U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2250 Mail: Stop SSOP, Washington, DC 20402–0001

82–175 PDF 2002

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

(II)

COMMITTEE ON GOVERNMENT REFORM

DAN BURTON, Indiana, Chairman

BENJAMIN A. GILMAN, New York

CONSTANCE A. MORELLA, Maryland

CHRISTOPHER SHAYS, Connecticut

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

STEPHEN HORN, California

JOHN L. MICA, Florida

THOMAS M. DAVIS, Virginia

MARK E. SOUDER, Indiana

STEVEN C. LATOURETTE, Ohio

BOB BARR, Georgia

DAN MILLER, Florida

DOUG OSE, California

RON LEWIS, Kentucky

JO ANN DAVIS, Virginia

TODD RUSSELL PLATTS, Pennsylvania

DAVE WELDON, Florida

CHRIS CANNON, Utah

ADAM H. PUTNAM, Florida

C.L. ‘‘BUTCH’’ OTTER, Idaho

EDWARD L. SCHROCK, Virginia

JOHN J. DUNCAN, JR., Tennessee

——— ———

HENRY A. WAXMAN, California

TOM LANTOS, California

MAJOR R. OWENS, New York

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

PATSY T. MINK, Hawaii

CAROLYN B. MALONEY, New York

ELEANOR HOLMES NORTON, Washington,

DC

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

ROD R. BLAGOJEVICH, Illinois

DANNY K. DAVIS, Illinois

JOHN F. TIERNEY, Massachusetts

JIM TURNER, Texas

THOMAS H. ALLEN, Maine

JANICE D. SCHAKOWSKY, Illinois

WM. LACY CLAY, Missouri

DIANE E. WATSON, California

STEPHEN F. LYNCH, Massachusetts

———

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

THOMAS M. DAVIS, Virginia,

——— ———

ELEANOR HOLMES NORTON, Washington,

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

(III)

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

(1)

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

2

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.

3

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:]

4

5

6

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

7

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 nonresident 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 imVerDate 11-MAY-2000 11:20 Oct 31, 2002 Jkt 000000 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 C:\DOCS\82175.TXT HGOVREF1 PsN: HGOVREF1
8

possible 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:]

9

10

11

12

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.

13

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.

14

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:]

15

16

17

18

19

20

21

22

23

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.

24

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.

25

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:]

26

27

28

29

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

30

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 micromanaging 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:]

31

32

33

34

35

36

37

38

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

39

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 coworkers. 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

40

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:]

41

42

43

44

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.

45

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:]

46

47

48

49

50

51

52

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

53

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 shortterm 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:]

54

55

56

57

58

59

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

60

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.

61

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

62

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

63

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 DisVerDate 11-MAY-2000 11:20 Oct 31, 2002 Jkt 000000 PO 00000 Frm 00067 Fmt 6633 Sfmt 6633 C:\DOCS\82175.TXT HGOVREF1 PsN: HGOVREF1
64

trict 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

65

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

66

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.

67

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.

68

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

69

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?’’

70

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

71

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

72

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 longterm 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

73

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.

74

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.

75

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

76

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.

77

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

78

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:]

79

80

Æ