Jefferson Parish officials anticipate FEMA loan forgiveness

Jefferson Parish officials continued to celebrate on Wednesday the news that a $55 million debt that had been looming over the parish’s finances for years could soon disappear.

Congress approved a bill earlier this month that changed the formula for how FEMA determines whether community disaster loans can be forgiven, and the news has been heralded by local officials as a boon for the region. In particular, it meant that Jefferson Parish might not be on the hook for the $55 million loan it received after Hurricane Katrina, and the Jefferson Parish Sheriff’s Office could qualify for forgiveness of a $6 million loan.

On Wednesday, U.S. Rep. Steve Scalise, R-Metairie, discussed the new rules with the Jefferson Parish Council, calling the bill’s passage the result of great “teamwork” by Louisiana’s congressional delegation. Louisiana officials like Sen. Mary Landrieu, D-La., have been pushing for loan forgiveness for years, noting that during previous disasters, communities were never required to repay loans. Congress changed the rules for repayment after Hurricane Katrina as a condition for raising the total loans that could be awarded. Scalise said officials had come close to full forgiveness in the past but finally got over the hump this month.

“The good news is that we were able to get this done. There’s not a lot of good news that comes out of Congress,” Scalise said.

Councilman Elton Lagasse thanked Scalise and the entire delegation for its work but also asked about a time frame for when the parish might get the loan forgiven. He said that the loan has been a dark cloud over the parish’s finances, particularly since officials were originally worried they might have to pay it back by 2020.

“We appreciate you being here and telling us this good news,” Lagasse said.

Scalise said the exact time line hasn’t been finalized, but he doesn’t expect it to take long for FEMA to release the new rules. FEMA has already collected reams of financial data from local agencies, and it should be easy to apply that information to the new formula.

“A lot of this information is already readily available … They’ve been knowing this is coming,” Scalise said.

Prior to the change, FEMA determined whether areas could repay disaster loans based on their financial state for three years after the disaster. Although Jefferson Parish sustained widespread damage during Katrina, the parish experienced an economic boom after Katrina as customers from other areas flocked to Jefferson Parish to make purchases. However, that revenue dried up, and the parish has been in an economic decline since then.

Under the new formula, municipalities and parishes would only have to show deficits in any three-year period after the disaster, and revenue dedicated to specific public works projects wouldn’t need to be counted in determinations. In addition, FEMA will consider debt repayment as part of overall expenses.

Loan forgiveness was a huge part of Parish President John Young’s 2013 budget presentation, because his administration had to dip into a reserve set aside to repay the loan to meet a budget shortfall. Young reiterated Wednesday that the parish had always been promised that it would have its loans forgiven, although those promises were not initially honored.

Young noted that FEMA’s old formula for calculating revenue was always flawed, and the change was overdue. He particularly praised Landrieu for her work and called her the “quarterback” of the efforts.

“We feel that based on the new regulations that were passed that we have a chance if not to get full forgiveness to get most of our loans forgiven,” Young said.

Young said the parish might not learn about FEMA’s decision on its loan until spring 2015. He also said that even if the loan is mostly forgiven, it won’t create a big pot of money for the parish. Jefferson Parish also would have until 2035 to repay any loan.

“It is good news, but certainly the full story hasn’t been written,” Young said.

The change could also be good news for some of the parish’s municipalities such as Gretna and Harahan. Gretna owed FEMA $1.2 million from its loan, and officials there have been bracing for sharp budget cuts to repay the debt. Harahan owed FEMA $700,000, and Mayor Provino Mosca predicted huge cuts to the city’s budget if it had to repay that amount.