by Tim Burns
As the northshore cleans up, digs out and regains essential services, the focus quickly turns to economic recovery efforts for the area. A quick assessment of the economic damage shows that it is just as staggering as the physical damage. The Louisiana Department of Economic Development estimates that Hurricanes Katrina and Rita wiped out 40 percent of the businesses in the state.
The sad reality for St. Tammany is that some of our residents lost both their business and their home, and are now faced with the monumental task of rebuilding both. Our hearts go out to the small businesses who have served the northshore for years past and who are now facing trying times. St. Tammany is also home to many who work on the southshore who have lost their businesses or jobs and face an uncertain future, as well.
This tremendous disaster has had considerable negative economic consequences for our community, as shown by the decline in sales tax collections parish-wide, despite an estimated 40 percent population increase. While many of the businesses in the lesser-affected areas are now up and running, there is a notable shortage in the labor force, with “Help Wanted” signs as plentiful as business advertising. Many workers have been displaced, and, in some cases, others have reportedly left for higher-paying positions in the storm recovery efforts, including working with FEMA. This labor force shortage poses an issue for businesses.
Plans for Recovery
Our immediate challenge is helping our community and its businesses get back on their feet. In an effort to pump life back into our economy, the state is working to get federal contracts awarded to local businesses. We want to make sure that Louisiana businesses are the ones who are given the opportunity to rebuild our communities, and this is a priority.
The Louisiana Department of Economic Development unveiled its recovery plan at the end of September. The keys to business recovery were outlined as follows:
Short-term bridge loan
Federal business grants
Incentives for individuals to return
Incentives for businesses to return
Hurricane recovery bonds
Unemployment compensation assistance
Although the program is not yet in place, and is largely dependent on congressional action, it is based on the Florida model, and could provide bridge loans to businesses from both state and federal sources. The federal business grants are based on the 9/11 model, and are included in the federal legislation. The incentives for businesses to return include accelerated depreciation and small-business investment tax credits, as well as other tax credits. Many of these programs are still being finalized at this writing. Additional information can be found at www.ledforward.louisiana.gov, www.accesslouisiana.com, or by calling the DED at 1-866-310-7617.
Senators Mary Landrieu and David Vitter have proposed the Hurricane Katrina Disaster Relief and Economic Recovery Act, which includes the appropriation for the DED bridge loans, a one-year moratorium before paying and an increase in the cap on the loans. In addition, Congressman Bobby Jindal is proposing legislation to provide an Economic Opportunity Zone in which the capital-gains tax on investments is eliminated and government regulations are simplified or eliminated. Businesses included in the zone could be allowed to fully expense business investments for the next five years, and also eliminate tax depreciation lives of new capital equipment and facilities and old capital. This would reduce the cost of purchasing new and more productive equipment and structures. These and other bold tax initiatives are what are needed to bring new and stronger economic development to the state, and will ultimately generate greater tax revenues for the region and the nation.
Help for
small businesses
The Business Roundtable that was recently sponsored at the Mandeville Community Center by Congressman Bobby Jindal included officials of the Small Business Administration, FEMA, the Corps of Engineers, the Louisiana Department of Economic Development and the Small Business Development Center at Southeastern University. There were several presentations made about available aid packages for small businesses.
At this time, the backbone of federal assistance to small businesses is the U. S. Small Business Administration Disaster Loans program, which has the following types:
1) Home Disaster Loans: Loans to homeowners or renters to repair or replace disaster-damaged real estate or personal property owned by the victim. With FEMA assistance limited to cash grants for rentals, repair and some replacement, the majority of the costs for replacing a house will be from an SBA loan. The interest rate ranges from 2.7% to 5.375% over 30 years, and the law limits loans to $200,000.
2) Business Physical Disaster Loans: Loans to businesses to repair or replace disaster-damaged property owned by the business, including real estate, inventories, supplies, machinery and equipment. Businesses of any size are eligible. Non-profit organizations such as charities, churches and private universities are also eligible. The interest rate ranges from 4% to 6.5% over 30 years, and the law limits the loans to $1.5 million for repair or replacement of business assets.
3) Economic Injury Disaster Loans: Loans for working capital to small businesses and agricultural cooperatives to assist them through the disaster recovery period. The interest rate is 4% over 30 years, and the law limits the loans to $1.5 million for alleviating economic injury caused by the disaster.
Small-business owners should apply for SBA loans right away. Applicants need an acceptable credit history to apply, but you should apply even if your credit history is less than perfect. Although the form is detailed, and you may not have all your records, do your best to complete it. More information can be obtained at www.sba.gov/disaster, or 1-800-659-2955.
In addition, the business center at Southeastern University is offering free SBA Disaster Loan Workshops. For information, go to www.selu.edu/businesscenter/ or call 985-549-3831. The St. Tammany West Chamber of Commerce has launched the Business Recovery Center, which is open to all small businesses regardless of their affiliation with the Chamber. Visit http://sttammanychamber.org, or call 985-892-3216. The Louisiana Association of Business and Industry is providing some small-business assistance from its relief fund. Go to www.labi.org, or call 1-888-816-5224.
Overall, it is my estimation that St. Tammany’s economic picture could be positive over the long term, provided the influx in population is managed correctly in terms of transportation, housing and economic development. This is a huge challenge for all of our elected officials at all levels, but especially for those of us in state and parish government. We have a strong commitment to work together to assist those businesses who are struggling, and to insure St. Tammany’s business community is represented in the rebuilding process at the local and state levels.
Much of the proposed assistance is not yet finalized. Updated information is available at www.timburns.us, or call Rep. Burns’ office at 985-624-4492.
Tim Burns is the State Representative for District 89.
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