[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]



 
   ROLE OF THE FEDERAL GOVERNMENT IN SMALL BUSINESS DISASTER RECOVERY

=======================================================================


                               (110-166)

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
    ECONOMIC DEVELOPMENT, PUBLIC BUILDINGS, AND EMERGENCY MANAGEMENT

                                 OF THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                           SEPTEMBER 12, 2008

                               __________

                       Printed for the use of the


                  U.S. GOVERNMENT PRINTING OFFICE
44-819                    WASHINGTON : 2009
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing
Office  Internet: bookstore.gov Phone: toll free (866) 512-1800 Fax: (202) 512-2104  Mail: Stop IDCC, Washington, DC 20402-0001



             Committee on Transportation and Infrastructure



             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                 JAMES L. OBERSTAR, Minnesota, Chairman

NICK J. RAHALL, II, West Virginia,   JOHN L. MICA, Florida
Vice Chair                           DON YOUNG, Alaska
PETER A. DeFAZIO, Oregon             THOMAS E. PETRI, Wisconsin
JERRY F. COSTELLO, Illinois          HOWARD COBLE, North Carolina
ELEANOR HOLMES NORTON, District of   JOHN J. DUNCAN, Jr., Tennessee
Columbia                             WAYNE T. GILCHREST, Maryland
JERROLD NADLER, New York             VERNON J. EHLERS, Michigan
CORRINE BROWN, Florida               STEVEN C. LaTOURETTE, Ohio
BOB FILNER, California               FRANK A. LoBIONDO, New Jersey
EDDIE BERNICE JOHNSON, Texas         JERRY MORAN, Kansas
GENE TAYLOR, Mississippi             GARY G. MILLER, California
ELIJAH E. CUMMINGS, Maryland         ROBIN HAYES, North Carolina
ELLEN O. TAUSCHER, California        HENRY E. BROWN, Jr., South 
LEONARD L. BOSWELL, Iowa             Carolina
TIM HOLDEN, Pennsylvania             TIMOTHY V. JOHNSON, Illinois
BRIAN BAIRD, Washington              TODD RUSSELL PLATTS, Pennsylvania
RICK LARSEN, Washington              SAM GRAVES, Missouri
MICHAEL E. CAPUANO, Massachusetts    BILL SHUSTER, Pennsylvania
TIMOTHY H. BISHOP, New York          JOHN BOOZMAN, Arkansas
MICHAEL H. MICHAUD, Maine            SHELLEY MOORE CAPITO, West 
BRIAN HIGGINS, New York              Virginia
RUSS CARNAHAN, Missouri              JIM GERLACH, Pennsylvania
JOHN T. SALAZAR, Colorado            MARIO DIAZ-BALART, Florida
GRACE F. NAPOLITANO, California      CHARLES W. DENT, Pennsylvania
DANIEL LIPINSKI, Illinois            TED POE, Texas
NICK LAMPSON, Texas                  DAVID G. REICHERT, Washington
ZACHARY T. SPACE, Ohio               CONNIE MACK, Florida
MAZIE K. HIRONO, Hawaii              JOHN R. `RANDY' KUHL, Jr., New 
BRUCE L. BRALEY, Iowa                York
JASON ALTMIRE, Pennsylvania          LYNN A WESTMORELAND, Georgia
TIMOTHY J. WALZ, Minnesota           CHARLES W. BOUSTANY, Jr., 
HEATH SHULER, North Carolina         Louisiana
MICHAEL A. ACURI, New York           JEAN SCHMIDT, Ohio
HARRY E. MITCHELL, Arizona           CANDICE S. MILLER, Michigan
CHRISTOPHER P. CARNEY, Pennsylvania  THELMA D. DRAKE, Virginia
JOHN J. HALL, New York               MARY FALLIN, Oklahoma
STEVE KAGEN, Wisconsin               VERN BUCHANAN, Florida
STEVE COHEN, Tennessee               ROBERT E. LATTA, Ohio
JERRY McNERNEY, California
LAURA A. RICHARDSON, California
ALBIO SIRES, New Jersey
DONNA F. EDWARDS, Maryland

                                  (ii)




 Subcommittee on Economic Development, Public Buildings, and Emergency 
                               Management

        ELEANOR HOLMES NORTON, District of Columbia, Chairwoman

MICHAEL H. MICHAUD, Maine            SAM GRAVES, Missouri
JASON ALTMIRE, Pennsylvania          BILL SHUSTER, Pennsylvania
MICHAEL A. ARCURI, New York          SHELLEY MOORE CAPITO, West 
CHRISTOPHER P. CARNEY,               Virginia
Pennsylvania, Vice Chair             CHARLES W. DENT, Pennsylvania
TIMOTHY J. WALZ, Minnesota           JOHN R. `RANDY' KUHL, Jr., New 
STEVE COHEN, Tennessee               York
JAMES L. OBERSTAR, Minnesota         JOHN L. MICA, Florida
  (Ex Officio)                         (Ex Officio)

                                 (iii)

                                CONTENTS

                                                                   Page

Summary of Subject Matter........................................    vi

                               TESTIMONY

Bourne, Marko, Director of Policy and Program Analysis, Federal 
  Emergency Management Agency....................................    10
Braley, Hon. Bruce, a Representative in Congress from the State 
  of Iowa........................................................     4
King, Hon. Steve, a Representative in Congress from the State of 
  Iowa...........................................................     2
Mitchell, Herbert, Assistant Administrator of the Office of 
  Disaster Assistance, U.S. Small Business Administration........    10

          PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS

Braley, Hon. Bruce L., of Iowa...................................    26
Graves, Hon. Sam, of Missouri....................................    32
King, Hon. Steve, of Iowa........................................    38
Norton, Hon. Eleanor Holmes, of the District of Columbia.........    44
Oberstar, Hon. James L., of Minnesota............................    46

               PREPARED STATEMENTS SUBMITTED BY WITNESSES

Bourne, Marko....................................................    49
Mitchell, Herbert................................................    67

                       SUBMISSIONS FOR THE RECORD

Bourne, Marko, Director of Policy and Program Analysis, Federal 
  Emergency Management Agency, responses to questions from the 
  Subcommittee...................................................    66
Mitchell, Herbert, Assistant Administrator of the Office of 
  Disaster Assistance, U.S. Small Business Administration, 
  responses to questions from the Subcommittee...................    71
[GRAPHIC] [TIFF OMITTED] 44819.001

[GRAPHIC] [TIFF OMITTED] 44819.002

[GRAPHIC] [TIFF OMITTED] 44819.003

[GRAPHIC] [TIFF OMITTED] 44819.004

[GRAPHIC] [TIFF OMITTED] 44819.005



   ROLE OF THE FEDERAL GOVERNMENT IN SMALL BUSINESS DISASTER RECOVERY

                              ----------                              


                       Friday, September 12, 2008

                  House of Representatives,
    Committee on Transportation and Infrastructure,
Subcommittee on Economic Development, Public Buildings and 
                                      Emergency Management,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 10:14 a.m., in 
Room 2167, Rayburn House Office Building, Hon. Eleanor Holmes 
Norton [Chair of the Subcommittee] presiding.
    Ms. Norton. Good morning and welcome to today's hearing on 
the role of the Federal Government in small businesses disaster 
recovery.
    The American people must be assured, in the midst of yet 
another hurricane season--and if I may say so, yet another 
hurricane--and in the aftermath of devastating floods affecting 
the Midwest, of the tools available from the Federal Government 
effectively to recharge the economic engine of America's small 
businesses. While small business recovery is not covered by the 
Stafford Act, it is important to assure that FEMA works with 
the Small Business Association to assure implementation of the 
small business policies of the Federal Government in order to 
hasten an expedient recovery.
    The Small Business Association Act of 1958 created the SBA 
as an independent agency to ensure that--and here is the quote 
from the Act--"The Federal Government should, insofar as 
possible, aid, counsel, assist, and protect the interests of 
small business concerns in order to preserve free competitive 
enterprise, ensure that a fair portion of the total purchases 
and contracts for supplies and services for the government is 
placed with small businesses, and maintain and strengthen the 
overall economy of the Nation."
    The SBA was given authority to coordinate and cooperate 
with government procurement officers to better utilize the 
unique capabilities of American small businesses and to act as 
a advocate for the concerns of the small businesses.
    The roughly 25 million small businesses in the United 
States account for 50 percent of America's private gross 
national product and create between 60 and 80 percent of new 
jobs in America. Post-Katrina small businesses turned to the 
SBA, particularly for below-market interest loans. In Iowa, for 
example, SBA recently announced the approval of $153 million in 
disaster loans to Iowa homeowners, renters and businesses 
damaged by floods in the spring of 2008.
    This Subcommittee will work closely with FEMA and SBA to 
ensure that small businesses recover as rapidly as possible and 
play an active role in the recovery of their areas. We are 
particularly concerned that small businesses have ready access 
to contracting opportunities as allowed under the Stafford Act. 
Contracting with the Federal Government has the dual purpose of 
benefiting both small businesses and the communities in which 
they are located, particularly during a disaster. The goals of 
disaster recovery and the desire of small business to do 
business with the government are mutually beneficial.
    I look forward to hearing from our colleagues and to 
hearing from our other witnesses.
    I insist this hearing not last more than an hour because of 
urgent commitments that I have as well.
    I want to hear first from our colleagues, Steve King of the 
Fifth District of Iowa and Bruce Braley of the First District 
of Iowa. Which of you would like to go first?
    Mr. King. Thank you, Madam Chair.
    Ms. Norton. I ask all the witnesses to summarize their 
remarks and to keep them to 5 minutes.

