<DOC>
[107th Congress House Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:82175.wais]
EMERGENCY PREPARATIONS IN THE NATION'S CAPITAL: THE ECONOMIC IMPACT OF
TERRORIST ATTACKS
=======================================================================
HEARING
before the
SUBCOMMITTEE ON THE DISTRICT OF COLUMBIA
of the
COMMITTEE ON
GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTH CONGRESS
FIRST SESSION
__________
NOVEMBER 15, 2001
__________
Serial No. 107-117
__________
Printed for the use of the Committee on Government Reform
Available via the World Wide Web: http://www.gpo.gov/congress/house
http://www.house.gov/reform
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___________________________________________________________________________
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COMMITTEE ON GOVERNMENT REFORM
DAN BURTON, Indiana, Chairman
BENJAMIN A. GILMAN, New York HENRY A. WAXMAN, California
CONSTANCE A. MORELLA, Maryland TOM LANTOS, California
CHRISTOPHER SHAYS, Connecticut MAJOR R. OWENS, New York
ILEANA ROS-LEHTINEN, Florida EDOLPHUS TOWNS, New York
JOHN M. McHUGH, New York PAUL E. KANJORSKI, Pennsylvania
STEPHEN HORN, California PATSY T. MINK, Hawaii
JOHN L. MICA, Florida CAROLYN B. MALONEY, New York
THOMAS M. DAVIS, Virginia ELEANOR HOLMES NORTON, Washington,
MARK E. SOUDER, Indiana DC
STEVEN C. LaTOURETTE, Ohio ELIJAH E. CUMMINGS, Maryland
BOB BARR, Georgia DENNIS J. KUCINICH, Ohio
DAN MILLER, Florida ROD R. BLAGOJEVICH, Illinois
DOUG OSE, California DANNY K. DAVIS, Illinois
RON LEWIS, Kentucky JOHN F. TIERNEY, Massachusetts
JO ANN DAVIS, Virginia JIM TURNER, Texas
TODD RUSSELL PLATTS, Pennsylvania THOMAS H. ALLEN, Maine
DAVE WELDON, Florida JANICE D. SCHAKOWSKY, Illinois
CHRIS CANNON, Utah WM. LACY CLAY, Missouri
ADAM H. PUTNAM, Florida DIANE E. WATSON, California
C.L. ``BUTCH'' OTTER, Idaho STEPHEN F. LYNCH, Massachusetts
EDWARD L. SCHROCK, Virginia ------
JOHN J. DUNCAN, Jr., Tennessee BERNARD SANDERS, Vermont
------ ------ (Independent)
Kevin Binger, Staff Director
Daniel R. Moll, Deputy Staff Director
James C. Wilson, Chief Counsel
Robert A. Briggs, Chief Clerk
Phil Schiliro, Minority Staff Director
Subcommittee on the District of Columbia
CONSTANCE A. MORELLA, Maryland, Chairman
TODD RUSSELL PLATTS, Pennsylvania ELEANOR HOLMES NORTON, Washington,
THOMAS M. DAVIS, Virginia, DC
------ ------ DIANE E. WATSON, California
STEPHEN F. LYNCH, Massachusetts
Ex Officio
DAN BURTON, Indiana HENRY A. WAXMAN, California
Russell Smith, Staff Director
Matthew Batt, Clerk
Jon Bouker, Minority Counsel
C O N T E N T S
----------
Page
Hearing held on November 15, 2001................................ 1
Statement of:
Peck, Robert, president, Greater Washington Board of Trade;
B. Doyle Mitchell, Jr., chairman of the board, D.C. Chamber
of Commerce; Joslyn Williams, president, Metropolitan
Washington Council, AFL-CIO; John Boardman, executive
secretary/treasurer, Washington, DC, Convention and Tourism
Corp.; William Hanbury, president and CEO, Washington, DC,
Convention and Tourism Corp.; and Stephen Fuller, professor
of public policy, George Mason University.................. 12
Letters, statements, etc., submitted for the record by:
Boardman, John, executive secretary/treasurer, Washington,
DC, Convention and Tourism Corp., prepared statement of.... 41
Fuller, Stephen, professor of public policy, George Mason
University, prepared statement of.......................... 54
Hanbury, William, president and CEO, Washington, DC,
Convention and Tourism Corp., prepared statement of........ 46
Mitchell, B. Doyle, Jr., chairman of the board, D.C. Chamber
of Commerce, prepared statement of......................... 26
Morella, Hon. Constance A., a Representative in Congress from
the State of Maryland, prepared statement of............... 4
Norton, Hon. Eleanor Holmes, a Delegate in Congress from the
District of Columbia, prepared statement of................ 9
Peck, Robert, president, Greater Washington Board of Trade,
prepared statement of...................................... 15
Williams, Joslyn, president, Metropolitan Washington Council,
AFL-CIO, prepared statement of............................. 31
EMERGENCY PREPARATIONS IN THE NATION'S CAPITAL: THE ECONOMIC IMPACT OF
TERRORIST ATTACKS
----------
THURSDAY, NOVEMBER 15, 2001
House of Representatives,
Subcommittee on the District of Columbia,
Committee on Government Reform,
Washington, DC.
The subcommittee met, pursuant to notice, at 10:10 a.m., in
room 2154, Rayburn House Office Building, Hon. Constance A.
Morella (chairwoman of the subcommittee) presiding.
Present: Representatives Morella, Platts, Norton, and
Watson.
Staff present: Russell Smith, staff director; Heea
Vazirani-Fales, counsel; Robert White, communications director;
Matthew Batt, legislative assistant; Shalley Kim, staff
assistant; M.K. Holuman, intern; Jon Bouker, minority counsel;
and Jean Gosa, minority assistant clerk.
Mrs. Morella. I want to welcome all of you here today,
witnesses and those who are interested. This is a continuation
of a hearing that we had on November 2nd on emergency
preparedness in the Nation's Capital. As you may know, at that
time we had planned to have a third panel, but decided the
importance of reviewing the economic impact of the terrorist
attacks on our Nation's Capital merited its own hearing.
I do want to express my very special thanks to our
witnesses, who have had to change their busy schedules more
than once to accommodate our schedule. We appreciate your
willingness to participate in this important hearing.
I also want to recognize, of course, my ranking member, who
has been so instrumental in matters of the District of
Columbia, her District, who is present, and there will be
others who are planning to attend. I know Ms. Watson will be
here.
Ladies and gentlemen, on September 10th the District of
Columbia had reason to be optimistic about its economic
outlook. Its recovery from the fiscal problems of the mid-
1990's was nearly complete, its budget was in balance, its bond
ratings were improving, and a half-billion dollar deficit had
become nearly a half-billion dollar surplus. As a result, the
Financial Control Board would cease operations in just a few
weeks, leaving the District in remarkably better shape than it
was when the authority came on the scene 6 years ago.
The September 11th terrorist attacks followed by ongoing
anthrax scares in and around the District of Columbia have
changed all that. There's good reason to worry that the
economic rebirth of the Nation's Capital will be yet another
victim of terrorism.
As we will hear from our speakers, the hospitality
industry, which is such an integral part of the District's
economy, is facing severe losses. Business travel has sharply
declined, a situation made worse by the small number of flights
that have resumed at Reagan National Airport. Downtown
restaurants and retail shops have seen a noticeable decline in
customers. Theaters have claimed smaller audiences.
I hope to join J.C. Watts and other Members of Congress
later today as they call attention to the slowing retail
sector, which affects the whole region, not just the District,
by doing some shopping and meeting with hotel industry
officials who will also be here on the Hill. And, while we hope
this downturn is a short-term problem, it, nonetheless, could
have some long-term consequences. The District is already
forecasting a budget deficit for next year due to expected
drops in tax revenue.
Construction of the new Convention Center is being funded,
in large part, through the District's sales tax on restaurants
and the hotel room tax. I'd like to hear whether that very
important project has been put in jeopardy because of declines
in both of those revenue categories. Also, the District has
some bold plans to clean up and revitalize the Anacostia
waterfront, in addition to rejuvenating some other areas of the
city.
These are important projects designed to expand the city's
tax base and bring some more vitality to long-neglected
neighborhoods. I have to say that I am worried that there will
now be a reluctance on the part of the private sector to invest
in the District, and I'd like to hear our witnesses' views on
that issue. However, I also want to look forward in a positive
way. I'd like to discuss with the panel, particularly our
business and tourism representatives, what action they or the
city are taking to put together some kind of marketing campaign
to draw tourists back to D.C. The city of New York just started
running TV advertisements, and I'm curious about whether
something similar is planned for the Nation's Capital.
I also want to take this opportunity to make sure that
we're doing a good enough job letting our businesses know that
the Small Business Administration has an existing loan program
of which they can take advantage. So far, only 24 businesses
have applied for loan relief, which seems too few to me.
But, for the most part, we are here today to get a sense of
the scope of the problem and to see if there are things that we
can do to help. One thing that we all realize would be
beneficial would be for the Federal Government to stop putting
up unsightly concrete barriers and blocking off streets. As I
have said before, we cannot turn the Nation's Capital into Fort
Washington, especially not if we are trying to attract
visitors. Tourists are naturally going to be afraid to come to
D.C. if we continue to give them the impression that we are
afraid to live and work here.
I look forward to the hearing this morning, and, again, I
reiterate my thanks to the witnesses for rearranging their
schedule to be with us.
As I yield to my ranking member of this subcommittee, I
will be leaving to go up for a markup of the Science Committee,
and then resuming just as soon as possible.
[The prepared statement of Hon. Constance A. Morella
follows:]
[GRAPHIC] [TIFF OMITTED] 82175.001
[GRAPHIC] [TIFF OMITTED] 82175.002
Mrs. Morella. So now if I might recognize our Congresswoman
Eleanor Holmes Norton.
Ms. Norton [assuming Chair]. Thank you, Mrs. Morella. I am
grateful to our Chair, Representative Connie Morella, for her
willingness to schedule a special hearing on the economic
effects of what has happened to our city since September 11th.
The economic effects on the District have been far more
widespread than the terrorism. I believe that nothing less than
early and concentrated attention and action can help the
District avoid a lengthy and deep recession more serious than
is forecast even for the national economy.
Two of the three crises that have struck this city have
been unique--the 3-week closure of our airport and the anthrax
crisis. The third, the precipitous, steep slide to the bottom
of our hospitality sector, is shared with other cities;
however, there are two important differences. First, the
District has no State to go to for financial support during an
economic crisis. Second, this city has no other significant
sector except government, and government jobs go overwhelmingly
to suburban residents whom the District subsidizes with free
use of services while our regional residents leave no commuter
tax or other payment here in the District.
Compounding the multiple effects of September 11th, for
weeks the country has gotten only two messages about the
Nation's Capital: that anthrax has been found in some
Government buildings; and that it is difficult to get here from
there since flights to our airport are still being phased in,
and even by Thanksgiving only 57 percent of the flights will be
up.
Notwithstanding its remarkable comeback, the District still
has a serious, unaddressed structural budget gap because there
are still too few residents and businesses and because it will
take years to recoup this shortfall. As a result, expenses
annually increased faster than revenue, even during the 1990's
boom economy.
When the current recessionary downturn is added to the
District's structural imbalance, both the District and the
Congress need to act quickly to forestall danger. How much more
warning do we need? The national economy lost 415,000 jobs in
the month after the attack, considerably worse than most
analysts had predicted. Job losses were in all sectors--
construction, transportation, retail, and services, spreading
rapidly from manufacturing, that had borne the brunt of the
economic decline in the prior months.
The losses throughout the region quickly emerged with a 70
percent rise in unemployment claims in Virginia, but a 148
percent surge in such claims in D.C. over a year ago.
The sectors to which the District is most attached--
tourism, hospitality, and airlines--have experienced a
disproportionate share of the national job losses. Minorities
who got their first break in the economic in decades have been
hit hardest. Lowest-wage workers--cooks, cab drivers, hotel
workers, sales clerks--have been those most often left without
any wages at all.
The effect on the people of the District and on their city
government must not be blinked. With hotel occupancy at half
the usual rate and cascading effects on the city's jobs and
business sectors across the board, both spending cuts by the
District government and assistance from the Federal Government
will be necessary if the District is to hold its own.
