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



 
                  REVIEW OF THE COMMUNITY DEVELOPMENT
                          BLOCK GRANT PROGRAM
=======================================================================

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                   HOUSING AND COMMUNITY OPPORTUNITY

                                 OF THE

                    COMMITTEE ON FINANCIAL SERVICES
                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 14, 2002

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 107-61





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                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                    MICHAEL G. OXLEY, Ohio, Chairman

JAMES A. LEACH, Iowa                 JOHN J. LaFALCE, New York
MARGE ROUKEMA, New Jersey, Vice      BARNEY FRANK, Massachusetts
    Chair                            PAUL E. KANJORSKI, Pennsylvania
DOUG BEREUTER, Nebraska              MAXINE WATERS, California
RICHARD H. BAKER, Louisiana          CAROLYN B. MALONEY, New York
SPENCER BACHUS, Alabama              LUIS V. GUTIERREZ, Illinois
MICHAEL N. CASTLE, Delaware          NYDIA M. VELAZQUEZ, New York
PETER T. KING, New York              MELVIN L. WATT, North Carolina
EDWARD R. ROYCE, California          GARY L. ACKERMAN, New York
FRANK D. LUCAS, Oklahoma             KEN BENTSEN, Texas
ROBERT W. NEY, Ohio                  JAMES H. MALONEY, Connecticut
BOB BARR, Georgia                    DARLENE HOOLEY, Oregon
SUE W. KELLY, New York               JULIA CARSON, Indiana
RON PAUL, Texas                      BRAD SHERMAN, California
PAUL E. GILLMOR, Ohio                MAX SANDLIN, Texas
CHRISTOPHER COX, California          GREGORY W. MEEKS, New York
DAVE WELDON, Florida                 BARBARA LEE, California
JIM RYUN, Kansas                     FRANK MASCARA, Pennsylvania
BOB RILEY, Alabama                   JAY INSLEE, Washington
STEVEN C. LaTOURETTE, Ohio           JANICE D. SCHAKOWSKY, Illinois
DONALD A. MANZULLO, Illinois         DENNIS MOORE, Kansas
WALTER B. JONES, North Carolina      CHARLES A. GONZALEZ, Texas
DOUG OSE, California                 STEPHANIE TUBBS JONES, Ohio
JUDY BIGGERT, Illinois               MICHAEL E. CAPUANO, Massachusetts
MARK GREEN, Wisconsin                HAROLD E. FORD Jr., Tennessee
PATRICK J. TOOMEY, Pennsylvania      RUBEN HINOJOSA, Texas
CHRISTOPHER SHAYS, Connecticut       KEN LUCAS, Kentucky
JOHN B. SHADEGG, Arizona             RONNIE SHOWS, Mississippi
VITO FOSSELLA, New York              JOSEPH CROWLEY, New York
GARY G. MILLER, California           WILLIAM LACY CLAY, Missouri
ERIC CANTOR, Virginia                STEVE ISRAEL, New York
FELIX J. GRUCCI, Jr., New York       MIKE ROSS, Arizona
MELISSA A. HART, Pennsylvania         
SHELLEY MOORE CAPITO, West Virginia  BERNARD SANDERS, Vermont
MIKE FERGUSON, New Jersey
MIKE ROGERS, Michigan
PATRICK J. TIBERI, Ohio

             Terry Haines, Chief Counsel and Staff Director

           Subcommittee on Housing and Community Opportunity

                    MARGE ROUKEMA, New Jersey, Chair

MARK GREEN, Wisconsin, Vice          BARNEY FRANK, Massachusetts
    Chairman                         NYDIA M. VELAZQUEZ, New York
DOUG BEREUTER, Nebraska              JULIA CARSON, Indiana
SPENCER BACHUS, Alabama              BARBARA LEE, California
PETER T. KING, New York              JANICE D. SCHAKOWSKY, Illinois
ROBERT W. NEY, Ohio                  STEPHANIE TUBBS JONES, Ohio
BOB BARR, Georgia                    MICHAEL E. CAPUANO, Massachusetts
SUE W. KELLY, New York               MAXINE WATERS, California
BOB RILEY, Alabama                   BERNARD SANDERS, Vermont
GARY G. MILLER, California           MELVIN L. WATT, North Carolina
ERIC CANTOR, Virginia                WILLIAM LACY CLAY, Missouri
FELIX J. GRUCCI, Jr, New York        STEVE ISRAEL, New York
MIKE ROGERS, Michigan
PATRICK J. TIBERI, Ohio














                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    March 14, 2002...............................................     1
Appendix:
    March 14, 2002...............................................    49

                               WITNESSES
                        Thursday, March 14, 2002

Meek, Hon. Carrie P., a Member of Congress from the State of 
  Florida........................................................     7
Ros-Lehtinen, Hon. Ileana, a Member of Congress from the State of 
  Florida........................................................    10
Shays, Hon. Christopher, a Member of Congress from the State of 
  Connecticut....................................................     6
Bernardi, Hon. Roy, Assistant Secretary for Community Planning 
  and Development, U.S. Department of Housing and Urban 
  Development....................................................    12
Cohen, Hon. David, Mayor, Newton, Massachusetts..................    36
Gonzalez, Yvonne, Chief Executive Officer, Rio Grande Valley 
  Empowerment Zone Corporation, Mercedes, Texas..................    38
Gramlich, Ed, Research and Community Development Program 
  Specialist, Center for Community Change, Washington, DC........    40
Hoover, Greg, President, National Community Development 
  Association; Manager, Housing and Neighborhood Development 
  Department, City of Davenport, Iowa............................    42
McNeil, Josephine, Director, Citizens Affordable Housing 
  Development Organization of Newton, Massachusetts..............    37
Oros, George, Minority Leader, Westchester County Board of 
  Legislators, New York..........................................    34
Spano, Andrew J., County Executive, Westchester, New York........    32

                                APPENDIX

Prepared statements:
    Kelly, Hon. Sue W............................................    57
    Diaz-Balart, Hon. Lincoln....................................    52
    Grucci, Hon. Felix J. Jr.,...................................    55
    Meek, Hon. Carrie P..........................................    59
    Ros-Lehtinen, Hon. Ileana....................................    63
    Roukema, Hon. Marge..........................................    50
    Shays, Hon. Christopher......................................    65
    Waxman, Hon. Henry...........................................    67
    Bernardi, Hon. Roy A.........................................    70
    Cohen, David.................................................    81
    Gonzalez, Yvonne.............................................    84
    Gramlich, Ed.................................................    88
    Hoover, Greg.................................................   105
    McNeil, Josephine............................................   111
    Oros, George.................................................   115
    Spano, Andrew J..............................................   117

              Additional Material Submitted for the Record


    City of Palo Alto, CA, prepared statement....................   124
    Community Letters of Support for HR 1191.....................   126
    Township of Lower Merion, PA letter March 13, 2002...........   150













