Rebuilding New Orleans and Louisiana

11:00 A.M. EST

MS. NISBET: I'd like to welcome Louisiana's Secretary of Economic Development, Michael Olivier, and Assistant Secretary Don Pierson. They'll be giving us an update on the state's recovery post Hurricane Katrina. We're really appreciative to have them. They'll give brief remarks and their presentation, and following this, questions and answers. We have the Washington Foreign Press Center also joining us, so there may be some times we're going to Washington on the monitor. Thank you so much for being here.

MR. OLIVIER: Good morning. I'm Michael Olivier, Secretary of Louisiana Economic Development. Don Pierson, my Assistant Secretary, is with us today. We are in New York City talking to media, the national and international media outlets, talking to site selection consultants, talking to the investment banking community and anyone else who will be willing to give us time and listen to what we're doing in Louisiana in this recovery process. Governor Kathleen Babineaux-Blanco we (inaudible) her a cordial invitation to listen to our information, ask questions, and also to visit.

We are not underwater. We are recovering. The level of devastation, as you may have seen, is greater than you know because some of you may not have had the occasion to visit New Orleans or Louisiana or the Gulf Coast, for that matter, but the level is unprecedented. It's the likes of which we've never seen.

What we're going to do today is to give you some information about the impact of the hurricanes. We had two hurricanes, Katrina and Rita, about four weeks apart. We're going to talk about why Louisiana should be a consideration for the investment community from the world, from the United States, from anyplace. We want to talk about the available incentives, which are state incentives which are significant. Added to that now is newly enacted federal incentives from the Katrina Emergency Tax Relief Act of 2005, the Gulf Opportunity Zone Act of 2005 and the Community Development Block Grants that have recently been approved.

Now, we had a significant impact to Louisiana from the two storms; some 23,000 square miles were impacted in our state; 37 parishes -- and we'll cover that in a moment -- were impacted and are considered in the Gulf Opportunity Zone. But we want people to know that we're open for business. Of the approximate 81,000 businesses that have been impacted, many of which were in some state of cessation, not open for business, about 70 percent of those now are back in business. We know that half of them are operating at a capacity to make them fully productive; however, not all are able to act to operate at a capacity because, in some instances, these are businesses that depend on the regional market, the local market. That market has yet to return. As an example, New Orleans is about half the size, in terms of population, that it was pre-Katrina.

Now, we want to talk a little bit about the logistics and transportation side of it. Logistics and transportation, as you might know, including ports, railways, the airports and the ground transportation, all of these are fully functional. However, when I say fully functional, that means they're operating but not at capacity in many cases.

If I can turn your attention to this map, you will note the Gulf Opportunity Zone areas. You can see the yellow area is the Katrina Zone, the blue is the Rita Zone only, and both zones are dark green. That means, as you can tell, that the impact from both storms covered the southern part of the state. In that we have ports, six deep-water ports, we have six class one railways, we have the interstate highway system that runs -- traverses from Florida to California through Louisiana, Interstates 10 and 12 specifically, and we had a series of bridges, causeways that were impacted.

We're proud to say that, as a result, most of these have been repaired. We are still in some state of repair on some; however, some of the major thoroughfares have been repaired to this point. And we're proud of the fact that after a four-month period we were able to get one of the main bridges going into the New Orleans River region from Interstate 10 was fully operational as of December.

People ask us often, well, what's so important about Louisiana and the Gulf Coast? And that is energy. We supply energy to fuel major industry throughout North America. Our port system is the gateway from Latin America and the world: 2,300 miles of navigable waterways; six deep-water ports, as I mentioned before; and we have six class one rails that are important. It's very unusual to have this level of transportation in a state as small as Louisiana is with about 4 million people.

The rebuilding is the answer to: Why Louisiana? We're going to be a significant market. You can imagine when we talk about the fact that 300,000 automobiles were destroyed in Louisiana, the fact that 1.5 million washing machines, refrigerators, freezers -- white goods, as they're called -- 1.5 million were destroyed -- we can go on and on and on. I mean, you can imagine with 200 -- over 200,000 homes destroyed, that we're going to have a demand that is created for businesses providing these goods and services, and beyond that: building supplies, telecommunications have to be replaced, the construction industry alone. So you can imagine those are just three that come to mind immediately.

So we are offering the opportunity for businesses worldwide to come into the Gulf Coast region and find an instant market for these areas and more is quite obvious. And we do not have the capacity that exists in our state to fulfill all of the need. So we're inviting businesses to come in and help us rebuild, help us recover. It's a great opportunity.

