[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]



 
     SMALL BUSINESS, BIG GAINS: HOW ECONOMIC RENEWAL CREATES SAFER 
                             NEIGHBORHOODS

=======================================================================

                             FIELD HEARING

                               before the

                      SUBCOMMITTEE ON EMPOWERMENT

                                 of the

                      COMMITTEE ON SMALL BUSINESS
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS

                             FIRST SESSION

                               __________

                      WASHINGTON, DC, MAY 11, 1999

                               __________

                           Serial No. 106-11

                               __________

         Printed for the use of the Committee on Small Business



                      U.S. GOVERNMENT PRINTING OFFICE
60-099                        WASHINGTON : 1999



                      COMMITTEE ON SMALL BUSINESS

                  JAMES M. TALENT, Missouri, Chairman
LARRY COMBEST, Texas                 NYDIA M. VELAZQUEZ, New York
JOEL HEFLEY, Colorado                JUANITA MILLENDER-McDONALD, 
DONALD A. MANZULLO, Illinois             California
ROSCOE G. BARTLETT, Maryland         DANNY K. DAVIS, Illinois
FRANK A. LoBIONDO, New Jersey        CAROLYN McCARTHY, New York
SUE W. KELLY, New York               BILL PASCRELL, New Jersey
STEVEN J. CHABOT, Ohio               RUBEN HINOJOSA, Texas
PHIL ENGLISH, Pennsylvania           DONNA M. CHRISTIAN-CHRISTENSEN, 
DAVID M. McINTOSH, Indiana               Virgin Islands
RICK HILL, Montana                   ROBERT A. BRADY, Pennsylvania
JOSEPH R. PITTS, Pennsylvania        TOM UDALL, New Mexico
MICHAEL P. FORBES, New York          DENNIS MOORE, Kansas
JOHN E. SWEENEY, New York            STEPHANIE TUBBS JONES, Ohio
PATRICK J. TOOMEY, Pennsylvania      CHARLES A. GONZALEZ, Texas
JIM DeMINT, South Carolina           DAVID D. PHELPS, Illinois
EDWARD PEASE, Indiana                GRACE F. NAPOLITANO, California
JOHN THUNE, South Dakota             BRIAN BAIRD, Washington
MARY BONO, California                JANICE SCHAKOWSKY, Illinois
                     Harry Katrichis, Chief Counsel
                  Michael Day, Minority Staff Director
                                 ------                                

                      Subcommittee on Empowerment

                JOSEPH R. PITTS, Pennsylvania, Chairman
PHIL ENGLISH, Pennsylvania           JUANITA MILLENDER-McDONALD, 
JIM DeMINT, South Carolina               California
FRANK A. LoBIONDO, New Jersey        DENNIS MOORE, Kansas
EDWARD PEASE, Indiana                STEPHANIE TUBBS JONES, Ohio
                                     TOM UDALL, New Mexico
               Dwayne Andrews, Professional Staff Member





                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on May 11, 1999.....................................     1

                               WITNESSES

Moore, Robert L., President & CEO, Development Corporation of 
  Columbia Heights...............................................     2
Mosley, Todd, Founder, Thumbs UP, Youth Enterprises..............     4
Watkins, Curtis, President, East Capitol Center for Change.......     5
Hopkins, Albert R., President & CEO, Anacostia Economic 
  Development Corporation........................................     7
Rosales, Celina Trevino, Executive Director, Latino Economic 
  Development Corporation........................................     9

                                APPENDIX

Opening statements:
    Pitts, Hon. Joseph R.........................................    27
Prepared statements:
    Moore, Robert L..............................................    31
    Mosley, Todd.................................................    33
    Watkins, Curtis..............................................    35
    Hopkins, Albert R............................................    38
    Rosales, Celina Trevino......................................    44


  HEARING ON SMALL BUSINESS, BIG GAINS: HOW ECONOMIC RENEWAL CREATES 
                          SAFER NEIGHBORHOODS

                              ----------                              


                         TUESDAY, MAY 11, 1999

                  House of Representatives,
                       Subcommittee on Empowerment,
                               Committee on Small Business,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10:30 a.m., at 
the Nehemiah Community Center, 2425 14th Street, NW, 
Washington, DC 20010, Hon. Joseph Pitts (Chairman of the 
Subcommittee) presiding.
    Chairman Pitts. Ladies and gentlemen, the time of 10:30 
having arrived, we will convene this public hearing of the 
Empowerment Subcommittee. I am Congressman Joe Pitts, from the 
16th Congressional District, Pennsylvania, and we will be 
joined, hopefully, shortly, by another member of the Committee.
    Thank you for joining the Subcommittee on Empowerment today 
to discuss the important issue of economic renewal and its 
effect on our Nation's communities. The site of today's hearing 
is a perfect example of the type of renewal that we wish to 
address.
    The Nehemiah Project arose from four vacant lots, due to 
the hard work and determination of the concerned citizens of 
this community, and I would like to take this opportunity to 
thank the members of the Nehemiah Community Cooperative for 
hosting this hearing.
    Today, the Subcommittee will explore the relationship 
between the revitalization of abandoned commercial strips and 
the increased sense of safety and higher quality of living in 
the surrounding community. Additionally, the Subcommittee will 
discuss the increased operating costs that small business 
owners face in areas with high crime rates.
    The issues of crime and safety are often on people's minds 
as they go through their day. This is especially true in 
neighborhoods where job opportunities are sparse and 
unemployment is high. Dilapidated and unused commercial strips 
contribute to the general sense of malaise and fear that one 
feels after walking by abandoned lot after abandoned lot. What 
is truly unfortunate in these situations is that business 
owners begin to believe that they cannot achieve economic 
certainty in these areas because of the state of disrepair. As 
members of our panel will tell us, this line of reasoning is 
counterproductive. Many areas in our Nation, especially in our 
inner cities, have quite unique business advantages. They are 
usually strategically located near public transportation and 
highway hubs. They usually have a high population density which 
translates into substantial purchasing power and they usually 
have a vast, untapped, labor pool.
    Once businesses decide to take root in underutilized 
commercial space, a sense of renewal takes hold of a community. 
As businesses are encouraged to move into a community, street 
cleaning initiatives and neighborhood watch programs tend to 
follow. During this cycle of renewal of hope and strengthening 
of the economic base, crime will start to decrease. The purpose 
of today's hearing is to learn how communities have been able 
to get this cycle started.
    While economic renewal can raise the spirit and sense of 
safety in a neighborhood, a high crime rate can have a 
detrimental effect on the business prospects of an area. 
Pervasive crime will often raise the costs of doing business in 
a neighborhood because of higher insurance rates and the costs 
of hiring extra security. Additionally, when a crime is 
committed against a business, it tends to weigh heavily on the 
mind of a business owner and may change his willingness to 
remain in an area. Even the perception of a high crime rate 
causes entrepreneurs to look for property elsewhere. This 
perpetuates a vicious cycle where businesses do not locate in a 
community because of this perception and residents of these 
areas are forced to spend their dollars in other communities.
    Today we will hear from real-life experts, no government 
employees or high-priced consultants, who will talk about the 
work that they have been doing to foster economic renewal in 
their communities. Todd Mosley, the Executive Director of 
Thumbs Up, will discuss his work with the youth mentoring 
program; Curtis Watkins, the founder and Director of the East 
Capitol Center for Change, will speak about the work he has 
done with at-risk youth in the East Capitol dwellings. Albert 
Hopkins, the President of the Anacostia Economic Development 
Corporation, will discuss his corporation's work renewing its 
community. Celina Trevino, the Executive Director of the Latino 
Economic Development Corporation, will testify about the 
changes that have been made in this community by the Nehemiah 
Project; and Robert Moore, the President of the Development 
Corporation of Columbia Heights, will discuss how the Nehemiah 
Project was able to rise from the ashes of the civil 
disturbances that occurred in 1968.
    I look forward to the enlightening testimony of our panel 
and would now like to turn to the distinguished--well, no other 
members have arrived yet, but we will let them speak when they 
come. We will turn to the first witness and our host today, 
Robert Moore, President of the Development Corporation of 
Columbia Heights.
    [Mr. Pitts' statement may be found in the appendix.]