The District has submitted a request for Congress for $1
billion in assistance--$250 million to equip the city as a
first responder and $750 million in targeted economic
assistance, in part to cope with the 10,000 small businesses
and 24,000 jobs that are at risk, many of them hospitality
related. Mayor Williams testified at our recent hearing that,
as a result, the District stands to lose about $100 million in
tax revenue during fiscal year 2001, approximately 3.5 percent
of local revenues. This means that, as a percentage of total
revenues, the District is projected to take a greater hit to
its budget than even New York City, which is projected to lose
approximately $1 billion in local revenue or 2.5 percent of its
city budget.
There is bipartisan support from the Senate, as well as
support from House Democratic appropriators, for most of the
$250 million the city has requested for emergency preparedness,
perhaps because they are mindful that D.C.'s fire, police, and
protective services were stripped during the fiscal crisis of
the 1990's. However, the President's budget contains only $25
million.
Even if the $750 million for economic relief is received,
the District will not be where it was on September 11th, and
the economy is likely to continue to decline in the final
quarter of the year, according to R. Glenn Hubbard, Chair of
the White House Council of Economic Advisors.
The District will be challenged to keep a full-fledged
recession from merging with its structural imbalance and
crashing its economy. There is an almost painless way to
address at least the city's structural imbalance, and it has
now become dangerous to delay any longer. If a D.C. non-
resident tax credit were enacted, the take-home pay of
commuters would not change because 2 percent taxes on their
salaries that they already pay to the Federal Government would,
instead, transfer to the D.C. government. The tax credit would
net the District about $400 million the first year, and, unlike
the flat Federal payment, which the District no longer
receives, would automatically rise every year because salaries
increase every year.
A non-resident tax credit approach is well suited for
congressional relief because: one, Congress has already
approved tax credits for the District and increasing the user's
tax credits nationally as a tool; two, a Federal tax credit is
the fairest way to recoup the cost of services, because most
commuters are Federal employees, most of the services rendered
to non-residents are due to the Federal presence, and most of
the land taken off the city's tax rolls is Federal land; three,
a tax credit would spread the obligation of securing a viable
economy in the Nation's Capital to the entire country; four,
the tax credit is set at 2 percent, the average of the non-
resident taxes in the country; and, five, the region has always
supported a Federal payment, and a Federal tax credit shares
most of the characteristics that made the Federal payment
acceptable to the region.
There is no place to run and no place to hide from the
combination of the recession and the uniquely high consequences
of September 11th and the anthrax crisis on the District. It
should be impossible to forget that only in September did the
Control Board sunset, ending the worst crisis for the city in a
century.
There is still time to act. The longer the District and
Congress wait, the deeper will be the predictable effects and
the greater will be the danger to the city's economic health.
I was a prophet of the doom that came true when the
District went down in the 1990's. Neither Congress nor the
District would act in time. I was left with only one
alternative--to call for a Control Board so the city could
borrow money and remain viable.
I do not believe the current economic crisis threatens to
return the Control Board. I do believe that this crisis could
wipe away all of the gains of the last 4 years and leave the
District hanging on, unable to grow and no longer attractive to
new residents and businesses that have come in far larger
numbers in recent years.
I hope that the city's present efforts, its next budget,
and early attention from Congress can lead to a more hopeful
scenario. I am grateful for this hearing and its potential to
be a wakeup call. I very much appreciate the participation of
today's witnesses and look forward to their testimony.
[The prepared statement of Hon. Eleanor Holmes Norton
follows:]
[GRAPHIC] [TIFF OMITTED] 82175.003
[GRAPHIC] [TIFF OMITTED] 82175.004
[GRAPHIC] [TIFF OMITTED] 82175.005
Ms. Norton. Here comes the Chair, right on time.
Mrs. Morella [resuming Chair]. I'm also pleased to
recognize Mr. Platts for any opening statement that he may
have.
Mr. Platts. Thank you, Madam Chairman. No opening
statements, other than I look forward to the testimony of all
of our presenters and appreciate your being here with us. Thank
you.
Mrs. Morella. Thank you. Let me ask our panel to step
forward. It is the custom of the full committee and its
subcommittees to swear in those people who will testify, so if
you would stand and raise your right hands.
[Witnesses sworn.]
Mrs. Morella. It is a great pleasure to welcome you. Thank
you again for coming. We'll ask each of you if you will comment
for 5 minutes, and then we'll open it up to questions. Your
entire statement will be in the record, so you don't have to
repeat it. You can synopsize or add any other points that you
would like.
We have Robert Peck, president, Greater Washington Board of
Trade; Doyle Mitchell, chairman of the board of the D.C.
Chamber of Commerce; Joslyn Williams, president of the
Metropolitan Washington Council, AFL-CIO; John Boardman,
executive secretary/treasurer, Hotel and Restaurant Employees,
Local 25; William Hanbury, president and CEO, Washington D.C.
Convention and Tourism Corp.; and Dr. Stephen Fuller, professor
of public policy, George Mason University.
I guess it worked out, Dr. Fuller. I thought you might be
here quite late, but with the interruptions we've had you're
right on time. Let's start off with you, Mr. Peck.
Congratulations on your new responsibilities with the Board of
Trade.
STATEMENTS OF ROBERT PECK, PRESIDENT, GREATER WASHINGTON BOARD
OF TRADE; B. DOYLE MITCHELL, JR., CHAIRMAN OF THE BOARD, D.C.
CHAMBER OF COMMERCE; JOSLYN WILLIAMS, PRESIDENT, METROPOLITAN
WASHINGTON COUNCIL, AFL-CIO;; JOHN BOARDMAN, EXECUTIVE
SECRETARY/TREASURER, WASHINGTON D.C. CONVENTION AND TOURISM
CORP.; WILLIAM HANBURY, PRESIDENT AND CEO, WASHINGTON D.C.
CONVENTION AND TOURISM CORPORATION; AND STEPHEN FULLER,
PROFESSOR OF PUBLIC POLICY, GEORGE MASON UNIVERSITY
Mr. Peck. Thank you. Thank you, Madam Chair and members of
the subcommittee.
On behalf of the members of the Board of Trade, I want to
thank you, Chairwoman Morella, Delegate Norton, the entire
Congressional Delegation from the region, as well as Mayor
Williams, Governors Gilmore and Glendening for their leadership
and assistance in achieving the reopening of Reagan Airport.
The Board of Trade helped form a coalition of tourism, economic
development, and aviation groups to help get that done. You
were very active in setting up meetings and informing the
administration, as we were from the private sector side through
newspaper ads and an Internet Web site that we thought that the
airport could be reopened in a secure way with the security of
this region and this city fully secured, and the President
ultimately agreed, for which we thank him and the
administration very much.
We are concerned, as Congresswoman Norton has noted, that
National Airport is not yet fully opened for service, and, as
Mayor Williams has said, it is hard to convince people that
Washington is open for business when the front door is closed.
Well, it's now ajar but it's not open all the way, and we need
that to happen.
We intend to continue our efforts on behalf of the business
community in talking to the government officials, particularly
in the Federal Government, about balancing the needs of
security, which are surely here, with the needs of Washington
and the region to behave as a normal city in an economy, so we
intend to monitor closely the preemptory closing of streets,
thoroughfares, and public spaces that make it very difficult to
get business done. We think that, working together with the
government, if we are consulted--which is a big if--that we can
provide security in a way that allows us to get our business
done.
We are also sponsoring a special meeting of the Potomac
Conference, an assembly of local leaders, business and private
leaders, to talk about emergency preparedness. It is our belief
that one way we will be able to get on with business better is
when we as a community are fully prepared for whatever may--
whatever eventuality we may face. We believe that it is
important for the local governments, which are working hard and
effectively to better coordinate emergency responses, to bring
the private sector in. There are certain critical services--
food distribution, broadcasting, wireless communication--which
are carried out solely in the private sector, and many other
emergency activities are carried out by the government but with
private contractors. We are urging the local jurisdictions, and
we'd ask for your support in making sure that, as regional
emergency preparedness planning goes on, the private sector is
fully consulted. It is still important for the governments to
let the community--private employers, nonprofits, employees--to
know what will be expected of them with different possible
emergency scenarios. We fully support additional funding for
the District and for the region in emergency preparedness.
On the question of what's happened to the economy, I'm
going to--there are other representatives of the tourism and
hospitality industry. They are the most dramatic emblems,
unfortunately, of what has happened to our economy.
We do see--and I know Dr. Fuller will talk about this--
growth in some sectors of the economy, and I am happy to say
that, although we continue, I think because the news media show
us for what we are, the leadership of the free world at this
time on television every night talking about a war and about
threats--we do see continued confidence long term in the
business sector. We do have people who were talking to us
earlier about relocating to this region. They are still talking
to us. We've had very few people say they're not coming. We've
had no businesses that I know of say they're going to leave.
But that's not to say that we're not facing a crisis in our
community.
A couple of things I will summarize quickly that we think
need to be done: One, in transportation we need more capacity
and redundancy in our transportation networks to be able to
handle, particularly in mass transit, whatever needs to be done
in case we need to evacuate all or part of our community again.
Second, we have--we do have this crisis in the hospitality
industry. We strongly urge support for national legislation
that would encourage hospitality spending, particularly by
restoring full deductibility of business meals and creating a
tax deduction for travel.
In the region, you will see, I believe, from the Counsel of
Governments, request for legislation to allow indemnification
among the jurisdictions for public safety workers working in
jurisdictions not their homes, and it appears that this is
something that only a Federal piece of legislation can help.
We support Congresswoman Norton's expanded enterprise zone
proposal for the District.
And, finally, I would just like to say this: our employers
have a strong sense of responsibility to this region. We are
working with just about everybody at this table to come
together as a community.
And, finally, I just want to say that we have seen from the
residents of this region the same kind of courage which we
believe Londoners showed during the Blitz. We have people here
who on September 12th, even though they may have been a little
bit shaken, showed up for work, whether they were in the public
sector, private, or nonprofit sectors, and we think that spirit
will carry us forward.
I've given you some specific suggestions. I will be happy
to answer questions, obviously, later.
Thank you very much.
Mrs. Morella. Thank you, Mr. Peck.
[The prepared statement of Mr. Peck follows:]
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Mrs. Morella. I am now pleased to recognize Mr. Mitchell.
Mr. Mitchell. Thank you. Good morning, Chairwoman Morella,
Congresswoman Norton, and Mr. Platts. I am B. Doyle Mitchell,
Jr. I am here to testify before you about the opportunity we
have to mitigate the impact on Washington, DC, of the terrorist
assaults that commenced on September 11th.
The District of Columbia Chamber of Commerce shares the
thanks of the Board of Trade of all the efforts of the local
and Federal officials in getting the Reagan National Airport
open. It meant a tremendous amount to the local businesses,
including our members.
Special concern of the District of Columbia Chamber of
Commerce throughout our 63-year history has always been the
city's small businesses. It is these businesses which Mayor
Williams has characterized as constituting 90 percent of the
city's business base, which provides the city jobs, pay our
taxes, and enliven our neighborhoods. We are present today to
speak on their behalf.
We entered a new world on September 11th. The catastrophic
events which brought such grief have also realigned the local
and national roles of Washington, DC. At present, the task
before us is to act quickly to mitigate this harm to the city.
Action taken now can prevent the disruption we've suffered over
the past 2 months from turning into lasting damage to the
Nation's Capital.
Small business must be a special focus of this effort, we
believe. What's at stake is the substantial progress toward the
civic and economic resurgence of Washington, DC, made under the
leadership of the Williams administration. Neighborhood
revitalization and downtown vibrancy are built from the
successes of the city's many small and mid-sized entrepreneurs.
The Chamber's goal and the goal that we hope this committee
shares is to ensure that District businesses which, but for the
effects of September 11th, are economically sound, and make
sure that they survive to serve the city in 2002 and beyond.
Allow me to report briefly on the small business impact of
September 11th and then ask your support in creating an
effective response.
