[Senate Hearing 109-1099]
[From the U.S. Government Publishing Office]
S. Hrg. 109-1099
REVITALIZING THE ECONOMY OF
SOUTH LOUISIANA: EMPOWERING THE
REGION FOR RECOVERY AND GROWTH
=======================================================================
FIELD HEARING
before the
COMMITTEE ON COMMERCE,
SCIENCE, AND TRANSPORTATION
UNITED STATES SENATE
ONE HUNDRED NINTH CONGRESS
FIRST SESSION
__________
NOVEMBER 7, 2005
__________
Printed for the use of the Committee on Commerce, Science, and
Transportation
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SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
ONE HUNDRED NINTH CONGRESS
FIRST SESSION
TED STEVENS, Alaska, Chairman
JOHN McCAIN, Arizona DANIEL K. INOUYE, Hawaii, Co-
CONRAD BURNS, Montana Chairman
TRENT LOTT, Mississippi JOHN D. ROCKEFELLER IV, West
KAY BAILEY HUTCHISON, Texas Virginia
OLYMPIA J. SNOWE, Maine JOHN F. KERRY, Massachusetts
GORDON H. SMITH, Oregon BYRON L. DORGAN, North Dakota
JOHN ENSIGN, Nevada BARBARA BOXER, California
GEORGE ALLEN, Virginia BILL NELSON, Florida
JOHN E. SUNUNU, New Hampshire MARIA CANTWELL, Washington
JIM DeMINT, South Carolina FRANK R. LAUTENBERG, New Jersey
DAVID VITTER, Louisiana E. BENJAMIN NELSON, Nebraska
MARK PRYOR, Arkansas
Lisa J. Sutherland, Republican Staff Director
Christine Drager Kurth, Republican Deputy Staff Director
David Russell, Republican Chief Counsel
Margaret L. Cummisky, Democratic Staff Director and Chief Counsel
Samuel E. Whitehorn, Democratic Deputy Staff Director and General
Counsel
Lila Harper Helms, Democratic Policy Director
C O N T E N T S
----------
Page
Hearing held on November 7, 2005................................. 1
Statement of Senator Stevens..................................... 1
Statement of Senator Vitter...................................... 2
Witnesses
Coleman, Elaine, Commissioner, Downtown Development District..... 56
Prepared statement........................................... 58
Drennen, Mark C., President/CEO, Greater New Orleans,
Incorporated; on behalf of the Southeast Louisiana Business
Coalition...................................................... 24
Prepared statement........................................... 27
Falgout, Ted M., Port Director, Port Fourchon.................... 28
Prepared statement........................................... 29
Francis, Dr. Norman C., President, Xavier University; Chair,
Louisiana Recovery Authority................................... 12
Prepared statement........................................... 15
Guidry, David, President/CEO, Guico Machine Works Inc............ 60
Prepared statement........................................... 61
Kennedy, Hon. John, State Treasurer, Louisiana Department of the
Treasury....................................................... 5
LaGrange, Gary P., President/CEO, Port of New Orleans............ 30
Prepared statement........................................... 32
McDonald Jr., Alden J., President/Chairman, Liberty Bank and
Trust Company; Commissioner, Bring New Orleans Back............ 17
Prepared statement........................................... 19
Nagin, Hon. C. Ray, Mayor, City of New Orleans................... 48
Olivier, Michael J., Secretary, Louisiana Economic Development... 7
Prepared statement........................................... 9
Perry, J. Stephen, President/CEO, New Orleans Metropolitan
Convention and Visitors Bureau................................. 49
Prepared statement........................................... 52
Smith, Ewell, Executive Director, Louisiana Seafood Promotion and
Marketing Board................................................ 34
Prepared statement........................................... 37
Thomas, Hon. Craig, U.S. Senator from Wyoming.................... 4
Appendix
Letter, dated November 7, 2005, from a group of commercial
fishermen and dock dealers to the Senators, Congressmen, and
State Officials of Louisiana................................... 69
Morris, Julie, Council Chairman, Gulf of Mexico Fishery
Management Council, letter with attachment dated October 7,
2005........................................................... 70
REVITALIZING THE ECONOMY OF
SOUTH LOUISIANA: EMPOWERING THE
REGION FOR RECOVERY AND GROWTH
----------
MONDAY, NOVEMBER 7, 2005
U.S. Senate,
Committee on Commerce, Science, and Transportation,
New Orleans, LA.
The Committee met, pursuant to notice, at 9 a.m. in
Louisiana Supreme Court Chambers, Hon. Ted Stevens, Chairman of
the Committee, presiding.
OPENING STATEMENT OF HON. TED STEVENS,
U.S. SENATOR FROM ALASKA
The Chairman. Well, thank you very much. Let me thank, on
behalf of the Senate, the Chief Justice Calogero, for allowing
us to use this court room and for meeting with us this morning
and we are indebted to our colleague and good friend, David
Vitter, for the invitation to bring this committee down here to
really inspect the damages and to determine what needs to be
done for this area to recover. My thanks also to Senator Thomas
of Wyoming, and Senator Brownback is expected any time now.
Alaskans are not in a different situation. We have an
abundance of wildlife and fishing and energy production, just
as you do. We share, we literally have half the coastline in
the United States. If it was only 90 degrees cooler here it
would be as in my hometown today. As it happens you'd have to
throw in a few mountains to keep us around. But we do enjoy
being with you and have a chance to tour the area. The Lakeview
areas at Ninth Ward, the levee breach on the Inner Harbor
Canal.
We've viewed the devastation to homes and talked to
residents there about the challenge and uncertainties they face
and we've listened to dozens of people on their thoughts about
the actions that Congress should take to assist in the recovery
of this area.
Let me make one point very strongly, we're not here to tell
you what to do. We're here to conduct a hearing, which we have
called ``Empowering the Region for Recovery and Growth.'' We
want to learn from you what you feel is required to reestablish
a new and better New Orleans. We ask questions and if you
misinterpret them, that is your problem, not mine. The
newspaper did.
Just last week, I worked with Senators Vitter and Landrieu,
to include $1.2 billion for coastal disasters and hurricanes
affecting the States in this area in our budget reconciliation
bill. That was in addition to the $200 million we had already
earmarked from the Commerce Committee. This portion of the bill
was just an area affecting this committee, the Commerce
Committee. But I do think your delegation is working very hard.
They are making progress, there's a great deal to be done and
I'm confident that your region will thrive again.
We're here to hear from the witnesses. But first, let me
see if Senator Vitter has some remarks to make this morning.
STATEMENT OF HON. DAVID VITTER,
U.S. SENATOR FROM LOUISIANA
Senator Vitter. Thank you, very much, Mr. Chairman. I
really do want to thank you and Senator Thomas, Senator
Brownback, who will be with us later today, for recognizing the
importance of being here today and for giving up a good part of
your weekend to see firsthand, the devastation and the
remaining challenges caused by Hurricane Katrina.
As we saw yesterday, we've really moved beyond the
emergency response phase, to rebuilding and recovering and
that's what this hearing is about. The decisions we make now
are the most important that we will make in our lifetime, in
Louisiana, in terms of our future. And that's why I asked you
to bring this hearing here, today. So, we can all hear ideas
about how to empower our citizens and businesses, to once again
have the economic security and certainty we all desire, so,
that our economy can get back on track.
I would tell everyone here, there is no one more
appropriate or more useful to be here, than the Chairman. He is
the Chairman of the Commerce Committee, President Pro Tem of
the Senate, the most senior member of the majority party there
and also a very high ranking member of the Appropriations
Committee.
And of course, I deeply appreciate Senator Thomas being
here, as well.
Before we get started, I would like to give a brief update
on some of the actions we've already taken in Congress to move
Louisiana forward, as a prelude, to where we need to go from
here. First, we passed two emergency appropriation bills,
totaling over $62 billion in emergency relief and recovery
efforts for Hurricane Katrina.
Today, over 1.2 million households have applied for
individual assistance, and of course, all levels of government
in the devastated area are taking advantage of public
assistance.
Second, I've worked with the White House to have 100
percent of the costs of many disaster activities covered by the
Federal Government for an extended period of time, the most
extended period of time ever in history.
Third, we enacted a $6.1 billion Katrina tax relief
package, for virtually everyone affected by the storm, to give
them some immediate individual tax relief.
Fourth, we provided an additional $2 billion for the
National Flood Insurance Program to ensure the money is there
to pay out benefits under the current program.
Fifth, we passed $300 million in additional funds for food
and health benefits for those unable to afford those
necessities.
Sixth, students and those paying off student loans were
given significant Pell Grant relief. That was important, we
certainly need more relief for higher education in those
students.
Seventh, the President recently signed into law, my bill to
provide $1 billion in assistance to parish and local
governments to provide essential services. And as I committed
on the Senate floor during the debate of that bill, we're going
to work to ensure that these loans have the ability to be
forgiven, if circumstances require that.
The city of New Orleans for instance, had to lay off nearly
one-half of its workforce and there are vital services that our
parish and local governments must provide. So, we need to
continue to work on that CDL program and improve it.
Eighth, we work closely with the President to ensure that
100 percent of the cost of restoring our hurricane protection
system, to at least category three levels, to begin with. One
hundred percent of that will be paid entirely by the Federal
Government, which is unprecedented. This allows our state and
local governments to focus the hundreds of millions of dollars
that they would otherwise have to devote to their match, to
other important recovery priorities. And of course, this
category three protection is not enough. I'll be introducing a
new program to provide an even greater level of hurricane
protection, up to category 5, urging the Corps to form an
integrated program for the entire region.
Louisiana already receives more Corps of Engineers funds
than any other state, despite our small size. So, we need to
make sure these dollars and others are spent wisely, in terms
of a fully integrated plan, moving forward.
Ninth, as Senator Stevens mentioned, we just added $1.2
billion to the already $200 million that his Commerce Committee
included in the budget package, for help to coastal states
dealing with coastal restoration and related issues. And as we
heard in our Corps briefing this morning, that is directly
related to hurricane protection. Very, very important.
Tenth, in that same budget package passed through the
Senate last week, there was a significant Medicaid piece, that
will be very important, in terms of health care in Louisiana.
Eleventh, in that same budget package, there was a very
significant education piece, to fund the education of evacuee
children, who have gone out of the New Orleans area to public
and non-public school systems all over the state and even more
broadly, all over the country, particularly, in states like
Texas.
And twelfth, the Senate has also passed hundreds of
millions of dollars for housing assistance, education
reimbursement, funds for the SBA, economic development
administration and more.
So, that's a lot of what we have done. Now, clearly, we
must do more and we must march on from here with significant
further action. But to allow us to do more in Congress and
quite frankly, to build the consensus to allow us to do more,
we also need to see important progress and vision, here on the
ground in Louisiana and so many of our leaders who are
providing that guidance and vision are here today.
I really think the biggest challenge we face now, is
convincing those in Washington, that we have a smart bold plan
to rebuild in the right way and that we have the structure that
can pull that rebuilding off. And I think, communicating that
really involves two things. Number one, communicating that we
are open to new ideas and bold proposals and in every area of
the rebuilding. Whether it's hospitals or education or a new
and improved flood and hurricane protection system. And number
two, we also need to make sure we communicate that we are
coming together with a single common vision, being developed on
the ground in Louisiana.
I think, there is more work to be done in that regard and I
hope this hearing will help us pull together to do that. For
instance, we have the Governor's Commission, the Mayor's
Commission, numerous advisory boards at all levels. In
addition, there are a number of not-for-profit commissions and
many in the private sector who are holding forums and providing
ideas.
And just last week, the President announced a council to
assist the new Federal coordinator in overseeing Federal
operations here.
I'm afraid we may be using a model I saw in the U.S. House
of Representatives. There, we had so many committees, that we
established a committee on committees. I'm not sure that's the
model we want to follow on the ground in Louisiana and so, I
think, a big part of our work now, is to pull all of this very
important work and thinking together, to develop a truly common
vision, to move forward.
I hope that the President's recent appointment of a single
Federal coordinator, Don Powell, will help us do that. In my
hour and a half meeting with him, last week, I urged him to be
a catalyst, to help bring everyone together on the ground, with
that single unifying bold vision for rebuilding and
reconstruction.
So, Mr. Chairman, that's my hope and certainly, the
witnesses you're going to hear from today, are a big part of
developing that bold common, unifying vision. I thank you
again, for allowing them to testify.
The Chairman. Thank you very much.
Senator Thomas, do you have comments to make?
STATEMENT OF HON. CRAIG THOMAS,
U.S. SENATOR FROM WYOMING
Senator Thomas. Thank you, Mr. Chairman. Very briefly, I
appreciate being part of this Senatorial visiting group. It's
amazing to see, actually be on scene and the difference between
what you hear in the news, of course and so on. But it's really
been interesting and what a devastating thing it's been.
I'm really pleased with the hospitality we've had and
certainly, everyone has gone out of their way to show us what
we need to see, and more importantly perhaps, talk about their
plans and their ideas of what we can do about it. Everyone has
great sympathy for the people of New Orleans, of course and of
the Gulf area and we want to do whatever we can. I'm just
hopeful that what we do and our plans can be based on the long
term needs. That we simply don't get ourselves back in the same
position we were in before, that rather, we have changes that
will be important, in terms of avoiding the things that have
happened here. I too, hope that we can have a balance between
the role of the Federal Government, the state government, the
local governments. This is not totally a function of the
Federal Government, as you know, and so, we need to work out
that.
So, thank you very much for the opportunity to be here, Mr.
Chairman. I look forward to hearing the participants.
The Chairman. Well, thank you. We're going to have a series
of witnesses now. Three different panels. I would ask the
witnesses to limit their comments to, not more than 8 minutes,
so we can listen to everyone and still make the helicopter tour
we're going to take following this and we each might have a
question or two. We're going to want to listen to all of the
witnesses who have come to testify.
Our first panelist is the Honorable John Kennedy, the State
Treasurer for Louisiana; Secretary Michael Olivier, the
Secretary of the Louisiana Department of Economic Development;
Dr. Nolan Francis, President of Xavier University and also
Commissioner of Louisiana Recovery Authority; and Walter
McDonald, President of Liberty Bank and Trust, also,
Commissioner of Bring New Orleans Back.
We'll first listen to Treasurer John Kennedy and each of
the witnesses in order and then ask questions after everyone
has had an opportunity to speak. So, Mr. Kennedy?
STATEMENT OF HON. JOHN KENNEDY, STATE TREASURER, LOUISIANA
DEPARTMENT OF THE TREASURY
Mr. Kennedy. Thank you, Mr. Chairman, members of the
Committee and particularly our own U.S. Senator, Senator
Vitter. I want to thank you for the opportunity to talk with
you this morning. I want to thank you for your presence here
today. I want to thank you for your past help.
I had prepared, as you can see, a few remarks regarding
infrastructure, regarding the levee system, regarding the Small
Business Association. But I think in light of Senator Vitter's
very eloquent and relevant remarks, I'm going to put my
prepared remarks aside just for a moment and talk to you about
what Louisiana is prepared to do to help itself.
Let me talk about our budget first. We all know that
Louisiana has experienced two natural disasters of epic
proportions. It has had a dramatic impact on the tax base of
our state. Both at the local government level, particularly at
the local government level, but also, at the state level.
Louisiana, if you add up all of our income, our salaries, our
dividends, our interest every year, we have about $125 billion
in state personal income. Which, in my judgment, is the best
indicator of economic activity.
In the area impacted by Katrina and the area impacted by
Rita, between a third and forty percent of that area
contributes this income. That's a $125 billion income. Roughly,
$40-$45 billion of income is contributed to our $125 billion in
gross state product. That will have an impact on our budget.
Our budget is $19 billion. We are estimating an impact of
between $1 and $2 billion, in terms of lost tax base. But I
want to emphasize to you, that the impact will be bigger.
Because, in addition to addressing a budget deficit of
between--let's call it $1.5 billion, the State of Louisiana is
prepared and indeed, must find additional fundings to help our
local governments pay their bonded indebtedness, to help our
local governments, particularly in Orleans and Saint Bernard
and Cameron parishes, which have no tax base, and pay their
operating expenses and Louisiana needs to find additional
monies in its budget to help our businesses with bridge
capital.
Let me tell you how I hope we will proceed to do that. Our
Legislature convened last night for a long overdue special
session. I am hopeful that our Legislature will begin by
looking at our budget. Not by making a 5 percent or a 10
percent cut, but by looking at our budget line by line, item by
item, project by project. And the question that we have to ask
ourselves, is that after these storms of epic proportions,
given the demands on state government, financial and otherwise,
what are the core functions of government that Louisiana is
prepared to fund and that the Louisiana citizens actually need
at this point? That has got to be our starting point.
We know we have to make structural changes in our budget
and I hope and believe that our Legislature and our Governor
are prepared to do that and I think they are and will. After we
have made the necessary adjustments to our budget, we need to
look at the other arsenals in the state's tools of economic
possibilities. We need to look at advance refunding some of our
State debt. Authority, that I believe, will be given to us by
the U.S. Congress, that allows us to basically do what you do
when you restructure the mortgage on your home. If you go from
a 15-year mortgage on your home to a 30-year mortgage on your
home, you lower your interest, principal and interest payments,
your monthly payments, which freeze up cashflow.
We need to look advance refunding our tobacco settlement
debt. We need to look at accessing our rainy day trust fund. We
need to look at securitizing the additional 40 percent of our
tobacco settlement income streams. We do not need to look at
raising taxes. Let me say that again. We do not need to look at
raising taxes. Our people have suffered enough.
If we do the things that I have mentioned, look at our
budget line by line, item by item, project by project, and I
believe our Legislature is prepared to do that and make the
necessary adjustments, a small or more efficient state
government. And then, we are willing to look and I think we
are, at the other tools in our economic arsenal. Advance
refunding of our debt, restructuring it. Our tobacco settlement
revenue possibilities, the purpose of which, will be, to
provide a pool of money, from which, local governments can
borrow to pay their bonded indebtedness, from which, local
governments can borrow to pay their operating expenses; and
from which, our businesses, our small businesses, can borrow
for bridge capital. Many of which, quite frankly and I say this
respectfully, can't get an answer from the Small Business
Administration. Thus, the State of Louisiana needs to step in
and help them.
I think, if we do that, the changes will be dramatic, in
terms of Louisiana State Government. But the changes will be
equally dramatic in terms of the help that we will provide to
ourselves and to our people. After we do that, and I believe
that our Legislature will do that, we respectfully ask you for
your continued help. We thank you for your past help. But even
with the dramatic measures that I have talked about, we cannot
do it alone. We need your continued support.
A person, much smarter than I am, once said that
perseverance is not a long race. It's a series of small races,
run one after the other.
Thank you for being here with us today. We hope you'll join
with us in running the race to rebuild Louisiana.
STATEMENT OF MICHAEL J. OLIVIER, SECRETARY,
LOUISIANA ECONOMIC DEVELOPMENT
Mr. Olivier. Mr. Chairman and members of the Committee,
thank you for this opportunity. Thank you very much for
visiting our state. My name is Michael Olivier, I'm the
Secretary of Economic Development for the State of Louisiana.
Prior to Katrina and Rita, these storms that we've
suffered, the main mission of my organization was to recruit
new diversified businesses to our state to create quality jobs.
And, more importantly, the retention of existing business and
industry, because you have to keep what you've got and that's
where we are now, trying to keep what we've got.
Of course, our mission is still the same. New business
recruitment, existing business and industry retention, but it's
different. We've expanded because our role to respond to the
needs of these impacted businesses require a different
approach.
Much of what we are going to be talking about today, is
dealing with the impacted areas. We consider that there are 13
parishes that are more dramatically impacted than the other 36
or 37 that have been designated as impacted. Of course, they
have a significant amount of impact all across the South
Louisiana area, the Gulf of Mexico region. But more
specifically, the most impacted parishes represent some 80,850
businesses that have been in some state of cessation. This
represents 90 percent of those of being small business and
also, represents 41 percent of the entire business community in
the State of Louisiana. We have about 197,400 businesses in our
state. This 80,000, almost 81,000 represents 41 percent of all
the businesses in our state.
Three of our largest industries, oil and gas, and the
petro-chem area, transportation and shipping, and agricultural
commodities and timber, have been severely impacted, among
others. In the oil and gas and petrochemical area, three major
refineries are out-of-service through the New Year.
Only now are we seeing, as our refineries come back online,
our gasoline prices coming back to pre-Katrina rates. This is
10 weeks later. It's interesting that some people would wonder,
what is the impact of Louisiana and the Gulf of Mexico region
and these states that have been impacted by these storms, on
the national economy. I submit, this is one such impact.
On the offshore oil and gas area, our pipelines are
returning to operation. However, only 32 percent of daily oil
production is back online, 45 percent of natural gas production
is back and 27 percent of manned platforms remain evacuated. A
lot of people do not realize that there are 40,000 miles of
pipelines in and offshore Louisiana.
In our ports and shipping and transportation segment, two
of our deepwater ports suffered extensive damage and are not
operating. Those are Plaquemines and St. Bernard, which, I
know, you visited those areas. We don't know when, if ever,
these ports will open. Later, you're going to hear more in
detail about our other two ports that have been impacted in the
immediate area from Gary LaGrange and Ted Falgout. In the
agricultural area, this is truly a disturbing area, because,
the total agricultural damage from both of the storms is over
$1.6 billion. Timber, is where we suffered some of the greatest
losses. Our combined timber losses, from both hurricanes, was
$850 million.
In Katrina alone, in three parishes, we call them parishes
here, you call them counties, in three on the North Shore, we
lost 3 billion feet of timber, equating to two times the annual
harvest.
For the houses that we've lost, we've lost some 205,000
homes that have been destroyed and another 45,000 that have
been severely damaged. It will take 5 billion board feet of
timber to reconstruct these houses. So, you can see, just
comparing that, the magnitude.
Now, since this committee's topic is revitalization, I'll
tell you something about the view of what can revitalize
Louisiana. Right now, it's access to capital. In our
businesses, if our businesses can have access to capital, we
can rebuild not only the individual businesses, but the entire
economy. If lack of access to capital continues, we're going to
have difficulties and we will be facing the largest default
rate since the Great Depression. Insolvency is going to be
ramped.
We ask that you help us with four critical recovery
priorities, to provide immediate access to capital. Those are
one, allocate $200 million from bridge loans to continue the
Louisiana Bridge Loan program. Because of the need for cash
infusion to our small businesses, especially, on October 17,
Governor Blanco allowed for us to use a reallocated $10 million
fund, that's a use for deal closing, for a Bridge Loan Program.
This is patterned after what was done in Florida and patterned
after what Congress provided Manhattan in the Economic Recovery
Act of 2002. This is intended for helping businesses meet the
immediate needs. It was only $25,000 per business, up to
$25,000 per business. Doing the math, out of 81,000 businesses,
we could only help 4,000 businesses. In 10 business days, we've
loaned all the money out.
We were hoping to be able to demonstrate to Congress, that
we could manage such a fund. That we knew, that you gave these
kinds of funds to New York State, lower Manhattan and it was
managed in such a way in Florida, that over 80 percent of these
funds, short term 180 day, no interest loan funds, were paid
back. 80 percent were paid back.
We're out of funds now. So, we're hopeful that Congress
will, before the holiday session ends, we will be able to get
some funding, just as you gave to New York State.
Number two, direct the Small Business Administration to
expedite loan processing. So far, we have received--the SBA
from this area, have gotten over 136,000 loan applications. Of
these, they had approved only 2,294 for $157 million. They've
maintained over 90 percent rejection rate.
Of the 157 million approved, only $1.5 million in business
loans has been fully disbursed. Less than 1 percent has been
disbursed. So, in other words, our business community is not
getting access to capital. And this, I submit, is not
acceptable.
The Chairman. Which type of money is that?
Mr. Olivier. That's Small Business Administration Disaster
Loan Program.
Priority number three for us, is provide $10 million for
business grants that parallel those provided to the lower
Manhattan businesses after 9/11. Like the 9/11 recovery grants
for Manhattan, this request is provided for programs that need
immediate relief. We have a great deal who are in our fishing
industry who need relief. They probably won't be able to
qualify for loans, we'll have to give them grants to get that
industry sector cranked back up.
Priority number four, $30 billion in tax exempt private
activity bonds. Again, the same thing that would turn Liberty
Bonds after 9/11, in the Economic Recovery Act of 2002, you
gave them $8 billion for that 16-acre area to be rebuilt. Just
after Katrina, we have 960 square miles, we submit that we
could use and this is allowing for businesses to get to
business by encouraging, not only redevelopment But new
development and enhancement of new industry to come to the Gulf
Coast region and we need the language. The language needs to be
broadened. That would allow for the construction and
reconstruction of rehabilitation of commercial property. Not
only manufacturing property, refineries, ethanol refineries,
residential property and residential rental property.
Because in the New Orleans region alone, 60 percent of the
people rented their homes or apartments.
In addition to the capital request, we need for you to know
that we're currently working to address our business needs,
based on our capacity to address that. We started a campaign,
which we call LED Forward, Louisiana Economic Development
Forward, and we have moved forward on that, providing access to
businesses.
And the last thing I want to say to you, as our time is
expiring, is that we're focused on getting Louisiana back to
business. And we are doing a lot of things as our treasurer has
outlined. And our people are very resilient, absolutely very
resilient. And the help that you can provide, along with the
help that we are providing to our businesses, will help give a
lifeline for the businesses to survive, thrive, and later,
prosper.
And I can say this about the people of this area, they are
very resilient. You'll see that and as you'll know, we've
demonstrated that resilience in many, many years. In fact,
we've been pulling for the Saints for 35 years, that's
resilience.
Thank you.
[Laughter.]
[The prepared statement of Mr. Olivier follows:]
Prepared Statement of Michael J. Olivier, Secretary,
Louisiana Economic Development
Mr. Chairman and distinguished members of the Committee, thank you
for the invitation to speak at this hearing. My name is Michael Olivier
and I serve as the Secretary of Louisiana Economic Development, or as
we call it, L.E.D.
Prior to Katrina and Rita, LED's primary mission was recruitment of
new businesses to Louisiana, as well as retention and expansion of
existing Louisiana-based operations. In spite of the hurricanes, this
is still our mission. However, we have expanded our role to respond to
the needs of impacted businesses.