TESTIMONY OF THE HON. STEVE KING, A REPRESENTATIVE IN CONGRESS 
                     FROM THE STATE OF IOWA

    Mr. King. Thank you, Madam Chair. I appreciate you holding 
this hearing today.
    I have my written testimony before me. I think I will speak 
off of my memory, recollection and my motivation here.
    We're here to discuss H.R. 6641, which amends the Stafford 
Act to qualify small businesses of 25 or less for grants within 
those otherwise definitions of the existing Stafford Act. My 
motivation on this goes back to deep and profound experience, 
having been a business owner throughout 28 years.
    In 1993, many will remember that Iowa was underwater 
multiple times in the floods of '93. You can look at the State 
of Iowa from satellite, and it looked like ocean from outer 
space. We had so much water, more water than ever before. It 
was at least a 500-year flood event.
    In my business, I had four different construction projects 
going on simultaneously. They had been underwater 
intermittently all spring; and on July 9th, the day that the 
Des Moines water works was taken out and the water supply for 
the capital city of Iowa was out of business, on that day I had 
all of my projects underwater simultaneously. There was nothing 
I could do to help myself at that period of time.
    We loaded up some men and equipment, and we went clear over 
to eastern Iowa to help some businesses out over there. A 
business in Keokuk that was a for-profit company couldn't 
receive any help. They had their inventory under 7 feet of 
water. They needed some help to get that inventory out. We put 
our equipment and our manpower over there without expectations 
of pay to try to help that business survive, even though the 
National Guard couldn't help them, FEMA couldn't help them, and 
small business couldn't help them because they were for profit. 
That was my first exposure to this.
    When I went back home to try to pump the water down on my 
projects and I looked around and realized what was going on, we 
have structured from the Federal Government relief in grant 
form for every sector of our economy except for private 
enterprise and sectors that are not necessarily sectors of our 
economy except for private enterprise, and the ones that are 
the most vulnerable are small businesses. There is grant money 
available for residences, for example. FEMA can go down the 
street and offer help for people that have their basements 
flooded, and they do. It is common.
    We do recognize they help a small business. It provides 
low-interest loans to businesses. But, aside from that, there 
is grant money available even to private-sector transportation 
such as railroads, not-for-profits. Even some churches qualify 
for grants, every level of government, political subdivision 
from city to county to State.
    Of course, the Federal Government can receive bailout money 
to rebuild back to pre-flood conditions. All of the links in 
the economic chain that are part of this--the educational 
institutions, the institutions of government, some of the 
religious institutions, transportation links that are privately 
owned and publicly owned--all of them and residences qualify 
for some form of Federal grant except the evil capitalist small 
business people that are in business to make a profit and make 
a living, the ones that create the jobs and pay the taxes.
    So I, as a business owner, want to emphasize there is 
nothing in H.R. 6641 that, had it been enacted back before 
1993, would have helped me or my business, because those are 
construction locations. But the businesses--for example, like 
let's take a flower shop that might be on the edge of a 
residential area. Maybe it is a partnership. And a house owned 
on the right and on the left of the flower shop might be the 
partners. Their homes can receive grants to bail them out if 
they are flooded, but the business cannot.
    This bill, H.R. 6641, provides that opportunity for grants 
to small businesses so that they can get that stipend up to the 
statutory limit that is under Stafford today, which would be, 
effectively, $28,800. If we can't do that here in this Congress 
when we look at the most essential link in the economic chain 
as the business link and the most important from the job 
perspective is a small business link, what is the point in 
setting up the rest of society, the rest of the community that 
has been devastated by a flood if the jobs that are provided 
can't be protected in the sense of small business?
    So I am submitting that whatever there may be for technical 
difficulties on the part of FEMA and small business, I haven't 
heard them suggest a way that there is a problem that can't be 
worked out. We are the United States Congress, and we can make 
changes, and we must look at the people in this country and 
provide equity.
    Cedar Rapids gripped my heart. It is outside my district, 
and my district has pretty much recovered from this. We have 
some places. But the eastern part of Iowa, particularly Cedar 
Rapids, Mr. Braley's district, and Loebsack district and also 
Mr. Boswell's district in central Iowa are examples of this. 
But nationwide we have got to help the small businesses. That 
is what this bill does.
    I appreciate the opportunity to testify, and I'd be happy 
to answer any questions, and I would yield back the unbalance 
of my time.
    Ms. Norton. Thank you very much, Representative King.
    Representative Braley.

    TESTIMONY OF THE HON. BRUCE BRALEY, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF IOWA

