After S.E. Minnesota flood, a new struggle

10/18/2007

Flood aid is not helping the way it should, Rushford business owners told legislators at a State Capitol hearing.


By Chao Xiong,
Star Tribune
October 17, 2007


In an emotion-wracked hearing that lasted for almost five hours Wednesday at the State Capitol, several business owners from Rushford, Minn., told legislators that loans being distributed by a state agency will leave flood victims buried in debt while funneling money back to the state.

The state's Department of Employment and Economic Development (DEED) was given $35 million to distribute to victims in seven southeastern Minnesota counties devastated by floods in the middle of August. The loan programs the agency is overseeing vary from city to city, with packages that forgive up to 90 percent of a person's debt.

But, said Sen. Sharon Erickson Ropes, DFL-Winona, the criteria for obtaining the high forgivable loans are so stringent that victims either don't apply or, if they do, then they get saddled with onerous debt.

"These loans tie them down to the point where they can barely move," Erickson Ropes said.

The department needs to create easier access to high forgivable loans or Rushford's business community will "slowly bleed to death," said Cristina Friederichs, vice chairwoman of the Rushford Economic Development Association.

Rushford business owners and some senators at Wednesday's hearing of the Senate's Economic Development Budget Division also expressed outrage that some of that loan repayment is set to go straight into DEED's Minnesota Investment Fund.

Sens. Mary Olson, DFL-Bemidji, and Erickson Ropes told DEED Commissioner Dan McElroy that the flood-relief bill passed by legislators last month did not authorize DEED to funnel any money back to itself. "That's shocking," Ropes said.

McElroy said funneling money back to the fund will ensure that funds are available for future disasters. He said the department is following "the letter of the law."We have tried to be very collaborative," he said to an audience that included visibly upset Rushford residents. "We want to see Rushford succeed, believe me, as much as you do."

McElroy said the department was following procedures similar to those implemented in previous disasters.

Committee Chairman Sen. David Tomassoni, DFL-Chisholm, and representatives from the flood-ravaged areas asked McElroy to return to the drawing table and work out a new aid plan that will satisfy flood victims. Although destinations for the money have already been determined -- Rushford will receive $17.66 million -- McElroy said it's not too late to change the terms of the loans.

Only Rushford residents spoke Wednesday, but Ropes said she has heard similar complaints from all over the flood-damaged region.