loans forgiven, the question becomes why them? Why not Orleans and Jefferson?”

This article originally published in the February 24, 2014 print edition of The Louisiana Weekly newspaper.