THE WHITE HOUSE

Office of the Press Secretary

                       REMARKS BY THE PRESIDENT
          IN EARTHQUAKE RECOVERY ANNOUNCEMENT TELEPHONE CALL

From The Oval Office

4:46 P.M. EDT

MAYOR RIORDAN: Mr. President, we'd like to thank you for the very quick response you've given to our letter of last Thursday, and the extraordinary effort that your A-plus team is still doing for our great city.

MAYOR ABDO: We also want to say how grateful we are for the people who have worked so hard together to find these solutions. And Santa Monica is particularly grateful for the quick and decisive response that you've made.

THE PRESIDENT: Well, I just want to say that it's been a privilege for all of us here in Washington to work with you to help get Southern California back on its feet again.

I visited Los Angeles a couple of days after the earthquake and saw that destruction and I was terribly moved by it. And now, in some ways, it's more moving to hear about all the progress that's been made in just six months. I think the people of Southern California have certainly showed a great deal of courage and resilience, and you have all shown strong leadership. And I very much appreciate that.

MAYOR RIORDAN: We appreciate the support, Mr. President, that you've shown since day one. In the months since the earthquake we've been able to develop a clearer picture of the damage to our city and focus our efforts on recovery. As you know, the most severe setback and the greatest needs are in the housing arena.

MAYOR ABDO: And in Santa Monica, the magnitude of this disaster was sweeping. There are approximately 3,000 people who were displaced. And the federal departments are critical to the recovery effort as we come together to do this.

THE PRESIDENT: What about the ghost towns in the areas, both in Los Angeles and Santa Monica? That's still a problem, isn't it?

SENATOR FEINSTEIN: Well, Mr. President, may I say something here?

THE PRESIDENT: Sure.

SENATOR FEINSTEIN: Oh, I think it was -- James Lee, was it a month ago we went to them, the ghost towns, with Richard Alercon?

THE PRESIDENT: I don't think he's on the phone.

SENATOR FEINSTEIN: Oh, he's not on the line. Richard, do you remember when it was?

THE PRESIDENT: I know you toured the areas.

SENATOR FEINSTEIN: We toured the area and we went to Silmar and Van Nuys -- in any event, we saw a number of areas where apartments were half-down or badly damaged; whole blocks. Some were condominiums where people had just walked away from their units, leaving maybe one owner. Gangs had moved in. Disruption had occurred. I think particularly in Richard Alercon's district this was very pronounced.

And I'm really very grateful to you, Mr. President, for moving so rapidly. And I know that this transfer of funds is in the manager's amendment on the bill that's coming up on the floor, and the money will be transferred from Transportation to HUD. And so I think this is just a major, major step forward.

THE PRESIDENT: Well, one of the things that we found out and that Henry Cisneros talked to me a lot about was that years after the natural disasters that struck the Bay Area in Northern California and in Southern Florida there are still these ghost towns and communities are still suffering. Now, it's more expensive to fix it than if we'd done it right away.

And so, I thought maybe what I would do is let Secretary Cisneros just talk a little bit about what he's been working with you, Senator Feinstein, Senator Boxer, and the mayors, and the other members of your delegation on.

SECRETARY CISNEROS: Mr. President, I've got to tell you Senator Feinstein held a hearing in Los Angeles that moved us all to act on this problem. And it was originally Mayor Riordan who identified about two weeks after the earthquake that this problem existed. The problem, basically, was that apartment owners strapped for resources before the earthquake occurred, after they had half of their units destroyed and no income coming in, really had no choice at all; they had no money to repair them and so they walked away.

The Mayor saw this coming and saw the potential of it as a financial problem because these are all small businesspeople with massive implications for the area economy. So he called our attention to it. Of course, I was able to meet with Mayor Abdo out there in those immediate weeks as well because the problem is a special problem in Santa Monica, where many of the units were rentcontrolled and people were going to be put out.

What we have done, Mr. President, is identify some $225 million, $200 million for Los Angeles, $25 million for Santa Monica, which is the program you know so well -- the Community Development Block Grant Program -- only this will be made available in direct loans to both apartment owners and condominium owners so that these ghost towns, as you describe them, Mr. President, can be brought back from the brink.

As they stand today, they are a major blight in communities, in neighborhoods, gang members and drug dealers are moving into them, and we've got to turn them back in order to save these neighborhoods.

So this is a major amount of funds that you've directed which will be made available in loans -- low-interest, long-term, first payment in five years in some cases, under an existing program in Los Angeles, so that folks can immediately have the resources to claim these buildings back and save these neighborhoods. And I want to just commend the Senator for her attention to it, the Mayor for identifying the problem originally, Mayor Abdo for the special dimensions of it in Santa Monica and, of course, Mr. President, you've given us direct instructions all the way to stay on top of this and act.

THE PRESIDENT: Thank you, Henry. I am really pleased with the idea that you came up with and I identify with the solution a lot, because it's the source of funds I'm familiar with and something I've used myself in my former life when I was a governor.

Today, I sent the formal request to Congress to provide $225 million in additional disaster assistance for the Los Angeles area, $200 million to Los Angeles, $25 million to Santa Monica as a down payment on our partnerships with the cities to solve this ghost town problem.

This goes beyond the typical federal disaster response, and it's possible, frankly, because we've been able to reallocate some other disaster funds. I eknow it doesn't meet the total need, and I know we'll have to have full cooperation and participation from local governments in the states as we go through this. But it is a very good beginning, and it gives you a chance to begin to get rid of this problem.

Mayor?

MAYOR RIORDAN: Thank you very much, Mr. President. I'd like to thank Secretary Cisneros for his vision and leadership and particularly Senator Feinstein, who is going to be the workhorse in getting this through Congress, and she's been a great help to Los Angeles ever since the earthquake.

