[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]





          CRITICAL SMALL BUSINESS ISSUES AFFECTING LONG ISLAND

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

                             FIELD HEARING

                               before the

                      COMMITTEE ON SMALL BUSINESS
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION

                               __________

                     RIVERHEAD, NY, AUGUST 30, 2001

                               __________

                           Serial No. 107-27

                               __________

         Printed for the use of the Committee on Small Business




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                      COMMITTEE ON SMALL BUSINESS

                  DONALD MANZULLO, Illinois, Chairman
LARRY COMBEST, Texas                 NYDIA M. VELAZQUEZ, New York
JOEL HEFLEY, Colorado                JUANITA MILLENDER-McDONALD, 
ROSCOE G. BARTLETT, Maryland             California
FRANK A. LoBIONDO, New Jersey        DANNY K. DAVIS, Illinois
SUE W. KELLY, New York               BILL PASCRELL, Jr., New Jersey
STEVE CHABOT, Ohio                   DONNA M. CHRISTENSEN, Virgin 
PATRICK J. TOOMEY, Pennsylvania          Islands
JIM DeMINT, South Carolina           ROBERT A. BRADY, Pennsylvania
JOHN R. THUNE, South Dakota          TOM UDALL, New Mexico
MICHAEL PENCE, Indiana               STEPHANIE TUBBS JONES, Ohio
MIKE FERGUSON, New Jersey            CHARLES A. GONZALEZ, Texas
DARRELL E. ISSA, California          DAVID D. PHELPS, Illinois
SAM GRAVES, Missouri                 GRACE F. NAPOLITANO, California
EDWARD L. SCHROCK, Virginia          BRIAN BAIRD, Washington
FELIX J. GRUCCI, Jr., New York       MARK UDALL, Colorado
TODD W. AKIN, Missouri               JAMES R. LANGEVIN, Rhode Island
SHELLEY MOORE CAPITO, West Virginia  MIKE ROSS, Arkansas
BILL SHUSTER, Pennsylvania           BRAD CARSON, Oklahoma
                                     ANIBAL ACEVEDO-VILA, Puerto Rico
                      Doug Thomas, Staff Director
                  Phil Eskeland, Deputy Staff Director
                  Michael Day, Minority Staff Director





                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on August 30, 2001..................................     1

                               Witnesses

Rogers, Aubrey, New York District Director, U.S. Small Business 
  Administration.................................................     2
King, James, State Director, New York State Small Business 
  Development Center.............................................     4
McEvoy, Judith, Director, New York State Small Business 
  Development Center at State University of New York.............     6
Kozakiewicz, Robert, Supervisor, Town of Riverhead...............     8
Aloisio, Anthony, Director of Economic Development, Town of 
  Brookhaven.....................................................     9
Cohn, Marion, Assistant Director of Government Affairs, Long 
  Island Association.............................................    11
Goldmacher, Roslyn, President/CEO, Long Island Development 
  Corporation....................................................    13
Shivak, Judith, Executive Director, Greater Smithtown Chamber of 
  Commerce.......................................................    14
Freierman, Sima, General Manager, Montauk Inlet Seafood Inc......    16

                                Appendix

Opening statements: Grucci, Hon. Felix...........................    32
Prepared statements:
    Rogers, Aubrey...............................................    34
    King, James..................................................    40
    McEvoy, Judith...............................................    46
    Kozakiewicz, Robert..........................................    71
    Aloisio, Anthony.............................................    87
    Cohn, Marion.................................................    89
    Goldmacher, Roslyn...........................................    92
    Shivak, Judith...............................................    99
    Freierman, Sima..............................................   101
    Grimm, William...............................................   105

 
          CRITICAL SMALL BUSINESS ISSUES AFFECTING LONG ISLAND

                              ----------                              


                       THURSDAY, AUGUST 30, 2001

                          House of Representatives,
                               Committee on Small Business,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 2:00 p.m., at the 
Government Center, 200 Howell Avenue, Riverhead, New York, Hon. 
Felix Grucci presiding.
    Chairman Grucci. I would like to thank everyone for joining 
us and I would like to thank our hosts here this afternoon, the 
great town of Riverhead and Supervisor Kozakiewicz and the 
entire Town Board for allowing us to use this facility to 
conduct this hearing which makes it easier for everyone to 
access the federal government in this hearing today.
    Good afternoon and welcome to this field hearing of the 
Committee on Small Business. The hearing will now come to 
order. On behalf of Congresswoman Sue Kelly and myself, I 
welcome all witnesses and thank you for your participation in 
this hearing.
    I would also like to particularly thank Ms. Kelly for 
taking the time to travel to my district from hers, which is in 
Westchester County. It has been a long and tiring ordeal on the 
Long Island Expressway on the weekend of Labor Day, but it just 
shows you her commitment to the small business community and 
how we can collectively be helpful to the small businesses who 
have elected to be with us today.
    Today's hearing will examine key problems facing Long 
Island's small businesses and potential assistance or solutions 
involving the Federal Government. Within the first 
Congressional district alone small business men and women work 
in a truly diverse environment, from historic Montauk Point to 
the beautiful elusive Hamptons, to the scenic intellectual 
giant of Brookhaven National Laboratory, the educational center 
at Stony Brook University and the Main Street businesses of 
Smithtown. With this great diversity comes unique problems for 
Long Island's small businesses. Our small businesses must 
balance the effects of seasonal tourism, the significant impact 
of storms on our coastal businesses, and the high cost of 
property, along with many other problems. In these slow 
economic times, small employers need all the help they can get 
to keep their companies afloat and their employees working. The 
Federal Government needs to foster the growth of small 
businesses, not hamper it.
    Today we will discuss the local impact and operations of 
the Small Business Administration programs, such as the Small 
Business Development Center, the SBDC, and the SBA's partners, 
such as the Service Core of Retired Executives or SCORE, 
S.C.O.R.E. I look forward to a lively and informative 
discussion of the issues presented. Again, welcome to this 
hearing.
    Before we get underway, I will turn to my colleague and ask 
Sue Kelly if she has anything she would like to add.
    Mrs. Kelly. I am very happy to be here on Long Island. 
Actually it is a wonderful place and we had a lot of fun 
driving out here. We made a lot of Long Island jokes, but it is 
very interesting to me to be able to be here and be with you.
    I am the former Vice Chairman of the Committee. I am also, 
was for many years, the Chairman of the Regulatory Reform and 
Paperwork Reduction Subcommittee, and I sit on the Banking 
Committee as well. I have the chairmanship of the Oversight 
Committee of Financial Services for the House of 
Representatives. So the business of being in business is not 
only of interest to me from that standpoint, but I am the only 
florist that was ever elected to Congress. I am a small 
business woman, and my husband and my children are small 
business, independent business people.
    This is a topic very close to my heart and I am delighted 
that you are all able to be here and join us and I look forward 
to your testimony and I thank Mr. Grucci for inviting me here 
today.
    Chairman Grucci. Thank you, Sue.
    Before we start taking our testimony, let me just introduce 
the panel of distinguished people that are with us here today.
    We have Aubrey Rogers, the New York State District Director 
and Acting Regional Administrator, United States Small Business 
Administration from New York.
    James King, New York State Director of Small Business 
Development Center, United States Small Business 
Administration, from Albany.
    Judith McEvoy, Director of New York State Small Business 
Development Center at SUNY, Stony Brook and Supervisor 
Kozakiewicz here from the Town of Riverhead.
    Anthony Aloisio, the Director of Economic Development, the 
Town of Brookhaven.
    Marion Cohn, the Assistant Director of Government Affairs 
for the Long Island Association.
    Roslyn Goldmacher, President and Founder of the Long Island 
Development Corporation, Plainview, New York.
    Judith Shivak, Executive Director of the Greater Smithtown 
Chamber of Commerce in Smithtown.
    Sima Frierman, General Manager, Montauk Inlet Seafood, 
Montauk, New York.
    We will get underway with Aubrey Rogers.

 STATEMENT OF AUBREY ROGERS, NEW YORK STATE DISTRICT DIRECTOR/
      ACTING REGIONAL ADMINISTRATOR, U.S. SMALL BUSINESS 
                  ADMINISTRATION, NEW YORK, NY

    Mr. Rogers. Members of the committee, my name is Aubrey 
Rogers and I am the Director the SBA's New York District 
Office. I am responsible for managing SBA's activities in 
downstate New York for all 14 counties in the State.
    Thank you for inviting me to testify about the assistance 
that SBA provides for small businesses on Long Island.
    SBA is beginning a new era with a new administration in the 
White House and a new Administrator at the SBA, and his name is 
Hector Barreto. Administrator Barreto grew up in a small family 
business and, in fact, ran a business of his own. He 
understands the problems and the issues that concern small 
business owners.
    The SBA is tasked with helping entrepreneurs start, run and 
grow small businesses. It does so through a large organization 
of employees and resource partners who administer several 
lending and management programs. These programs include 
financial assistance, counseling and training and access to 
Federal contracts. SBA's capital access programs are designed 
to provide financial assistance to a variety of small business 
types, and to deliver them the agency partners with banks, non-
bank lenders, certified development companies, the Long Island 
Development Corporation and small business investment 
companies, as well as microloans for intermediate years. The 
programs include:
    Microloans for very small, start-up businesses with loans 
up to $35,000.
    504 loans for the purchase of real estate and equipment, as 
well as 7(a) general business loans that are used for working 
capital and general business purposes.
    Finally, small business investment company deals where SBIC 
has invested in small businesses during their growth stages.
    Just recently the SBA introduced a new program that's 
called the New Markets Venture Capital Program that is designed 
to bring venture capital to low income rural and urban areas. 
In the first round of applications, seven companies were 
approved to deliver this program, and in the spring of 2002 
another request for proposals will be made.
    With respect to counseling and training, SBA delivers this 
program, again through partners, one of them, the Service Core 
of Retired Executives. Here on Long Island we have 78 
volunteers that deliver that program for Long Island residents, 
and through the Small Business Development Centers, two of them 
here on Long Island and one of them is represented here at this 
panel today.
    The Government, the Federal Government buys approximately 
200 billion dollars worth of goods and services annually, and 
SBA is tasked with the responsibility of securing some of those 
contracts for small businesses. It does so through a Government 
contracting program where prime and subcontracts are identified 
for small businesses. It does so as well through the 8(a) 
business development program, where socially and economically 
disadvantaged small businessses receive management technical 
assistance and Government contracts through this program. On 
Long Island there are 41 certified 8(a) firms.
    We also have a small disadvantaged business certification 
program where companies are certified as ``small 
disadvantaged,'' in order to make them eligible for special 
bidding benefits.
    Finally there is a program introduced just two years ago, 
called the HUBZone Empowerment Contracting Certification 
Program, developed to bring economic development and employment 
growth in distressed areas. This is a race neutral and gender 
neutral program. To date we have two small businesses on Long 
Island certified in this program and they are reaching out to 
expand the outreach. Combined, these programs have had a 
massive economic impact on the Long Island economy, creating 
jobs and expanding the local tax base.
    With respect to regulations, SBA is also charged with 
oversight regulatory compliance and, therefore, we have created 
the office of the National Ombudsman to do that. And a new 
Administrator of that division has just been named.
    Let me close with a word about SBA's award winning Web 
site, www.sba.gov. This site brings information about SBA into 
the homes and offices of Long Island businesses, and at the 
touch of the keyboard, 24 hours a day. It receives about 1.6 
million hits per week and is a key component of our outreach 
efforts.
    I want to thank you for inviting me and as both of your 
offices know, Congressman Grucci and Congresswoman Kelly, we 
are delighted with the strong support that you have for small 
businesses in New York State and for your support of the Small 
Business Administration.
    I will be pleased to answer questions.
    Chairman Grucci. Thank you. As the format is generally 
conducted, the questions will be asked at the conclusion of the 
panel's testimony and we will certainly have available some 
time, I see we have some guests in the audience, if they have 
any questions as well.
    [Mr. Rogers' statement may be found in appendix.]
    Chairman Grucci. I would just like to take a moment: We 
will hear from him momentarily,but I would like to acknowledge 
the presence of Supervisor Kozakiewicz who just joined us at the panel. 
Thank you once again, personally, for lending us this meeting room. 
Thank you for letting me sit in your seat and allowing us to conduct 
this meeting.
    Mr. Kozakiewicz. You are welcome.
    Chairman Grucci. Mr. King.