LED is working to build a New Louisiana--a place where businesses
can thrive and citizens willing to work can find quality jobs.
This is no easy task.
First, let me put the impact of both storms in perspective from a
business standpoint. Many of the parishes in the Katrina and Rita
impact zone are so dramatically affected they require substantial,
sustained investment by Federal, State and local Governments and the
private sector. In the 13 parishes most dramatically impacted by
Katrina and Rita, before the storms there were 80,850 businesses. By
comparison, the entire state economy had 197,446 registered businesses.
Although only 13 of 64 parishes were severely impacted, they
represent 41 percent of the state's total businesses--90 percent of
which are small businesses.
Let me also describe the damage to three of our largest industries
- oil and gas/petrochemical, transportation and shipping and
agribusiness which includes agricultural commodities and manufacturing
and timber.
In oil and gas/petrochemical, in the Katrina impacted area, three
major facilities--Murphy Oil in Meraux, ConocoPhillips in Belle Chasse
and ExxonMobil in Chalmette will remain out of service through the end
of the year. In the Rita impacted area, the three Lake Charles
facilities, Citgo, ConocoPhillips and Calcasieu Refining, are expected
to be at full operation by mid-November--three months after Rita hit.
On- and off-shore pipelines are reporting a return to operation
following shut-downs from Katrina, Rita and Wilma. As of October 28,
MMS reports:
Only 32 percent of daily oil production is back online
Only 45 percent of natural gas production is back online
27 percent (224 of 819) manned platforms remain evacuated
Ports, shipping and transportation is the lifeblood of this state.
Louisiana's shipping activities are increasing:
21 inland and shallow-water river ports remain fully
operational
Eleven of twelve grain transit facilities are fully
functional
The Louisiana Offshore Oil Port (LOOP) is unloading
supertankers at 70 percent capacity
However, our deepwater ports are a different story. Two suffered
extensive damage and are not operating, Plaquemines and St. Bernard. We
don't know when, if ever, either of these ports will reopen. The Port
of New Orleans is partially operational, but it will be another six
months before fully operational. The infrastructure (roads, rail)
leading to the terminals are 90 percent operational. You will hear from
Gary LaGrange later, so I'll let him describe the port's condition in
more detail. The Port of South Louisiana, which is the Nation's largest
port by tonnage and essential to the Nation's agriculture exports, is
100 percent operational. The Port of Lake Charles remained open during
and after Katrina, however it sustained damages from Rita. It is again
operational, but will require some reconstruction. The Port of Baton
Rouge was the only Louisiana port to remain open through all of the
storms and has been taking diverted cargo.
However, by saying fully operational, does not mean that ports are
fully functional. The combined damage to our ports is in the billions
of dollars. To bring them back to the level of operation that the
Nation relies on will require substantial investment from the Federal
Government.
Agriculture is where we've seen some of the greatest damage to
business interests. In the area of commodities, according to estimates
by the LSU AgCenter, Katrina's total agriculture products damages are
approximately $1 billion, while Rita's are $569 million. For many
commodities, the economic impact could potentially grow as delays in
re-establishing infrastructure exist.
While crop damage was significant on the manufacturing side,
agribusiness manufacturing and processing is coming back online. Sugar
and rice mills are all fully operational. Our pulp and paper mills are
at 50 percent capacity. Food processing, which is mainly New Orleans-
based, is 50 percent online. Most processors have December start-up
targets because of mechanical/electrical issues from water damage.
Timber is where we suffered some of the greatest losses. Louisiana
is a major timber supplier and manufacturer of wood products. The
combined timber loss sustained by both hurricanes is estimated to be
approximately $850 million. Katrina alone has total estimated losses of
$612 million. In that storm alone, we lost over 3 billion feet of
timber equating two times annual harvest amount.
We estimate in Louisiana alone that there were 250,000 homes
impacted by Katrina--meaning either totally lost or substantially
damaged. To rebuild and repair these homes will require five billion
board feet of lumber and three billion square feet of panel products.
Rita's top commodity loss was timber at over $227 million in projected
losses.
Since this committee's topic is revitalization, let me tell you my
view of the one thing we need to revitalize the economy--access to
capital.
If our businesses can have access to capital, we can rebuild not
only the individual businesses, but the economy as a whole.
If the lack of access to capital continues, we are facing the
largest default rate for private and public entities--including local
governments--since the Depression.
LED is currently working to address our businesses needs in the
ways we have capacity by:
1. Connecting affected businesses with information and
resources
2. Securing financial assistance for business recovery
Area 1: Connecting Affected Businesses With Information and Resources
We started a campaign called ``LEDforward.'' Our goals were to
register and assist impacted businesses, connect businesses with
immediately available resources and facilitate on-going dialogue with
business owners about recovery process. Elements of the campaign
include a dedicated website, LEDforward.louisiana.gov, and a toll free
call center--866-310-7617.
Both provide access to LED personnel. At the toll-free number,
callers make specific requests that are not addressed online. LED staff
can track emerging and unmet needs, create business database for
follow-up on emerging assistance and counsel business people about
program opportunities.
We have established business counseling centers across Rita and
Katrina zones. The business counseling centers are funded through a $4
million EDA grant. They are staffed by Federal and state government
representatives, local economic development professionals and private
volunteer consultants. Businesses do not receive general information,
they receive specific program information that applies to their
business and long-term business planning assistance.
This is a prime example of the types of programs that LED will
continue to initiate. We act as catalyst and lend expertise. We partner
with local economic allies to deliver locally appropriate information.
We recognize and appreciate all economic development is local.
We have also expanded accesslouisiana.com, a web portal that
enables businesses to: post capabilities for sub-contracting
opportunities, search sub-contractors, and retrieve or post commercial
property opportunities. LED utilizes this database to find qualified
Louisiana-based businesses for the recovery work.
This points to one of the biggest gaps in FEMA services. There must
be opportunities to facilitate local work for Louisiana businesses and
their workforce.
Since the beginning of the reconstruction phase, LED staff have
been working at FEMA's center in Baton Rouge to provide qualified sub-
contractors to prime contractors. As of October 20 (the last period we
could get figures for), FEMA contracts had been awarded to Louisiana
companies 25 percent of the time, but this only represented 4 percent
of the actual dollars or $156 million of $3.7 billion awarded.
Also as of that report, all other Federal agencies had awarded
Louisiana companies 28 percent of the time, but only 18 percent of the
dollars or $123 million of $675 million.
We need your help to improve these numbers.
Finally, LED has played an important role in returning businesses
and their employees to work. Through November 3, LED coordinated
delivery of 3,477 mobile housing units purchased by FEMA for displaced
workers at/near their worksite. After a brief suspension of the program
by FEMA, LED has resumed deploying units on an ongoing basis. The
program initially worked in heavy industry sectors, but now supports
small businesses and ``mom and pop shops.''
Area 2: Facilitating Small Business Aid
Under Governor Blanco's direction, we have forwarded a
comprehensive aid request for the impacted region both on the state and
Federal level, as well as with private capital providers. We implore
you to help us with four critical recovery priorities, we have to
provide immediate access to capital for business recovery.
Priority 1: Allocate $200 Million for Bridge Loans to Continue Existing
Louisiana Bridge Loan Program
Because of the desperate need for cash infusion, Louisiana
reallocated its $10 million Rapid Response Fund--a fund set aside for
business recruitment--to seed this program. This program provides
$5,000 to $25,000 loans for up to 180 days at zero interest to
businesses with more than two, but less than 100 employees. We work in
partnership with 17 regional banks and the Louisiana Public Facilities
Authority, under the trusteeship of JP Morgan, to administer the
program.
We allocated the $10 million seed proportionally by region. By the
end of the first week, there were no funds left for the Rita area.
Within the first two weeks of operation, the fund lent $8.8 million to
467 businesses. We conservatively estimate a need for 8,000 more of
these bridge loans.
Priority 2: Direct the Small Business Administration (SBA) to Expedite
Loan Processing
Through November 3, SBA has received 136,086 loan applications. Of
these, they had approved only 2,294 for $157 million. They had rejected
11,703.
They have maintained almost a 90 percent rejection rate.
Of the 2,294 approved, only 282 for $19.8 million were either for
businesses or economic injury. The others were home loans.
Most disturbing, of the $157 million approved, only $1,518,000 are
fully disbursed. We have no report from SBA whether any of the
disbursements made to-date were to businesses.
This is not acceptable.
Priority 3: Provide $10 Billion for Business Grants That Parallel Those
Provided to Lower-Manhattan Businesses After 9/11
Like the 9/11 recovery grants for Manhattan, this request is for
programs to provide much needed relief and enable recovery.
9/11 programs included small business recovery grants (similar to
business interruption insurance), large business retention grants,
technical assistance programs and worker training programs.
Like the 9/11 program, initiatives would be designed with business
input with targeted growth/recovery goals.
Priority 4: Authorize $30 Billion for Tax Exempt-Private Activity
``Hurricane Recovery Bonds''
These bonds would be used to finance construction, reconstruction
and rehabilitation of nonresidential (commercial) property, residential
property and residential rental property.
In conclusion, we want for you to understand that LED and the
Blanco Administration is focused on ``Getting Louisiana Back to
Business''--taking steps toward building a better and stronger economy.
The greatest key to our businesses succeeding is access to capital. We
need your help to continue to find grants, loans and other
opportunities that will give all of our businesses the lifeline they
need to survive, thrive and prosper.
STATEMENT OF DR. NORMAN C. FRANCIS, PRESIDENT, XAVIER
UNIVERSITY; CHAIR, LOUISIANA RECOVERY AUTHORITY
Dr. Francis. Good morning and thank you, Mr. Chairman and
Mr. Thomas and Senator Vitter for being here. There's nothing
like coming and seeing things for yourselves. The press and the
pictures don't tell the whole story and we're most appreciative
that you are here.
I guess, I wear so many hats and I'm not too sure to which
one I should be talking from. But let me start with the first
one that I've just assumed--chairing the Louisiana Recovery
Authority. Senator Vitter, you just covered almost all the
major parties that we chose in our first meeting, and there are
a number of others that we will be addressing.
The authority, Mr. Chairman, is intending to try to pull
together and coordinate all of the various activities that will
help us recover in Louisiana, from coast-to-coast. This is not
an easy job. We just had our first meeting, maybe came in a
little late. But when you get hit with a hammer, as we did,
before you get all the shock, you realize that you've got to
start pulling things together and the one point I want to make
is, that we are working together now, and we intend to continue
to work together--and to work together with parish officials
and city mayors and the like. To look at, what are the major
areas of their concern, how can we pull this together and how
can we bring the State's assistance, in a way that we speak at,
Senator Vitter's saying, with one voice, so there's no
confusion.
I must say that there has been some confusion about what is
in fact, our efforts and the like. I think, that should be
considered, be behind us and we want that message to go through
the Congress, as well. In particular, we chose the parties that
everybody is talking about. And the first one, Senator Vitter
covered, was coastal restoration and levees. Levees, levees,
levees. We aren't going to get any money back, getting money to
build, unless, we give that comfort level, that we have handled
the levee system and that's going to take a while. But we know
that we have to get the Category 5 and we are supporting that,
in total.
The same thing is true helping small and large companies
and businesses and the Governor last night, talked about how
the State will react to that in providing incentives and the
like.
We, also, are going to ask the Congress to make amendments
to the Stafford Act, to provide, what we call appropriate
support for state and local governments. I should say in my
second half, that I'll talk to a minute, we certainly are very
much into--in change of the Stafford Act, because apparently,
some 5 years ago, the Congress took out nonprofit institutions
and limited us to only the first two categories in the Act and
if we had to get help, we had to go to SBA and then get turned
down, then, go back to FEMA. We think that's unwise, we think
it's somewhat unfair. So, we're going to ask that the Stafford
Act be looked at again.
Senator Vitter also covered some of the other parties that
we have. Health care. The Medicare problems that we are going
to face, and of course, we need to build our infrastructure and
transportation. So, in covering this part of my role as the
authority, I want the Congress to know, that we have a number
of great people, now, about 24 people from around the State, in
task forces, at least eight task forces, dealing with those,
what we call quality of life issues that have been damaged and
we have to recover. And not just recover, enhance in Louisiana.
And one of the big ones, of course, is education. And the
Governor now has the authority to take over the failing schools
in New Orleans.
Hopefully, in the response, that will come and with expert
advice we will get from around the country. We're not seeking
to do all of this ourselves. We have to bring people in, who
have had the opportunity to face what we have faced and to
rebuild in these various areas. So, we bring in that, the
experts. Thursday and Friday and Saturday, we are bringing a
conference where architects are going to come and talk about,
how do you start from scratch and make this a better place. Not
just recover, enhance. And so, we'll be meeting about that.
The second half of what I would like to comment on, because
it hasn't gotten as much attention, although Senator Vitter,
I'm much pleased about the financial aid for students that will
be coming forth--higher education. One of the jewels in
Louisiana and this city, had been higher education. In this
city alone, we have nine institutes of higher education and two
centers for health care. I would suspect estimate it to be
about $3 billion annually to this city, for what we employ and
what we do from economic development in this city. And as we
look to the future, sure that we have short-term concerns But
we need to do the long-term. And the long-term, it's education
from K-12 to higher education and higher education has to be,
not only stabilized, it has to be enhanced, so that we can in
fact, go the long ways. Mr. Thomas mentioned this, and I think
that's critical for us.
Now, I come here this morning as someone who has been in
higher education for a long time. Mr. Chairman, I have been a
president of a university for 38 years, Xavier University. I'm
here as a displaced person. I'm here as a President of a
university that was totally flooded and we expect to be back at
business on January 17. Are we going to make it? I'm not sure.
But I think we will and are going to make it because, it is
important that we continue to serve this state and this region.
We were founded to serve and develop leadership in the African-
American community. Our institution is totally diverse, totally
integrated. But we have a distinction and I speak now, as a one
part of the higher education system, but I speak because, it is
important for, I think, the Nation, the Congress to understand,
that we can't afford not to have quality education. From this
small school that I happen to have the privilege of serving, we
produce the largest number, number one producer of African-
Americans who are admitted to medical school and graduate from
medical school.
In the science area, we're the number one producer of
African-Americans who major in the biological and the physical
sciences. We're the number one producer of African-Americans
who get doctor pharmacy degrees. We're the only College of
Pharmacy in New Orleans. We are high in not only science, but
in the health care side. And we are doing so in a population
that has and needs more professionals, in a Nation that needs
the care and counsel that we bring to the table.
But we're here, asking for an investment in continuing what
is important to the common good and general welfare of this
country, not simply this region. But we're committed to this
region and the question is always asked, what are you doing for
yourself in this devastation? Well, I had the tough decision of
laying off one-third of a faculty, fifty percent of the staff,
cutting off athletics for the coming year, in order that we
might be able to start back, trim and tight, and then we would
be able to maintain our record of contributions.
But more importantly about this, you know, in disasters, as
you have seen, I have seen in the Lower Nine and St. Bernard
Parish, unfortunate disasters impacting the people who could
least afford to be hit. Not that anybody should be hit, but I'm
in an institution where I have a $97 million budget and a $50
million endowment and 75 percent of that endowment is
restricted. So, I have little cash-flow.
In the semester before Katrina, we had the largest
enrollment in our history, in August 2005. Today, our
institution has students and faculty scattered all over the
place and we are rebuilding, trying to get back.
What are we asking for from the Congress? Support and
assistance and that is to help us maintain the faculty,
maintain our structure. And we hope, that you will understand
and help us, in that regard.
Thank you for being here.
[The prepared statement of Dr. Francis follows:]
Prepared Statement of Norman C. Francis, President, Xavier University;
Chair, Louisiana Recovery Authority
Mr. Chairman, Co-Chairman Inouye; distinguished members of this
committee, and my Senators, the Honorable Mary Landrieu and Senator and
committee member David Vitter:
I thank you for the opportunity to appear before you this morning!
I am here as a hurricane displaced person, no home to return to for
months; a president of 38 years of a university severely damaged by
wind and flooding, and chair of the Louisiana Recovery Authority, an
individual like thousand of others who are working under unimaginable
circumstances to rebuild our state and cities.
In the precious minutes available before you, I will limit most of
the broad concerns of the disaster recovery in this region--and these
are real and daunting--but with your indulgence, I want to
personalize--to put a face on our struggle. Yes, there are the
frustrations. However, our commitment to rebuild is firm and
unwavering.
Economic Development
Louisiana and New Orleans, in particular, are witnessing the
greatest challenges ever faced in the history of this Nation by a
region. The devastation has impacted virtually every aspect of the
quality of life measures for people, all of which adversities reduced
resources and added enormous expenses to the public fisc. Louisiana's
Governor Kathleen Blanco cut $315 million last night from her budget.
The ultimate total will be $1 billion. To meet one of these challenges,
to recover financially, we must continue to enhance our total
educational system. To the state's credit, higher education has been
one of this state's jewels, and a major economic provider, represented
in New Orleans, alone by fourteen (14) institutions, including two
Health Sciences Centers. All of these entities have been impacted by
this large natural disaster in some way shape or form. And as it
happens far too often in disasters, those least able to afford the
impacts, are the ones which were hit the hardest. Three of the
institutions including my own were totally flooded.
What has happened to all of us is a horrific nightmare, but one
very real. Let me now personalize this presentation as one example of
what is being currently experienced by individuals and institutions in
this state.
Pre-Katrina
Post-secondary education was the largest employer in New Orleans--
$3 billion annually to the city--and largest intellectual importer
providing the bulk of health care and the scientific professionals.
Statewide we enrolled 244,608 students and today 83,821 are
displaced (34 percent); with 15,163 displaced faculty.
Xavier is an 80-year-old private, Catholic, historically Black
institution, relatively small--4,000 students--serving a student body,
85 percent of whom require financial assistance for a tuition that is
1/3 less than the average cost of private institutions, nationally.
Xavier is first in this Nation, however, graduating African-Americans:
Who major in the natural and physical sciences (62 percent
of our enrollment major in the sciences)--1,100 biology majors;
Number 1 for African-Americans who are admitted to medical
schools in the U.S., and the producer of 25 percent of African-
American pharmacists in this country;
Xavier is the only College of Pharmacy in this city and
southern region of the state.
Like other higher education institutions, we are critically
important to the city, state and Nation's scientific and health care
industry; and our resources are limited.
We have virtually no endowment, $50 million, for an annual $97
million budget. Yet we have had no deficits in 40+ years. Like most
Americans, we are prudent financially and fiscally responsible.
Disasters exacerbate our financial challenges.
When we opened in August 17, 2005, we had our largest student
enrollment ever.
On August 29, Katrina closed our institution; students, faculty and
staff scattered to the four corners of this nation; our campus was
flooded by 7 feet, wherein every building was impacted in some way; we
lost virtually all income on a budget projected for the first semester
and we are faced now with reconstructing and remediating physical
structures and equipping laboratories, which, in the past 10 years, we
had invested $100+ million to serve this high achieving student body.
In the past 9 weeks, like thousands of citizens and businesses, we
have been seeking resources to rebuild and thus far, in this transition
period, the only support we have received has come from several
concerned foundations and modest contributions from alumni and
individuals, like the old lady in Salt Lake City who sent me $25 after
my interview on NPR.
Our recovery, like the two other flooded campuses--Dillard and
Southern New Orleans, will be costly, and we have started; we could not
wait. However, we have not received Federal dollars, as yet. Again like
individuals, who have lost homes, including our faculty and students,
our insurance coverages will not cover the cost to rebuild.
What have we done?
1. Reduced our faculty by 1/3 as we attempt gallantly to re-
open in January 2006;
2. Furloughed, without pay, 60 percent of our staff, awaiting
the enrollment numbers for January;
3. Eliminated all athletic participation for the coming year;
4. Sought Board permission to borrow from our small endowment
to meet cash calls on current remediation work by contractors;
5. Sought funds to retain faculty, now and the future, to
maintain the high quality achievements of our institution's
legacy.
What assistance and support are we asking of the executive and
legislative branches of our government?
Resources to retain our faculty to maintain our services to
this Nation;
Immediate matching support to rebuild the capital
infrastructure of our campuses;
Additional financial assistance to students who are further
impacted now by their families' economic circumstances;
Amendments to the Stafford legislation which treats private,
nonprofit institutions different from our state supported
universities in disaster relief resources support;
Support for housing needs of faculty, staff and students at
a time when many are virtually homeless;
Eliminate the ``road blocks'' that use normal responses to
what are totally abnormal circumstances, today.
Lastly, I would ask you, collectively and individually, to stay
with all of us in this Gulf Coast region as we work to rebuild
our communities, various institutions and economic development
efforts. Not one of us has gone untouched, and neither will
this nation be, ultimately, by this tragedy. The human
suffering and long lasting trauma are real and unimaginable.
This Nation has gone to the aid of countries around the world
in difficult circumstances. We are now in desperate need at
home.
For us in Louisiana, it has not been easy or simple in these past
difficult weeks to answer all the cries and pleadings for help,
information and resources in an effective coordinated manner. This is
not an excuse, but a fact brought about by the massiveness of the
disaster. However, the efforts of working and coordinating together
priorities are taking place, region and statewide.
What I have tried to present to this committee is a microcosm, a
model of the related challenges represented in our devastated region.
If my colleagues, neighbors and other citizens were sitting in this
chair their refrains would be the same. We are hardworking,
compassionate, honest and committed people who have faith and courage
that we will, indeed, rebuild and welcome back so many who have lost so
much.
Please do not be persuaded by those who would use excuses or
distortions to abandon us in our time of need. When this country called
us, we saluted and served this nation well over our long history. We
are doing for ourselves, but we need your support! We entreat you to
treat us with the same fairness and compassion shown to others. It is
in this Nation's best interest to do so. It is the American way.
We are comforted in these times by the spiritual, ``His eyes are on
the sparrow and we know He watches over us.''
Thank you for your indulgence and patience.
The Chairman. Thank you very much.
Mr. Alden McDonald, President of Liberty Bank and Trust.
STATEMENT OF ALDEN J. McDONALD, JR., PRESIDENT/
CEO, LIBERTY BANK AND TRUST COMPANY;
COMMISSIONER, BRING NEW ORLEANS BACK
Mr. McDonald. Good morning, Gentlemen, Mr. Chairman,
members of the Committee and Senator Vitter. Thank you for
being here today. We really appreciate you taking time out of
your busy schedule to visit our city, firsthand.
I will represent three hats, this morning. One, as
President and CEO of Liberty Bank, which is a small community
bank and we've been in business since 1972. The second hat I
will wear, is Chair of the Board of Directors of the local
Chamber of Commerce. And the third hat, would be a member of
the Mayor's Rebuild Commission.
I'd like to first, start off by giving you a feel for small
business and what our small business, our small bank is going
through with Hurricane Katrina. You have copies of this map in
a packet that is presented. But if you just take a look at the
green areas, these are the areas that include the water and you
can see, by looking at the map, there was a significant amount
of the water in the area, in which, we are located.
Our businesses in New Orleans East, primarily servicing
that particular part of the community. All of the individuals,
all 100,000 of the individuals, had to relocate to other parts
of the State and many other states. As a result of that, my
35,000 customer base, primarily is gone out of state. This is
an example of what has happened to the small business, as well,
in that area. This is only 100,000 of an area that was flooded,
that really affected close to 300,000 people, in the New
Orleans area. So, if you just take that particular area and
multiply it out, you can see the devastation.
Our business lost all of our background files, all of our
credit files, all of our collateral notes, all of the records
of the institution, was lost in the storm. So, we have to start
from the rebuild point of view, which we are in the process of
doing and making pretty good progress.
I also lost almost 50 percent of my staff, who cannot
relocate, because of a lack of housing. This story doubles, for
every small business in this particular area. We have the
ability to really start the process and to really get the
process going, if a number of things were to happen.
I have basically, some short-term goals and some long-term
goals, I would like to present to the Committee. One goal,
would be for your committee to really have the insurance
companies to become accountable. We have not received payment
to people who paid for insurance coverage. The payment is very
slow coming in. And I wear the Chamber hat, because a lot of
these small businesses cannot function without the capital.
This is--they are not asking for a handout here, they are
asking for the protection that they've paid for and if we can
get the insurance companies to step up the process and
processing in paying these claims, we can get a lot of
businesses restarted quickly.
The Chairman. That business interruptions insurance, is
that what you are talking about?
Mr. McDonald. I'm just talking about, sir, the insurance,
not only the business interruption insurance, but insurance
claims that would pay to get the businesses rebuilt, that was
damaged from the hurricane. We are talking about the inventory,
we are talking about machinery, et cetera.
The Chairman. Property damage and inventory insurance, is
that what you are talking about?
Mr. McDonald. Yes, sir.
The Chairman. Would you furnish us the names of those
insurance companies?
Mr. McDonald. Yes, sir. The same thing exists with
residents. The insurance companies are not sending the checks.
A lot of claims have been taken, but payment on those claims
are not occurring. And as a result of that, people cannot move
forward in rebuilding their homes. Once we repopulate the
homes, business can function. Once business functions, we have
our economy going again.
The second piece, which was already talked about, is the
Chamber would like to endorse the concept of the $10 billion in
business grants, similar to what was given for the 9/11
recovery, that was already talked about earlier. So, I will not
go over that again.
The housing, for our area, is much needed. We have a lot of
people who want to return, who can return for jobs. But because
of a lack of housing at this particular time, they can't
return. And I explained to you, that we also experience this in
our business.
To give you an example, we have opened two of our eight
branches that were affected in New Orleans. We cannot bring
more individuals back, because of a lack of housing, not being
available to house the employees. We have businesses who are
paying higher rate, higher wages, offering benefit packages,
but again, they are operating with a skeleton staff and limited
hours of operation, because of the need for employees.
Under the long-term solutions we'd like to put on the
table, infrastructure is very important. Dr. Francis spoke to
one of the items that I was going to mention and that is
education and our airport. Those are two main major factors
that we need to really put in place. Because the airport, we
need to get going again, because of our tourism base and our
economy. We have to be able to get people in and out, in order
to get things moving.
And on the education level, the higher education level, we
must get those universities back in commerce, as quickly as
possible and we must do things, in order to help them attract
the students, that they used to attract from other communities.