        REVIEW OF THE COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM

                              ----------                              


                        THURSDAY, MARCH 14, 2002

             U.S. House of Representatives,
 Subcommittee on Housing and Community Opportunity,
                           Committee on Financial Services,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:36 a.m., in 
room 2220, Rayburn House Office Building, Hon. Sue Kelly, 
[acting chairwoman of the subcommittee], presiding.
    Present: Chairwoman Kelly; Representatives Miller, Grucci, 
Frank, Lee, Jones, Capuano Waters, Clay and Israel.
    Chairwoman Kelly. The hearing will come to order. This 
hearing of the Subcommittee on Housing and Community 
Opportunity is on the Community Development Block Grant 
program. And we welcome our first panel of witnesses here 
today: the Honorable Christopher Shays, the Honorable Carrie 
Meek, and we understand the Honorable Ileana Ros-Lehtinen is on 
her way.
    The Chairwoman has asked me to take the chair here. She is 
on her way to another hearing.
    Ranking Member Frank, I want to thank you for agreeing to 
hold the hearing today to review this Community Development 
Block Grant program.
    As we are all aware, the Administration has called for 
reforms of the Community Development Block Grant program in the 
budget submission. And we all need to give these proposals a 
close examination. CDBG grants distribute approximately $4.3 
billion to over 1,000 cities, urban counties and the States 
each year. These funds support various community development 
activities that are required to be directed primarily to low- 
and moderate-income persons.
    In my home county of Westchester County, New York, these 
funds fill critical needs. Seniors, the disabled, low- and 
moderate-income working families are dependent on the services 
these funds provide. In addition, these funds help strengthen 
communities by assisting towns with the proper growth and 
redevelopment of their commercial and public areas.
    On page 175 of the budget, the Administration calls for a 
redistribution of the CDBG grant funds. In an effort to ensure 
that these funds are truly targeted to poorer communities, the 
Administration calls for a 50 percent cut of these funds to 
communities whose per capita income is two times the national 
average.
    On the list of the towns and cities who qualify for this 
proposed cut is one single county, one county and a number of 
other locations. But only one county has been chosen for this 
cut. That is Westchester County, New York.
    Because of this, Westchester would be subject to a $3.5 
million cut, which makes up 35 percent of the expected revenues 
of the county. This proposal troubles me and my neighbors in 
Westchester County. The needs of the county will only grow 
larger in the future.
    Poor families will still need clean, safe, affordable 
housing. Seniors and disabled residents will still need support 
services. In light of all these needs, this proposed cut is 
unacceptable for Westchester.
    Secretary Martinez has assured me he is willing to work 
with us on this issue. And I have found him to be a good and 
reasonable man. It is my hope the testimony we hear today and 
the discussions we will have will give us all a better 
understanding of the issues involved.
    I look forward to working with my colleagues on this 
subcommittee and along with HUD, County Executive Spano and 
County Legislator Oros as we seek to ensure that the Community 
Development Block Grants continue to be distributed fairly and 
equitably in this proposed cut and that the cut does not become 
a reality.
    At this time, I would like to ask if any other Member has 
an opening statement.
    [The prepared statement of Hon. Sue W. Kelly can be found 
on page xx in the appendix.]
    Mr. Frank.
    Mr. Frank. Madam Chairwoman, I agree with much of what you 
have said. We have two separate proposals in the works here. 
One is a proposal, long advocated by the gentlewoman from 
Florida, who has been one of the most tenacious and forceful 
defenders of social justice to serve in the House and has used 
her position on the Appropriations Committee successfully to 
block some raids on the Community Development Block Grant 
program that would have tapped into funds regardless of any of 
the social requirements.
    She has a piece of legislation. And I have been asking the 
subcommittee leadership for some time to have a hearing on it. 
And I appreciate the fact that they have accommodated us in 
this regard.
    And the thrust of it, I think, is very important. I have 
some questions about the details and specifics.
    But we have a program that is intended to benefit low- and 
moderate-income people. And I think it is reasonable to say 
that no Administration in the 22 years that I have been here, 
which encompasses both parties, has really enforced that.
    And one of the things that we can do is to encourage HUD--a 
relatively new HUD, so they come to this with a clean slate--to 
enforce better than we have the requirement that low- and 
moderate-income people be the beneficiaries. And I hope we can 
move in that direction.
    There is another proposal that the Chairwoman of the 
hearing just mentioned, which is an Administration proposal to 
take CDBG funds away from about a dozen communities on the 
grounds that they are too wealthy. Now, these two are 
interconnected in my mind, because if we did a better job of 
enforcing the low- and moderate-income requirement, you would 
not have an argument that wealthy people were unduly 
benefiting.
    That is, I do not think any of these communities has only 
rich people. Every one of the communities, as is virtually--
remember, we are talking about communities of 50,000 or more. 
So we are not talking about an enclave of 3,000 people. And I 
do not know of any communities of 50,000 or more that do not 
have some low-income people.
    So the remedy that you might, if you think there is a 
problem of this not going where it is supposed to, the remedy 
is perhaps to strengthen the requirement statutorily, as the 
gentlewoman from Florida is trying to do, and certainly to 
enforce them administratively. And I know, because I represent 
two of the communities that are on the--what we would 
technically refer to as the ``hit list''--that have substantial 
low-income populations. And they are in the metropolitan area.
    And as it will be shown, I think in testimony, they are 
both communities that work very hard to try and promote 
diversity. They are communities which, in the absence of 
Government action, local government action, would be more 
homogeneously wealthy than they are. And I do not want to see 
us take away from those communities one of the major tools that 
they use to promote diversity.
    It seems to me, in fact, in Massachusetts there has been a 
lot of criticism of communities that are resisting low-income 
housing, resisting doing things to make the communities more 
diverse. Here, we have two communities that are at the top of 
the list in doing that. And I do not want to take the funds 
away that allow them to do that.
    I am prepared to look at tighter requirements on the use of 
those funds, both statutorily and administratively. So I do not 
regard these two things necessarily as in conflict. I think 
that they can be harmonized.
    And the final thing I would say is this. We are told 
``Well, after all, we want to give more money to the lower 
income communities so we have got to take the money away from 
the top communities.''
    I congratulate anyone who advances that with a straight 
face. If you look at the total amount of money that these 
relatively small communities get, it would amount to very, 
very, very, very little if it was spread around.
    I do think we should be spending more money on the lower 
income people. But my own view is that the people in the lower 
income areas are, at this point, in far graver danger from a 
number of social and other kinds of ills than they are of being 
hit by a missile from North Korea.
    So if we are looking for a source of funds better to 
support these important community services, I have other places 
to look than communities that are trying hard to promote 
diversity within themselves.
    Thank you, Madam Chairwoman.
    Chairwoman Kelly. Thank you, Mr. Frank.
    Mr. Miller.
    Mr. Miller. Thank you, Madam Chairwoman. I would like to 
associate my comments with yours, Mr. Frank and the Chairwoman. 
You have hit on issues that are very concerning for me.
    I was a former Mayor of the city of Diamond Bar. And it was 
a new city. And from the outside, it might appear to be a 
fairly prosperous community, but it is a low tax community too, 
because it is a newer one. So the revenues to that city were 
very low compared to some of the cities that might seen less 
affluent, because they are older cities and they receive a 
higher tax generation.
    Yet, I look at what Diamond Bar does with their funds on 
Meals for Wheels and childcare through the YMCAs and other 
functions that really benefit people who are in need. And I am 
concerned if we throw the baby out with the bath water here by 
just taking a generic look from the outside--this community 
needs it; this one does not--yet not looking inwardly at the 
funds the cities actually have and what they do with those 
funds, especially to benefit CDBG funds to those communities 
and people who need people, whether it be seniors, children or 
just people who are struggling to get by.
    So I am interested in having this hearing, listening to the 
testimony and hearing what your proposal might be.
    I yield back the balance of my time.
    Chairwoman Kelly. Thank you, Mr. Miller.
    Mrs. Jones.
    Mrs. Jones. I am just coming from one hearing to another. I 
am just glad to be here. I am looking forward to the testimony. 
The Community Development Block Grants are very important to my 
community in the development of opportunities for affordable 
housing.
    Thank you very much.
    Chairwoman Kelly. Thank you.
    Mr. Grucci.
    Mr. Grucci. Thank you, Madam Chairwoman. I have a prepared 
statement that I will asked to be submitted into the record. 
Allow me to associate myself with the remarks that are being 
made here today.
    I was a town supervisor. And for those who do not 
understand what that is, it was tantamount to being the mayor 
of a small city. My town was 450,000 people strong.
    And while it may have an appearance of being an affluent 
area, there are many pockets of poverty throughout the town who 
benefited from the Community Development Block Grant program. 
And in fact, every time the Federal Government would cut it 
back and less money would come into those areas, the less we 
could do.
    I always looked at this program as the conscience of 
Government, where we were able to do those things for people 
who really and truly needed the help--whether it was youth 
programs, youth interventions, whether it was to help the 
elderly with Meals on Wheels, whether it was to do things to 
improve the quality of life in communities that had been 
forgotten for many a year, whether that was to improve a park 
or put a pool into an area that allowed people to enjoy a 
quality of life. Everyone in America should be able to enjoy 
the riches and the beauty of this country and be able to know 
that their Government is there to help and support them.
    I support the concept of taking money and putting it where 
it can do the most good. I am a little apprehensive about how 
this program is going to be implemented. I see that the 
Chairwoman's district is one of those districts that have been 
targeted. I am fearful that the county I represent may be 
another one, because it does have the pockets of affluence in 
it that could have a detrimental effect on the computations of 
whether or not it should or should not receive the funds.
    I can assure you that, without the Community Development 
Block Grant funds, many people will not have the help that 
Government ought to provide for those who are less fortunate.
    And so, Madam Chairwoman, I appreciate the opportunity to 
be here at this hearing. And I am eager to hear the testimony 
of the esteemed panel. Thank you.
    Chairwoman Kelly. Thank you very much, Mr. Grucci.
    Mr. Clay.
    Mr. Clay. Thank you, Madam Chairwoman. I too am eager to 
hear from this esteemed panel. I am really interested in the 
proposed legislation that Ms. Meek is proposing because, 
representing the city of St. Louis, I know of projects that 
have gone to higher income neighborhoods, to light bridges.
    And I do not think that was the original intent of the CDBG 
programs and would like to tighten the rules and regulations. 
And hopefully, that is what her bill proposes to do.
    I am also interested in hearing from Mr. Shays in coming up 
with another way to reward those communities that spend funds 
in accordance with the letter of the law. So I will stop there 
and look forward to this panel's testimony.
    Chairwoman Kelly. Thank you very much, Mr. Clay.
    Ms. Lee.
    Ms. Lee. Thank you very much, Madam Chairwoman. I look 
forward to hearing the testimony from the panel. I think it is 
very important, at least for some of us, to look to be sure 
that Community Development Block Grants are really benefiting 
those that I thought it was intended to help, and that is low- 
and moderate-income communities.
    It is a pot of money. It is an instrument that we use very 
aggressively to ensure not only housing, but economic 
development, which creates jobs for those who need these types 
of jobs. So I just look forward to the testimony.
    Thank you very much for the hearing.
    Chairwoman Kelly. Thank you very much.
    I appreciate the statements from the panel members. I also 
would like unanimous consent to insert into the record the 
statement of Chairwoman Marge Roukema, Congressman Henry 
Waxman, Congressman Lincoln Diaz-Balart, the city of Palo Alto, 
California and 22 other community letters that we have received 
on this issue.
    Mr. Frank. Madam Chairwoman.
    Chairwoman Kelly. Yes?
    Mr. Frank. May I also get unanimous consent? I know our 
colleague, Mr. Waxman of California, has a statement. And there 
is a statement submitted through Mr. Hoeffel of Pennsylvania 
for Lower Merion, Pennsylvania. So I would ask unanimous 
consent that those and other statements on this be also part of 
the record.
    Chairwoman Kelly. Yes, thank you. I had included Mr. 
Waxman. But I am glad we did it twice.
    [Laughter.]
    With that being said, we turn now to our first panel. We 
have Honorable Christopher Shays from Connecticut, the 
Honorable Carrie Meek from Florida and the Honorable Ileana 
Ros-Lehtinen from Florida. We welcome the three of you.
    We begin with Mr. Shays.