    STATEMENT OF JAMES KING, NEW YORK STATE DIRECTOR, SMALL 
       BUSINESS DEVELOPMENT CENTERS, U.S. SMALL BUSINESS 
                   ADMINISTRATION, ALBANY, NY

    Mr. King. Thank you, Mr. Grucci and Ms. Kelly. First, I 
feel like an interloper coming down here to the Island, but I 
am very pleased with the invitation. Just so you don't feel 
left out, Ms. Kelly, I was in your district on Tuesday and 
working with the folks out of Ulster Center.
    I would like to point out, it is kind of significant but 
this might be the first hearing I have ever attended where we 
had two small business owner families heading up the hearing, 
and I could also add that only two small business persons would 
come in from a day like today, off the beach or whatever else 
was calling, and sit here and pay attention to the issues of 
small business.
    One other thing, before I really get started, I have rather 
lengthy testimony and I will provide that for the record, but 
one thing I would like to point out is that last year, I would 
like to seriously thank the Committee for your efforts in 
making sure that the SBDC primary core service of business 
advisement was not forced to implement fees for our 
constituents and clients. From my perspective, that would have 
been a disaster. It would have taken money out of the equity 
base that many of our smaller clients use to get their 
businesses started and leveraged with the financial community, 
and it would have just been the wrong thing to do. So I do want 
to thank you for your initiatives in stepping forward on that 
critical issue.
    Today we are talking about the issues that confront the 
Long Island small businesses, and I guess I can go back a few 
years to--I was around regretfully, well, happy I was around--
that many years ago when the soothsayers were pronouncing Long 
Island's economy dead. We were looking at Grumman and several 
other large firms leaving the area. The foreign raiders were 
coming in from other states trying to recruit our businesses 
away as fast as possible. Thankfully, that did not happen and I 
think the reason that did not happen was the strength and 
vitality of the entreprenuerial community here on Long Island 
and elsewhere in New York.
    The change, I think, that is underscored here on the 
Island, when I looked at the statistics, over 40 percent of 
Long Island's employment is now provided by firms or in 
occupations that did not exist ten years ago. Some folks would 
say that that could be as high as 60 percent. I think that 
really underscores what I think is the major issue that small 
businesses are confronting and that is change. The change is 
increasing ever faster and we try and provide a sector analysis 
focus on each one of the small business areas. The primary one 
for us has been manufacturing. Where our manufacturers--in 1998 
we had a turnaround for the first time in ten years, that 
manufacturing employment did not decline in New York State, we 
actually had an increase. I think that increase is based upon 
our manufacturers being much more highly sensitive to costs, 
they're much more productive and they're getting much more 
investment out into their businesses.
    That investment or access to capital and at reasonable 
rates and terms is often a concern where many small business 
people fall short, and that's where we spend a lot of time 
within the SBDC, making sure that small business owners do have 
proper access to the capital that they need. In that context, I 
am a very avid supporter of SBA, of the guaranteed programs and 
some of the programs that have been launched recently, but I 
really think that we should look to concentrate on even 
expanding those programs and making them more widely available. 
There are always many individuals that have good, successful 
ideas, that cannot get them implemented on a timely basis with 
the proper amount of capital, because we are confronting some 
of those loan guarantee limitations, and I don't believe those 
programs cost the Federal Government; I think they are an 
investment and they get returned many times over.
    One other area of change that I would like to touch upon, 
and that's an area that, again, the Committee has taken action, 
and that is with HR203, that's a compliance assistance 
initiative. Small business people do not have the wherewithal 
to respond to all the regulatory compliance agencies that are 
in existence. They don't have experts in OSHA. They don't have 
experts dealing with the IRS and some of the intricate rules 
and regulations there, and definitely they don't have experts 
that know every chemical and compound that could be declared 
hazardous today that wasn't declared hazardous yesterday.
    My own office, I went out of the way to find someone--we 
had a person coming in to review my office. We still had some 
of that liquid whiteout around and I was surprised to hear that 
that was declared a hazardous material which should no longer 
be kept in the office.
    So we constantly go out in the field. We meet with 
individuals and I was up in Watertown the other day, met with a 
small bakery, family owned bakery operation. We worked with 
them to set up a new facility, expanded to about a 12,000 
square foot operation; it's employing about 45 people. OSHA 
came in and fined him $8,000 because he didn't have his plug 
outlets covered in an area of the factory that wasn't yet 
completed. There was no one working there. It was an area that, 
you know, he had moved in early and he was working on it and he 
got hit with a fine like that, which was just unbelievable, 
from the viewpoint that he just moved into a new facility, he 
was tight on working capital and he received a fine of that 
nature.
    I guess I will wrap up by just saying, I would almost say 
that the major issue is that small business often times is not 
a major issue and should be. Maybe that's a reflection of the 
fact that within the Beltway, SBA is not a major agency, and it 
should be. We looked at some of the Federal agencies and what 
we are talking about and often times SBA's budget might be 
equated to a statistical discrepancy. If we look at how 
important small business is to the Nation and to Long Island, I 
think it deserves a lot more.
    Chairman Grucci. Thank you, I tend to agree with you.
    [Mr. King's statement may be found in appendix.]
    Mr. Szymanski. Excuse me everyone. We usually have timing 
lights, green, yellow, red. I will just wave my hand when you 
have a minute left and help you track your time.
    Chairman Grucci. We are trying to keep the opening comments 
to about five minutes so that we can get to the questions and 
open up a dialogue because I am sure that people may have 
questions that they would like to bring forward.
    At this time we will go to Ms. McEvoy. It's good to see you 
again.

  STATEMENT OF JUDITH McEVOY, DIRECTOR OF THE NEW YORK STATE 
     SMALL BUSINESS DEVELOPMENT CENTER, SUNY AT STONY BROOK

    Ms. McEvoy. My name is Judith McEvoy. I am Director of the 
New York State Small Business Development Center at the State 
University of New York at Stony Brook. I think I would like to 
describe the SBDC to a small extent, but what is very 
interesting about the SBDC is that we are all located in 
centers for higher learning and I believe that we are a true 
partnership of the public, private and both Federal and State 
Government in servicing small business.
    An essential part of the Small Business Development Centers 
is that we are located in all 50 states. We can talk to each 
other and offer to our clients at least 23 locations in New 
York State. Again, access to the educational community is a 
very big part of what we do.
    We also, because of our affiliation with and administered 
by the SBA, can help service and retail businesses. There are 
other economic development agencies; they are looking for 
value-added business. We are the ones that service the small 
mom and pop stores and service the retail sector.
    The SBDC provides assistance in financial, marketing, and 
technical matters. What we do is direct one-on-one business 
advisement. Every client has their own personal business 
adviser. There is no cost. Again, I thank the Small Business 
Committee for making sure that fees were not imposed for 
services. The number of clients who have thanked us for our 
services, who could not afford, at this point in their 
establishment, to pay high consulting fees, are hoping that we 
get them to grow, that we get them to become larger businesses.
    Small business on Long Island is 92 percent of all 
businesses and 75 percent of all the jobs are in the small 
business sector. It is essential that the no cost services of 
the SBDC be maintained and available to keep the Island 
thriving.
    The Small Business Development Centers routinely see the 
types of business that cannot afford the higher priced 
consultant. Working with our partners, we hope to make these 
businesses grow.
    One of the things that I am proud of, and I am stressing 
this, is the fact that we are located in centers for higher 
learning. I have the privilege of being located at the State 
University at Stony Brook. I tell people many times, in talks 
that I give, that we see the sublime to the ridiculous coming 
through. That is absolutely the case; we see the smallest, 
single entrepreneur to the high tech incubator companies that 
are being incubated at the State University at Stony Brook. We 
are a port of entry, if you will, to not only services but 
those of the strategic partnership for industrial resurgence, 
and the Long Island Forum For Technology. We utilize every 
single economic development agency on Long Island if it 
benefits that client. All of our business advisors know where 
to send the individual to get the technical services that are 
available for small businesses.
    I am also very proud of the fact that we are located in 
Southampton, that enables us to service the east end, and of 
significant interest to this Committee, is the Small Business 
Development Center located at Brookhaven National Laboratory, 
the first in the Nation. It is a joint effort of the United 
States Department of Energy and SBDC. I support the--I will 
list them very quickly, HR203, which is the National Small 
Business Regulatory Assistance Act, which is geared for our 
high tech incubator clients. I also support HR2538, which is 
the Native American Small Business Act, because Southampton 
services the Shinnecock Indians. You have another bill, the 
Vocational and Technical Entrepreneurship Development Act which 
is important, but more than that, the University utilizes the 
Small Business Technical Transfer Program which utilizes 
students, companies incubating on a campus faculty and their 
association with private businesses.
    My other concern from the perspective of what we see, that 
as banks are merging and becoming bigger and bigger, they are 
losing the personal touch with our clients. I cannot tell you 
how many personnel shifts there have been as each of these 
banks merge, and I just want to request as banks merge, that 
small businesses are paid attention to, and that their needs 
are takeninto consideration.
    Thank you very much.
    Chairman Grucci. Thank you, Judy. It looks like I am not 
paying attention, but I'm trying to do a number of things, so 
please forgive me if it looked as though I wasn't, but you know 
me long enough to know that I always pay attention to you.
    Ms. McEvoy. Yes, you do.
    Mrs. Kelly. We can hear and read, and we won't talk on our 
cell phones.
    Chairman Grucci. That I promise.
    [Ms. McEvoy's statement may be found in appendix.]
    Chairman Grucci. At this time I'd love to hear from our 
host, Supervisor Bob Kozakiewicz.