At the request of Mayor Williams, the D.C. Chamber convened
and coordinated the efforts of the city's Task Force on Small
Business Impact of September 11th. We have provided the
committee with a full copy of our report. Washington's small
businesses have been hit with lost revenues, changed
perceptions of the city's safety, and the fear that the effects
of the terrorists' assaults will be long-lasting and deep.
In mid-October, the Small Business Task Force surveyed the
impact of September 11th on local business. Revenue losses
experienced through mid-October and forecast through year's end
reported by only 75 Chamber hospitality businesses, which
represent but a fraction of the District's hospitality sector,
averaged more than $300,000 per enterprise. Extrapolating the
$12 million in losses reported by 29 restaurants to the 140
joint members of the Restaurant Association and Chamber
suggests losses through year's end on the order of $60 million
for this portion of Washington's restaurant sector.
The plurality of non-hospitality businesses responding to
the outreach effort estimated 10 to 25 percent revenue drops,
with no end in clear sight.
Is Washington, DC, open for business? The Chamber and our
sister business organizations continue to receive calls from
around the Nation from would-be visitors who believe the city
is locked down.
The litany of our woes is familiar: streets disrupted, the
prolonged closing of national airport, more bad press, and
scary CNN visuals, and, on top of that, the anthrax panic,
which appears targeted on the Nation's Capital. This damage to
the city's image is particularly harmful, given our
disproportionate reliance on tourism.
The most frequent request from small business after the
loosening of credit restrictions has been a plea for aggressive
marketing of the city, including its neighborhoods. Effective
marketing requires the participation of Federal faces and
themes. We must get this word out. Washington, DC, is open for
business and for the business of government.
Washington, DC, avoided the grievous loss of life suffered
by the city of New York, but the requirements and the
constraints placed on the Nation's Capital mean that the
effects of tourism here may be longer lasting and deeper.
From the banking industry perspective, we anticipate
phased-in damages. September and October saw direct hits to
hotels and restaurants, which this month are being translated
into paying for wholesalers and suppliers who hold aging
receivables. By the beginning of 2002, mortgage lenders may
likely see the consequences of last month's layoffs. One major
hotel group in the city forecast its recent layoffs will not
last 3 to 5 months, but 12 to 15 months.
The effects of September 11th are felt more deeply here,
where the assault on the Nation's Capital resonates in the
local business community.
The responses to September 11th requested by the business
community are detailed in the Task Force report submitted by
the committee. As stated, priority concerns are aggressive
marketing of the city and availability of bridge financing.
Two weeks ago the D.C. Council passed the Emergency
Economic Assistance Act of 2001. This legislation, which has
the mayor's support, permits District government to back loans
to hospitality businesses which have been damaged by September
11th. The resources the bill provides will allow banks to
exercise appropriate flexibility in their underwriting of loans
associated with the disaster.
The leadership exercised by Council and the mayor on this
issue has provided a beacon of hope to small business. At
present, approval of this lending program is before
decisionmakers in Congress. We urge your support and seek
whatever assistance this committee can bring to moving this
process rapidly.
As you know, time is of the essence. Accessibility
financing--essential financing will allow us to prevent loss of
healthy businesses temporarily damaged by September 11th.
Thank you, and I will be prepared to answer questions, as
well.
Mrs. Morella. Thank you very much, Mr. Mitchell. As I
mentioned, your entire testimony will be in the record.
[The prepared statement of Mr. Mitchell follows:]
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Mrs. Morella. Before I recognize Mr. Williams, I wanted to
indicate that we now have been joined by Ms. Watson, our newest
member of the subcommittee.
Did you want to make any statement?
Ms. Watson. No, thank you.
Mrs. Morella. Thank you.
Mr. Williams, thank you.
Mr. Williams. Thank you very much, Madam Chair and members
of the committee. My name is Joslyn Williams. I am the
president of the Metropolitan Washington Council, which is the
umbrella group of all the AFL-CIO unions in the District of
Columbia and five counties in Maryland.
Let me first of all thank the chair for not only inviting
us here, but also for the leadership which you have shown since
the tragedy of September 11th. You have been in the forefront
advocating solutions to the problems, and we certainly, from
the labor side, thank you very much for your leadership.
I also would like to say to my Congresswoman that it is
always a pleasure to be in her presence, and in particular I
also want to commend her for leadership that she has provided
not only September 11th but ever since she has been in the U.S.
Congress. We like to think of her as our gift to the U.S.
Congress. In particular, I want to commend her for the
leadership that she has shown in bringing labor, government,
and business together. As soon as September 11th occurred we
were all taken up to the White House. It is one of the few
times that I can simply say that someone was able to get the
government, labor, and business on the same page on the same
day at the same time, and for that she certainly deserves our
commendation.
All I can say by way of summary, since my full testimony is
in the record, is, first of all, amen to Congresswoman Norton's
opening statement. I could not have said it better. She has
covered the solution and I want to fully associate labor's
support with her comments.
Let me just say that our concern is--and my comments this
morning will be more of a global nature. My colleague to my
left will speak specifically of the impact that this has had
upon workers in the hospitality industry.
We always view ourselves, Madam Chair and members of the
committee, as speaking not only for members who carry a union
card, but even those members who are not fortunate enough to
carry a union card, and it is in that vein that I want to make
my comments this morning about what I consider to be the
problems.
I think, from our standpoint, Congresswoman Norton has laid
them out. I just wanted to add one particular segment to her
statement, and that is the impact that this has also had upon
the immigrant population.
I do not want the impact of this on the immigrant
population of the District to be lost in the rush to try and
find a solution. In fact, they have had the greatest impact
that anyone has been--on the immigrant population.
Let me say, if I may just refer to my testimony, and in
particular that most of these immigrants are from El Salvador
and they are in legal limbo. They live and work here legally,
they pay taxes, and they contribute to the local economy;
however, most of them have an immigration status called
temporary protected status [TPS], which allows them to work
legally but stops short of legal permanent residence, or green
card status. As a result of the 1996 welfare reform, people
with TPS are disqualified from all safety net programs except
for unemployment. They cannot access food stamps, welfare, or
subsidized housing.
In my testimony we have presented two solutions that we
consider essential. We do not want--and we agree with
Congresswoman Norton--the District of Columbia, itself, needs
to step up to the plate and use this occasion not just as a
challenge but also as an opportunity to address many of the
problems that are wrong with the safety net, because we need to
create a safety net which will be able to deal with the
problems that now face many of our workers.
We have shared with you our solutions of what the District
should do, not because we are seeking the blessing of this
committee or the Congress, but more because we think it is
essential that once the District acts on these reforms, as we
would like them to act, that this Congress, Madam Chair, should
not engage in micro-managing and should, in fact, allow the
District of Columbia to manage its own problems. In particular,
we would bring to your attention the restrictions of the
Congress on the District to be able to use the rainy day fund.
We would remind you that the District is now in the middle of a
thunderstorm and it cannot afford to be saving money in the
rainy fund when the roof needs to be fixed immediately, so I
would hope that the Congress would not interfere with the
District's ability to use its rainy day fund or its ability to
use moneys in the surplus fund from this year into next year.
Now, the respect to the congressional actions, we think
that Congress, itself, should be taking some immediate action,
and we would hope that the economic stimulus plan, certainly
which the organized labor community has been pushing in the
U.S. Congress, is a stimulus package which we think the
Congress needs to move to immediately right away.
Finally, we would say to you that we also think that
Congresswoman Norton's legislation is one which the Congress
should be acting on immediately as a first step.
I will stop there and will be happy to answer any
questions, Madam Chair, which the committee may have. Thank you
very much.
Mrs. Morella. Thank you, Mr. Williams.
[The prepared statement of Mr. Williams follows:]
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Mrs. Morella. I also wanted to acknowledge our very newest
member--sorry, Ms. Watson, you are no longer the newest member
of this subcommittee. The newest member of the Government
Reform Committee, but also the newest member of the D.C.
Subcommittee, and that is a gentleman from Massachusetts who
took Mr. Moakley's place, Stephen Lynch. Welcome.
Mr. Lynch. Thank you.
Mrs. Morella. You know, I am originally from Massachusetts.
A lot of the politicians are. But we welcome you.
Mr. Lynch. Thank you.
Mrs. Morella. Thank you. Mr. Boardman, a pleasure to
recognize you, sir.
Mr. Boardman. Good morning. Thank you, Madam Chair,
Congresswoman Norton, and other distinguished members of the
subcommittee. My name is John Boardman. I am executive
secretary/treasurer of Hotel and Restaurant Employees Local 25,
AFL-CIO. Our local union represents a little over 8,000 workers
in a variety of sectors of the hospitality industry. I am also
a vice president of our national organization, Hotel Employees
and Restaurant Employees International Union.
I want to thank you for giving me an opportunity to appear
before you this morning on some issues affecting the major part
of our metropolitan economy, the hospitality sector. I am sure
you will be hearing from a number of panelists this morning who
are more qualified than I to speak to the macro statistics.
Those numbers are staggering.
From our perspective, to give you some flavor of what Local
25's members have been dealing with, in the 5,000 or so members
directly connected to the hotel industry here in the District
of Columbia and metropolitan surroundings, on any given day
since September 11th, 2,500 to 4,000 of those workers have been
out of work. On a national level, our membership across the
country currently has more than 105,000 members out of work. So
I certainly endorse and support my fellow panelist, Mr. Peck's
comments that the hospitality industry deserves and, in fact,
needs special consideration.
What I thought might be appropriate this morning--and you
are going to hear a good deal on macro statistics, but a little
bit about what happens in the day and some of the lives of the
folks that work in the hospitality sector.
If this were a normal day here in the fall season in
Washington, DC, our busy season, an attendee to a convention or
a meeting would be arriving at National Airport and could
choose from somewhere around 750 flights. She would have taken
a cab downtown to check into a hotel, where the occupancy would
have been somewhere around 95 percent. For the next few days
she would have attended meetings, gone to luncheons, and have
needed to make a reservation to get into a restaurant because
those restaurants were busy. That person would have also
ordered some room service probably, had a few drinks with
friends in the lounge. She also would have visited some of our
retail establishments and bought some souvenirs for her
children and family members.
All that changed on September 11th. Our meeting attendee
doesn't come to Washington now. Maybe she couldn't get a flight
that worked for her. Maybe it is a fear of anthrax. But, as a
result of her not coming and thousands like her, we are
experiencing an economic tragedy of the proportions I have
never seen in the 23 years I have been working within the
hospitality industry.
Here's what we see now: attendees aren't arriving in any
great numbers, because our airport operates at a little over a
third of the normal load capacity. At an in-flight catering
kitchen that we represent at National Airport, Maria Cadena is
no longer preparing meals for the flights and is not working,
along with 100 of her co-workers. Dennis Thomas, who is a
member and is an on-call banquet waiter who also drives a cab
to make ends meet, didn't get that fare to the downtown hotel.
He's also not getting called in to work on banquets.
At the hotel where our attendee would have checked in, the
lobby is empty. Only one front desk clerk is working, where
normally there would be five or six. Anthony Hoston, who is an
employee with 22 years seniority, is the only bellman on that
bell stand waiting to take guests to their room, but few
arrive. The rest of the bell stand is on layoff.
The few attendees that make it to our convention have
breakfast in empty dining rooms. Jane Welsh is a waitress of 24
years, isn't serving guests because her seniority doesn't give
her an opportunity to work. She is on layoff.
Conventioneers go to sparsely attended meetings and a
luncheon where Mary Smith, a full-time banquet waitress of more
than 30 years, is working only her second day of a very slow
week. She and her co-workers in the Banquet Department have
seen their incomes drop by 75 percent.
In housekeeping, with so few guests in the hotel there are
not many rooms that need clean linen or bed changed. Tawanna
Reed is not working at her station in the laundry, and Katy
Daly, along with more than half the housekeepers in the hotel,
are without work.
With the phone quiet and no orders coming in, Mary Wise, a
room service cashier, sits at home. She is wondering how she
will pay the rent, feed her two grandchildren that are now
living with her after the death of her daughter. This is only
the second time Mary has been laid off since she started her
job 19 years ago.