   STATEMENT OF HON. CHRISTOPHER SHAYS, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CONNECTICUT

    Mr. Shays. Thank you, Chairwoman Kelly and Ranking Member 
Frank. And thank you, other Members of this subcommittee. I am 
impressed that you have such a large number of Members 
participating and appreciate it a great deal.
    I am here to ask that you evaluate the CDBG based on how 
communities spend their funds and to encourage you to 
reconsider the Administration's proposal to cut 50 percent of 
the CDBG funds from the top one percent of the eligible 
communities. CDBG is the largest source of Federal community 
development assistance to State and local governments, as you 
know.
    Frankly, I would add a third request that you increase the 
amount from $4.3 billion and let it at least go up with the 
cost of living. It is a very valuable program.
    It is one of the most flexible and most successful programs 
the Federal Government administers. And I would say to you that 
Mr. Frank knows this in particular. My predecessor, Stewart 
McKinney, was a strong believer in this program, a strong 
architect of it. And I think we have seen tremendous good 
happen from it.
    The Administration's proposal includes, obviously, the 
recommendation to reduce the size of the grants for communities 
with income two times the national average. But it begs the 
question: many of those communities have three or four times 
the cost of living.
    As a Congress, we are committed to helping those in need 
and those who are not in a position to help themselves. And I 
think the message of this proposal is that those in need in 
communities of wealth should not get the kinds of attention 
they need. For instance, in one community impacted in my 
district, Greenwich, Connecticut, bordering your district, Ms. 
Lowey--excuse me, Ms. Kelly; Ms. Lowey as well touches that 
district.
    Greenwich has used this money for homeless shelters, for a 
food bank, for drug liberation programs and for two youth 
homes. And also, it has used this money for neighboring 
communities.
    Chairwoman Kelly. Excuse me, Congressman Shays.
    Mr. Shays. Sorry.
    Chairwoman Kelly. Could you pull the microphone closer? We 
are having a hard time hearing you up here.
    Mr. Shays. Thank you very much. I am at a conclusion here.
    [Laughter.]
    Let me then just be as wise as I can be and say I thought 
your statement, Ms. Kelly, was awesome. I thought your 
statement, Mr. Frank, was awesome. I totally concur with it.
    And would just ask ultimately that we design a program 
based on the merit of how the money is spent. And I can just 
tell you, a wealthy community in my district, which gets some 
of these funds--Greenwich--is spending this money on homeless 
shelters, on food banks and so on and is spending a good chunk 
of it in the surrounding areas where they have partnered.
    And it has helped draw Greenwich into the rest of the area. 
And this money has been spent well.
    Where it is not spent well, then take it away.
    [The prepared statement of Hon. Chris Shays can be found on 
page XX in the appendix.]
    Chairwoman Kelly. Thank you very much, Mr. Shays.
    Mrs. Meek.

STATEMENT OF HON. CARRIE P. MEEK, A REPRESENTATIVE IN CONGRESS 
                   FROM THE STATE OF FLORIDA

    Mrs. Meek. Thank you very much, Madam Chairwoman. And I 
want to thank the Members of this subcommittee.
    Chairwoman Kelly. Please get that microphone close to you.
    Mrs. Meek. Sorry.
    Chairwoman Kelly. We do not have the new wonderful 
microphones here. So you really have to get them pointed at 
you.
    Mr. Frank. And our ears are not so good either.
    [Laughter.]
    Chairwoman Kelly. Speak for yourself, Barney.
    Mrs. Meek. I am really grateful to the subcommittee for 
hearing us today. And I really agree with everything I have 
heard so far regarding Community Development Block Grant funds.
    And I want to thank my colleague, Ileana Ros-Lehtinen. We 
are almost like the gold dust twins. We go together in most of 
our programs to benefit the people of our area. And I must say 
that we do fairly well--pretty well--in meeting those needs.
    I do not need to lengthen this presentation by talking 
about the needs of low- and moderate-income people. But I do 
not want you to confuse the Administration's proposal with this 
bill. They are quite different, with two different concepts in 
mind.
    We know that we have an affordable housing crisis. And each 
of you has spoken to that.
    But you must realize that Community Development Block Grant 
funds follow the people, the lower income people. The real 
purpose of the Community Development Block Grant funds. It does 
not mean that high-income communities do not have low-income 
people and do not have needs to that point.
    But if you have distressed areas and you do have 
unemployment in your areas and you have deteriorating areas, 
urban and rural as well, that is why it is so important that we 
ensure that the funds are used for the intended purpose of 
helping low- and moderate-income.
    Since 1974, this has been going on. It is a very good 
program. It is a flexible source of Federal funds.
    You know, it is not revenue sharing. All people like me 
remember the revenue sharing program. This is not revenue 
sharing. It is not meant simply to redistribute money from the 
Federal Governments to the States and local government for any 
purposes whatsoever.
    Rather, the primary purpose of the CDBG program is to build 
housing, to provide safe, healthy housing for people who cannot 
afford market rents. It is meant to provide economic 
development and jobs. I do not need to tell this subcommittee 
this. You know more about this than I do.
    I introduced this bill because I am very concerned that, 
while many jurisdictions--and I must underline, Chris, many 
jurisdictions--comply with both the spirit and the letter of 
the CDBG law, many other jurisdictions are using CDBG funds for 
purposes far removed from CDBG's intended goal, to 
principally--and I must emphasize to principally--benefit low- 
and moderate-income persons.
    At a time when community development corporations, 
individuals and other agencies are focusing on trying to 
develop these poorer neighborhoods, they are inadequately 
funded. Jurisdictions should not use their poor neighborhoods 
to justify and obtain CDBG funding, but then use these funds in 
their wealthier neighborhoods. That is not the intent of the 
CDBG legislation.
    Many of you may be familiar with recent reports of CDBG 
funds being used to develop United States Post Office 
facilities, to repair airport runways, renovate museums, build 
sports arenas and pour miles of concrete in many jurisdictions. 
These may well be wonderful projects. But they are not projects 
that should be funded through CDBG.
    It is time to do a better job to manage these scarce CDBG 
funds. My bill, H.R. 1191, would seek to amend the statute to 
reflect and to solve some of these problems and to go back to 
the original intent of the law by focusing the grant program on 
low- and moderate-income. It is sponsored by 59 Members of 
Congress who want to see more of their monies used for low-
income Americans.
    And then, as a just cause, Madam Chairlady, let me 
highlight some of the provisions of H.R. 1191. It would require 
grantees to spend at least 80 percent of their CDBG funds to 
directly benefit low- and moderate-income people, instead of 
the current 70 percent threshold. That gives you a little bit 
better target than the 70 percent.
    My bill would require grantees to spend at least 40 percent 
of CDBG funds to directly benefit low-income persons, those 
with incomes between 30 percent and 50 percent of the median 
income. These are the people who are really low-income people. 
And they need these funds.
    Currently, there is no mechanism that HUD uses to prevent 
jurisdictions from spending all or most of their CDBG monies 
for households at the relatively high income of 80 percent of 
the area median income. Now I go way back with HUD to some of 
the people who really, really put all of these things in. As 
they say in my district ``back in the day.'' And they have 
never really, really, really had an accountable way of 
measuring how CDBG monies are spent.
    Finally, my bill would require proportional accounting so 
that CDBG guarantees would calculate the benefits to low- and 
moderate-income people by using the actual percentage of lower 
income persons residing in the census tracts that would be 
served by the grant. And that highlights what some Members of 
this subcommittee have already indicated.
    The reason that many jurisdictions can claim that over 90 
percent of their expenditures benefit low- and moderate-income 
is because currently, CDBG law allows 100 percent of the money 
spent on non-housing activities to count as benefiting lower 
income people only if 51 percent of the beneficiaries are low- 
and moderate-income. So you see that broad umbrella that is 
there.
    For an example, if a jurisdiction spends $500,000 on a road 
improvement in a census tract where 51 percent of the 
households are low- or moderate-income, that jurisdiction can 
report to HUD that all $500,000 of that spending benefits low- 
and moderate-income people, rather than a proportionate amount 
of $255,000, which is $500,000 times the 51 percent of the 
population of lower income. This lack of proportionate 
treatment inflates the benefit report by 49 percent.
    So it just tells you that the benefit inflation is well 
documented. In a 1993 audit of the HUD, the Inspector General 
reviewed CDBG expenditures of 18 grantees and found that HUD's 
low- and moderate-income claims were significantly overstated. 
The audit shows that when proportionate accounting was used, 
the actual benefits to low- and moderate-income individuals 
were approximately 65 percent for the individual grantees, even 
though HUD continuously reported the annual percentage of low- 
and moderate-income benefits as exceeding 90 percent.
    Madam Chairlady and Members of the subcommittee, 
proportional accounting in the CDBG program is badly needed. 
And it will bring out many of the things which each of you has 
indicated, that the money will follow the need.
    Counting all of the CDBG dollars spent on an activity as 
benefiting lower income persons when it is known that a 
substantial portion of those benefiting from the activity are 
higher income persons is just plain wrong. The absence of 
proportional accounting greatly exaggerates the CDBG program's 
achievements in serving low- and moderate-income.
    The reforms included in my bill, H.R. 1191, have been 
around for some time. As I said, I have been around. Starting 
out with Jack Kemp, who was probably the guru of housing, under 
the first Bush Administration, tried to pass these provisions 
into law.
    These changes to the CDBG program raise the fundamental 
issue of fairness. The Federal resources----
    Chairwoman Kelly. Ms. Meek.
    Mrs. Meek. I could put the rest in the record.
    Chairwoman Kelly. Could you do that?
    Mrs. Meek. I know I am going on and on. But I just wanted 
the subcommittee to understand that this concept is quite 
different from the one that has been presented by the current 
Administration. It is one that is asking for a proportional 
accounting so that low- and moderate-income people, that the 
money will follow where they are.
    Thank you very much, Madam Chairwoman.
    [The prepared statement of Hon. Carrie P. Meek can be found 
on page XX in the appendix.]
    Chairwoman Kelly. We thank you. We also know that----
    Mrs. Meek. I also forgot to put in the record----
    Chairwoman Kelly. With unanimous consent, we will insert 
your statement in the record.
    Mrs. Meek. Thank you, ma'am.
    Chairwoman Kelly. I also know you have family that live in 
my district.
    Mrs. Meek. That is true.
    Chairwoman Kelly. So you know how hard Westchester County 
is.
    Mrs. Meek. You better be good to me, Madam Chairlady.
    [Laughter.]
    Chairwoman Kelly. You know how hard we are going to get hit 
if Westchester County has to take this on the chin, because you 
have been all over my district. I know that.
    So I really appreciate your presence and your testimony 
here today. And we will include that with unanimous consent.
    Mrs. Meek. And I want to be excused. I have a hearing. 
Thank you.
    Chairwoman Kelly. We turn now to Ms. Ros-Lehtinen.