Now, the existing state incentives that we have are substantial and I will tell you that prior to Katrina, Louisiana was doing quite well, thank you. We had announced in the previous year to Katrina $3 billion in capital investment. General Motors expanded their plant, adding an additional billion dollars, which was the new Colorado and Canyon Production facility, and then taking the old facility and renovating it into the new renovated facility for the H3 model, the SUV. Additionally, Union Tank Car named Louisiana as its new manufacturing site in Alexandria, Louisiana, producing what would be a significant investment of over $200 million, adding to the manufacturing capacity of our state, employing 850 people there in construction now.

And then additionally, Shin-Etsu from Japan, Shintech, their U.S. subsidiary, announced a $1 billion expansion -- excuse me, not expansion -- $1 billion new facility that would be on the Mississippi River below Baton Rouge, Louisiana, that would employ 2,000 people for two years in construction and take 150 people to operate. So you can imagine the level of technology. This will be the most highly sophisticated PVC plant in the world and we're proud that this Japanese company chose Louisiana to make this very significant investment.

The state incentives that we have -- the Quality Jobs Program, the Property Tax Exemption Program, the Training Program and our Enterprise Zone Program -- were reasons that we've been selected by these companies to make these significant investments.

Since the storm, we've been spending a great deal of time trying to talk to the companies who are making investments that were not under water that their investment is safe, that our levee systems are going to be enhanced so that their investments are secure, that our people will be returning, that the workforce will be there as we rebuild. So along with these opportunities, we have to give protection that Louisiana is a safe place to invest.

Now, the federal incentives are giving what we call a most extraordinary incentive suite, and this is the Katrina Emergency Relief Act, which provides tax relief to individuals in the affected areas, which means getting people back to our state, getting people back to their jobs. The Gulf Opportunity Zone Act increases the Rehabilitation Tax Credit to help restore commercial buildings and then the Act further provides, as was enjoyed here in New York state after 9/11, an accelerated deprecation bonus. Now, in New York state the accelerated depreciation feature, as a result of the economic stimulus package of 2002 for New York state, lower Manhattan, was a 35 percent bonus depreciation year one. This provides a 50 percent bonus appreciation year one. So in other words, if you invest $10 million, you stand to qualify for up to $5 million year one off of your federal income tax liability and you can go back five years to get to that $5 million, or that 50 percent level.

This is extraordinary. Now, we have 36 months, according to the law, to enjoy access to this outstanding incentive. So by December of 2008, you have to take advantage and it has to be in one of the 37 parishes out of 64 that we have in our state to enjoy this significant advantage.

Another advantage is the enhanced Section 1709 expensing, which is going to assist small businesses in being able to deduct those expenses as a result of the rebuilding, and also a net operating loss carry-back, another feature that was added. It also expands and extends the employee retention credit, giving businesses an opportunity to take another tax advantage because they were able to maintain their employment levels or extend their levels of employment. And also, it's expanding an area for the new market tax credits, which again is a federal program, again dealing with your federal income tax liability, being able to reduce the federal income tax liability.

Now, another feature that was shared by New York state, as it was called here, the Liberty Bonds, if you recall, that was about $8 billion of bonds that were enacted, authorized, for New York state for mainly the area where the Twin Towers were located and beyond that, that could be tax-exempt private activity bonds. We will enjoy and have received an authorization for $7.9 billion, $7.9 billion of tax-exempt private activity bonds that we expect to be issuing on a per-project basis. It is not based on the full faith and credit of the federal or state governments; it is based on the full faith and credit of the business, the project itself. Just as you have industrial revenue bonds, these are the same thing except there is no limit. As you know, with industrial revenue bonds you have a $10 million limit for tax-exempt bonds. In this case, there is no limit. It can be a $100 million project, it can be a billion dollar project. Please bring your projects. We look forwarding to issuing bonds for these purposes.

Now, we think that this, along with the accelerated deprecation, are two of the primary feature attractions of the federal legislation. The bond program extends for five years. Now, there's another federal incentive that was also authorized in the form of some $29 billion of funding that was diverted and directed from the FEMA authorization of $62 billion; $29 billion was directed then towards the rebuild of those states impacted by Hurricanes Katrina, Hurricane Rita and Hurricane Wilma in Florida.

One element of it is there is an $11.5 billion line item. They have line items that are dedicated in that 29 billion package. Line items are directed to transportation issues, public infrastructure issues, hospitals, rebuilding institutions of higher learning, et cetera, in all of those states.

One element of it, one line item of it, is an approximate $11.5 billion line item that is directed to the Housing and Urban Development Department under the Community Development Block Grant Program. That's what CDBG stands for, and when I refer to that please you'll understand CDBG is Community Development Block Grant.