STATEMENT OF ROBERT KOZAKIEWICZ, SUPERVISOR, TOWN OF RIVERHEAD, 
                               NY

    Mr. Kozakiewicz. Thank you. Good afternoon, Congressman 
Grucci and Congresswoman Kelly. I certainly want to first and 
foremost once again welcome you to the Town of Riverhead, thank 
you for bringing Washington to Riverhead. We are honored to 
have members of the House Committee on Small Business here 
today to visit our town, and I hope that you have a chance to 
visit some of the small businesses that make this town the 
great community it is.
    We are a small community. We have our roots founded in 
agriculture and agricultural businesses. We have large shopping 
districts in three prominent downtown areas, Riverhead, Wading 
River and Jamesport. The majority of these businesses in the 
downtown areas throughout our 78 square miles are predominantly 
small businesses. These businesses are owned by individuals. 
These businesses are businesses handed down from parent to 
child.
    We are experiencing a growing spirit that will only be 
enhanced by additional small businessses. To ensure this, we 
have a very active industrial development agency. We have 
established or are working to establish, we passed a resolution 
to establish the East End Office, which will be the home for 
the Long Island Development Corporation, as well as the Empire 
State Agency at the former Grumman site in Calverton. In 
addition to that, I am looking to establish a Riverhead Office 
of Economic Development to further promote and enhance the 
opportunities for small businesses to locate within the 
boundaries of our rural town.
    The Town of Riverhead is also collaborating with Stony 
Brook University and the State of New York to establish an 
agricultural business incubator at the former Grumman site, to 
further encourage small businessses to start to grow; this 
means that the town residents have invested in the future of 
small businesses. I say this because it is extremely necessary 
that these agencies have the appropriate funding needed to 
sustain the individuals who are willing to take these risks to 
start new businesses and expand existing small businesses. 
Without your support and without the support of your Committee, 
the State of New York is limited in what it can do, as is the 
County of Suffolk and the Town of Riverhead. Whether we are in 
an economy that is peaking, stalled or reaching the depths of 
despair, small businesses have been the life line of American 
commerce. Your support, continued support for the funding of 
small business agencies and programs is paramount to the 
survival of these small businesses into the community here, as 
well as communities of this great nation.
    In closing, as I start to wind down, I do have to take this 
opportunity to reach out to you and to express to you my 
sincerest concern that you can address damage that is being 
incurred in our small business community as we speak, damage 
that is being sustained because of the skeleton frame, that eye 
sore, that albatross on West Main Street, which was to be the 
new and improved United States Postal Office. We in the Town of 
Riverhead understand that there has been a difference of 
opinion between the contractor and the Postal Service. We 
understand the issues surrounding the contractor not meeting 
schedules and providing an expected quality of work. What we do 
not understand, and have a difficult time accepting, is the 
fact that the Postal Service began such an enormous project and 
abandoned it to the point of causing us serious damage to the 
beautiful vistas that we have here in the Town of Riverhead and 
the damage that it has caused, what we are trying to do for our 
small businesses along West Main Street and our community at 
large. It is one of our main gateways to the heart of Riverhead 
Town and it is such an eyesore. It has been forced on the Town 
of Riverhead and its residents, and I am asking you to do 
whatever it is in your measures, to take whatever necessary 
steps you can to help us, to help the Town of Riverhead, to 
help its residents remediate this problem. I am asking you to 
please help us with that.
    I close, thank you.
    [Mr. Kozakiewicz's statement may be found in appendix.]
    Chairman Grucci. Thank you, Supervisor. You have brought 
that issue to my attention day one when I became Congressman 
and I applaud you for your efforts in trying to resolve that 
issue. We will talk about that more as we get into the question 
and answer session.
    Mr. Kozakiewicz. I do have one additional thing: I have had 
some photographs that are being developed with a digital 
camera. May I ask permission that they be made part of the 
record? I don't have them available at this point, but before 
we close today.
    Chairman Grucci. Without objection, they will be made part 
of the record.
    At this time we will turn to my former Director of Economic 
Development. As most of you here know, I used to be the 
supervisor of the Town of Brookhaven and Tony Aloisio was the 
Director of Economic Development, so let's hear from Tony.

STATEMENT OF ANTHONY ALOISIO, DIRECTOR OF ECONOMIC DEVELOPMENT, 
                     TOWN OF BROOKHAVEN, NY

    Mr. Aloisio. Thank you, Congressman Grucci and 
Congresswoman Kelly. It's nice to have the opportunity to speak 
to you this morning and to act as an advocate for some of our 
small businesses in Brookhaven. I am sure our concerns are 
similar to what you might experience in other areas of the 
country.
    What I would like to briefly do is highlight a few areas 
where I think we might have some congressional attention in 
order to alleviate some of the issues that we are dealing with. 
The first point I would like to bring up is, you may not think 
of the dollar figure that I'm going to use usually associated 
with small business, but Roz, you can correct me, small 
businesses are usually those with 500 or under employees with 
the Federal Government.
    Often I also act and run an industrial development agency 
which issues tax exempt bonds, small caps, on behalf of small 
manufacturers. All of these employees generally fall into what 
we consider the small business category, 200 or less employees. 
They really are not large enough to access the corporate bond 
market, and they are really too large in many cases for 
traditional bank loans, so industrial revenue bonds are very 
typically the way they want to go for building 100,000 square 
foot, 150,000 square foot factories, with building and 
machinery expenses that will usually be in excess of $10 
million, but they very much still fit the small business 
category.
    Since 1979 a cap was put on the amount of individual 
projects at $10 million per project, and since that date, that 
number has not been adjusted. So as inflation has occurred over 
time, we have not been able to assist deals which will have the 
capital expenditure requirement of over $10 million for a 
particular new project. So for those larger small businesses--
that's the way I like to talk about them--that is really a 
major issue, and I really speak probably on behalf of most 
IDA's that that is something that there can be some attention 
to in the future.
    Again, just having some discussions with some of the small 
businesses in the town recently, a number of issues have come 
up, and they really come up repeatedly. I know it was just 
mentioned earlier, some of the regulatory problems as with 
respect to OSHA and the IRS. You know, I certainly can second 
those thoughts. A lot of the complaints that I hear will, for 
example, relate to the IRS's discussion or definition, I guess, 
of who can be contractors and how they are able to use them 
effectively. The rules are still somewhat confusing to some of 
our small businesses and it really does need some attention so 
that they can be effective in the use of those type of 
technical skills that an independent contractor can bring.
    I might remind you that there was the Small Business 
Regulatory Enforcement Fairness Act that went into effect a few 
years ago that essentially was supposed to have the top to 
bottom review of all agencies that impact small business, and I 
would just hope that there could be a real commitment to 
following through on what that law set in practice, and really, 
because of changes that have occurred in the small business 
environment, really upgrade or update some of the existing 
laws.
    The other issue that I was little surprised to hear and I 
actually went into a little bit more research as a result of 
it, was the interest of our small business community in global 
trade. One of the statistics that I have become aware of 
recently, and I think it is up to 67 percent of our businesses 
with 20 or more employees are now involved in global trade. 
That's up eight or nine percent from 1992.
    It is really interesting the way some of our companies are 
really aggressively trying to get into those market areas, but, 
again there are risks, there is some confusion really working 
in areas where we do not have any type of trade agreements. I 
am not only necessarily talking about costs, but issues related 
to even having the appropriate credit or, in some instances, 
letters of credit are required for purchases. That really 
creates a real problem for some small companies, and I guess if 
there could be some progress in trade agreements between our 
country and those where there are, it really does benefit the 
small businesses.
    The last point that comes up a lot with some of my 
companies is, again, transportation and infrastructure issues. 
A company this morning was just telling me about their concern 
that the Port of New York has to be dredged because they get a 
lot of their goods and services through that particular port. 
Roads, infrastructure connections, trucking to that is very 
important and there is a concern that we are falling behind in 
infrastructure, and that, of course, is really the lifeblood of 
feeding the east end of Long Island for goods and services.
    I will just close with that.
    [Mr. Aloisio's statement may be found in appendix.]
    Chairman Grucci. Thank you, Tony. Your information is right 
on the money and very current in the things that are happening 
and we will talk about TPA trading, the promotion authority in 
a moment, but I think that will hit on a lot of issues that you 
just talked about.
    At this time we will hear from Marion Cohn.

