[Congressional Record Volume 149, Number 63 (Wednesday, April 30, 2003)]
[Senate]
[Page S5608]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. MURKOWSKI:
  S. 961. A bill to expand the scope of the HUBzone program to include 
difficult development areas; to the Committee on Small Business and 
Entrepreneurship.
  Ms. MURKOWSKI. Mr. President, I rise today to introduce legislation 
to correct an inequity in the HUBzone contracting program administered 
by the Small Business Administration, SBA. This bill amends the 
criteria by which areas are designated as HUBzone under the Small 
Business Act by adding a new category designated as ``Difficult 
Development Areas.'' These ``Difficult Development Areas'' are already 
recognized by the Internal Revenue Service and the Department of 
Housing and Urban Development. For reasons I will explain, the 
businesses and people in the community of Ketchikan, AK have been 
wrongly denied participation in the HUBzone program. This bill will 
take care of that problem.
  The current HUBzone qualifications have two tiers. The first is that 
the county in which a business seeking to participate in the program 
must not be located in a Metropolitan Statistical Area, MSA. The second 
level has three separate criteria. If an area meets any one of the 
second level criteria, it qualifies as a HUBzone area. One of the 
criteria simply relates to whether a business is located in an Indian 
Reservation. The other two are correlated to the characteristics of the 
resident population.
  The first of the characteristic is that the area is not located in a 
metropolitan statistical area at the time of the most recent census. 
the second criterion is that the unemployment rate in the area is not 
less than 140 percent of the statewide average unemployment. In the 
case of Ketchikan, the community is not located in a metropolitan 
statistical area. In February of this year the Alaska statewide 
unemployment rate was 7.1 percent almost 2 percent higher than the 
national average. But Ketchian's preliminary unemployment rate for 
February is 11 percent and the reviewed rate for January was 11.9 
percent. The Ketchikan figure currently exceeds the requirement. In 
June of 2002 the rate was 8.6 percent in the Ketchikan Gateway Borough 
in comparison to 7.4 percent statewide at that same time. But because 
of the timing of the compiling of the information by the Census Bureau, 
Ketchikan has been denied participation in the program although it 
routinely exceeds the statewide rate. The anomaly is that for a few 
short months in the summer Ketchikan does not exceed 140 percent of the 
statewide average due to the influx of workers from the area related to 
the tourism industry.
  The SBA has the best intentions and understands the problems. 
However, the SBA has stated to me that nothing short of a legislative 
change can fix the problem. Part of the problem as I understand it is 
that the SBA's current use of the median income and unemployment rate 
criteria makes the assumption that the populations are relatively 
immobile. Further, the SBA criterion assumes that the area in question 
has a fully developed labor market. The criteria assume a community 
model more closely aligned to the traditional urban areas.
  In Alaska, our largest community, Anchorage is rightfully not 
considered a HUBzone area. But the SBA's criteria based on the use of 
the Census Bureau statistics fails to accurately reflect the true 
unemployment and labor market in one place in particular in Alaska--
Ketchikan. The program now uses a Qualified Census Tract.
  Ketchikan is a small coastal community that was highly dependent on 
the timber industry which has been shut down as a result of changes in 
Federal policies and activities of the U.S. Forest Service. As a 
result, the population has become highly dependent on the tourism 
industry. Further, the labor pool is highly transient and leaves to 
collect unemployment after the summer tourist season is over.
  The Census Bureau data taken when the summer population is higher and 
more fully employed does not reflect the reality of the area. As a 
result the Ketchikan Gateway Borough is not considered a HUBzone. There 
is a dry-dock and ship repair facility located in Ketchikan that could 
provide year round employment. But it cannot compete for government 
vessel repair contracts offered by the U.S. Coast Guard and the NOAA 
that have been set aside for HUBzone. These vessels operate in Alaska 
and could be better repaired near where they operate. Now they must 
leave the State and perhaps be out of service longer.
  The bill adds a fourth area to qualify as a HUBzone. The Deptartment 
of Housing and Urban Development already has a program that recognizes 
not only the Qualified Census Tracts but also denotes a ``Non-
metropolitan Difficult Development Area.'' The amendment simply adds 
this Difficult Development Area. Many of these areas already qualify as 
HUBzones under the prior three criteria. I have asked the SBA to advise 
me how much this would expand their program but in reality I expect the 
addition to be only a minor expansion of the HUBzone program. However 
small the change is, the change will be significant to the people and 
businesses located in Ketchikan, AK.
  Mr. President, I ask unanimous consent that a copy of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 961

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. EXPANSION OF HUBZONE PROGRAM.

       Section 3(p)(4)(B)(ii) of the Small Business Act (15 U.S.C. 
     632(p)(4)(B)(ii)) is amended--
       (1) in subclause (I), by striking ``or'' at the end;
       (2) in subclause (II), by striking the period at the end 
     and inserting ``; or''; and
       (3) by adding after subclause (II) the following:

       ``(III) there is located a difficult development area, as 
     designated by the Secretary of Housing and Urban Development 
     in accordance with section 42(d)(5)(C)(iii) of the Internal 
     Revenue Code of 1986.''.

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