Now, Louisiana can qualify for 54 percent of that $11.5, or we can qualify for up to $6.2 billion. These monies are to be spent for housing reparations, workforce development and economic development. We are looking forward to making recommendations to our Louisiana Recovery Authority and the Louisiana Legislature and then to HUD from our Governor to use approximately $1.5 billion of these funds to provide bridge loans to our businesses who are in dire need of capital access now, just as you did here in New York state, making bridge loans available for 180 days interest free, so that they can find a way to get to the next level in terms of their insurance claims, in terms of any funding that they might get through other loan programs that might be available. We also hope to have, as New York state did, an exceptional business retention and expansion grant program to help those businesses that may not qualify for loans, particularly as it relates to our seafood industry, as it relates to the cultural economy.

Another feature is, as New York state did -- and I'm sorry to keep using New York state as the model but that's what the model is -- the Empire State Economic Development Group flew their people down between the storms of Katrina and Rita, assisted us in learning about their economic stimulus package. We learned what they would have chosen to do differently. We have been certainly using that information and they have been constantly allowing us to make contact with them and continue that dialogue as we go forward. So that's been helping us in a great way.

And so just as New York state did, we have the opportunity to create a promotions package, just as you did with bringing the tourists back to New York, bringing the businesses back to New York, bringing your people back to New York. And we hope to do the same. So we hope that there will be a significant amount of dollars that will be coming from this $1.5 billion ask of the $6.2 billion that Louisiana may qualify for.

And another important feature is we would like to put $150 million over the next three years in workforce training because we will have a significant demand in terms of construction, in terms of other new businesses that will be attracted to the area as a result of this rebuilding effort. So we need to take the bread truck drivers and teach them to be carpenters and electricians and framers working in, as an example, in the construction industry. We have a number of other healthcare needs in the healthcare profession, to name a few. So that's why the workforce training element is so critical and important to us.

The bottom line is Louisiana is open for business, ladies and gentlemen. And we think you have a great opportunity, your businesses have a great opportunity to come and grow as we rebuild Louisiana, as we make New Orleans a better place for the world. Thank you.

MS. NISBET: Questions. You know what, let's start out with Washington. Mr. Secretary, if you could just look to the back here. And go ahead, Washington.

QUESTION: I'd like to ask -- Marislav Kornvaninov from Czech Radio, how are the countries as small as the Czech Republic with limited and (inaudible) possibilities can help?

MR. OLIVIER: Well, I think you have some significant companies that offer technological advances, particularly in the advance materials area or new construction. We're going to have to be enhancing our standards to world standards in terms of new construction. You can imagine with over 200,000 homes, and I didn't even get into the number of commercial buildings that have to be repaired or replaced, there's going to be such a significant demand in construction and there should be and will be a significant demand for advanced materials to be engaged in this reconstruction process that countries who have advanced materials capacity and technology should be looking to the Gulf Coast of the United States to not only sell their product, but probably to manufacture their product and distribute it.

Yes, sir.

QUESTION: Good morning. Is it on? Okay. Good morning. Laurent Mauriac with Liberation, a French newspaper. Actually I just visited New Orleans and I was amazed to -- I mean, to see that the reconstruction didn't really start, I mean, all the flooded areas which account for 80 percent of the city. So I'd like to know why didn't it start? I mean, the people haven't come back yet? And when -- how can things move forward because actually from what I saw, the main areas of funding are providing temporary houses for the people, but not really, you know, moving forward in terms of reconstruction?

MR. OLIVIER: Very good question. I'll pay you later. That is a good question because as was noticed, when you visited, much of the distressed area, much of the devastated area were residential. And so we have now the federal government, the Corps of Engineers, has to give us what are the elevations, what are the requirements to which these buildings can be reconstructed to. Without knowing that, the owner of the property cannot get insurance. Without getting insurance, you cannot get a mortgage, financing. And so we have this cycle and we hope that the Corps of Engineers, we are understanding in a relative few months, will be giving us the elevation levels -- how high do we build, so that we can rebuild, so that our property owners can get financing and so that they can get insurance. And so that is an integral part of bringing the people back that we have places for them to live and that's how we intend to be rebuilding that workforce.

Now in the meantime, you will notice that the traffic counts in Louisiana on the highways leading to New Orleans, as an example, are significantly higher. Between Baton Rouge and New Orleans on Interstate 10 Highway, 90,000 more cars a day are traveling to and from because these people are living between Baton Rouge and New Orleans because they found housing there and they're going back to work in New Orleans. So we're going to have a different circumstance.