    Mr. Braley. Thank you, Madam Chairwoman, and thank you, 
Ranking Member Graves, for holding this important hearing today 
and inviting me to testify.
    I am very pleased the Subcommittee is holding this hearing 
to examine the role the Federal Government in helping small 
businesses recover from natural disasters, because in the 
spring and summer of 2008 Iowa was hit hard by tornados, storms 
and flooding of epic proportions, causing the greatest level of 
widespread damage in our State's history, with even 500-year 
floodplains affected.
    Iowa has suffered damages that place this disaster within 
the top dozen or so all-time national disasters. Eighty-five of 
Iowa's 99 counties were declared Presidential disaster areas 
for both individual and public assistance, and the rebuilding 
and recovery from these storms and floodings will take place 
for years.
     These storms have affected nearly everyone in Iowa, 
causing unprecedented damage to our homes, our lives, our 
property and our livelihoods. Iowa's small businesses have been 
particularly impacted by the storm and face an uncertain future 
because of lack of capital, revenue gaps and a weakened ability 
to generate revenue. In fact, unemployment in Iowa has jumped 
from 3.9 percent in May to 4.3 percent in July, largely because 
of these natural disasters.
    According to the data from the Iowa Department of Economic 
Development, the Iowa Finance Authority and the Iowa Homeland 
Security and Emergency Management Division, small and 
intermediate businesses alone have sustained $5.36 billion in 
total assessed damages. Approximately 48 non-manufacturing 
small businesses and 800 intermediate businesses were impacted. 
Large businesses experienced an additional $100 million in 
losses, and these businesses will sustain hundreds of millions 
of additional dollars in lost revenue.
    Although the data is not final and continues to be updated, 
the Rebuilding Iowa Advisory Commission just released its 
preliminary report that the total unmet need for damage to 
small and intermediate businesses just in Iowa is estimated at 
$2.78 billion. These businesses provide jobs and are critical 
to the local economy but will struggle to survive without some 
additional assistance.
    Small businesses were devastated and will never reopen in 
many of the towns that I represent. Local governments, in 
addition, face extraordinary challenges to sustain a tax base 
that is in jeopardy as a result of loss in housing and the 
local economy; and the closing of these small businesses, as we 
will talk about, have an especially detrimental impact on the 
small towns and livelihoods that I represent.
    The Iowa impact indicates that the SBA has provided 
approximately 3,500 loans for $222 million just from this 
event, which is greatly appreciated, but the issue that we are 
talking about today is that small businesses have few other 
places to look than the SBA for flood relief support, and they 
provide only loans. When these businesses are going through 
such a difficult transition, there is a reluctance on the part 
of the small business owners to take on additional debt.
    Others have taken loans from SBA, but the amounts are not 
nearly enough to cover their damages. For example, Mike Tully, 
who is a constituent of mine, is president of an aerial 
services business; and among the things that company does is 
aerial mapping and imagery. They have submitted nearly $2 
million of losses in physical damages but have only received 
$308,000 of insurance proceeds and a $213,000 SBA loan, which 
doesn't even cover a third of their total loss.
    Or consider Don and Vicky Bowers, who own Tapken's 
convenience store in Anamosa, which had flooding that covered 
its entire athletic fields and its wastewater treatment 
facility. The Tapken's lost more than $120,000 to the 
floodwaters. But the only reason they are now open for business 
is because of the generosity of people in their community who 
donated time and materials to fix up their store. And they face 
additional challenges as they continue to rebuild their 
business.
    Although SBA is the only source of financial assistance 
directly to small businesses affected by these disasters, there 
are other agencies that could indirectly aid small businesses. 
FEMA can reimburse State and local governments for debris 
removal and even on commercial property. HUD provides community 
development block grant funding that can be used to create jobs 
for expansion and retention of businesses.
    That is why the Iowa congressional delegation came together 
in a bipartisan manner and worked with the President to quickly 
pass a $2.65 billion flood relief package which included 
funding for SBA, FEMA, HUD and other agencies. That will go a 
long way to helping Iowa families, farmers and businesses to 
rebuild, but the cost of recovery is increasing every day. 
Unfortunately, much of that money is tied up in red tape.
    It is important that small businesses have the assistance 
available to recover apart from loans, which is why I was happy 
to co-introduce, along with my colleague, Mr. King, H.R. 6641, 
the Small Business Owner Disaster Relief Act of 2008. This 
important bill would amend the Stafford Act to allow these 
emergency assistance grants for small businesses of 25 or fewer 
employees.
    It is also why I introduced, along with my other Iowa 
colleague, Dave Loebsack, H.R. 6587 the Midwestern Disaster Tax 
Relief Act to help small business owners affected with the 
storm and flooding get back on their feet. Among other things, 
it reduces the tax burden for small and mid-sized businesses by 
substantially increasing allowed deductions for the 
depreciation and expensing of their property.
    You can be assured that, along with other Members of the 
delegation, I will continue to fight to work toward legislation 
that helps Iowa's small businesses as well as completing a 
second relief package. We need to ensure that the 
administration is releasing all currently appropriated funds as 
soon as possible and work to make sure that small business 
owners get the much-needed relief that they do.
    Thank you again for allowing me to testify, and I look 
forward to your questions.
    Ms. Norton. Thank you, Representative Braley.
    I do want to say that Mr. Graves was unable to remain in 
Washington this Friday, but he wanted to assure the witnesses 
he is concerned about this issue, and he has asked that his 
statement be placed in the record.
    I only have one question. We sat through multiple hearings 
on Katrina, the total wiping out of a major American city and 
of an entire section of Mississippi; and in all of the time I 
don't remember anyone asking us, even given the devastation 
there, even ever suggesting that the Federal Government should 
give grants to a private enterprise, small or large.
    I read in the paper this morning that GM wants loans, and 
they are coming for loans. I don't know if they will get them, 
but they want some government loans because they want to 
retrofit their cars to keep the car business from going out of 
existence in this country because people didn't do it when they 
should have done it.
    There is--the bipartisan support for small businesses in 
this Congress is pretty close to absolute. But I really have to 
ask you--and Mr. King is the author of this bill. He is from 
the side of the aisle who has not exactly been an advocate for 
giving money to private businesses, small or large. How--
particularly after Katrina, particularly after devastation in 
Florida that is recurrent, and particularly given the deficit 
we have, how are we to convince the Congress that it should 
offer grants to private enterprises who can get insurance, 
private enterprises to whom the Federal Government offers 
below-interest loans as it does not to others if they are small 
businesses, how are we to convince for the first time since the 
Stafford Act was passed, how are we to convince a Congress 
faced with an extraordinary deficit that this is the time to 
start giving what amounts to money to private enterprises?
    Mr. King. Well, thank you, Madam Chair. And, as you can 
imagine, I have examined the justice and equity of this 
thoroughly over the last 15 years since I had many of my 
projects underwater. I want to emphasize there is nothing in 
this bill that would have helped my in the circumstances that I 
was in. But I looked across the entire spectrum of the grants 
that we had. I wasn't aware at the time of what programs were 
available, but, as I looked at this, I could tell you personal 
anecdotes that go pretty deep inside me. But it caused me to 
look at how can we justify going into grants with residences--
--
    Ms. Norton. You really are questioning? You do not see the 
difference----
    Mr. King. No.
    Ms. Norton. --between a residence and a business 
enterprise?
    Mr. King. Well, if I could make my point, I think this, 
that we have justified providing relief for residences. We have 
justified providing relief for not-for-profits, even some 
churches who qualify.
    Ms. Norton. Not-for-profits--and that is an important point 
you make--do qualify for aid under the Stafford Act.
    Mr. King. And we have justified grants for every political 
subdivision--city, county, State and, of course Federal; and 
when I look at the entire economic chain the link that is the 
most essential is the private sector that funds everything 
else. And if we can look at this and say to business owners 
that you are going to pay the taxes, including the unemployment 
of this, and you are going to fund all of this, but when things 
visit you, then we don't have any relief for you.
    As I saw that from the inside, from underwater, from 
standing in the mud and from running in the pumps, and I saw 
people that went broke and sacked up their bats, so to speak, 
and gave up on a lifetime, I came to the conclusion that from a 
justice and equity standpoint we could not say to the business 
owners, you are out of luck because you are for profit and we 
don't like you, even though you are the ones who pay the tax.
    Now this is minimal, I will emphasize. That it's capped 
underneath the limits that exist, the $28,800. And it is just 
for small businesses, and it would not be enough to save many 
of them, but it is a component like it would be of a series of 
scholarships that you might have to compile the resources 
necessary to go to college.
    So I look at this from the standpoint of I think it is 
unjust for us to compel businesses to fund every other entity 
except business when we have a disaster, and these disasters 
are calamitous.
    Ms. Norton. Mr. Braley?
    Mr. Braley. Madam Chairwoman.
    Ms. Norton. Would you put your microphone on?
    Mr. Braley. You are absolutely correct that under the 
Stafford Act that provision does not exist, but when you look 
at what we have recently done to bail out Bear Stearns at a 
time of national crisis, if you look at what we've done to bail 
out Fannie Mae And Freddie Mac at a time of national crisis----
    Ms. Norton. They are not grants, Mr. Braley. There are some 
big loans and guarantees of loans being proposed, but nobody is 
giving these people money. Now there is a whole big controversy 
as to whether or not we should stand behind them as we have, 
and you want to go much further and say give some money, albeit 
to smaller businesses for whom we have much greater affinity. 
But in a market economy, those could be fighting words.
    Mr. Braley. You also made the point these are businesses 
that could get insurance. That is not true in a flooding 
disaster.
    In Iowa, for example, I have a picture up here of a town, 
Elkader, a county seat town in Clayton County. The flood 
forecast, flood stage is 12 feet. The forecasted flood was at 
24 feet, higher than it had ever been on the Turkey River 
before. The flood actually crested at 31 feet, and many 
businesses outside the flood plain who would not have had a 
need to purchase flood insurance were affected, like the 
grocery store and the bank in Elkader and the grocery store and 
the bank in Greene, Iowa, which also had record flooding.
    The problem is these businesses are the lifeblood of a 
small community. When they are destroyed, it impacts everyone 
in the community; and it makes people decide whether they want 
to stay in those communities. And as it impacts the financial 
ability of those communities to survive, it impacts the 
eventual flow of revenues to the Federal Government through the 
forms of businesses that are putting money into the hands of 
taxpayers that pay money. It is an unmet need.
    I can tell you from all the time I have spent in the past 2 
years dealing with people affected by blizzards, by ice storms, 
flooding, the most powerful tornado in the country hit my 
district this year, the number one concern on the minds of 
small business owners is they do not have the resources to 
survive. When they go out of business, it devastates small 
communities in the same way that Katrina devastated New 
Orleans.
    Even though Cedar Rapids, Iowa, is the largest city in Iowa 
impacted by this, I drove this week through 400 square blocks 
of boarded-up homes and businesses. If you are living in 
Elkader, Iowa, facing the devastation of that magnitude, you go 
through the same things in your life that the people in New 
Orleans have gone through. And the problem is you have even 
fewer resources to rebuild because you don't have large 
corporations in your community that have a longer standing 
ability to reinvest in the community. That is why I would 
contend, especially in rural parts of America, small business 
owners are ill-equipped without this type of assistance to 
survive and thrive.
    Ms. Norton. Both of you made very important points about 
what small businesses do not only to small communities, I must 
say, but do for job creation in our country. I indicated that 
in my opening statement, and I hope you don't take my own 
comments to be anything other than my normal cross-examination 
of witnesses, because there will be great sympathy for what you 
desire to do.
    I do want to say for the record, Mr. Braley, that Iowa's 
claims--for this year's Midwest floods, we asked for the amount 
in insurance claims to businesses. Because, in fact, the 
national flood insurance program does not leave people just out 
there on their own; and the amount is very hefty. It is 
$20,302,272.26 for business claims. This is an area that we 
need to look at more closely, and I think that your testimony 
indicates that that is the case.
    The Chairman may want to----
    Mr. Oberstar. No, you go right ahead.
    Ms. Norton. I am through with my questions, sir. And I 
certainly was going ask Mr. Braley and Mr. King if they wished 
to remain and come sit on the dais.
    Mr. Oberstar. I was going to ask unanimous consent that Mr. 
King may be allowed to sit with the Committee, but under 
Committee rules noncommittee Members are not allowed to ask 
questions. But we would invite the gentleman from Iowa to 
remain with the Committee, sit at the dais. Sit on our side, if 
you wish.
    Ms. Norton. We would be glad to have you, Mr. King.
    Mr. Oberstar. And throughout the hearing, because of the 
intense interest and concern of the gentleman on the subject 
matter. But under Committee rules, as much as I would like to 
invite the gentleman, it is a long-standing practice that 
noncommittee Members are not allowed to ask questions. He may 
submit questions to the Chair in writing, but I welcome the 
gentleman's participation.
    Ms. Norton. Thank you very much, Mr. Chairman.
    Mr. King. Madam Chair.
    Ms. Norton. Yes, Mr. King.
    Mr. King. Thank you, Madam Chair. If I could enter into the 
record an additional comment----
    Ms. Norton. Please do.
    Mr. King. I want to make also the point that Mr. Braley has 
met with a lot of the business people who had their lives 
devastated by this event that goes beyond a 500-year event. 
That 500-year event already took place in 1993. They were above 
that level. This is an extraordinary anomaly. I looked these 
people in the eye that for a lifetime had built their business 
and have seen it devastated. And they are 63, 65 years old; and 
they are looking at a 30-year loan to keep their business 
going.
    If we can inject a little bit of capital into that, their 
salvation was, I think I can pass this loan along to the next 
generation. I am going to try to convince my daughter or son to 
come back and pick up this business, but they are going to be 
saddled with a 30-year debt. This is the kind of thing we are 
dealing with, especially in eastern Iowa.
    And the reason that the question probably hasn't been 
raised before, a very astute observation that out of Katrina we 
didn't hear these requests, I think the business people just 
don't think outside the box they are delivered. It weighs them 
down. And it is a very depressing thing to march through a slow 
flood. Your adrenaline goes up. It diminishes as the water goes 
down, and you are left with the sandbags and nobody to empty 
them. We have to help them empty their sandbags and get their 
lives back together.
    Ms. Norton. Well, this county better get ready for it. 
Houston is about to experience something to the likes of which 
they have never experienced before either, and I wonder what 
small business is going to look like when this is all over.
    There is a very important point that you raise. I certainly 
invite you to stay, because the administration does not support 
this bill, and they will offer testimony to that effect. I 
would ask you, Mr. Braley, of course, as a Member of the 
Committee, if you would both like to stay, we would be glad to 
have you both; and I will go on to the next witness.
    Mr. Oberstar. Madam Chair, I will ask unanimous consent Mr. 
Braley be allowed to sit. He is not a Member of the 
Subcommittee but he be allowed to sit with the Committee and to 
ask questions.
    Ms. Norton. So ordered.
    Mr. Oberstar. If I may Madam Chair, I offer a few 
observations while FEMA is getting ready to come to the table. 
I apologize for being delayed this morning not by Committee 
business but by family business. I was unexpectedly delayed.
    While we all have September 11th and Katrina in our minds, 
we, today, and thanks to your generosity making time on a 
Friday for hearing, we will hear from the SBA and FEMA who are 
Federal partners in disaster recovery. And under the authority 
of the Small Business Act, the SBA provides low interest loans 
now at 4 percent, with a cap of $2 million for businesses that 
are stricken by disaster. Those are the business physical 
disaster loans for businesses to repair, to replace, to restore 
to condition of good repair, property damaged by disaster, 
including the real estate, their inventories, supplies, 
machinery and equipment.
    Businesses with also receive economic injury capital loans 
which are working capital loans to help small businesses with 
their financial obligations that cannot be met because of the 
disaster, and we have thousands of those loans over the many 
years.
    I worked as a staff person, Committee staff and as a 
Member. This year, in Iowa, over 498 loans were approved by SBA 
totaling $65 million. We went to hear FEMA's response to the 
issues raised by the Members from Iowa, in particular Mr. King, 
on the issue of grant assistance to businesses; and Mr. Braley 
also shares in that concern.
    In the anticipation of and right at the outset of the Iowa 
floods I convened a meeting of the Iowa delegation with FEMA to 
assess their readiness and preparedness to deal with the 
tragedies, and this issue was the principal question that came 
out of those meetings and subsequent disaster effects.
    FEMA clearly has responded. They provided over $500 million 
in assistance in Iowa and grants to families, nearly 24,000, 
23,300, totaling $127 million in grants. This hearing is not in 
criticism of FEMA or of SBA but to probe further to see how 
much more we can expand properly the assistance under FEMA to 
those stricken.
    Thank you, Madam Chair, for the opportunity to make those 
remarks.
    Ms. Norton. Thank you, Mr. Chairman.
    We now go to our next witnesses; and I will ask Mr. Bourne 
of FEMA and Herbert Mitchell--Marko Bourne, the Director of 
Policy and Program Analysis at FEMA, and Herbert Mitchell, who 
is the Assistant Administrator of the Office of Disaster 
Assistance at SBA, to proceed.