In the bar the seats are empty except for one guest. Elleni
Megistu, a cocktail waitress, feels lucky to be at work,
though. She won't be earning many tips, but it is better than
sitting at home, like her friends and co-workers. At least she
has her health insurance because she's working. Her co-workers
have lost theirs due to the layoffs.
The workers I've noted here above are real, and so are the
thousands of other co-workers that are laid off in the
Washington metropolitan area. They face real and immediate
needs. They are the folks that have gotten up every morning,
year after year, taken the Metro or a bus to work, put in a
hard day at honest labor. They are the cooks, the dishwashers,
the housekeepers, the laundry workers, the bellmen, the
bartenders who have always paid their bills, kept a roof over
their family's head, have put food on the table. They are also
those who work in the ancillary industries that support
hospitality, such as cab drivers, provision delivery drivers,
and warehouse workers. They are all workers who, even in good
times, are one or two paychecks from crisis, and they are in
crisis now. They need your leadership and help. You need to
carry their stories to your colleagues, make them understand
that extending unemployment is absolutely necessary to keep
these families intact. You must convince your colleagues that a
75 percent COBRA rating is the basic minimum for providing
health care and keeping these critical families in health
insurance.
These are our friends, our neighbors, your constituents.
They are the backbone of this area's service community, and I
hope you speak out on their behalf.
And I would just like to note one other thing, which I
think is an extremely sad commentary. Local 25 that normally
engages in representation and collective bargaining has had to
convert its entire operation to helping families survive. In
the past 3 weeks, we have distributed food to more than 2,600
families here in the Nation's Capital. As of yesterday, we are
distributing food to 50 families every day just to keep body
and soul together. We have another 50 to 100 families that are
supported by nonprofit groups and churches weekly. I think this
is a shame that in the Nation's Capital hard-working people who
are the solid members of our community have to come and take a
handout like this.
Thank you very much. I will answer any questions if you
have any.
Mrs. Morella. Thank you, Mr. Boardman, for that very
poignant description of how September 11th has affected the
people in the District of Columbia.
[The prepared statement of Mr. Boardman follows:]
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Mrs. Morella. I am now pleased to recognize Mr. Hanbury.
Mr. Hanbury. Good morning, Madam Chair, and good morning to
our committee members. Of particular note to Congresswoman
Norton, thank you for all your great help and leadership here
in recent days. It has been deeply appreciated.
I guess Washington, DC, has been humbly reminded in recent
days that we bear both the glory and the responsibility of
living, working, and doing business in our Nation's Capital. As
the capital, Washington, DC, will be the symbolic leader of the
country's return to normalcy. Revitalizing our metropolitan
economy must be a key to our Nation's recovery.
As John Boardman so well put it, over 260,000 employees and
their families in the capital region rely on a vital travel and
hospitality industry to make their living. It pumps over $10
billion a year into our economy, and really this industry must
be foremost in your minds as you consider emergency
preparedness.
Perhaps more than any other destination in America,
Washington runs the significant risk of a long-term downturn in
the hospital sector as the result of these recent events.
Because of our large number of national attractions and
government facilities, travelers perceive Washington, DC, as a
high-risk area. If we are unable to sustain a thriving
hospitality industry, the economic health of our beloved
capital region will be in peril.
Thus, as the Congress considers emergency preparedness,
there needs to be sensitivity concerning the effects it has on
the hospitality industry. Every street closure, every false
alarm, every pronouncement by Federal officials has an effect
on the travel industry. A family in Massachusetts planning a
vacation to the Nation's Capital receives all its perceptions
from the national media. Negative or inaccurate news coverage
will diminish our chances of attracting visitors to the region.
As the engine that drives our metropolitan economy, the
drop in visitors has caused tourism-related businesses to
experience significant layoffs, major losses in revenues, and
in some cases closed their doors permanently. Because tourism
is this region's No. 1 private sector industry, it has had
serious implications on the overall economy.
From a hospitality perspective, normally this time of the
year--and John said it well--we usually run about 80 to 90
percent occupancy during this time of the year. In dollars and
cents we estimate that visitors spend over $285 per day in our
economy. These dollars are spent on hotels, restaurants, tours,
recreation, retail, local transportation, rental cars. In the
fall of 2000, visitor spending per day was over $5.9 million.
This fall, spending has fallen to less than $3.3 million per
day. Thus, the District of Columbia, alone, is currently losing
almost $6.5 million per day in tourism spending.
Going forward, both the national and local tourism industry
is anticipating several very difficult months.
PricewaterhouseCoopers now forecasts that the lodging industry
will have the worst fourth quarter in 33 years. They also
predict further deterioration in 2002.
It should be remembered that the lodging industry demand
took a full year to recover from the Persian Gulf war, and I
must tell you that the downturn this time is dramatically
steeper than then. The week of October 14th is a good example.
Hotel room occupancy was at 58.1 percent, down 37.3 percent
from last year.
Our recovery rate will also be slower than other American
cities; thus, for the next several months it will be very
difficult for us to return our economy to some level of
normalcy.
Although the situation appears bleak, there is a tremendous
amount of work underway to return the hospitality industry to a
position of strength. On a daily basis the Convention and
Tourism Corp. continues to work with travelers, meeting
planners, and the media who have questions concerning closing,
safety, and scheduling changes. We are assuring people that
Washington, DC, is open for business.
Additionally, the Convention and Tourism Corp. has created
a ``Be Inspired'' marketing campaign. It will implement
marketing, advertising, public relations, Internet, and
promotional activities aimed at reestablishing Washington as a
premier convention and visitors destination.
I'm pleased to report that we have already raised over $3.5
million in public and private sector resources to assist with
this campaign. Our goal is $10 million.
As has been noted by Congresswoman Norton, other
municipalities have States to bail them out of their problems.
D.C. has no such option. For example, as you may have noted, as
the Chair has noted, New York City is spending over $40 million
to rebuild their tourism industry, $20 million from the State
of New York, $20 million from the New York/New Jersey Port
Authority. We just do not have those resources.
The Congress can play a role in assuring the recovery of
the Nation's Capital. Congress must publicize that our capital
city is open for business. I would ask that every Member of
Congress communicate with their constituents that Washington is
safe and a hospitable destination.
Also, as Congress considers emergency preparedness, it must
be sensitive to the fragile nature of our hospitality industry.
Statements and pronouncements should be carefully worded not to
alarm visitors to our Nation's Capital.
Finally, the Chair had asked about the Washington
Convention Center. I will tell you that no other convention
center probably in the history of our industry has had a more
successful pre-opening activities. We have 157 events booked
into the new Washington Convention Center for future years
after it opens in 2003. I'm happy to report that none of those
events have canceled for future years. Not one has canceled for
future years. The bonds are secure. There is a very large
financial resource available for rainy days, and so we are
confident that project which is on schedule and on budget will
continue to go forward and will be an extraordinary success for
our Nation's Capital.
Thank you.
Mrs. Morella. Thank you very much, Mr. Hanbury.
[The prepared statement of Mr. Hanbury follows:]
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Mrs. Morella. Now I am pleased to recognize Dr. Fuller.
Thank you, sir.
Mr. Fuller. Good morning, Chairwoman Morella. Thank you.
And good morning, Members. I am pleased to be here to add my
voice to the panel.
You have a copy of my testimony. Just to summarize a few
key points, it is important to recognize that the District
economy was in very good health prior to September 11th, and we
were forecasting growth of over 15,000 net new jobs for this
year and about a 2 percent real growth rate in the economy.
That was before September 11th.
The September data showed a 0.6 percent job growth rate for
the year ending in September, 3,700 jobs, far below the
expected annual rate of 15,500.
Unemployment was still at 6.5 percent, hadn't begun to rise
yet, but it will. Initial claims were moving up, but still the
October data will show much more serious impact, as has been
described here. It should not come as a surprise in January or
February if unemployment goes to double digits in the District.
And if it doesn't, it's because many of the unemployed persons
aren't being counted.
As you've heard, the most visible impact--and we know this,
too--of the terrorist attack has been the near shut-down of the
hospitality industry. As was mentioned, October is the best
month of the year and September is the third-best month of the
year. The performance this year has looked like January, so
we'll have 5 months of January where hotel occupancy tends to
be around 40 percent. My estimates are, at the regional scale,
that we're losing, on average, over the course of the remainder
of this year from September 11th onward, $10 million a day in
lost hotel, restaurant, transportation, entertainment, and
retail sales. 50,000 jobs are at risk. Some of these are part
time, some of them are full time. They're spread around the
region, but the District economy is much more dependent on this
industry than the suburbs. It has less to cushion the impact.
Even though the District only has about 40 percent of the hotel
rooms, it reaps or captures at least 55 percent of the
revenues.
The loss this year, by my estimates, will total about $1.25
billion in the hospitality industry. For the District, that's
going to be a loss of almost $700 million of revenues not
realized. Instead of growing 2 percent, the District will grow
at 0.9 percent. More than half of this year's growth was lost
because of the impact that the hospitality and related
industries had following the September 11th attack.
The consequences of lost and slower business in the
District are seen also in many small businesses facing hard
times. I think we can expect to see a substantial increase in
the failure rate of small businesses. This was--as for the
hotels, this was the season where they earned the money that
got them through the rest of this month, December, January, and
February, until the season begins again. Many of the small
businesses going into the September attack were already
suffering problems from the slowdown in the national and local
economy. They're going to need some help.
There's a larger problem that I see that we can't quantify
that worries me, though. I think, as this region recovers, the
suburbs will recover much stronger than the District, and part
of this will be at the expense of the District. Business
visitors right now who can't come through National Airport are
coming into BWI and Dulles. It is likely that many of those are
also staying in the suburbs, because that's where they're
flying into. They may also be having their business meetings in
the suburbs. We're going to be getting--you're going to see a
transfer of business--it won't be very large at first, but it's
happening--from the District into the suburbs. You also may see
this among local employers and firms that are considering
location to the District. They want to come to Washington. The
District is becoming too expensive to locate. It has higher
costs. But this may be the tipping point, the cost of
terrorism.
The forecast had been for 15,000 net new jobs this year.
We're looking at about 3,000. It's a substantial slow-down.
Next year it will be worse. Our forecasts right now are that
the District will add jobs next year, but probably about 1,000.
It is actually adding more jobs, but it is losing more jobs,
and so the net is going down.
The District could very well experience recession. The
Nation's economy is in recession. This region will not, but the
District could very well have a recession.
I think we need to look at this in short-term as well as
long-term perspective. Short term, clearly the personnel who
have been laid off need help. They will not be re-employed at
the earliest until March, and many won't be re-employed until
2003. They don't have adequate food, shelter, medical services.
We need a short-term program to provide a safety net for the
thousands of District residents, as well as many suburban
residents who have been impacted by the sabotage to the
hospitality industry.
We also need a longer-term program. The District needs to
become more aggressive to sell itself as a good place to visit,
as a good place to live, as a good place to do business.
Clearly, getting National Airport back up to 100 percent is
critical. It's not the only answer. We need to be much more
sensitive to the armed camp environment that is becoming
visible in this city. As long as the District retains this
image, the economy is not going to retain its vitality that it
fought so hard for since the mid-1990's.
The longer it takes to address these problems, both the
short-term problems and the long-term problems, the more likely
the District is of sinking into recession, and its recovery is
going to be quite difficult.
Thank you.
Mrs. Morella. Thank you very much, Dr. Fuller.
[The prepared statement of Mr. Fuller follows:]
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Mrs. Morella. We will now start with questioning, and I'm
going to allocate about 5 minutes for each of us for each round
of questioning so that we get many of our questions in.
I'm trying to put together kind of a synopsis of what
you've said about what we need to do. We certainly have had you
paint for us a depiction of the post-September 11th terrorist
attacks on the Nation's Capital. But from what you have said,
pulling together what we need to do--certainly, increase the
number of flights at Reagan National Airport. No doubt about
it. Do more advertising about what is offered at the airport,
where people can go. Hopefully, there would be fewer barriers
in the District of Columbia, whether we're talking about street
closings or barricades that will be barriers psychologically,
as well as in other ways. Unemployment insurance obviously, and
Mr. Williams mentioned looking at those immigrants,
particularly from El Salvador, who do not have the advantage of
some of the other safety net services. Small business was
mentioned a number of times, and in my opening statement I also
referred to the fact that the U.S. Small Business
Administration has an economic injury disaster loan program.