Our people are going to have become used to, for the next several years, transferring from their place of residence now to their place of employment. Many of you are used to that where you live. You're used to taking an hour to get to work, an hour to return to home. We're going to have to get used to that. And so we'll have people who are living in one part of the state moving to the other part of the state. Usually, we expect it'll be something on the order of probably 75 miles or less in terms of where they live and where they will be employed.

MS. NISBET: We'll go here and then over to Leonard.

QUESTION: Hi. David Dreyfus from TV Tokyo. You mentioned under the CDGB program that there would be federal monies available for cultural tourism promotion. Are any federal or state monies going to be directed toward the upcoming Mardi Gras celebrations and can you just contextualize it -- contextualize for us how important this upcoming celebration is going to be for the development of tourism?

MR. OLIVIER: I owe you for that question, as well. Mardi Gras has traditionally been funded by the private sector. The public sector has been depended upon to provide security. And so there will be state and local funding of the security forces in the form of the police force, the state police force and the National Guard who will be assigned for security purposes at the Mardi Gras festivities.

Mardi Gras is important. It's a cultural thing. It's also time for our people to celebrate. Because of the losses that we have had, because of the overwhelming work that we have in front of us, the joie de vie of Louisiana requires that we acknowledge Mardi Gras, that we are living and we are ready to move forward. So as we rebuild, we must celebrate. And we invite all people to come to New Orleans and yes, hotel rooms can be found. We have about 26,000 hotel rooms that are operational now and we invite you to come to New Orleans and enjoy what will be one of the most memorable Mardi Gras, although the krewes, as we call them, k-r-e-w-e, the krewes will be smaller, the parade routes will be shorter, but we will have Mardi Gras. And I think it will be one of the most memorable in recent times.

MS. NISBET: The amplifier apparently is on the blink, so we're just going to have to speak loudly. No mikes necessary.

QUESTION: (Inaudible.)

MR. OLIVIER: Well, obviously, New Orleans is going to be a smaller city for the next coming years. And five years from now, New Orleans probably will be a smaller city. Going forward, it remains to be seen. We're starting with a clean slate, aren't we? What an opportunity in urban planning. We've received a significant amount of assistance from the AIA, from the Urban Land Institute and from so many others who are continuing to assist us in this planning process in this visualization process.

And there's a lot of people from all over the world who are keenly interested in maintaining the historical aspects of New Orleans because that's important as well, while at the same time leap-frogging into the next level of technology, as you might imagine, and the example would be the telecommunications aspects. We believe that we look forward to having a wi-fied city. The ability as we're replacing all of this technology, why not. And so that's an example. The new building codes, transportation, the universities, the new schools that we've impacted. We've done away with the original schools that were there. We've implemented 12 charter schools in New Orleans. We think it's a very important feature to make sure that education is a top priority. After all, Governor Blanco is a former school teacher and certainly she realizes that education and economic development are the same.

And I want to remind all of you, you know, we have a part of our state that was damaged. We have some counties, "parishes" as we call them, that were devastated. At the same time, we have many of the areas north of Baton Rouge, Baton Rouge itself, Houma- Thibodaux, Lafayette, areas like Alexandria, Monroe, Shreveport, Bossier City. These areas were un-impacted. These areas are open for business and have been open for business and will be carrying the economic football for a while, as our major metropolitan area New Orleans recovers.

MS. NISBET: Okay, our. Apparently, our mikes are still working, even though the amplifier is off. Sir, if you could go ahead.

QUESTION: Thanks. Andy Robinson of La Vanguardia, Spain. How will you avoid the -- how will you avoid the -- the point you just made about the city becoming smaller? How would you avoid that having a disproportionate effect on lower-income residents from New Orleans? For example, I mean, if the federal government does impose costly elevation requirements, presumably that will mean that lower-income residents of areas affected will not be able to rebuild their houses. How will you help avoid New Orleans becoming a city of -- in which working-class and lower-income residents are no longer able to live there?

MR. OLIVIER: Well, two things, one of which is some of the funding that we have from the federal government will be used for housing reparations, in other words, to help those people who are outside of the flood plain to pay for some of their loss.

The other thing is the Baker bill that was introduced in Congress, unsuccessfully introduced in Congress, to be reintroduced in Congress, is another solution and an imaginative solution that has merit. Also you must know that about 70 percent of the population rented, just as you have a lot of people here in New York that rent. It's not unusual in a metropolitan area. And so what we're doing to rebuilt the housing stock in the area is working very closely with the owners of apartments and condominiums, using these great incentives and accelerated depreciation and the bond program so that we can get them in a position to rebuild, to recover and offer more housing. And so many of the people who are low income, many of the people who are medium income or high income choose to rent in that metropolitan area.