     STATEMENT OF MR. ROBERT MOORE, PRESIDENT, DEVELOPMENT 
                CORPORATION OF COLUMBIA HEIGHTS

    Mr. Moore. Thank you, Mr. Chairman. It is, indeed, my 
pleasure to present testimony before the Subcommittee on 
Empowerment, the House Committee on Small Business, in the 
middle of Nehemiah Home ownership housing and retail 
development. The Nehemiah Project closely corresponds with the 
Subcommittee's interest in the economic renewal of 
neighborhoods, the relationship between abandoned commercial 
strips, and achieving a higher quality of life in the 
surrounding community.
    The 14th Street area, where we sit, was once a major 
commercial corridor extending for over 12 blocks. The corridor 
held some 308 nonresidential establishments, including 2 movie 
houses, 66 general merchandise, apparel, and furniture stores, 
along with 27 restaurants and entertainment venues. The 
commercial corridor and our excellent housing stock were the 
attractions to the neighborhood. The vibrant commercial 
corridor began to experience difficulties in the early 1960's 
as economically mobile households moved to the growing suburbs 
beyond Silver Spring, Maryland and into nearby Virginia, as 
farmland was developed for detached homes. Businesses began to 
follow income to the suburbs, leaving a weaker and unfitting 
commercial area relative to resident needs.
    It should be noted that Federal policies continued to 
decline in the 14th Street and other commercial corridors that 
served inner-city neighborhoods. Federal Housing 
Administration, FHA, insurance made readily available to 
support development in the suburbs, resulted in redlining in 
Columbia Heights. Transportation policies focused on funding 
for the Beltway and other highway projects, all designed to 
bring suburban commuters into and out of the city.
    The 14th Street commercial corridor became a focus of the 
civil disorders on April 4, 1968, following the assassination 
of Dr. Martin Luther King, Jr. Some 61 percent of the 
commercial properties, 275 buildings, were damaged, nearly half 
the total loss, according to the National Capital Planning 
Commission Report ``Civil Disturbances in Washington, D.C., A 
Preliminary Damage Report.'' Depopulation quickly followed the 
disorders and the Federal Government purchased and cleared 62 
acres of land for redevelopment. The thought seemed to be, if 
we clear it, they will come. They did not come. Without a 
commercial center, the neighborhood stagnated with no new 
investment. Crime and street drug sales became all too common 
to the corridor, and all other social indicators decreased 
dramatically.
    The government's response was building over 3,400 units of 
assisted rental housing. While the housing for lower income 
households was needed, the intervention was one-dimensional. 
There were no programs for home ownership, or efforts to 
replace retail development lost during the disorders. The 
impact of the neighborhood urban renewal program was to 
decrease the home ownership rate in Columbia Heights to 20 
percent of the housing units. In effect, Columbia Heights 
became a temporary stopover, when the real need for building 
community was more stakeholders.
    It took almost 30 years for the first new ownership housing 
and a retail center to be. Through the aggressive work of nine 
non-profit organizations and the investment by nine private 
lenders, an insurance company, several philanthropic entities, 
and the District of Columbia Department of Housing and 
Community Development, a new front door to the neighborhood was 
developed.
    We now have some of the basic commercial services needed to 
attract new homeowners, to in-fill vacant houses, and to become 
real stakeholders in a better future for the neighborhood. The 
issues of crime and violence remain concerns. We have made some 
small inroads to reducing crime, but much more remains to be 
done. Some 31 years after the disorders, we need more help than 
ever. That assistance must be targeted to increasing small 
business development and simultaneously creating jobs. These 
are the keys to reducing crime and violence.
    Thank you, Mr. Chairman.
    [Mr. Moore's statement may be found in the appendix.]
    Chairman Pitts. Thank you, Mr. Moore, for your testimony.
    We will hear the testimony of all the witnesses before 
questions. We will now hear from Todd Mosley, Executive 
Director of Thumbs Up Youth Enterprises.

 STATEMENT OF MR. TODD MOSLEY, EXECUTIVE DIRECTOR, THUMBS UP, 
                       YOUTH ENTERPRISES

    Mr. Mosley. Good morning and thank you, Chairman Pitts, 
staff, community, and guests. My name is Todd Mosley and I work 
with some amazing young people here in Washington, D.C. My 
youth group, Thumbs Up, Youth Enterprises, provides an 
economical alternative to the drug trade. The youth and I have 
built a strong business that currently employs about 15 youth 
part-time. Thumbs Up has generated more than $90,000 in youth 
wages in four years. I have seen the dependence on the drug 
trade decrease in visible and substantial ways due to the 
efforts of local policing activities, engaged neighbors and 
parents, and the economic impact of the $90,000 Thumbs Up has 
placed into the hands of local youth in the form of wages.
    Some say money is the root of all evil. In my neighborhood, 
the lack of money is the root of evil. The instinctual desires 
and economic necessities of kids wanting to work is as true 
today, if not more, than it was when most of us were busing 
tables, mowing yards, or working at the local shopping mall. 
D.C. youth live in a local economy that is not generating 
enough part-time jobs. These same youths are more often than 
not, raised by single mothers, like I was, who can barely make 
ends meet. A weekly allowance of $20 or $40 can become 
economically stressful for single mothers and can become 
practically impossible if she has more than one child.
    For many D.C. youth, the reality is, you can make money 
either one of two ways. You can work at McDonalds or you can 
sell drugs. There is very little in the middle. We must grow 
this middle area.
    Profound change will take time. Short-term results are 
possible. Bad habits must be broken. Jobs must be created. 
Wages must be earned. Savings must be accumulated.
    What I am proposing is intended to interrupt the cycle of 
poverty that dominates so many D.C. neighborhoods. In D.C. 
neighborhood economies, I see critical-mass changes as the only 
honorable and genuine goal. Anything less is a Band-Aid.
    I propose starting with about one thousand D.C. youth, 
between the ages of 14 and 21--and at less than a $3 million 
cost per year to the Federal Government and probably close to 
$2 million a year--provide area business owners with a 100 
percent youth-investment tax credit for hiring local teenagers, 
part-time. A youth-investment tax credit creates jobs and 
opportunities where none have previously existed. Home-based 
businesses, one-and two-person enterprises, and contractors of 
all types could benefit from an apprentice. Literally hundreds 
of jobs could be created.
    A youth-investment tax credit rewards excellence because 
young people would compete with other young people to acquire 
and keep the apprenticeship positions, which include additional 
benefits and conditions. For example, a local grocer may have 
eight young people working, but only three are counted as 
apprentices.
    A youth-investment tax credit rewards commitment and 
relationship development because employers can only choose one 
youth per apprentice slot per year. The incentive is to commit 
and to focus on strong partnerships between local youths and 
local business owners. Local youth can even choose where they 
would like to work. They can seek out preferred locations, 
preferred employers, and then approach the business owner with 
the 100 percent tax credit opportunity. Self-determination by 
youth, again, is a component. The capital invested by the 
business owner is emotional and professional, not financial.
    A youth-investment tax credit increases the tax base, 
expands neighborhood cash flow, and expands small businesses, 
by placing $3 million into the hands of local youth in the form 
of wages; provides $3 million in tax credit for local 
businesses; creates new jobs, adds new taxpayers to the rolls, 
and expands D.C.'s tax base from the inside out, not the often 
discussed, outside in.
    Another important component of neighborhood economic growth 
is savings accumulation and investment. As we get into the 
discussion in a few minutes, hopefully, we can look at creative 
ways to attract youth to the habits of saving and investing 
their earnings.
    Thank you for the opportunity to let me testify before you 
today.
    [Mr. Mosley's statement may be found in the appendix.]
    Chairman Pitts. The Chair thanks you, and notes that the 
gentleman from South Carolina, Congressman DeMint, has joined 
us.
    And for those of you standing in the rear, there are seats 
available upstairs if you want to sit down. There are plenty of 
seats up there.
    We will go now to Mr. Curtis Watkins, Director of the East 
Capitol Center for Change.