 TESTIMONY OF HERBERT MITCHELL, ASSISTANT ADMINISTRATOR OF THE 
      OFFICE OF DISASTER ASSISTANCE, U.S. SMALL BUSINESS 
   ADMINISTRATION; AND MARKO BOURNE, DIRECTOR OF POLICY AND 
     PROGRAM ANALYSIS, FEDERAL EMERGENCY MANAGEMENT AGENCY

    Mr. Bourne. Good morning, Mr. Chairman, Madam Chairwoman. I 
appreciate the opportunity to be here before the Subcommittee.
    I am Marko Bourne. I am the Director of Policy and Program 
Analysis at FEMA; and joining me today is James Walke, who the 
Division Director of FEMA's public assistance program. We thank 
you all for the opportunity to appear here today.
    My written statement certainly goes into a more detailed 
account of FEMA's disaster assistance programs, the history of 
some of the disaster assistance programs, their evolution, how 
they have been invoked over the years and what those programs 
do and who they are designed for and, more specifically, 
additional testimony on how FEMA is incorporating the needs of 
small business, and minority, disadvantaged businesses into its 
overall disaster relief acquisition strategies, how we are 
meeting our socioeconomic contracting goals and how we are 
engaging the private sector in areas of preparedness, 
prevention, protection, response, recovery and mitigation.
    At this time, I would like to take just a moment or two to 
provide some historical context on Federal disaster assistance, 
which is well-known to this Committee. But, for the record, the 
Robert T. Stafford Disaster Relief and Emergency Assistance Act 
is the Federal law that is designed to bring an orderly and 
systemic means of providing Federal disaster assistance to 
State and local governments to help them carry out their 
responsibilities to aid citizens in times of disaster events. 
And the law also establishes the process of requesting and 
obtaining such a declaration. It defines the scope and 
assistance available under the Stafford Act and certainly 
contains the conditions for obtaining that assistance. It also 
allows for assistance authorized by this statute to 
individuals, families, State and local governments and certain 
nonprofit organizations.
    And, as you are well aware, the Stafford Act does not at 
this time allow FEMA to provide assistance to business or 
business-related needs in the form of grants. Historically, 
Federal assistance has only been eligible for individuals, 
households, public entities and nonprofits of affected 
jurisdictions within and in support of a presidentially 
declared disaster or emergency.
    Obviously there is other assistance that is available to 
individuals and businesses other than a presidentially declared 
disaster or emergency assistance under Stafford. Certainly the 
main program in any of the disaster relief acts, either for 
individuals and exclusively for business, is managed by my 
colleague from the Small Business Administration with the low 
interest loan programs. I will defer to him to discuss his 
programs in more detail.
    Other Federal agencies have distinct disaster relief 
authorities outside of Stafford and address certain other 
business community needs such as the Department of Agriculture, 
Department of Commerce and others.
    Following the San Fernando earthquake in California in 
1971, Hurricane Agnes in '72, Congress spent a quite a bit of 
time looking at disaster program administration and expanded 
the authority to assist certain private nonprofits, namely 
educational, utility, emergency medical and custodial 
facilities that support the restoration of services to the 
public in general; and Congress has revisited this matter 
several times over the last three decades and enacted disaster 
relief amendments to the Stafford Act in 1974, the Robert T. 
Stafford Act in 1988 and most recently the Disaster Mitigation 
Act of 2000, all of which refined even further the roles and 
relationships and eligibility requirements for those that are 
eligible for that assistance.
    DMA2K, as the Disaster Mitigation Act of 2000 is short-
handed known by, amended the Stafford Act to include certain 
noncritical private nonprofit facilities to apply first to the 
Small Business Association for a loan for permanent repair or 
restoration work, rather than FEMA for a grant. Most of the 
grants, most the disaster relief act monies that are provided 
to individuals are in the form of low interest loans. They have 
to be denied by SBA for a loan before they are eligible for 
direct individual assistance, with the exception of critical 
immediate needs and temporary housing if their insurance does 
not cover those items.
    At this time, I would like to highlight what some of FEMA's 
accomplishments have been in working with the private sector, 
especially small businesses, and what our goals are in the 
future.
    As you know, the first priority of FEMA during an initial 
phase of any major disaster is and always has been to provide 
relief to the victims in the most efficient and effective way 
possible in order to save lives and property. We try to use 
competitive strategies in providing small businesses a 
competitive advantage, and we are proud to report that FEMA 
competed 81 percent of it's procurement dollars in fiscal year 
2007 and year-to-date total more than 83 percent. FEMA went 
from last place within the Department of Homeland Security from 
competing its dollars to first place in 2007.
    To enhance our efforts in attaining these small business 
goals, we recently dedicated a full-time small business 
specialist. His primarily responsibility is to increase 
contracting opportunities for small, minority and disadvantaged 
businesses, especially those in the areas that are most 
affected by disasters. This assignment will further help 
institutionalize our small and minority contracting efforts to 
help maintain a more level playing field.
    To date, FEMA's achieved very good results in meeting and 
achieving most of our contracting goals.
    From 2006 to present, we have awarded more than $2.6 
billion to small businesses in contracts. In fiscal year, 2006 
FEMA awarded approximately $1.8 billion to small businesses. 
This amount represents approximately 27 percent of the total 
procurement dollars awarded.
    In 2007 FEMA, awarded $485 million to small businesses. 
This represented 33 percent of the agency's total procurement 
dollars that fiscal year, thus exceeding our small business 
goal of 30 percent.
    So far in 2008, FEMA is on target; and we have awarded more 
than $293 million to small business, which represents now 31 
percent of the total procurement dollars awarded so far this 
fiscal year.
    As the Committee considers the role of the Federal 
Government in small business disaster recovery, we would like 
to urge the Committee to also consider how the Federal 
Government is engaging the private sector, small or large, 
across the disaster relief and homeland security landscape.
    We have made significant progress in obtaining our 
thresholds for supporting small businesses under contract. We 
have also begun to proactively lean forward to integrate the 
private sector into emergency preparedness programs, our 
response, recovery and mitigation planning and beginning to 
find ways to engage them also in training, exercise and the 
real time implementation of disaster support.
    FEMA's new structure and vision is now in place, and the 
agency is aggressively pursuing new inroads with the private 
sector community. We have stood up a new FEMA office in the 
private sector where small businesses and large businesses can 
be engaged in supporting and learning about preparedness 
efforts as well as our response.
    We have created small business community outreach, we have 
also leveraged the private sector in development and refinement 
of the National Response Framework and the national 
preparedness system and trying to create a stronger, more 
vibrant public-private partnership through programs such as 
Citizen Corps, Ready Business and the Loan Executive Program, 
which we enacted last year now to help foster the open lines of 
communication with our Homeland Security partners and the 
nonprofit communities as well. And we are leveraging the 
resources and expertise of those private sector and nonprofit 
partners even as we move beyond the role they played in the 
past.
    Now I am happy to know it has been a two-way street. The 
Ready Business program has allowed businesses to take more 
proactive mitigation and preparedness approaches. Our Citizen 
Corps program is bringing civic and business leaders together 
in order to do all hazard emergency preparedness planning and 
mitigation.
    We are also actively encouraging our small businesses and 
individuals to actively participate in the National Flood 
Insurance Program, which is the primary means for providing 
insurance to flood events, as well as working with the larger 
insurance community on issues that relate to other types of 
disasters.
    In conclusion, as Congress considers H.R. 6641, it is 
important to note that for over 50 years the posture of the 
Federal Government has been to provide Federal disaster 
assistance grants mostly to individuals and to businesses low 
interest loans as the primary means of recovery. Grants have 
not been part of the equation for the private sector community. 
The individual grants that have been provided to nonprofit 
organizations have traditionally been targeted to those 
nonprofits that perform a governmental mission or are in 
support of a governmental mission. While there has been some 
expansion of that----
    Ms. Norton. Mr. Bourne, will you further summarize your 
remarks? We have let you go well beyond the time.
    Mr. Bourne. Thank you. Sorry, Madam.
    In conclusion, while we cannot support the language as 
currently drafted, we certainly believe the issue is worthy of 
discussion and debate and look forward to working with the 
Committee on that bill in the future.
    Ms. Norton. Thank you very much, Mr. Bourne.
    Herbert Mitchell, the Assistant Administrator of the Office 
of Disaster Assistance at SBA, we ask you to summarize your 
testimony in as close to 5 minutes as you can.
    Mr. Mitchell. Good morning, Madam Chairwoman. Thank you. 
And to the Committee Members as well, thank you for inviting me 
to discuss this important topic today. Not only will I try to 
summarize my written testimony, I will try to summarize my oral 
testimony that was prepared as well with respect for the time.
    SBA's Office of Disaster Assistance has the mission of 
providing timely, affordable and accessible financial 
assistance not only to small businesses but large businesses, 
private nonprofits and to homeowners and renters as a result of 
the disaster.
    Probably something that is not well-known, but about 80 
percent of all of the disaster loans are actually made to 
homeowners and renters, which constitute about 50 percent of 
the dollars. The businesses, while they are smaller in number, 
actually receive the majority of dollars, well over 50 percent 
of the dollars.
    As has already been mentioned, SBA disaster loans really 
take on two forms, one in the form of a physical loan that can 
be used to repair or replace the property that has been damaged 
or destroyed by the disaster, and for small businesses only a 
working capital loan identifies an economic injury disaster 
loan to help sustain that business to meet its operating 
expenses such as rent and payroll or invoices that become due 
during that disaster period until the business can return to 
normal operations.
    For the homeowner, they can receive a low interest loan up 
to $200,000 to repair or replace their home, $40,000 for the 
personal property. The renter as well is eligible for $40,000 
for personal property loss.
    For business owners, SBA just recently raised the limit 
from 1.5 million to 2 million for repair of the property or it 
can take the form of a working capital loan. It is up to 2 
million. It is not a combination thereof, but the total of the 
two is limited to $2 million.
    One of the other features that happens in a disaster--
obviously, there is the preparedness phase. There is the 
emergency response. SBA's focus is on long-term recovery. Once 
