- Associated Press - Thursday, April 3, 2014

PICAYUNE, Miss. (AP) - The remainder of a $3.2 million loan approved for the city of Picayune after Hurricane Katrina in 2005 has been forgiven by the Federal Emergency Management Agency.

After the storm, many businesses and services in Picayune shut down, causing the city to lose millions in tax dollars and spend millions in operating expenses. The FEMA loan was to replace some of those lost dollars.

The Picayune Item reports (http://bit.ly/Odj3EL ) half of the loan was forgiven in 2010. The city was informed March 25 by FEMA that the remaining $1.6 million also was forgiven.

“This would have been quite a burden on the taxpayers to pay this back each year, said Mayor Ed Pinero. “We would have eaten into our cash reserve, now we won’t have to.”

Part of the losses suffered after Katrina involved not only loss of tax dollars, but also the additional expenses of paying overtime to city employees in order to bring the city to operational standards again, officials said. Storm debris had to be cleared from the streets. In order to clear the debris the city had to purchase equipment.

Meanwhile, Pearl River County officials are working to get a similar loan forgiven by FEMA.

County Administrator Adrain Lumpkin said the county received the $4.6 million loan from FEMA after Katrina to continue funding the county’s day-to-day operations.

Lumpkin said part of the loan forgiveness process involves showing FEMA that a local increase in revenue wasn’t a normal part of their operations. If Hurricane Katrina hadn’t been so destructive, the county wouldn’t have seen an increase in income, he said.

Lumpkin said with the increased revenue, which came from an influx in population, there was also an increase in operational expenses.

Lumpkin said he hopes for a decision from FEMA by June.

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Information from: Picayune Item, http://www.picayuneitem.com