STATEMENT OF MR. CURTIS WATKINS, DIRECTOR, EAST CAPITOL CENTER 
                           FOR CHANGE

    Mr. Watkins. Good morning, Mr. Chairman and members of the 
Subcommittee and guests, and my fellow panel. I am pleased to 
come to share with you today about my experiences as President 
of the East Capitol Center for Change, a non-profit 
organization that serves the youth and adult residents of the 
577 unit East Capitol Public Housing Development, the largest 
in the District of Columbia, being a former resident of this 
same community and understanding God's purpose for me.
    The center was established in 1996 as an all-volunteer 
organization, to teach, guide and support residents of this 
low-income neighborhood, so that they can develop productive, 
successful, spiritual-centered lifestyles--empowering them to 
make a positive difference in their own community and help 
others to do the same. Since its inception, the center has 
worked closely with the grassroots leadership of the 
neighborhood, the East Capitol Resident Council. Together, we 
have worked to provide value-based guidance, job training, 
preparation for entrepreneurship, educational programs, and 
employment opportunities for the youth and their parents. Those 
who are assisted through the services of the center are 
encouraged to give back to the neighborhood.
    I have learned much through my work with the East Capitol 
Center for Change. I have learned that within our Nation's most 
disadvantaged communities lies a wealth of creativity, 
determination, and practical wisdom. I have learned that those 
that may have been written off by society pose remarkable 
talents, a desire to succeed, and a sense of pride in, and a 
commitment to their neighborhood. And I have learned that, in 
reaching and helping our young people, we should aim high. It 
is not enough to tell them that they should not get involved 
with drugs or drop out of school. Showing them what they can do 
is just as important; sometimes, more important than telling 
them they should not do that. I must listen to them. We must 
spark their dreams and we must do all we can to equip them to 
reach their goals.
    The young people who come to the center each day are not 
simply at-risk youth. They are leaders of tomorrow who are in 
need of nurturing and skill development in order to reach their 
full potential. They have eagerly responded to the projects and 
activities that the center has developed to provide this 
guidance and training.
    Two years ago, we launched a stock investment club. In this 
club, the youth were given certain amounts of Monopoly money, 
and they then experimented as teams, making stock investments 
based on information they received from the daily market 
reports. At the end of the six-month period, prizes were given 
to the teams with the highest profit records. It is important 
to raise the sight of our young people, exposing them to the 
corporate investment world and teaching them how to build 
wealth by investing in the future. In addition, we have 
assisted with hands-on experience and entrepreneurship through 
a number of micro-enterprises, including a catering business 
and a tee shirt printing company.
    The parents of these kids also have unheralded skills in 
financial management. Many of them have been able to maintain a 
household, providing food, clothing, and shelter for their 
families with the limited income of public assistance. Others 
have successfully managed their expenses with only a minimum 
wage job. It is important to recognize and build on the skills 
of adults as well, and our youth programs provide many 
opportunities to get parents involved in the center activities.
    The East Capitol Center for Change mentoring programs are 
designed to support and uplift, never to replace the role of 
the parents. Youth are encouraged and rewarded for 
incorporating their parents in the center's activities. I am 
going to go further down in my testimony.
    As young people and their families have had an opportunity 
for training, technical assistance and basic preparation to 
enter the arena of employment and entrepreneurship, a new sense 
of cohesiveness, pride, and security has emerged in the 
community.
    I believe the following steps can be taken in the East 
Capitol Community and other low-income neighborhoods, to 
promote the self-sufficiency and success of the residents:
    First, there must be a change in the perception of the 
capabilities of these neighborhoods and their residents, which 
have often been considered as lost causes.
    Young people should be exposed to business development 
skills from the first grade through college.
    Youths should be taught investment principles in the 
process of their education.
    Tax incentives should be given the community businesses 
that make commitments to provide four years of business skill 
development for youths.
    Tax incentives should be given to provide for associations 
and corporations to develop in-house business development 
training and internship programs for five years for low-income 
individuals and youths.
    An easier process should be created for community business 
entrepreneurs to register and comply with licensing 
requirements.
    Community residents should have input regarding the 
programs that are designed for their neighborhoods, to explain 
what works and what has value to them.
    Tragically, our Nation spends millions of dollars to 
incarcerate individuals with hopes of changing their lives and 
behaviors. Investment on the front end is much more effective. 
Young people should be introduced to a positive vision of 
business development in their early development years, through 
the community, their schools, and their homes. This vision 
would be more powerful than a simple job approach in 
encouraging youths to become involved in productive, positive 
endeavors and to avoid the lures and the destructive behavior. 
The safety and the security of the neighborhoods are improved 
as residents feel hope for the future and understand, in 
practical terms, how progress is possible.
    Before I close, I must thank God for allowing me the 
opportunity to work with the East Capitol Resident Council 
President, Mrs. Evelyn Brown, the National Center for 
Neighborhood Enterprises staff, and particularly, Bob Woodson, 
and Aaron Rhones and the East Capitol residents, who have been 
a major part of the East Capitol Center for Change's success so 
far.
    [Mr. Watkins' statement may be found in the appendix.]
    Chairman Pitts. Thank you, Mr. Watkins, for your testimony. 
It is interesting that you mentioned Bob Woodson and the 
National Center for Neighborhood Enterprises. The Empowerment 
Subcommittee consults with Bob Woodson on a variety of issues. 
I co-chair a group, a bicameral group in Congress, called the 
Renewal Alliance. In fact, the Executive Director of the group, 
Robin McDonald, is here; wave your hand Robin.
    We will turn now to Mr. Albert R. Hopkins, President and 
CEO of Anacostia Economic Development Corporation, for his 
testimony.

   STATEMENT OF MR. ALBERT HOPKINS, JR., PRESIDENT AND CEO, 
           ANACOSTIA ECONOMIC DEVELOPMENT CORPORATION

    Mr. Hopkins. Good morning, Mr. Chairperson and members of 
the Subcommittee on Empowerment of the House Committee on Small 
Business. I am Albert R. Hopkins, Jr., President and CEO of the 
Anacostia Economic Development Corporation, a neighborhood-
based community development corporation, organized to help 
address the overall economic development needs of Anacostia/Far 
Southeast, Washington.
    Anacostia Economic Development Corporation (AEDC) has over 
the past two years, witnessed the increased sense of community 
pride which occurs when blighted neighborhoods are converted to 
striving neighborhood commercial centers or corridors. Safeway, 
Inc. and AEDC developed a 96,500 square foot shopping center on 
an abandoned Sears Department Store site in the Anacostia 
Hillcrest section of Washington, D.C. in 1997. Anacostia is a 
low-income community with a crime rate reported by police 
records of over 8,000 incidents per year, and an unemployment 
rate of 15 percent over the Nation's average.
    In December of 1997, the Good Hope Marketplace opened, 
anchored by a 55,000-square-foot Safeway superstore, and 41,500 
square feet of 15 smaller businesses, including a United States 
Post Office, two banks and a police substation.
    The Good Hope Marketplace has increased tax revenue for the 
District and improved access to goods and services for 
Anacostia/Far Southeast residents. Eighty-two cents of every 
dollar is spent on retail goods; over $150 million in annual 
sales was being spent in the adjoining suburbs. The Marketplace 
has captured a portion of those dollars, thereby allowing AEDC 
to use the profits to reinvest in new neighborhood projects.
    The Marketplace has created 185 new jobs for local 
residents and reduced crime in the area by 46 percent. This 
striking turnaround serves as a catalyst for changing the 
overall dynamics of the area. The appearance of a well-
maintained, modern shopping center helps in rehabilitating the 
negative attitudes that permeate the community.
    This success serves as an example of the benefits that a 
commercial shopping center can bring to a community and to the 
participating businesses. The Safeway superstore, located at 
the Good Hope Marketplace, is one of the most profitable stores 
in the District of Columbia metropolitan area. The 
effectiveness of such a project is also reflected in the life 
of one local business owner, Mr. Calvin Johnson. Mr. Johnson 
owns and operates an Athlete's Foot store in the Good Hope 
Marketplace. Mr. Johnson grew up in the Anacostia community and 
opened its first Athlete's Foot store a few miles away in a 
smaller Anacostia commercial strip development three years ago. 
Due to the success of that store, he was able to open another 
store in the Marketplace one year later. Mr. Johnson is now 
negotiating to rent an adjoining store in the Marketplace where 
he will open another footwear franchise. His success 
illustrates the positive impact a successful commercial 
development can have on just one individual's life, not to 
mention the impact on the staff of young men whom Mr. Johnson 
hires from the community. Their lives will also be impacted in 
a very positive way, by not only having a job, but by having 
Mr. Johnson as a role model to emulate in the future.
    With respect to the costs experienced by retail merchants 
who operate in blighted deteriorating neighborhood commercial 
corridors in underserved areas, it is well documented that 
those businesses, in comparison with businesses in safer areas, 
will pay higher insurance premiums, if they are fortunate 
enough to be offered a policy, experience rapid turnover of 
employees, and denied business loans from financial 
institutions. In addition, such basic services as municipal 
street cleaning and regular police patrols will be much less 
than that experienced by merchants who operate in ``better'' 
neighborhoods.
    It would seem to me to be quite apparent that if the 
underserved areas had better public safety services, regular 
trash and street maintenance services, access to insurance and 
loans, then the cause-and-effect cycle would be broken. 
Community residents would have the opportunity to come out from 
their shelters and participate in normal activities, such as 
shopping in their neighborhood stores, providing facelifts to 
abandoned buildings, and becoming active in grassroots efforts 
to restore their community. The practice of redlining by 
financial institutions and insurance companies, as well as the 
lack of normal public services, conspire to ensure that 
underserved neglected areas remain that way.
    In conclusion, as a President and CEO of a community 
development corporation for over 20 years, it is my expert 
opinion that commercial development in the underserved 
community, and the provision of basic public services and 
access to financial assistance are essential components to 
developing and maintaining economic growth. The vision of clean 
and safe community shopping centers and neighborhood commercial 
corridors facilitates in maintaining and increasing moderate-
income residents, which raises an area's tax base, thereby, 
benefiting the entire community. There are no losers when more 
revenue flows into a community.
    Thank you for allowing me the opportunity to present this 
testimony.
    [Mr. Hopkins' statement may be found in the appendix.]
    Chairman Pitts. Thank you, Mr. Hopkins. I am sure that we 
will have a lot of questions for you. The last witness is 
Celina Trevino, Executive Director of the Latino Economic 
Development Corporation.