people are taken care of, people are safe, and they now look to 
rebuild their property, that is where SBA comes into play and 
certainly in cooperation with FEMA. We are collocated in the 
recovery centers. We share information on applicants, or 
individuals who register assistance are recovered to SBA, for 
those that are dependent upon an SBA decision, even prior to 
getting recovery assistance or assistance from FEMA.
    One of the things that we would point out in terms of the 
SBA role in economic recovery and assisting small businesses, 
and I have already mentioned the fact that employees who own 
homes that are damaged in that community who are employees of 
those small businesses are eligible for home loans and personal 
property loans as well.
    For the small business owner and, just recently, SBA 
included private nonprofits that are eligible for working 
capital loans, it is a critical point to make, particularly in 
a lot of disasters even where the small business owner has not 
received physical damage or incurred physical damage, they are 
still eligible for working capital assistance. Oftentimes, for 
the small business owner their business is disrupted because 
the customer base has been disrupted or a supplier has been cut 
off and not been able to provide supplies to that business. So 
if the business is economically impacted in any way, even 
though there is no physical damage to their property, they are 
still eligible for a working capital loan up to $2 million to 
sustain their operation until the business returns to normal.
    SBA, also, through what I call the regular programs, our 
7(a) guaranteed lending program, certainly are available to 
small businesses in those communities as well. SBA provides 
management and technical assistance through the Small Business 
Development Centers, the SCORE program, the Women's Business 
Centers and counseling businesses that have been impacted by a 
disaster in term of helping them prepare the application. In 
some cases, making decisions about taking alternative 
directions in terms of do I really want to build back the way I 
built or do I really want to stay in this particular line of 
business. So counseling can play an important role in a 
disaster situation in helping businesses to make that decision.
    I will just close by making some observations. Like a lot 
of Federal agencies and private sector firms post Katrina, 
certainly SBA was challenged, not unlike a lot of agencies. So 
we learned a lot and what we put in place now we are seeing the 
benefits of and, obviously, the Midwest floods and, God forbid, 
Hurricane Ike that is targeted toward Houston right now or the 
Texas area.
    We have basically cut our processing time. Our goal is to 
process a loan within 16 days. We are currently processing 
within 9 days. We have upgraded our computer underwriting 
system. From pre-Katrina 2000 concurrent users, we have the 
ability now to process with 12,000 concurrent users. We have a 
cadre or reserve force of about 2,000 employees that are 
available to us for immediate call-up to be deployed within 48 
hours. We have additional search space in place in terms of the 
overall infrastructure and all of the equipment outfitted to 
basically almost 200,000 square feet of storage pace.
    Probably one of the most important things we have done 
post-Katrina, we assign a case manager to every----
    Ms. Norton. Mr. Mitchell, would you briefly summarize the 
rest of your remarks?
    Mr. Mitchell. I sure will. We assign a case manager to 
every borrower that receives a loan so that they walk through 
the process, they understand the process from beginning to end. 
And I assure the Committee that SBA is better prepared than 
ever to respond to disaster events.
    And, with that, if there are any questions, I will be glad 
to answer any questions. Thank you.
    Ms. Norton. Thank you very much.
    Now, I am going to ask one question that gets to another of 
my concerns, and then I am going to have the chutzpah to have 
the real Chair to take the Chair as I go to an urgent 
appointment that I must attend.
    When I questioned some colleagues, my concern was about--if 
you forgive the pun--the floodgates, opening the floodgates, 
countless small businesses critical to the economy. My own 
opening remarks said that is who makes the jobs in America. I 
don't think you have to convince anybody in this Congress how 
important they are. When they go down, we know what happens to 
jobs in the community.
    I must say in listening to both of you I heard of 
assistance that I didn't know of before. It does seem to me 
that the Federal Government has heard small businesses, has not 
begrudged small businesses; and the question before us is in a 
market economy experiencing great problems, small businesses 
will be experiencing them even more, even before floods or 
hurricanes. But in the context, particularly where we sit, the 
unprecedented notion of grants comes up I think precisely 
because these colleagues have seen small businesses wiped 
completely out and don't see any way for them to quickly 
recover. And Mr. King even analogizes a small business to a 
residence. There he and I depart. But I do think that his point 
about small businesses cannot be gainsayed.
    Now the notion of loans I have had some experience with in 
my own district where there was a hurricane here and there were 
floods. They were below-market-rate loans. We were very 
pleased. But the fact is--and I think it was Mr. King that made 
the point about 30-year loans. So if I were going to grapple 
with changes, I perhaps would not have taken the route that Mr. 
King took, because it is such an uphill battle to ask the 
Federal Government to give some money--let's be clear what it 
is--some money to businesses.
    I probably would have--the most compelling argument I heard 
him make was about a 30-year loan. You say to a small business, 
look, here is a below-interest loan. Aren't you happy? And SBA 
is trying to make it easier, not harder by giving the person 30 
years to pay it off.
    It looks like it has been 30-year loans like this without 
change. Has SBA in particular given any thought to how often 
these below-market-rate loans businesses think they shouldn't 
take, can't take? Is there any way that some of the concerns 
raised by our colleagues could be addressed by more lenient 
loan terms so that a small business didn't see a loan, even one 
offered by the SBA, as just another burden on him rather than 
relief for him?
    I guess that would be to Mr. Mitchell.
    Mr. Mitchell. Well, there is always a question; and there, 
again, I make the distinction between emergency response and 
long-term recovery. I then point out that SBA loans are only 
designed to cover uninsured loss; and while obviously there are 
situations where small business owners do have insurance, there 
clearly are situations where small business owners don't have 
insurance. And I would suggest that even those who have 
insurance may be underinsured, so SBA does play a role.
    We think the 30-year term, the low interest rate of 4 
percent gives us the flexibility to work with the borrower. 
What we try to do is we don't set an initial term like in the 
private sector that is geared toward the useful life of the 
property. For example, generally working capital loans are 
limited to 3 to 5 years. We determine first what can you afford 
to pay on a monthly basis and then we back into the term of 30 
years to----
    Ms. Norton. So this is negotiable? The terms are negotiable 
up to 30-year loans?
    Mr. Mitchell. We can make them up to 30 years. And we set 
the target payment based on one-third of the cash flow of the 
business as an affordable amount that they can pay and then we 
back into the term. So a different borrower with the same 
amount of loan amount may get a different term based on what 
they can afford to pay, based on their monthly cash flow.
    Ms. Norton. Are there--if--I think it was Representative 
King talked about burdening--I can't imagine how big a loan 
this would be--but burdening one's children. Are there any 
prepayment penalties of any kind if one wanted to pay off the 
loan quickly once one's business jumped back?
    Mr. Mitchell. There are no prepayment penalties involved. A 
lot of loans obviously do pay off. In some cases, businesses 
may ultimately settle with their insurance companies and the 
insurance companies pay off. Obviously, there are situations 
where people run into financial difficulties; and we have some 
tools available to work with people in terms of adjusting 
payments, extending the term of the loan, deferring payments as 
they work through those financial difficulties.
    Ms. Norton. It is very important to hear that. Obviously, 
the 30-year loan is not meant to be a burden. It is meant to be 
just the opposite. I am only asking about the terms to make 
sure that we don't have some rigid notion and that the terms 
can be tailored to the business, just as a bank would tailor 
often the terms within certain parameters to the particular 
needs of the client.
    Mr. Mitchell. Absolutely.
    Ms. Norton. Mr. Chairman, could I ask you to be the 
Chairman once again?
    Mr. Oberstar. [Presiding.] I want to thank you very much 
for being here, both SBA and FEMA.
    I just note for the record that, time and again, we refer 
to the underlying FEMA authority as the Stafford Act. It 
probably should be called the Tom Ridge Disaster Assistance 
Act. Because in 1987 he came to me as the Chair of the 
Investigations and Oversight Subcommittee in the aftermath of 
the Reagan administration budget submission to Congress 
proposing to zero out the funding for the then Civil 
Preparedness Agency.
    It wasn't called FEMA at the time, and proposed only in the 
most extreme conditions 25 percent Federal funds, zero Federal 
assistance for most disasters. And the Pennsylvania delegation 
was understandably in an uproar because they had just been hit 
with a big disaster. Bill Clinger of Pennsylvania, sitting 
right here, my clefthand partner in a wide range of hearings 
that we held, was offended. And we then called the emergency 
preparedness authorities from all over the country into this 
Committee room and had 3 days of hearings and literally rewrote 
the civil defense program and restored the authority much as it 
is today. Somehow, along the way, it got off track. It was 
named for a very nice fellow, first a House Member and then a 
Senator, Stafford, Bob Stafford. But it really should have been 
named for Tom Ridge because he led the way.
    Now I want to come back to the core issue here, and that 
is, in your testimony, Mr. Bourne, the administration supports 
current Stafford Act authorities. It does not support authority 
for grants to businesses. But in the same breath, you do not 
offer a rationale. Why?
    Mr. Bourne. Mr. Chairman, we are not certainly 
unsympathetic to the plight of businesses, especially small 
businesses that are affected by disaster. But the rationale at 
this point is that the posture that the agency has taken over 
the years for many years has been that--and the Federal 
Government has--is that Federal support is supplemental and 
that insurance is a primary means for recovery, whether it be a 
home or a business that has a fire or whether it is a flood in 
a major disaster and that the assistance provided by the 
Federal Government, as codified in Stafford those many years 
ago and prior incarnations, is supplemental in nature to 
support those unintended or those uninsured, uncovered needs 
and that primarily the focus of that support has been for 
governmental entities or for individual homeowners. Part of the 
challenge with having grants to small businesses under the 
current conditions falls along the lines of not really having 
yet a good understanding of what the implications of that would 
be to either the Stafford Act programs, public assistance 
program or the individual assistance program. What that would 
do to the coverage--not just the availability but whether 
businesses would then maintain insurance, you are asking at 
that point the Federal Government to actually invest in a 
business with no guarantees that that business may survive even 
after the grant is provided to them. Certainly one of the 