Apparently, of the 108 applications that were issued, SBA has
only received 24 applications.
I wonder if--and I would address this to whoever would like
to respond--whether or not these numbers are correct, whether
small businesses know about the program and are taking
advantage of the program. Also, have you all provided technical
assistance to businesses who might want to complete the
applications but, again, find that as a barrier? Of course, I
am just astounded even that there are only 108 businesses that
would qualify for these loans, wondering about the criteria. So
if there is anyone who is familiar with that program and that
particular loan, I would ask that person to respond. Mr.
Mitchell.
Mr. Mitchell. I am somewhat familiar with the program. I
believe that the numbers are in the neighborhood of being
correct. There has not been a tremendous amount of loans
approved, anyway, that we have heard of in this area. That was
reported to us by the District's director of the SBA not long
ago. I think he only said that there were somewhere in the
neighborhood of 20 loans out of the District office that had
been approved.
We are not providing--in response to the question as to
whether small businesses are aware of the program, I cannot
answer that. I can only assume that there is not widespread
knowledge about the SBA's program, given the number of
applications.
There is one technical problem with the program is that it
does not allow refinancing of existing SBA loans into the new
emergency loan program, and therefore, although the SBA has put
in place forbearances, the debt service on those existing 7(A)
loans will continue and, of course, they are amortized over a
short 7-year term. So I've had several people come to me and
raise the issue about the fact that those 7(A) programs cannot
be refinanced or existing debt cannot be refinanced into the
new emergency loan program.
Mrs. Morella. It might be good for you to put that into
writing and show me what you sent to SBA, and maybe we can
piggyback onto it in terms of this. This appears to be what is
needed, if you all agree. The indication we got from SBA is
that 108 applications have been issued, 24 have been received,
and 12 have been approved at this point. It seems as though we
could do a better selling job of making people aware that this
does exist, maybe bring SBA more into the picture.
If no one else wants to comment on that, I would ask: is
there any combined program with the Federal Government and the
District government to promote tourism in the Nation's Capital?
Mr. Hanbury.
Mr. Hanbury. Madam Chair, there is not. As you know, there
is no national tourism organization. We are really, in many
respects, doing it alone as the District of Columbia, although
we're collaborating closely with the State of Virginia and
Maryland and the immediate surrounding municipal areas. We
really have to do this on our own. There is no bail-out
possible, and even with collaborations with National Parks and
with Smithsonian, although we work with them on a regular basis
to promote Washington, DC, there's no structured Federal
program that provides for significant funding to go to the
District of Columbia and to promote the Nation's Capital to
national audiences and international audiences.
That's why, you know, we have had--we're not in the
fundraising business, but we have been challenged by the Mayor
and by community to go raise up to $10 million in resources to
drive a marketing campaign, our ``Be Inspired'' marketing
campaign.
We are a little over one-third of the way to that $10
million, but I must tell you that in a national campaign that
is not a dramatic amount of money, and we need to continue to
work with the Federal Government through the Smithsonian,
National Parks, and other agencies that have very significant
resources to help promote the Nation's Capital.
Mrs. Morella. Mr. Peck. I am going to give you your 5
minutes in about 10 minutes.
Mr. Lynch. Well, relative to this comment, if it's all
right, Madam Chair, I just wanted to probe a bit. Would it be
possible within this piece of legislation we'll be marking up,
H.R. 2995, to put a grant program in there for the tourism
convention industry?
Mrs. Morella. At this point that's the CFO Enhancement Act.
I don't think it is going to be germane to that. But we will
have issues coming up later on with the Convention Center. We
will be looking at how moneys are being disbursed, and I know
that the District of Columbia has asked for $250 million and
$25 million so far has been approved, but we're hoping to get
more money in that regard, so I think there will be some ways
that we probably could help.
I think what we would be looking for is a program so that
we're not just saying, ``The Federal Government should give
this amount of money,'' but we need a program. I would guess
that you would all agree, also, that we need to do more public
service announcements, we need to do more kind of heavy lifting
when it comes to promoting the District of Columbia. I mean,
what's happening at the museums, the stores, the vitality of
Union Station stores, too, as a matter of fact, as well as the
airport, so more needs to be done. We haven't really done what
New York has done with far greater difficulty, but we have not
really been following some of the good pointers that have come
from New York.
Mr. Hanbury.
Mr. Hanbury. Just a brief comment, Madam Chair.
We are working very diligently on a local and immediate
drive market to spur the tourism industry. Our restaurant week
that is underway this week----
Mrs. Morella. Yes.
Mr. Hanbury [continuing]. Right now is really a great----
Mrs. Morella. How is that working? I meant to ask you.
Mr. Hanbury. Unbelievable. Fantastic is the only comment.
Mrs. Morella. It has gotten some good publicity.
Mr. Hanbury. And we're getting some more people back to
work--not enough, but we're getting some more people back to
work. That has been great.
We, in all candor, are very carefully watching, polling
data about the national opinion about travel, and we're
convinced that the American traveling public is not ready to
re-engage itself at this point in returning to the Nation's
Capital, so for us to go and begin to spend the major part of
these $10 million in resources is probably not the best of
ideas, so we are holding until we believe it's the right time
to begin again, from a national perspective, begin to promote
Washington to the Nation and the world.
Mrs. Morella. There's also someone coming by this afternoon
at 2:30 with a press conference, a Mr. Ledsinger of Choice
Hotels, to talk in general about tourism and travel and to give
out the ``Thanks for Traveling'' pins, and I know that
Washington is probably involved with that, too.
Mr. Peck, and then my time is up.
Mr. Peck. A couple of comments.
One, the Board of Trade runs something called the ``Greater
Washington Initiative,'' which markets this region to the rest
of the country and the world. It's a region-wide organization
that includes the economic development organizations of the
counties and the city. And I just wanted to say we found the
same thing that Bill Hanbury found, which is that we were
prepared to begin a new media campaign this fall and we are
holding off on it because we think we need to change the
message and move it into the spring.
But one important point. A number of people have touched on
it. The Federal Government, money aside--and I don't want to
belittle money, because we can use it for this effort--one
problem we have is that we are overwhelmed by what we call in
political campaigning ``free media,'' the network news and the
way in which Federal officials portray the city. It's very hard
to overcome with almost however much money you have when what
people see coming out of Washington are Federal officials with
a backdrop of, you know, closed-off, barricaded places talking
about the Nation's Capital.
One bit of help we really need is to get Federal officials
to sort of raise some pride about the Federal Government and to
say that we can--this is a great national capital, that people
should be proud of what's going on here.
That's another side, quite honestly, of what we feel is
necessary, so when we meet with Federal officials we are trying
to say that we need that aspect of the region played up, as
well.
Mrs. Morella. This subcommittee could encourage Members of
Congress to do, like, 1 minute at a certain time about the
District of Columbia and what it means to them, but thank you.
My time has expired.
I now recognize Congresswoman Norton.
Ms. Norton. I've got the Mayor's stimulus package here for
$750 million, an economic recovery package, and I think part of
the difficulty is finding ways to assist a city which has
sectors like ours. For example, if this were a sector that had
manufacturing, then you could kind of stimulate the
infrastructure and the rest of it, but I tell you, I'm looking
in here to find anything that would have any effect upon you.
It says, ``Loans and grants to small businesses.'' OK. I'm not
even sure I understand what the city means.
Here you have the SBA, which puts forward small businesses,
business loans, and the Chair has just indicated the small
number of loans. Well, here comes the District in the face of
100 percent federally financed loans which you can get 30 years
to pay from the Federal Government, pay back, and you can get
up to $1.5 million--that's what they are offering--and they now
say you don't even have to exhaust your credit. You can come.
And here comes the District, and in its package all I can
find of small business loans are loan credits or loan
guarantees. I'm not sure how the Federal Government--if these
loans aren't being taken already in large numbers when the
Federal Government finances them 100 percent, is the Federal
Government going to give D.C. money to finance them? And even
if it did, it looks like they're not taking those loans. So I
need some information. I don't know how we can help our tourist
sector.
The only thing in his package--most of these things have to
do with unemployment, benefits, temporary assistance to needy
families, homeowner assistance, but very little of it has to do
with our kind of sector, perhaps because it is difficult to
find ways that the Federal Government is accustomed to using to
help a sector like ours, which is its service sector.
So if you look at the $750 million, I don't see that it
would do anything for the major sector that is in trouble here
for its workers or for its businesses. I need some help if I'm
supposed to go to get some targeted money to help the major
private sector industry. If all I've got is SBA loans down here
that we're not even taking from the Federal Government and D.C.
comes and says, ``Give us some of the same'' and they don't
tell me what the credit is on that, I need to ask you: are
those better loans? You can get those cheaper? People are going
to rush forward and take them in a way they haven't the SBA
loans? I'm really very perplexed, because I don't see any way
that the District's money is going to help the major private
industry problem in the District, and that is very serious.
Mr. Peck. Let me take that. I think you've put your finger
on something very important. One is you have to analyze this
sector by sector, and I'll defer to Dr. Fuller on some of that,
but Dr. Fuller's numbers show--and I think he's right--that the
IT sector, which is not much represented in the District of
Columbia, will probably do well next year. Government is
increasing its spending.
The hotel industry--and, again, John Boardman can probably
tell more than that--the hotel sector tends to be large
businesses. The hotels are owned by large businesses purely
driven by how many room days they can generate and probably
aren't at all eligible for these kinds of loans.
The restaurant industry, which is--you know, one thing
about the restaurant industry is people in that industry tend
to go week to week on cash-flow, and I have a hunch there's a
lot of worry about if the market isn't there will people be
able to repay the loans, and I don't quite know where we go
there. That's why, you know, we have to look at this other side
of sort of getting more people into the restaurants, getting
more people into the city eventually to sort of--to generate
that.
And I think we, too, I have to say, are very concerned that
there is this differential impact on workers. You know, let's
face it, lawyers and accountants so far, although there are
beginning to be layoffs in that sector, too, are not feeling
the impact that we're seeing among the people who really have
no safety net, probably no savings under them, so we're going
to have to analyze this again sector by sector. And those
people, by the way, are probably not much able to move into the
sectors that are going to be more healthy.
Ms. Norton. Mr. Fuller, I would appreciate your response. I
mean, if you were trying to ``stimulate'' this economy with its
sectors and its kind of folks, not simply stimulate the region,
which even you have said has better prospects, how would you
stimulate this economy with its service sector, with its hotels
and travel?
Mr. Fuller. As you reviewed some of those recommendations,
those are really, as I see them, some of those are still quite
important, not in stimulating the economy but in supporting the
businesses and individuals who have been damaged, and I would
certainly argue to support extension of employment benefits and
even provision of benefits for people who are not covered and
some other----
Ms. Norton. That's the kind of thing that Congress is going
to do, anyway.
Mr. Fuller. Yes.
Ms. Norton. That's why I'm looking. We went to the White
House. Joshua Lumbren said, ``We need a targeted package for
the District of Columbia.'' Mr. Hanbury will remember. We said,
``We need targeted assistance.'' Well, I'm having a hard time
coming up with what that means. I didn't--they didn't ask me to
say exactly what it means, and I'm having a hard time with that
now.
Mr. Fuller. I think one of the reasons that the small
businesses are not responding to what SBA has to offer is that
these businesses don't need more debt. What they need is to
restructure their debt, they need to defer principal and
interest. They need to cut their cost. They need technical
assistance. They will not survive. They're already up to their
ears in debt, and so--and many of them just don't have the
business plans or the formal documents that SBA requires. Now,
they need to get some of those, too, and I'm not an expert in
this area, but I've heard small businesses talk about what they
need and it isn't exactly what SBA is offering.
Now, to stimulate the District economy, that would be
different than what the Federal Government or the Congress is
already considering. We clearly need--I don't have a good
answer for you there, other than that there are two or three
segments of the District economy that are quite unique. The
hospitality segment is one of those that may not be as well-
reflected in the broader proposals for stimulation, but in my
view we need to help businesses of any size clear out their bad
debt. We need to help them depreciate equipment that they've
purchased and don't need or have available on inventory and
can't sell. We need to clear up the old business of the economy
so that these companies can start buying again, so accelerated
depreciation, some investment inducements that may be targeted
to special kinds of industries here that we have in the
District would be helpful.