  STATEMENT OF HON. ILEANA ROS-LEHTINEN, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF FLORIDA

    Ms. Ros-Lehtinen. Very few people, Madam Chairwoman, are 
able to get Carrie Meek to stop talking. So I congratulate you.
    [Laughter.]
    We have never done it in the Florida House and in the 
Florida Senate. It is the first time I have ever seen it. What 
a sight to behold.
    But thank you so much. I am here to testify on behalf of my 
very good friend, Congresswoman Carrie Meek, on her bill, H.R. 
1191, the Community Development Block Grant Renewal Act. As you 
know, this Act concerns one of the most significant sources of 
Federal funding for housing, economic development, job creation 
and community revitalization.
    The Community Development Block Grant Renewal Act would 
target funds to low- and moderate-income communities by 
providing affordable housing, suitable living environment and 
expanding economic opportunities. The CDBG--it sounds like one 
of the clubs in my South Beach District. Not that I have ever 
been there, but I hear it gets really good about 3:00 in the 
morning.
    Mr. Frank. I think that one closed.
    [Laughter.]
    Ms. Ros-Lehtinen. That one closed. You know, they close. 
They open. You know? I do not know, I heard you were the one 
responsible for closing it down, but I do not know.
    [Laughter.]
    But it was originally established as Title I of the Housing 
and Development Act of 1974. The Act served to improve 
communities by providing State and local governments with an 
elastic source of money to use for the benefit of low- and 
moderate-income communities. Title I assured that, at minimum, 
70 percent of the allocated funds would be used for those 
people earning low- and moderate-incomes.
    H.R. 1191 looks to improve the ``Primary Objective'' of 
CDBG to ensure that at least 80 percent of such funds go 
directly to aid those individuals and their families. The Act 
specifies even further that at least, as has been testified 
before, 40 percent of the appropriated money is earmarked for 
people of lower income. And this ``Primary Objective'' will 
help bring needed aid to a suffering housing industry and will 
help fill the gaps of the current law.
    H.R. 1191 also enables the CDBG to give monies to non-
profit organizations whose sole purpose is to help low- and 
moderate-income people. This non-profit funding will promote 
greater public participation and will provide a better forum to 
monitor the use of CDBG funds. According to H.R. 1191, any 
business which receives funds from CDBG still has to make sure 
that at least 51 percent of any new or retained jobs would 
target lower income people.
    It has strong support from several groups, such as the 
National Council of La Raza, the National Low Income Housing 
Coalition, the National Alliance to End Homelessness and our 
Miami-Dade Board of County Commissioners. I would like to 
encourage all of our colleagues to please support H.R. 1191, 
the Community Development Block Grant Renewal Act, and help end 
the current housing crisis that so many of our communities are 
suffering.
    So thank you very much, Madam Chairwoman. And I ask to have 
it be entered in the record.
    Thank you.
    [The prepared statement of Hon. Ileana Ros-Lehtinen can be 
found on page XX in the appendix.]
    Chairwoman Kelly. We thank you very much, Ms. Ros-Lehtinen.
    I have no questions of this panel.
    Mr. Frank. Just one point to reinforce what I hope is going 
to be a consensus here, which is rather than exclude particular 
communities, the answer is, for us, both statutorily perhaps 
and certainly administratively, to do a better job of enforcing 
the low-moderate requirement for every community. And I think 
we can all work together on that.
    Chairwoman Kelly. That is right.
    Mrs. Meek. Thank you very much.
    Ms. Ros-Lehtinen. Thank you very much.
    Chairwoman Kelly. We thank you very much for appearing. 
This first panel is excused. We now will seat the second panel.
    The chair notes that some Members may have additional 
questions and may wish to submit those in writing of this 
panel. So without objection, the hearing record will remain 
open for 30 days for Members to submit written questions to the 
witnesses and place their responses in the record.
    We thank the panel for appearing with us today. We thank 
the second panel.
    On our second panel today is Mr. Roy Bernardi. He currently 
serves as the HUD Assistant Secretary for Community Planning 
and Development. Prior to this, Mr. Bernardi served two terms 
as Mayor of Syracuse, New York, the first Republican to serve 
in that position in 24 years. Previous to being elected in 
1993, he served five terms as Syracuse City Auditor.
    We welcome you, Mr. Bernardi. And we look forward to your 
testimony. Please proceed.

STATEMENT OF HON. ROY A. BERNARDI, ASSISTANT SECRETARY, OFFICE 
   OF COMMUNITY PLANNING AND DEVELOPMENT, U.S. DEPARTMENT OF 
                 HOUSING AND URBAN DEVELOPMENT