  STATEMENT OF MARION COHN, ASSISTANT DIRECTOR OF GOVERNMENT 
         AFFAIRS, LONG ISLAND ASSOCIATION, COMMACK, NY

    Ms. Cohn. For the record, the Long Island Association is 
not a recipient of any Government grants.
    Good afternoon. My name is Marion Cohn and I am the 
Assistant Director of Government Affairs for Long Island 
Association. I am here substituting today for Mitchell Pally, 
the Vice President of Government Affairs at the LIA, who is 
taking his second daughter to college today.
    The Long Island Association is the region's largest 
business and civic organization with over 5,500 members, over 
5,000 of which could be considered small businessses. We are 
very pleased and honored to be able to testify here today 
regarding the needs of Long Island small business community.
    Many of the other speakers on today's hearing list will 
discuss specific aspects of the needs of small businesses, 
including financing and capital needs. The ability of our small 
businesses to move an idea or a product from inception to the 
marketplace is one of the most important areas where the 
Federal Government can effect change. From our Small Business 
Development Centers to our Small Business Administration 
regional offices, these agencies attempt to provide small 
businesses with the financing necessary to make their ideas a 
success and reality. I will defer to the other witnesses here 
today to discuss the specifics of these entities and how we can 
make them better for our companies.
    In addition to these small business issues, these companies 
are faced with many of the same needs as our larger companies 
on Long Island, namely, the need for highly skilled workers. 
The need for such educated workers cuts across all segments of 
the Long Island economy, from our service sector to our 
expanding high technology sector. This need is all the more 
important, given the issues which evolve from it, including the 
ability of Long Island to provide affordable housing for our 
young people just coming out of college, young people who have 
just the skills necessary for our Long Island companies. If 
Long Island cannot provide such affordable housing to this 
segment of the population, these young people will not stay 
here, nor will they come back here, regardless of the desires 
of their families. Not every mom or dad wants their grown-up 
son or daughter living in the basement, and not every son or 
daughter wants to live in mom and dad's basement.
    It is essential for Long Island to provide appropriate 
housing opportunities for this segment of the population. It is 
for this reason that the Long Island Association has attempted 
to work with our municipalities to fashion a program to build 
affordable rental housing for our young people. Long Island has 
fewer rental units than any other comparable region in the 
United States. This is the type of housing that our young 
people want and this is the type of housing which is in such 
short supply on Long Island.
    The Long Island Association is working with the towns of 
Brookhaven and Islip and Suffolk County to find sites on which 
such housing can be built. In fact, they are attempting to find 
just such a site in a downtown area where density can be 
increased, so that we can attempt to find two solutions: One 
for such housing and one for the redevelopment of the downtown 
area. Funding from the Federal and State housing agencies is 
going to be necessary for this to work, because these rents 
must be kept below market rates to be affordable for our young 
college graduates. If we can keep these college graduates here 
on Long Island, then the expansion of our small businesses can 
be possible, but without these prospective workers, it is going 
to be very difficult for our small businesses to expand.
    In summation, the Long Island Association remains committed 
to working with our elected officials at all levels to assure 
that the atmosphere of success is available on Long Island to 
allow small businesses to succeed. We remain committed to 
providing affordable housing for our young people, reasonable 
energy costs for us all, finding the highly trained workers 
necessary, providing the financing for the development of new 
ideas, and providing affordable and accessible health insurance 
for all. We thank you very much for this opportunity.
    Chairman Grucci. Thank you. We appreciate your comments.
    [Ms. Cohn's statement may be found in appendix.]
    Chairman Grucci. Roz how have you been? Good to see you 
again. The last time I think we were together we were doing a 
radio show.
    Please, the floor is yours.

STATEMENT OF ROSLYN GOLDMACHER, PRESIDENT/FOUNDER, LONG ISLAND 
             DEVELOPMENT CORPORATION, PLAINVIEW, NY

    Ms. Goldmacher. Good afternoon. I am Roslyn Goldmacher, the 
President and CEO and Founder of the Long Island Development 
Corporation, which is a 20-year-old regional economic 
development organization here on Long Island, serving the small 
business community. Our membership represents the economic 
development community of Long Island, including banks, 
businesses and Government. We provide 15 different financing 
and technical assistance programs for small businessses in 
Nassau and Suffolk Counties. Over the years, Long Island 
Development Corporation has made some $450 million in loans to 
small Long Island companies and helped small Long Island 
business obtain and perform on $426 million in Government 
contracts.
    We operate the SBA's 504 Certified Development Company 
program for Long Island, as well as the Department of Defense 
Procurement Technical Assistance Center for Long Island.
    We also operate a targeted industry loan fund aiding 
defense dependent manufacturers, commercial fishermen and 
targeted industries under a program of the Economic Development 
Administration.
    There are two issues I would like to address today: One of 
them is access to capital for small businessses, particularly 
for minority and women-owned businesses and businesses located 
in blighted areas. Lack of adequate access to such capital on 
affordable terms was an issue when LIDC was founded 20 years 
ago, and it is still an issue today.
    The solutions that I would like to propose are policies 
which will increase such capital for small businesses. For 
example, increased reliance on Government guarantee programs, 
such as the SBA 504 program, rather than direct loan programs. 
It is quite clear from the historical numbers that Government 
guarantee programs are less costly to the Government than 
direct programs.
    Federal agencies, such as the Small Business 
Administration, should increase their reliance on private 
sector, community based partners, such as the certified 
development companies like LIDC; such as the Small Business 
Development Centers, et cetera, to deliver financing products. 
It is less costly to the Government, more efficient, in terms 
of delivery, and less reliance on limited Government resources, 
including declining agency staffs. There is also a better 
knowledge of community needs by the local community partners.
    Another way to increase capital for small businesses is to 
ask that agencies, such as the Small Business Administration, 
monitor regulations regarding the lending programs, to make 
sure that they encourage lending rather than discourage it, and 
that they have enough risk tolerance to permit lending to these 
targeted communities, particularly during times of recession.
    Increasing incentives for lenders is another way that the 
Federal Government can help increase access to capital for 
small business. Both bank and non-bank institutions do better 
when they are provided with incentives rather than mandates. 
Incentives to make such loans, such as tax credits, giving the 
lending institution the ability to expand in exchange for a 
good record of such lending, these are the ways to get these 
lenders to get more money out into the small business 
community.
    In addition to access to capital, an issue of importance to 
Long Island small businesses is high tech. Our economy out here 
does revolve around high technology. These type industries 
which Long Island has and continues to foster in the wake of 
the defense downsizing. Such industries as biotech, 
pharmaceutical, high-end electronics, software development, 
biomedical instrumentation. Increasingly such companies are 
proliferating here on Long Island and we need to support the 
development of these industries because they provide high 
paying sustainable wages, they do not negatively impact on 
fragile physical environment, and they can co-exist with our 
high land costs, high utility costs and labor costs.
    It is requested that the Small Business Committee continue 
to monitor Federal legislation, regulation and funding to 
encourage high tech businesses with direct funding for research 
and development, funding and technical support for those 
industries whose technology can be used by the Federal 
Government as well as the commercial sector, and by monitoring 
Federal regulations to make sure that they encourage the growth 
of such companies, not restrict them with over burdensome 
reporting and other requirements, particularly in early stages 
of growth. Finally, that the Federal Government create a tax 
structure which encourages investment in these types of 
companies, their capital assets and their growth.
    The Long Island Development Corporation is proud to serve 
the small businesses of Long Island, our affiliate, LISBAC, the 
Long Island Small Business Assistance Corp., makes mini micro 
loans to women-owned businesses and we were the first, and to 
my knowledge still the only community development financial 
institution in the nation certified by the U.S. Treasury to 
provide services to women-owned businesses. Together we hope to 
continue serving the small business community of Long Island 
with your support.
    Thank you very much.
    Chairman Grucci. Thank you, Roz.
    [Ms. Goldmacher's statement may be found in appendix.]

    STATEMENT OF JUDITH SHIVAK, EXECUTIVE DIRECTOR, GREATER 
          SMITHTOWN CHAMBER OF COMMERCE, SMITHTOWN, NY

    Ms. Shivak. Good afternoon, Congresswoman Kelly and 
Congressman Grucci. I would like to thank you for inviting me 
to be part of this panel.
    I am the Executive Director of the Greater Smithtown 
Chamber of Commerce, which as of this week had 310 members. 
This week actually the Long Island Business News had a listing 
of all the Chambers of Commerce in Nassau and Suffolk County by 
order, and we are the sixth largest Chamber in Nassau and 
Suffolk County.
    I also speak as the Corresponding Secretary of the newly 
created Suffolk Coalition of Chambers, which represents 
chambers of commerce from Suffolk County, from Montauk 
toHuntington. Chambers of Commerce are the front door to the business 
community. We represent professional men, women, merchants, property 
owners, wholesalers, servicemen, manufacturers and financial 
institutions in the communities where we are located. In other words, 
we represent businesses from as little as one person up to 500.
    We act as the informational center for visitors and for 
businesses seeking a new location, and we answer thousands of 
inquiries by phone, by fax and even now by the Internet. We 
represent, according to 1999 statistics, 38,000 of the 42,000 
small businesses in Suffolk County, and the definition of that 
was less than 20 people employed, and a good percentage of that 
is even less than five.
    The panel today is intended to focus on critical business 
issues, and I am speaking as someone who represents, quote, 
``mom and pop,'' the people on Main Street. One of the major 
issues facing them and all levels of the small business 
community is the continuing struggle to find competent and 
skilled workers to fill their business needs. This goes across 
all sectors, from the hourly wage earners to the highly skilled 
employees.
    I questioned a sampling of the local merchants in both my 
town and several of the other Chambers on every retail level, 
and the issue that was most often raised was the ongoing 
shortage of qualified candidates for employment. Almost every 
store in our town area has a ``Help Wanted'' sign in the 
window. They are constantly asking Chambers how can we help 
them.
    The latest unemployment figure for Suffolk County was 3.8 
percent as of the end of July, almost the same as last year at 
this time. This is in comparison to the national unemployment 
rate figure, the 4.5 percent for the rest of the country, 4.5 
for New York State and 5.3 for New York City. In other words, 
any resident of Suffolk County who wishes to find employment 
has a 96.2 chance of finding the employment, if he can get 
there.
    What are the reasons for this continued lack of employees? 
Can it be tied to the fact that Suffolk County has one of the 
highest costs of living for the entire Nation? Does it have to 
do with the lack of adequate public transportation to get those 
willing to work to the places which have the jobs to offer, 
especially if you are not just going east or west but north and 
south. Is it the lack of affordable housing or is it a 
combination of all three.
    I would like to ask this Committee to work with the small 
business community and other organizations which were alluded 
to on this panel to find these answers.
    The downtown area of Smithtown has a unique problem of its 
own. Its main street is actually two main State roads which go 
through it. The Department of Transportation wants you to go 
from A to B as fast as you can. We want people to, quote, 
``stop and shop.''
    One of the problems that we have is the need for adequate 
parking and traffic mediation. I am happy to say that under the 
auspices of the last Congress, June of 1998 an IST grant, now 
known as T-221, Smithtown did receive a grant of one million 
dollars, which will be used now to mitigate traffic and provide 
parking. This was passed in 1998, it is now almost September of 
2001, and we hope--we are saying ``hope''--to have a shovel in 
the ground maybe by October.
    I think one of the problems has always been when a grant is 
given, it takes so many years and so many different levels of 
Government to get this augmented, and this makes long-range 
planning very difficult. I would like to see a shortening of 
the time of actually helping with this. In other words, I would 
like help from this Congress to help the small businesses in 
any way they can.
    Thank you.
    Chairman Grucci. Judy, thank you for your testimony.
    [Ms. Shivak's statement may be found in appendix.]
    Chairman Grucci. Our last panelist who will be speaking, I 
have had the pleasure of visiting her operation out in Montauk. 
I was quite impressed with what I saw. You always hear about 
the east end fishing industry, how important it is, and we all 
recognize that, but to actually see the process, it was very 
impressive and I thank you for giving me the opportunity to do 
that.
    You expressed some concerns at that particular time and I 
think it was important to bring you here so you can put it on 
the record so that we can continue to try to help our fishing 
industry, not just here but along the eastern seaboard, as you 
pointed out.

