Washington, DC – Today, U.S. Representative William Jefferson (D-LA), along with Reps. Bobby Jindal (R-LA), Rodney Alexander (R-LA), Richard Baker (R-LA), Charlie Melancon (D-LA), and Charles Boustany (R-LA), introduced a bill that would allow the federal government to once again forgive Community Disaster Loans (CDL) made to local governments after disasters.  Current law prohibits the loan cancellation; however, very few loans have ever been repaid after a disaster. 

“New Orleans borrowed approximately $50 million from the CDL program,” Jefferson said.  “With a significantly reduced tax base and increasing recovery costs, it is highly unlikely that our city will have the resources to repay that loan and rebuild our infrastructure.  Every community that has faced a disaster since the Act’s creation in 1976 has had their loans forgiven. Yet, the communities that were hit with the largest natural disaster in our nation’s history are now required to repay the loans. There’s no fairness in that. This bill seeks only fairness in our ability to rebuild and restart our infrastructures.”

Jefferson’s Community Disaster Loan Forgiveness Act of 2007 provides for loan forgiveness (cancellation) when it is determined in three years following a disaster that the affected government will not be able to repay the loan. The bill repeals provisions inserted in the CDL Act of 2005 that prohibited such cancellation.  From the program’s start in August 1976 through September 30, 2005, 97% of all Community Disaster Loan amounts were cancelled. 

“We want to be able to rebuild our local infrastructure in the same way that communities have been able to do since this program was created,” Jefferson said.  “We simply will not be able to do that with the cloud of a $50 million loan hanging over our recovery. We must act on this loan forgiveness now.”