    Mr. Bernardi. Well, thank you, Madam Chairwoman. Good 
morning, Ranking Minority Leader Frank, Members of the 
subcommittee. My name is Roy Bernardi. I am Assistant Secretary 
for Community Planning and Development at the Department of 
Housing and Urban Development.
    And I have with me today two members of my staff. To my 
left is Deputy Assistant Secretary Nelson Bregon, who directs 
grants programs. And to my right is Dick Kennedy, who is the 
Director of the Office of Block Grant Assistance in our 
Department and has great institutional knowledge.
    On behalf of Secretary Martinez, I want to extend our 
commitment to work with you to improve the effectiveness of the 
Community Development Block Grant program and to ensure that 
America's neediest communities receive adequate Federal 
resources to meet the local development needs. We are certainly 
appreciative of the additional $95 million proposed for the 
Department's CDBG formula programs for fiscal year 2003.
    The increased funding will provide for larger allocations 
to our grantees and result in more assistance being made 
available to those that are most in need. These communities 
have fewer resources for addressing housing, community and 
economic development needs and are consequently in greater need 
of Federal financial assistance.
    The lowest income residents of these communities deserve to 
share in Congress' vision of viable urban communities. The CDBG 
program, authorized by the Housing and Community Development 
Act of 1974, as amended, is one of the most successful 
Government aid programs to have ever been created. A testimony 
to this success is the longevity of the program and how it has 
adjusted over the years in response to changes in public policy 
over the nearly 28 years since its inception.
    The CDBG program remains one of the most flexible local 
tools for revitalizing neighborhoods and encouraging economic 
development. Since its inception, the CDBG program has provided 
approximately $100 billion to our Nation's cities, towns, 
counties and States, so they may undertake a wide range of 
activities that are locally determined.
    The imprint of the CDBG program can be seen in nearly every 
jurisdiction of this great country of ours. As a former mayor 
and municipal worker, I can attest to the significance of the 
CDBG program. Each and every year, when Syracuse received its 
grant--when I talk about flexibility and when I talk about 
local determination, that is the beauty of the program. And I 
was just very proud, each and every year, to utilize those 
dollars to help the people that were most in need.
    Immediately prior to accepting my current position at HUD, 
as Madam Chair indicated, I served as the Mayor of Syracuse, 
New York. And that provided me firsthand knowledge of the 
usefulness of the CDBG program as a tool for housing and 
economic development, and to providing a better quality of life 
for our people.
    More than that, however, was the appreciation I developed 
for the devolution of this wonderful Federal program back to 
the community level. I also appreciate the insightfulness of 
the designers of this program in recognizing the basic truth 
that people know what their needs are better than Government 
officials. I was also old enough to remember revenue sharing, 
and I think this program provides more opportunity for people 
in every jurisdiction.
    As Mayor, I often interacted with other mayors and 
officials on issues related to community development and the 
dwindling availability of resources. The CDBG program, however, 
has remained one of the most useful and dependable sources of 
funding for municipalities.
    In fact, our proposed reduction--not elimination--of 
funding to the more fortunate communities will still provide 
those communities with a steady annual funding stream, albeit 
it at a lower level. There are currently 865 cities and 158 
counties entitled to receive CDBG funds directly from HUD. 
These are entitlement communities.
    In addition, 49 States and the Commonwealth of Puerto Rico 
award more than 3,000 grants to smaller cities and counties 
from CDBG funds allocated to the State by HUD each year. Those 
are all non-entitlement communities, the smaller cities and 
rural areas.
    I am very pleased to say we cover the entire spectrum of 
the country. HUD also administers CDBG funds to Hawaii's three 
non-entitlement counties.
    Within this vast number of grantees exist a wide variety of 
recipients. Some are quite wealthy, especially when compared 
with the poorest grantees. It is therefore quite understandable 
that calls would be made to reevaluate the method of allocating 
the limited resources of the CDBG program.
    The continually increasing number of grant recipients has 
resulted in CDBG funds being stretched further and further 
with, in some localities, a continually increasing number of 
grand recipients. This has resulted in some localities, a 
lessening of the impact CDBG dollars can have on local housing, 
neighborhood development, public facilities, economic 
development and the provision of social services.
    Even though the CDBG formula funding has grown 11 percent 
since 1980, many large cities have seen a decrease in their 
CDBG funds, while some of their wealthier suburbs have received 
increased funding. For example, New York City's 2002 CDBG grant 
was 16 percent less than its 1980 grant, while over this same 
time period, Greenwich, Connecticut's CDBG funding increased 43 
percent and Westchester County's increased 51 percent.
    Likewise, Boston's funding decreased five percent, while 
Newton, Massachusetts' CDBG funding increased 11 percent over 
the same period of time. Even some distressed cities have seen 
substantial decreases in their CDBG funding over the past 20 
years. St. Louis and Cleveland, each with per capita income 
less than three-fourths of the national average, receive 21 
percent less CDBG dollars today than they did in 1980.
    This proposal represents a small, but important step in 
redirecting CDBG dollars from areas with sufficient fiscal 
capacity to meet their housing and community development needs, 
to those communities with greater needs and fewer resources. 
While the CDBG program may be heralded as the dependable 
flagship of Federal financial resources, the Department clearly 
recognizes that current economic realities require at least 
some rethinking of how we do business.
    The Department supports targeting of CDBG funds to provide 
assistance to lower income persons to the greatest extent 
permissible under the Housing and Community Development Act of 
1974.
    H.R. 1191, a bill introduced to amend this Act, proposes a 
fairly stringent targeting of CDBG funds in an effort to assure 
that the needs of the lowest income communities are met. With 
respect to H.R. 1191, it would be premature for the Department 
to respond to this bill at this time, since it has not yet been 
voted out of committee.
    We recognize that there is some concern with this bill 
because while it will demand more targeting, it will 
significantly limit, for many communities, the very flexibility 
that has been the cornerstone of the CDBG program. In addition, 
the Department was asked by Congress to submit a study of the 
targeting of CDBG funds and HUD's administrative oversight of 
the program.
    This study was delivered to the House Committee on 
Appropriations yesterday, and emphasizes three things. First, 
targeting of CDBG funds is accomplished by the formulas used in 
determining allocations. Second, the program requires that 70 
percent of a grantee's CDBG funds principally benefit low- and 
moderate-income persons. And third, activities identified as 
principally benefiting persons of low- and moderate-income 
generally assist persons of whom at least 51 percent are low- 
and moderate-income.
    Chairwoman Kelly. Mr. Bernardi.
    Mr. Bernardi. Yes.
    Chairwoman Kelly. The lights here indicate your testimony 
time. And you have gone well over the 5-minute allocation. If 
you could sum up, please know that your written testimony is 
included in the record. It is a matter of our record. So we 
have the written testimony and we are interested in having you 
sum up.
    Mr. Bernardi. Madam Chair, I will be happy to do that.
    Chairwoman Kelly. Sorry for interrupting you.
    Mr. Bernardi. I feel very strongly that the written 
testimony will answer the questions that you are possibly going 
to have.
    In closing, the Administration looked long and hard at ways 
in which we can provide additional dollars to the most needy 
people in our country. As a matter of fact, when it comes to 
providing CDBG funds, we are doing better than the 70 percent 
that is statutorily required. We are at 84 percent.
    I think that the program works well. The flexibility of the 
program is very important.
    Right now, from the 1990 census, the population numbers and 
growth lag have been entered into the formula for the 2003 
year. However, poverty and overcrowding and pre-1940 housing 
data will not be available until the summer or fall of this 
year.
    And so the formula will be changed. We will be conducting a 
study which will be completed at some time next year.
    Also, we have a comprehensive plan. Today, there is a 
meeting in Washington. We are taking a look at the overall 
comprehensive plan, how to streamline it, make it more 
effective, and eliminate some of the red tape that the 
communities go through. There were two of these meetings held 
around the country.
    And the meeting that is being held in Washington today 
includes providers. It includes local government. It includes 
HUD officials and institutions that deal with CDBG.
    In closing, we are here to answer any questions that you 
may have. I appreciate your time.
    [The prepared statement of Hon. Roy A. Bernardi can be 
found on page XX in the appendix.]
    Chairwoman Kelly. We thank you very much.
    Mr. Bernardi, I have a question about that formula that you 
were talking about. The fact that the Administration is 
proposing a redirection of the CDBG money and you are talking 
about doing a study and coming up with a comprehensive plan 
next year, it indicates to me that you have a lack of 
confidence in the grant formula that was created back in 1974.
    Now I want to know why the Administration has not simply 
proposed a new formula right now for Congress to consider that 
will account for the new needs in our communities.
    Mr. Bernardi. Well, we feel the formula works very well. 
And the formula is looked at in a constant way, especially 
after the census numbers are in. The 2000 census numbers, 
including population and the growth lag are in; however, 
poverty and pre-1940 housing have not yet come in from around 
the country.
    That is when the formula is looked at. And then proposals 
are made, in conjunction with yourselves, as to any changes 
that might take place to improve the formula.
    As you know, there are two formulas. There is a formula 
that helps cities that are growing. There is also a second 
formula that helps cities that have population lag and 
increased poverty.
    Chairwoman Kelly. Well, I would beg to differ with you, 
sir. I think when you lop off 50 percent of these communities, 
in these communities, that is a formula problem. And I question 
the criteria in the formula. And I think that it is time that 
we take a look at the criteria that you are using in that 
formula and make sure that the criteria actually are reflective 
of what is within the communities themselves.
    And so perhaps Congress should be working with you in 
setting the criteria for evaluating who gets the CDBG grants.
    Mr. Bernardi. Well, this is just a work in progress, Madam 
Chairwoman. These communities are at two times the per capita 
income, and we are talking about $17 million. And with a 
reduction of 50 percent. And that money would go to other CDBG 
communities.
    The fact of the matter is there are communities that are 
better able, that have the capacity building, the 
