Tough questions about flood relief

ST. PAUL (AP) - The head of the state's Department of Employment and Economic Development fielded a series of tough questions and criticism from legislators Wednesday as they met to discuss how to better assist southeastern Minnesota communities recovering from the August floods.

Agency commissioner Dan McElroy promised to work toward a resolution with officials in Rushford, the city of about 1,700 that officials have said was hardest hit by the disaster.

During a Senate Economic Development Budget Division meeting that lasted more than four hours, several DFL senators accused the department of failing to carry out the "legislative intent" of the flood relief package lawmakers passed during a special session last month.

"This legislature passed one of the largest and fastest flood relief bills in our history," Sen. Sharon Erickson Ropes, DFL-Winona, said, referring to the nearly $160 million aid package approved Sept. 12. "The flood relief is not working."

Much of the discussion focused on $35 million being administered by local governments through collaboration with DEED to help damaged businesses in the seven-county flood area. While as much as a third of the money is available in the form of forgivable loans, the remaining funds would be distributed as low-interest loans.

But several Rushford business owners told the Senate panel they didn't see how they would be able to repay the loans.

"It's very difficult to take on hundreds of thousands of dollars in debt on top of the debt we already have," said Jim Hoiness, owner of Rushford Foods grocery store.

Lawmakers also questioned a part of the plan that calls for some of the $35 million to be returned, though loan repayments, to the Minnesota Investment Fund for help in future disasters.

"The legislative intent was ... to get the dollars in the bill into the communities to help those in dire need," Rep. Lyndon Carlson, DFL-Crystal, said, telling McElroy he had no recollection of funds being repaid to a fund for future disasters.

But McElroy said the program was similar to others administered during previous floods in the state and said policies adopted now would likely be a model for the next disaster.

He also said that changing the policy to better address Rushford's needs could mean having to change the other agreements DEED has already made with the other affected city and county governments.

"I have some obligations to the other communities that have already said what was fair," McElroy told the committee.

"We want to see Rushford succeed," McElroy said. "I commit to you that we will try to resolve these issues as quickly as we can."

(Copyright 2007 by The Associated Press. All Rights Reserved.)

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