The universities in this area provide a huge number of jobs and
the much needed brain talent that's necessary, not only for our
community, but for our country.
The second long-term piece we would like to endorse, is
that this community put together a very successful and unique
bid, to help keep the military here and that was part of the
Federal City for the BRAC Commission. If Congress or other
powers to be were to bring that back to New Orleans, we could
also, again, provide a number of long-term jobs. This year is
very, very important to our community, and our city and our
state agreed to fund the Federal City. So, we are trying to
help ourselves and with an expedited piece for our BRAC
Commission to look at, perhaps helping us to move that a lot
faster.
I see that my time has expired, but I have two other
industries that I think are very important. We, in the city, we
put together biotech district. One common piece, one small
thing that we could do, is to have the Congress or our
leadership, in our country to perhaps, invite the CEOs of
pharmaceutical companies, our medical companies, to come for a
one-day visioning to look at how they could tie in with our
universities and look at the possibility of jump starting our
biotech industry. Or, I should say, increasing our biotech
industry. It will bring employees in, it will bring business in
and it will help us in a lot of ways.
The last piece would be tourism. Tourism is a major driver
of our community and one small piece that could be done
perhaps, in one of the grants and one of the economic pieces,
would be to perhaps, give incentives to companies, to
nonprofits, to associations to bring their conventions back to
New Orleans, in an earlier way than our rebuilding process may
call for.
For example, over the next 24 months, if there is some type
of incentive that can actually be put in place, that would be
very beneficial to us.
With that, Mr. Chairman, Senators, I appreciate you giving
us the opportunity to talk with you, today and in my comments,
I'll go into more detail.
Thank you.
[The prepared statement of Mr. McDonald follows:]
Prepared Statement of Alden J. McDonald, Jr., President/CEO, Liberty
Bank and Trust Company; Commissioner, Bring New Orleans Back
Allow me to introduce myself:
I serve as President and CEO of Liberty Bank and Trust Company
headquartered in New Orleans. Liberty Bank, founded in 1972, is the
third largest African-American-owned banking institution in the United
States with over 35,000 customers in both Louisiana and Mississippi.
I am also here as the Chair of the Board of Directors of the New
Orleans Chamber of Commerce whose membership employs approximately
20,000 individuals in the metropolitan area.
And finally, I am a member of the Mayor's rebuild commission . . .
Bring New Orleans Back, serving on the Economic Development Committee,
and chairing the Subcommittee on Federal/Military/Aerospace.
New Orleans East, where I have raised my family and which is the
headquarters of Liberty Bank, constitutes half of the land base for the
City of New Orleans, population 96,400, with an average income of
$42,000, and homes owned by African-Americans that exceed $1 million in
value, as well as a significant Asian population, many of whom are
small business owners.
New Orleans East also includes some of our major industries. To
name a few: Folger's coffee owned by Proctor & Gamble, Budweiser,
Trinity Yachts, the Lakefront Airport, Northrop Grumman, and our
Michoud facility that has been and continues to be central to building
the rocket boosters for the NASA space program.
New Orleans East is also a major tourist destination, containing
the Six Flags amusement park, Bally's Casino, the Bayou Sauvage
National Wildlife Refuge, the Audubon Institute Nature Center, swamp
tours, fishing and Fort Pike.
This is a city historically built and maintained by small to
medium-sized businesses, whose ability to rebuild and to recover is
being severely hampered by the magnitude of the disaster.
Unlike 9/11, the Chicago fire or the earthquake in San Francisco,
all of which affected a section of the city it was within, this
devastation is total--throughout the region, affecting all of the
surrounding ten parishes.
Many business owners, myself included, took a double hit--our homes
were destroyed and simultaneously our businesses. Municipalities are
unable to provide basic services and are subject to bankruptcy. The tax
base has been completely eroded. $4.2 billion in buying power has been
lost among African-Americans in Orleans Parish alone. It is estimated
that the current level of debris that the city has to contend with now
is the equivalent of what would have been accumulated over the next ten
years.
In this midst of what is mind-boggling, we need fast action to
address very targeted and specific needs. I have both short and long
term recommendations:
Short-term
1) Our Small and Medium Sized Businesses in Particular Need an
Immediate
Response in the Form of Checks From the SBA, From FEMA and From
the
Insurance Industry
This is proving to be an extremely slow and torturous process. Over
71,000 businesses were affected in this area and we are subject to lose
two-thirds of these in the next 30-60 days if they are unable to get
immediate financial assistance. Many are surviving now literally out-
of-the pockets--committed owners who are dipping into savings and
retirement to renovate their property, keep the employees they have, in
many cases pay for housing for these employees, and build back
inventories and customers.
FEMA and SBA funds are available and need to be released without
bureaucratic red tape. The insurance industry needs to be called to
task and held accountable for releasing insurance claim money with all
due haste, once the adjuster has filed a report. We understand
insurance companies are sitting on reports filed weeks ago.
2) Interim Grants
The New Orleans Chamber wholeheartedly endorses ``KEEP''--Katrina
Emergency Employment Program, requesting that Congress authorize $10
billion in business grants, similar to the recovery grants made
available to businesses in New York after 9/11. This has been endorsed
and recommended by the Southeast Louisiana Business Coalition that
represents our major business organizations in the ten-parish area.
3) Housing and Transportation
On equal status as the money that is needed to rebuild, we need
housing and return transportation back to New Orleans for our employees
that are currently evacuated to just about every state in the Nation.
They took with them the institutional knowledge and the skills upon
which our businesses operate.
We want our citizens and our employees back.
Our businesses that are open have jobs and are offering higher
wages and benefit packages. They are operating with a skeleton staff
and limited hours of operation. They have the ability to fully open,
generate revenues and tax dollars, but they need employees.
We have nowhere to house anybody. It is estimated that during the
day the city's population is around 150,000 and at night we are at half
of that. The traffic jams back to Baton Rouge and across the lake are
testimony to the fact there is nowhere for anyone to stay within the
City of New Orleans.
The New Orleans Chamber and its sister Chambers through the Metro
Chamber Alliance in this ten-parish area can coordinate this three-
prong approach:
Job/Housing/Transportation
The Chambers are the connection to the business community. We urge
you to have FEMA work with and through these valuable organizations to
expedite getting our residents and our employees, in essence our
business families back. The New Orleans Chamber will gladly coordinate
this effort.
Long term:
1) Infrastructure
Louisiana, particularly this region, as the Nation has learned, is
a significant contributor to the national and global economy. We have
to be whole and functional to maintain our economic viability. To that
end we need funding for our port, for the Louis Armstrong Airport, our
highways, and our schools.
2) Federal City/BRAC Commission
We have very successfully presented a unique concept to the Defense
Department in order to retain our military bases. The military is a $10
billion industry to the City of New Orleans. We are committed to
Federal city, our city, and state role in creating a unique community
for our military and enhancing our port activity.
We ask, as a vote of confidence, that the Defense Department
returns its military personnel, re-ignites the national call center in
New Orleans and follows through on its commitment to work with our BRAC
Commission in making that a reality. This in itself can serve as a
catalyst to this economy by creating jobs, by expanding our economic
base, and by creating what we would hope to be a permanent home for our
military personnel in the area upon their retirement.
3) Biotech Industry
Last year the business community in New Orleans, with the help of
our legislative delegation and Mayor Nagin, successfully passed two
significant pieces of legislation:
The biotechnology district, which will enable our nationally
recognized universities--Tulane University, Xavier University and
Delgado Community College to partner with the business community for
research and business creation in the biotech, pharmaceutical and
medical industries. If we can create products here at our local
universities then certainly we can manufacture and distribute them here
also.
We ask for your assistance in convening the top CEOs in these
respective fields to come to New Orleans and to explore and invest in
the possibilities. We believe the future of the biotech, pharmaceutical
and medical fields are right here in our backyard, only steps away from
downtown New Orleans.
The second piece of legislation, a Senate resolution to explore the
governance of Charity Hospital, has many more implications than just
the governance of Charity in New Orleans. Our healthcare system
statewide is outdated. Louisiana has the only charity hospital system
in the Nation.
We have been overly reliant, as with other states, on the Federal
Medicare/Medicaid system to bail us out. We cannot continue as I am
sure you would agree. Healthcare is already at a crisis in the City of
New Orleans, and as we rebuild, we do not want to be constrained by an
outdated system and a system that does specifically focus on the needs
of citizens in New Orleans and surrounding parishes.
Again, we would ask for seed money to objectively assess the
healthcare system currently under the governance of Louisiana State
University and for the Federal Government to provide some of their
greatest minds to assist in restructuring healthcare in New Orleans
into a model.
4) Last and Finally, Levee Protection and Coastal Restoration
I would be remiss if as president of Liberty Bank, with six of our
eight branches affected by the flood, and as chair of the New Orleans
Chamber of Commerce, to not also emphasize, if not respectfully demand,
that funds are made available to adequately safeguard southeast
Louisiana by building a levee system that can withstand a category 5
hurricane and restoring our coastline.
Let's understand this is a national crisis, not just a local one.
A category 5 levee system may end up being the eighth wonder of the
world, but as other nations and civilizations have risen to the
challenge, we would expect no less, from the United States of America,
that one of its own, with a city that is renown worldwide, with
historical connections that go back to the beginning of time, that was
in fact one of the largest ports in the United States at one time, that
the Federal Government, would not, as the world watches, safeguard one
of its treasures for future generations to enjoy.
The Chairman. Thank you very much. We appreciate all of
your statements. Do you have any questions Senator?
Senator Vitter. I just wanted to follow up, really, for
your and Senator Thomas' information on three points that
Secretary Olivier made.
First of all, the SBA process being way too slow and
unsuccessful, in terms of approving loans. That seems to be a
fair and universal judgment, and in fact, Chairman Snowe is
having a hearing because of that tomorrow morning. It is a very
slow and frustrating process and I appreciate her leadership,
pushing them. Hopefully, we'll see some results out of that
discussion and that hearing.
Second, bridge loans. Even if the SBA were working at a
reasonable speed, there is really a gap, in terms of their
normal menu and we need these additional bridge loans to help
fill that gap. Again, Chairwoman Snowe has passed out of her
committee, a small business package, including these business
loans. In fact, we passed that package on to one of the
appropriation bills on the Senate floor. So, I am hoping we can
continue to advance that.
And third, Liberty bonds. That is in both, the Senate
finance package and the House Ways and Means package. Although,
the House Ways and Means package is much more robust, in terms
of allowing expanded uses of those Liberty bonds, as the
Secretary discussed and I'd love for the Senate Finance
Committee to follow suit.
So, I just wanted to make those comments, flushing out
those three ideas.
Mr. McDonald. Mr. Chairman, if I might, also, one of the
other issues that's really big and proven to be a benefit in
the recovery for Manhattan, was the accelerated depreciation
provision. That is something that would spur industrial and
economic development in the impacted areas.
The Chairman. Thank you.
Senator Thomas?
Senator Thomas. Just very briefly, I know you want to go
on. Mr. Olivier, you mentioned $40 billion in commercial loans,
is that what you suggested?
Mr. Olivier. No, sir. We asked for $30 billion. What was
approved in the Economic Recovery Act of 2002 was $8 billion
for that 16-acre area of Manhattan. We have, just after
Katrina, 960 square miles of economic impact. Over 81,000
businesses in those 37 parishes, that are included in the
impact area, so, we have a much larger--the magnitude is much
greater. And so, the need is going to be much greater.
These would be private activity bonds, that would be able
to recover and encourage more business----
Senator Thomas. What would be the cost to those, do you
know?
Mr. Olivier. No, sir. I do not know what the cost of those
would be.
Senator Thomas. Their bonds, I would presume there would
be----
Mr. Olivier. They would be tax exempt. That's correct, sir.
They would be tax exempt, private activity bonds. It would be
based on the full faith of credit of the company. Just as you
have industrial revenue bonds today.
Senator Thomas. Mr. McDonald, you mentioned $10 billion
business grants?
Mr. McDonald. Yes, sir. The $10 billion business grants,
represents, I believe, the amount that was given for the 9/11
recovery and we're suggesting that something similar to that
recovery piece, be done for this impacted area. It would help
jump start a lot of the small businesses.
Senator Thomas. Do you have any idea, I mean, I understand
your needs and so on. But on the other hand, you have to
understand that we have to look a little bit at spending, as
well. What would be, do you think, the total amount that you
are going to--you have $60 billion already there. You're
talking about $40 billion, you're talking about $40 billion, do
you have any idea what the totals would be?
Mr. McDonald. No, sir. I don't. But some of the same
funding that I made reference to, in the $10 billion, which was
the example for the 9/11 recovery, is some of the same money
that Mr. Olivier is talking about, as well. It just so happened
that my comments were overlapping.
Senator Thomas. I understand. We need to be a little
concise about it, as people hear about how much we are
spending, so that there is some consolidation.
I don't understand your comments about BRAC, what is that
have to do with it?
Mr. McDonald. OK, the BRAC Commission reviewed the base
closing for this particular area.
Senator Thomas. For all areas.
Mr. McDonald. Yes, sir. The City of New Orleans and the
surrounding parishes, put a committee together to fund a
project called the Federal City, where the state, the city
would put new infrastructure in for the military, if they were
to bring back some of the cuts that they made, in the local
military presence here, in New Orleans.
My comment and my suggestion is, that perhaps, they could
re-look at that and perhaps, return some of the military that
was removed from this particular area, since this Federal City
has already been committed and it would help our economy by
moving more jobs into the community.
Senator Thomas. I understand that. But you know, you need
to understand that BRAC is to talk about the efficiency of the
military. It's not an economic development activity.
Mr. McDonald. Yes, sir?
Senator Thomas. So, that's really the basis of it, yes.
Senator Vitter. And just to further clarify, the BRAC
Commission, in fact, recommended that a large portion of the
Federal City proposal, be used. And so, in fact the Marine
Reserve Command, will stay here under this Federal City
concept. The BRAC Commission basically, adopted it. Assuming,
the State meets its commitments to build out the Federal City.
Senator Thomas. That's fine.
Senator Vitter. It did not adopt the same recommendations
with regard to the Naval Reserve Command. Which unfortunately,
is still slated to get an offer.
Senator Thomas. I understand that and that's fine. I just
wanted to make the point that BRAC and the military
reorganization, is not an economic development activity.
The Chairman. We really got to move on now, I'm sorry, But
I have one question. Are you talking about guaranteed loans or
are you talking about direct loans from the Federal Government?
Mr. Olivier. May I answer that? The loan program that was
done for 9/11 was a short-term loan. This is not to supplant
the SBA loans that are taking quite a long time. As a matter of
fact, as was pointed out, less than 2 percent of the loans have
been made--the loans applied for, have been made. And less than
one percent have even been disbursed and this is in the 10
weeks. So, obvious, that the SBA loan program, whether it's a
disaster loan program or an economic injury loan program, they
are not working fast enough. And we need a bridge loan program,
just as was done in Manhattan and what we are asking for is a
$200 million bridge loan program, which is comparable to the
bridge loan program that was offered in New York State and
managed by the Empire State Group and the Lower Manhattan
Economic Development.
The Chairman. You mentioned $10 billion?
Mr. Olivier. No, sir. I don't think that figure is correct.
The $10 billion that you are referring to, was in Mr. Alden
McDonald's comments. I believe, that number is $500 million for
grants. He was talking about a total package.
There were $20 billion totally authorized by the Economic
Recovery Act of 2002. $8 billion of it was private activity
bonds, that were referred to as Liberty bonds, we're asking for
$30 billion. Of that, about $500 million were used for grants.
The Chairman. You know, we're also dealing with disasters
in Mississippi, Alabama, Florida and Texas. Are you talking
about authorization just for this area?
Mr. Olivier. Yes, sir. $30 billion is what is requested for
Louisiana. Mississippi is asking for $15 billion and the other
two states are asking for smaller amounts.
Senator Vitter. And again, just to clarify. Although there
would clearly be cost to the Federal Government, it wouldn't be
that whole amount.
Mr. Olivier. No, sir.
Senator Vitter. And the cost would be well below that.
You're talking about the entire capacity for the bonding.
Mr. Olivier. Correct, just as you have industrial revenue
bonds, the cost to the----
Senator Vitter. The cost would be the forgone revenue for
basically, the----
Mr. Olivier. Forgone revenue for the taxes, correct.
The Chairman. All right, we appreciated very much your
statement. We thank you for appearing, we're going to have
another panel now and we'll take about a 5-minute recess to
change and call Mark Drennen, the President and CEO of the
Greater New Orleans Regional Business Organization, Ted
Falgout, Director of the Port Fourchon, Gary LaGrange,
President of the Port of New Orleans and Ewell Smith, President
of Louisiana Seafood Promotion Board. Will you put the signs up
please? Take about a 5-minute recess.
[Recess].
The Chairman. Thank you, very much. This panel, as I
indicated, four additional people, we urge you to keep your eye
on that clock, if you will. We've allotted 8 minutes for each
witness.
Mr. Drennen, Mark Drennen, President and CEO, Greater New
Orleans, incorporated. We'd be pleased to have your statement.
STATEMENT OF MARK C. DRENNEN, PRESIDENT/CEO,
GREATER NEW ORLEANS, INCORPORATED; ON BEHALF OF THE SOUTHEAST
LOUISIANA BUSINESS COALITION
Mr. Drennen. Yes, sir. Good morning, Mr. Chairman. I want
to, like everyone else here, I want to truly thank you for
taking the time out of your schedules to come and see this
region. I grew up, unlike most of the panel people today, I am
not a native of Louisiana. I grew up in upstate New York. I
moved to Louisiana, some 30 years ago, for a job opportunity. I
stayed in Louisiana because I fell in love with the people in
the state and the community and all the--as you have probably
seen already, in your short stay here, the wonderful people and
customs that are here. So, I have made this my home.
I've had an interesting career. I've worked both for the
legislative branch here in Louisiana, I've worked for the
executive branch and I've worked for the private sector. My
current hat is with the private sector, running a newly formed,
18 months ago, Regional Economical Development Agency. We
started out with a goal of creating new jobs in the region, of
establishing business plans on how we were going to accomplish
that and in fact, have made a lot of progress. We, of course,
like everyone else in the region, have had to change our focus
and our focus now, is on bringing back the businesses that we
had.
In an effort to do that and hearing messages that we got
from Senator Vitter and others in Washington, we wanted to do
what we could as a regional group, to bring together the
business community with a common message, to make it consistent
with what others are talking about. We wanted you to know that
at the Federal level, not only are we asking for some help and
normally business is not asking government for help, we're
normally saying, just let us do what we do best. But in this
case, as you've seen the devastation, you know that we do need
some help. Short-term help.
You've heard already about a lot of the problems. We won't
talk to you today about the SBA problems anymore, FEMA
problems, our housing issues are severe. I want you to know,
that we have set up a Regional Task Force and would like the
opportunity to get back with you later, as we try to solve some
issues with housing, that nobody in this country has ever, ever
faced before and there aren't any good answers out there.
You've heard about the devastation to our colleges and vo-tech
schools.
You have not heard so much about some of the other problems
with our health care. Our health care system was severely
damaged. Our hospitals, our teaching hospitals and others are
hurting as we speak today, and those are other issues that
we're going to have to work our way through.
Tourism, you will hear in a little while from Mr. Steven
Perry, head of the Tourism group. And you will recognize from
his comments how serious the problems, and complicated the
issues are. But tourism is extremely important to our recovery.
In bringing together a Southeast Louisiana Business Coalition,
though we wanted to make sure that our message to you was not
only are we doing everything at home to help ourselves, but
there are areas where we need help. You've already heard about
two of them from Senator Vitter and others. Number 1, for every
business leader, every small, medium and large business, is our
levee system. We felt and we made plans for the success of our
future, based on our belief that we had a category 3 level
protection. It is now becoming evident as the Corps of
Engineers know, they've studied the issues that we did not have
category 3 protection. And we sincerely believe, as for us to
be able to come back, that we're going to need that protection.
In the long term, meeting with the Corps of Engineers we
hope that you will be able to finance and find a way to finance
category 5 hurricane protection.
Number 2, is our coastal restoration. Louisiana has now
been working with the Federal Government for decades, we have a
plan, the scientific studies have been done. We know how to
restore our coastal wetlands. And certainly the destruction
that's been done over decades was partly responsible for
Hurricane Katrina's devastation.
Again working through our Senators, Senator Vitter and
Senator Landrieu , there are a number of bills and issues
before you and again we respectfully request your help in
funding some of the restoration of our wetlands.
It was also of course important in Florida, it's equally
more important, we believe--equally or more important in
Louisiana for coastal protection.
Number 3 and 4 on our coalition of business leaders
representing over 2,000 businesses that have come together are
the issues as Secretary Olivier talked to you about, we like
Secretary Olivier got with the Empire State Development
Corporation to talk about what were the lessons learned after
9/11. What was it that you folks used that most enabled you to
bring your businesses back. And they told us three things.
Number 1, it was paramount that their governor, their
mayors, and local officials work together. That is our issue
here, and that will happen. Number 2, they talked about the
immediate need for some grants. We are asking for a
proportionate response to Louisiana, as was done for New York
City in 9/11 in the grant program. Quite frankly you've heard
about the SBA loans, and the solution to some of our businesses
coming back will not simply be borrowing more money. There are
cases especially, mostly in the small and medium size
businesses where there will have to be some bridge grants for
them to come back. Their insurance is not going to cover their
issues, and again borrowing more money won't solve all their
problems. But they can come back with a little assistance.
The other one Secretary Olivier talked about that was so
important to New York's City recovery was the issue of the
Liberty Loan Program. Those loans, low interest loans will also
be important in our long term recovery. So, number 1, the
levees; number 2, coastal restoration; and numbers 3 and 4 are
those 9/11-type programs that were so helpful to New York City.
And finally if I could conclude my comments by talking
about Federal programs that were already in the New Orleans
region. We have a service economy for example, our IT industry
services a lot of the Federal programs. We respectfully ask
that the Federal Government give us an opportunity to bring
some of our infrastructure back, and not make any long term
decisions about taking out Federal programs that are already in
our region that have had to move because of some of the
destruction, but we ask that those programs be returned to New
Orleans as soon as possible.
With that I conclude my comments Mr. Chairman, and again,
we truly appreciate you taking the time to come visit us in the
New Orleans region.
[The prepared statement of Mr. Drennen follows:]
Prepared Statement of Mark C. Drennen, President/CEO, Greater New
Orleans, Incorporated; on Behalf of the Southeast Louisiana Business
Coalition
Southeast Louisiana Business Coalition, a group of business leaders
representing thousands of small, medium and large employers from the
hardest hit areas of the New Orleans region have united for three
primary purposes:
to educate Congress and Federal agencies as to the vital
pre-Katrina national economic impact of the Southeast Louisiana
region.
to alert Congress and Federal agencies about the severity of
the devastation to the regional economy.
to propose a post-Katrina Congressional relief package.
Critical to our message are some startling facts and figures. To
date:
80,000 businesses have been disrupted by the hurricane and
are in severe risk of failure.
438,000 new claims for unemployment have been filed since
Hurricane Katrina.
The State of Louisiana anticipates $1 billion in lost
revenue for Fiscal Year 2005/06.
200,000 homes have been substantially damaged.
basic infrastructure necessary for economic recovery,
including schools, hospitals, colleges and roads have been
severely damaged or destroyed.
tax bases for governmental operations have been lost.
The Southeast Louisiana Business Coalition representing businesses
from a variety of sectors such as banking, law, information technology
and telecommunications, and engineering are requesting critically
needed help through appropriations requests, an economic stimulus
package and a call for a federally appointed figure to direct recovery
efforts.
Appropriations requests include:
(our top regional priority)---essential infrastructure help
on an aggressive schedule to rebuild the levees to real
Category 3 strength to provide disaster mitigation, structural
stability, and psychological reassurance for businesses and
residents to return to the area.
In addition, we respectfully request long term funding to
implement plans developed by the Corp of Engineers and other
experts to protect the area from a Category 5 hurricane.
(our second regional priority)--the allocation of 25 percent
of revenues derived from Louisiana offshore mineral production
to implement our already developed coastal restoration plan. A
significant contributor to the devastation caused by Katrina
was the previous loss of much of our coastal wetlands, which
are also vital to the national economy.
a grant program to provide vital immediate cash for
businesses, similar to the recovery grants provided to
Manhattan businesses, by Congress, following the September 11th
disaster.
low interest loan programs for commercial and residential
development similar to the post-9/11 plan for Manhattan.
funding to repair damages to key infrastructure for our
ports, the airport and highways.
a comprehensive economic stimulus package authorizing
various tax relief measures and incentives, including a
combination of
--Relocation Tax Credits and Employment Credits targeted at
stimulating business re-entry into the market at pre-Katrina
employment levels.
--Accelerated Depreciation and Tax Exempt Bonds to provide an
incentive for increased capital projects.
--Personal Tax Relief and Tax Credits for those in the affected
region in order to entice back individuals, business owners and
corporate managers.
The Southeast Louisiana Business Coalition has recommended that the
President and Congress create a single regional board to be directed by
a person of national prominence to coordinate the recovery and
rebuilding efforts in Southeast Louisiana. The group believes that
relief coordination must occur at the Federal, state and local levels
in order to maximize resources, execute effective planning, and
expedite implementation for post-Katrina recovery.
We fully understand that Louisiana must take every action possible
to help itself. With this in mind, our local governments are proceeding
with the development of action plans for recovery of their respective
areas. Parish presidents and mayors are including business leaders in
their recovery plans. Outside expertise from national groups such as
the International Economic Development Council (IEDC), the U.S. Chamber
of Commerce and American Institute of Architects (AIA) are actively
involved. Governor Blanco has convened a special session of the
Louisiana legislature to address budget issues and state incentive
programs as well as convened the Louisiana Recovery Authority to
coordinate the state efforts.
We have convened a regional housing task force group to devise
short and long-term solutions to this severe problem. Without housing
for our citizens, we will be unable to provide a workforce to re-open
our businesses. As recommendations are developed, we will share them
with Congress.
In conclusion, time is of the essence for our successful recovery.
We request your thoughtful consideration of our proposed solutions.
With the temporary assistance of the citizens of the United States, we
will be successful.