organizations, and members in the community that perhaps can 
assist more. There are other communities, communities that I 
visit when I travel this country, the colonias for example, 
where people have absolutely nothing.
    Chairwoman Kelly. I understand what you are saying about 
the fact that your assumption is that certain communities can 
better handle their own things. And that is probably so, in 
some instances. But I think where you have a blanket cut in 
some communities that perhaps are based on inappropriate 
criteria, it is time to change the criteria.
    We need to take a look at the criteria before you decide 
how you set this formula. And I would look forward to working 
with you. I am very concerned about that.
    HUD's identified projects that I think that they think, for 
instance in Westchester County, should not have been funded. I 
would like to know what you think they are. I would like to 
know what criteria you used to identify those.
    Mr. Bernardi. Which projects are you referring to?
    Chairwoman Kelly. I understand that there are certain 
projects in the Westchester Urban County Consortium that you 
have decided were inappropriate. I would like to know what you 
think they are.
    Mr. Bernardi. I do not know the projects that you are 
referring to, Madam Chair.
    Chairwoman Kelly. Why are you cutting funding?
    Mr. Bernardi. Well, it is to provide funding to communities 
that are more distressed than Westchester County.
    Chairwoman Kelly. If they are inappropriate, sir. Why cut 
the funding if they are doing their job?
    Mr. Bernardi. They are not inappropriate, Madam Chair. I 
have not looked at Westchester in particular, but I am sure 
they are used according to the statutory regulations and for 
the needs that the CDBG program was established.
    The fact of the matter is that we are looking at ways, 
together with you, to perhaps redo the formula in a way which 
would provide monies. Our goal here is to take the very low- 
and moderate-income people and to provide them with more 
services and a better quality of life.
    Chairwoman Kelly. Are you planning to send us legislation 
with these proposed changes in the formula so that we can take 
a look at what criteria you are using on the formula?
    Mr. Bernardi. To make any proposals on a formula change, we 
have to wait until the statistics come in from the 2000 census. 
So that will be approximately 2003, by the time we have the 
information.
    Chairwoman Kelly. So you have no intention of changing the 
formula?
    Mr. Bernardi. No.
    Chairwoman Kelly. Changing the criteria, until after this 
year?
    Mr. Bernardi. That is correct.
    Chairwoman Kelly. Until next year. Why not?
    Mr. Bernardi. The formula has been changed already.
    Chairwoman Kelly. Why are you proposing these changes? With 
the 50 percent cut?
    Mr. Bernardi. It is a 50 percent reduction.
    Chairwoman Kelly. Yes, why? Why are you proposing that if 
you do not even have the statistics to back up what you are 
saying? I do not mean to put you in the hot seat here, but we 
need to work together if we are going to be efficient and get 
that money to the people who need it.
    Mr. Bernardi. Those statistics could change with additional 
information. Westchester County may not be in the top nine.
    Chairwoman Kelly. But you are not sure. That is precisely 
my point.
    Mr. Bernardi. There is a starting point. This is a 
proposal. There is a starting point.
    Chairwoman Kelly. It is a starting point? I think that for 
you to cut 50 percent from these communities, without having--
coming here and being able to speak to us with the criteria 
that you have used, show us what criteria and talk to us about 
the appropriateness of this formula.
    Mr. Bernardi. Well, the criteria is two times the per 
capita income.
    Chairwoman Kelly. It is not just Westchester County that 
has been cut. That is why these other people were here. That is 
why these women were here from Florida and that is why Mr. 
Shays was here. Mr. Frank has somebody that is being cut in his 
area.
    Westchester happens to be the only county. You have cut an 
entire county with Westchester County.
    My concern is that these people have been cut and you are 
sitting here telling me that you are not comfortable with the 
formula, because you are going to study it and come up with 
something you feel is more appropriate.
    Mr. Bernardi. The entire formula.
    Chairwoman Kelly. But then if the entire formula is being 
applied to these areas that have been cut, why are you applying 
it this way now? Why not wait and do what you have done before?
    Mr. Bernardi. When we have all of the information in from 
the census, the proposal will be ready to implement, in 
conjunction with this subcommittee and Members of Congress.
    Chairwoman Kelly. My time is over. I have several other 
questions. If we have a second round, I will ask those 
questions. In the meantime, I want you to know that I am going 
to submit to you a group of questions in writing. And I am 
going to hold this hearing record open for 30 days so that we 
can get those answers and put them in the record, sir.
    Mr. Bernardi. Sure. Be happy to respond to your questions.
    Chairwoman Kelly. Mr. Frank.
    Mr. Frank. Mr. Secretary, first, I was kind of struck by a 
rare, if you will accept this, example of deference by the 
Administration to the Congress. With regard to H.R. 1191, if I 
heard you correctly, you said it would be, quote: 
``premature''--to comment, because the bill has not yet been 
voted on by committee.
    Is that a new Administration policy, that you are not going 
to comment on legislation until the committees have acted? I 
would welcome that.
    [Laughter.]
    Do I accurately understand you, sir?
    Mr. Bernardi. Well, that is an OMB policy.
    Mr. Frank. That you are not to comment?
    Mr. Bernardi. Well, I can comment on it. But until we have 
the particulars of the bill, it would be premature to make 
those comments.
    Mr. Frank. So in other words, until--no, you did not say 
the particulars of the bill. Particulars of the bill have, in 
fact, existed before the committee process. Is this HUD policy 
now that you are not going to comment on legislation until it 
has been voted on by committee?
    Mr. Bernardi. Well, OMB would prefer that I not comment on 
that legislation.
    Mr. Frank. A lot of people would prefer a lot of things.
    Mr. Bernardi. Well, I follow the company line.
    Mr. Frank. My question is: is this now HUD policy? Can we 
expect that there will be no HUD comment on pending legislation 
until it has been voted out of committee?
    Mr. Bernardi. I can only speak for myself, sir.
    Mr. Frank. OK. Let me suggest, Mr. Secretary, that what we 
have got here is a duck on a controversial issue. And it is 
particularly troublesome to me for this reason.
    You say in your testimony that cities like St. Louis and 
Boston have lost money because of the formula. But you are not 
yet proposing any change in the formula, which is what caused 
them to lose money. Correct?
    I mean, the money that Boston, St. Louis, the other 
communities lost, they lost that because of the existing 
formula. Is that correct?
    Mr. Bernardi. Yes.
    Mr. Frank. OK. And you are proposing, as of this point, no 
changes in that formula?
    Mr. Bernardi. The census tract takes population into 
consideration. Each year, the formula changes based on 
population.
    Mr. Frank. Did they lose money because of population 
shifts, do you think?
    Mr. Bernardi. In some instances, they did lose money 
because of population shifts.
    Mr. Frank. Frankly, I think you gave a somewhat contrary 
suggestion here because the suggestion was that they were 
losing money because other communities were gaining the money, 
the wealthier communities. That is the juxtaposition.
    The total amount of money that would be saved by your 
proposal to knock off the communities at two times and above is 
how much money?
    Mr. Bernardi. It is $17 million.
    Mr. Frank. No, the total amount saved.
    Mr. Bernardi. About $8.6 million.
    Mr. Frank. $8.6 million. The total CDBG appropriation for 
this year will be what?
    Mr. Bernardi. $4.4 billion.
    Mr. Frank. So you are going to alleviate some of these 
problems by applying $8.6 million to a total of $4.4 billion. 
By my arithmetic, that is .05 percent. I have never seen----
    Mr. Bernardi. It is a little less than that.
    Mr. Frank.----wielded as a weapon before in the battle 
against poverty. But that is what you are doing.
    [Laughter.]
    In fact, having resolved .05 percent of this problem, have 
you any proposals to do the rest? I mean, you make a good 
point. Boston should not be losing money. Cleveland should not 
be losing money. St. Louis should not be losing money.
    And you are going to give them .05 percent of that back. 
You got any ideas for the other 99.95 percent? Or do we have to 
wait until the committee acts before you can comment? Would it 
be premature for you to comment, in other words?
    Mr. Bernardi. When all of the census information is in and 
the formula is looked at again, in conjunction with all of the 
Members here, I am sure there will be proposals in how the 
formula should be changed.
    Mr. Frank. OK, so then in other words, we should tell the 
nine communities that are now on the list that they are only 
the early ones? Because if you are going to hold the amount 
constant, you are going to have to take money away from other 
communities as well. Is that correct?
    Mr. Bernardi. There is a limited amount of dollars that are 
going to be available, Congressman.
    Mr. Frank. So you contemplate, once you get the census and 
you change the formula, do you contemplate taking money way 
from other communities that are maybe at 1.8 times the median 
or 1.7, to make up for these problems with Boston and St. 
Louis?
    Mr. Bernardi. The extra $95 million that is proposed for 
this year is welcomed. There are additional monies that are 
always needed for many programs. But dealing with reality and 
what we have to deal with and what our charge is and what 
Secretary Martinez----
    Mr. Frank. My guess----
    Mr. Bernardi. No, can I finish please?
    Mr. Frank. At this point, it looks to me like the thing you 
lament, the lack, the loss of money for some of these big 
cities, is going to be unchanged, certainly for this year. 
Correct?
    Mr. Bernardi. I am sorry. Could you please repeat the 
question?
    Mr. Frank. You have talked about how Boston has lost money 
and St. Louis has lost money. And I know they appreciate your 
sympathy. But can they expect to get any more than your 
sympathy in the current year?
    Mr. Bernardi. No.
    Mr. Frank. In the 2003 budget? Boston and St. Louis and the 
others?
    Mr. Bernardi. Depending on the formula. The formula that 
they utilize, whether it is formula A or formula----
    Mr. Frank. Do you contemplate that they will be getting any 
of that cost back in the next fiscal year?
    Mr. Bernardi. No. The answer is no.
    Mr. Frank. OK. Frankly, I am a little troubled that you 
invoke their plight on behalf of your proposal to knock out 
these other communities but now acknowledge to me that that is 
all they are is kind of props, frankly, in the effort.
    Mr. Bernardi. I think it shows a comparison of communities 
that have benefited to those that have not.
    Mr. Frank. It does. But it also shows that you are not 
going to do anything about it. And I think it is an 
inappropriate invocation of their plight when you are going to 
wind up with $8 million.
    Last question I have is this: with regard to the 
communities you are going after, I would think----
    Mr. Bernardi. Congressman, we are not going after anyone 
really. It is a proposal.
    Mr. Frank. Well, the communities who will lose funding as a 
result of your beneficent actions. It would seem to me--and I 
would just recommend this to you and then I have one other 
question that I would ask for in writing--that what is relevant 