  STATEMENT OF SIMA FREIERMAN, GENERAL MANAGER, MONTAUK INLET 
                      SEAFOOD, MONTAUK, NY

    Ms. Freierman. Thank you, Congressman Grucci and 
Congresswoman Kelly. It is really an honor in this company for 
commercial fishing to have been chosen as the small businesses 
to represent the front line of folks in the trenches, and it is 
certainly appropriate to be recognized by the Small Business 
Committee since the over 6,000 floating small businesses that 
make up New York's commercial fishing industry are under the 
direct auspices, by an act of Congress, of the Department of 
Commerce.
    I have a little sense of deja vu sitting here. About 15 
years ago, in the County of Alachua, Florida, I sat on the 
board of the Gainesville Area Innovation Network--the acronym, 
of course, was GAIN. From my office in a glass building, I put 
together a coalition of State, County, academic, City, venture 
capital and small business entities to start up and support a 
high tech business incubator at Florida Power's Innovation 
Center. It was sexy and exciting and we added the 80 percent of 
job creation, just like the Baker report said we would.
    Now today, as the Congressman mentioned, my office sits at 
the end of a long dock in Montauk, and when the big trawlers 
come in with their catch, they bump it and my office sways a 
little bit. For excitement this week I went in at 5 a.m. one 
morning to show solidarity with my totally Hispanic crew, 
because one of the trawlers wanted to squeeze in one more trip 
before the market closed for the holiday weekend. If you want 
sexy, you should see the baby bald eagle that hunts from dock 
piling about 20 feet from my computer.
    It is good to be back in the field of economic development, 
only this time I am trying not to create jobs so much as I am 
trying to save some jobs. The commercial fishing industry 
contributed $150 million to New York State's economy in 1999 
and $3.6 billion to the national economy. We helped feed 280 
million people about 15 pounds of fresh, canned and cured 
seafood each. The Long Island region employs over 10,000 
individuals in commercial fishing and its support industries. I 
am employed by six middle aged small businessmen who have had 
the same job since they were teenagers. They have all been 
relatively successful so far, but some of them will be out of 
business within the next ten years. They will be out of 
business like the Boston Harbor fleet. It used to number over 
100 boats right there in Boston Harbor; after years of 
increasingly restrictive regulations, about 75 percent of the 
fleet sold out to a Government buy-back program in the '90s. 
They will be out of business because there is now talk of 
legalizing individual, transferable quotas that would be issued 
based on historic catch, and some them, simply don't keep those 
kind of records. I am not talking about tax evasion or altering 
records of what was caught. I am talking about fishermen filing 
scraps of paper and handwritten logs in the proper way over 
many years. I am terribly sorry, but if I had to produce my 
paycheck stubs from 1985 to 1995, I would also be out of 
business. Those who did keep the records may eventually have to 
sell out if too much quota goes to large corporate operations 
who will make it financially difficult for small independents 
to operate.
    Some of my employers will be out of business because they 
are losing heart. My most successful employer has his 22 year 
old son on the boat. He doesn't want to be a lawyer. He doesn't 
want to manage a dock. He doesn't want to be a congressman. 
This boy wants to fish, and every third night the two of them 
come in angry and depressed and talk about crimes against 
nature because they had to throw over 4,000 pounds of fish to 
land the 30 to 60 pounds they are allowed to keep. I am not 
talking about juvenile fish, I am not talking about a rare 
stock, I am talking about 14, 16, and 18 inch fish that had 
spawned three times and are too thick to stay away from. We 
have to throw them over because of poor science and 
mismanagement of the fishery industry.
    What small business woe would you like to add to the 
picture? How about the impossibility of finding crews who can 
afford to live on the east end of Long Island? How about 
geographic power coalitions that form so that New Jersey 
processors stop buying Shinnecock quahogs and that fleet 
disappears or converts?
    The same kind of political muscle results in opening season 
trip limits--that's in January, when all the fish are in 
southern waters, that are four times the trip limits allowed in 
the winter when the fish are in New York waters.
    I sit on the fishing committee for the Town of East 
Hampton's comprehensive plan. We distributed a quick survey to 
the commercial and recreational fishermen, and we asked them to 
name the problem that most bothers them. Everyone said 
``regulations.'' The very language of fisheries management is 
stilted, and I am going to read quickly from the testimony of 
Bill Grimm, a fisherman who couldn't be here because he is 
taking his daughter to college.
    The language of the Magnuson Stevens Fisheries and 
Conservation Management Act and the Sustainable Fisheries Act 
referred to any and all fishery stock depletion as overfished. 
That is, if an oil spill results in a fish kill, if an 
overabundant seal population eats most of the juveniles of a 
particular stock, if development destroys the spawning habit of 
a stock and causes it to decline, these stocks are called 
overfished. The Sustainable Fisheries Act set standards for the 
level of fish population that cannot be and have never been 
attained in nature. Basically, it calls for all stocks to exist 
at their maximum level all at once. That's like saying that 
foxes and rabbits should exist at the highest level they have 
ever achieved, all at the same time.
    Mr. Grimm is one of my employers who owns two 90-foot 
trawlers. Last spring I persuaded his most productive captain 
to forego a high priced season and do side-by-side comparisons 
with the Government's research vessel Albatross. I stress that 
the purpose of this research was not to compete with the 
Government. They have a multi-year time line and it is 
important that they don't change their methodology, but the 
fact is they were catching an average of two fish per tow of a 
certain species, while the commercial vessel caught an average 
of 110 fish per tow. And when I sat with the Government 
scientists earlier this month, because they are finally ready 
to release this data, they actually suggested that the fishing 
vessel change its gear to reduce professional catchability so 
that the figures would be more comparable. I am happy to report 
that we were able to convince them that there might be value in 
the data to be gained from the commercial boat.
    One more example of regulatory language: Managers are 
beginning to focus on what's being called ``essential fish 
habitat.'' In reading the definition of that term, one comes to 
realize that the whole ocean is, of course, essential fish 
habitat. The next step, according to the National Marine 
Fishery Service is to identify potential adverse effects and 
potential habitat degradation.Fisherman have been interacting 
with that habitat for hundreds of years. Whatever they are doing, it 
hasn't prevented certain areas from being rich fishing grounds for 
centuries and centuries. Could it be that they're really the original 
conservationists? Is there some reason regulatory language doesn't try 
to identify potential beneficial effects or habitat enhancement?
    I will stand here with my education and do quite well 
splitting semantic hairs with fishing management counselors, 
but please don't ask the small business fisherman to do that. 
When you are all at the beach this weekend, if you can see past 
the charter boats, take a look at their world. When a fisherman 
wants to go from Point A to Point B, he aims his boat and he 
goes there. And on the back of my written testimony you will 
find a chart on the fisheries management structure, and you 
will see there is no Point A and there is no point B. Not only 
do management and industry for commercial fisheries work for 
different companies, sometimes they don't even agree on the 
product.
    Thank you, sir.
    Chairman Grucci. I appreciate your testimony. As always, 
you were very articulate about it.
    [Ms. Freierman's statement may be found in appendix.]
    [Mr. Grimm's statement may be found in appendix.]
    Chairman Grucci. The process now is that we will ask a 
series of questions and then we will open it up to see if 
anyone else in the audience may have questions they would like 
to ask of us or the panel.
    Out of consideration and thanks to Congresswoman Kelly for 
making this trip down today, I will turn the questioning over 
to you.
    Mrs. Kelly. Thank you very much.
    Sima, I do not have a written copy of your testimony, I 
would appreciate having that simply because I have an interest. 
I have a boat and I am in the waters, I see the fishermen.
    Thank you, very much. Is the map there too? Thank you.
    I want to go to Aubrey Rogers. Mr. Rogers, you and I have 
talked with each other over the course of a good many years; I 
want to know what you have done recently to help Long Island 
with the 7(a), 8(a) to help the 41 certified businesses get 
Government contracts. Have you interacted recently with people 
out there to get them contracts?
    Mr. Rogers. The contracts that we are talking about are 
Federal contracts with Federal agencies. They can come from 
local Federal agencies or Federal agencies located outside of 
the state.
    Mrs. Kelly. I understand that, Mr. Rogers. I am asking what 
you, as the head of the SBA in the New York State region have 
done to try to help the businesses out here on Long Island? You 
said in your testimony there are 41 certified 8(a) firms, for 
instance.
    Mr. Rogers. That is correct.
    Mrs. Kelly. But if I read your testimony correctly, there 
are only seven of those firms who actually have a contract. 
It's a long process to get certified. It is a hard process to 
get certified.
    Mr. Rogers. That's true. We have a number of contractors, 
8(a) contractors, that graduated from a program that indeed 
received lots of money and lots of contracts from our program 
over the years. In the past two years we have been trying to 
replace those contractors with a new group of contractors, so 
more than half of the 41 that are now in the program came into 
the program in the last two years.
    We have staff who reach out to Federal agencies to market 
the skills and products of the companies that are now in the 
program. They are also training the companies on how to 
negotiate the Federal process so that they, in turn, will be 
able to access the contracts on their own.
    Mrs. Kelly. Two years, Mr. Rogers, for a small business 
person is an eternity. A small business person needs to get in, 
once they go through that process of being certified, they need 
to get contracts or the process of certification is useless. I 
would like to encourage you to do everything you can from your 
position to try to help the small businesses.
    I drove through town here in Riverhead and found a fair 
number of empty store fronts. There are probably small 
businesses who could use some guidance. You have a whole group 
of people sitting at this table who have the ability to help 
you. Having met them, I hope you will take their advice and I 
hope you will work with them----
    Mr. Rogers. Absolutely.
    Mrs. Kelly [continuing]. And emerge from a mere seven. 
Let's try to get all 41 some kind of a contract.
    Mr. Rogers. Yes.
    Mrs. Kelly. That takes me to you, Roz I understand that 
part of what you said you did here was work with the Department 
of Defense. Under the Federal Government guidelines, the 
guidelines are that women and minority owned businesses should 
have five percent of all the contracts that are let by the U.S. 
Government; what have you done, is my question, to help the DOD 
make that goal? Because I know they are currently not at that 
goal.
    Ms. Goldmacher. As a procurement technical assistance 
center licensed by the DOD, we do have that five percent goal 
within our mandate. I am proud to say that here on Long Island 
we exceed that goal. That's not the case nationwide, however.
    One of the specific suggestions I would have to help that 
goal be achieved nationwide, as well as also help the 8(a) 
certified companies is a closer working relationship between 
the Department of Defense procurement centers and the SBA. Here 