concerns is with regards to the fact that the vast majority of 
the assistance provided is low-interest loans and that the 
assistance that is provided under the individual assistance to 
homeowners is minor dollars for repair. Mostly it is for 
temporary housing and other needs that are not covered by their 
insurance policies. Now, one of the things that I----
    Mr. Oberstar. Let me just stop you there for a moment.
    Mr. Bourne. Yes, sir.
    Mr. Oberstar. I understand your concern about the magnitude 
of effect. But we do know that as FEMA has a list of all 
businesses in itself; SBA has a listing of all businesses, you 
have an experienced track record. You know what the universe of 
businesses has been in receiving loan assistance. And I 
understand your concern that if an entity can anticipate 
getting a grant, that it might not--that it might forgo 
insurance. But in the farm program, a farmer cannot expect to 
and does not receive assistance in a crop failure if he has not 
signed up for crop insurance. So supposing we condition any 
kind of grant assistance upon a minimum--whatever the level 
might be--a minimum level of flood and storm damage insurance. 
You sign up for that. You pay your premiums, and then whatever 
amount over that coverage is not protected, then a grant could 
be available up to the $28,000 cap that is proposed in the 
legislation of Mr. Braley and Mr. King, would be limited and 
condition that upon the State cost share as proposed in their 
legislation.
    Mr. Bourne. That is certainly worthy of consideration and 
it actually in many ways ties to what is already required under 
the public assistance and individual assistance programs for 
the obtaining and maintaining of flood insurance for a flood 
event should they receive Stafford Act assistance, whether it 
be a governmental entity or whether it be an individual who has 
been flooded. There are requirements that if you do receive 
assistance under those programs, then you are required to 
obtain and maintain flood insurance.
    So certainly anything that could increase the obtaining and 
maintenance of such insurance would go a long way towards 
reducing overall the impact on the Federal Government's 
contribution to it and continue to promote the culture of 
preparedness that puts insurance as the primary means of 
restoration.
    Mr. Oberstar. That is a very encouraging gesture, and I 
welcome your offer to consider it and will welcome your 
thoughts back to the Committee by, say, mid next week because 
we only have a couple of weeks left in the session. And if we 
are going to act on something, we need this--we need some 
substantive input from the administration. How many businesses 
in Iowa in the current flood received--what is the total number 
of businesses that received FEMA assistance?
    Mr. Bourne. Actually, that assistance would have been 
through SBA programs. I can see if I have got those figures 
with me. I may not have them handy. But if I don't, I will get 
them to you.
    Mr. Oberstar. Mr. Mitchell, do you have the number?
    Mr. Mitchell. I don't have the number as of this morning, 
but I think, as of last night, 523 businesses had received 
loans for a little over $220 million. But we will get you the 
exact number.
    Mr. Oberstar. In Iowa, 523.
    And how many, Mr. Bourne and Mr. Mitchell, what was the 
total number of homeowners that received assistance?
    Mr. Mitchell. Well, the total loans in Iowa is about 3,300. 
So the difference would be about 2,700, 2,700 homeowners.
    Mr. Oberstar. 2,700 homeowners and 530 some, maximum of 
530.
    Mr. Mitchell. Right.
    Mr. Oberstar. So we are not talking about a vast number. 
Now you multiply that over the country, however, with 50 
disasters listed in your testimony here, and that is just so 
far this year, through 9 months or 8.5 months of this year--or 
no, this is fiscal year. So from fiscal year last year. So it 
is almost a calendar--almost 12 months. There are a lot of 
disasters we are dealing with.
    Mr. Mitchell.
    Mr. Mitchell. Just to comment on the numbers. Those are the 
approvals. But it does not represent all of the businesses and 
homeowners that may have been impacted. Obviously, everybody 
who is impacted doesn't apply for an SBA loan. Some have 
insurance, or some just decide not to seek debt but just to put 
it in perspective.
    Mr. Oberstar. Certainly, and then we have the problem in 
the Gulf in the aftermath of Katrina where insurance companies 
were making a distinction between storm damage and surge, a 
rather fine line distinction without a difference. The surge 
that came from Lake Borgne across the Mississippi River Gulf 
Outlet. And because the MRGO, as it is known, had been dredged 
and built some years ago and allowed salt water to move up that 
channel and kill off the grasses and reeds and other plant 
material that served as the shock troops, the buffer against 
storm surge; never in the history of St. Bernard parish had it 
been overtopped, but it was in Katrina.
    And the insurance companies came in to the homeowners and 
said, sorry, you are not covered because this is storm surge. 
This wasn't hurricane wind damage and rain damage and flood 
damage. There was a storm surge. Well, you mean, it just 
happened all by itself? That the storm, that Katrina didn't 
have anything to do with the storm surge? Those are the kinds 
of things that drive people nuts.
    Now I spent a good deal of time down there in St. Bernard 
parish. My wife is from New Orleans, has a great many friends 
there and family. And so we just went there. And you know what 
happened? Not only were the houses overtopped, they were lifted 
off their base with their concrete pad and floated in some 
cases three blocks away. One stopped only when it crashed into 
another house that didn't move. And after 6 months of no action 
by the Corps of Engineers, by FEMA, by private insurance 
companies, the homeowner whose house was stationary sued the 
other homeowner for collision damage. I asked him why. He said, 
what else are we supposed to do down here? No one is helping 
us. So, you know, there are these anomalies that happen. And 
what we have to do is try to be as equitable as possible.
    Now I would like you to take those 50 storms and develop a 
list of the total number of businesses that were affected and 
multiply that by the 28,000 cap and a 25 percent State cost 
share and come back to us with what the potential exposure to 
the Federal Government would be in terms of the grants--as a 
result of a grant program proposed by the Iowa delegation 
legislation.
    Now, Mr. Mitchell, from your standpoint, you are able to 
offer businesses 4 percent loans--not you. I mean SBA. I don't 
mean to personalize this. But SBA is able to offer 4 percent 
loans. Those are pretty good interest-bearing loans. And 
compared to the market rate, what would those loans be if they 
had to go out in the open market to borrow money?
    Mr. Mitchell. Probably somewhere around 5 percent now. 
Generally, small businesses are going to qualify for prime plus 
two, two and a half. And obviously depending on the type of 
business and the credit risk, I mean, the spread could be as 
high as 5 to 6 percent. So within a range of about 7.5 to 11, 
percent. Depending on that business situation, that is what the 
market would probably----
    Mr. Oberstar. And then the next question is, can they get 
the loan? When the bank looks at the disaster and the effects, 
there are probably a great many that----
    Mr. Mitchell. Obviously, it is going to vary for every 
business situation, whether or not they have the cash flow, the 
assets and the collateral to go to the marketplace. The 
challenge with a disaster, it is unplanned debt. And in a lot 
of cases, it is just debt on top of debt where it doesn't add 
value to the business. But it just--you know, we make it 
affordable, but it is still debt at the end of the day.
    Mr. Oberstar. And that is what Mr. King and Mr. Braley are 
saying, that businesses in their State go to the lending 
institutions, and then they look at it and say, well, we are 
just piling debt upon debt. We are digging ourselves in deeper. 
And the grant funds would make a difference.
    Now in restoring a community, restoring a region, the 
cornerstone is business. The private sector creates the jobs. 
And minimal, as both Members state up front, this isn't going 
to provide a total rescue for them. But it is a gesture. It is 
a big helping hand. It will help them move up out of their 
current problems.
    I will withhold at the moment and ask Mr. Braley for any 
questions or comments that he might have.
    Mr. Braley. Well, thank you, Mr. Chairman.
    And I want to start by saying to both of our witnesses that 
on, behalf of the people of First District of Iowa, I want to 
tell you how much I appreciate the initial response from both 
of your agencies. I spent time with Administrator Paulison and 
Acting Administrator Carranza in my district, and the 
compassion they showed to the people I represent and the field 
program on the ground from both of your agencies was extremely 
impressive.
    But I want you to look to the photograph that I placed on 
the easel because New Hartford, Iowa, is the home of someone 
you may have heard of before, one of my constituents, Senator 
Chuck Grassley, who is the Ranking Member of the Senate Finance 
Committee, who is working very hard on tax relief for small 
business owners and individual homeowners who have been 
impacted by disasters.
    Now we know that there are two sides of this finance 
puzzle. One is the revenues, and one is the appropriations. Now 
what I want to talk to you about is how we can get to the point 
that Mr. King and I are interested in. Neither one of us wants 
to do anything to create disincentives for businesses to buy 
their own insurance. That should be the primary source of 
relief. But we know that there are already in place tax 
incentives for people whose lives have been devastated, whether 
they are business owners or homeowners, that a lot of people in 
Iowa, quite frankly, aren't spending a lot of time thinking 
about. Because of their immediate needs, they are not thinking 
about those tax appointments next spring.
    But isn't it true, Mr. Bourne, that if we wanted to, in 
addition to putting in place as a condition of eligibility for 
the type of grants Mr. King and I are talking about, in 
addition to putting an insurance requirement in there, we could 
also say, if you take this incentive, there may be some tax 
credits that ordinarily would be available to you that you will 
not qualify for because we are going to assume with the benefit 
of these grant dollars that are coming to you, you are going to 
be in a better position than someone who is adding additional 
debt through a low-interest SBA loan.
    Mr. Bourne. Well it would be a little unwise for me to talk 
about tax policy. That is not normally FEMA's bailiwick. 
Certainly the concept of tax relief or some type of tax relief 
has been considered by States at times in their own recovery 
from disasters. And I know it has been placed before the 
Congress in various forms over the years. I think that is a 
consideration worthy of discussion. I am not sure exactly what 
the administration's policy is on that. But I think it is 
certainly worthy of looking at because one of the things that 
we have recognized in FEMA over the years is that communities 
survive when their businesses stay and survive; that 
communities that lose their largest employers or many of their 
smaller employers have a tendency to fail as communities 
ultimately. And that is a challenge. So certainly the 
incentives that can be provided to, one, keep businesses in 
business, provide them opportunities to get their people back 
to work very quickly by engaging them in their own recovery, 
and then certainly providing an avenue for them to continue to 
serve that community, is always preferred. And I think that is 
something that we could take a look at.
    Mr. Braley. Well, in fact, you mentioned earlier in your 
testimony that one of the distinctions on why grants are 
available to municipalities and not-for-profits is because one 
