a critical shortage of all types of affordable housing in this area. The housing vacancy for this area varies between 1 and 2 percent. This general shortage makes it more difficult for migrant farm workers and others to find adequate housing.

In January 1990, the Housing Subcommittee appointed the panel that I just mentioned to you to hold these types of field hearings in the earthquake-impacted areas, and to report to the subcommittee with any significant findings or recommendations that we may find based on the testimony that we are about to hear today. It is timely, ladies and gentlemen, that this ad hoc committee hold field hearings, particularly to assess the efforts of Federal agencies in delivering housing-related services in earthquake disasters, and determining methods to assess long-term housing needs of low and moderate income persons when temporary disaster assistance is provided. I believe that the experience here has shown that many of our agencies and many of the entities involved were not prepared to deal with this devastating issue. This hearing also gives us an opportunity to assess the coordination between local, State and Federal assistance agencies to lead disaster victims in this case.

So, I look forward to this testimony this morning; I look forward to hearing from the many witnesses. I am going to remind witnesses at this time that your entire statement will be put into the printed record. I would ask each of you, because of our long list of witnesses, confine your statement to 5 minutes; summarize it, as a matter of fact. That way, we can move expeditiously to hear from everybody today. We have added some people to the list and we hope that we can hear from everybody, but it will require your cooperation in limiting testimony to 5 minutes. Do not forget that your entire statement will be entered into the record, printed, and you will receive copies of the record once it is done.

As I mentioned to you earlier, I am joined by my colleague, who has taken a very important step in allowing this ad hoc committee to come here. He has lobbied the House of Representatives, especially the California delegation, at the time of the need felt by so many in this State. Mr. Leon Panetta is with me today; he is an articulate, effective leader in the House of Representatives, and Chairman of the Budget Committee. I now would like to turn the forum over to him for a statement. Leon.

[The prepared statement of Mr. Torres can be found in the appendix.]

STATEMENT OF HON. LEON PANETTA, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA

Mr. PANETTA. Thank you very much, Esteban. Thank you for coming here and holding these very important hearings in this district.

I would like to take the opportunity to in particular thank Esteban Torres for his consistent support for improved housing assistance. The earthquake did not affect his district and there was very little reason for him, in terms of the impact of natural disaster, to take the kind of leadership role that he did on this issue. But he did, because he cared about the impact that this disaster would have, particularly with regard to farm worker housing and for that

matter, all housing needs within this district. So for that reason, I want to express my personal thanks to you for the cooperation and support that you have given this community, and also for taking. the time to come hear to hold these very important hearings.

Together, we have introduced legislation in the House of Representatives, H.R. 3666, copies of which are available, to try to provide additional housing assistance to victims of disasters. It is my hope that this legislation will serve as a framework for making recommendations to the Housing Subcommittee for long-term housing assistance to areas that have been devastated by natural disasters. While emergency housing assistance is available to victims of natural disasters in varying degrees, I think that all of us recognize that there is a very serious shortfall of assistance available when it comes to rebuilding affordable housing and providing affordable housing in an area like this.

Prior to the earthquake, Esteban and, I think, members of the community all understand that this area, the area of Santa Cruz County, the area of San Benito, the areas that were particularly devastated by the emergency-we already had a serious housing problem in this area. We had a less than 1 percent vacancy rate with regard to people trying to find decent housing in this area. As a matter of fact, there were a number of efforts going on to try to address the housing problems in this community, which are serious; they were serious before the emergency and obviously were made that much more serious after the earthquake.

The epicenter of the earthquake is located about 4 miles north of Aptos, CA; that is the heart of this congressional district. And obviously, until you have taken the time to tour a little bit of downtown Watsonville, let me assure you that if you have the time to go to Santa Cruz and also to go to Hollister, you will see similar impacts in terms of the downtown area. The downtown area of Santa Cruz, particularly the Pacific Garden Mall, and the downtown area of Watsonville have virtually been destroyed. All you have to do is take a simple drive through each of those communities to understand the extent of the impact in terms of the downtown area. Every one of those businesses that have been destroyed represents the livelihood of a family and represents a very important contribution to the economy of this area. It will take years-it will take years before the life of Santa Cruz and Watsonville ever gets back to normal.