The Chairman. Mr. Falgout. I'm not going to mispronounce
that Port name again.
Mr. Falgout. No, I'll say it for you.
STATEMENT OF TED M. FALGOUT, PORT DIRECTOR,
PORT FOURCHON
Mr. Falgout. Thank you Mr. Chairman, Senator Thomas,
Senator Vitter. I am Port Director of Port Fourchon Louisiana.
We are the southern most port on the Gulf, some 60 miles south
of New Orleans. And perhaps you've never heard of this port,
it's not that well known, but like Alaska, much of this country
should think of us as they turn on their light switch each
morning.
It's by far this Nation's most significant energy port.
Playing a key role in support of 18 percent of this country's
oil supply. I've had the opportunity to testify before several
committees and subcommittees over the years about the
significance of coastal Louisiana, and I've generally told the
same story. I'd like to read to you a closing statement I made
in July 2004, to the Subcommittee on Water Resources and the
Environment of the House Committee on Transportation and
Infrastructure. The statement read like this.
With the level of land loss that exists today, a well
placed category 4 hurricane would cause the price of gasoline
to go up a dollar, double the price of natural gas, cause huge
loss of life, this would throw this country into an immediate
recession, and its impacts would dwarf the cost of protection.
I pray that the next time I testify it's not to say I told
you so. Well, now I get to say it, I told you so, but what a
hollow feeling. Unfortunately this country historically hasn't
reacted until a crisis occurs, well we have our crisis, and
now's the time for action.
This is truly an issue of National significance. An
astounding 87 percent of the oil, and 80 percent of the natural
gas from Federal offshore waters is coming from offshore
Louisiana. In additional LOOP this Nation's only offshore oil
port which handles about 15 percent of this country's foreign
oil and is connected to over 30 percent of U.S. total refining
capacity sits just 18 miles offshore of Port Fourchon.
Gentlemen, much of the support infrastructure for nearly a
third of this country's oil and gas supply is located in the
most rapidly deteriorating and vulnerable areas of the
Louisiana coast.
The recent storms have further exacerbated our
vulnerability to a point of crisis. Today over half the oil and
gas production in the Gulf of Mexico remains shut in as a
result of Katrina and Rita. Over 1 million barrels of oil and
5.6 billion cubic feet of natural gas per day. Since August 26,
2005, over 75 million barrels of oil and 400 billion cubic feet
of natural gas from the Gulf is unavailable to the U.S., that's
almost $10 billion of product.
By the end of the year, the Gulf's annual production could
very well have been reduced by 25 percent. We should all be
very thankful that Port Fourchon and New Orleans did not
receive a direct hit from either storm. If either had just been
a few miles closer, my dire projections of 2004 would have been
grossly underestimated, and my recession prediction much closer
to reality.
I commend this committee's actions of last week, which
amended the Budget Reconciliation Act, which could add $1.2
billion to our coastal efforts. This is definitely a step in
the right direction.
The recent energy bill included a coastal impact assistance
provision, which is a start, but fell short of direct offshore
revenue sharing that is needed. We must approach a level of
revenue sharing which is at, or near that which currently
exists on Federal lands within a state.
We have a plan to build a sustainable coast. It must
include levee protection, coastal restoration, and critical
energy infrastructure support. To fund one without the others
will not yield the needed results.
This plan could have been implemented at a fraction of what
these storms have cost this country. Until this Nation truly
comes to the realization of what's at stake here in coastal
Louisiana, and makes the proper investment to sustain America's
wetland, we will most likely remain on a collision course with
an unprecedented energy shortage in this country.
And my greatest hope is that I do not have to return and
say I told you so. Thank you.
[The prepared statement of Mr. Falgout follows:]
Prepared Statement of Ted M. Falgout, Port Director, Port Fourchon
Mr. Chairman and members of the Committee, I am Port Director of
Port Fourchon, Louisiana's southern most port on the Gulf, some 60
miles due south of New Orleans. Perhaps you have never heard of this
Port; it's not well known, but believe me, you should think of us every
time you turn on your lights. It is by far, this nation's most
significant energy port, playing a key role in support of 18 percent of
this country's oil supply.
I have had the opportunity to testify before several committees and
subcommittees over the years, and I have generally been telling the
same story.
I would like to read to you a closing statement I made in July 2004
to the Subcommittee on Water Resources and the Environment of the House
Committee on Transportation and Infrastructure. My closing statement of
2004 read like this: With the level of land loss that exist today, a
well placed Category 4 Hurricane would cause the price of gasoline to
go up $1.00, double the price of natural gas, and cause huge loss of
life. This would throw this country into an immediate recession and its
impacts would dwarf the costs of protection. I pray that the next time
I testify it is not to say, ``I told you so.''
Well, now I get to say it, I told you so. What a hollow feeling!
Unfortunately, this country historically hasn't reacted until a
crisis occurs. Well, we have our crisis and now is the time for action.
This is an issue of national significance.
An astounding 87 percent of the oil and 80 percent of the natural
gas from Federal offshore waters is coming from offshore Louisiana. In
addition, LOOP, this nation's only offshore oil port which handles
about 15 percent of this country's foreign oil and is connected to over
30 percent of the U.S.'s total refining capacity, sits just 18 miles
offshore of Port Fourchon.
Much of the support infrastructure for nearly one-third of this
country's oil and gas supply is located in the most rapidly
deteriorating and vulnerable areas of the Louisiana coast. The recent
storms have further exacerbated our vulnerability to a point of crisis.
Today, over half the oil and gas production in the Gulf of Mexico
remains shut-in, over 1 million bbls of oil and 5.6bcf of natural gas
per day. Since August 26, 2005 over 75 million bbls of oil and 400bcf
of natural gas was made unavailable to the U.S. That's almost $10
billion of product. By the end of the year, Gulf's annual production
could very well have been reduced by 25 percent.
We should all be very thankful that Port Fourchon did not receive a
direct hit from either storm. If either had been just a few miles
closer, my dire projections of 2004 would have been grossly
underestimated.
I commend this committee's actions of last week which amended the
Budget Reconciliation Act, which could add $1.2 billion to our coastal
efforts. This is definitely a step in the right direction. The recent
Energy Bill included a Coastal Impact Assistance provision which is a
start, but fell far short of direct offshore revenue sharing that is
needed. We must approach a level of sharing Federal OCS revenues which
is at or near that which currently exists on Federal lands within a
state.
We have a plan to build a sustainable coast; it must include levee
protection, coastal restoration, and critical energy infrastructure
support. It could have been implemented at a fraction of what these
storms have cost this country.
Until this Nation truly comes to the realization of what's at stake
here in coastal Louisiana, and makes the proper investment to sustain
it, we will most likely remain on a collision course with an
unprecedented energy shortage in this country.
My greatest hope is that I do not have to return and say, ``I told
you so.''
The Chairman. You sound like me when it comes to drilling
in the North country. Mr. LaGrange, President and CEO of the
Port of New Orleans.
STATEMENT OF GARY P. LaGRANGE, PRESIDENT/CEO,
PORT OF NEW ORLEANS
Mr. LaGrange. Thank you Mr. Chairman, and Senators Vitter
and Thomas. Thank you for being here with us today, we truly
appreciate it. I'm going to briefly wear a second hat, in
addition to President of the Port of New Orleans is Immediate
Past Chairman, of the American Association of Port Authorities,
which is all the Ports of the Western Hemisphere. You know,
Katrina and Rita together, actually a number that has not been
talked about quite a bit, but 22 Ports on the Gulf coast were
detrimentally affected by both of those storms.
From the Golden Triangle area of southeast Texas, all the
way across Louisiana, Mississippi, and over, including Mobile
to some extent. So we thank you for all of your efforts to this
point.
The Port of New Orleans is not just a Louisiana Port, or
it's not just the Port of New Orleans, and for that matter it's
not even a Mississippi River Port, it's a national port. It's a
port that services, 62 percent of the consumer spending public
of America, and probably the most unique port in the United
States, because it's connected directly to 15,000 miles of
inland navigable waterways, including the Ohio, the Tennessee,
the Missouri, the Mississippi, and so on and so forth.
Ports like Pittsburgh, Memphis, St. Louis, Chicago, Little
Rock, Tulsa, and Oklahoma, all are very very dependent on the
products that come into the Port of New Orleans and the Lower
Mississippi River, and on the export side, the opposite is very
true as well.
We want to look at a plan to redevelop Louisiana and we
certainly propose and ask your cooperation and your assistance
but not only from a navigation standpoint, as our other
colleagues have mentioned here this morning, from a coastal
restoration standpoint, and certainly from a flood protection
standpoint, first and foremost.
So we don't want to overlook the entire package. I talk
about the inter-connectivity of the Port of New Orleans to the
rest of America, you know and it's no wonder that the Port of
New Orleans is the largest importer of steel, it's the largest
importer of rubber, it's the largest importer of plywood and
forest products. We're second now to New York, but we'll be
first again next year in coffee imports. And we're the largest
certified London metal exchange port for precious metals in the
United States. And we're the largest exporter of poultry in the
United States. All of that said, being located where we are in
the lower Mississippi River, we also see over 60 percent of the
grain exports from mid-America and America's bread basket come
right through the lower Mississippi River and right through New
Orleans and the other ports on the river as well, from the Port
of South Louisiana.
New Orleans also, according to the International Council of
Cruise Lines, was the fastest growing cruise port in the world.
In the world. And had Katrina not come along, we'd have gone
90,000 passengers in 1993 to over 850,000 cruise passengers
this year in 2005. That's all been put on hold now
unfortunately.
The Port of New Orleans sustains an employment nationally
according to studies that were recently completed by Martin and
Associates, 380,000 United States jobs are a result of the Port
of New Orleans and the Louisiana purchase, 202 years ago. That
accounts to roughly 28 states, as I said 62 percent of the
consumer spending public of America. That's $37 billion
annually in economic benefits and $2.8 billion annually in
Federal income tax paid. All of this said, the Port in the
storm itself sustained publicly and privately, a little over $1
billion in damages. Thirty percent of the Port of New Orleans
as we knew it on August 28, does not exist today. Thirty
percent is gone. The public side of that number is roughly $275
million of the little over $1 billion. So that to the Dock
Board and to the Port of New Orleans, we are looking at
relocation and rebuilding, not covered by insurance and not
covered by FEMA our exposure is roughly $275 million. And quite
honestly it's going to be a huge task and a huge chore. And
somebody said earlier we need to think out of the box, I think
we need to create a new box. And we certainly are going to need
your help and your assistance, as I said it's not a local
Louisiana, New Orleans thing, it's a national thing, it's a
national situation.
I think the long and the short of it all, is that we will
bounce back, we are back at a 50 percent level roughly, almost
approaching 50 percent today. The day after Katrina, we were
told that it would be 6 months before a ship came back into the
Port of New Orleans, in 8 days we off-loaded our first
container ship, the Lykes Flyer, a CP and that was quite a
memorable day. The three things that we knew we needed were
electrical power, certainly manpower, and intermodal
connectivity. The roads need to be rebuilt, the bridges needed
to be rebuilt, but first and foremost was manpower. And I want
to take my hat off to Secretary Minetta, and John Jamian of the
Maritime Administration for in quick order deploying some of
your ready deployment vessels to New Orleans, to serve as
cranes to help us off-load cargo while our gantry cranes were
down in those early days, to serve power while we had no power,
while we had no generators, and more importantly to house port
related personnel that we desperately needed to bus and truck
back into the area, to work those ships so vital to America's
economy.
So we thank the Federal Government for moving
expeditiously. I know we hear all too often about the
complaints of somebody not moving fast enough. But this is
certainly a case where we can fly the banner and we were
really, really happy with that display and that effort.
NOAA was great, the Corps of Engineers were great in
getting the river opened up the day after the storm. Albeit
with a curfew in one way, the Coast Guard was there, aids to
navigation were put back into place quite quickly and quite
readily. And we certainly appreciate all of those many, many
fine efforts.
The story certainly is a bleak one. But as I said we thank
you, we'll persevere through the efforts of our Congressional
Delegation, including Senator Vitter, we'll continue to put one
foot in front of the other and we'll make this thing happen,
and we'll bring New Orleans back to the level that it once was,
and hopefully bigger and better, but not without your
assistance gentlemen, thank you.
[The prepared statement of Mr. LaGrange follows:]
Prepared Statement of Gary P. LaGrange, President/CEO,
Port of New Orleans
My name is Gary P. LaGrange, President and Chief Executive Officer
of the Port of New Orleans and immediate past Chairman of the American
Association of Port Authorities (AAPA). I am grateful for the
opportunity to appear before you today to discuss the future of New
Orleans as a major port and transportation hub for our Nation.
Within a one-month span, Hurricanes Katrina and Rita have impacted
over twenty AAPA-member ports and many other private and public ports
in the Gulf of Mexico region. The impact of these hurricanes has
varied, with the largest impact on the ports of Louisiana, Texas,
Alabama and Mississippi. For several ports, including New Orleans, the
impact has been considerable; some port facilities may need to be
relocated, and it will take months if not years to fully recover.
Concerning the Port of New Orleans, that recovery process is underway--
the Port is now operational up to 40 percent of its full pre-Katrina
capacity.
Though I am here to specifically address issues and opportunities
at the Port of New Orleans, I would like to note that the Port is
working closely in a coordinately manner with interested stakeholders
to convey a united vision for the restoration of coastal Louisiana. To
that end, the Port strongly shares the view that the future of
Louisiana is absolutely dependent upon the proper and immediate
execution of a coordinated program that enhances navigation, coastal
restoration, and flood protection measures.
Value of Maritime Trade to This Nation
The business and economic health of this Nation is heavily
dependent on maritime trade. America's ports are our gateways to the
world and a critical component in the Nation's economic health and
national defense. When ports are impacted, there is a quick and sizable
ripple effect throughout the economy. U.S. ports and waterways handle
over 2 billion tons of cargo annually. Much of that commerce flows
through the impacted ports in Louisiana, Texas, Alabama and
Mississippi. These ports are heavily linked to this Nation's petroleum,
grain and farm products, fruit, poultry, coffee, chemical and steel
trades. Through its critical location on the inland waterways system,
the Port of New Orleans alone serves as the focal point for waterborne
transportation of cargo to 28 states. That cargo activity supported $37
billion in economic benefits to the country and generated $2.8 billion
in Federal tax revenue.
In the post-Katrina environment, examples of affected cargo
activity include the following:
Agricultural products from 17 midwestern states flow through
the Mississippi River. Over half of the grain exports for this
Nation depart from ports impacted by Katrina. Oil, agriculture
and chemicals rely heavily on the infrastructure provided in
these port areas.
Gulf ports serve as one of the Nation's largest gateways for
poultry exports, and the inability to handle frozen poultry
products through unique dockside facilities would affect the
industry worldwide. Estimates for the Port of New Orleans show
that relying on less efficient means to transport these
products would increase costs by $7-$8/ton, thus making U.S.
poultry products extremely noncompetitive in the international
marketplace.
Steel is another critical commodity handled by the Port of New
Orleans. The cost of diverting steel imports from New Orleans
would increase the cost of such products by an estimated $80-
$90/metric ton because of reduced access to inland barge and
rail transportation systems and associated delay costs.
Disruptions in the delivery of natural rubber products through
the Port of New Orleans are creating raw material distribution
and supply problems for tire manufacturing facilities in the
U.S.
Passenger cruise operations are also an important economic
component at many U.S. ports, including the Port of New
Orleans. Prior to Katrina, the Port of New Orleans was the
fastest growing cruise port in the world. Cruises provide
significant tourist trade, jobs and income for New Orleans and
the region, and the rebound of passenger cruise operations will
depend heavily on the ability of New Orleans to rebuild.
Should Port of New Orleans services not be completely restored, any
rerouting of traditional port cargoes would increase related supply
chain costs, including those associated with trucking and rail
services, barging, distribution and warehousing, and ocean freight.
Importance of Federal Assistance
Catastrophic events, whether natural or man-made, can greatly
impact maritime trade. Hurricanes are especially dangerous and are the
most frequent threat since ports are located in affected coastal areas.
Ports also are impacted by other disasters such as earthquakes and
terrorist events. The impact on New Orleans from Hurricanes Katrina and
Rita has been considerable. There are several key actions that are
important to the port's recovery: quickly reopening and maintaining
shipping channels; restoring communications, electrical power and other
utility services; obtaining a readily available workforce; and
repairing facilities and intermodal connections (reliable truck and
rail services).
Concerning Federal assistance provided to the Port of New Orleans,
the Maritime Administration (MarAd) is to be especially commended for
its efforts. The agency took the historic step of diverting military
ready reserve ships to help ports quickly reopen. MarAd provided a
vessel in New Orleans for use as housing for Port workers. The vessel
also had cranes for recovery and cargo operations and provided the
ability to generate power for the Port.
Several other Federal agencies stepped in quickly to help out
affected ports, and were critical to the ports' ability to reopen
quickly. The Coast Guard, the Army Corps of Engineers, and the National
Oceanic and Atmospheric Administration should especially be commended
for their vital and timely assistance provided to ports by surveying
channels, identifying any obstructions, reinstalling aids to
navigation, and providing emergency dredging. These agencies worked
quickly and cooperatively to reopen the shipping channels.
FEMA has also been an important partner. It has directed many of
the Federal recovery activities for the Port and is helping to
facilitate rebuilding activities.
Future of New Orleans as a Transportation Center
It is clear that the Port of New Orleans serves as one of the
Nation's key intermodal gateways for domestic and international trade.
The very geographic proximity of the Port to the Gulf of Mexico and the
mouth of the Mississippi River makes it the ideal and central location
for the inbound and outbound shipment of cargo. As a key transportation
focal point on the Mississippi River, the Port of New Orleans serves as
the primary hub for the shipment of cargo on the Nation's inland
waterways system. Given the regional access to major road systems,
including Interstates I-10, I-55 and I-59, the Port is perfectly
situated to facilitate the highway transport of goods flowing through
the New Orleans port region. Finally, the Port of New Orleans provides
immediate rail access for six major national railroads, namely Union
Pacific, Burlington Northern/Santa Fe, Kansas City Southern, Norfolk
Southern, Canadian National, and CSX. No port in the Nation is more
ideally located for the intermodal inbound and outbound movement of
domestic and international cargo by ocean-going vessels, trucks,
railroads, or barges. That is why the Port of New Orleans is so vital
to the business and economic health of the region and our Nation. The
operations of the Port must be fully restored in order to continue to
reap the trade and other vital economic benefits that accrue from such
operations.
Katrina Impact and Recovery
Hurricane Katrina completely shut down the Port of New Orleans. The
Port is only now beginning to restore full electricity, water, sewage
and other services, and its terminals and facilities were severely
damaged by both storms and subsequent flooding. The total closure of
the Port not only affected the economy of Southeast Louisiana, but also
the entire Nation. In 2004 alone, more than 380,000 jobs in the U.S.
were dependent on the cargo activity at the Port.
In the immediate aftermath of Hurricane Katrina and Rita, the Port
of New Orleans has been working non-stop to restore its facilities and
services. As noted above, the Port is currently operating at only 40
percent of its pre-Katrina level. The Port of New Orleans is still
struggling with a limited workforce and the ability to move the cargo
in and out of the Port. Damaged terminal, warehouse and other Port
facilities need to be repaired and/or replaced. Mississippi and some
Texas ports face similar problems. Intermodal connections, such as
truck and train, are still a challenge. Highways and rail tracks need
to be repaired and/or rebuilt, and workers need basic housing in order
to continue any long-term employment. The recovery of the Port of New
Orleans is tied to the problems of restoring the entire city. Without
adequate infrastructure for longer term housing and family needs,
workers will not be able to return. Cruises will wait to return until
hotels and tourist attractions are restored.
The Port is a major economic engine for New Orleans and the region.
Quickly restoring the Port to full operation will help return economic
vibrancy to the area. The Port will also be a critical part of
rebuilding the city. It can provide a means of bringing in the
materials needed for the major repair and reconstruction efforts.
Based upon post-Katrina engineering and other studies, the Port of
New Orleans estimates that funding of approximately $275,000,000 for
unrecoverable damages will be required to rehabilitate Port facilities
damaged or affected by Hurricanes Katrina and Rita. Other ports in
Louisiana, Alabama, Texas and Mississippi also will incur costs to
repair facilities. If the Port returns to full operation, the New
Orleans region will soon follow. With repaired port and intermodal
infrastructure and a return of the workforce, the Port will be a major
factor in the business and economic revitalization so desperately
required for the Gulf Coast region and our Nation.
Conclusion
I thank you again for the opportunity to address this committee
today. I look forward to working with you and your fellow committee
members on the recovery of the Port of New Orleans and other affected
Gulf Coast ports.
The Chairman. Thank you very much. And thank you for this
comprehensive statement. We're going to print all the
statements that were presented to us in the record, fully as
though read. I do appreciate your comments. Now Mr. Ewell
Smith, please.
STATEMENT OF EWELL SMITH, EXECUTIVE DIRECTOR, LOUISIANA SEAFOOD
PROMOTION AND MARKETING BOARD
Mr. Smith. Thank you Mr. Chairman, I want to thank you,
Senator Vitter, Senator Thomas and the other members of the
Committee. As a child growing up New Orleans, my mom made
crawfish etouffe and shrimp etouffe just about every other day
it seemed like. It was so special cooking that and trout
almondine. It's something we take for granted in New Orleans,
and the rest of the country comes to New Orleans to enjoy it
and hopefully while you're all here, you'll get to enjoy some
of our seafood, and understand the importance of our natural
resource.
I serve as Executive Director of the Louisiana Seafood
Promotion and Marketing Board. We represent over 16,000
commercial fishermen, and the board markets the state's
commercial seafood products, both to consumer and to trade.
Louisiana seafood industry is primarily made up of five
different sectors: shrimp, oysters, crawfish, blue crabs, and
finfish. Louisiana is second only to Alaska in total seafood
landings, while we lead the Nation in shrimp, oysters and
crawfish production. Louisiana's seafood industry is the fuel
that drives our restaurant and tourism industries with over
$2.8 billion in retail sales. Prior to Hurricanes Katrina and
Rita, our seafood industry was struggling with high fuel prices
and imports.
Hurricanes Katrina and Rita have impacted our industry in
ways unimaginable. Three of the six largest docks in the U.S.
by landings are in Louisiana: Empire, Venice and Cameron. The
infrastructure in these areas are completely destroyed. As a
whole, our fishing communities east of the Mississippi River
are out of business. There are no docks to land the product, no
lighthouses, no fuel, no electricity, no cold storage, no
marinas, no bait and tackle shops, no communities, meaning no
welders, no mechanics, no deck hands, and on. West of the
Mississippi, our shrimping industry has lost 2 of its largest
shrimping docks which land about 30 percent of all our product.
Seventy percent of our wholesale retail dealers, licensed in
Louisiana, based in the parishes impacted by Hurricanes Katrina
and Rita. Our oyster industry is operating at a fraction of 40
percent, the crops for finfish, shrimp and crabs, just like you
would see in the movie Forest Gump after the storm. However
current estimates are approximately 15 to 25 percent of our
fishermen are actually out there fishing. Over 3,000 of our
commercial vehicles are on land where they don't belong. Even
though the resource is strong, this may be a false positive.
The marshes washed away during the hurricanes released some
nutrients which helped the crops to flourish, so those who can
fish right now are doing well. But next year will be uncertain,
for 100 square miles of our marshes have been lost. Areas that
are needed for resources to grow.
Between Katrina and Rita, we lost more marshland in less
than a month, than we were projected to lose over the next 45
years. We have also what I call a crisis on top of a crisis.
More than likely you saw the dewatering of New Orleans on
television and the press labeled our waters as toxic soup,
killing seafood sales across the board. We have fought this
battle vigorously working with the Department of Health and
Hospitals, Department of Environmental Quality, LSU Food
Science, the FDA and NOAA, and the good news is there are no
toxins in the water. And the seafood is safe to consume.
However the damage is done, we will fight this seafood
safety challenge for the foreseeable future. The double whammy
for our industry is that Wildlife and Fisheries has already
estimated a loss of over $2.2 billion in retail sales just from
the damage of the hurricanes, much less the perception
challenge we have.
If you look out these windows, about seven or eight blocks
is one of the biggest shrimp processors in our state, and
probably in our country. The biggest challenge they're going to
have--they were severely damaged during the hurricane not by
the hurricane itself, but by looters.
Looters got into their facility, destroyed their
administrative offices, some of their equipment and ripped the
doors off of their freezer coolers destroying over 2 million
pounds of product. But that's the short term challenge for
them. The long term challenge for them is going to be getting
labor. Right now labor in Lakeview, the area where you may have
visited yesterday, are getting paid up to $15 to $20 an hour to
tear our sheetrock. Burger King's paying $8.50 an hour and a
$6,000 signing bonus, and our processing plants are losing
their laborers that they have right now, and having a hard time
replacing them. This gentlemen, Paul Piazz and Sons, six or
seven blocks over is going to have a difficult time come May
season.
So, where do we begin? The first issue is the fishermen,
without our fisherman, nothing else matters. We need to provide
the funds necessary for the fishermen to get up and going, the
seafood vessels and the oyster farmers. We need to help the
fishermen get their boats back in the water as soon as possible
and put them back to work cleaning the water of debris. We need
to rebuild the infrastructure as soon as possible. That means
boats, docks, fuel, ice houses, cold storages, marinas, bait
and tackle shops, oyster reefs and on. We need to rebuild the
markets lost through marketing and promotions. If you ask any
of the seafood dealers around town, or around the state, if
they've lost market share, they will tell you ,yes. We've lost
we estimate $2.2 billion in sales this coming year. Those
markets losses are probably gone.
As you know our shrimping industry alone, 10 percent of the
shrimp consumed in the United States is imported. We've given--
these hurricanes have given those industries a perfect
opportunity to slip into our shoes. Into our markets that we
had. Rebuilding those markets will be critical. And of course,
you've heard we need to rebuild our coastlines, not only to
save the lives of the people of our state and in New Orleans,
but we also need that habitat for our natural resource for our
seafood.
In closing, it's my understanding that you all will be
doing a helicopter tour today. We--this past Friday, my
Louisiana Seafood Board organized an event that took our
Natural Resource Committee down to Lower Plaquemine's Parish.