 STATEMENT OF MS. CELINA TREVINO ROSALES, EXECUTIVE DIRECTOR, 
               LATINO ECONOMIC DEVELOPMENT CORP.

    Ms. Rosales. Yes. Thank you. Good morning, my name is 
Celina Trevino Rosales. I am Executive Director of the Latino 
Economic Development Corporation, LEDC. We are a private non-
profit organization which serves the District of Columbia's 
multi-cultural communities of Adams Morgan and Mount Pleasant.
    I thank you for the opportunity to speak about the subject 
of economic renewal. This is a much-talked-about, but more 
importantly, acted-upon phrase in our communities. Commercial 
corridor revitalization, as we refer to this movement in our 
community, has manifested itself in multi-level approaches to 
community development.
    LEDC has had laudable success in its conceived micro to 
macro methodology to individual, cluster and community 
development, which have helped to bolster these two 
communities' revitalization efforts and transform their 
economic fate.
    LEDC works at a grassroots level of business development. 
Since our initial efforts in Adams Morgan and Mount Pleasant 
almost two years ago, the cynicism and apathy have been altered 
to empowerment and a defined plan for continued improvements to 
our community over the long term.
    Entrepreneurial spirit is at the core of all our commercial 
corridor revitalization activities. We have caught a wave of 
small business devotion in our communities which has uplifted 
the merchants' commitment to the economy and their ability to 
make their own economic alternatives work.
    The merchants' and residents' concerns and complaints 
regarding primarily, cleanliness and safety were not being 
addressed quickly and as permanently as desired. These urban, 
multi-ethnic, multi-class, and multi-cultural neighborhoods 
required a comprehensive work strategy and simultaneous points 
of action to gain resolution.
    So much had been promised to these communities from 
government and non-government entities alike. A new self-
reliant, community-based approach is needed. LEDC's development 
strategy has been to use the existing independent essence to 
make the merchants and surrounding resources be their own 
system of action for commercial corridor revitalization. Adams 
Morgan and Mount Pleasant, comprising 340 businesses, are 
unique in that over 90 percent of the commerce on the street 
are from independent, small businesses with no more than five 
employees at any store. Despite the significant small presence, 
there are no huge franchises such as the Gap or Wal-Mart that 
reside in our community. The small businesses provide well for 
these urban neighborhoods' everyday and entertainment needs.
    These small businesses are vested in the community 
independently and have learned that, as a united force, they 
can now positively drive the economic base of their corridors. 
These merchants now seek direction and collaboration 
opportunities.
    Creative resource pooling and implementation of a voluntary 
business improvement district have yielded the collaborative 
results ranging from small project undertakings, such as 
contracting with a non-profit organization, Ready, Willing and 
Able, to supplement cleanup along their commercial corridors, 
banner design and installation, the purchase of new trash cans, 
refurbishment of lamp posts, anti-panhandling campaigns, to 
larger undertakings such as facade improvements for 125 of 250 
storefronts in both communities, creation of a master urban 
design plan for both communities, serving as blueprints for 
long-term improvements, as well as implementation of a formal 
Neighborhood Business Improvement District. Forty thousand 
dollars of out-of-pocket money from the merchants, has been 
invested in the community, on a voluntary basis.
    One of the more evident clues that our revitalization 
efforts are taking hold in the community is that the recent 
design activity of 52 storefronts in Mount Pleasant, beginning 
construction this June. Mount Pleasant, eight years ago the 
site of civil unrest and riotous activity, is now a more 
tranquil and confident community. The more recent round of 
facade improvement designs for this once rough neighborhood 
includes less intrusive safety measures for the storefronts. 
Merchants and residents alike are now enjoying the more 
prideful benefits of their two-year labor and the true lesson 
of community building.
    LEDC's purpose is to build foundations and promote 
sustainability; be it for the individual, cluster, or for an 
entire community. We work hands-on, knee deep, and 
wholeheartedly with our merchants and target communities with 
expansive results which have provided systems for advancement 
on our commercial corridors. The infrastructure now established 
provides a venue to seek out useful partners and develop 
productive vehicles for communication and activism. Small 
business development in our communities is taken seriously and 
cherished. Revitalization and the costs and energy that it 
entails are seen as a part of conducting responsible business 
on our commercial corridors.
    It does take an entire community to influence economic 
change.
    Thank you.
    [Ms. Rosales' statement may be found in the appendix.]
    Chairman Pitts. Thank you, Ms. Rosales. We will now pose 
some questions to the panel and if it is okay with you, Jim, 
I'll take five minutes and then we will alternate.
    First of all, I noticed that a community bank has opened 
here in the Nehemiah retail center and I am sure that it is 
quite advantageous to the community. I am particularly 
interested in your initial financing for the Nehemiah Center. 
Was the funding for the project mostly in the form of Federal 
assistance or private grants; and more specifically, was it 
difficult to secure lenders for the project?
    Mr. Moore. Thank you very much, Mr. Chairman. The retail 
center is primarily private financing by bank financing; at 
that time, Nation's Bank, now Bank of America, was the 
predominant lender and they provided almost $3 million in loan 
funds. We did have the urban renewal program that sold us the 
land at a substantial discount and provided some dollars to 
enable small businesses who were not able to pay the top rent 
to have a five-year wrap-up in the rent, so that after five 
years, they were paying the full rent that everybody else was 
paying. So that, primarily, we had some grants from a 
foundation to help us do the design work for all of the 
project, and we had some grant money from the community 
development. But, 80 percent of the financing was private bank 
lending.
    Chairman Pitts. Since 1994, when the retail center was 
completed, has there been much of a problem with crimes against 
the businesses that hold the rental space here in the Center?
    Mr. Moore. Well, as far as I know, we only had one 
incidence of a robbery and that was the second month that the 
Center was open. Since that time, there has not been a robbery, 
so we do not have a serious crime problem. We do have--and I 
guess it would tie in with my other comment--we talk about 
young people who have nothing much to do, who sometimes hang 
out in the Center. And if we did have some more jobs and 
opportunities for them to be constructively engaged, I think we 
can solve that problem. But, overall, the Center has had a 
dramatic effect on reducing crime and has not had a crime 
problem inherent to this location.
    Chairman Pitts. Are there any special precautions taken to 
provide security for the Center?
    Mr. Moore. No, there is no special processes. Pretty much, 
a lot of the businesses are very community sensitive. We have a 
convenience store that does not have a bullet-proof glass and 
that kind of activity in it. A number of the businesses know 
people. Big Wash, which is a neighborhood Laundromat, is owned 
by people who live in the neighborhood. Some of them may well 
be here in the meeting today. And being community-friendly, 
having employment opportunities, working with people in the 
neighborhood, they have not experienced any serious problems, 
although the lenders were very sensitive to that issue, that 
they may be making an investment in an area that would have 
problems, that has not been true.
    Chairman Pitts. Mr. Mosley, your testimony referred to the 
fact that Thumbs Up has built a small business that employs 15 
youth part-time. Could you please elaborate on the structure of 
this business? How have you been able to keep it operating?
    Mr. Mosley. The District of Columbia had, during the 
financial crisis, a difficult time maintaining its curbside 
recycling program. And so the major enterprise--we have a 
couple--the major enterprise that took us over the $45,000 mark 
was our recycling drop-off locations. But, I looked into the 
Congressional Record and know that you used to own a 
landscaping service, and you, as well as I, know that 14-, 16-, 
18-year-old young people are amazing at working at landscaping 
companies. We contracted with the Latino Economic Development 
Corporation, a $16,000 contract to develop and maintain the 
tree boxes on Columbia Road. We have done hundreds of tree 
boxes. We have landscaped dozens of front yards and back yards, 
and we also have flier distribution, snow removal, leaf 
removal, stuffing envelopes, and all those various enterprises, 
together, have generated over $90,000 directly into youth 
wages. That is not accounting for the administrative--which is 
voluntary at this point--with office space at the Latino 
Economic Development Corporation and the local Advisory 
Neighborhood Commission, which is a locally-elected body. So we 
have a lot of community partners that allow us to generate 
that.
    Chairman Pitts. Now, in your testimony you mentioned one 
important aspect of attaining economic prosperity is savings 
accumulation, and I would like to know, what is your experience 
with that? Why do you believe it is so important?
    Mr. Mosley. Well, it is extremely difficult for anyone to 
save, including the people in this room, and, especially, 
teenagers. But the individual-development accounts, there have 
been some pilot programs around the country. I know in 
Indianapolis, they have a very generous 1-to-10 match.
    So to reflect what the gentleman to my left said about 
creating wealth and creating a savings component to the 
development of young people, that if there were an individual-
development account, where money would be matched, 1 to 3, or 1 
to 5, and those funds and those savings could be used for 
educational purposes, home ownership, and small business and 
enterprise development. And I think that it would be with a 100 
percent tax incentive for local businesses. Let us say Katiri 
Ellison, who is the Chair of our board, who is the Entrepreneur 
of the Year 1998, she does not necessarily employ anyone. But 
if she knows that she gets a 100 percent tax break for hiring a 
young person, that creates a job. It is an emotional investment 