In addition to the businesses that were affected, we had tremendous impact, obviously, on the houses in this area because, as you pointed out, despite the fact that we had a serious vacancy problem in this area to begin with, we have now in addition lost 8 percent of our housing stock.

Another area that has been badly damaged that I would draw your attention to is the agricultural industry, which is also an important part of this community. Watsonville is the home of a large food processing operation; that industry was damaged. Hollister is the center of an agricultural area and that industry, as well, was damaged as a result of the earthquakes. The flower industry in this area is one of the major industries in terms of the production of flowers in the country; many nurseries here suffered serious damage as a result of that earthquake. In addition to that, obvious

ly, is the impact on farm workers in this area. Because we have a large agricultural industry, farm worker housing has become seriously affected as a result of the earthquake.

I want to draw your attention to all of those impacts because the problem that we sometimes have is that as earthquakes strike, we get a tremendous amount of attention and a tremendous amount of cooperation. But as the damage from that earthquake fades in the minds of both the press and the public, the communities are still left with having to pick up the pieces; that is the situation right now. Although we have been able to house people who were living in tents for a good period of time, people who were living in shelters-we have now found temporary housing for all of those individuals we still have a very serious problem in terms of providing affordable housing for people in this area.

That is the reason for the legislation that we have introduced. We desperately need to have additional MOD-REHAB funding targeted to natural disaster areas so people can begin the repair work on their housing and try to retain the housing as affordable. I have to share with you that one of the great fears we have in this area is that as landlords repair their houses, rents are going up. And as rents go up, we lose affordable housing in this area. So that has added to the very serious problem that we are already confronting: Landlords having to spend a great deal to repair the damage now are raising rents in this area. That is why we desperately need MOD-REHAB money; to try to keep that money available to landlords without the necessity of increasing rents.

We also need section 8 vouchers and certificates to help those displaced by the earthquake. We have about 101 people living in motels in this area right now as part of the emergency temporary housing. That program is going to come to an end within the next 15 to 30 days; we have got to find a place for people who are living in motels. And as the area begins to get back into the tourism business, that too is impacting because these motels want to go back to catering to the tourists who come to the area and not just providing housing for the people who live here. That is going to create a tremendous crunch in this area as well.

In addition, as I mentioned on farm worker housing, we have a particular problem here because the population of Watsonville does not allow it to qualify for farm home loan assistance and for farm worker housing under the various programs in agriculture. What this bill that we introduced does is allow for the Watsonville area to qualify for that kind of housing; it is absolutely essential because despite the fact that it does not meet the population needs, this place is still very much a rural community that depends on farm workers in order to be able to not only assist them and their families, but to assist the general economy of this area.

And finally, we need to have additional Community Development Block Grant funding. One of the things that we have been able to find is that CDBG money, because it does provide grants to the community, allows us to be able to restore our downtown areas and gives the community some grant money to apply to areas of need. And very frankly, I might indicate to you that in the budget that I will introduce to the committee when we return, I intend to provide increased funding for CDBG funding because I think that that

is essential to the country; I intend to provide additional funds for the Economic Development Agency because, very frankly, that is one of the agencies that has been very helpful to us in terms of trying to rebuild our downtown communities.

So again, I want to thank you, Esteban, for all of your assistance. I hope that you will continue the leadership that you have provided on this issue. Our greatest fear, very frankly, is that as the memory of the earthquake fades, the assistance will fade as well. And the important thing for us is keep the pressure on the various agencies that are involved here to continue to provide needed assistance. Without them, we cannot make it. And very frankly, the purpose of this hearing is to ensure that we continue to get that help.

Thank you.

[The prepared statement of Mr. Panetta can be found in the appendix.]