on Long Island we do work together. We work with Mr. Rogers' 
local representatives. Any time there is a workshop regarding 
Federal contracting, our procurement center is invited to 
participate. We try to work with the 8(a) companies to search 
for specific contracts, but nationwide there is no formal means 
of communication linkage.
    For example, in the recent past there was a whole system 
set up for certification of small disadvantaged business by 
private certifiers. That's now discontinued, but when that 
first came up one of the first things I asked Congress to do is 
let's let the PTAP nationwide do it. You have a whole system 
out there that can do this and do it for free, instead of 
charging fairly large sums to these small businesses, but there 
was no mechanism set up to link the programs. That's something 
that perhaps the Committee could work on, is to establish a 
more formal means of communication between the PTAP Center 
program and the SBA 8(a) program and procurement divisions so 
that they can work together for the benefit of these companies.
    Mrs. Kelly. Thank you very much.
    I have a couple of other questions. We have a couple of 
supervisors here. One of the things that I think several of you 
brought up, Roz you did and both supervisors indicated 
something about this. I don't know how many of you are aware 
that I got through Congress a bill called the Truth in 
Regulating Act. This is a bill that was signed into law. 
Unfortunately I haven't been able to get the funding from the 
Committee, this Committee or other committees or anybody else 
in Congress, to get funding there. It sets up a separate office 
in the General Accounting Office that would take a look at all 
of the rules and regulations that affect small businesses. It 
would look at them for redundancy, for overlap; it would also 
look at them from a cost benefit analysis.
    There is a great deal of need for this to happen, just as 
you pointed out, because people don't talk to each other. Both 
of our supervisors indicated that they felt that there were 
things that could be, perhaps, I think could have been 
addressed had this office been funded this year, since it was 
signed into law last year. Since all of you have something to 
do with small businesses and this has a direct impact on how 
small businessses are really affected by what the Federal 
Government does, it is something I hope that you will, perhaps, 
talk to your representative and others to help me get some help 
to get this thing funded.
    I do think that according to some of the testimony that I 
heard, we have an opportunity through this office to prevent 
small businesses from having to file numerous pieces of paper. 
Sima, you talked about your fishermen; if they were able to 
file once or twice a year with a particular type of thing--I 
know because I am in small business, my husband is in small 
business, we are a family of entrepreneurial small business 
people--we get the weirdest kind of questions from agencies 
that we didn't think had any control over anything that we did. 
They invade the privacy of people who work for us, some of them 
do.
    I think that there is a strong need for all of us to work 
together to try to stop that kind of thing from happening so 
that you can focus on making money, which is what small 
business is all about.
    I have a couple of other questions. I was writing notes as 
we went along.
    This is, Judy, you talked about the cost of living, the 
lack of transportation, the lack of housing and the problem 
with tax incentives. I would ask our supervisors what their 
approach is, because a lot of this can be handled on a regional 
level. Are the two of you working together to try to approach 
some of this, and do you offer tax incentives to small 
businesses to locate in your towns?
    Mr. Kozakiewicz. We do have an Empire Zone created in the 
Town of Riverhead which does provide tax incentives. We also 
work closely with the Industrial Development Agency to provide 
tax incentives for location to the Town of Riverhead. So, yes, 
there are opportunities that are provided. This does not mean 
that we should stop looking for other means and other 
mechanisms to make it work and we will continue to do that.
    Mrs. Kelly. Tony, do you want to speak as the 
representative here?
    Mr. Aloisio. We do have a couple of different programs: in 
fact, one on a County basis called the Suffolk County Incentive 
Program, where we have taken downtown areas, special industrial 
areas, and offered real estate property exemptions to 
geographic areas, mainly taking in small business.
    Of course, our industrial development agencies were able to 
offer property tax exemptions to small businesses that create 
jobs. In fact, I would say, I don't know, Roz maybe we have 
done 15 or 20 projects just in the Town of Brookhaven, which 
used a combination of an SBA financing, subordinate financing, 
and an IDA lease, in order to provide relief fund on real 
estate taxes and sales tax exemptions. So there is a pretty 
good network of those programs.
    Mrs. Kelly. Judy, you seem to want to add something?
    Ms. Shivak. Because each town is separate and apart and you 
have, what, five towns--ten towns in Suffolk County, and not 
all of them are together. I'm not saying ``yes'' or ``no,'' but 
everybody's town is independent and that's why we are looking 
beyond the town level.
    Mrs. Kelly. You are trying to look at the regional level.
    Ms. Shivak. Regional.
    Mrs. Kelly. I just want to ask one more question and that 
is indicative of my concern, again, to start small businessses, 
to get them moving, and that is: What is the availability of 
access tocapital here on Long Island? It is not terribly good 
in some areas of the country. What is it here? I am going to throw that 
question out to anybody, anybody who wants to answer that.
    Ms. Goldmacher. I will be happy to because I deal with that 
all the time.
    It is probably better here than it is in many areas of the 
country simply because we have so many banks and non-bank 
institutions. Also, over the last few years, many of the banks 
have finally come to realize that the small businesses, truly 
small businesses, are their only remaining area of profit; that 
small business lending can be profitable and that small 
businesses eventually become big, because there aren't that 
many mega-businesses left, so they have to concentrate 
somewhere. Since Long Island is mainly made up of small 
business, we see many more small business products coming out 
from the traditional lending institutions. But there still is a 
lack of access.
    When I say a lack of access, I am not talking about the 
person who has a great idea and nothing else. If someone walks 
into my office with a wonderful idea, the first thing I say to 
them is: Do you have a business plan? Have you seen the Small 
Business Development Center? And, do you have some equity to 
put into this? And it really amazes me how often people will 
say to me, ``Well, no, I have no money to put into this, I want 
you to give me 100 percent or lend me 100 percent.'' Even if we 
get past that and we can find some equity, then the next thing 
is, ``Well, for the loan that I am going to make to you, how 
can you scrutinize this loan? What kind of collateral can you 
give me? Sometimes we may even have to look to the person's 
house. ``Oh, no, I don't want to give my house for collateral 
for a loan.'' My response to that is always, ``As a lender you 
are asking me to put my dollars at risk, you are the one who is 
going to benefit economically from this and you don't want to 
put yourself at risk and you don't have enough faith in your 
company?''
    I think what that all points out to is we need more 
technical assistance at the start-up level. LISBAC, for 
example, Long Island Small Business Assistance Corporation, 
which is a CDFI under Treasury, was formed specifically to meet 
that need. We don't just make loans to small businesses, to 
women-owned businesses. Very intensive, free technical 
assistance is provided to each of those applicants, along with 
the series of seminars.
    Our targeted industry program, under the EDA, even though 
those are slightly larger businesses, that also combines 
technical assistance. I am very happy to say that Mr. Grimm was 
one of our recipients under the Commercial Fisheries Program, 
and there we said, ``Okay, you need a bigger chiller system for 
your boat so that you can go out further, catch fish that needs 
to be refrigerated, but we are not just going to make you a 
loan.'' Cornell Cooperative Extension came in and provided the 
technical assistance to go with it.
    So that technical component is an important piece of the 
access to capital. Just throwing money at people doesn't do any 
good if the technical assistance and the support isn't there at 
the start-up stages.
    Mrs. Kelly. It sounds to me like we are lucky to have you 
here.
    Judy, again?
    Ms. McEvoy. In the past year we have helped our clients, 
that's over $21 million, and that is a result of the business 
plan; if they are willing to do the work that we assign them 
and work through the process, there is capital available to 
them, but many times, as Roz said, we get the person who comes 
in and they say, ``Does the money truck pull up at 3:00, I came 
here just to get the money bag,'' and when we say, ``Well, you 
have some work to do,'' those that absolutely do the work, they 
have a very good shot.
    Ms. Freierman. In further praise of Roz here, not only the 
technical assistance, but something that they do that I find 
very important, and the dock is also a client of the LIDC is, 
they went, they showed up, they had a representative at the 
fisherman's forum, where there were working people who never 
have time to think about. They had a representative there. It 
was that kind of outreach going on. They said, ``Here is who we 
are and here is how we can help you.''
    Mr. Rogers. We agree with Roz that indeed technical 
assistance is necessary. SBA financial assistance programs, 
have grown tremendously over the last few years. Indeed, as we 
speak today, this is the only area in the entire district where 
the lending will surpass last year's levels because lending has 
dropped off in general.
    Mrs. Kelly. I feel it in my district, Mr. Rogers.
    Mr. Rogers. Just a little bit, I keep an eye on it.
    The importance of the technical assistance cannot be over 
stressed, because we know when borrowers see the Small Business 
Development Center and other technical assistance providers 
first, they will do much better with the lender and they'll do 
much better when they get the loan.
    I would also add that we recently introduced the microloan 
program on Long Island, and the micro-lender here won the award 
as being the top micro-lender in our district last year, as a 
result of the work they are doing.
    Ms. Shivak. I just wanted to say that that's what the roles 
of the chambers of commerce are. We get many calls from start-
up companies, especially someone who is starting up in their 
home, and we tell them to call Roz and Judy and the other 
agencies. We are the front door. We give them that assistance, 
whether it's from low-cost marketing or how to develop, where 
do they go?
    Ms. Goldmacher. I would like to just ask for one specific 
issue of relief.
    On the SBA 504 program, as you know, it receives zero 
appropriations. The subsidy issues are addressed by fees to 
borrowers and to the lenders, and the subsidy rate is 
determined by a model that OMB manages. Currently OMB is 
looking at the model, the subsidy model for the 504 program, 
looking at providing for a shorter look-back period; doing that 
would substantially reduce the fees to our borrowers and our 
participating lenders, and it makes the capital more cost 
effective and more available for more small businesses. So I 
would urge the Committee to continue monitoring OMB and make 
sure that they look closely at the subsidy models in the 504 
program, as well as the 7(a), in order to reduce the fees, 
particularly for our borrowers under the program.
    Mrs. Kelly. Thank you very much.
    Mr. King. In your question about the access to capital, I 
think probably for a lot of years I was concerned because 
money, as a commodity, was flowing out of New York in huge 
bundles, financing development all across the country and world 
wide, but I have been pleasantly surprised since about the late 
1990s, a lot of our own financial institutions have come to the 
recognition that there are some excellent solid investments 
here locally. It is amazing to me for them to realize so late 