Now I grew up in Lakeview, around the corner here, and I've
helped gut a few houses, and I thought that area looked bad
until I went to Lower Plaquemine's Parish. Lower Plaquemine's
Parish makes Lakeview look like paradise. The challenges there
are great. Lower Plaquemine's Parish is home to two of our
biggest fishing communities and symbolic of the rest of our
coastal communities around the state.
Hurricane Katrina was the right hook, and Rita was the left
hook. Every part of coastal community has been affected. Never
in the history has the entire oyster industry been completely
shutdown, as it has been for the passed few months. It just
recently opened up. The thing that I want to leave you with is
this.
When we visit with our fishermen in these coastal
communities, they've been knocked down before, they're used to
it. They're not a city boy like me, they can--they're used to
fighting back very quickly and getting up on their feet again.
They need assistance. That is for certain. They need that
bridge to get them going. They are ready to rebuild their
lives, they are ready to get back to work. They're not looking
for handouts, they do need assistance, but they need the help,
and they need help soon. They're dying down there and there's a
world hurt.
And they're ready to help rebuild Louisiana. So there is a
sense of hope among them and it inspires me, and we just need
your help and we appreciate you all coming down. Thank you very
much.
[The prepared statement of Mr. Smith follows:]
Prepared Statement of Ewell Smith, Executive Director,
Louisiana Seafood Promotion and Marketing Board
I am Ewell Smith and serve as Executive Director of the Louisiana
Seafood Promotion and Marketing Board. Representing over 16,000
commercial fishermen, the Board markets the state's commercial seafood
products both to consumer and trade.
Louisiana seafood industry primarily is made up of five different
sectors: shrimp, oysters, crawfish, blue crabs and finfish. * Louisiana
is second only to Alaska in total seafood landings, while we lead the
Nation in shrimp, oysters and crawfish production. Louisiana's seafood
industry is the fuel that drives the restaurant and tourism industries
with over $2.8 billion in retail sales.
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* Finfish: tuna, shark, mullet, black drum, menhaden, snappers,
groupers, etc.
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Prior to Hurricanes Katrina and Rita, our seafood industry was
struggling with high fuel prices and imported products being dumped in
our marketplace.
Hurricanes Katrina and Rita have impacted our industry in ways
unimaginable. Three of the six largest docks in the U.S. by landings
are in Louisiana: Empire, Venice, and Cameron; the infrastructure in
these areas is completely destroyed.
As a whole, our fishing communities east of the Mississippi River
are out of business. There are no docks to land the product, no ice
houses, no fuel, no electricity, no cold storage, no marinas, no bait
and tackle shops, no communities meaning no welders, no mechanics, no
deckhands and on. West of the Mississippi our shrimping industry lost
its two largest shrimp docks.
Seventy percent of the Wholesale/Retail Seafood Dealers licensed in
Louisiana are based in the parishes impacted by Hurricanes Katrina and
Rita. Our oyster industry is at 40 percent. The crops for finfish,
shrimp, and crabs are strong; however current estimates are
approximately 15 to 25 percent of our fleet across the state is
actually fishing--over 3,000 commercial vessels are on land where they
don't belong. Even though the resource is strong, this may be a false
positive. The marshes wash away during the hurricanes releasing
nutrients which help the crops flourish so for those few who can fish
now are doing well; but next year will be uncertain for 100 square
miles of our marshes have been lost--areas that are needed for our
resources to grow. Between Katrina and Rita, we lost more marshland in
less than a month than we were projected to lose over the next 45
years.
We have also what I call the crisis on top of the crisis. More than
likely you saw the ``dewatering of New Orleans'' on TV, and the press
labeled our waters ``Toxic Soup'' killing seafood sales across the
board. We have fought this battle vigorously working with DHH, DEQ, LSU
Food Science, FDA, and NOAA and the good news is there are no toxins in
the water; the seafood is safe to consume. However, the damage is done;
we will fight this seafood safety challenge for the foreseeable future.
The double whammy for our industry is that wildlife and fisheries had
already estimated a loss of over $2.2 billion in retail sales just from
of the damage of the hurricanes much less the perception challenge.JLW
One final issue our industry is dealing with is labor shortages.
Existing labor is going to relief workers making $15 an hour cash or
you may have heard that Burger King was paying $8.50 an hour plus a
$6,000 dollar signing bonus. Processing plants are losing the workers
they did have to these wages and can't find other to fill in.
So where do we begin?
The first issue is the fishermen!
Rebuild fishing communities! Without them nothing else
matters!! Provide funds to fishermen, seafood vessel owners,
oyster farmers.
Help the fishermen get their boats back in the water as soon
as possible and put them to work clearing the waters of debris.
We need to rebuild the infrastructure as soon as possible
(boats, docks, fuel, icehouses, cold storage, marinas, bait and
tackle shops, oyster reefs and on).
We need to rebuild markets lost through marketing and
promotions.
Rebuild our coastlines to save lives.
In closing it is my understanding that this committee will be
taking a helicopter tour today. Seeing the damage from the air will not
suffice and I urge you to land in the affected areas and see up close
and personal the devastation. Once you see this devastation you will
understand the funds requested outlined in the full written testimony
are just enough to get the industry going on the path to recover. I
would like to thank all of you for taking the time to understand our
challenges and opportunities.
Next is information provided by the Louisiana Department of
Wildlife and Fisheries.
The Louisiana Department of Wildlife and Fisheries estimates that
storm -related fisheries losses at the retail level could exceed $2
billion over the next year. The latest estimates combine $981 million
in production losses for parishes affected by Hurricane Rita with the
$1.29 billion losses projected for areas damaged by Hurricane Katrina
for a total of $2.27 billion. That number represents 80 percent of the
total commercial and recreational retail harvest values in 2003, based
on sales levels of $2.85 billion.
Summary: Preliminary Louisiana fishery losses caused by Hurricanes
Katrina and Rita (10/12/2005)
Hurricane Katrina affected Orleans, Jefferson, St. Bernard, Plaquemines,
St. Tammany, Tangipahoa, Livingston, Ascension, St. James, St. John the
Baptist, St. Charles, and \1/2\ of Lafourche parishes.
Hurricane Rita affected \1/2\ of Lafourche, Terrebonne St. Martin (for 6
month each), Assumption, Iberville, Point Coupee, St. Landry, Acadia,
Avoyelles, St. Mary, Iberia, Jefferson Davis, Vermilion, Calcasieu, and
Cameron (for 12 months each) parishes.
------------------------------------------------------------------------
Potential direct Potential direct
loss of available loss of available Potential direct
Category resource (Hurricane resource (Hurricane loss of available
Katrina) Rita) resource (Total)
------------------------------------------------------------------------
Crab N/A N/A N/A
Freshwate N/A N/A N/A
r Fish
Oysters* $ 206,811,000 $25,103,235 $231,914,235
Saltwater N/A N/A N/A
Fish**
Shrimp N/A N/A N/A
Wild N/A N/A N/A
Crawfish
Recreatio N/A N/A N/A
nal
Fisherie
s
Freshwate N/A $ 7,323,128 $7,323,128
r Fish
Loss
------------------------------------------------------------------------
Total $206,811,000 $32,426,363 $239,237,363
------------------------------------------------------------------------
------------------------------------------------------------------------
Potential Potential
production loss at production loss at Potential
Category dockside dockside production loss at
(Hurricane Katrina) (Hurricane Rita) dockside (Total)
------------------------------------------------------------------------
Crab $12,297,617 $10,264,261 $22,561,878
Freshwate $189,019 $2,859,492 $3,048,511
r Fish
Oysters* $ 44,577,072 $12,374,438 $56,951,510
Saltwater $ 25,887,471 $ 27,428,103 $53,315,574
Fish**
Shrimp $81,054,864 $57,198,057 $138,252,921
Wild N/A $4,166,514 $4,166,514
Crawfish
Recreatio N/A N/A 0
nal
Fisherie
s
Freshwate N/A N/A 0
r Fish
Loss
------------------------------------------------------------------------
Total $164,006,043 $114,290,865 $278,296,908
------------------------------------------------------------------------
------------------------------------------------------------------------
Potential Potential
production losses production losses Total potential
Category at retail level at retail level production losses
(Hurricane Katrina) (Hurricane Rita) at retail level
------------------------------------------------------------------------
Crab $81,776,427 $68,255,059 $150,031,486
Freshwate $1,256,934 $19,014,988 $20,271,922
r Fish
Oysters* $296,427,648* $82,287,284 $378,714,932
Saltwater $172,145,944** $182,390,804 $354,536,748
Fish**
Shrimp $538,996,879 $380,354,398 $919,351,277
Wild N/A $27,706,395 $33,691,720
Crawfish
Recreatio $199,517,744 $221,383,678 $420,901,422
nal
Fisherie
s
Freshwate N/A N/A N/A
r Fish
Loss
------------------------------------------------------------------------
Total $1,290,121,576 $981,392,606 $2,271,514,182
------------------------------------------------------------------------
* Oyster losses are for two (2) years.
** Includes Gulf Menhaden.
S. 1765 Federal Appropriation Request
Rationale and Recovery Implementation Summary
Fisheries Disaster Assistance--Hurricane Katrina: $134 million;
Hurricane Rita: $114 million.
This request is based upon the estimated production loss in terms
of dockside value for crabs, shrimp and saltwater fish excluding
menhaden for a twelve month period and oyster production over a twenty-
four-month period. This estimate uses LDWF trip ticket landings and
value data averaged over the past five years (2000-2004) from the
impacted parishes. In consideration of the damages and loss of
infrastructure supporting these fisheries, we have estimated a minimum
of one year for most coastal areas before significant harvest resumes.
Since 1999, the LDWF has maintained trip ticket report records
which in addition to dealer and fisherman names and license numbers,
transaction date, area fished, trip length, etc., capture information
on the species, amount and value of seafood products landed and sold to
wholesale/retail seafood dealers and retailed to the public by
individual fishermen. With the support of the Louisiana shrimp
industry, the LDWF has successfully used its trip ticket data to
identify and qualify shrimp fishers for direct financial assistance
payments under U.S. Department of Commerce NOAA Grant NA03NMF4520310,
administered by the LDWF. Trip ticket data could be again used to
identify eligible fishers and vessel owners for potential distribution
of replacement dockside values.
Under direct lump-sum grants, the LDWF could use trip ticket data
to form the basis of identifying and certifying Louisiana harvesters
and vessel owners qualified to receive potential direct grants. The
database could be used to partition these grants into tiers or levels
linked to reported individual landings histories. Grants to harvesters
and vessel owners could be used as direct assistance for personal needs
or to repair and/or replace damaged vessels, fishing and navigational
equipment.
Menhaden Fisheries Recovery--Hurricane Katrina: $14 million;
Hurricane Rita: no separate request for menhaden.
This request represents 30 percent of the average annual dockside
value of the Gulf menhaden landings over the last 5 years. A menhaden
plant in Plaquemines Parish was severely impacted by Hurricane Katrina.
They report that they land about 30 percent of the total Gulf menhaden
landings. Using information from a recent LDWF economic impact study,
they estimate that their total economic benefit to Louisiana is $155
million, with $116 million in retail sales, $25 million in wages and
earnings, $17 million in total landings. The plant was flooded with
several feet of water, and the fleet of 11 boats was beached. Based on
a report published by the company, they employ approximately 270
personnel, mainly in Plaquemines Parish.
Funding could be applied toward uninsured losses of the facility,
vessels or fishing equipment. It could also be used to support
personnel and infrastructure needs while harvest vessels boats and
processing plant were refurbished.
Fisheries Infrastructure Recovery--Hurricane Katrina: $154 million;
Hurricane Rita: $114 million
This request is based on the average annual (2000-2004) dockside
value of all commercial species harvested within the affected parishes
and the estimated costs to replace boat launching facilities in these
areas. The infrastructure within the impacted area appears to have been
totally destroyed. We estimate that there will at minimum be a need for
investing at least one year of dockside value into rebuilding at least
some infrastructure components. Infrastructure losses include lost or
damaged vessels, docks, ice plants and processing facilities but also
include cold storage facilities, boat ramps, launches, marinas, bait
and tackle shops. Seventy percent of the Wholesale/Retail Seafood
Dealers licensed in Louisiana are based in the parishes impacted by
Hurricanes Katrina and Rita, as are 79 percent of the licensed
commercial fishers.
Funding could be used by NOAA to fund grants that help local
governments who own ramp facilities restore them. In the same way,
monies may also be used to help local governments and private interests
provide emergency services to set up temporary dock facilities
including fuel and ice docks, unloading facilities, and fishing
equipment and supply stores which will enable local fishers to begin
landing their catches as soon as they are able to fish again.
The Department maintains a directory of Louisiana licensed charter
vessels used to conduct dockside and telephone interviews and develop
estimates of fishing effort and recreational harvest from that sector.
The granting process would use the data in the directory to identify
vessel owners/operators who would be potentially eligible to receive
direct grants for losses of vessels and other facilities. Other
facilities could include live bait holding tanks, land-based or
houseboat overnight accommodations for clients and possibly other land-
based infrastructure necessary for the rehabilitation of the charter
industry in the affected parishes.
Louisiana Oyster Recovery--Hurricane Katrina: $94.25 million;
Hurricane Rita: $10 million
The reef rehabilitation request was derived from estimates of the
value of lost reef habitat using pre-storm and post-storm surveys of
oyster mortality and the benefit to costs ratios of past rehabilitation
projects using Federal grant funding in response to past hurricanes by
combining estimates of oyster reef acreage from both the public oyster
seed grounds and private oyster leases.
The LDWF would utilize rehabilitation funding to enhance oyster
habitat by contracting and planting cultch material such as limestone,
recycled oyster shell, or crushed concrete over suitable supporting
bottom substrates within the impacted public seed grounds. Based upon
the percentage difference between impacted oyster reefs on the public
seed grounds and private oyster leases, approximately $29.5 million of
the $104.25 million requested for reef rehabilitation would fund rehab
efforts on the public seed grounds with $66.2 million used to fund
rehab efforts on private leases. Using Federal grant funding, the LDWF
has completed a number of projects such as these and all have proven to
be highly successful with benefit to cost ratios ranging as high
as16:1, but averaging around 10:1. The value of lost reef habitat was
estimated at nearly $960 million following Hurricane Katrina. With a
benefit-cost ratio of 10:1, it is estimated to take a 10 percent
rehabilitation effort to replace the value of the lost habitat.
Therefore, the $96 million used to rehabilitate reef habitat on both
public grounds and private leases is anticipated to yield a future
return of the $960 million worth of reef habitat lost to the storm.
Private oyster lease holders could employ similar habitat enhancement
efforts but may choose to use funding to cleanse their reefs by towing
sediment removal devices such as bag-less oyster dredges over them.
Federal funds were used following Hurricane Andrew to compensate oyster
lease holders for expenses associated with cleansing their own oyster
leases. Funding would also be used to resurvey and mark all oyster
leases within the impacted area. In addition, funds would be used to
replace an existing oyster hatchery which was located on Grand Isle and
totally destroyed by Hurricane Katrina and to repair, replace and
modernize LDWF oyster lease survey equipment and facilities, allowing
more efficient services to this user group.
Louisiana Marine Research Recovery--Hurricane Katrina: $14 million;
Hurricane Rita: $0.4 million
The Marine Fisheries Division suffered losses or damage at most of
its coastal facilities:
The Slidell field facility was totally destroyed as it was
in the path of hurricane force winds. The structure, boats, and
equipment were destroyed.
The New Orleans leased office is located in the Central
Business District, near the interstate. The offices were not
flooded beyond the first floor, however, floors above that
lacked power for a month and records, equipment, and office
equipment were damaged by heat, humidity, and mold and the
building still remained closed as of November 7th.
The field facility at Pointe a la Hache was totally
destroyed, as were the vessels and equipment stored there.
Most buildings at the Marine Laboratory on Grand Terre
Island were destroyed.
The field facility at Sister Lake, a designated public
oyster seed ground was damaged by Hurricane Rita.
Monies appropriated would be used to replace and repair these
coastal facilities. All of Louisiana's fisheries require intensive
monitoring and assessment to ensure that management programs and
practices are effective in ensuring recovery.
Seafood Marketing--$35 million
As a result of extensive media coverage of the aftermath of the
flooding of New Orleans following Hurricane Katrina, public perception
about the wholesome nature of seafood from the affected areas has been
damaged. Although no additional fishery closures beyond the
precautionary closure of oyster growing areas have been implemented,
and although ongoing tissue assays of fish and crustaceans taken from
area waters have shown no levels of concern for potential contaminants;
local, regional and national markets for Louisiana seafood have been
severely impacted by both product availability and public perceptions
concerning seafood safety. These monies would be spent on promotional
and marketing campaigns aimed at recapturing lost and developing new
markets, enhancing quality assurance and certification standards and
assuring national confidence in the continued safety of Louisiana
seafood.
Louisiana License Renewal--Hurricane Katrina: $14 million;
Hurricane Rita: $2.5 million
This request is based upon the costs of recreational and commercial
fishing licenses purchased within the impacted area for a two-year
period, oyster lease rental fees over a two-year period and oyster
lease renewal fees over the full renewal period. One way for the state
to keep the public engaged in fishing, both commercial and
recreational, is to forgive fees for licenses for two years. Seventy-
nine percent of commercial fishing licenses were issued in the parishes
impacted by Hurricanes Katrina and Rita. In addition, about 369,500
recreational licenses were sold in those parishes, and all of the
state's privately held oyster leases are also located in those impacted
parishes. This appropriation would provide licenses and leases to
affected fishers and lessees for two years. The state has approximately
400,000 acres of water bottoms under private lease for oyster
cultivation. The monies would cover the annual lease rental for 2 years
and associated costs of oyster lease renewals.
Fisheries Habitat--Hurricane Katrina: $5 million; Hurricane Rita:
$5 million
Nursery habitats include coastal wetlands, grass beds and beach
foreshores. Monies could be expended as grants to survey, assess
damage, and rehabilitate these habitats in the affected areas. Addition
of hard structures may provide important habitat for some species.
Additional funds could be used to coordinate Department priorities for
fish and wildlife resources with other State and Federal priorities
regarding coastal restoration such as flood protection and navigation.
Subtitle L--Department of the Interior.
Freshwater Fisheries Recovery--Hurricane Katrina: $2 million;
Hurricane Rita: $5.3 million
Numerous freshwater water bodies in southeast Louisiana experienced
fish kills due to saltwater intrusion and poor water quality.
Additionally, most of the water bodies designated as Gulf Sturgeon (a
federally-listed fish) critical habitat in Louisiana were significantly
impacted by Hurricane Katrina. The Mermentau River, prime paddlefish
habitat, also experienced fish kills following Hurricane Rita. Another
species of fish, the Rio Grand Cichlid, is an exotic, invasive species
of fish that can replace native fish. Although its range was slightly
expanding each year, it was limited to only several water bodies.
Katrina may have further expanded the range of this fish. The
Department's fish hatcheries near Lacombe, Woodworth, and facilities
near Beechwood were damaged by the hurricane and the fish in the ponds
were lost. Hurricane Rita spread common Salvinia and possibly giant
Salvinia to areas throughout coastal Louisiana. Additional spray
efforts with relative expensive herbicides will be made in an effort to
control it. Boating access has been greatly reduced in the impacted
areas due to downed trees, residential debris and the spread of aquatic
vegetation.
The Department proposes designing and implementing monitoring
programs to determine the impact to freshwater fish, including Gulf
Sturgeon, paddlefish, and the spread of Rio Grand Cichlids. Results
from these studies will assist the Department in determining what
management options may be necessary. Options may include habitat
modifications, fish stocking, fish eradication (for exotic species) and
management regulations. Boating access in rivers will be improved by
removing fallen trees and other debris. We will expand our spraying
activities in impacted areas to reduce nuisance aquatic vegetation.
USGS Reports Preliminary Wetland Loss Estimates for Southeastern
Louisiana From Hurricanes Katrina and Rita
Hurricanes Katrina and Rita transformed some 100 square miles of
marsh to open water in southeastern Louisiana, according to preliminary
estimates by U.S. Geological Survey (USGS) based on an analysis of
Landsat satellite data from September and October.
Future observations of Landsat imagery over the upcoming year will
allow scientists at the USGS National Wetlands Research Center (NWRC)
in Baton Rouge and Lafayette, Louisiana, to determine how much of the
loss is permanent and how the marsh recovers. Although this early
analysis of wetlands does not take into account some marsh recovery,
indications are that much of the loss may be permanent. Some of the new
areas of open water will likely become new lakes.
Most of the loss east of the Mississippi River is attributed to the
effects of Hurricane Katrina's storm surge, although Hurricane Rita's
surge appears to have rearranged some of the wrack, or marsh debris,
left behind by Hurricane Katrina in the upper Breton Sound area.
Substantial marsh loss, primarily from Katrina, occurred east of
the Mississippi River in St. Bernard and Plaquemines parishes.
Approximately 39 square miles of marsh around the upper and central
portions of Breton Sound were converted to open water by ripping of the
marsh or by marsh submergence. Large compressed marsh features several
thousand feet long are evident in Breton Sound. Most of the loss was
concentrated in an area bounded by the Mississippi River levee to the
west, the Delacroix Ridge to the east, and State Highway 300 to the
north. Follow-up imagery and aerial photography will be used to
determine if some of the submerged marshes reemerge over time.
An additional 47 square miles of marsh were lost throughout the
Pontchartrain, Pearl River, Barataria, and Terrebonne basins. The
active Mississippi Delta also incurred approximately 14 square miles of
loss. The lower Pearl River basin contains numerous marsh rips south of
Highway 90.
Direct impacts from Hurricane Rita were not as severe as Hurricane
Katrina's impacts in southeastern Louisiana. For example, rips in
marshes from Rita were not nearly the size of rips from Katrina in
upper Breton Sound although they are noticeable in the Barataria and
Terrebonne basins. Rita's surge caused new tears in fresh and
intermediate marshes within Barataria and Terrebonne basins and
reactivated older hurricane scars attributable to Hurricane Lili (2002)
in western Terrebonne and the East Cote Blanche Bay area.
Rita's surge caused detectable marsh loss west of the Mississippi
River to the Texas border that could not be attributable to Katrina
based on analysis of satellite imagery obtained a week after Katrina's
landfall, but prior to Rita's landfall.
Now that the compounded effects of the storms on Southeastern
Louisiana have been analyzed, NWRC scientists are analyzing Landsat
imagery to quantify Rita's impacts in southwestern Louisiana.
To perform satellite analysis, USGS scientists in Louisiana used
remote sensing technologies and geographic information systems. They
compared land and water areas identified by using Landsat 5 Thematic
Mapper satellite imagery. Landsat data from November 11, 2004 were
compared to data acquired on September 7, 2005, September 16, 2005,
October 9, 2005, October 18, 2005, and October 25, 2005 to identify
potential wetland loss.
The imagery was collected by the USGS National Center for Earth
Resources Observation and Science in Sioux Falls, South Dakota.
The USGS serves the Nation by providing reliable scientific
information to describe and understand the Earth; minimize loss of life
and property from natural disasters; manage water, biological, energy,
and mineral resources; and enhance and protect our quality of life.
The Chairman. Thank you very much. You know your group has
probably the most independent people, individually owned boats
in you know really, it's a different part of the economy. We're
extremely interested in trying to help you restore that fishing
community. And we'll be very much open to suggestion about how
to have some sort of a conference with NOAA and your state
people and your business associations and your Senators, but I
think we've got some ideas up our way about how to help
fishermen, and we've used them in the past. We'd like to--
really like to explore that, because this is going to be the
toughest area. The rest of the people have more infrastructure
to support them to start with, but fishermen by definition are
solo operations and--but they all collectively come back to
your ports, and this is a tremendous problem here in terms of
how to make sure those fisheries can--the species themselves
can be restored after the damage that's has been reported to
us.
So I want to urge you to contact our people, and let's see
if we can get some meetings here before we close down this
year, make sure we understand where there are any gaps in
existing law that would prevent us from helping your area.
As I said all your statements will appear in the record.
I'm at a loss on one thing. Mr. Falgout, what's the income
stream to your area from all the products that are coming down
and leave through your port.
Mr. Falgout. The income stream directly through our port,
or----
The Chairman. You and Mr. LaGrange both point out how much
comes down through mid-continent and comes through and leaves
through your port here. Your ports, more than one port. But to
what extent? Is there any income stream there that comes to you
now?
Mr. Falgout. Business coming through coastal Louisiana is a
$100 billion business, and am I answering you?
The Chairman. That's products coming in, I understand that.
Senator Vitter. I think what the Senator is saying, if we
don't get any significant cut of royalties, then what if any
income do we get from that activity?
Mr. Falgout. On shore and out the three miles, of course
the state gets a share, but offshore of that, outside of six
miles, we get zero. We do not receive any of the offshore
revenue sharing. Prior to the last 5 years, it was not that
significant because most--the state was producing considerable
amount of oil and gas on its own lands offshore. And the deep
water Gulf of Mexico has not yet developed. But now the shift
has gone to deep water Gulf of Mexico. The overwhelming
majority of production now is coming from Federal OCS lands,
the state is carrying the burden of infrastructure and
supporting that without any revenues coming back from that. And
the state revenues have dwindled because the production is now
in deep water.
The Chairman. You may be interested to know that twice the
Senate passed a bill to give coastal communities a revenue
sharing. And twice the House has refused to pass it. We're
still trying to work with your Senators and Congressional
Delegation again, but the difficulty is, had we passed those
bills, they were back in the 1970s and 1980s, all of the wells
that have been drilled since then you would have had a revenue
base from.
Mr. Falgout. Had you passed that, we'd have golden highway
down to Port Fourchon, because we'd be sharing in about $2.5
billion a year in revenues from that, and we would have built
the levies ourselves and more than likely restored Coastal
Louisiana.
The Chairman. But we have the same problem. There are nine
villages that were destroyed in October of 2004, they're still
waiting for even Environmental Impact Statements to be
completed on how to help them. Because we don't have the
revenue share coming back from the activities either, so we
share your point of view on that.