QUESTION: Yes. Neeme Raud, Estonian TV. A longer question. There are lots of racial overtones in this reconstruction process. It's not your field, but we -- I followed the town hall meetings that were in New Orleans just recently and a lot of people are really taking it as a kind of racial project, rebuilding, the thing that the blacks should be kept out and all those concepts that are going around. Could you address that issue? How much is that dealt with and what's the racial situation there now?

MR. OLIVIER: You know, you have to be in Louisiana because New Orleans has always been a population, a large black population and it's a melting pot, just as metropolitan areas are, just as New York is. New Orleans has, for a long time, been a melting pot. So there is no distinction relative to rebuilding. Our population is what it is and they're coming back. They can't stay away from gumbo and jambalaya for that long. So whether they become a part of the economic fabric in Dallas, Texas, or wherever they might be, they're going to want to return home. And as we rebuild they're going to become hungrier and hungrier for that dose of gumbo, for those crawfish and for that lifestyle. New Orleans is a unique place. It's a place that is a little bit bohemian; it's a place that depends on that racial mix for its character. That's what's important about New Orleans. It's who we are.

You know, when people talk about the resilience of our people and we're very proud of that. And I remind them all the time that after all, we're very resilient. We agree, we've been pulling for the Saints for 35 years.

MS. NISBET: Go ahead, David.

QUESTION: David Watkins, South China Morning Post. Just earlier you mentioned the Baker plan. I was wondering if you could comment on the frustrations of the White House not throwing its support behind that at the moment.

MR. OLIVIER: Well, we're frustrated. Our governor is frustrated; as she likens it, they've given us a ladder, but left a few of the rungs out at the top. So we're hopeful that the Congress will see the merits of the program. We think Congressman Baker is certainly a credible member of Congress who will find a way to win over other congressional leaders.

And the other thing is that we need to bring people to New Orleans, we need to bring them to Louisiana so they can see what that need is. And until you get there, until you go there, right, until you go there and see with your own eyes, do you really understand the magnitude of what we're talking about? We have an entire area -- we have entire areas that the residential area is totally devastated. How we rebuild that is going to depend on some plan that'll have to go beyond the few billions dollars we have to throw at it. Because what we have is hundreds of billions of dollars in need that has to be met and just a few billion is not going to solve the problem.

QUESTION: (Inaudible.)

MR. OLIVIER: Well, my reading on it is it's a number of in the 200 billion. Now, we're not asking for gifts here. We're asking for the ability to help these people with a leg up, so they can make low-interest loans or have part of their damage repairED.

MS. NISBET: Questions? Gabe.

QUESTION: Gabriel Plesea for Romania Libera, Bucharest. During the disaster, there were claims and comments that money from the federal government was not coming, you know, to rebuild or to reinforce the levees, and also there was talk about corruption and things like those. Now with this huge amount of money coming in that you expect and, you know, from the local authorities, state and federal and so on, is there a mechanism to make sure that these things are not repeated? Thank you.

MR. OLIVIER: We're not concerned because this is not the Louisiana you think of from 50 years ago. This is Louisiana under the leadership of a governor who believes in transparency and believes in accountability. It's why she hired two auditing firms -- one to audit the other, the other to audit everything else -- to make sure that there's transparency and accountability.

In everything that we do, the Governor has reinforced the fact that the world is looking at us and we need to demonstrate that this is the different Louisiana; this is the new Louisiana. If you look at our administration, if you look at the administration for the past eight years, there have not been any scandals in the capital. We're proud of that. And so also you have the states of Mississippi, Alabama and Florida who will also be the beneficiaries of these dollars. And so I don't think that Louisiana needs to be singled out, but I think that Louisiana will be the model in terms of transparency and accountability.

QUESTION: Pia Mascaro from LeDeux, Switzerland. You were here on a tour, a visit to meet the press, international and national, also to meet banker. Do you do that because you have somehow the impression that the world community, but also the American community, is kind of forgetting New Orleans and Louisiana?

MR. OLIVIER: Yes. Absolutely. Yes, this -- I want you to know that from time to time, we do come to New York because it is a national media outlet and an international media outlet. And now we find the time is appropriate so that we can talk about recovery and demonstrate what we are doing and to celebrate that we have received federal funding to some extent to begin the process. This is very important. We thank the United States Congress. We thank the Bush Administration for giving us these tools. We're not done yet. In fact, what we'd like ultimately is for the United States Congress to give Louisiana a share of the offshore oil and gas revenues as they do with other states, sharing in the mining of these resources. We would not have to ask the U.S. Government for any assistance in coastal restoration or for the building of levees. These monies alone would take care of that forever.

