The FEMA Special Community Disaster Loan issued to the city of Picayune just after Hurricane Katrina has officially been forgiven.

Just after the storm, many businesses and services within Picayune shut down, causing the city to lose millions in tax dollars and expend millions in operating expenses.

In response to these hurdles, FEMA offered loans to cities affected by the storm. Picayune received a loan of $3.2 million in 2006, which was used to supplement the lost revenue. When issued, the loan was to be paid back by the city.

City Clerk Amber Hinton said the city received a letter last week that states the entire balance of the special community disaster loan, in addition to the interest accrued, has been forgiven.

Forgiveness on the loan has been sought by the city for the past four years after they initially were forgiven of half of the loan, or $1.6 million, in 2010.

Last year in May changes to the law under the Consolidated and Further Continuing Appropriations Act of 2013 allowed the city to reapply and eventually have the entire balance of the loan forgiven. While the city was initially granted cancellation of only half of the total loan, upon submitting further information for review the agency later determined that the $3.2 million loan did not cover the estimated $12.2 million in cumulative operating deficits the city experienced in the years after Katrina, according to a letter from FEMA.

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

“If we would have had to pay that back it would have hurt the city. This is a terrific milestone for the taxpayers,” City Manager Jim Luke said.

Hinton said she and a number of other city employees worked with FEMA to collect the necessary documents to have this loan forgiven. The completed package was submitted on March 13; approval was issued on March 25.

Luke said in addition to Hinton’s hard work, this accomplishment is also due to Pinero and council members heading to Jackson and Washington DC to lobby for forgiveness of the loan.

“Everything in City Hall is a team effort, but I especially want to credit (Hinton),” Luke said.

Pinero said Board of Supervisors president Patrick Lee also attended the state and federal capital to have a similar loan taken out by the county forgiven.

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