of the primary concerns is restoration of services. And we are 
talking about basic human needs here. And in fact, if you look 
at that photograph, beyond those flooded vehicles, you will see 
a reddish building back in the background which is a hardware 
store in New Hartford which is going out of business. And if 
you go down the street to the left, you will come to a Quick 
Star convenient store, which is the only place in New Hartford 
for people to get gas or groceries. And it is going out of 
business because of decisions that were made by those business 
owners that, even with the availability of low-interest loans, 
they could not afford to maintain their businesses. And one of 
the things we have to do is start thinking about these policies 
in terms of fundamental human needs that will not be met in the 
New Hartfords all over the State of Iowa if we don't provide 
some incentives that really make a difference. And one thing I 
would ask you, Mr. Mitchell, is during the surveys you do after 
a disaster with small business owners who have benefited from 
the essential services your agency provides, do you ask them 
survey questions about their unmet needs? And is the demand for 
grant money identified as one of the top priorities that is not 
currently being met by the Federal Government?
    Mr. Mitchell. We conduct surveys. We don't ask a specific 
questions about grants. We do ask whether or not they have been 
able to recover as a result of receiving the loan.
    Mr. Braley. One of the points you made--and Mr. King and I 
were talking about this--is that this 30-year low-interest loan 
is also--part of the eligibility determination is based upon 
the capital position of those small businesses in terms of 
whether they are eligible for that 4 percent loan or might have 
a higher interest rate, correct?
    Mr. Mitchell. Correct.
    Mr. Braley. So if you don't have the great capital position 
and you are a 50-year-old small business owner who doesn't 
qualify for anything other than a 30-year loan, you would agree 
that that would be a pretty daunting future if you were facing 
that choice?
    Mr. Mitchell. Well, yes. But it is no different from a 60-
year-old homeowner who gets a 30-year loan. Obviously, the debt 
will attach to the property or to, you know, the new owner. 
Generally, we don't--I mean, obviously people at certain ages 
are reluctant to take on debt, so they make business decisions 
in that regard. But the debt would attach to the business or to 
the new owners.
    Mr. Braley. But the big distinction there is that most 
people are not rebuilding their homes for the purpose of 
generating revenues to feed their families.
    Mr. Mitchell. Understood.
    Mr. Braley. One of the other points I wanted to ask you 
about is the issue between an emergency response and long-term 
recovery. You said that SBA's focus is on long-term recovery. 
It is obvious from a lot of the small business owners that I am 
talking to in the First District of Iowa that they can't even 
focus on long-term recovery until their short-term needs are 
met. And one of the short-term decisions they have to make is 
whether they are even going to stay in business and whether the 
opportunities to inject immediate cash into their business 
without adding to their debt load is going to make that 
decision one way or the other for them.
    So I guess the question I have for you is, isn't it true 
that the legislation Mr. King and I are proposing would 
certainly make a much greater impact on the short-term decision 
of business survival than adding additional debt over a long 
period of time to a small business owner?
    Mr. Mitchell. Well, clearly, any source of funds that 
address business needs would be helpful to that business. I 
mean, obviously, I can't address in terms of what form that 
assistance should take, but certainly businesses obviously have 
immediate emergency needs just as individuals do as well.
    Mr. Braley. Under the SBA disaster loan program where we 
have talked about this range of interest rates 4 to 8 percent, 
who actually sets the floor of that interest rate?
    Mr. Mitchell. There is a formula in statute that guides us 
in determining the interest rate itself, whether it is, you 
know, the low rate is 4 percent and the high rate is 8. What we 
do is we apply a test to every applicant. We take a look at 
their net assets, their credit history, and their cash flow to 
determine whether or not it is reasonable to assume that this 
borrower with this set of financial conditions could get a loan 
in the marketplace at a reasonable rate. And those that we 
determine they can get that high--the rate will get the higher 
rate. And those that can't will get the 4 percent rate.
    Mr. Braley. But in terms of this existing 4 percent floor 
of the interest rate level, when is that adjusted? Who makes 
that determination? And how frequently is that adjusted?
    Mr. Mitchell. It is adjusted on a quarterly basis. And SBA 
itself makes that determination.
    Mr. Braley. The administrator or someone within the agency?
    Mr. Mitchell. Someone within the agency. It is generally 
done within my office.
    Mr. Braley. Within your office?
    Mr. Mitchell. Yes.
    Mr. Braley. Thank you, Mr. Chairman.
    Mr. Oberstar. I thank the gentleman.
    I thank you for your responses.
    I want to compliment SBA and FEMA; SBA for their long-
standing program of assistance to businesses in disasters, 
which I have personally observed for over 40-some years, my 
service in Congress, on the staff as staff director of this 
Committee, and House Member and Chair. SBA has also done a 
great service to businesses by simplifying the forms. I 
remember when the forms were this thick. By the time a business 
got through with its application and got their funds awarded, 
they say, I will never do business with them again. Now you 
have made it--it has happened over several successive 
administrations. That problem has been cleaned up.
    And FEMA, after the problems of the mid-80s that I already 
described, has improved substantially and especially after the 
disaster of Katrina. There is a program that I want to probe a 
little bit. And that is the mitigation assistance in which FEMA 
has, I think, you know, performed very well. Its mitigation 
assistance to businesses, that goes in two categories. The pre-
disaster mitigation program started during the year of James 
Lee Witt and the HMGP, the Post Disaster Grant Program. In the 
case of those two programs, the funding goes to the State and 
then from the State to local governments. Local governments 
then can help homeowners raise their homes to avoid future 
effects from storm or storm surge and also to relocate out of 
the flood plain. And they can also provide funding to 
businesses to relocate out of the flood plain.
    Now, what is the difference between PDM and HMGP post-
disaster mitigation--mitigation assistance and the proposition 
that the Iowa delegation is offering?
    Mr. Bourne. Well, in general, pre-disaster mitigation 
really looks at money provided in advance of a disaster to a 
State through a competitive grant process that allows State and 
local governments to prioritize their risk areas. It may be--
parts of their communities that have flooded out before or are 
at risk to tornadoes or other disasters and they wish to take 
steps in advance in order to mitigate those.
    Those mitigation activities can support the protection of 
public and private property, such as, you know, elevations, 
other flood protection methods that may not be directly with 
the property that is owned by a business but certainly can 
protect the business itself as well as the homes in that area. 
HMGP is really very similar only that it is money provided 
after a disaster based on a formula that is provided to the 
State and the local governments to again address mitigation 
measures that they have prioritized to support their community. 
Many of those mitigation measures are in the form of buy-outs 
of affected properties or elevations of those properties or 
elevating certain components of a building in order to protect 
them from future disaster. And the State and local governments 
look at their risk, prioritize their risk and apply the 
mitigation money, whether it be for PDM or HMGP, to address 
those risks. Those risks certainly are not just confined to 
private homeowners, but it is also for flood protection 
measures for communities as well.
    Mr. Oberstar. Yes, they have described it well, and I 
appreciate that. As you respond to the earlier questions and 
provide the information I requested, consider that as well. And 
for Mr. Mitchell, for SBA, SBA also has mitigation loan 
authority for homeowners. But does it provide such assistance 
to businesses as well?
    Mr. Mitchell. Yes. Mitigation covers both homeowners and 
businesses. We have the authority to increase the loan by 20 
percent----
    Mr. Oberstar. By 20 percent?
    Mr. Mitchell. Of the loss.
    Mr. Oberstar. 20 percent of loss.
    Mr. Mitchell. Right. So, in the case where someone may have 
insurance that covers say the property and we can make a 
smaller amount of loan for the uninsured amount, we can cover 
20 percent of the loss of the property for mitigation.
    Mr. Oberstar. Have you made such decisions in the case of 
Iowa?
    Mr. Mitchell. I would have to check. I am not sure. But 
they are eligible.
    Mr. Oberstar. Would you do that, provide that information 
for the Committee so we can then----
    Mr. Mitchell. Yes. Yes, sir.
    Mr. Oberstar. Okay. I think we have really covered the 
essence of the subject matter at hand and the legislation 
pending. And we will await responses and the information 
provided and then we will have further--engage further in 
discussions. Mr. Bourne, will you be heading off to the Gulf to 
welcome Ike?
    Mr. Bourne. I will initially be heading back to FEMA 
headquarters for a series of meetings this afternoon in 
preparation. And based on the current storm track and the 
potential for damage, I am sure that many of us will be engaged 
in the Gulf for quite some time. Ike is proving to be a massive 
storm that is pushing far more water than its current wind 
speeds might indicate. And I think we are going to see a 
significant event in that region. And we are prepared. We have 
got a lot of folks in place. The State is well positioned. The 
other Federal agencies are supporting us completely. But it is 
going to be a very significant flooding event and wind event 
for Texas and perhaps even the western parishes of Louisiana.
    Mr. Oberstar. It appears on the Weather Channel report this 
morning that I was following, the diameter may be as much as 
400 miles.
    Mr. Bourne. It is an odd storm in many respects. The 
Weather Service has told us that it is not one that is common. 
It has a wind field of hurricane winds that extend more than 
140 miles, when normally that radius is less than 30 or 40 in 
most hurricanes. Tropical storm winds almost 300 miles. It has 
a barometric pressure that would allow it to support a smaller 
circumference storm but one at category three or four level, 
but it is really only at a category two. But because the wind 
field is so large, it is pushing a tremendous amount of water 
in the Gulf of Mexico into Texas and into the northern 
landscape there. Storm surges may be in excess of 20-plus feet 
in some areas, including the Houston ship channel, if it 
follows the course it is on right now.
    Mr. Oberstar. I know FEMA will lend its best efforts. SBA 
will be there as well in the aftermath to help. I just wish we 
had a FEMA for Haiti. I lived 3.5 years in Haiti; have many, 
many friends still there. Many Haitians who moved to this 
country, they have suffered extraordinarily, and with the 
deforestation of the land, the mountain rush of water that is 
sweeping the hillsides down into the valley and into Gonaives, 
at one time was a lovely community, is now just cake and mud. 
It is an unspeakable tragedy.
    I thank you very much for your participation.
    Mr. Bourne. Thank you, Mr. Chairman.
    Mr. Oberstar. I await your comments. The hearing stands 
adjourned.
    [Whereupon, at 11:45 a.m., the Subcommittee was adjourned.]
    [GRAPHIC] [TIFF OMITTED] 44819.007
    