One of the reasons that we've suffered the damages that we've suffered is beyond levees is because coastal Louisiana has been eroding for years at a rate that is alarming. We must do something and we're asking that the federal government share the revenues from oil and gas that's extracted offshore Louisiana with the state of Louisiana so we can apply those dollars to coastal restoration and to flood protection systems.

I hope you write that down. (Laughter.)

MS. NISBET: We'll go to Kristen and Andy and then I'd just say to Washington, if there's any questions, please approach the podium so we know that you have a question. Thanks.

QUESTION: Kristen Buzzi from Norway and I want to know (inaudible) and I want to know what will you do so it won't happen again.

MR. OLIVIER: You have to talk to God about that one. (Laughter.)

QUESTION: But you have to -- about the coast area. Do you make many investments so the flood won't have that impact that it had last time?

MR. OLIVIER: The question is a difficult one to answer. As you know, Governor Blanco and Senators Vitter and Senators Landrieu led a delegation to the Netherlands just recently so that we could understand how the Netherlands has contended with -- since the 1950s has contended with the catastrophic flooding that they experienced. We are to learn from their practice -- that is a best practice -- as to how they have employed and engaged technologies that we hope to employ and engage in a system of not only levees, but also weirs, dams and gates, flood gates, that can be employed.

Now again, beyond that, we need to look below to the south of us at the coastal erosion problem which is cause for the saltwater intrusion, which has destroyed the vegetation which was miles and miles and miles of protective barrier from the winds and surges of the hurricanes. So that's part of the answer is the coastal restoration, which is why Governor Blanco chose to take the levee boards and combine all of the supervision into a levee board and coastal protection agency because the coastal protection issue is part of the flood control prevention system, just as the levees are part of the flood control prevention system.

QUESTION: Thanks. Could you give us a vision of how the New Orleans economy might change, say, in ten years, compared to what it was before Katrina, just in terms of which sectors of the economy are going to be predominant?

MR. OLIVIER: Well, renaissance comes to mind. The word "renaissance" comes to mind. First, you're going to be seeing some numbers that will dismay you. You will say, oh, my goodness, look at this. Because the sales numbers at Sears, the sales numbers at Home Depot, Lowes, Target -- all of these are extraordinary. In fact, the last four months, remember all of the losses of refrigerators and air conditioners and freezers and all sorts of things that you have in your household, people are starting to replace those. So there is a huge sales going on of all of these items, from bed linens to carpeting to building materials, to appliances, automobiles. So sales are extremely up.

So you're going to look at sales figures in Louisiana and say, my goodness look at that booming economy. Unfortunately, it's a false economy. And also it's driven by the FEMA buys. You know, FEMA's buying all kinds of things nationally and locally. So that's driving up the sales figures. And so as people start to get their insurance claims checks, as they start to get their insurance money in, which many haven't for their housing, they're going to start continuing those buys. So we see into 2006 a significant level of purchases by the people in the area. Now, when that levels off -- obviously we think there will be not only a leveling off, but a decline because that huge buy will have been accomplished and people won't be buying at the rate that they had been the previous year. So we expect that rate will decrease from that and so there may be some misunderstanding about sales numbers.

Now, what we expect is that new businesses will be created as well as businesses, existing business will no longer exist. New markets will be found. As we look at this recovery process, I was giving you examples: building materials, advanced materials for building, telecommunications, all of the construction industry. But it goes beyond all of that. Can you imagine the number of school desks that have to be replaced out of the two dozen schools -- not two dozen -- out of a hundred or more schools that have been devastated in the storms? Can you imagine the number of things in a hospital? Anything you think about, the replacement is going to be significant and huge.

But for a time, it's going to cause a false economy, okay. It'll be much more expanded than what it normally had been. Now, beyond that, we hope to see new businesses coming on line. We hope to see existing businesses expand because they will be meeting a new market, an expanded market, an expanded appetite.

MS. NISBET: We'll go to Siu Wai.

QUESTION: Siu Wai Chung with Tao Kung Pao, Hong Kong. Please excuse my ignorance on the part of your previous plea for sharing the revenue from the federal government with the oil and gas revenues drilled from the offshore of Louisiana. I personally have no idea on that. And I have been to Alaska and I know they share revenues from the oil drilling in that part and I don't know any sharing of revenues for mining. Can you give us any detailed information on that? For instance, it can break down into what kind of mining that the federal government would like to share the revenue with, with certain states and what kind of things you consider should be shared or, in other words, you have legitimate right to claim certain part of that from the offshore drilling. If that's true, then what about other states in the Gulf area? Thank you.

MR. OLIVIER: Exactly right. We think that there is a case. Your example, Alaska, is that Alaska does share in the taxes that are charged from oil and gas extraction. In some coal mining states when the coal mining occurs, there's a tax that is placed on it and it is shared both by the federal government and the state government.