for her, and not a financial investment for her. If that young 
person could match 3 to 1, they will invest their savings. If 
they put in $5 dollars, they know they get $15 on the back end 
and that could be used for small business and enterprise 
development. There may be a point that Katiri would like to 
expand and the young person invests in the three new sewing 
machines. So in effect, they have become a partner and not just 
an employee. So it creates wealth; it creates investment; it 
supports small business; it supports the young people, and it 
increases cash flow in our inner-city neighborhoods.
    The $90,000 that Thumbs Up has been able to generate and 
place in the hands of young people has hit our streets. It has 
not gone out to the suburbs, like most of the wage creation 
that exists in Washington. We all know, the Metro system, 16th 
Street, 15th Street, many of the major transportation corridors 
in our city, have been built and do usher in people from the 
suburbs and usher them out at 5 o'clock, taking all of that 
wage creation, taking all of that tax revenue, which is another 
totally different issue. Money does not stay inside the economy 
and flip. We need to create taxpayers from within our city and 
not just market on bringing them into our city.
    Chairman Pitts. My time is up. I will continue in the next 
round. I'll now turn the questioning over to the gentleman from 
South Carolina, Mr. DeMint.
    Those of you standing, if you came in late, there are seats 
upstairs if you desire to sit.
    Mr. DeMint.
    Mr. DeMint. Thank you all for being here. One of the things 
we would like to do is to replicate your success all over the 
country. One of the things I would like to find out today is, 
more specifically, what you think the Federal role is--being a 
catalyst or facilitator. Maybe if you would each just take a 
few minutes to--and some of you have already referenced this--
discuss what role the Federal Government has played in what you 
have done so far; what role should it play, and what are your 
suggestions on how we could improve the role of the Federal 
Government? I know it is kind of a three-part question, but, 
Mr. Mosley, we will just start with you, and just a quick 
comment, not a book at this point, and I will come back and ask 
questions.
    Mr. Mosley. The Federal Government has played no role so 
far in our success. The community and the market and the 
desired services have played the role. I believe that 
understanding that young people are the predominant cause of 
crime and violent crime, of what we call blue collar crime, not 
necessarily white collar crime, and the basic reason for that 
crime, is economic access or access to an income. That basic, 
fundamental, number one cause of violence can be addressed in a 
substantial way in a critical-mass form, and not in a Band-Aid 
approach. That would help violence and crime in the inner city, 
and economic progress of the inner city, and investment in the 
inner city, and the health of the economies of the inner city. 
So creating those habits, by creating a youth-investment tax 
credit, which helps everybody, as we have gone through before, 
and a 100 percent, making it simple--not an 80 percent; not 
percentages, but a straight-up Xeroxed W-2 form and attach it 
to your tax application and tax filings, that would help 
tremendously.
    Mr. DeMint. Okay, good. Mr. Watkins.
    Mr. Watkins. Thank you, Congressman DeMint. Some of the 
things I can see the government playing a role is, basically, 
from the start, increasing your comfort zone in relationship to 
the way you perceive the youth and the things that create 
violence. This is a good start right here.
    Mr. DeMint. Excuse me for interrupting, but did the Federal 
Government have any role in what you did here?
    Mr. Watkins. No, not really. Through the resident council, 
they get funding from HUD, and we have implemented some 
programs through that funding, which I have worked very closely 
with the resident council to develop programs. Some of the 
things that I can see creating business development for the 
youth would be an advantageous thing for the communities.
    Mr. DeMint. Okay, good, thank you. Mr. Hopkins.
    Mr. Hopkins. Thank you, Mr. Congressman. Similarly, with 
respect to my experience with the shopping center, the Good 
Hope Marketplace, HUD's 108 Loan Program was extremely 
beneficial to us. As opposed to the Nehemiah Shopping Center, 
our experience is that we received absolutely no private 
financing. A project that had total funding for acquisition of 
$13.2 million and pre-development soft costs ran about 
$1,450,000, had no private financing. For example, $11.5 
million was a HUD 108 loan, $1 million was a HUD EDI grant, and 
$600,000 represented a grant from the Office of Community 
Services of the Health and Human Services Department. So 
certainly, continuing that program is very instrumental to 
communities and what communities can do in leveraging their 
resources, leveraging their future community block grant funds 
as collateral guaranteed for the HUD 108 loan.
    In addition, obviously the CDBG Program that comes through 
HUD should continue to be funded by the Federal Government. It 
is very important to what we do in communities; it has a direct 
benefit, or it certainly is a direct cause of our ability to 
move forward and revitalize our communities. We have a bank 
across the street that is a CDFI financial institution, very 
successful for this community. How long has it been in 
existence, Bob?
    Mr. Moore. About 6 months.
    Mr. Hopkins. About 6 months, but it is doing good and we 
all want to take part in it and access its benefits. The HUD 
Empowerment Zone and Enterprise communities, that legislation 
should be continued. It is a wonderful tool to have in 
underserved communities when you are retail shop businesses, 
because of the various tax incentives as a result of being in 
an enterprise community.
    Mr. DeMint. Thank you. Mr. Moore.
    Mr. Moore. Thank you. The Federal Government was very 
instrumental in the development of our community in a number of 
ways. For one, much of the land that we have built on was 
purchased with Federal money and urban renewal program and sold 
to us at a discount, enabled us to build. We were able to get 
down payment assistance, using home funds and community 
development block grant funds, so that persons who were near to 
being able to purchase a house had the down payment necessary 
to complete the transactions.
    We also were able to, as Mr. Hopkins talked about, have a 
community development financial institution. We only have one 
bank in the neighborhood for 29,000 people. Our community 
development financial institution is the second bank, and 
dedicated to making community development-type loans and 
accounts for us. So, it has been very instrumental in providing 
that kind of blue dollars that are needed for non-profits to 
make the kind of advances it needs to attract private capital. 
We know, for sure, that our objective is to attract private 
investors back to our neighborhoods. So we have to take the 
risks and the Federal Government needs to assist in providing 
the dollars to take that risk to show developers that a 
shopping center in an urban neighborhood makes good sense. And 
now let's do something larger than that a little ways.
    Three things that I would like to see: One is, as Todd 
Mosley talked about, the issue of crime and small business 
development can be united if we help small businesses to grow 
and hire folks who live in the neighborhoods--certainly young 
people.
    Using that same philosophy that Mr. Mosley did, we could 
give incentives for businesses to hire young people for those 
areas that are green. Not only do you give them a tax credit, 
more young people are able to get jobs and that is the real key 
to reducing violence and crime.
    Secondly, finding a way to look for capacity building. We 
would not be able to do what we do, I know the three CDC's for 
sure that are here, unless we received community development 
block grant funds to help us with our organizational expenses. 
That investment in the District and the community development 
corporations--which there are eight--has resulted in over $200 
million worth of investments being brought to neighborhoods 
across the city. There have been five shopping areas built in 
the District in the last eight years. Four have been done by 
non-profit organizations. So we used those dollars that are 
invested through the community development block grant program 
to build the capacity to move from doing a house, to doing 
shopping centers, to doing business improvement districts, to 
really be able to go to scale on some projects. So capacity 
building.
    The third would be some new initiatives. We have behind 
you, as we build the shopping center--some two years later, the 
building behind the shopping center burned down. It is kind of 
like taking two steps up and one step back. But we have to 
maintain our effort. We cannot just look at the shopping center 
and say, ``We have done a good job.'' We have to keep going up 
that block and doing all the vacant housing. As I have said to 
the Chairman, our real objective in Columbia Heights is home 
ownership. The riots and the Federal programs left us with only 
20 percent homeowners and 80 percent renters, and if we are 
going to have real long-term stakeholders, we have got to all 
that we can to create as much home ownership as we can.
    Mr. DeMint. Could we make HUD easier to do business with?
    Mr. Moore. Absolutely. [Laughter.]
    Mr. DeMint. Just a couple of examples, maybe?
    Mr. Moore. Well, an example would be behind this building 
there is a project called Clifton Terrace, which is a HUD 
section 8 project. It became a real problem to the crime and 
violence and bad for the conditions of the residents. HUD came 
in--Secretary Cisneros came in--and seized that property from 
the owner, who had taken the security away and left the 
residents to their own. Well, Cisneros has been gone for four 
years. It has taken HUD four years to now dispose of that 
building to a property development. They just did last week, 
but it took four years, and it should not take that long for 
287 units of really valuable housing, a key to our 
neighborhood, to be disposed so that we could redevelop it as 
something--an important asset for the community. So reducing 
the bureaucracy, providing dollars, as Mr. Hopkins talked 
about, for loan funds for neighborhood non-profits, to invest 
in the neighborhood are all important.
    Mr. DeMint. Thank you. Ms. Rosales.
    Ms. Rosales. Yes. I certainly concur with all of my 
colleagues. So much has been said. The only thing that I might 
add is to reiterate--we do receive funding as a private non-
profit organization from the District government, which is 
funds that come the Department of Housing and Urban Development 