Ms. Norton. Mr. Hanbury.
Mr. Hanbury. Congresswoman, we are making a concerted
effort to raise private sector resources to help with the
marketing campaign. I believe the simple answer here is how you
do something targeted is you spend financial resources to
promote Washington, DC, to the world. That's the most important
thing we could possibly do right now is to let people know that
we are open for business, invite people back to the Nation's
Capital, and get our tourism economy up and running and
promoting the Nation's Capital to the Nation and to
international visitors.
We have asked--literally are asking hundreds of
organizations for financial resources--the corporate community
of the metropolitan area that has a direct link to the
hospitality industry, good corporate citizens who find value in
the overall economic health of the economy. The foundation
world is also extremely interested in a compelling ask from us,
because the reality is that visitation to arts, cultural, and
historic institutions of this community have been dramatically
compressed because of what has happened here.
So there is a compelling reason here for people to
collaborate in a joint marketing fund. We have established--are
in the process of establishing a not-for-profit 501(C)
foundation that can accept money from not-for-profit entities
and foundation entities, and I'm just convinced that is the
best way--the best thing we can do.
Ms. Norton. You're probably right, Mr. Hanbury, because it
looks like the traditional ways in which government stimulates
would help--you know, even if we do infrastructure and the
like, those jobs are not transferrable to the thousands who are
unemployed.
It would have been difficult to put ads up with the
megaphone that has been up there saying, ``Come to D.C. and get
anthrax,'' so it wouldn't have been a good time to put your ad
up, anyway. Can I ask you how much money has been raised and
when you think ads might go up?
Mr. Hanbury. To date we have about $3.5 million committed,
and we are doing a significant amount of work right now on a
local and metropolitan area in the media drive markets to bring
people back to restaurants. We're doing deep discounts in
hotels and----
Ms. Norton. Do you mean an ad, a national television ad
campaign?
Mr. Hanbury. Will not happen until probably after the first
of the year, because, Congresswoman, we have the same concern
you have. You have these continuing messages from Washington,
DC, and it is very difficult to push back against those
messages. We're going to do cable and national media buys that
there will be some days where--I've seen the media schedule--
we're spending $100,000 a day. We do not want to be spending
$100,000 a day when the Attorney General is out there telling
the Nation's public that it's not safe to travel, and
particularly when that pronouncement comes from Washington, DC.
Ms. Norton. That message does trump any ad you could
possibly put up, and one of the things you're going to need is
to conference with some of the high-powered media people in
this town.
I was at the Ex/Im Radio kickoff yesterday where Hugh
Canaro offered to be in touch with such people. I'm not sure we
have enlisted such people. Some of them would be, I'm sure,
willing to do a lot of it pro bono. We've got very high-powered
public relations folks in this town that serve corporate
America nationwide, and I look at what New York has done. New
York has, of course, what we don't have, you know, it's star
town. But I think that it would be very important to somehow--
this town has going for it in many sectors some of the top
people of the country. You know, it's got some of the top
politicians, by definition, but it's also got top people all
over now.
You have an ad campaign that talks about being inspired and
so forth, but it has been criticized as not sexy enough, you
know, not inclined to make people run and come. I noticed that
New York has taken its ad, ``I love New York'' and ginned it up
with, ``I still love New York,'' which somehow resonates and
gets you where you want to be gotten.
Of course, we don't have Woody Allen and we don't have the
great stars. I do think that there are folks--I mean, the bunch
of politicians you see in the Congress. I have asked the
Speaker and I'm sending a letter--I've already asked Leader
Gephardt--if they would help us deal with one of the great
problems that we have, which is the House of Representatives,
the Capitol was closed down. So if I was coming to Washington I
would say, ``Let me just wait until the Capitol opens.'' I've
asked the leader, my own leader, to give us a date for when the
Capitol opens. They don't even have a date for that because
they're trying--you know, all of this is done in the name of
security. They have a trailer out there that they're trying to
get ready so you could go there first before you came in, in
order to protect the complex.
I think we need to look at short-term and long-term ways to
go at this issue, because we can't guarantee that Mr. Ashcroft
is going to stop doing what he's doing or that the House will
open soon enough.
And there are people in this town who have national
reputations that would help us. I mean, maybe Bob Dole would do
an ad--I don't know--with somebody. I mean, I think that we
need to take advantage of people like Hugh Canaro and the other
top public relations people in this town and try to see what we
do in the interim, what we do in the long run, and not simply
say that, ``Until they finish doing what they're doing, I guess
we just can't break through this.'' I can't think of any way to
do so, but I would like to put that proposition to some people
who have had to handle just such tough corporate decisions with
people like Firestone, for example, or Ford when they had to
keep advertising, keep people buying cars and tires, even
though they were getting slashed, if I may say so.
Mrs. Morella. The gentlewoman's time has expired, but very
briefly.
Mr. Hanbury. Very, very brief. We have an outstanding team
of media and public relations council working on this. We are
assembling, I think, an outstanding group of celebrities who
will help us with our public service announcements and paid
media.
You're going to be very, very pleased when this is rolled
out that it will match up very well with the standard that New
York City has set.
Mrs. Morella. I'm pleased now to recognize Mr. Platts, and
thanks for your patience.
Mr. Platts. Thank you, Madam Chairwoman.
Having come from the State House, including service on the
State House Committee on Tourism, I well appreciate the case
you've made and the impact on the economy across the board, as
we saw it. In Pennsylvania, agriculture is still our No. 1
industry, but tourism is quickly approaching that status. And
coming from an area that includes Gettysburg and what tourism
means to that community and the dollars brought to it, I
appreciate your testimony.
The questions that have been asked and the comments help me
as far as what is that comprehensive approach to marketing
D.C., and sounds like it's really going to be after the first
of the year in the national marketing. When I think of the
holidays I do think of New York and Central Park and ice
skating at Rockefeller Center more than coming to D.C., so that
probably has some logic in that. But I would encourage that,
and Ms. Norton stole my thunder with reference to Senator Dole.
The New York commercials I've seen are just incredibly witty
and a great play to just put people at ease, and that approach
to getting on with life in a fun way. And Senator Dole also
came to mind because of his notoriety with Viagra commercials
and the one that's out there with the race car driver and--I
don't know if you've seen that, ``Who did you expect? Bob
Dole?''--something along those lines to promote Bob Dole in
that celebrity status.
I couldn't remember the name--the Federal City Council,
where Senator Dole is actively involved in promoting D.C. He
jumps out as just one example, and maybe that's somebody you
have in mind already, but I think that effort of--by doing
that, I think you're going to help with reassuring people, you
know, because I'm asked back in the District in Pennsylvania,
``What's it like in D.C. right now?'' There is that perception,
because of all that's going on and this being the center of our
Government and of the military leaders, that there is great
trepidation and things. I say, you know, ``It's actually very
calm and deliberate and normal, in a sense, to me. And my wife
and children come down here on a regular basis for events. You
know, we have different priorities and focus because of the war
on terrorism, but our day-to-day interactions in the city and
with a brother and his family who live here in the District, as
well.'' That's not the perception, though, nationally, and that
national campaign I think can help go a long way as it is for
New York, and they're beginning to restore that calm to things.
I think--I'm not a marketing expert, so don't--I'm not
going to give you advice how to do it, although the Bob Dole
one I couldn't pass up. I think that's too good.
Mr. Mitchell. If I may, Madam Chair, just respond to some
of the marketing efforts, I think that the private sector
raised $100 million and put on the most creative campaign that
we possibly could, as Ms. Norton said, the Capitol being closed
is going to trump all those efforts. No one is going to come,
no matter how much money we spend to get the country to come to
Washington, DC.
It is imperative that the Government, by its actions, say
that the District is open, and then the private sector, along
with the District and maybe some Federal efforts, can team up
and do an effective marketing effort.
Mr. Platts. Let me respond to that. I think having the
Capitol open is an important part, but there is so much history
and opportunities here, and playing on that the war on
terrorism is being fought on many fronts, including individual
citizens and, you know, a way of showing your patriotism is to
go visit Lincoln's Memorial and to stand there where Martin
Luther King stood and to go to Arlington Cemetery and the
changing of the guard with our men on the war front, men and
women, you know, in Afghanistan. It can be from a patriotic
sense of coming here. The Capitol is part of that, but I don't
think it's the only part. I mean, for a lot of people,
families, the tour of the Capitol is something, but it's not
what draws a lot of families, in my opinion. I say that as a
father of young children and what they enjoy when they come to
Washington. It's not necessarily the Capitol building.
So I think there is an importance to doing that, and that
symbolism that goes with the Capitol being closed, but there's
so much else obviously to market.
Mr. Mitchell, if you had something else that you were--it
sounded like when I----
Mr. Mitchell. It was actually a comment that I can address
later.
Mr. Peck. May I just say there is--if you go downtown you
will see people out. On a day like this, you'll see people at
cafes. But I have to say I just drove up here. Many of you
know, I ran the Public Buildings Service and spent a lot of
effort on security. I just drove by the Air and Space Museum,
which has jersey barriers on the front steps. Now, there are
people still going up and through there, but I just have to
tell you, as I think I'm something of an expert on securing
buildings, it somewhat boggles the mind about why that is
necessary. We are piling layer of security upon layer of
security. There is snow fencing around LaFayette Square, which
won't stop a person let alone a vehicle. And some days you
can't get across it.
I think, unfortunately, word of mouth is around, too.
People say, ``What can I see in Washington?'' There is still a
lot to see. I mean, I hear you. But, you know, we're somewhat
constrained.
Doyle was saying, you know, if you do go to New York, if
you're inspired by that commercial, as I am, you can pretty
much get around New York.
So I think one of the things we have to say to the security
folks, as we said in GSA, the job is not to make the buildings
fortresses but to keep the buildings open and inviting to the
public, and we have to figure out--and there are ways to do
security that will keep the place much more open and inviting,
and that's the message we have to get across, too.
Mr. Williams. At the threat of appearing to rain on this
parade, let me say I agree with everything, Congressman,
members of the committee, that has been said here this morning
in terms of solution and long-range solution, what the District
needs to be doing and what everybody else needs to be doing,
what help we can get from individuals.
The challenge that I faced in coming here this morning was
to try and speak about what can the U.S. Congress do to assist
the District through this crisis. And I do not want, at the end
of this exercise, to leave here and say to unemployed workers
out there who are facing this tragedy on a day-to-day basis
that hope is down the line 18 months from now or even 10, 12
months from now. Their question to me and to their union
representative is, ``What about the here and now? What do I
have to face with respect to my loss of health care? What do I
do when the beginning of the month comes and I cannot pay my
rent?'' All these things that we are talking about here, you
know, we leave a community fully endorsed. But I just think
that there is immediacy here that I do not want to be lost on
this committee that there are workers out there who need the
help.
Now, I am glad to hear that there seems to be some optimism
that the Congress is going to be doing certain things, you
expect, to unemployment compensation. I would say to you that
on this issue I'm from Missouri. I'm just not quite sure that I
see our shared enthusiasm with respect to what the Congress
might do to help workers immediately. I just don't see it. And
I would hope that we could have a discussion, not only in terms
of what we can do in the long term, but what can we do now to
help these workers make it through the winter and the spring,
because what I read tells me that, come the spring, even with
all of these ads, I don't think the people are going to come
clamoring to the District.
The Boston Globe had an article that said that high schools
were canceling their trips to Washington, DC, for the spring.
There wasn't the clamor of these high schools that the District
depends on in the spring coming here, so what do we do come
spring and people are not here?
I just put that out, and I just think that I hope that
Congress is also struggling about what is going to be happening
to workers and in trying to solve the long-range problems of
the District of Columbia we do not forget the tragic short-term
impact upon workers here and now in the Nation's Capital.