In the area of our coastal states of Texas, Louisiana, Mississippi and Florida, there is offshore oil and gas drilling in Texas and in Louisiana and in Alabama. And yes, those states would certainly be in favor of sharing in those taxes so that they can apply the revenues to coastal erosion issues. Louisiana's coastal erosion, because of its geography, being the mouth of the Mississippi River is much different than what you find in Texas or in Alabama or in Mississippi or in Florida. And so because of the fragility, because of the commodities that are brought in to North America by the Mississippi River, because of the need to protect that important navigable waterway for North America, for both export and import, we are asking the federal government to share in those revenues and then we will agree to apply those to coastal erosion issues -- not to anything else, but to coastal erosion. To us, it is a national issue. To us, it's an issue not just for Louisiana but for the nation.

MR. PIERSON: (Off-mike.)

MR. OLIVIER: Excellent. We should give that.

MR. PIERSON: Well, just in your context of thinking about Louisiana and thinking about New Orleans, Louisiana is the number one crude oil production state in America when you take into account what is coming in from the Gulf coast. It's brought onshore and it's processed in 15 refineries arrayed across our state. If you go to the gas station and you put ten gallons of gas in your car, two and a half gallons came from Louisiana. That's how important the New Orleans region and Louisiana are to the energy equation of America today.

It's in large part, when people say, well, why do we need to restore New Orleans? What's so special? Well, you have to have an understanding of the economy that supports that part of our state and this important part of our nation. The transportation element that you heard the Secretary speak to ask well. All the grains that are harvested in the Midwest, transported to the Mississippi, loaded on to barges and transshipped to all these countries represented here. Global commerce. Louisiana, five port systems operating in southeast that are critical to America's economy. All the importation that comes to all the factories, manufacturing facilities that are arrayed along the Mississippi River throughout the heartland of America, they have to come through Louisiana ports for transloading in many cases onto these six major railway systems we have.

America needs Louisiana to be strong. We need the investment that we're beginning to receive to restore this area. And these new Gulf Zone Opportunities present not only to us in a U.S. fashion the opportunity to invest and have a unique profitability option here, but also to global companies around the world. We want to share that message. We have an aggressive outreach internationally in Louisiana. We've always had that focus because we understand trade. That's been a big part of our economy for many, many years, since our very beginnings, actually. But we have been in Europe in December, we'll be going to Mexico during the month of February, and I believe our Governor has tentatively scheduled a meeting in September to go to Asia.

So we will be looking for viable partners to share in these opportunities in the strong parts of our state and, where applicable, into these areas that need disaster recovery assistance. So there's two great opportunities that exist in Louisiana today. You heard the Secretary talk about a billion dollar investment from Shin Etsu, through Shintech. We're also with a $200 million Grupo IMSA investment in Shreveport, Louisiana, in a steel factory. So a lot's going on, a great story to tell, and it's just enhanced by this federal legislation that we've talked about today.

QUESTION: Hi, Janine Harper of Fuji Television. As far as the economy, I know the population will pay a very large role. As far as regaining the original population of Louisiana, I wanted to know if part of the business incentives, is there any requirement for the companies to hire residents of Louisiana or former residents in order to create, I guess, a reason for a lot of people to return?

MR. OLIVIER: There's a federal incentive that deals exactly with that. It's dealing with retention of employees who were pre-Katrina employees. At the same time, our demand for workforce is high and so anyone who wants a job can absolutely come to Louisiana and find a job. We have a very disparaging statistic. We have a number that says we have a large double-digit unemployment rate, but then we have a significant demand for people to be employed. So it's confusing. But you can go to New Orleans right now and you can see Burger King is advertising a $5,000 signing bonus and guaranteeing $12 an hour to work in a hamburger place. So the demand for labor is certainly there. The numbers that reflect the unemployment numbers are high because the people are displaced and many of them haven't been able to return yet to get back to their employment or, in some cases, their businesses are not open so that they can be employed.

But that's changing and now you're going to see as we got into this fifth and sixth month, as we're able to help these small businesses particularly, they will be able to come back online. We're going to give them access to capital through our bridge loan program. They're going to be able to reemploy the people that are there. But let me make it perfectly clear. The large companies, like Proctor & Gamble, which has four coffee plants in the New Orleans area employing 1,500 people, were back to work in October. They knew where all of their people were. They put travel trailers onsite through the FEMA program and Louisiana Economic Development came up with the idea and the concept, introduced it to FEMA. They accepted and we started placing -- we placed over 5,000 travel trailers on the sites of our businesses, both large and small.