I do think though that the question now is how we look to
some of these structures. It's been mentioned about the money
that went to New York, the Liberty Bonds were a product of the
state and City of New York, not the Federal Government. The
Federal Government made a $10 billion grant to the whole area,
and turned over $10 billion to the National Administration to
help. But as a practical matter, the Liberty Bonds as I
understand were a product of the monies that were granted to
the City and the State of New York to recover from that
incident.
We may have to look to a similar process here, to determine
priorities as to where money goes after we do get the support
to get additional monies to come your way.
Senator Vitter.
Senator Vitter. First, just a comment, I want to point out.
I want to thank Mr. Smith from the Louisiana Seafood Promotion
and Marketing Board. He helps represent the commercial fishing
industry. In addition, there's a very important, very vibrant
recreational fishing industry. And certainly in future hearings
and meetings, particularly as we lead up to the reauthorization
of the Magnuson-Stevens bill, we're going to include the CCA
and other recreational fishing groups as well as the commercial
side.
So, I just wanted to point that out. In terms of this
discussion of revenue sharing from offshore production, I would
also note that this not a one-way street in terms of it
representing Federal loss, but revenue loss to the Feds, this
could avoid a lot of what would otherwise be an up-front
payment directly from the Feds in terms of investment in both
hurricane and flood protection, and coastal restoration.
So, if we had a fair long-term revenue share, this would
avoid a significant amount of up-front costs from the Feds in
terms of those projects. So, it would be a very significant and
in some ways attractive tradeoff for the Feds as well
particularly, now that we have this obvious need. And with
that, Mark Drennen was real good at identifying top four or so
things to do. I'd like to ask each of you if you would
identify, three top priority actions for Congress to take.
Mr. Falgout. In general, of course the restoration of our
levee system, upgraded to a category 5 is paramount. And you
know how to fund all that. As you just said, if we could share
close to 50 percent as state's inland share with the Federal
Government on Federal lands, on mineral production, we could
get there. The wetland restoration, we have to attain a
sustainable coast, it will not be the coast you saw before
Katrina, it won't be the coast you saw after Katrina and Rita,
but at some level we can sustain coastal Louisiana.
Third, outside of that there will be some areas south such
as Port Fourchon, such as Venice, such as areas in St. Bernard
that can sustain themselves. There are sediments available and
the interior area between that site and the mainland is not
sustainable, and you're going to have to have support
infrastructure that connects you to the mainland, whether that
be an elevated highway, a bridge for instance, that will allow
these areas to continue to produce the Nation's energy. You
cannot move that infrastructure farther inland, because you'll
be moving 200 large vessels a day, you'll be moving thousands
of people inland each day, causing huge amounts of energy usage
and environmental impact, instead of having them on the best
place as they should be on the coast, but you're going to have
to build a bridge to get there unfortunately.
Mr. LaGrange. Well, I would hate to be redundant, but Ted's
absolutely correct, category 5 level protection first and
foremost. And I lump coastal restoration in with that because
the two are directly related. Second, is infrastructure
rehabilitation and relocation. And I'm thinking specifically in
terms of the Port of New Orleans, in that 30 percent part of
the infrastructure that we totally lost. That's an absolute
must. And we can't do that fast enough if we're going to
maintain the competitive rates that we have on an international
trade level, with the importation and the exportation of
products that we were alluding to.
And the third one, thank you. You're already doing it quite
nicely, and that's a navigation maintenance through the Army
Corps of Engineers, we appreciate that.
Senator Vitter. And Ewell, from the seafood perspective,
what are the top three tasks?
Mr. Smith. I asked that same question to our fishermen and
processors when he had them on this tour this past Friday. And
the first thing is to get the help to the fishermen.
Second, is to get the infrastructure up and going. And I'm
being redundant as well. And third, is to have the funds to
market and promote our product so we can get our market share
back and these guys get their lives back in order.
The Chairman. I got severely criticized for such a fund for
Alaska, but it has worked out, and it has increased the market
share for Alaska products, and I think you're right. It's one
thing to get the business going, but you have to recover this
market share now with aggressive action of those foreign
nations that are producing particularly the farm-raised fish.
It's very difficult to compete with them to begin with. But we
have to get the American product out there and emphasize what
it means.
We've utilized the activities of Dr. Wile, the
nutritionist, trying to keep people informed, really a quality
concept of American fish as opposed to farm-raised foreign
fish. But we'll work with you on that too. I look forward to
that.
Anything further, Senator Thomas?
Senator Thomas. Very briefly.
The Chairman. He doesn't have much fishing in his area.
Senator Thomas. I was going to say, we need to get our
share of that fish promotion in Wyoming. Oysters particularly,
we need.
I was going to ask Mr. Falgout, do you ever talk about
the--we hear a lot about the over concentration of energy
facilities, particularly refining here. Does that ever occur,
that maybe there's some reason not to continue to have such a
concentration of refining in a territory that's subject to this
sort of storm.
Mr. Falgout. Well, the last time I checked, there was
nobody waiting to take Louisiana's role in the oil and gas
business. Florida and California would be the most likely
candidates and have production off their coasts, certainly----
Senator Thomas. I'm not talking about production. I
understand that. But I must tell you there is a good deal of
talk about offshore production now in the Atlantic Coast. Not
Florida, but the others.
But you can move products you know, you don't have to
refine them right on the coast.
Mr. Falgout. Correct.
Senator Thomas. They have pipelines they're called.
Mr. Falgout. And specifically, my comments on Port
Fourchon. Port Fourchon has no refinery, and that should not be
on the Gulf of Mexico, those should be protected farther
inland, and certainly we ought to look at moving our refining
capabilities into very well protected areas. But the support
services that are essential for turning on the oil fields after
a hurricane, for the daily movement of cargo to support this
activity, need to be on the Gulf of Mexico.
Senator Thomas. Very quickly, because I know you talked
about the royalty costs, and I understand and that's a big
issue. But when you bring oil products through your port, if
there's a cost to you, as there obviously is, why doesn't that
product pay for the cost?
Mr. Falgout. I don't know if I follow that question. But I
mean we are unable to assess a tax.
Senator Thomas. I'm not talking about a tax, I'm talking
about a commercial charge. If you're going to handle a product,
all these ships and all that sort of stuff, why isn't there
just a charge then to support your port?
Mr. Falgout. Of course the port does charge, it does very
well, OK. But when you're talking about moving much of the
product through this coast by pipeline, we are not able to
charge a tax on the commodities coming in by pipeline. And we
don't specifically need that amount of money.
Senator Thomas. No, you don't.
Mr. Falgout. It needs to be--go to the State of Louisiana
to make those improvements.
Senator Thomas. And I think you have to keep in mind at
some point there is a limit to how far the jurisdiction goes
out in the ocean are you going to be out a 150 miles, I don't
think so.
So you're going to have to be a little careful about how
far you go, you already can go out six miles.
Mr. Falgout. No, we only are allowed three miles in
Louisiana, and we share out to six miles a lesser percentage
than----
Senator Thomas. No, I understand, but it's not just a clear
cut issue I'm afraid, and it needs to be talked about, the
royalty thing.
Mr. LaGrange, just one final question. I misunderstood you.
You were talking about the cost to your--the cost to be
maintained by your port.
Mr. LaGrange. The $275 million figure?
Senator Thomas. Million, was it million?
Mr. LaGrange. Million with an M, yes sir. It's a little
over a billion public and private.
Senator Thomas. I thought you said B, and I was a little
surprised.
Mr. LaGrange. No sir, it's $275 million for the Public Port
Authority.
Senator Thomas. I understand. Thank you, sir.
The Chairman. I don't want to belabor it, but the real
problem here is that we're reaching a 60 percent importation
right now for foreign oil. That oil doesn't have any sharing of
anything. And it comes in, and the price is set by foreign
producer. And we've tried to put some level of import duty, or
whatever you want to call it on it. I really think we should.
But it's been very difficult to do.
Senator Thomas. Mr. Chairman, I wasn't talking about that.
I was talking about the cost that he's seeing going to the
port, and I'm saying those costs incurred can be charged
commercially.
The Chairman. Well, that's true. But here they've got one
of the major offshore ports for imported oil, and it's not
contributing at all to the economy. But--and that's a national
problem I think. I do think what we ought to put on table and
start thinking about--and I think that's where the Senator from
Wyoming is going. We're committed to do everything we can to
restore this area, but the problem is--the probabilities of
another Katrina are pretty great. We ought to start thinking
about establishing funds and reserves so that you don't really
have to have you know, massive change, and a loss to take care
should it happen again, God forbid.
But you know there is a--when I was in the State
Legislature I helped create a disaster fund after our 1964
earthquake, and that has been--we pay into that disaster fund
on an annual basis. And it's been used because of disaster that
have come along.
I think we all have to start thinking about how do we treat
disasters, and where do we get the revenue flow into that fund
that will continue to build and be available for disasters
nationally. There's a serious problem here about that, as far
as I'm concerned.
Senator Vitter. Chairman, if I could----
The Chairman. Yes sir.
Senator Vitter.--make just three other comments responding
to some of the discussions, in terms of refining capacity,
which Senator Thomas brought up. We have a desperate need in
this country for additional refining capacity, but we need to
do that, not to move the capacity out of here, we just need to
do it, to add capacity to what we have nationally. Because we
are topping out right now, in terms of refinery capacity, and
reaching a real crisis level.
So we really need to do both, we need to maintain and grow
what we have here, but we need to grow it in addition anywhere
we can, around the country. And I'm afraid we've built up over
the last 30 years a regulatory environment that makes it
virtually impossible to open a new refinery in this country.
So that's a real national priority that I think we share.
Second, in terms of your comment about a disaster fund, I agree
with you completely. In terms of future disasters in this area
though, the best fund and the best investment in my opinion is
heightened category 5-type protection. Because that's what's
going to avoid another $100 billion event in the future, or in
inflated dollars, who knows what it would be in 10 or 20 years,
$200, $300 billion event.
If we're really going to be fiscally responsible about
this, the first thing I hope we're going to do is make sure
that hit to the national economy and the national taxpayer
never happens again. And when you talk about the investment
needed to avoid that, it dwarfs the loss and the expense of
having another one of these over $100 billion events.
The Chairman. Any other comments gentlemen?
Very well. We do thank you all very much for your
contribution, all of these hearings will be printed and will be
available to the Members of the Senate and the public
obviously. I do think we've just got a lot of questions to ask.
And, again as I opened, I would say unfortunately people take
too many inferences from the questions we ask.
We'll call the next panel after a 5-minute break.
I see that Mayor Nagin is here.
I'm glad to give you a seat at the table and listen to your
comments if you'd like to give them.
Mr. Mayor, would you like to make comments on the record
here this morning?
Mr. Nagin. I will do whatever the Committee would like me
to do.
The Chairman. I could tell a joke I heard once but it's not
the time for it. But this is professional courtesy Mr. Mayor.
STATEMENT OF HON. C. RAY NAGIN, MAYOR,
CITY OF NEW ORLEANS
Mr. Nagin. Well, I appreciate that members of this
committee and you know it's a pleasure to see you in the
wonderful city of New Orleans, I hope that you are getting a
good feel for some of the challenges that we have in this
wonderful city.
I think when you come down and you see exactly what has
happened, and our opportunities, I think it gives you a
different perspective.
I've been on--in D.C. on a regular basis talking with many
Members of Congress, trying to make sure that we put our best
foot forward in getting people to understand exactly the need
to rebuild New Orleans. I know there is a lot of debate going
on right now, about whether we should or should not do it.
There's no doubt in my mind we should rebuild New Orleans. When
you look back at the history of this country and you look at
the incredible land deal that this country made to buy
Louisiana, and at the center of that land deal was New Orleans,
the access of the port. And it was one of the most incredible
land deals that this country has ever undertaken.
As you look at how important New Orleans is to the country,
you look at our oil and gas productions, I don't think this
country could do without that. If you look at the Port of New
Orleans, that has six class A rail lines. I don't think the
country could do without that. And you also look at what New
Orleans has done culturally for this country. The President of
the United States basically said he couldn't imagine America
without New Orleans. We have a history of great music, great
food, great fun, but in the middle of all that you have people,
wonderful American people. They're the essence of what this
country is all about. We were a very diverse city, we will
continue to be a very diverse city. We are a city that is going
to come back, and if I could express any, the top three things
that I think that we need to come back, from this committee and
from Congress. We need comfort and verification on the levee
systems. We need to know the city of New Orleans, the residents
of New Orleans need to know and have comfort that we're going
to rebuild the levee system to the category level, hopefully
category 5, that will protect us from another Katrina.
Second, the City of New Orleans is cash strapped right now,
we basically are without any incoming revenues, and we need
support to allow us to continue to operate over the next 6 to
12 months.
And then finally, we need some unique incentives to attract
both people and businesses back to this area. We don't want to
be a burden to the country's treasury, but we do think the
country should support us as we continue to rebuild.
So, I'm happy to have you here, I hope that you have a
productive meeting, and anything I can do to help, just let me
know. Thank you.
The Chairman. Well, thank you very much Mr. Mayor. We've
appreciated having Don Hutchinson, your Economic Development
Advisor with us on this trip. He'll continue to be with us, so
I appreciate your stopping by.
Mr. Nagin. Thank you.
The Chairman. Any questions, any gentlemen? We do thank you
for joining us. And now to Mr. Steve Perry, President and CEO,
New Orleans Convention and Visitors Bureau.
Mr. Perry.
STATEMENT OF J. STEPHEN PERRY, PRESIDENT/CEO, NEW
ORLEANS METROPOLITAN CONVENTION AND VISITORS
BUREAU
Mr. Perry. Mr. Chairman, thank you very much. Senator
Thomas, Senator Vitter. We--I am here representing New Orleans
largest industry. We are by far the largest economic sector in
the city of New Orleans and we are by far the largest employer.
Over 85,000 people in a city of less than 500,000 people work
in our industry. In fact, it's often said that the New Orleans
tourism industry in Louisiana is third Fortune 500 Company.
We are in arguably the most famous mid-sized city in the
world. And it is famous because of its tourism. Because of
those things that we're known for so much nationally and
internationally, nine Super Bowls, more than any other City,
more Final Fours, the greatest Jazz and Heritage Festival on
the earth. But the creator of the most famous indigenous form
of American music, jazz, and of course, culinary arts. There's
no place like New Orleans.
It's also the place where more than half of its city is
comprised of an historic district. And that means something,
because this is a place truly different. And it's a place that
has been preserved. But we've got real challenges ahead of us.
And what we're here today to talk to you about, is literally
the economics of our industry. To give you a report on how that
largest industry faired, what our challenges are, and to offer
you, we hope, some opportunity for investment, that are far
smaller than many of the numbers that you're hearing about, but
they can in fact, help rebuild the Federal Treasury, the State
Treasury and the economics of this city.
I said we're a $5 to $8 billion industry, that really only
scratches the surface. Five billion dollars of visitor spending
comes in here every year. It fuels the jobs of 85,000 people.
In many ways we're a lot like the fisheries industry, because
we're comprised of a lot of small business people. And those
small business people are incredibly damaged right now. What
are the kinds of things that we need to get going you know, and
you saw on television through the MSNBC reports, and CNN, you
saw the graphic nature of the images here in the two weeks
after the storm. That's had a powerful impact on our market
share in American tourism. One of the top four markets in the
United States, we're sitting right in the heart of New Orleans,
in the French Quarter, yet we were damaged unbelievably by
those graphic images, and we're going to need marketing help to
rebuild. It is extremely hard for us to appear before committee
of the U.S. Senate or any other governmental entity, and ask
for dollars, we don't do that. We're private sector businesses,
we have flourished for many years and built tens of thousands
of jobs on our own.
But we need a little bit of help right now, to get back
going. And it's not hundreds of billions of dollars that we
need, it's tens of millions of dollars. We are very
appreciative of the fact that Senator Vitter and Senator
Landrieu have worked so hard on behalf of our industry.
Lieutenant Governor Landrieu has helped bring our whole
industry together over the last few weeks, and in fact we're
probably the most organized business sector in the State of
Louisiana right now, and have been since two weeks after the
storm.
What is it that we need, and what help do we need to get
back? We could literally bring with small amounts of investment
over $5 billion back into the economy in the next 12 months.
The Mayor has laid off over half his city's workforce because
we are the largest contributor to the city's revenue base of
any group in the City of New Orleans. The same is true for the
State of Louisiana. And frankly, the course of last resort for
us would have been the U.S. Senate, and the U.S. Congress. It
pains us to be here to talk about this and to ask you for help,
but where we are now, is we've got tremendous needs in the
areas of marketing. Recapturing market share for us, literally
just over the next 24 months, will be critical to the
repopulation of New Orleans, to the building back of tens of
thousands of jobs and of thousands of businesses. Now, how does
it work and what kind of money are we talking about? The little
company that I lead, a 501(c)6 corporation, the New Orleans
Convention and Visitors Bureau is a non-profit private sector.
But we are the official entity for the marketing, and the
branding and the re-imaging of New Orleans, as it relates to
the business side, and corporate meetings, associations and our
general tourism marketplace.
Right now, we have no other source to go to. Our funding is
basically completely eliminated. The hotel tax has been
destroyed here this fall, and our revenue base of all the small
businesses that comprise us, has been decimated.
What does it take to rebuild $5 billion? For us, it's $10
million to help with a Convention and Visitor Bureau to go
forward as the City and the state's official entity which works
nationally with associations, corporations, to bring meetings
here.
But what we need in addition to that is $10 million in
incentive--in convention marketing, and convention incentive
revolving fund that will allow us to take some of the concerns
out from our meeting customers.
As you can imagine many of the images that were seen around
the United States here in September has had a real impact on
our clients. We've had a lot of our customers who have said you
know what, we're ready to come back and come back right now.
Many of the major Washington Associations, and Chicago
Associations, are already telling us they want to come back,
but many of them are not sure they're ready to come back yet.
And it could be 3 years from now, it could be 4 years from now,
and if that's the case, we're going to lose tens of thousands
of jobs that will make the repopulation of New Orleans, and the
regeneration of our tax base extremely difficult.
We need some marketing help now. And we have no other
source to go to. So what we're asking is that $10 million of
convention marketing, but $40 million of leisure side tourism
marketing. This really serves multiple purposes. Not only would
it bring $5 billion of visitor spending back, but it will
recharge the tax base of the City of New Orleans, and help the
repopulation of this city, because it will bring back the
85,000 working men and women of the City of New Orleans.
As you all know, people have real challenges to come here.
And they've got to have two things. They've got to have a job,
and they've got to have a place to live. And other people will
testify and work with you on how we do the rebuilding of our
neighborhoods and communities. But the ability to rebuild our
jobs and to give our small businesses the ability to move
forward is critical.
Louisiana Rebirth, the Restoration of the Soul of America,
a program put together by many of the top national business
leaders in our industry under the direction of our Lieutenant
Governor has effectively provided some solutions and some
opportunities for Congress to step in and help us help
ourselves.
We're looking, as Mr. McDonald said, the Chairman of the
Chamber of Commerce, and Mark Drennen, President and CEO,
Greater New Orleans Inc. Tourism is critical here. Because it's
critical not only to one of the Nation's foremost powerful
tourism meetings and convention businesses, but it's critical
to the future of people wanting to come home. New Orleans is
not a rich community, and because of the power of tourism, we
have the restaurant quality, the museums, the art galleries,
the parks, the recreational opportunities that are critical to
creating the quality of life that makes business want to be
here.
Without tourism, we won't have the individuals who are the
depositors in the banks, who buy the automobiles from the car
dealers. We will not have those 85,000 people who buy goods at
retail.
The future of this city depends on the quick restoration of
its tourism industry because it drives not only the economics
of the city, and the jobs of the working people here, but it
affects the quality of life, and it will determine whether many
of our businesses that are not part of tourism chose to come
home.
So what we're asking for, I think this past week, Senator
Vitter, and Senator Landrieu sent a letter to the
Appropriations Committee, and also have worked to pair down and
to hone not in requesting the billions, but a request of less
than $700 million for the entire State of Louisiana, and here
in the City of New Orleans, for the Convention Center, and it's
less than $100 million of damage and needs. Our marketing
efforts of $60 million and help for the airport to get
reestablished as the core of commerce.
We have the ability to make money for you, and many of the
requests you're getting the money flows out, but doesn't flow
back in. The small dollars that we're asking for will make
money for the Federal Treasury, will reduce Federal dependence
on those tens of thousands of workers, and will provide you an
opportunity to help restore the economics of this city in a way
that gives you great return on the investment.
We thank you very much for being here, and we're sorry we
can't show you the kind of hospitality we have in a normal
month, but we're honored to have you here.
The Chairman. Did you say $100 million to repair the
Convention Center?
Mr. Perry. Sir, we have close to $100 million in actual
damages. Fortunately we had $500 million of private insurance
on the Center which is a state building. We'll have
approximately $25-$35 million in gap on the deductibles. We
believe that in fact those dollars could be applied against the
$52 billion that Congress already authorized, and that in fact,
we could get that repaired and up very quickly without having
another appropriation, so we're asking for assistance there. We
have another--here in the French Quarter, and I think as you
walked around, you've probably seen the military vehicles, the
recovery vehicles, the generators, and water tankers have done
a lot of damage to the sidewalks in the Quarter.
We need about $17 million, and that's all. Really between
$17-$35 million to repair sidewalks and curbs here in the
Quarter, because the city won't have the ability to do that.
And the state won't have it. And this is our economic front
door of the world. And we believe that that money could well
come without another appropriation if it was authorized to come
within the $52 billion already awarded for the initial
recovery. So past that, we honestly believe that the newly
appropriated dollars will have to--can be fairly small. And
that is the $60 million of marketing, and the money for the
airport contained in Senator Vitter and Senator Landrieu's
proposal in tourism.
[The prepared statement of Mr. Perry follows:]
Prepared Statement of J. Stephen Perry, President/CEO,
New Orleans Metropolitan Convention and Visitors Bureau
Overview
The primary catalyst and driver of the New Orleans economy is the
tourism industry, comprised of large and small scale association and
corporate meetings and conventions, rotations of most of the major
national sporting championships, a vast leisure and family destination,
large packaged tour series, a popular foreign traveler destination, and
many of the most important special events in the Nation such as Mardi
Gras, the Essence Festival (the world's most important annual African-
American culture and music festival), the New Orleans Jazz and Heritage
Festival, the French Quarter Festival, Satchmo Fest, the Sugar Bowl and
many, many more.
The industry is served by more than 2,500 companies and employs
85,000 people in a parish (county) of less than 500,000 persons. The
entire retail, banking, professional and services industries depend on
the more than 85 billion of annual direct visitor spending and
additional several billion dollars of spinoff impact. Not only is the
impact direct through visitor spending, but the 85,000 workers employed
in the industry are the primary depositors in banks, purchasers of the
largest segment of retail goods, and generally drive the overall health
of the economy and the success of its large and small businesses.
The return of the tourism industry will determine the very survival
of the New Orleans economy not only from the corporation and tax
generation perspective, but will be the primary determinant of whether
the working people of New Orleans are able to return to the city,
reestablish their lives, and bring their families home to live and
repopulate the city.
Immediate Budgetary Needs
New Orleans Metropolitan Convention and Visitors Bureau
The New Orleans Metropolitan Convention and Visitors Bureau
(NOMCVB) is the primary catalyst and sales, marketing, and branding arm
of New Orleans largest industry, tourism. It is a private sector
501(c)(6) company governed by a private board of directors and serves
as the statutorily authorized entity in Louisiana to manage and market
tourism in New Orleans and is the recipient of state authorized hotel
tax funding. It thus performs a vital public function, though a private
entity. The city's economy depends on its effective operation.
The NOMCVB is the sole link of the city's largest industry to the
international tourism markets, wholesalers, packagers, brokers, tour
series operators, travel agents, national and international
conventions, meetings, special events, and sporting events representing
$5 to $8 billion of annual economic impact and resulting in the
employment of 85,000 New Orleanians. Most of these employees are in
those entertainment and commercial enterprises which brand New Orleans
internationally in hotels, food, music, and entertainment and drive its
economy.
The NOMCVB is funded by a hotel tax that has now been obliterated
and by a member dues base that will be non-existent for at least two
years.
The NOMCVB operation must be sustained because its sales manager
base has all of the data and relationships to all of the worldwide
convention and meeting planning and travel professional community. This
is an industry that is primarily relationship driven, particularly on
the convention and meeting side. If those employees are laid off and
hired elsewhere, billions of dollars of competitive information and
data would leave Louisiana, crippling the entire rebuilding process of
New Orleans' largest industry. It would likely be a death knell for the
city's economy and the early return of its citizens if our employees
were lost to competitors.
Operational Shortfalls and Needs
2005 The NOMCVB has reserves to
carry it until March 1,
2006
2006 $9,000,000 annual operating (anticipated revenue =
needed $2,000,000)
Total NOMCVB $9,000,000 (1 year)
operating
needs
Marketing and Incentives
Operation REBIRTH Marketing Fund
Essential marketing dollars for the NOMCVB and its sister the New
Orleans Tourism Marketing Corporation to re-image and remarket New
Orleans leisure side tourism in light of the catastrophic events . . .
the primary key to rebuilding the 10,000,000 visitors and $4 billion of
combined leisure impact:
2006 $40,000,000
2007 $25,000,000
NOMCVB Convention Marketing Fund
To rebuild the image of the Convention Center and remarket
following the devastating events and national images.
2006 $5,000,000
2007 $5,000,000
NOMCVB Convention Incentive/Indemnification Fund
To provide incentives and guarantees to major associations to
remain in or book major conventions in New Orleans.
2006 $5,000,000
2007 $5,000,000
Timeline: Emergency operational funding to the NOMCVB of $6,000,000
is needed on March 1, 2006. The second $3,000,000 is needed on July 1,
2006. Without these dollars, the city's largest economic driver will
lay off all of its employees and close its doors, effectively ending
economic recovery.
The NOMCVB Convention Marketing Fund of $5,000,000 is needed by
January 15, 2006, if the multi-billion dollar base of convention
business is to be preserved and recaptured.
The NOMCVB Convention Incentive Fund of $5,000,000 is needed by
January 31, 2006, if the multi-billion dollar base of convention
business is to be preserved and rebuilt.