The $200 million will be used to put up, hopefully, approximately 15,000 housing units in the so-called "ghost towns" that would not be able to get funding otherwise because of the type of problems that Secretary Cisneros has mentioned. This will give us a flexibility we need to direct the dollars where they're most needed.

MAYOR ABDO: Santa Monica has a loss of almost five percent of the housing stock in our city, and of that, approximately 90 percent was affordable to lower-income families. So of the 17,000 units that were damaged, many, many of them need this kind of help.

We don't have exactly ghost blocks, or ghost neighborhoods, but we do have ghost buildings in Santa Monica, some very large buildings that were heavily damaged. And we will use this money to provide residential earthquake repair and reconstruction loans with a heavy focus on multi-family buildings in --

THE PRESIDENT: Senator Feinstein?

SENATOR FEINSTEIN: Mr. President, I want to just say -- ask Judy one question. Judy, do you know how many units that $25 million will cover?

MAYOR ABDO: Well, we're not sure, because we need to find out what the degree of loss will be after the SBA loans have been given out. So we'll be trying to spread it as far as we can, both in purchasing some of the buildings that may have no way of being handled by the current owners, and in helping the current owners to repair them themselves. But it will be hard to tell until we know how much money they're each going to need.

SENATOR FEINSTEIN: Alright, good. Mr. President, you should know that Henry Cisneros has been a 10. He's been out in Los Angeles; he has worked so hard. And maybe it takes another mayor to see somebody that really has a touch and a feel for streets and people, but he really does. And on behalf of my state, and I know the mayor feels the same way, I'd just like to say thank you.

SECRETARY CISNEROS: Thank you very much, Senator.

SENATOR FEINSTEIN: And I'm going to miss a vote, so I'm going to have to sign off.

THE PRESIDENT: Thank you, Senator.

SENATOR FEINSTEIN: Thank you, Mr. President.

THE PRESIDENT: Well, I just wanted to make one final comment before we all sign off. Today, we are marking the six-month milestone in your recovery effort by releasing a report prepared for by our Office of Management and Budget that describes what's been done so far.

And I really want to thank again our FEMA Director James Lee Witt, Secretary Pena, Erskine Bowles, our SBA Administrator, and of course, Henry Cisneros for all their hard works.

So far we have identified $11.9 billion in federal assistance to meet California's need after the earthquake. That's the largest amount ever provided to an individual disaster. And with the assistance, obviously, of both of you -- Mayor Riordan, Mayor Abdo -- and the hard work of your senators and the California congressional delegation, Congress enacted that emergency relief package in record time.

Our report shows now that record numbers of applications for assistance have been received. FEMA received -- has accepted over 600,000 registrations, which is twice the previous all-time high for Hurricane Hugo. The SBA has accepted over 200,000 disaster loan applications to repair homes and businesses, which is more than for the Midwest floods, Hurricane Andrew, the Loma Prieta earthquake and Hurricane Hugo combined. ANd I know that Henry has signed over 12,600 leases providing homes to families who were displaced by the earthquake. So we've tried to be creative and flexible in our response.

Secretary Pena's now-famous cost plus time contracting proposal led to the opening of damaged freeways in record time, faster than even I believed it could be done -- and I'm an incurable optimist. And the SBA Administrator Erskine Bowles exercised his discretionary authority so that disaster loans went to larger numbers of major employers to retain communities. The Commerce Secretary developed new and innovative programs to help rebuild infrastructure and assist small businesses that don't otherwise qualify for federal assistance. So we've tried to be quick and flexible and helpful.

And I just want to say again, looking back on the last six months, I feel good about what all of us have done together; but I know the job is not finished. And I hope this announcement today will give you the leaders, as well as the citizens of Southern California, assurance that my personal pledge and our entire administration -- we're still committed over the long haul to make sure that we get over the Northridge earthquake and we make it, over the long run, a net plus for the people of Southern California because of the rebound.

MAYOR RIORDAN: Well, Mr. President, once again, you've proven your commitment to the people of Los Angeles. We greatly appreciate your support and rapid response to our requests. Your continued assistance will make a substantial difference for thousands of Angelenos who want to remain in this city -- the city they call home, the city we all love.

MAYOR ABDO: We in Santa Monica recognize that this program goes well beyond what the normal response to a disaster would be; and that it represents new thinking, not off-the-shelf kind of approaches. And particularly for Santa Monica's needs for multifamily housing, I just want to make everybody aware of how flexible Henry Cisneros has been in helping us to work through all of the problems that are different from some of the other areas that have been recovering from this disaster.

And I want to say that I don't think any of these innovative programs would have happened had it not been for the teamwork of President Clinton, Henry Cisneros, Dianne Feinstein, Barbara Boxer and those of us here in the local areas that were able to express our needs to you. And I just want to thank all of you for all the citizens of Santa Monica.

SECRETARY CISNEROS: Mr. President, I will -- this is Henry speaking. I'll be out in Los Angeles on Thursday. And it had been my intent to visit some of these sites to see firsthand and then visit with the HUD staff there to move this just as quickly as possible -- work with Gary Squires and Mayor Abdo with the folks in Santa Monica. So I look forward to seeing you.

If I don't get to see you because you have your schedules, I will be there and available to your people in trying to get this program implemented just as quickly as we can. So I'll be on site on Thursday.

MAYOR ABDO: Wonderful.

MAYOR RIORDAN: Thank you, Mr. President. Thank you, Mr. Secretary.

THE PRESIDENT: Thank you very much. Goodbye.

END5:01 P.M. EDT