Mr. Platts. Mr. Williams, I fully agree and appreciate that
concern. The economic stimulus plan that came out of the House
to get the ball rolling included about $12 billion for
unemployment extensions, either extension of weeks of
unemployment or expansion of the amount of unemployment
available each week. Included--$3 billion of that was for
health care to pay COBRA payments or other flexibility to the
local officials on how to provide health care for their
unemployed, especially those areas hardest hit because of
September 11th, which the D.C. area I think is strongly,
clearly one of the areas in that category.
The Senate has not yet passed a stimulus package, but
certainly they have been discussing both of these issues and
what will be in their stimulus package, so I share the hope
that in the short term, before we break for this year's term,
ideally before we broke before the end of this week, but it
looks like we'll be in a post-Thanksgiving session, we pass an
economic stimulus plan that long term includes the incentives
to make sure people don't need unemployment because they have a
job to go to, and that turns the economy around in all sectors,
including the tourism sector, so that people don't need
unemployment benefits because they're working and they have a
paycheck so they don't need, but in the short term, while that
recovery is occurring, that they do have additional assistance
for health care and for unemployment benefits.
We need to get that job done as part of the response
nationally, including the people of the District of Columbia.
Mrs. Morella. Thank you.
Mr. Platts. Thank you, Madam Chairman.
Mrs. Morella. The gentleman's time has expired.
Ms. Watson, I recognize you.
Ms. Watson. Thank you. There are several things I'd like to
say.
There are some realities that we all have to face in this
country, if not around the world. Things will never be the same
again. I would not encourage my own constituents right after
September 11th to fly to the East Coast, to fly here or to fly
to New York.
Now, we are not going to be able to tell the news media not
to regard a statement made by the President or Rumsfeld or the
Attorney General. That is not going to happen. So if that's not
going to happen, we must frame our own message. We're not going
to be able to have the Capitol open until we're sure that every
single building up here on the Hill has been cleared for any
kind of contagious disease, any kind of bioterrorism agents,
and so on. Just understand that. These are the realities.
All of you have described the problem very well. We know
the problems. We hear them all day long every day. I represent
Los Angeles, and they are defining the problems, their impact
to my office, every single day including the weekend because
they have my home phone. I'm in the telephone book. So we know
the problems.
What we have to do is come together in a problem-solving
mode. Now, I just heard something startling from Hanbury saying
that there is no national organization for convention and
tourism. Well, that's a place to start. We need assistance
nationally. New York is suffering from the same way, but what
New York did, it came right back. I saw the stars off of
broadway. I saw stars coming from my own Hollywood there to
join in this effort to promote New York. Every day you turn on
the TV you can see Ground Zero, but you also see a promotion
celebration of some kind.
You must come together and say, ``How do we promote
Washington, DC? If they never get back into the Capitol
Building, how do we promote Washington, DC?''
And I suspect that many of the buildings and many of the
offices in the buildings will remain closed until we can get a
handle on the spread of anthrax. That's reality.
Another thing, too, on the political side, I don't think we
need a tax rebate to stimulate business. You can weigh in on
that issue. I think that SBA needs to relax some of its
requirement and be more applicant friendly. We were having that
discussion on September 11th when we learned that there was an
airplane headed toward the White House.
So I think you've got to weigh in on some of those issues,
but those of you who represent workers and businesses, the
Convention Bureau, must come together with, say, a 10-point
plan. How do we salvage this?
And let me just say this to you: it is going to take time.
People are petrified of flying. You ought to talk to the
representatives who represent Hawaii and know that there is a
23 percent occupancy rate going on. People are stiffed. It is
going to take a while, and another plane crash on Monday didn't
help. We've got to have an airline security bill out right now.
You can help us on that. You can go to the people who are
holding it up. But we've got to let some time pass. We have to
get rid of the jitters that America is facing.
We are doing all that we can here, but we need you to help
us, so what I would say, the people around this table, when you
leave this capital you get together with other like kind and
you come back to us with a 10-point plan and say, ``This will
work.'' And then let us grapple with the political side of
developing a policy that really will bring people back to
Washington, DC, but it is going to take a while.
Many of us are canceling our own plans because it requires
flying over water and taking American Airlines. I have to fly
on American Airlines to get from Los Angeles here. United
Airlines I fly on. You know, you have to just put your fears
aside. We can't be fearful in this. We have to be constructive.
So come together. Give us a plan of what you would think
would work. Join with the media, you know--and, believe me, the
competition in the media industry is just horrendous, so I
don't think you can do much to get them to relax their
coverage, but how do we work with them. How do we use it for
our advantage? How do we use them for our advantage? How do we
bring the well-known people who reside here to play in on this.
Who do we bring?
I think you could be very helpful by coming in with a plan
and letting us look at that plan, tear it apart and look at it
politically, what it's going to cost, but address it, and so we
need to hear from you.
Mr. Mitchell. In the District's economic assistance plan,
of course, there was the $100 million loan plan in there. I am
not exactly sure how the SBA publicized its loan program;
however, when the District announced last week that it was
going to implement a loan program, low-interest loan program
through the depositing of dollars into District banks, the
Industrial Bank, of which I'm the president and CEO, was one of
them. We were flooded with calls. We have been flooded with
calls all week.
I agree with Dr. Fuller that most of these small businesses
don't want debt. They don't want additional debt. But I think
as every day goes by that they are not giving some assistance,
they have no other choice. And this week we've probably gotten
over 40 calls--that's our bank, alone--about this particular
loan program. So I believe the demand is there for loans and
grants for these businesses. I don't know how the SBA is
reaching its individuals, but the press conference that the
city conducted last week on this most recent program was
extremely effective, and it showed me that the demand is out
there.
Ms. Watson. Mr. Mitchell, Mr. Mineta, the Secretary, is in
Los Angeles right now being taken around through the city. You
know, we have our little crises all the time and we have to
work our way out of them. We started something called ``RLA,''
where we had all the heads, the executives of big business
committed for a certain number of years for a certain amount of
money, but it would be very helpful to us if you would look at
the SBA and see how SBA could help.
Now, you don't want to get into more debt, but if you had
all those responses maybe there are people, if maybe some of
the provisions are restructured, that could be assisted by SBA.
That could be part of your plan that you bring back to us, and
I'm sure Mr. Mineta would have an open ear as to how we could
restructure some of the provisions in SBA to be very, very
helpful at this time.
And my last comment, we need to look at a short-term plan,
and I heard it here, and also a long-term plan. I think it was
Joslyn Williams who mentioned that. I think you are right on
target. What can we do now for the workers? We were trying to
put workers' interests into our stimulus plan and we passed out
immediately a bill to support the President in his response to
terrorism, and we were trying at the same time to address all
of the workers and their families that would be out of business
because of what happened on September 11th.
We are concerned. You know, you're speaking to and singing
to the choir here, and, you know, we just have to do it. We
have to get through the political morass to get it done, but we
are very, very concerned, and that's your short term. Over the
long term, give us a plan. Give us, you know, your suggestions.
Come together and start organizing nationally.
We're all in these United States affected by what happened.
Mr. Boardman. Is there any timeframe? Just a couple of
quick comments, if I may, in response, Congresswoman.
To give you some perspective on what marketing dollars do,
Bill has been talking about $10 million. I deal with two
resorts that will spend in any given year between $1.5 and $2
million on a single resort. So the fact that we're out with our
hat in our hand soliciting dollars for this effort is a
critical element that I'm very glad to hear you are
considering.
The second thing is the macro level. You can, when you look
at New York, think of the thing in terms of Ground Zero, which
doesn't necessarily, as someone noted, mean that you can't get
around the rest of the city. Anyone who has talked to anyone
else around the country, we are the victims of the perception
that the whole city is affected, as opposed to one building or
one part.
You asked for specific recommendations, and I would make
two, one directly affecting workers--and I would argue that it
is also something that I would believe my partners in the
business community would appreciate, as well, and that is
there's a tremendous effect in terms of the multiplier when
rents don't get paid, when utilities don't get paid, when new
clothes don't get purchased by the folks that we represent who
are out of work, so direct relief in terms of subsidizing those
efforts on the part of families is important.
But, from a specific thing that I think is important both
from our perspective and from the industry's perspective, if we
cannot maintain the level of staffing and the service levels
that our customers are used to, we are not going to be able to
sustain the continuing visits of those who are inclined to fly
at all. So toward that end what I would suggest is that you
look, whether it is in the context of an SBA loan or some other
tax relief element, I think it is completely appropriate to
subsidize employment in the service sector industry, and that
will counter the direct response of businesses who are inclined
to keep themselves afloat at low general cash-flow by
understaffing, which ultimately affects service, and service
is, after all, what we are about in the hospitality industry.
So if you can subsidize a restaurant or a hotel rather than
have one waiter on the floor or one cook in the kitchen, have
two waiters and two cooks, I think ultimately that does two
things. It helps that business and it also keeps people
employed.
Ms. Watson. Let me just comment that we need to look at the
public and the private sector and how the public sector then
relates to the private sector in terms of the short-term goals
and the long-term goals, so it would be very helpful to us if
you could come up with the kind of recommendations you are
making as to how the two come together in this emergency
situation short term, and then how, over the long term, we can
help.
Mr. Williams. Madam Chair, the Congresswoman makes an
excellent suggestion. Let me say that the stimulus package,
Congresswoman Norton, which you referred to earlier, I'm not
quite sure how many of us in this panel have been privileged to
that stimulus package. Maybe some other people are here, but
let me speak for the labor community and say that we have not
been privileged by a stimulus package, and therein may very
well lie a problem.
I referred to earlier, you used your good offices to bring
government, business, and labor together at a very, very
critical time, and I think you will agree that it was a very
successful beginning. We have not seen that since then, and, in
fact, my colleague from the Board of Trade just suggested,
Congresswoman Watson, that it would be a good idea if the
executive, the legislature in the District of Columbia,
business, and labor could get together to pick up on your
suggestions about coming up with ideas. This is a critical
time, and it is essential that all the elements come together
to deal with one problem.
I would suggest that probably that Congresswoman Morella or
Congresswoman Watson or Congresswoman Norton or in one of the
committees, and maybe what you need to do is to use your good
offices probably to suggest to the government that it might be
a very good idea if the Mayor would convene all of the elements
of the District of Columbia around the table at the same time
to just pick up on your idea.
We would certainly--I would speak for the labor community
and say that we would be happy and we would adjust our schedule
to do just that, and I just want to put that in the record. We
are willing to do that. We think that the convening really
needs to come from a different level. If it came from
Congresswoman Norton, it probably needs to come from the
government of the District of Columbia, and probably the
stimulus package which the Congresswoman just referred to would
have been a different stimulus package if probably other people
had input before it came to the U.S. Congress.
Thank you.
Mrs. Morella. I thank you. And thank you, Ms. Watson.
We certainly do believe that all parties should come
together, and I think the fact that we have all of you on this
panel and had the previous one where we had the Mayor and the
Council of Governments and the Council Chair and others, all of
you should get together for a concerted plan.
But when mention was made of people who service and people
who may not have jobs, I have been noting that a number of
companies--and I'm not sure whether this includes the District
of Columbia--have been asking their employees, ``Would you be
willing to work reduced hours so that we do not have to lay off
or fire people,'' and some of the executives saying, ``I will
refrain from a salary increase or I will not take a salary,''
in other words, working together. Would you like to comment on
that, Mr. Boardman?
Mr. Boardman. Thank you very much. Yes, I would. In fact,
our members have initiated a number of programs on their own
and with our assistance. Individuals who had accrued vacation
took vacation and allowed others with lesser seniority to work.
We have whole departments that have gone onto reduced work
weeks, where everyone in the department, to the extent work is
available at all, works 1 or 2 days, rather than have fewer
people working longer weeks.
Our problem, quite frankly--and I noted it in a couple of
our examples that we looked at in my testimony--is that when
you have occupancy levels, as Bill notes or Dr. Fuller notes,
you are essentially operating at the most minimum of par
staffing. You will have one person in each department. And when
I say there's one waitress in a restaurant, we had hotels
operating for the better part of September at below 10 percent
occupancy. So I have a hotel with 775 members normally that's
operating with 45 people. There's no work to share.