The Operation REBIRTH marketing fund of $40,000,000 for the NOMCVB
and its sister the New Orleans Tourism Marketing Organization is needed
for January 15, 2006. The 2007 dollars are needed for January 1, 2007.
Ernest N. Morial Convention Center
Capital Construction Needs
Repair and renovation of the Ernest N. Morial Convention Center.
Total $100,000,000
Minimum Insurance Gap of $25-35,000,000
Structural repairs, Halls A and B, major roofing repairs, all
equipment, interior surfaces, signage, environmental decontamination.
Timeline: All repairs and renovations must be executed and the
building ready to open by late spring 2006. Insurance coverage will be
deducted when determined. Funding needed ASAP.
It is anticipated that the combination of deductibles and gaps in
sub-policy coverage will result in a funding gap of at least $25-35
million.
Convention Center Operating Needs
Operating Shortfall for 2005 $15,000,000
Operating Shortfall for 2006 $26,000,000
Operating Shortfall for 2007 $25,000,000
Debt service shortfalls due to loss of multiple hotel, occupancy,
tour, and f & b taxes.
2006 $34,000,000
2007 $30,000,000
Timeline: Debt service issues must be addressed immediately.
Operating shortfall for 2005 needed immediately due to loss of rental
and other self generated income. Calendar year 2006 funding needed in
Quarter 1. Total need in Q1 is $100,000,000.
French Quarter Infrastructure Rebuild
The French Quarter has sustained serious infrastructure damage to
its streets, sidewalks and curbing system. The introduction of large
trucks, emergency vehicles, military equipment, water tankers,
generator systems, and the parking of emergency and police vehicles on
the sidewalks and fragile streets has resulted in serious degradation
of the area's infrastructure. The Nation's largest and most important
historic district and mixed use commercial/residential neighborhood has
sustained highly problematic damage. It is also the key to recovery of
the multi-billion dollar tourism industry. This rebuild must commence
in early 2006 to facilitate tourism rebound.
Capital Construction $17,000,000
Priority Keys to Immediate Rebuilding
Federal funding to jumpstart New Orleans' largest industry and
employer is critical to accelerate recovery, allow the return of our
citizens and rejuvenate tax flow.
Funding Needs Timeline (2006)
New Orleans CVB (NOMCVB)
Operations $9,000,000
Convention Marketing Fund $5,000,000
Convention Incentive Fund $5,000,000
NOMCVB/NOTMC Leisure Marketing $40,000,000
Ernest N. Morial Convention Center
Operations losses 2005-2006 $41,000,000
Debt Service shortfall $34,000,000
Repairs Insurance shortfall $25-35,000,000
French Quarter Infrastructure Rebuild
$17,000,000
Summary
America's most romantic, walkable, historic city took quite a blow.
But we believe it will only be for a matter of a very few months. Only
time will tell the duration. The birthplace of jazz, home of unique
French and Spanish architecture, and the originator of the most
renowned cuisine on the planet has truly suffered. But its government,
business and tourism industry leaders are pledging that beginning over
the next few months the city will begin its efforts to be reborn better
than ever.
The tourism leadership is committed to helping lead the greatest
urban rebuilding project in our Nation's history. We have a historic
opportunity to be a living laboratory for taking disaster,
infrastructure degradation, and social ills and rebuilding a new city
that remains historic and unique, but is a model for rebirth socially,
culturally, and structurally.
The historic French Quarter and nearly all of the hospitality
infrastructure survived, though battered. The amazing historic texture
and fabric of this unique city . . . all of those things that draw
millions of visitors from around the world resiliently remain.
Though we will be down for a period, there is a sense already
forming among our leaders and the people that we will successfully be
able to preserve all of those things which have made us world famous,
and that we will be able to rebuild an even more welcoming vibrant city
in which to live, work and do business. It will require all of us to
unite. The work will be hard but gratifying. The challenges are
immense. We are up to the task.
It may be quite a while . . . but one day the riffs of jazz
trumpets, the indescribable tempting smells wafting from the kitchens
of our great chefs, the aroma of cafe-au-lait and beignets, the buzz of
great conventions. that foot-wide magnetic smile of the front bellman,
and the romantic strolls through the Quarter will be commonplace again.
The spirit of the multicultural people of New Orleans is indefatigable,
and though we may be bowed and emotionally stretched. we cannot be
defeated and cannot wait to rebuild the world's most authentic city.
All that is needed to regenerate an annual $8 billion, 85,000
employee industry, is an investment this January by the Federal
Government of $159 million of funding for the Convention and Visitors
Bureau, the marketing and promotion and re-imaging of the city, and the
Convention Center. A stunning return on investment and one that will
reap billions of dollars year after year. Without this funding the
industry will wither and atrophy.
Another $17,000,000 is needed to rebuild America's most famous
historic and commercial district, the French Quarter.
A small part of a $200 billion recovery, but one that has the most
business and human impact of all.
The Chairman. Thank you very much. Our next witness is
Elaine Coleman, Commissioner of the Downtown Development
District.
STATEMENT OF ELAINE COLEMAN, COMMISSIONER, DOWNTOWN DEVELOPMENT
DISTRICT
Ms. Coleman. Thank you very much Chairman Stevens, and
Senators Vitter and Thomas. I really do appreciate you inviting
me here today to speak.
I am a life-long Louisianian. Born and raised in Louisiana,
but I've made New Orleans my adopted home. I've been here for
the past 24 years, and for the last 20 years, I have spent
working in downtown New Orleans. After 30 years with Entergy
Corporation, I took early retirement last year and I've spent a
lot of my time doing volunteer work, and I was immediate past
Chair of the Downtown Development District. I'll be speaking
this morning, honing in on downtown, but certainly anything I
will say today, will be in essence throughout the entire region
that I speak.
But I do want to focus on downtown. The Downtown
Development District was chartered in 1974 by the State of
Louisiana, and we're responsible for physical and economic
development of downtown. We accomplish this by providing
strategic planning and professional economic development
services, by helping to fund capital improvements such as a $17
million Canal Street revitalization project that was ongoing
when Katrina hit.
We also do enhanced public services downtown such as
sidewalk cleaning, and enhance public safety. The DDD is
acutely aware of the devastating economic and social cost of
Hurricane Katrina. Our own downtown offices were flooded,
equipment and documents were lost and our staff were displaced.
We have also had to downsize by cutting 50 percent of our
staff members because we're bracing for a projected 50 percent
reduction in property revenue, property tax revenue in 2006.
And all this is happening at the time that the DDD is
needed more than ever. Downtown and the French Quarter for many
years, have been the most important economic generators in the
city of New Orleans. We are the center of the city's
hospitality and tourism industry. As Mr. Perry just stated,
with 25,000 of the region's 38,000 hotel rooms, we're the
center of medical research and clinical care, home to both the
Tulane and LSU Medical Science Centers. Our office and service
center sectors employed about 70,000 people in other key
industries such as oil and gas when Katrina hit. And downtown,
unlike most of our counterparts across the country, we continue
to be a major tourist and shopping destination. Downtown can be
again the economic engine that revives New Orleans, but there
are some things that need to happen and we're asking for your
help.
First, local government and agencies such as Downtown
Development District, must receive short-term alternative
funding to allow us to continue to operate. The DDD is applying
for a Federal Community Disaster Loan and we're grateful for
these funds. Yet the maximum loan limit of 25 percent of one
year's operating expenses will not come close to making the DDD
whole as we're trying to respond to one of the most enormous
challenges our lifetime.
We need Federal grants to the city of New Orleans, to the
DDD, and similar agencies in the disaster zone so that we will
have the financial resources to get the job done.
The DDD also adds its voice to the litany for those calling
for a Federal commitment to build a levee system capable of
withstanding a category 5 hurricane, and to make coastal
restoration a top priority.
And fixing the levee system is closely linked with another
DDD concern. Keeping the insurance claims process fair and
rates affordable for those who do business and live in the
devastated area.
The DDD calls for the Federal Government to do all that it
can to eliminate red lining, and keep insurers rates
reasonable. If casualty and liability insurance are not
available in New Orleans, or they're unnecessarily, or
unusually, or if they are highly priced, it will spell disaster
for our economy.
Business cannot thrive without insurance or with uneconomic
cost structures. We ask the Federal Government to intervene if
necessary to ensure fair and reasonable treatment of businesses
and residents along the entire Gulf coast.
And speaking of uneconomic cost structure, I would be
remiss after spending 30 years with Entergy if I didn't mention
that Federal grants are needed to assist electric and gas
companies to pay for the restoration of their devastated
systems. This is essential because if customers are asked to
pay for these enormous restoration costs, rates would
skyrocket. Remaining customers would have difficulty paying
such bills and economic development recovery efforts would be
stifled, not only downtown, but for the entire region.
Therefore, Federal intervention such as the precedent set
following the 9/11 terrorist attacks, when Con Edison was
provided with Federal funds is crucial to this city's recovery.
In addition, small business who are hurting and can't meet
payroll, or can't meet mortgages, so we indeed need your help
there as well. We've already heard about temporary housing
which is also a major concern. And we've also heard about the
Liberty Bond Program after 9/11 and I know Chairman Stevens
corrected us and helped us to understand that a little bit
more. But we do indeed need that program as a way of helping
for long-term housing. And the Federal Government can also
assist in returning residents and businesses to New Orleans by
providing a tax credit to residents and businesses displaced by
Katrina.
It is a fact that every family and business that have been
displaced, have incurred unforeseen costs related to
transportation, to temporary lodging and facilities, replacing
personal properties and so on. Families and businesses wishing
to return to New Orleans will face additional costs. The
Federal Government can help remove this disincentive by
creating tax credits for businesses and families who've been
displaced and who return to the affected area. This would help
downtown to retain many firms in key industries such as oil and
gas by encouraging them to return from their temporary
facilities elsewhere without paying a penalty to do so.
And lastly, the Downtown Development asks that the Federal
Government commit itself to maintaining Federal agencies and
contracts and services in New Orleans. That has been talked
about already, so I won't go into any additional detail about
it. But it's especially important for downtown in this area of
health sciences which is so important to downtown's success.
Please assure us that the National Institutes of Health and
other agencies do not give up on the many scientists and
clinicians working in New Orleans that impact the entire
country.
In closing, I thank you for visiting us here in New
Orleans. It's important that you're actually here, on the
ground. And I know that Senator Vitter and Senator Landrieu
have worked very hard along with the rest of the delegation to
get you all here, and I know that you've seen the devastation,
and we're living it everyday. And we're simply asking you not
for a handout, but simply a hand up as we rebuild the city.
We're committed to rebuilding. We're not asking you to do
everything, but we do know that without the Federal
Government's help it will be much more difficult. So we're
simply asking you for assistance at this time. Thank you very
much.
[The prepared statement of Ms. Coleman follows:]
Prepared Statement of Elaine Coleman, Commissioner,
Downtown Development District
Good Morning Senators. I am Elaine Coleman, a life-long resident of
Louisiana, with 24 years residing in the New Orleans area, and over 20
of those years spent working in downtown New Orleans. After 30 years
with Entergy Corp. I retired last year and continued my volunteer
services as a Commissioner on the Downtown Development District.
Thank you for allowing me to speak to you today on behalf of the
New Orleans Downtown Development District . . . or DDD for short--which
is the oldest business improvement district in the U.S., funded by a
special taxing district established by the property owners of downtown
and city voters.
Chartered in 1974 as a political subdivision of the State of
Louisiana, the DDD is responsible for the physical and economic
development of downtown New Orleans. We accomplish this by: (1)
facilitating and expediting private real estate and business
development, (2) by helping to fund capital improvements such as the
$17 million Canal Street Revitalization Project, which was under
construction when Katrina hit, (3) by development planning, and (4) by
providing enhanced public services downtown, such as sidewalk cleaning
and enhanced public safety.
The DDD is acutely aware of the devastating economic and social
costs of Hurricane Katrina. Our own offices downtown were flooded by 18
to 24 inches of water, destroying documents and equipment and
displacing our staff. Our full-time staff has dwindled from 14 down to
7 due to layoffs and resignations caused by the relocation of staff
members to other parts of the country. The DDD has downsized staff and
programs in order to brace for a projected 50 percent reduction in
property tax revenue in 2006.
All this happens at a time when the services of the DDD are more
necessary than ever.
Downtown and the French Quarter for many years have been the most
important economic generators in the City of New Orleans:
We are the center of the city's hospitality and tourism
industry, with 25,000 of the region's 38,000 hotel rooms.
We are a center for medical research and clinical care--home
to both the Tulane and LSU health science centers.
Our office and business service sectors employed about
70,000 people in other key industries, such as oil and gas,
when Katrina hit.
And downtown, unlike many counterparts across the country,
continues to be a major tourist and retail shopping
destination. With three major shopping malls and hundreds of
thousands of square feet of street-level retail, downtown has
served--and can continue to serve--as the city's main source of
retail goods and services.
Downtown can be, once again, the economic engine that revives New
Orleans. But several things must happen for downtown to revive:
First, local governments, and agencies such as the Downtown
Development District, must receive alternative funding to allow us to
devote every bit of our professional expertise and local knowledge base
to overcoming downtown's challenges. The DDD is applying for a Federal
Community Disaster Loan, and we are grateful for these funds. Yet the
maximum loan limit--25 percent of one year's operating expenses--will
not come close to making the DDD whole, and capable of responding
sufficiently to the enormous challenges we face downtown. We need
Federal grants to the City of New Orleans, DDD and similar agencies in
the disaster zone so we have the financial resources to do the good
work we are capable of.
The Downtown Development District also adds its voice to the litany
calling for an immediate Federal commitment to build a levee system
capable of withstanding a Category 5 hurricane and to make coastal
restoration a top priority. Working on the ground with downtown
businesses and property owners, we know that this is foremost on our
constituents' minds. It's about more than peace of mind. It is a
critical economic issue that will stall reinvestment until it is dealt
with.
Fixing the levee system is closely linked with another DDD concern:
Keeping the insurance claims process fair and rates affordable for
those who do business and live in the devastated area. The DDD calls
for the Federal Government to do all it can to eliminate redlining, and
to keep insurance rates reasonable. If casualty and liability insurance
were not available in New Orleans, or were unreasonably priced, it
would spell disaster for our recovery. Business cannot thrive without
insurance or with an uneconomic cost structure. We ask the Federal
Government to intervene if necessary to ensure fair and reasonable
treatment of businesses and residents along the Gulf Coast.
Speaking of an uneconomic cost structure, I would be remiss, if
after spending 30 years employed by Entergy, if I did not mention the
need for Federal grants to assist private electric and gas companies to
pay for the restoration of their devastated systems. This is essential
because if customers are asked to pay for these enormous restoration
costs, rates would skyrocket. Remaining customers would have difficulty
paying such bills and economic development recovery efforts would be
stifled, not only downtown, but in the rest of the region. Therefore,
Federal intervention such as the precedent set following the 9/11
terrorist attack; where Con-Edison was provided with Federal funds, is
crucial to this city's recovery.
In addition, small businesses are also hurting. Getting Small
Business Administration (SBA) loan funds immediately into the hands of
downtown and other businesses is crucial. Many small businesses have
little or no reserves to tide them through disasters of this magnitude.
They are losing talented human resources to other parts of the country
because they cannot afford to pay staff; they will soon lose leases or
mortgages if they do not resume payments; and many cannot resume
operations to pay for these things because they have lost equipment and
inventory, but they do not have the funds to replace them.
Well over 100,000 businesses have applied for loans and are still
waiting for assistance. And every day more businesses go under because
they have not been given this critical lifeline to success. Please help
our small businesses to succeed by expediting the SBA process and
taking into consideration the unique circumstances caused by Katrina,
whereby many have lost all financial and other records.
The DDD also calls on the Federal Government to do all it can to
help us house our New Orleans workforce. It's impossible to overstate
how critical this is to reviving downtown businesses. Many hospitality
businesses have lost 80 percent of their workforce due to the
dispersion of New Orleanians across the country. Many employees who
would like to live and work in New Orleans once again cannot, because
there is not enough housing to support the number of jobs that are left
in the city. This is a rare problem to have: too many jobs and not
enough workers, but this is what is occurring downtown and in other re-
opened parts of the city. It is clear though, that the jobs will not
wait forever for workers to fill them. If we do not react quickly, jobs
and businesses in the ``dry'' parts of New Orleans will be the next
victim of Katrina. The DDD asks that the Federal Government step-up its
deployment of trailers and other forms of temporary housing in order to
meet the short-term housing crisis.
To address longer-term housing needs, the DDD requests that the
Federal Government institute a low-interest loan program for commercial
and residential development in the disaster area, similar to the
Liberty Bond Program after 9/11. Downtown is already home to several
historic and emerging neighborhoods, and we see ourselves as a haven
for many displaced New Orleanians in future years. We need to get
moving now, though, to develop more mixed-use--and mixed-income--
residential developments downtown. The real estate market, however, is
in a wait-and-see mode right now. Developers and investors need the
strong vote of confidence that a Federal low-interest loan program
would signify. With this in place, the high ground of downtown can be
home to many more New Orleanians in safe, attractive, and inviting
medium and high density housing downtown.
The Federal Government can also assist in returning residents and
businesses to New Orleans by providing a tax credit to residents and
businesses displaced by Katrina. It's a fact that every family and
business that has been displaced has incurred unforeseen costs related
to transportation, temporary lodging and facilities, replacing personal
property, and so on. Families and businesses wishing to return to New
Orleans will face additional costs. The Federal Government can help to
remove this disincentive to return by creating tax credits for
businesses and families who have been displaced and who return to the
affected region. This would help downtown to retain many small- and
medium-sized firms in key industries like oil and gas, by encouraging
them to return from temporary facilities elsewhere without paying a
penalty to do so.
Lastly, the Downtown Development District asks that the Federal
Government commit itself to maintaining Federal agency offices and
contracts for services in New Orleans. Unfortunately, despite the best
efforts of local, State, and Federal Governments, New Orleans will lose
many private employers in the wake of Katrina. We at the DDD hope that
the Federal Government will send a strong signal of its confidence in
the future of New Orleans by committing itself to the City--by
maintaining job sites and contracts, and looking for opportunities to
expand Federal contracting in the region where practical. This is
especially important for downtown in the area of the health sciences,
which are so important to downtown's success. Please assure that the
National Institutes of Health and other agencies do not give up on the
many great scientists and clinicians working in New Orleans on behalf
of the Nation.
In closing, I thank you for visiting us here in New Orleans. It is
important that you are here, on the ground, so that you can see the
devastation for yourselves. I trust you have found that--even after the
devastation of Katrina--New Orleans' warm and generous hospitality is
still evident. We appreciate your visit and commit to work hard with
the Downtown Development District to make New Orleans an even better
version of itself in the future. We are committed to doing our part. We
know, though, that we cannot fully recover without the assistance of
the Federal Government. Thank you.
The Chairman. Thank you very much. Our last witness is
going to be David Guidry.
Mr. Guidry. A good Irish name from the Bayou, sir.
The Chairman. Guico is your company.
Mr. Guidry. Yes sir.
The Chairman. I apologize.
STATEMENT OF DAVID GUIDRY, PRESIDENT/CEO,
GUICO MACHINE WORKS INC.
Mr. Guidry. Thank you. Chairman Stevens, Senator Vitter,
Senator Thomas, I appreciate the opportunity to be able to
stand before you today to share with you our experience. We're
an oil and gas equipment manufacturer, pre-Katrina we had 60
employees turning our well heads in our factory across the
river. We've been impacted many ways by the storm.
Our current workforce is now down to about 20 employees, up
from 12 about a week ago. Our insurance claim is in limbo, our
bank, or the U.S. mail service held up any payments to our
company for nearly 7 weeks, inhibiting our ability to make
payroll. Suppliers have put us on COD and the rumors are
rampant that Guico Machine Works will go bankrupt. But when I
listen to the problems of the gentleman talking about the
fisheries, I have to tell you, my problems pale in contrast.
When I was sitting down, I was thinking about the damage
that was being done to me. And I decided to deviate from my
testimony to share with you something different. All my life I
have been taught to believe in the American Dream and the
American institutions. When I was 24 years old, I decided to
pursue the dream of owning my own business. I was surprised to
find that America thought it was so important that they had
created an institution called the Small Business
Administration, and it was as if they had created it just for
me. When I went there, when no one would loan me a dime, it was
the SBA that helped us to secure a $210,000 loan that started
my business. From that, we grew it and we grew it, and 10 years
ago when we needed to build a new factory, we went back to the
SBA and we explained to them what our vision was, and they
anted up $1.3 million for us to be able to build that factory.
And a cash crunch came about maybe 4 years later, they came
back and we were able to borrow another $300,000. I believe in
the SBA, they have been there for me. But what's happening now
is quite different. Six weeks after we have applied for a loan,
we have to ask these questions. Why has no one from SBA even
contacted us to say they've actually received our loan package?
Why has no one visited my site even to verify that I'm a
legitimate business? Whether I need sustaining money, or
whether I need rebuilding money? Why is it that the local
office isn't even included in the loop? When we talk to them,
they said everything has gone to Washington D.C. Why is my
local banker not included in the process? He has been doing
business with me for over 10 years and knows all of the
components. My credit, my character, and all of the things that
are used to judge me in being able to my validity in being able
to survive as a business.
And then finally, from the technology side, why can't I
even go online to look at where the status of my loan is? When
I listen to all the statistics that everyone said here today, I
may be one that has already been approved. I may be one that
has been rejected. But the thing of it is that I have no idea.
Now I have to tell you with all of my heart, I believe that the
SBA is going to be there for me, because they always have. The
question I have for you guys today is this. Will they be there
in time?
I appreciate the opportunity to visit with you this
morning, thank you all for listening to what I had to say.
[The prepared statement of Mr. Guidry follows:]
Prepared Statement of David Guidry, President/CEO,
Guico Machine Works Inc.
We are an oil and gas equipment manufacturer who was in the middle
of the best sales year in our twenty-three year history. Our company
had sixty employees churning out wellheads and related products in our
plant located on the Harvey Canal in Jefferson Parish. Pre-Katrina our
business had accounts receivable of nearly $1,000,000 from sales of
$400,000 per month. However, after Katrina hit, our sales in September
dropped to zero. In October, sales were $80,000. The problem for my
business is that for six weeks, the mail delivered no checks and while
our customers are still giving us orders, we have no shop employees to
fill them. We are down from 60 employees to 12 because we are having
trouble making payroll. However, we have a facility full of materials
and machinery that is sitting idle.
Suppliers put us on COD, core management employees had to be paid,
and loan relationships had to be met. Deferments were later offered,
but the auto drafts had already been taken. My community bank was
underwater and is in no better shape than my business. The Small
Business Administration (SBA) and its disaster loan program is our only
way out of this situation. Three weeks after Katrina hit, our business
attended a seminar at Southeastern University regarding the disaster
procedure process. Our application for SBA disaster assistance went out
one week later. Other than the reports we hear from SBA representatives
at small business gatherings, we have heard nothing back from them. I
have had three different prior loan relationships with the SBA and
could not have built my company without their help. Their thoroughness
and due diligence is to be applauded as a government agency really
helping businesses in normal times. However, Katrina is anything but
normal times. I have applied and been approved for normal SBA loans and
they do a good job on those, but in this emergency situation, the SBA
is failing me and my business.
I am an active member of several business organizations and have
chaired several of them in the region. I cannot tell you how many
struggling businesses are counting on ``the Cavalry'' to arrive in time
and help us. But, rather than seeing ``the Cavalry'' come down here and
help, instead the running joke is that SBA disaster funded loans are
like UFO's. Everyone knows that they are out there and there have been
sightings of some, but I do not know anyone who has actually seen one.
That is why I was happy Louisiana started their bridge loan program.
Although I have heard nothing back from the SBA for over a month, I
applied for a bridge loan through the State of Louisiana program and
got it within seven days. This program goes through local banks, so I
just went into my local bank, a bank that knows my business and already
has my credit history, and they got me a response quickly. That is how
things should work, businesses need immediate capital to make repairs,
make payroll and get back on their feet--in two to three months many of
these businesses will be gone, maybe forever.
Let me contrast my experience with the Louisiana bridge loan
program with my experience with the SBA disaster loan program. To date,
we have received no acknowledgment that the SBA is even in receipt of
my loan package, not to mention any word back as to when I can expect
to get any funding. We knew to send our loan package certified mail,
but how many business knew this? At a minimum, for the sake of customer
service, the SBA should have an acknowledgment sharing some idea of the
process and the length of time should have occurred. Perhaps, after
receipt of a loan package, the SBA could arrange a timely site visit.
This way they could have proof of a storefront to slow fraudulent
claims, and then they could give an assessment of whether a re-building
loan or life sustaining loan is needed.
Also, perhaps the SBA could allow businesses to use present banking
relationships to help in the underwriting of the loan. Along the same
lines, I suggest they use the local SBA office for greater input, as
they know the local business and local landscape. Maybe they could form
an ``express line'' process for prior SBA customers. You already know
these guys so maybe that could help in the future to get businesses
with a history with the SBA to process their loans quicker. For the
next disaster, this would help out affected communities. If some
businesses get loans, this would help other businesses in the area
while they are waiting for their loans to come through.
Another suggestion that I have is to provide online tracking of the
status of your loan. This way you could track when it is received, when
it is being processed, and when you could expect to hear something
back. They have online banking, online package tracking, the SBA should
allow businesses to track the process online as well. The current
system is not providing us with any information, and more importantly
any certainty. Our business is making day-to-day decisions based on the
availability of funds. I applied for $1,500,000 and need some
certainty. I have no idea if I will receive that amount or if I will
get nothing. But at this point, given how things are going, I have to
plan as if it will be nothing so my business, my family and my
employees can get by. I do not have a clue on when the money is coming,
if it's coming, so I cannot plan and cannot spend a dime. If I had some
certainty, I could make a business plan but this is just crazy not
having funds and any certainty as to how/when I can expect to hear
back!
Thank you.
The Chairman. Well, thank you very much. Mr. Perry, what
you're seeking is promotion dollars really, right? In
connection with your association?
Mr. Perry. Yes sir, on behalf of all the businesses in New
Orleans, yes.
The Chairman. I'm--I've got to tell you, I'm not an expert
in this area. Someone previously testified that nonprofits are
not eligible for disaster grants. Is that your understanding?