in order to assist us with our work in the community.
    We have done, I believe, a very good job of leveraging 
those funds in order to create the systems that I have referred 
to earlier. The District government, in particular, has 
referred to us as one of the CDC's that does get so much bang 
out of the buck, so to speak, because we are able to go out to 
the community and find pro bono work, find volunteers, develop 
leadership that are not paid, as Todd pointed out. And that 
creates the foundation and the stability in the community that 
will stay, and hopefully, the funding can help to support that.
    Something that I would also reiterate is that our 
organization does quite a lot on very limited funds and we 
would appreciate continued support or administrative support 
for some of the work that we do; although we do it with genuine 
care, I think giving value for that work would be very 
appropriate.
    Also, in particular, regarding our neighborhood improvement 
district, I mentioned earlier that our merchants on the street 
have put out $40,000 of out-of-pocket money to improve the 
streets of 18th Street, Columbia Road, and Mount Pleasant 
Street over the last year and a half, partly because there was 
a feeling there was deficiency among the services that are 
provided within District that should be considered basic 
services, so they are having to pony up and make sure that is 
being done. Some assistance or sensitivity to making sure that 
services are done on a timely basis and are done in the 
rightful manner, so that the merchants are not having to invest 
more than their fair share than maybe some other communities or 
other communities nationwide.
    Also, the process which we go through to access Federal 
funds and District funds, we would appreciate perhaps looking 
at that: How we can streamline? Now we build these momentums 
within the community and get merchants and residents excited 
about development and improvement, and then are at a standstill 
in many instances because there is quite a lot of red tape and 
perhaps confusion about what the process really is, when it is 
represented one way and then another way later on. So, we would 
hope that there would be an opportunity over the near future to 
evaluate some of the systems in order to help streamline and 
create this great partnership that exists on many levels. I 
think we all can look at them, look more closely, and focus, so 
that we find a real stride in community development over the 
next few years.
    Mr. DeMint. Thank you.
    Chairman Pitts. Many of your suggestions and proposals 
mirror those contained in a bill called the American Community 
Renewal Act (ACRA). Are any of you familiar with that 
legislation? I will leave copies of the bill for you. The 
sponsors of ACRA, like you, believe that cutting taxes, giving 
tax credits, reducing burdensome regulations, increasing home 
ownership, and encouraging savings, will stimulate renewal in 
many of our communities. And this legislation provides for 100 
renewal communities in the Nation. It provides for a capital 
gains tax relief rate of zero for businesses located in the 
renewal qualified zone. It provides for increased expensing, 
raising the maximum liable expenses for purchasing of plant and 
equipment in these communities. It also provides wage credits 
in the qualified zones and brownsfield relief. We will give you 
all an analysis of the bill, for your perusal.
    It looks like this legislation is going to move soon--
wouldn't you say, Jim, probably before the break? This bill 
could be very helpful to you.
    I want to go back to another round of questioning. First, 
for Mr. Watkins. I would like to know a bit more about the 
micro-enterprises that the East Capitol Center for Change has 
worked with. What roles did the youth play in these businesses? 
Does the practical business experience make them more confident 
in turning around? Are they interested in small businesses of 
their own? Could you comment on that?
    Mr. Watkins. Thank you, Mr. Chairman. Some of the 
businesses that we have within that community, we employ 
approximately 12 youth and they are considered community youth 
leaders. Within this program, these particular youths' 
responsibilities are to survey their community, make written 
reports on how to improve their community. They are also to set 
up a small tee shirt business in which they have learned 
leadership skills, being accountable, and we have tied this 
into a Junior Achievement Program also with these youths we 
teach them entrepreneurship skills. We also have a catering 
business that the resident council has started, and they are 
tapping into some of the community development organizations to 
provide catering for their particular meetings and events. So 
it is a partnership within the total community and this has 
been successful for capacity building, in which they have 
learned new skills of financial management, ability to project 
on, if you have ``X'' number of people, what do you need? And 
some of these things are very basic skills but they are 
necessary in reference to business development.
    Chairman Pitts. What is the most noticeable difference in 
your community? You have been in operation for three years? 
Have you noticed differences in the community in this short 
time?
    Mr. Watkins. Yes, current involvement and awareness that 
individuals have a capability to create their own desires, but 
they have to actually want to be nurtured in order to develop 
those desires. But we are seeing parents getting involved with 
our programs that normally have said they would never be a part 
of this program. And the roles the parents have played, they 
have supported the kids in conflict resolution. And we've 
brought the two together to resolve issues.
    Chairman Pitts. And you mentioned the need for easier 
registration of the compliance process for entrepreneurs?
    Mr. Watkins. Yes.
    Chairman Pitts. Can you elaborate on that? Is that a burden 
that deters some of our young entrepreneurs?
    Mr. Watkins. Yes. I pray a lot, to be honest with you. 
[Laughter.]
    When we designed this program for the youth to develop the 
tee shirt business, I went to the District government and tried 
to get all the paperwork done, and it was a fiasco of red tape 
that I had to go through. But, like I said, I pray a lot. And 
the Junior Achievement Program allowed me to bypass a lot of 
that government regulations and tap into their system in 
reference to bylaws and structure and insurance requirements. 
As Mr. Hopkins has said, that is sometimes difficult for a 
community to establish, especially when you are dealing with 
youth. So, the Junior Achievement Program had been a 
facilitator of establishing the foundation for our business.
    Chairman Pitts. Thank you. Mr. Hopkins, you mentioned the 
46 percent reduction in crime rate in your area. Is this 
attributable to the Good Hope Marketplace?
    Mr. Hopkins. Directly attributable, Mr. Chairman. One of 
the things that we have established in the shopping center is a 
police substation that we provide them space at no cost. The 
interesting thing about that is that the police officers who 
man that particular precinct are volunteers. They go through 
the same training that regular police officers do, but they are 
not fully employed police officers; they are volunteers. What 
they do is basically patrol the area, patrol the shopping 
center; they supplement the security firm that we have. And not 
only do they look at the shopping center, they circle the 
surrounding areas. And so, it is very enlightening to us and 
very pleasing to us to learn that crime has decreased in the 
immediate community by 46 percent.
    Chairman Pitts. Now that Good Hope Marketplace has been 
built, do you find more commercial entities beginning to view 
Anacostia as a viable place to locate a business?
    Mr. Hopkins. Absolutely. We are getting inquiries from 
major retail national franchise operations. For example, we 
have a Radio Shack at the Good Hope Marketplace, which is the 
first sort of high-tech store to open in the Anacostia/Far 
Southeast area, in my memory which goes quite a ways back. 
[Laughter.]
    Also, we are now having Hollywood Video--we are negotiating 
with them. Mr. Calvin Johnson is representing Timberland; so 
they are certainly interested in coming in to open a store 
there. So, we are also involved in looking at the lower part of 
Anacostia, in the Historic District. With respect to that 
particular area, we are planning on developing some new retail 
as well as office development. One way to bring back a 
neighborhood is to increase the daytime base employment. So if 
you bring more people into the community with disposable 
income, then obviously retail will come out there to meet that 
demand. And so it is sort of a strategy that has worked for us 
and we want to continue it, and we are getting interests from 
such retail as CVS, Starbucks and others. So, to us, that is 
the real formula for beginning to turn around a neighborhood. 
And as I mentioned before, the city can certainly cooperate by 
keeping the communities clean and adequately policed and 
providing all the various safety services, et cetera.
    Chairman Pitts. You answered my next question. Ms. Rosales, 
could you describe the change of the attitudes of community 
residents since economic renewal that you testified about has 
taken hold?
    Ms. Rosales. Oh, yes. It has been about two years since we 
began our efforts--actually two years ago this month. And it 
was upon my arrival as the Director of Business Development, we 
assessed the community, it seemed that there was non interest 
or the thought that to participate did not necessarily mean 
results. So we had to get down to the grassroots level, knock 
door-to-door and survey residents, survey merchants, conduct 
focus groups, conduct visioning sessions. It was a very 
intensive process. But the merchants, in particular, took the 
process, because they understood that we were not necessarily 
coming in to take control, but we were inquiring and wanting to 
give them the elements so that they, themselves, could take 
control.
    The process has been very successful. We have developed two 
large merchant associations in both communities. There are 
several community work groups and leadership cell groups that 
have grown from those two efforts as well. So we have many sub-
groups that exist that take merchants, for example, at their 
comfort level. For example, the Korean work group might come 
together as a Korean group; Latinos as one and perhaps Columbia 
Road as another, and restaurants as another group. We kind of 
stratify those, categorize them in different stratus, and then 
bring them together as a larger group so that we give them an 
element of comfort, so they can express themselves, but then 
have a voice--a representative at the larger group. Eventually, 