is not simply the overall income, but the distribution within 
the communities. Certainly, the Federal Government is not 
suggesting that a community which has a large number of wealthy 
people and a large number of poor people should be one in which 
the wealthy people are individually taxed locally to pay for 
certain kinds of services.
    So if you were going to try and reallocate, I would urge 
you to take in a formula. And statistical techniques can do 
this. You do not simply look at the overall amount. A community 
in which everybody is making $70,000 probably needs the money 
less than a community in which a number of people are making 
$150,000, but a number are making $30,000 and $20,000.
    In other words, even on your own terms, this is simplistic 
beyond what we ought to be doing. You need to take some kind of 
matrix approach.
    Last point I would make is this. And I am touched by your 
concern for the failure of the funds to reach the intended 
recipients.
    You have been Assistant Secretary for how long, Mr. 
Bernardi?
    Mr. Bernardi. Eight months.
    Mr. Frank. During that period--and, in fact, during the 14 
months of this Administration--would you submit in writing 
examples of interventions by HUD against inappropriate uses of 
CDBG funds by recipient communities? That is, how many cases 
have you found in which money was not being spent 
appropriately? It was being spent other than----
    And in general, if you could give us a record of your 
enforcement of the low- and moderate-income requirements, I 
would be pleased.
    Thank you for your indulgence, Madam Chairwoman.
    Chairwoman Kelly. Thank you, Mr. Frank.
    Mr. Grucci.
    Mr. Grucci. Thank you, Madam Chair.
    Mr. Bernardi, welcome. Good morning.
    If I am correct in what I thought I heard, that there is 
going to be a 50 percent reduction in the CDBG funds. Did I 
hear that correctly?
    Mr. Bernardi. On the nine communities in question, yes.
    Mr. Grucci. Low-income and moderate areas, low-income to 
moderate communities that are adjacent to, in picking up from 
what Mr. Frank was saying, let me give you an example. In the 
district that I represent, I have a very affluent area known as 
the Hamptons. South Hampton, East Hampton, they have very 
wealthy areas, million dollar homes, multimillion dollar homes 
along the oceanfront.
    Go about six blocks away from the oceanfront and there are 
people struggling, who are living in what would be considered 
poverty. They are struggling to make ends meet because the high 
cost of living in that region causes the prices of houses to go 
up. The taxes are hurting people. And one thing after another.
    These areas should not be punished as a result of living 
next to a community that has been blessed with affluence. And I 
see that is what is going to take place.
    And I said in my opening statement that as a supervisor, 
you understand this. That Community Development Block Grant 
money, when it comes into your town or into your city, was 
enabling us to do some great things for the people who were the 
least fortunate.
    In infrastructure, it helped us to build the roads, the 
drainage, the signage in communities where people did not even 
have signs up on their blocks that tell law enforcement or 
emergency vehicles what street they were coming down. Bringing 
fresh, clean water into areas that had been polluted.
    It built parks and it built ball fields and it built pools, 
as well as the teen crisis centers and senior centers, as well 
as programs like the teen pregnancy program, the battered women 
programs and nutritional program centers. And the list just 
keeps going on.
    If these communities are going to lose their money simply 
because they are fortunate--or misfortunate--enough to be in a 
census tract that would demonstrate that that area is affluent, 
where are they supposed to get their money from? Where are they 
going to get their help?
    The local government--and I do not know about the finances 
of Syracuse, but I can tell you that the local finances of our 
local governments are the least capable of helping these 
people. They have the least amount of resources. And county 
governments are already being besieged with burdens of mandated 
programs coming down upon them. They cannot keep up with the 
mandates.
    Are these people to just fall by the boards because they 
have the misfortune of living next to an affluent community? 
How do they get the help?
    Mr. Bernardi. Congressman, communities that have a 
significant number of affluent people, as I mentioned earlier 
in my statement, have the capacity, have the wherewithal, if 
you will, the technical assistance. You look at city 
governments, town governments and county governments.
    In certain areas, obviously, there are more people. There 
are more people who do the work. There are more resources.
    And this is just a proposal. We are not going to take any 
unilateral action here on the part of HUD. Looking for ways, 
quite generally, to find ways in which we can help those that 
are less fortunate, the people that you talked about, that live 
out on the water in those mansions, in those other areas.
    How can we provide them with additional assistance? That is 
the proposal.
    Mr. Grucci. I would encourage you to do as much as we can. 
I would encourage you to restore more money into the CDBG 
program. Let's do the things that that money can do.
    I have watched as it has helped teenagers get a fresh start 
on life. And I have also been there when the Federal Government 
has cut those programs and as a supervisor and a town board had 
to make the decisions as to what programs could not get funded. 
And we watched as programs that were helping the community fell 
by the boards.
    And there was no place for these people to get help. 
Instead of looking to cut CDBG, I think we should be looking to 
increase it. It is the conscience of Government that does the 
best for the people who are least capable of helping 
themselves.
    Mr. Bernardi. Well, as I indicated, there is an 
appropriation of $95 million more for the CDBG entitlement 
program, which is welcomed.
    Mr. Grucci. But if areas of the country that were once 
receiving these funds--and I am not sure my county will be part 
of that county cut that was talked about. We will know that 
when the new census tract numbers come out and all the 
information comes out.
    But the fact of the matter is, if it indeed does, and it 
has been getting cut year after year as a result of whatever 
reasons HUD has been cutting that money, people have been 
hurting and programs have been falling by the boards. And this 
money ought not to be--we ought not to take from this program 
to find monies to help balance budgets or to put things into 
perspective. This area is where Government ought to shine its 
best.
    And I would encourage you to do all that you can to not 
just put $95 million in, but also to make sure that the areas 
that were receiving these funds are not asked to take a bigger 
cut and be asked to make the sacrifice so that other areas of 
the country can be helped. It would be wrong to ask the poor 
people of one region to be impacted even further so that they 
can help poor people in other areas.
    And I yield back the remainder of my time.
    Chairwoman Kelly. Thank you, Mr. Grucci.
    We go now to Mr. Clay.
    Mr. Clay. Mr. Bernardi, in your testimony, you extolled the 
virtues of benefits to a community of flexibility in the 
program. I know, for instance, in St. Louis and in my 
neighborhood in particular, they have used CDBG funds to erect 
gates, close streets, special lighting. I think that may be 
where the problem exists in the program is that this 
flexibility allows communities like where I live, which is 
probably one of the better parts of St. Louis, to use those 
funds in a manner which I do not think they were initially 
intended to be used for.
    Don't you see some areas where that flexibility could allow 
for abuse in the program?
    Mr. Bernardi. Well, the eligible activities that are 
statutorily required between headquarters and the field offices 
and our integration disbursement information system, we do 
track how communities use that money and that they reach that 
70 percent threshold. And the average is even more than 70 
percent. About 84 percent of the dollars spent each year by the 
grantees, on an average, go to benefit low- and moderate-income 
people.
    But I am sure there are situations that occur where that 
money could be utilized in a different way. But I think to take 
away that flexibility, you would really hamper the local 
decision-making process. The decisions are made locally, as 
they should be, with the community development boards in each 
locale.
    Mr. Clay. OK, what about what Representative Meek talked 
about in her testimony, that the original intent is to build 
decent and affordable housing? We know that home ownership 
creates wealth. We know that.
    Can you point to many instances in cities such as mine 
where the dollars have actually gone toward building decent and 
affordable housing? Giving people the opportunity to own a home 
for the first time?
    What I know about in St. Louis City is that these funds 
have gone to benefit supporters of the mayor and have not 
necessarily gone to create housing. Of if they have created 
housing, it has been substandard. I mean, can you point to 
instances where they have actually gone to build affordable, 
decent housing?
    Mr. Bernardi. Mr. Kennedy indicates to me that St. Louis 
has a very good record in housing and will be happy to get that 
information to you.
    Mr. Clay. Would you be willing to point that out?
    Now also in your testimony, you point to the fact that St. 
Louis and Cleveland, with per capita incomes less than three-
fourths the national average, received 21 percent less CDBG 
dollars today than they did in 1980. Can you tell me what are 
the reasons for this?
    Mr. Bernardi. The population decrease.
    Mr. Clay. The population shift.
    Mr. Bernardi. Primarily. Yes, the shift.
    Mr. Clay. I know in St. Louis, that population has 
decreased. However, what is left are that you have more and 
more poor. So don't you think maybe the formula may need to be 
tweaked in order to address the increased amount of poor?
    Mr. Bernardi. It is a very complex formula. But the fact is 
is that the decrease or the shift in population primarily led 
to the reduction. But there are other factors as well, I am 
sure.
    Mr. Clay. The other factors are?
    Mr. Kennedy. If I could just comment generally that, with 
respect to the formula changes, HUD simply cannot launch a 
study of what is happening with the 2000 census data until we 
have all the data in. We expect to have that in by the fall.
    And then we can do a complete study that will look at the 
effects of the 2000 census changes. And we expect those changes 
to be fairly substantial.
    We want to be able to present to Congress a thought out 
evaluation of what those effects are and allow you to perhaps 
make some suggestions regarding changes to improve the formula. 
Certainly, that is a congressional activity. We want to be able 
to present the facts to you, once we have the data in, with 
respect to the overall formula.
    Chairwoman Kelly. Excuse me, sir. But you are not a listed 
witness at this hearing.
    Mr. Kennedy. I am sorry.
    Chairwoman Kelly. I would like to have you identify 
yourself for the record, please.
    Mr. Kennedy. I apologize, Madam Chairwoman. My name is 
Richard Kennedy. I am the Director of the Office of Block Grant 
Assistance. And I work for Assistant Secretary Bernardi and Mr. 
Bregon. I apologize.
    Mr. Clay. In conclusion, Madam Chairwoman, let me also ask 
that when you do give me that information on St. Louis housing, 
would you also look at the fact that the fact that the funding 
was used to build a convention center and hotel and tell me if 
that is proper or not.
    Mr. Bernardi. That was economic development. Section 108 
