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Aug 19, 2010 9:43 PM by Alison Haynes

State wants more disaster loans forgiven by feds

BATON ROUGE, La. (AP) - One in five of the sheriffs, school
boards, parish councils and other storm-ravaged local government
agencies who borrowed federal funds after hurricanes Katrina and
Rita won't have to repay a dime of the loans.
Those 11 agencies - in New Orleans and surrounding St. Bernard
and Jefferson parishes - were deemed to be so financially
struggling after the 2005 storms that their federal disaster loans
were forgiven by FEMA. That includes the City of New Orleans, its
sheriff's office and its port.
Other towns, sheriffs and local agencies had part of their loans
wiped away.
The total debt "forgiven" by FEMA was $501 million of the $822
million borrowed in Louistina, according to data provided to the
State Bond Commission on Thursday.
But more than 40 fire districts, parish governments, towns and
municipal agencies owe the federal government $296 million - nine
agencies that had part of their loans forgiven and 32 agencies that
owe total repayment. Many are in areas devastated by the storms and
still trying to rebuild.
Local government offices denied outright by FEMA include the
school board, sheriff, tax assessor and police jury in Cameron
Parish, which was nearly wiped away by Rita, and the parish
government and sheriff's office in Plaquemines Parish, where
Katrina came ashore.
Gov. Bobby Jindal's chief financial adviser, Paul Rainwater,
said the state is haggling with federal officials about the loans,
arguing more of the borrowing shouldn't have to be repaid.
"We're going to push back," Rainwater told the commission.
Financially troubled local governments receivhe the community
disaster loans after Katrina and Rita to help cover the costs of
regular operations and services after the storms wiped out much of
the local tax bases and parish government income.
Congress agreed not to require loan repayment if agencies met
certain criteria involving operating deficits and revenue losses,
based on 75 pages of rules devised by FEMA. Local governments apply
to FEMA for the loan forgiveness and have to show deficits in their
operating budgets for three fiscal years following the storms.
Rainwater said state and local recovery officials disagree with
some of the ways FEMA calculated the revenue drops and are
gathering documents to plead their case, while also requesting that
the rules governing the repayment criteria be tweaked.
Whit Kling, director of the Bond Commission, said agencies can
appeal FEMA's decision about loan repayment. But he added, "It's
going to be difficult to overcome this determination."
The loans had a five-year repayment period, but included
provisions for getting extensions. According to the report given to
Bond Commission, only one entity has repaid its loan: the City of
Mandeville, which had borrowed $650,000.

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