in the game that they can make a profit lending to small 
business. They had always approached it as the necessary evil 
under CRA or something. I think they are awakening to that. Now 
they are much more proactive with our own organization in going 
out and asking us to work with them to improve the borrowers' 
access to them.
    Mrs. Kelly. Mr. King, are you helping people like Roz move 
people from 7(a) to a 504 and then out on their own? Mr. 
Rogers, are you two working with Mr. King in helping Roz do 
this kind of thing so we can get these businesses up and out?
    Mr. King. We are in the unusual position that our golden 
rule is we do whatever is right for the client, and if the 504 
program is charging a substantial fee and that fee is very 
difficult for the client to handle up front, then it is not a 
good buy for the client.
    In terms of some of the guarantee fees, the committee, I 
think, forced them down recently because they were making a 
profit. I don't think that's what it should be doing. So that 
we just look at what is the best financial decision for the 
client, and if that means going outside of the guarantee, 
that's probably a good thing, but I think they would improve 
their term, they would improve their access, and possibly the 
time line contract if some of these fees were not so 
oppressive. I think they are oppressive.
    Chairman Grucci. If I can just interject for a moment, we 
are going to move on, because I did promise if there were any 
questions from the audience, and I do want to get to them 
before our time expires.
    I would just like to ask a few questions myself, before 
taking questions from those who came to visit us today.
    Mr. Rogers, I would also like to ask you a few questions, 
if I may: Obviously, as having a strong voice in Washington and 
being a voice here in New York, you have a lot of influence 
over this program, the SBA program. One of the things that I 
find somewhat confusing, maybe you can help me understand it, 
is the lack of attention that I believe Long Island has been 
getting from the monies that are being sent from Washington to 
New York. It is roughly $600 million that comes into the State 
of New York for SBA programs. Long Island gets about $14 
million of that, but we have about one-third of the population 
of the State of New York. Simple math would say that we should 
be looking at about $200 million worth of SBA involvement here 
on Long Island, which might ease up a lot of the trauma of 
trying to find access to capital.
    Could you explain why Long Island doesn't see more of that 
roughly $600 million that is coming here?
    Mr. Rogers. I am not sure about the $600 million, 
Congressman, but if the $14 million pertains to the SBIC 
financing----
    Chairman Grucci. The number of $600 million, it's actually 
$592 million from your testimony, page 3 of your testimony.
    Mr. Rogers. The Small Business Investment Company deals are 
based on the applications of small businessses for that money, 
so that, for example, in Manhattan, where there are close to, I 
believe, 72 Small Business Investment Companies, they tend to 
get many more applications than applications in other parts of 
the district. For example, in the mid Hudson Valley, we get 
very, very few applications for Small Business Investment 
Company money, even though the programs are advertised across 
the district equally. The $600 million is the figure for New 
York State.
    Chairman Grucci. That's correct. That's what I said. I said 
the number for New York State is roughly $600 million that 
comes in; we see here on Long Island about $14 million out of 
that $600 million, yet we account for about one-third of the 
population for the State of New York. It would just seem to me 
that that number of 14 million should be considerably more.
    Mr. Rogers. From these numbers it appears as though these 
deals are much smaller deals. I would have to look at this much 
closer to see why the number is so very small.
    Chairman Grucci. I would certainly like to hear the 
response to that.
    Mr. Rogers. We will present that to you.
    Chairman Grucci. Thank you.
    Judy, we have been together for a long time on a lot of the 
projects; working as a former supervisor of the town, I 
recognize the hard work that you have done. Just to stay in 
focus to what today was about, today was about to find out how 
the Federal Government, through its SBA programs, could be 
helpful to small businesses. Could you tell us what the single 
mostcrucial issue is that you see that's a problem with our 
programs and how our programs can be better tuned or revamped to help 
the small businesses that you see coming through your front door?
    Ms. McEvoy. I think one of the things is--I'm out there all 
the time, as you know--we get so many people who say to us, ``I 
didn't know about your program.'' One of the things that we try 
and do is to connect them with some of the other Government 
programs. I don't know why there is this lack of knowledge or 
this lack of access to the things that we do, but I can't tell 
you how many times people say to me, ``I wish I knew you were 
here five years ago.'' ``I wish someone had told me that you 
were here.''
    So we are trying very hard, all of us here, to connect to 
each other, to provide the services that we provide, but I 
really think that the Government is really doing a lot. In my 
shop alone I have the Deta Delta advisor who is the defense 
diversification. We have worked with the New York State 
Department of Labor to provide self-employment opportunities 
for people who are getting unemployment. There is a tremendous 
amount of programs out there, but the problem is that people 
don't seem to be finding out about them. I laugh because I 
say--someone just came in to me recently and said, ``I wish I 
knew you had been here.'' I said, ``I can't be out any more 
than I am.'' I don't know whether there should be an 
advertising type of promotion, but that's what I get all the 
time.
    I want to add, I was asked specifically to provide some 
individual stories. I have included about 14 success stories 
here, so you can see the type of individual that comes in, but 
I would say that the access to the information that we are out 
there, that we have these programs, and that we are more than 
willing to help.
    Chairman Grucci. Anything that you might be able to provide 
us as a means to be more helpful to making your programs 
successful, making your endeavors successful through our 
programs, we would welcome that on the Committee, because 
that's what our function is. Our function is to help the small 
businesses through the SBA programs and there's no better 
person to tell us if we are succeeding or failing than those on 
the front line.
    Ms. McEvoy. I would be happy to.
    Ms. Kelly, one of the things that I have found interesting, 
in terms of your questioning about the 8(a)'s, I have a 
business advisor on the grounds of the Brookhaven National 
Labs, and one of the goals of that individual is to get more of 
the minority businesses and women-owned businesses involved. We 
just recently did a workshop within the last two weeks to 
advise the purchasing agents there who now have credit cards 
that they purchase, on how they can use the Internet to look 
for some of these 8(a) companies, you know, the minority 
companies, when they do their purchasing with credit cards, and 
we will run that workshop again.
    Mrs. Kelly. It's a Federal mandate that the Federal 
Government should purchase at the level of 5 percent. Of 
course, nationally they are not.
    Ms. McEvoy. Right.
    We need to get to those purchasing agents, which we have 
started to do at Brookhaven National Labs. They have their own 
credit cards that they can purchase with. They have to be 
advised of the minority 8(a) companies, and we are in the 
process of doing that; so there are programs where we are 
working on that.
    Chairman Grucci. Thank you, Judy.
    Roz, let me ask you that same question: How can we better 
help you? What is it that we can do?
    Ms. Goldmacher. One specific example, you mentioned venture 
capital before in terms of the small business investment 
companies. I have to say that Aubrey and his representatives 
were extremely helpful to us several years ago when a bunch of 
us certified development companies, ten of us around the 
country, got together and we saw a need for that next level of 
capital for our 504 borrowers, where they got to that next 
level and they needed equity or debt, but they weren't ready or 
able to take advantage of the usual sources. We wanted to be 
able to provide venture capital.
    We put together a venture capital firm, which is licensed 
by SBA to do debt and equity, it's an SBIC. It's a great 
program, and Aubrey and his people were very helpful to us in 
putting that together. Unfortunately, we have been stymied in 
using that fund to help our 504 borrowers, because the SBA at 
the central office level has instituted a policy prohibiting us 
from doing so. They are saying that if a Certified Development 
Company has an interest in an SBIC, then the same borrower 
cannot receive 504 financing that came from that Certified 
Development Company, as well as SBIC financing from the SBIC 
because of an alleged potential conflict of interest.
    Now keep in mind, for example, Long Island Development 
Corporation invested $150,000 in this fund. We were the largest 
investor, as far as certified development companies; this is a 
$70 million fund. It is a very tiny percentage. We have no seat 
on the board, we have no part in the loan management, et 
cetera. Conflict of interest is something that can be always be 
managed. If we could get that policy eliminated, then it would 
open up nationally more venture capital for small businesses. 
Those who are going from the 504 level up to that next level. 
So that's one specific thing that I would like to see 
addressed. We have not been able to get it addressed on the 
agency level, and we are probably, at some point, going to be 
coming to you with some specific proposals.
    Mr. Rogers. If I may, I noted that in Roz's testimony and I 
brought it to the attention of the 504 office in Washington, 
and we will be happy to provide a response or an explanation to 
the Committee.
    Chairman Grucci. I would be very appreciative of that. I'm 
eager to see it.
    As you know and you are probably aware, but let me just 
tell you from my perspective, our job here in Washington is to 
help those on the front line, that's coming from small town 
Government, and watching how the biggest relief, the biggest 
help to our business communities have always come at the local 
level, and the local level is the least equipped financially to 
make those kinds of commitments.
    You have heard the Town of Brookhaven, the Town of 
Riverhead and every other town here in Suffolk County, as I am 
sure every town across the State of New York has these programs 
where they are struggling by giving up tax revenues that goes 
to supporting the local Governments and supporting the fire 
departments and the schools and the libraries and a variety of 
other things, in order to entice businesses to come and locate 
in their communities to make them grow. The most equipped level 
of Government is the Federal Government to be able to help with 
those programs, and if we are failing to do that, then we are 
failing in our responsibilities.
    I am hearing from the small businesses themselves, I am 
hearing from people like this panel that we have some 
difficulties, we have some problems, and this committee is very 
eager to resolve those and to move those problems aside so that 
we can continue this growth. I know I am preaching to the choir 
here when I say that the job creation that has happened in this 
country hasn't happened at the hands of the mega corporations. 
While we need them as part of the mix, and we all encourage 
them and we try to do all that we can to see that they succeed, 
we can't do that on the backs of the small businesses, because 
70 percent of the job growth, at least in this area if not the 
State has been the direct result of small businesses. So I 
welcome these testimonies here today because I think it is 
going to help our committee to continue to do its job and do it 
more efficiently, and we need your help and your assistance. I 
would like to see more of that resource that is coming into 
areas that have one-third of the population, that means there's 
a lot of entrepreneurs out there that are sitting there 
wondering, as Judy said, ``How do I get involved with this?'' 