Northrop Grumman Ship Systems, 6,000 employees are up and running at work. Lockheed Martin, the main tenant at the NASA manufacturing facility that produces the shuttle tank at the Mishu facility in east New Orleans has been up and running, received commendations from the President just recently for keeping that plant open during the storm, preventing what could have been a loss of NASA's largest manufacturing facility. Forty-three acres under one roof. Forty-three acres under one roof in east New Orleans is operational today with their 2,000 employees at work. And we're hopeful of getting the next stage of the next space exploration vehicle there. Keeping the talent that we have. Just those few examples. Tulane University, another large employer in New Orleans, opened its doors January 17th.

QUESTION: Hi, my name is Hiroshi Nakamae with Nihon Keizai Shimbun of Japan, Nikkei. And I'm sure you have talked with a lot of business executive people and what are the concerns the most frequently addressed by those investment community and what are the legitimate concerns based on the facts and what are the kind of concerns that are not based on the facts, based on rumors or (inaudible)?

MR. OLIVIER: The first thing we have to do is get rid of the uncertainty about the security of their investment, about the security of the individuals and families to return. Now, we're also talking about New Orleans proper here. Remember, that is one area. We have many areas of our state that are operational, have been operational, have not been down. So I know the world focus has been on New Orleans, much of our conversation has been on New Orleans, but I want to remind you we have a lot of area of our state that were not impacted by the storm that are fully operational.

But to get to your question, we have to convince business that they are secure, that there is no uncertainty, that the levee system is being enhanced by almost $3 billion. This will be completed by next summer. Additionally, we have the incentive programs that will further their interest to come and invest in our state.

The next issue is workforce, and so we've got to work very hard to get the housing back online and we're going to do that through the rebuilding of our apartment complexes and condominiums because, again, many of our people are renting and they certainly would love to come back to new facilities. And that will appeal to the low to moderate income as well. Our blue collar workers are the -- they are the central piece of that recovery process. And that's what we look forward to -- rebuilding -- and they'll come.

QUESTION: Perhaps this is for Mr. Pierson. Sir, with your West Point, you know, graduate and military background, maybe you can answer this one. There is a note here saying that the strongest U.S. military presence in the Gulf south is located in Louisiana. Was the military affected in any way by the destruction and what was the contribution of the Army in this reconstruction/rebuilding process? Thank you.

MR. PIERSON: Well, certainly we're fortunate in Louisiana to have a strong federal component represented in the Department of Defense. In the northern part of our state is Barksdale Air Force Base, where the Eighth Air Force is headquartered, and you would recognize the B-52s as a frontline part of America's global defense capability. In the central part of our state we have Fort Polk, which is a Army Training Center. In fact, all the troops that deploy overseas into the Middle East first go through extensive training at Fort Polk, Louisiana.

In the greater New Orleans area we have both the Naval station and Marine components there, and certainly prior to the storm we had a lot of focus on the Base Realignment and Closure Commission and our facilities in Louisiana fared very well in these studies, and in fact, under the leadership of Governor Blanco we had proposed a program called Federal City whereby we would combine a number of governmental agencies on a military installation and provide with some new facilities that that the state would finance and construct and then provide to the federal government some tremendous cost savings that would allow a number of agencies to be affiliated there.

Our experience during Hurricane Katrina and the difficulties were that we were quickly able to mobilize this Marine and Naval facility. It became one of the largest active helicopter centers in America. There is a great story of how heroically they performed. I think some people saw on the television a helicopter with Red Cross on it and say, well, look the Red Cross is out there working. No, that was the Louisiana National Guard. Those red crosses are on those military aircraft to identify them as rescue workers. But they worked around the clock. Not only did they play a great role in restoring security and a lot of the rebuild that was happening in the immediate aftermath of the devastation, but they had to brace for the second storm that arrived three weeks later when Rita pounded southwest Louisiana.

To give you an idea of the magnitude, 1,500 miles of electric transmission lines were knocked down by Hurricane Rita. Our state has been dealt a double punch. We focus on New Orleans, but we shouldn't forget a lot of difficulty that's being in another part of our state. But for the National Guard, they had to hunker down in their tent city outside New Orleans during the second wave of this major storm, but there's a tremendous heroic story there of the performance of our National Guard troops in Louisiana.

MR. OLIVIER: I'd also like to mention that Louisiana's National Guard has the highest number of National Guardsmen in Afghanistan and Iraq, which his where a lot of our equipment is as well. And so that affected our ability to be able to respond as we could have, having had a full capacity National Guard in our state. And that's why our Governor asked for the assistance immediately, the Friday before the storm, of the United States Government.