And we have had a couple of situations where the work has
increased. Particularly over the last couple of weeks we've had
some little bit of occupancy and people are sharing. But the
bottom line is you can't share work if there is no work to
share, and that is, quite frankly, what we are looking at for
the next 6 to 8 months.
Mr. Williams. Let me just speak in general on the subject
and let me just say candidly that our experience in that area
has not been a very, very positive one, so it is not one that I
would--that I think members of the labor community, given their
experiences, now would embrace.
We have found, candidly, that whenever there is a crisis
the first individuals that are required to step up to the plate
and make sacrifices are the workers. And I do not--it happened
when the District was going through its crisis. I think the
Congresswoman, yourself, know exactly what sacrifices workers
who worked for the District of Columbia government paid during
that crisis.
The crisis that construction workers--the give-backs that
they had to make when the crisis went down in the private
sector, every time there is a crisis, the workers are asked to
give. We do not see the same give-back from managers, from
supervisors, from owners.
So I would say to you, Congresswoman, that the labor
position is that in this effort, if we are to solve it, there
must be equal sacrifice across the board. But we are not going
to be the first one to step up to the plate and say we are
prepared to go over the cliff while others meditate whether or
not they should do the same.
Mrs. Morella. I understand. I was pointing it out because I
think it shows the innate sense of respect for each other that
workers have, when given the proposition, will say, ``I would
rather work fewer hours and sacrifice for a bit rather than to
have you lay off or fire someone else.'' But, at the same time,
I also mentioned that there have been a number--and I hope it
has been equitable--of executives who have foregone their
salaries or not--you know, reduced it significantly in order to
demonstrate to the workers that they feel the same difficulty.
But let me bring up another point that kind of relates to
that. As a result of the consequences of the terrorist attacks,
grants will be available under the national emergency grants
authorized under the Workforce Investment Act. They will be
offered as an incentive or an initiative to assist displaced
workers. The funds will be used to provide a variety of
employment and training assistance, including income support
payments to individuals who are out of work but are ineligible
to receive unemployment benefits.
How do you anticipate that this kind of assistance could
be, should be, is being utilized in the District? Will your
organizations be available to promote the grants' existence and
assist workers with their applications? Anybody want to comment
on that?
Mr. Boardman. If I can field that very quickly,
Congresswoman, I'm pleased that you mentioned this program
because I think it is one brick in a continually built
building.
We are aware of that, and I would suggest that there are
probably several ways that are appropriate in the current
context, and again addressing both the needs of the worker, but
also anticipating some of the things that employers would like
to see out of that trend.
We, for example, think that it would be important, and we
are already ramping up to do some of the front-end process work
to do skilled maintenance or skill upgrade. And I'm thinking,
as an example, a cook who wants to go back and refresh their
saucemaking techniques, or something on that order.
The other thing that I think is equally important to
employers and certainly a desire on the part of the folks that
we represent, and that is training in English as a second
language, and also upgrade of general educational skills.
There are very rare opportunities--and this may be one of
them--when families have enough time out of a work life to
devote to further education, so we may have a valuable
opportunity here, as bad as things are. If folks aren't
working, they can certainly be getting a little bit of an
education.
Mrs. Morella. Is that program offered also to immigrants
who have the temporary protected status? Would they be eligible
for that?
Mr. Boardman. My understanding is that the English as a
second language as part of that program would be available to
those folks, and that is, as Josh notes, of particular
importance in the hospitality industry, as well as some of the
continuing education components.
Mrs. Morella. Yes. Very good.
Mr. Williams. Can I point out that it seems to me that
there is a predicate to that, and that is that the city must
apply for a national emergency grant [NEG]. It is my
understanding--and, Congresswoman Norton, you may correct me--
that the District of Columbia has not applied for an NEG grant,
Madam Chair, and does not contemplate applying for an NEG
grant.
Mrs. Morella. Do you know why? Have you had any reason why
they have not, do not plan to?
Mr. Williams. Our understanding is that the District
indicated that it has enough money already in the pipeline and
does not need the NEG grant, which is, of course----
Mrs. Morella. Very interesting.
Mr. Williams. It's one of those good news--you know, it's
good news if that is the case, and if it does not have the
money, then I just do not know where we'd go from there. But in
the District I'd say that they do not apply for--at least the
last indication to us, that we have had that discussion, that
it does not need an NEG.
Mrs. Morella. Is that what you've heard also, Mr. Boardman?
Mr. Boardman. I'm not as close. I'm more on the ground
level. We anticipate that at some point someone will come to
the realization that any money that we can get in to help
employers train and employees learn, we will be pursuing that.
Mrs. Morella. I would think so.
Mr. Boardman. So we're ramping up the process.
Mrs. Morella. I would think so. So what we will do then is
we will inquire of the Mayor and the Council about why they
have not availed themselves of it and what their plans are.
Mr. Boardman. You should also note, Madam Chair, that this
is something that I am working very close with my counterparts
in the Hotel Association to identify those exact issues which
employers feel are important so that we can target some of the
whatever amount of money is available to those critical areas
that will help people in their career paths.
Mr. Williams. And I would hope that we would recognize
again that--and I recognize the hospitality industry is a very,
very important sector, but the grants and training and stuff
are--it's an element that should be targeted all across the
board, and there would be a lot of industries outside of the
hospitality industry that are critical to the livelihood of the
District of Columbia that we should also be looking at--the
health care industry, the impact of the closing that D.C.
General has had upon the community, and other industry
hospitals which may be affected.
So I would hope that, as we talk about the economic
stimulus for the District of Columbia, we are looking not just
at the health care industry but all across the board.
Mrs. Morella. Thank you. I now recognize the ranking
member.
Ms. Norton. Well, I know the Chair wants to get to the
markup of the budget autonomy bill. Indeed, I want to say to
Mr. Williams that in your testimony you mentioned the
restrictions on the use of surplus. If this budget autonomy
bill is enacted, the District will be like Maryland and
Virginia--it can use its surplus. I mean, imagine the absurdity
of not being able to use your surplus at a time of recession
because you are treated as a Federal agency. Budget autonomy
would release us from that, and the Chair is going to lead the
markup of that shortly.
Also, I will raise with the Mayor, Mr. Williams, the notion
of the NEG grant. We are in for a long, hard time, and I can
understand how he might have said that earlier, or thought that
somehow we could get over, but after anthrax, I mean, the
writing is on the wall.
And I will also ask him to convene all elements, if for no
other reason because we know we don't have any answers right
off the top of our head. We need to inspire hope in our people
to believe that we can get together, and if enough of us get
together and put our heads together, some answers will come out
of this, but if we are all working in our own spheres without
good communication across these lines, then the answers will be
not as forthcoming as rapidly.
I do have a question that I need guidance on, as we work on
the stimulus package here in the Congress from the labor
representatives. Some of us have pressed very hard on COBRA. We
think adding to the number of people without health insurance,
given the failure to make progress on that in the first place,
is quite unthinkable.
But I need to know from you, particularly since there are
so many low-wage workers and even workers that are not low
wage, what it would take to get people to want to maintain
their health insurance even if we were able to get Federal
subsidy of COBRA.
For example, the Democrats have said that the subsidy
should be at least 75 percent of the cost of the premium. I'm
not sure what the Republican package has in it. But even at 75
percent of the cost of the premium, if the person isn't getting
a wage, is COBRA likely to--are people likely to keep up their
health insurance while they are unemployed? I mean, do you
think that----
Mr. Boardman. I think that's an excellent question,
Congresswoman, and I can speak from direct statistical data. We
have done over 1,200 intakes at our local union and have
queried people on this issue, and the bottom line is that
anything below 75 percent subsidy you can virtually guarantee
that people who are on unemployment, limited household cash-
flow, are not going to allocate money to health care, and that
is a fact, and that's what we have been told over and over
again in direct response to the question.
I would think that there were some other critical
downstream costs which one might anticipate in this debate, and
that is people are not going to be less sick, children are not
going to fall off bicycles and break arms fewer times simply
because the COBRA is not being subsidized. In the District or
in Prince George's County or in the surrounding communities, it
sort of puts the burden on public health systems who are
already under attack or under-funded.
To take that argument one step farther--and, again, we have
very close relationships with our health care providers and we
want them to be healthy--I would be prepared to argue--and I
hope you would, too--that the most efficient delivery system
for health care is in the current private sector context at the
present time, and that's not negating any national health care
argument. But in the context now, I would say that if a doctor
has my medical records, has a relationship with my family, it
is probably going to be less costly, from a public coffer point
of view, to have me continue to receive health care in that
environment rather than go over to the public sector where I
have no records, I'm entering a system which is grossly under-
staffed. I think it makes sense from both points of view. You
can look at it from the moral point of view, where it is the
right thing to do to take care of these families, but I think
from a public policy point of view and a fiscal point of view
it makes sense also because you are going to spend less money
taking care of those families in their current environment than
you will shifting them over to the public sector.
Ms. Norton. Thank you.
Could I ask Mr. Hanbury, you responded to the question of
the Chair that you did not think the Convention Center was in
jeopardy. I need you to elaborate on that about the security of
the bonds. You talked about rainy days. Are you saying to me
that if there were a long turndown, a year or two, since this
is paid for almost entirely from tax receipts from the hotel
and restaurant industry, that even though you all are down to
often nothing, that there has been built up such a huge rainy
day fund that we don't have to worry?
Mr. Hanbury. Madam, Louis Dalli is probably the best person
to answer that from the Convention Center Authority, but I do
know that they have an extremely large reservoir of resources
to draw upon in an economic downturn, and the bondholders were
assured early on that these resources would be put in place to
assure that, if there was a very dramatic economic downturn,
that the bonds would still be secure.
Mr. Dalli believes that there are adequate resources to
deal with this downturn and to deal with a very extended
downturn of the economy and still assure that the bondholders
would be secured.
Ms. Norton. Thank you. That's very comforting to hear.
Madam Chair, if I can ask one more question, Mr. Fuller
said something that I found very discomforting because there
was some ring of rationality in how people operate, and that is
that when people get used to coming to Baltimore and to Dulles
they then get used to going to the surrounding hotels. I'd like
to know whether you know, from your experience, whether or not
a new way of doing business like that sticks, or is the
attraction, the magnet of coming to the Nation's Capital, such
that you think people will revert to old habits? I mean, are
they going to get used to being out there where you don't have
to take all that traffic to come back into the District and
say, ``Well, we might give up some of the glamour of coming to
the District, but it's easier''? Or do you think we have
sufficient magnet effect to rearrange that habit as the
recession recedes?
Mr. Fuller. I think it's--this is a trend that has been
going on anyway as employers have moved to the suburbs or are
located in the suburbs. There is more reason to stay and
conduct business in the suburbs.
I think some of these temporary lost souls will find their
way back to the central city, and once they start flying in
through National then it is a logical location for them to come
to, so I think the biggest threat is the longer it takes to get
back to normal, the less likely it is to recapture these
individuals. But there's this threat that the industry needs to
work against, and quickly.
Ms. Norton. Thank you, Madam Chair.
Mrs. Morella. I want to thank all the panelists. I think
this has been a very productive coming together of these
stakeholders who are very much involved in the economic
situation in the District of Columbia. I hope we have pointed
out the need to work together, to come to work together on an
agreement of what needs to be done, to look into SBA, to
respond to us about what the needs are, to also look at the
national emergency grants, other promotional and marketing
things that can be done. I want to thank all of you.
Ms. Watson has said she would hold back any other
questions, and Mr. Platts, and so we may be sending some
questions to you and look forward to working with you as we go
along inch by inch, long range and short range, so I'm going to
adjourn the meeting and thank you.
But as I do that, I do want to just note for the record
staff who have been very much involved with this committee
hearing: Russell Smith, my staff director; Robert White;
Matthew Batt; Shalley Kim; Heea Vazirani-Fales; Jon Bouker;
Jean Gosa, and Cheryl Williams.
Our subcommittee is adjourned.
[Whereupon, at 12:24 p.m., the subcommittee proceeded to
other business.]
[Additional information submitted for the hearing record
follows:]
[GRAPHIC] [TIFF OMITTED] 82175.038
[GRAPHIC] [TIFF OMITTED] 82175.039
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