Mr. Perry. We believe that that is correct, but in working
through the office of the Lieutenant Governor here, which is
statutorily charged with the oversight of the tourism industry,
there are mechanisms for us to work in partnership to do that.
The Chairman. Well, what's your suggestion, as to who
should get the money?
Mr. Perry. We believe that the most appropriate so that it
would be fully audited by the Louisiana auditors and by Federal
auditors, would be to flow through the office of the Lieutenant
Governor, because then you'll have all the checks and balances
that would be appropriate to see where the marketing dollars
were spent and for what purposes.
The Chairman. I see. Are you satisfied that the Convention
Center will be restored in time for these conventions if we can
assist you in getting them back?
Mr. Perry. Sir, we believe sir. We are working on a very
tight timeframe right now. We've lost over $2 billion of
business during this period. We're shooting to open June 1st of
next year with the American Library Association, a 21,000
member organization, to kick off the new season. But we've lost
many of our--we've lost many of our customers obviously as you
can imagine over the next year. If we are able to get these
dollars in for the Convention Center, we'll be able to have it
opened, and fully restored and renovated, and the impact of
that in the next 24 months probably is in the $5-$6 billion
range, just on having the facility back online. Tremendous
impact. And for the Mayor, what's so problematic for him is
with our industry effectively shutdown right now, his entire
revenue base is damaged. And that's why he's had to lay off so
many people and can't provide the basic city services.
We're trying to find a way to pay for it ourselves. And so
that's why we're asking for that amount of Federal assistance.
The Chairman. Thank you very much. Mr. Coleman, we all
appreciate your statement, DDD is obviously very lucky to have
your experience. I did not know that CON ED had gotten money
directly. My staff has looked this up and we find that there
was money provided to--we appropriated funds to Housing and
Urban Development for the Lower Manhattan Development
Corporation, which was to reimburse the utility companies for
what you suggested, uncompensated costs associated with
restoring services. The amount of money involved in that was
$250 million. Have you an estimate through DDD of how much
money would be needed here?
Ms. Coleman. Are you asking specifically about the utility
company?
The Chairman. The utility companies, yes ma'am.
Ms. Coleman. Right, I'm wearing two hats. Regarding
Entergy, what I have seen, what has been asked for. I have
retired, so I'm not as close, but I do talk with them all the
time. I believe they are asking for a little over $400 million
for the restoration. When you look at what's happened in the
City of New Orleans, it's the entire customer base of Entergy
New Orleans that was impacted. Not a portion of it, but the
entire customer base lost. The company lost approximately 70
percent of its customers. And we're working to restore those
that are able to take service. But the restoration costs are
enormous and that's why the company is asking that there be
some type of Federal relief so that customers will not have to
bear that burden. It would be very uneconomic, we could not try
to bring business here if we didn't have a rate structure that
was competitive.
The Chairman. I think you're right, there's a substantial
precedent there in terms of the New York action, and we'll look
into that, and hopefully be successful in assisting you.
Senator Vitter.
Senator Vitter. I wanted to ask Steve Perry. Steve, we're
talking a lot about the 9/11 comparison, what precisely was
done for New York tourism, marketing, and branding after 9/11
and in what amounts? And I want you to specifically exclude the
National Airline piece, which I would put in a different
category to make the comparison a little fairer, but what was
done for New York tourism, marketing and branding after 9/11?
Mr. Perry. It was virtually the identical $40 million for
the marketing and branding side that we are asking for, it's
even more critical here, as you know Senator Vitter, because
tourism is important in New York, but it's just a tiny piece of
their economy. Here it's disproportionately large. $40 million
came from the Federal Government on a series of grants through
both the City and the State entities that were received in
through the Empire State Organization. And frankly, that
combined with Mayor Guiliani's pitches helped restore tourism
very very quickly to New York City, and in fact, New York
City's tourism base right now is the strongest it has been in
probably 25 years. Here it's disproportionately critical,
because so many of the employees in our tax base depend upon it
and because so many of our customers are literally in here this
month making decisions as to whether to come next fall, or even
the spring of 2007. So, the tide is going to turn in the next
90 to 100 days and that's why it's so important for us to get
this money for assistance as soon as possible.
Senator Vitter. In the New York case after 9/11, were they
also helped by any donated air time, or other in kind
contributions that went toward a national marketing campaign,
and if so, is that same sort of private sector contribution
available here?
Mr. Perry. It is, we have already begun exploring. I'll
give you an example. The New Jersey Association of
Broadcasters, I mean how far away could that be from Louisiana,
have offered to give us $250,000 of free radio time in the
State of New Jersey. We're doing this in nearly every state.
We're going--we're doing everything we can to help ourselves
right now. We're going to every other--everyone of our peers in
other states and cities. We're going to every national trade
organization in our business. We're going to all of our
national customer bases. Those associations that meet here
regularly. And Senator Vitter, we are asking for every
contribution we possibly can to help re-image and re-brand us.
Senator Vitter. So therefore it's fair to say, any Federal
dollars could be leveraged significantly and used as a base on
which to add on these sorts of private sector contributions.
Mr. Perry. We have a multiplier effect, and when you think
about the $40 to $60 million that we're talking about, just for
New Orleans alone, there are not many times the Federal
Government can think of investing $40 to $60 million and
getting $5 billion of economic impact in return. And for us
it's the life and breath of our businesses now.
Senator Vitter. David Guidry, I really appreciate your
comments about the SBA because that has been a big focus, and
quite frankly, a huge frustration of mine. And we've heard that
from you, unfortunately we've heard it from a whole lot of
business folks. I just want to repeat that tomorrow morning,
the Senate Chair of the Small Business Committee is having a
hearing exactly about the frustrations you're talking about:
Slow time line, lack of approved loans, et cetera, so I'm
certainly hopeful we're going to begin to get SBA's attention.
But could you also speak to this proposal for bridge loans,
because it's my understanding that even if the SBA were working
in a very timely manner, their normal menu of loans and options
would have some gaps in it. In terms of the current needs of
small business on the ground here, and that's what this bridge
loan proposal is designed to fill in, could you speak to that a
little bit.
Mr. Guidry. Yes sir. The uncertainty. And guys, I want you
to walk in my shoes for a second. OK. I'm trying to plan the
destination of a company that employs 60 people. And we need to
figure how we're going to be able to make it through what we
consider this next 6 months. And obviously, the choices that
we're going to make will have a lot to do on the amount of
capital we will have available to us. The 90-day suspension of
payments that nearly every long term creditor we have will run
out, in the end of December.
We have those immediate needs of maintaining what we call
our intellectual capital. The top people in the company that
keep us running. Then the second component is incentives to
help to lure our people back. We have some folks that are in
Houston that will be lured back via housing, lured back via
some economic incentives, and even our ability to be able to
compete with what has just become this wild wage scale that has
occurred inside New Orleans. So a bridge loan that would help
us to be able to stem the tide of the bleeding that occurring
in the company right now, knowing that the cavalry will come in
90 days, 180 days. Or even if I just know that the cavalry
won't come. It will allow our decision process to make our
company survive. Because we--I'm an entrepreneur, I will
survive. I'm not interested in business grant. I'm a for profit
operation. OK. Whether--if I could get a loan from the bank
that would be fine. It's just that SBA has always marketed
itself as having this disaster loan component. A safety net
that we just always felt that we could count on.
Well, we've done our part in the disaster side, OK. It is
now--to like this safety net was going to kick in for us. And
so it's the uncertainty. The bridge loan, speedy, it involved
people in the process who know me. It was done via our bank
which made it a lot simpler. And I've got to tell you our bank
knows which--our banks here in the area know how to perform
what we call battlefield triage. Which companies are savable.
Which companies need working capital to exist just 90 days,
which companies need it for 180 days. And everybody's not going
to survive and the local banking industry knows that. And the
SBA has done itself a disservice by not employing that
institution.
Senator Vitter. Do you have any particular insight to why
the SBA has been so slow moving on this, is it just being
purely overwhelmed by the numbers not having the people, or
what's going on?
Mr. Guidry. I don't know, you know. The running joke on the
SBA funded disaster loans is like UFOs, we all believe they're
out there. There have been even sightings of some. But I don't
know a soul who's ever seen one. And so we--I can't speculate
on it Senator, it's kind of mind boggling to be honest.
The Chairman. Mr. Guidry, I was in Alaska at the time, the
1964 earthquake, and had a small business, a law firm, and the
house was substantially damaged. I applied to the SBA and for
each--for a loan for each operation and was turned down. And a
little while later, well they got it back--I petitioned for a
review they got back to looking at it. And it was the sheer
number of people involved. So I hope you don't lose hope, I
didn't. And I went back again and got my loans and survived
obviously. But these people are now dealing with a disaster
area from Mississippi, Louisiana, Florida, Texas, and Alabama.
All these disaster areas all at the same time. So it's a
massive problem to deal with individual applications. And I
learned that it's a problem waiting. So I hope you not lose
heart. And I hope that they will come around. We're going to
have that hearing tonight. But very clearly, the numbers
involved in these disasters now, are the greatest in history. I
hope we all keep in mind that there are human beings at SBA
too, and they are just overwhelmed.
Senator Thomas?
Senator Thomas. Mr. Chairman, thank you so much for
allowing us to come and be here. This has been an excellent
experience for us. We've heard a lot about the problem, and of
course, we have some in our states, not nearly the size of this
one, so it's an experience. And you've done a great job in
helping us understand it. I appreciate your comments about SBA.
I hope we can move along with these kinds of things. Mr. Perry,
tourism is a major thing in my state. It's one of our three
highest things, so I understand what you're saying. So I'm
going to go back and feel very strongly about assistance here
and doing the things that we can do to be helpful, and I think
most people do.
Senator Vitter has done a great job, and Senator Landrieu
also, in promoting what needs to be done here and helping us to
understand it.
Just for your own information, you need to understand as we
go back, it's not going to be as easy a job as you might think.
I mean take a look at what we're doing now, we're talking about
the highest deficit we've had in this country for a very long
time. We're talking about that we just last week reduced
spending by $35 billion, and so we're trying to keep a hold of
spending and we should. We have to do that. We're trying to
keep the economy strong by not raising taxes and so on to do
that. So we're looking at health care costs that are going to
be going up. So all I'm saying to you is, I think that we're
committed, but it isn't going to be the easiest thing in the
world to be able to do this. And when we do it, we will provide
these things basically that you're talking about here. I think
we have to have accountable spending, we need to know where
that money's going, who's responsible for it. We've had some
experience in these kinds of places where the spending has not
been watched. And I think that's very important, people feel
strongly about that. We need to make the best choices for
spending so that what's spent here, and you're going to be very
key to that, as to what's most effective for now and for the
future. And there has to be leadership in this process so that
somebody is accountable and somebody is responsible. And from
our standpoint, one of the keys is going to be accountability
and what the Federal Government's doing. That's part of our job
as well.
So you know, I see it kind of like a family or a business.
When you have an emergency you have to deal with it, and take
care of it. At the same time you have to take care of your
family and then you have to start looking for ways to offset
those costs. And those are kind of the challenges that we're
going to have. So I just want to thank you all for what you've
provided for us, I feel much more comfortable, as I go back and
working with Senator Vitter, to work forward to trying to give
some assistance to you all to get your economy back in place.
Thank you so much for your efforts to help enlighten us.
The Chairman. I also want to thank the court system for
allowing us again, to use this room for our hearing. We'll be
leaving here in a few minutes and take our helicopter trip and
see more of the damage. I said yesterday, I've seen typhoons
and hurricanes, and earthquakes, and tsunamis and great fires
that covered million of acres. But I've never seen anything
like that devastation we saw yesterday.
So we'll be working with you, but I don't know how to say
this, but Rome wasn't built in a day, and you can't rebuild New
Orleans in a day either. It's going to be a long haul, but we
will be with you all the way. Thank you very much.
[Applause].
[Whereupon the hearing was adjourned]
A P P E N D I X
Gulf of Mexico Fishery Management Council
Tampa, FL, October 7, 2005
Hon. Thad Cochran,
Chair,
Senate Committee on Appropriations,
Washington, DC.
Hon. Trent Lott,
Member,
Senate Committee on Finance,
Washington, DC.
Dear Senator Cochran and Senator Lott,
Thank you for your letter asking the Gulf of Mexico Fishery
Management Council to recommend projects to rebuild fisheries and their
associated infrastructure in the Northern Gulf of Mexico.
At our October meeting in St. Petersburg, Florida, the Council
discussed your request and developed the attached list of
recommendations. All three Council members from Mississippi attended
the meeting, and our discussion was greatly informed by their
experiences.
The Gulf of Mexico Fishery Management Council is taking deliberate
action to address overcapitalization and overfishing in several Gulf
fisheries. Shrimp and red snapper are overcapitalized. Red snapper is
also overfished. In addition, the charterboat sector is
overcapitalized, targeting reef fish and mackerel. Inventories are
incomplete, but many vessels in these three fisheries have been damaged
or lost in the northern Gulf. A voluntary buyout of vessels and permits
in these fisheries would help fishermen who choose to exit the fishery
following the storms, and, at the same time, would reduce
overcapitalization and support recovery of overfished reef fish.
The storms damaged trawling gear, and a replacement program
providing nets with the most effective turtle excluder devices (TEDs)
and bycatch reduction devices (BRDs) will reduce bycatch in the shrimp
fishery.
Docks, fish houses, ice plants, and freezers have been lost and
damaged, and fishermen are scrambling to find places to land their
fish. Federal relief funds could fill the gap between insured losses
and the funds needed to rebuild docks and high quality handling
facilities that will bring Gulf seafood to customers.
Over the next months, fishermen could be employed to work with NOAA
and the Coast Guard to locate and remove hurricane debris from state
and Federal waters and conduct research on the effects of the storms.
Longer term, fishermen can work as observers, collecting crucial data
to improve fishery management.
The Council has identified vessel monitoring systems, electronic
logbooks, and improved bycatch reduction devices, as important tools
for responsible, science based management of the shrimp and reef fish
fisheries in the Gulf of Mexico. Our management plans call for vessel
owners to purchase these tools, which will be difficult for fishermen
in financial crisis. We also have a strong need for observer data in
these two fisheries, and have asked NOAA to fund observers.
Congressional funding of these management tools would be a tremendous
boost for sustainable fishery management in the Gulf of Mexico.
Thank you again for considering the attached recommendations, and,
thank you for your leadership on these issues at this moment of crisis.
Our Gulf Council and NMFS staffs can provide rough estimates of costs
for many of these recommendations, and I encourage you to work with
them as your committee explores way to restore and recover Gulf of
Mexico Fishery Infrastructure.
Sincerely,
Julie Morris,
Council Chairman.
Recommendations to Congress on Gulf of Mexico Fishery Restoration
Projects--Endorsed by Gulf of Mexico Fishery Management Council,
Oct. 6, 2005
Overall goals: Compassionate relief response; restore fishing
infrastructure; address overcapacity and overfishing through voluntary
buyouts and gear improvements; employ fishermen in clean-up and
research; provide retraining for fishermen leaving the fishery; add
improved management tools to the fishery.
Restoration and Recovery of Fishing Infrastructure
1. Fully fund a voluntary buy-back program for vessels and permits
in federally managed Gulf fisheries with limited entry. Vessels bought-
back would be scrapped and permits would be permanently retired. The
Council's first priority is for shrimp vessels and permits, second
priority is for red snapper vessels and permits, and third priority is
for charterboat vessels and permits. (Shrimp Amendment 13, currently
under Secretarial review, will limit entry by a moratorium on permits,
but implementing rules will not be effective until 2006. Congress may
need to expedite the moratorium.)
2. Provide funds for replacement of hurricane damaged gear (not
including vessels) with best available gear to reduce bycatch and
minimize habitat damage (turtle excluder devices)--TEDs--and bycatch
reduction devices--BRDs, etc.).
3. Provide funding to dealers/processors to cover the gap between
insurance payouts and the cost of rebuilding damaged and destroyed fish
houses, freezers, and related infrastructure using best available
technology to improve handling and processing of Gulf seafood. Ensure
that fishery infrastructure persists in strategic geographic areas to
support the managed Federal fisheries in the northern Gulf.
4. Provide funding to NOAA for a two-year sonar project to map
hangs and locations of hurricane debris. Also provide funding to
contract with fishing vessels to remove hurricane debris from state and
Federal waters. Finally, provide funding to remove damaged and
destroyed fishing vessels, with special attention to fire and
environmental hazards from vessel fuel leaks.
5. Provide job retraining for fishermen who want to voluntarily
leave the Gulf fishery.
6. Provide funding to the southeast Cooperative Research Program to
support research carried out over the next three years by commercial
vessels.
7. Waive cost recovery in red snapper IFQ for three years by
providing direct allocation to NMFS for administering the program.
8. Waive minimum income requirement to renew permits for three
years for fishermen whose vessels or fish houses were damaged or
destroyed.
Rebuilding for Sustainable Fisheries Management
1. Provide funds to pay for VMS for all federally permitted
commercial reef fish vessels.
2. Provide funds to pay for VMS for all federally permitted shrimp
vessels.
3. Pay for three-year observer programs in the Gulf EEZ commercial
shrimp fishery and commercial reef fish fishery.
4. Provide funding to train shrimp fishery observers and reef
fishery observers.
5. Provide funding to speed the implementation of the red snapper
IFQ and the grouper IFQ.
6. Provide funds for replacement of all shrimp trawling gear in the
fleet with best available gear to reduce bycatch and minimize habitat
damage (TEDs and BRDs, etc.).
Additional comments: Many Gulf fish stocks depend on northern Gulf
coastal habitats. A comprehensive program of habitat restoration,
particularly restoration of vegetated wetlands and barrier islands,
will be important. In addition, seafood consumers need to be reassured
that the majority of Gulf seafood is unaffected by Hurricanes Katrina
and Rita--the seafood reaching markets has been tested and is safe for
consumption.
______
November 7, 2005
Dear Louisiana Senators, Congressmen and State Officials:
We are writing to you as a group of tuna/swordfish fishermen with
homeports in Dulac, Leeville, and Venice comprising a total of about 40
commercial fishing vessels, our dock dealers and related businesses.
Venice is essentially ``wiped out'' from Katrina as far as fishing is
concerned now. While the damage in Leeville is extensive from both
Katrina and Rita, Dulac was horrendously flooded with 4 to 5 feet of
water from Rita.
Prior to Hurricane Rita's arrival, Dulac was officially declared a
mandatory evacuation town where the majority of the fishing boats dock.
And sure enough, local officials were correct 100 percent. While a mass
evacuation puts extensive responsibilities on elected officials such as
providing the means to get the community out both safely and timely,
the right decision saved many lives, as we all know from Katrina.
Lives are saved, but many businesses are not.
The financial impact of these two monsters on our businesses is
exponential. We know that the budget situation is very tight and that
you are doing everything that you can to help Louisiana in the face of
this. But we are not asking for every dollar we have lost. We are
writing to you today as boat owners, deckhands, dock dealers, trucking
companies, and others desperately seeking whatever immediate financial
assistance you can find to help us rebuild our lives. Through our
fisheries association, we know you have been working hard on this and
we are very thankful for your kind efforts. We just want to make sure
you are aware of our particular fishery's situation.
We, as Louisiana fishermen, supply more domestic fish from tuna/
swordfish longline fishing boats to seafood wholesalers around the
country than any other Gulf State. Our Louisiana fleet comprises at
least half of the overall U.S. Atlantic tuna/swordfish fleet. Our
captains and crews are scattered around in evacuation centers
throughout the Gulf States, primarily in Houston. Those who have
returned cannot go fishing until their families have shelter. Some
await insurance surveys before they can return to work. Because their
New Orleans homes were destroyed or rendered uninhabitable, they have
no opportunity to return to fishing without abandoning their families.
As a major fish-supplying region, Louisiana cannot afford to lose these
hard working fishermen.
As Louisiana fish dealers, our fish houses have had nearly no
production for over three months. Insurance will not cover our losses
because our buildings remain intact. But no production is still out of
business.
As seafood truckers and related service and supplier businesses, we
need the boats to go back fishing and the fish houses return to
activity.
We desperately need immediate mobile trailers so our
captains, crew and families can return home and to work. If
necessary, such trailers can be placed on existing dock dealer
properties in Dulac and Houma.
We desperately need the necessary insurance surveys of our
New Orleans homes completed as quickly as possible. Some
captains and crews are forced to remain onshore just in case
the surveyor arrives.
We desperately need at least temporary relief from
restrictive fisheries regulations such as the restriction on
using live bait, incidental swordfish trip limits and closures
to protect what is now a fully recovered swordfish stock. These
restrictions are unnecessary while we strive to rebuild our
lives and businesses.
Just like the shrimpers and oyster boats, we also have a lot to
recover and we know that it involves a lot of work ahead from us.
Please don't let anyone forget about our longline fishery including the
Louisiana Seafood Promotion Board. We are a very important fishery and
we are also working very hard. But we desperately need your help to
provide us with the means to recover. We heard that the Commerce
Department declared our fishery as a disaster so we could receive help
but we haven't heard anything from them since.
We are also proud members of the Blue Water Fishermen's Association
who continue to work hard to represent our interests to you. If you
need more information, please contact the Executive Director, Nelson
Beideman at 609-361-9229, P.O. Box 398 Barnegat Light, NJ 08006, e-mail
[email protected]. If he cannot answer your questions, he can make direct
contact with any of us.
We thank you so . . . so very much for thinking of us during this
difficult time.
Respectfully,
Dock Dealers
Ken Trinh, Jensen Tuna, Inc., Dulac/Houma, LA
Vinh Tran, St. Vicent Seafood, Inc., Leeville, LA
Tuan/Khai Nguyen, Sharko Seafood Int'l, Venice, LA
Steven Le, Steven's Seafood, Inc., Dulac, LA
Steven Loga, Warehouse Food Group, Dulac/Gretna, LA
Larry Loga, Tuna Fresh, Inc., Venice, LA
Michael Nguyen, TUNACO, INC., Dulac, LA
Archie Dantin, Griffin's Seafood, Leeville, LA
Boat Owners
Mien Nguyen, F/V Night Star II, New Orleans, LA
Peter Tran, F/V Queen Mary, New Orleans, LA
Tuc V. Nguyen, F/V Red Fin, Gretna, LA
Tung ``Jim'' Nguyen, F/V Peaceful Lady-Red, Chalmette, LA
Han Nuoi, F/V Master Ray, Chalmette, LA
Duong Nguyen, F/V St. Joseph & Peter, New Orleans, LA
John Le, F/V Sea Queen III, Houma, LA
Tom Huynh, F/V Morning Star, New Orleans, LA
Michael Pham, F/V Thuan Loi, New Orleans, LA
Cuc Huynh, F/V Kim Thanh II, New Orleans, LA
Peter Nguyen, F/V Blue Sea I, Kenner, LA
Suong Tran, F/V Tran Brothers, Gretna, LA
Phan Nuoi, F/V Kim Nhi, New Orleans, LA
Loi Nguyen, F/V Capt. Robinson, Cut Off, LA
Thien Nguyen, F/V Queensland, New Orleans, LA
Anna Biu, F/V Lillian, New Orleans, LA
Khanh Huynh, F/V Miss Lena, New Orleans, LA
Andy Nguyen, F/V Capt. David, Kenner, LA
Diem Le, F/V Victoria, New Orleans, LA
Ban Van Nguyen, F/V Cecilia II, New Orleans, LA
Tu Le, F/V Sea Queen, Houma, LA
Hoa Nguyen, F/V St. Maria, New Orleans, LA
Lan Tran Nguyen, F/V Our Lady of Lavang, New Orleans, LA
Suong Quang, F/V St. Peter, Gretna, LA
Hung Viet Tran, F/V DeQueen, New Orleans, LA
Phuc Truong, F/V Kim Thanh-PN, New Orleans, LA
Luu Nguyen, F/V Capt. Luu, Dulac, LA
Dong Tran, F/V Kenny Boy, New Orleans, LA
Kinh Tran, F/V Capt. Michael, Dulac, LA
Thien Nguyen, F/V St. Joseph, New Orleans, LA
Tony Nguyen, F/V St. Benedict, Houma, LA
Hanh Tran, F/V Alexander, New Orleans, LA
Ba Truong, F/V Capt. Mike, Houma, LA
Kinh Tran, F/V Capt. Johnny, New Orleans, LA
Phuong Nguyen, F/V Lien Hiep, Woodlawn, LA
Trinh Nguyen, F/V Star Sea, Woodlawn, LA
Minh Dinh Nguyen, F/V Captain Paul, New Orleans, LA
Trucking Companies
Terry Gold, Panda Trucking Express, Houma, LA
JJ Conway, Seacap Trucking, Inc., Jessup, MD
Meade/Harry Amory Trucking Hampton, VA
Diesel Fuel Suppliers
Al Waguespack, Waguespack Oil Co., Thibodaux, LA
Jean Lamont, Tri-State Oil Co., Belle Chasse, LA
Diesel Fuel Services
Tien Le, LL & T Ice & Fuel, Dulac, LA
Electronics Supplier/Services
Ron, EMT Electronics, Inc., Houma, LA
Mechanics
Richie/Joe, S & H Diesel, Inc., Houma, LA
Robert Lirette, Lirette's Diesel Service, Chauvin, LA
Gary, Diesel Tech, Inc., Houma, LA
Diving Service
Timmy Price, Diving Service, Chauvin, LA
Scott Diaz, Scott's Diving Service, Dulac, LA
Drydock and Shipyard
Donald Bourg, Bourg Marine Services, Dulac, LA
Steven, Bayou Grand Marine, Dulac, LA
Hardware Supplier
Sandy/Chris, Bayou Hardware, Inc., Dulac, LA
Generator and Parts Supplier
Dave Landry, M & L Engines, Inc., Houma, LA
Fishing and Tackle Supplier
Eva, Alario Brothers Marine Supply, Inc., Westwego, LA
Foam Insulation
Charlie LeCompte, LeCompte Insulation, Inc., Houma, LA
(Also there are numerous Deckhands, out of state Tuna vessels
who use Louisiana ports, and many additional tuna boat service/
supply companies in Louisiana and out of state, whose names can
be provided upon request.)