Chairman TORRES. Thank you, Representative Panetta, for a very important and very succinct opening statement. I would like to advise our audience that we may be joined later by other Members of our ad hoc committee.

Nancy Pelosi of San Francisco had indicated that she would be with us this morning; we hope to see her at a later point.

Representative David Dryer, a Republican colleague from Whittier, may be with us as well. He also has had long experience with these situations, Whittier having suffered a major earthquake in 1987 as well.

Now, I would like to introduce to you a number of staff persons who are very important in keeping this kind of hearing going and gathering all the available information and all of the logistics involved. I have behind me John Valencia, Anne Gallagly, and Anita Bedelas.

We would like to begin now with the reason why we are here, and that is to hear from our distinguished witnesses. I am going to call you forth in this order; I would hope that you can address the ad hoc committee in the same order. First is the Honorable Todd McFarren, the mayor of the city of Watsonville. If he is here, please come forward and join us. The mayor is not here.

All right. We have the Honorable Mardi Wormhoudt, the mayor of the city of Santa Cruz. The mayor is with us.

The Honorable Oscar Rios, council member and vice-mayor of the city of Watsonville. He is not here.

The Honorable Robley Levy, the chair of the County of Santa Cruz Board of Supervisors, Santa Cruz, CA. And we also have with us the Honorable Fred Keeley, who is the chair of the California Supervisors Association of California Earthquake Relief Legislative Task Force. Mr. Keeley.

As I stated to you earlier, ladies and gentlemen, we hope that you will summarize your statements; they will be entered, in their entirety, into the record and you will see that printed at a later point.

Mr. Panetta, perhaps, I suggest that we hear from the panels and then raise questions with them before they leave us.

Mr. PANETTA. That is fine.

Chairman TORRES. All right. We will begin, then, with Ms. Wormhoudt.

Ms. WORMHOUDT. Thank you, Congressman Torres. I very much. appreciate your concern about and interest in the damage and the difficulties that we are dealing with.

Chairman TORRES. I am just wondering if you could hold a minute. It appears that all the microphones are in the center of the room. Maybe we could have you sit in the center and after your testimony, we will play musical chairs. All right?

Mayor, please join us, there. We are playing some musical chairs right now; you will get your chance soon.

Ms. WORMHOUDT. Congressman, would you like to start with Mr. McFarren?

Chairman TORRES. You are there already, so let us start there; we will get him next. All right?

And if I may add, we were just joined by Representative Nancy Pelosi, representing San Francisco, our neighbor to the north. And of course, she is a Member of the House Banking, Urban Affairs and Finance Committee and a Member of this ad hoc committee. So, Nancy, it is wonderful to see you here. I would like, at this time, to ask you if you have an opening statement for the record that you care to make, or any statement to that effect before we begin with our witnesses.

MS. PELOSI. Thank you, Mr. Chairman. I do have a brief opening statement, and I will keep it even briefer because I know that we are very anxious to hear the testimony of our witnesses. And I know, when the mayor arrives, the mayor goes on.

But I do want to thank you very much for coming to northern California to follow up on unmet needs for victims of the disaster. In our area in San Francisco and as you know down here, while there was a tremendous rally to support those in need, here we are, some months after the earthquake and we still have some unmet needs. We must see to the needs of these people and make sure that in the future, when disaster strikes, we will not be months afterward still trying to fill in the blanks.

I am very grateful to you, Mr. Chairman, for your leadership on this issue and for coming here for that. I also cannot come to this area without saying how proud we all are of Leon Panetta. He brings great distinction and honor to the California delegation in Congress by his service there, especially now as Chair of the Budget Committee. I would not trust anyone more than Leon Panetta with establishing the national priorities for our country in our budget. It is a pleasure to be in Leon's district.

[Applause.]

Thank you, Mr. Chairman.

Chairman TORRES. Thank you, Nancy. Thank you for a very eloquent opening statement. And now at this time, if we could ask the audience to take seats and we will begin our testimony as we had agreed to here.

Ms. Wormhoudt.