Maybe what we need is a better advertising and ad campaign, 
letting the people know what we have, what is available to us.
    Mr. Rogers. I want you to know, sir, that we are anxious to 
do that; our team is, and our new Administrator, just last week 
in a meeting he talked about hearing issues such as this, and 
listening to what small businesses have to say and responding 
to these things. So you will see much more of this.
    Chairman Grucci. Thank you.
    I want to turn to Supervisor Kozakiewicz. I know that he 
talked a moment ago about the Post Office, and that may not 
seem like a small business issue for this panel, but I assure 
you in the way that he has presented it and what I have seen 
here, it most assuredly is because it is the entranceway to 
their downtown communities, and it is an albatross hanging 
around the neck of a vibrant community trying to revitalize 
itself. I would like to ask the Supervisor to expand a little 
bit more on the problems and what it is that this Committee and 
we, in the Federal Government as a whole, can do as 
representatives, to help you alleviate that problem.
    Mr. Kozakiewicz. I have the photos by the way, now. 
Although I travel by the site often, it is when I started to 
look at the photographs that I got a little chuckle. It says 
``United States Postal Service,'' and then, below it it says, 
``A new facility.'' I will hand up to you 13 photographs which 
show the condition of the site. It is not bad enough that the 
work was stalled, but the site has not been maintained in any 
way, shape or form as well. It's overgrown, it is weedy, it is 
an eyesore. It goes beyond what I can do here at the local 
level, and, therefore, it is incumbent for me to ask you for 
your assistance.
    I understand that you can do many things that we cannot do 
at the local level or at the State level or at the County 
level, such as a direct inquiry to the Postal Service, 
gathering of records, convince them that it is time to get past 
the impasse that they have been struggling with the contractor, 
and that is how I come to you. I ask you to use your resources. 
Perhaps this is not the proper forum, but I believe it can be 
taken to the proper forum so that it can be done.
    It is obvious that the visual impacts are great. If you go 
past the site, as the photographs depict, it is in deplorable 
condition, where we have seen a spreading of new businesses. 
There is a new restaurant that opened not too long ago, which 
now features some pretty good pizza. There has been the ice 
cream store that's just a stone's throw away, and they're still 
managing well and they're improving their site, and we had 
another nice little business that opened up which features 
Mexican food, and it's called Funcho's. I have been there. The 
amazing thing is that people from far away from Riverhead are 
discovering it, and as a matter of fact they told me that there 
is one particular person who comes out every weekend on the way 
to Sag Harbor and makes sure that they stop there before they 
head out to Sag Harbor so that they can enjoy this food.
    The problem is the businesses are trying to improve their 
sites. They are trying to make the investment, which obviously 
we need to help them as far as tax incentives or otherwise, but 
it is tough to convince them when just a short distance away 
you have to look at this. Furthermore, the fact of the matter 
is while it sits there, there are jobs that are not being 
addressed. There are jobs that could be given out to 
contracting firms and others on that property, not to mention 
onceit is up and running, the maintenance of the site, which 
are not being addressed.
    It also goes contrary to visitors and our residents who see 
this and tend to want to avoid that area because of its look 
and because it is not attractive and inviting. If it is not 
attractive and inviting, again, businesses suffer. So these are 
things that I am asking for on behalf of our residents that you 
can address.
    Chairman Grucci. Supervisor, isn't it fair to assume also 
that the businesses depend upon that post office for being able 
to get their bills paid on time and get their invoices out? It 
was my understanding in reading through the files and records, 
there was a consolidation that was taking place of several 
entities coming together to create a more efficient Postal 
Service covering this community, and being able to help your 
business community, as well as your residents, and without that 
there has to be some suffering that is taking place; would you 
agree to that?
    Mr. Kozakiewicz. We are stagnated with what we have. This 
was designed to be a more efficient location, taking what is 
existing and providing a more efficient operation; so certainly 
it has stagnated us and it is counter-productive to the growth 
and the spurt that we are experiencing in Riverhead.
    Chairman Grucci. What would you say the impact on the 
existing businesses are, not necessarily from the standpoint of 
walking in traffic and having to deal with the eyesore, but the 
everyday operation of their businesses and dependency upon that 
post office?
    Mr. Kozakiewicz. It forces them to the current location on 
Second Street, which we have talked about, and we have had some 
correspondence back and forth. The current location is not 
handicap accessible, and that is counter-productive to 
businesses and to the community at large. I see that we need 
this new facility to be opened. We need help and assistance to 
make it a reality.
    What it is also doing is clearly hampering--again, I can't 
emphasize this enough--hampering our efforts to just improve 
that area.
    Chairman Grucci. Thank you very much.
    I know that our time is closing, but I did offer the 
opportunity to anyone who would like to make a comment or a 
question. I see a hand raised, so we will take you first.
    Mr. McKnight. Bob knows me, Judy McEvoy knows me. I guess 
I've worked for BOCES as a consultant.
    Chairman Grucci. If you would just put your name on the 
record.
    Mr. McKnight. Warren McKnight, Middle Road, Riverhead.
    I worked for BOCES as a consultant, for the minority 
entrepreneurship program. Part of that program, I was 
privileged to assist people on disability and handicapped 
people, to provide employment in the Town of Riverhead. 
Approximately ten percent of our population receive some sort 
of disability checks from our Governments.
    To get right to the point, these people have a real 
problem: They want to participate. I have started a number of 
people in business, sent them to Judy. Part of their problem is 
that they have temporary housing, rooming houses around here, 
they become self-employed sales people or they start their own 
craft business or their own businesses, they work at home. 
Their problem is this: They have not been able to get a post 
office box at Riverhead to use. They have to go into hospitals 
for treatment and when they come out, they have to live in 
Riverhead because of low rents, where are they going to get 
their business checks, their other checks and all their mail 
sent? They can't get it sent to the rooming house. They can't 
get a post office box. They can't get a post office box in 
Calverton. I mean, this is a clear violation of the handicapped 
rules.
    This is why I have been calling your office, being a pain. 
This is why I have been writing letters to the editors. This is 
why I am saying, ``Can they please, if they are not going to 
build a new post office, rent a couple of stores and get post 
office boxes for people with heart conditions and people who 
have wheelchairs down there, so they can participate and become 
small business people, become self-employed.'' They want to pay 
their double social security. They make anywhere from $5,000 to 
$30,000 a year.
    You know, you want to know what's wrong with the programs, 
the other thing that I did when I worked for BOCES, as a 
minority entrepreneurship, I went to soup kitchens, I stayed at 
the unemployment office there, I told people about these 
programs. I went to work fairs, I went to job fairs. You need 
hands-on people. What you really need is somebody in a 
wheelchair to reach out to people who are in wheelchairs. 
Somebody who is on disability to reach out to somebody on 
disability, if you want to get it moving here.
    I am going to cut it real short now, but the only thing is 
that's why I am so upset about this, and that's all we have to 
do, get some post office boxes down there, get some real 
outreach workers in this program, people one on one, maybe 
dedicated people in the clergy. So basically that is I hope you 
really can do something. Just get some post office boxes.
    Chairman Grucci. I appreciate you bringing this to our 
attention. We have been moving forward on trying to help get 
this resolved. I guess it underscores the point that the 
Supervisor was making that we really do need the completion of 
the post office done so we can expand the service of the post 
office to do just what you are saying, to provide more space, 
more boxes and more ability for more entrepreneurs, more small 
businessses to grow and to become a small business. I 
appreciate your comments.
    One of the things that we were just talking about, 
Congresswoman Kelly and I, is that at least on a temporary 
basis, places like Mailboxes Et Cetera is a bone fide drop 
point that could be used for the purposes of delivering mail, 
if there is any available, but if they're not available----
    Mr. McKnight. It is not available, and what had happened 
over the years, they go out of business. We are the poorest 
town on Long Island.
    Chairman Grucci. I am not suggesting that to be a permanent 
fix, I was just trying to see if this might be a temporary fix 
while we work on the Supervisor's bigger problem.
    Mr. McKnight. Only if they could be like Fed Ex, 
underwritten by the Federal Government. We are the poorest town 
on Long Island. We have a disproportionate amount of people on 
disability. We have a disproportionate amount of people who 
need these services, and that's what really hurts. It hurts 
this town, it hurts the pride of our Supervisor and everybody 
that lives here.
    We are the poorest town on Long Island, the lowest income. 
People who are poor have to live here because they are on 
disability or partial disability, and they have this extra 
handicap.
    Chairman Grucci. I am just going to have to ask you to sum 
up so we can get a couple of more in before we have to close.
    Mr. McKnight. I think I made my point and I want to thank 
you for listening, and I want to thank the Supervisor and you 
and for doing it, but please, let's get something done. Thank 
you.
    Chairman Grucci. Anyone else?
    Yes, ma'am?
    Ms. Blostein. My name is Anne Blostein, from Calverton.
    I am very glad that you are going to take care of what is 
happening in our post office in Riverhead. I think right now it 
is a blight for our town and it is stopping the economic 
development, which we are very hard trying to do. Thank you.
    Chairman Grucci. I appreciate that, but a lot of the credit 
belongs to the Supervisor for being on the forefront in 
bringing that to my attention.
    Any other questions?
    Seeing none, I just wanted to sum up by saying I want to 
thank our panelists for being here. I think the testimony today 
was a good one and it will give the Congresswoman and I an 
opportunity to go back to the full Committee and report what we 
have heard here today, which is probably not going to be 
dissimilar to other places throughout the country, the same 
kinds of problems that are out there. Maybe those in Arizona 
may not have the fishing problem but I know that they enjoy 
eating our fish because I have spoken to a couple of them 
already.
    We are going to continue to work on this. Small business is 
the heart and soul of our economy. It is what has built this 
country. It is where our giant entrepreneurs started; every one 
of them will tell you the story, whether it's Mr. Grumman or 
whether it's Bill Gates, their ideas started in their basement 
or their library or their garage and grew, and with the help 
that we can provide from the Federal Government--and, Mr. 
Rogers, I suspect that you will hear the cries of the small 
business community and put a special emphasis on helping the 
Long Island region.
    Mr. Rogers. Yes.
    Chairman Grucci. We will be able to continue to grow this 
economy, keep these jobs flourishing, and I thank you all for 
being here today. Thank you, and God bless you all.
    [Whereupon, at 3:50 p.m., the committee was adjourned.]
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