over the last year and a half, in particular, we have seen a 
lot of those different groups begin to merge, begin to contact 
each other without our intervention, begin to make plans, take 
on small projects and that is the movement that we needed in 
that community because, as I mentioned, our resources are very 
limited. We have a limited staff ourselves, and so we rely on 
non-traditional cooperations with the District government, with 
the neighborhood organizations such as Thumbs Up and youth 
groups.
    We have churches involved. We try to tap every group 
possible. We have a multi-cultural committee, as I have 
mentioned. Staff speaks Vietnamese, Korean, Spanish and 
English, at the minimum, and other languages, because we are 
interested in giving the community a voice and helping them 
find their own voice. And then, you know, we are able to take 
on the larger projects, such as facade improvements, commercial 
development. We receive 2,000 clients a year in 
entrepreneurship alone. We have a $300,000 micro-loan fund; 
peer group lending had developed 60 businesses from the very 
start-up in a year's time; technical assistance for business 
and housing. So we have many other efforts that we need to 
concentrate on.
    But your particular interest regarding commercial corridors 
and its effect on crime and violence, that effort we thought we 
should give the spotlight because it has been something that 
has given the community back to the merchants and residents and 
has found a community building effort really taking hold.
    Chairman Pitts. Thank you. My time is up and I will yield 
to the gentleman from South Carolina.
    Mr. DeMint. I have been a small businessman for years and 
have worked with a lot of companies who were small businesses. 
And one of the deterrents to hiring young people was really all 
of the regulations related to hiring. Not just the withholding; 
if they got hurt while they were doing something for you, you 
were liable. You cannot just write them a check if they worked 
for you for a couple of--all of this reporting--and the thought 
just came to me: Would any of you support waiving of a lot of 
the employment practices within these enterprise zones to give 
employers some flexibility in what they pay and some relief 
from liability? Maybe even replacing the withholding for these 
investment accounts that you talked about? I would just be 
interested because right now, if you are following the rules, I 
do not know how you deal with 20 teenagers. [Laughter.]
    Maybe that's the question: Are you following the rules? 
[Laughter.]
    Mr. Mosley. It is quite difficult to. Thumbs Up had a high 
of young people working of 36. Now just coming out of a non-
snowy winter, we are at about 15, and landscaping is kind of 
picking up. You talked about flexibility and what they pay. 
There is definitely a living-wage level in the District of 
Columbia. And a lot of the time, because of the lack and the 
inability of some parents to pay an allowance--a weekly or 
monthly allowance--is that it is above minimum wage. I think 
that $5.25 is the minimum wage now in the District of Columbia? 
There are not many young people that can actually work for 
$5.25 an hour. It is difficult to let that be a minimum wage in 
the District of Columbia. I think that if there was flexibility 
in that wage. It could not go down, there is no way. But, if 
there was flexibility in reporting about a 100 percent tax 
break. On Columbia Road and on 18th Street and in these 
shopping centers, it sometimes is difficult to pay someone $7 
an hour, a young person $7 an hour to bus tables or to work in 
a Laundromat. I think that if we assisted those small 
businesses and those restaurants by employing a young person 
from their own community, it pays for itself in many ways. But 
flexibility in wages, I don't think can go below minimum wage.
    But on the liability insurance, as long as there is in the 
District of Columbia a child welfare--the legislation, I 
believe it passed this year, with the mayor's proposal about a 
broad-based children's health coverage--there would be an 
environment that we could get on that, then, to reduce those 
liability purposes, possibly. But I do not want children 
working and not having healthcare either.
    Mr. DeMint. Yes?
    Mr. Moore. I think that this is an important opportunity if 
we can waive some regulations, because some of those 
regulations are not productive, and requiring small businesses 
to keep all the tax information on 14-year-olds is nonsensical. 
We find a great desire among young people to work. And what I 
think we can do in the issue that you have raised is a cycle to 
be able to deal with the tax question, so that there is less 
burden on the business owner who wants to employ somebody, in 
particular, from these zones, in waiving some of those 
regulations and requirements, not workplace safety, but those 
requirements that are barriers to producing young people, or 
producing anyone who needs to have a job is an important piece.
    We are a working neighborhood in the main. We have a bunch 
of people who work here. They do not make a lot of money. They 
work in a service industry. That industry pays $6.25 an hour. 
It paid $6.25 an hour last year and it will pay $6.25 next 
year. If you don't like the wage, you have got to find another 
job. So, they are really kind of trapped. We have got to find 
ways in which people can move up.
    On the youth issue, we have a youth entrepreneurship 
program that we run each summer. We recruit young people to 
learn business. My staff is here now who run that program. I 
think my reaction to the program was that this is the Gates 
generation, because when I ask them, ```How much money do you 
want to make?'', they said, ``Gates.'' So they have been 
listening to Gates too much. [Laughter.]
    There is a great demand for young people who want jobs. We 
were able to not only train the young people in the summer, but 
also to place in on-the-job situations during the winter 
months, and to give them a small stipend monthly to work in a 
private business, to absorb that business culture as part of 
your being, and that was very effective for us. So I think that 
removing the barriers, finding a way we can get some 
protections for young people, but not create barriers to being 
employed is an important part of the work.
    Mr. DeMint. Mr. Chairman, I would like to follow up some 
more, but I am out of time.
    Chairman Pitts. Why don't you finish up and then we will 
move on.
    Mr. DeMint. Okay. Mr. Watkins.
    Mr. Watkins. Thank you, Congressman. Rules, yes, they are a 
problem. We have actually paid our youth $6.25 an hour, through 
a stipend process which has allowed us to not penalize their 
parents who might be on public assistance or whatever it might 
be. This has worked for us. This program that I am talking 
about, we have actually employed some of the parents as school 
monitors to deal with some crisis situations within their own 
community school, and we are paying them a stipend also. So we 
bent the rules a little in order to get the job done.
    Mr. DeMint. I have had a situation where someone wanted to 
do some work in my house, but they said I could not report it 
or their husband would lose their disability. I know that a lot 
of times in business, it would be nice to just ask a teen, say, 
``I will give you $30 if you move these boxes for me.'' But you 
cannot just give them $30; you have got to get into all this 
reporting and stuff. Again, I just wondered if you would 
support some loosening up, because you may have some kids that 
want to make some extra money and that employer says, ``Well, I 
am not going to pay them $6.00 an hour, but if they want to do 
this for $20 and get finished with it''--but then that does not 
meet minimum wage requirements and all of that. I was just 
wondering how you felt about it.
    Mr. Watkins. Absolutely. I think that could be wonderful to 
give youth that opportunity and some of our older residents 
that opportunity in my particular community. The other thing, 
in expanding this a little further, is life skill training. A 
lot of our youth and adults, they cannot sustain a job because 
of the perception of who they are. I think that, as a 
component, programs such as Todd's program, and other programs 
within our community, need to develop life skill training in 
order for people to sustain a job for a period of time. Because 
it is one thing to give a person a job, but that does not mean 
that they are going to maintain it.
    Mr. Mosley. Yes, I would support easing those types of 
regulations tremendously. Sometimes it is easier for a young 
person to move a bunch of boxes for $20 instead of taking out 
the taxes and doing it at $6 an hour. One of the life skills 
and the professional skills that we learned is that the young 
people are there to negotiate. When we do someone's yard, we do 
not charge by the hour. We negotiate the job, and it ends up 
being about $10 an hour. When you say, ``We will do your yard 
for $200,'' and you go buy two shrubs and the rest is labor and 
the other expenses, and it works out better when young people 
learn the negotiation skills of what value does that have to 
you, instead of, ``How much will you pay me by the hour?'' What 
is your front yard and your back yard landscaped worth to you? 
And yet, busy professionals, they are spending money all over 
the place, and you can charge more to the professional than to 
some savvy, lower-middle income school teacher. [Laughter.]
    And so you know which clients that you can do that, and 
young people need to learn those skills. And when they learn 
those skills, the customer respects them more.
    Mr. DeMint. I yield back to you, Mr. Chairman.
    Chairman Pitts. Thank you. Mr. Moore, you placed a great 
deal of emphasis on home ownership. Do you think that the pride 
of home ownership creates a thriving community that is 
receptive to new community businesses, and attractive to 
entrepreneurs? Can you explain the synergy that you think is 
occurring here?
    Mr. Moore. I think that it is important. We think for a 
neighborhood that had only 20 percent homeowners--the last 
census said 27 percent, so it has moved up about 7 percent in 
10 years; that is a significant jump. I think that, next, with 
the incentives that Congress has provided to the District, I 
think we will see a significant jump in rate of home ownership. 
It doesn't end with this project. We not only have a small 
shopping center, but we also have a population to support the 
shopping center. So, it is mutually supportive--the shopping 
center providing services to the residents; the residents 
providing income to the businesses in the shopping center. So, 
both go together. Home ownership is just so critical.
    Just this morning, a lady came in to see me and she just 
had a day off and we were going to do some housing, some vacant 
housing, in the neighborhood we are going to renovate for home 