    [GRAPHIC] [TIFF OMITTED] 44819.008
    
    [GRAPHIC] [TIFF OMITTED] 44819.009
    
    [GRAPHIC] [TIFF OMITTED] 44819.010
    
    [GRAPHIC] [TIFF OMITTED] 44819.011
    
    [GRAPHIC] [TIFF OMITTED] 44819.012
    
    [GRAPHIC] [TIFF OMITTED] 44819.013
    
    [GRAPHIC] [TIFF OMITTED] 44819.014
    
    [GRAPHIC] [TIFF OMITTED] 44819.015
    
    [GRAPHIC] [TIFF OMITTED] 44819.016
    
    [GRAPHIC] [TIFF OMITTED] 44819.017
    
    [GRAPHIC] [TIFF OMITTED] 44819.018
    
    [GRAPHIC] [TIFF OMITTED] 44819.019
    
    [GRAPHIC] [TIFF OMITTED] 44819.020
    
    [GRAPHIC] [TIFF OMITTED] 44819.021
    
    [GRAPHIC] [TIFF OMITTED] 44819.022
    
    [GRAPHIC] [TIFF OMITTED] 44819.023
    
    [GRAPHIC] [TIFF OMITTED] 44819.024
    
    [GRAPHIC] [TIFF OMITTED] 44819.025
    
    [GRAPHIC] [TIFF OMITTED] 44819.026
    
    [GRAPHIC] [TIFF OMITTED] 44819.027
    
    [GRAPHIC] [TIFF OMITTED] 44819.028
    
    [GRAPHIC] [TIFF OMITTED] 44819.029
    
    [GRAPHIC] [TIFF OMITTED] 44819.030
    
    [GRAPHIC] [TIFF OMITTED] 44819.031
    
    [GRAPHIC] [TIFF OMITTED] 44819.032
    
    [GRAPHIC] [TIFF OMITTED] 44819.033
    
    [GRAPHIC] [TIFF OMITTED] 44819.034
    
    [GRAPHIC] [TIFF OMITTED] 44819.035
    
    [GRAPHIC] [TIFF OMITTED] 44819.036
    
    [GRAPHIC] [TIFF OMITTED] 44819.037
    
    [GRAPHIC] [TIFF OMITTED] 44819.038
    
    [GRAPHIC] [TIFF OMITTED] 44819.039
    
    [GRAPHIC] [TIFF OMITTED] 44819.040
    
    [GRAPHIC] [TIFF OMITTED] 44819.041
    
    [GRAPHIC] [TIFF OMITTED] 44819.042
    
    [GRAPHIC] [TIFF OMITTED] 44819.043
    
    [GRAPHIC] [TIFF OMITTED] 44819.044
    
    [GRAPHIC] [TIFF OMITTED] 44819.045
    
    [GRAPHIC] [TIFF OMITTED] 44819.046
    
    [GRAPHIC] [TIFF OMITTED] 44819.047
    
    [GRAPHIC] [TIFF OMITTED] 44819.048
    
    [GRAPHIC] [TIFF OMITTED] 44819.049
    
    [GRAPHIC] [TIFF OMITTED] 44819.050
    
    [GRAPHIC] [TIFF OMITTED] 44819.051
    
    [GRAPHIC] [TIFF OMITTED] 44819.052
    
    [GRAPHIC] [TIFF OMITTED] 44819.053
    
    [GRAPHIC] [TIFF OMITTED] 44819.054
    
    [GRAPHIC] [TIFF OMITTED] 44819.055
    
    [GRAPHIC] [TIFF OMITTED] 44819.056
    
                                    