ownership. And she came to see me about her mortgage. And I 
said, ``Well, do you have your down payment?'' She said, ``I 
have got $4,000 in the bank.'' She had saved up her money; she 
is taking a class in home ownership; she is looking at interest 
rates. She is on the Net checking rates all over the country. 
It just changes the perception and allows people to really let 
down their roots in the neighborhoods where they--the average 
price of a house in Columbia Heights is over $175,000, except 
for the housing that is being done by non-profits and community 
organizations which is affordable housing. And so we are able 
to help people who lived here and worked here all of their life 
as a renter to stay here as a homeowner. And there are numbers 
of groups in the District who are contributing to that 
throughout Columbia Heights.
    Chairman Pitts. I noticed, when we were doing our walk-
around, I did not see any graffiti. How do you keep buildings 
free of graffiti? It scares some people. [Laughter.]
    Mr. Moore. A little bit scares some people. I think it is 
really the pride of the community--the young people. We have a 
little bit, but not a serious problem. But I think it is the 
pride that is something that happens. People value those things 
that mean something to them, so they don't do it. I am not 
saying that we don't have graffiti artists; I am sure they are 
here. But we don't have major problems with it. If they do, 
they do it to the back of their buildings rather than the 
front, so we do have some on the back of the buildings, but not 
much, and I think it is a value issue.
    Chairman Pitts. Mr. Mosley, you mentioned the benefits of 
proposed tax credits and an increase in the number of 
apprenticeships. Do you think that apprenticeships are a good 
way to stimulate entrepreneurship?
    Mr. Mosley. Because it is the whole ``each one teach one'' 
type of concept. If a young person is working with a 
contractors of many different types or a one-or two-person 
enterprise, or a tailor, or a shopkeeper, or a new record store 
that is being developed, then that young person gets to learn 
the dynamics of small business. If you buy too many bolts of 
fabric, you will go down the tube, just like my grandfather did 
in a department store in Mississippi. And that environment and 
knowing how inventory works and how to operate a cash register, 
and having the skill of not taking cash out of a cash register 
when you are working it, because it is easy to figure who did 
it during what shift. Those basic skills--you know you have a 
young person that has never worked a cash register before and 
they have, like, a tray of $250. Sometimes it can be lunchtime. 
And learning those basic skills of how our economy works is 
tremendous. The phone bill comes in; the electricity bill comes 
in; the rent comes in, and all those. So it has many residual 
benefits, like the life skills he was talking about--the small 
business. The immediate income and wage creation for that young 
person. It ricochets throughout our neighborhood.
    Chairman Pitts. Mr. Watkins, as the founder of your group, 
you mentioned that one of your goals was preparation for 
entrepreneurship. At what age do you think this preparation and 
education is most effective?
    Mr. Watkins. My personal vision is that it starts when you 
are in the first grade; I mean as early as possible. Because we 
have taught our kids to get a good education, go to college and 
then get a good job. We need to change that philosophy and turn 
it around and teach them business skills at a very early age in 
order for them to understand the principles of how to be 
successful. A lot of our programs--we have to start from the 
bottom level in order to teach kids the basic skills. And a lot 
of it is dealing with attitudes, to be honest with you--dealing 
with attitudes.
    Chairman Pitts. Mr. DeMint.
    Mr. DeMint. Just a quick question here, Mr. Watkins. I know 
that you are doing this because you feel like you have been 
called; that this is a ministry to you, at least I assume from 
what I have read. And I am wondering what do you believe about 
the Federal Government working with faith-based organizations 
or folks like you, if you take some program or money from the 
Federal Government and they require you not to have anything 
faith-based. What would be your advice to us about 
organizations? And there are a lot of them across the country 
that are successful. But there are some folks, as you know, 
that argue, well, the Federal Government should not be involved 
with anything that is religious.
    Mr. Watkins. I don't view my organization as a religious 
organization. I view my organization as a spiritual-based 
organization, and within that, I feel that if the Federal 
Government frowns upon those types of organizations, I would 
have to go elsewhere. I have dealt with the situation as far as 
funding for the last two years, and I have received no funding, 
but we have gotten things done through the resident council, 
funding through HUD that the resident council obtained, but we 
are able to do programs that are of substance without funding. 
So it takes the commitment more so than the funding. But as far 
as the Federal Government is concerned, I would just have to 
deal with that situation and move on, and pray a lot.
    Chairman Pitts. Mr. Hopkins, how important are mentors, 
like Calvin Johnson, to the young people in your community? 
What role do they play?
    Mr. Hopkins. They are extremely important. It certainly is 
an example to the young people to see someone from their own 
community succeed. Mr. Johnson is a unique success because he 
is one of the principal members of Athlete's Foot. He goes up 
and down the East Coast locating franchise sites for the 
Athlete's Foot operation, and he has done that in just like a 
period of, since I guess 1996. So in a very short time frame, 
he has advanced significantly as a franchise operator with 
Athlete's Foot.
    The ability to have merchants who take an active interest 
in young people in the community, whether it would be to 
sponsor a softball league or a baseball league, what have you, 
or a midnight basketball program, it is very important. Again, 
when people in the community see that other folks in the 
community are continuing to be successful and care about them, 
and when they see that the city cares, because the city is 
going to provide the type of services that serves the kids, 
then people began to take a very serious interest in their 
surroundings.
    And I might add, one other Federal program that Bob may 
remember that we would like to see the Federal Government 
continue, and that is the $5,000 tax credit for first-time 
homebuyers in the District. As you know, we have experienced 
sort of an out-migration of middle-income residents. This 
particular program has been extremely beneficial in bringing 
people back into the city. They need not be first-time 
homebuyers; they could have owned a home elsewhere, but they 
must be first-time homebuyers coming into the city, and that is 
one way to attract people back into the city. It is a very 
beneficial program.
    Chairman Pitts. One of the programs I had in my district 
uses mentoring, and pairs CEO's or business owners with a small 
start-up business, and micro enterprises. Mentors can transmit 
a lot of practical experience very quickly with that mentoring 
relationship. And I see some heads nodding, so evidently, you 
use a similar model.
    Mr. Hopkins. We use the Small Business Administration's 
SCORE program--the Service Corps of Retired Executives.
    Chairman Pitts. Right.
    Mr. Moore. Mr. Chairman, the District of Columbia has a 
community/business partnership program where they mentor 
neighborhood businesses. We have been in this program three 
years. One of the businesses across the street, Chat and Chew, 
which was a restaurant, was mentored by the President of the 
National Restaurant Association, who decided it was more 
economically feasible for her to be a caterer than be a 
restaurant. So, even though it is closed, it is not really 
closed as she is doing much better as a catering business than 
she did serving across the counter. So we do have--the third 
year of that program--it is only in several neighborhoods where 
they do mentor, but it has been a great benefit to the 
businesses to be able to export their products or services to 
the region and not just to the neighborhood.
    Chairman Pitts. We have heard a lot of excellent testimony 
here, some wonderful stories. We are going to make this 
excellent hearing record available to our Committee. We thank 
you for sharing your practical experience and insights. We look 
forward to working with you.
    Before we close this up, I want to make sure that if you 
have anything else to put on the record, you get that 
opportunity. So, if you have other statements that you would 
like to include, you are welcome to submit them at this time.
    Mr. Moore. I would like to thank the staff for helping to 
coordinate this important opportunity for us. They have been 
working hard to get here, and thank you and Mr. DeMint for 
visiting Columbia Heights. We think we have a really great 
neighborhood in the District of Columbia, not withstanding 
Anacostia and East Capitol. We all work together, and I think 
that one of the things that is unique in the District of 
Columbia is that folks work together. Faith-based and non-
faith-based groups--we all are collaborators; we all teach each 
other; we all learn from each other. And that has been an 
important benefit to all of us.
    We thank you for coming and hope you come back and visit 
with us some more.
    Chairman Pitts. The record will be held open for five 
legislative days. So if any of you would like to add to your 
testimony, amend your testimony, you may do so within five 
legislative days.
    Yes?
    Mr. Mosley. I just want to give a compliment to the 
organization of Junior Achievement that he just mentioned. When 
I was in junior high school, I went through a Junior 
Achievement course, and I have relied on that experience often 
for the reasons I do what I do now. So, these young men that 
are going through his Junior Achievement and that access, when 
they get to be 35 years old and they are doing that in their 
neighborhood, we are looking at truly breaking the cycle of 
poverty, and we are looking at creating this habit of 
enterprise development and savings and investment.
    So I just wanted to give a compliment to the Junior 
Achievement program. Thank you.
    Chairman Pitts. Thank you. The Chair would like to thank 
all of the witnesses, for their testimony, and the Nehemiah 
Community for their hospitality.
    We will make this information on the record available to 
you.
    The hearing is adjourned.
    [Whereupon, at 12:04 p.m., the Subcommittee was adjourned.]




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