monies, I believe, were involved in that.
    Mr. Clay. But would you put that in writing?
    Mr. Bernardi. Of course.
    Mr. Clay. Thank you.
    Chairwoman Kelly. Thank you.
    Ms. Lee.
    Ms. Lee. Thank you, Madam Chair.
    Mr. Secretary, let me just ask you about the proposed cut 
and at least where the budget summary says you intend to put 
the revenues that you receive from the cut. The comments 
indicated that the savings would fund a regional initiative to 
enhance affordable housing, economic opportunities in the 
colonias? Is that accurate, in terms of where you intend to put 
the money?
    And I just want to find out where these colonias are. It 
says they are within 150 miles of the U.S.-Mexican border. And 
they lack infrastructure. And all the descriptions of what 
these colonias are.
    The criteria and the lack of infrastructure appears to be 
already late to qualify for existing funds. So why would you 
have to cut any to put the money there? Why couldn't you fund 
them with existing funding?
    Mr. Bernardi. The money from the proposal would go back to 
the formula for redistribution to the remaining entitlement 
communities. The colonias is 150 miles of area along the Texas-
New Mexico-California border, where there are communities that 
are really not communities.
    They are basically outside of the towns in that particular 
area. They have tremendous poverty and no infrastructure.
    The Secretary is very committed to putting together a 
proposal to help those people. There is money earmarked for 
that purpose that is separate from what we are talking about 
here. We have $16 million earmarked for that.
    Ms. Lee. Is it coming from CDBG though?
    Mr. Bernardi. No.
    Ms. Lee. At least the budget summary indicates that the 
savings from, as a result of the cuts, would go to fund this 
regional initiative. And I am just asking that because it seems 
to me that we should fund that anyway.
    Mr. Bernardi. It will give us more room in the budget to 
have the $16 million to help the colonias. But it is not coming 
from the CDBG program.
    Ms. Lee. It is not coming from the CDBG?
    Mr. Bernardi. No, that money will go back to be 
redistributed amongst the remaining entitlement communities, as 
I understand it.
    Ms. Lee. It is in your budget proposal, where it indicates 
that the savings from this proposal, which we are talking about 
today, would go to fund these colonias. Unless I am misreading.
    Chairwoman Kelly. Mr. Bernardi, what she is asking, I 
believe, is for clarification, because in the proposal, while 
you talk about it--in basically the information you sent out 
about what you are proposing, you do not define the colonias. 
And it just says, actually let me read from this: ``The savings 
from this proposal will fund a regional initiative to enhance 
the availability of affordable housing, economic opportunity 
and infrastructure in the colonias.''
    We do not know where that is. We do not have a definition 
of that. And we are sitting here wondering why you are not 
talking about things like the Appalachian region, the 
Mississippi Delta region. What is the colonias?
    In other words, we need a geographic definition. That is 
what she is asking.
    Ms. Lee. And also, Madam Chairwoman, in addition to the 
geographic definition, what I am also asking is why can't these 
communities access CDBG funding now? And why do we have to 
establish a new pot of money for these communities?
    Mr. Bernardi. They are not entitlement communities. And 
with the redistribution of the dollars, they would go to the 
remaining entitlement communities.
    Communities within those States could provide assistance 
and some already have. I know that the Texas legislature has 
passed money to help the colonias.
    Ms. Lee. OK. So then you are saying again--I need to 
clarify this, as we move forward--you are saying this money, 
the proposed cuts that you are presenting to us today do not go 
to fund, the savings do not go----
    Mr. Bernardi. No. They go back to the formula and will be 
redistributed to the remaining entitlement communities.
    Mr. Frank. If the gentlewoman would yield?
    I think it is very clear. First of all, there appears to 
have been a change from the budget proposal where it talked 
about putting the money into the colonias. But I think what you 
have here is one more effort to get some sympathy for this 
proposal by invoking a very worthy, but legally, quite 
irrelevant issue.
    Ms. Lee. Thank you very much, Mr. Frank.
    Thank you, Madam Chair. I understand now. I get it.
    Chairwoman Kelly. Thank you.
    Mr. Bernardi, we need a definition. And we need a 
geographic definition, a better definition of what this is 
because you have not defined it. And it is necessary if we are 
going to seriously pursue----
    Mr. Bernardi. It is not part of the program and the 
reduction. But I will get you the definition, all of you.
    Chairwoman Kelly. Thank you.
    Mrs. Jones.
    Mrs. Jones. Am I the last one?
    Chairwoman Kelly. No, no.
    Mrs. Jones. Let me pass.
    Chairwoman Kelly. All right. Then we go to Ms. Waters.
    Ms. Waters. Thank you very much.
    I do not know, Mr. Bernardi, you have not been around here 
very long maybe. You have not been doing this very long.
    You have to understand that we decide to support efforts in 
various ways. For example, it would be very attractive--it 
would seem very attractive--for me to accept the idea that you 
are doing something to give more money to the poorest areas of 
the country. It would be easy for me to grab hold to that.
    But I have learned to be very selective about doing that 
kind of thing because we all define these needs in various ways 
at various times. For example, when I look at your proposal 
where it says, ``Our 2003 budget proposes reducing the annual 
CDBG allocation to the wealthiest one percent of eligible 
grantees.''
    Now, I use that kind of language with tax cut when I talk 
about who should be given a tax cut and who should not be given 
a tax cut. And I say that the wealthiest people in this country 
should not be given a tax cut.
    But the Administration rejects that kind of thing. They 
believe that the tax cut that they have given, that the 
wealthiest people should benefit from it. So, on that occasion, 
we differ.
    On this occasion, where you are using that same kind of 
argument, I differ with you because I have learned that once 
you give somebody some money, you are not going to get it back. 
And when you have, in this case, Republicans who come from 
wealthy communities who like this money and they are accepting 
this money and they honestly believe that, despite the fact 
they have a wealthy community, there are pockets in those 
communities that benefit.
    And as was described, maybe even more when you have a 
community where you may have $150,000 incomes and pockets of 
$30,000 incomes than where you have everybody getting $70,000. 
So, you are going to lose that one.
    And I think what we are all saying is this. And I use that 
argument too with Social Security. I am selective. And Social 
Security, when they try to make the argument that wealthy 
people should not benefit from it, I say, ``No, no, no, no, no, 
no. I reject that because I want to keep everybody in the loop 
so that we join hands and get as much money as we can.''
    So, you find yourself in a position where the 
Administration's argument will not work with one. What we are 
going to do is we are going to join hands and we are going to 
all say, ``Well, we need more money. We need more money. We are 
not going to let you cut out these wealthy communities. They 
are our friends on this one.'' OK?
    [Laughter.]
    We are going to support them. We are not going to let you 
separate us out.
    Mr. Bernardi. I am so happy I could bring you all together.
    [Laughter.]
    Ms. Waters. So my advice to you is number one, first of 
all, it is not enough money that you are going to take from 
them to really spread out to do anything. And you got caught 
talking about the colonias and some other places that are not 
going to benefit at all. So, we caught you.
    And having caught you, I hope this is a nice little, you 
know, beginning lesson for you. What you should be doing with 
all of this now is recognize that we all love CDBG. It is 
extremely important.
    We depend on it. We love it. It works in poor communities. 
It works in not-so-poor communities. We are all together on 
this.
    We need more money for CDBG so that we can have more money 
to spread around. Now, there may be some places that do not use 
this money appropriately. And it is OK. You go look for those 
and find those and try to extract those. And then, we will all 
join hands, perhaps, on that one.
    But on this one, uh-uh. Nope. It is not going to work.
    So, take the message back. Do what you have to do. But I am 
going to support Westchester.
    [Laughter.]
    Mr. Bernardi. If we took more, could we change your mind?
    Ms. Waters. Huh? Nope, will not work on this one.
    Mr. Bernardi. Thank you. Thank you for your comments.
    Ms. Waters. And understand, there are some times when what 
appears to be logic does not fit. And this is one of them. 
Sorry.
    Mr. Bernardi. Thank you. Thank you for your comments.
    Chairwoman Kelly. Thank you very much, Ms. Waters.
    We go to Mr. Capuano. Oh, I am sorry.
    Mrs. Jones.
    Mrs. Jones. Thank you, Madam Chairwoman. I talk loud so I 
do not really need a microphone.
    Mr. Secretary, thank you very much for appearing here 
today. I was reading through your testimony. And at page four, 
it says: ``St. Louis and Cleveland, with per capita incomes 
less than three-fourths the national average, receive 21 
percent less CDBG dollars today than they did in 1980.''
    I represent the great city of Cleveland. Can you be a 
little more specific? Or could you have your staff submit to me 
information with regard to the city of Cleveland and CDBG 
grants and why our grants have gone down?
    Mr. Bernardi. Yes, I will be more than happy to get you all 
that information.
    Mrs. Jones. I would deeply appreciate it. Let me ask you 
another question. At page five of your testimony, it says: 
``With respect to H.R. 1191, it would be premature for the 
Department to respond to this bill at this time, since it has 
not yet been voted out of committee.''
    Even though the bill has not been voted out of committee, 
we are here to discuss conceptual things, what would best work 
for the CDBG community. Could you discuss with me conceptually 
some things that would either support or not support the 
legislation and on and on and on that would be great to improve 
the CDBG?
    Mr. Bernardi. If we had a copy of a bill that is in final 
form, we would be happy to. We want to work with you on it. If 
there are things in the bill that would be of a benefit to 
especially low- and moderate-income people, of course. We are 
all working toward the same goal.
    But that is a proposal that you had. And we will look at 
it. And we will get back to you on it.
    Mrs. Jones. But you do not have any responses for me this 
morning?
    He can talk for himself. You do not have to bug him. He is 
a big guy, he can handle it.
    [Laughter.]
    Mr. Bernardi. Well, the----
    Mrs. Jones. Who is this guy whispering in your ear?
    Mr. Bernardi. This is Nelson Bregon. I introduced him 
earlier. He is the Deputy Assistant Secretary for the grants 
program, the CDBG program that we are speaking of.
    Mrs. Jones. Well, pass him the microphone.
    Mr. Bernardi. OK, I would be happy to.
    Chairwoman Kelly. Sir, will you identify yourself for the 
subcommittee, please?
    Mr. Bregon. Yes, honorable Chairwoman. My name is Nelson 
Bregon. I have been a career HUD employee for over 22 years. 
And I am the Deputy Assistant Secretary for the Office of Grant 
Programs.
    Mrs. Jones. So are you permitted in your capacity to 
respond to that question I just asked?
    Mr. Bregon. No, not without the permission of my boss.
    [Laughter.]
    Mrs. Jones. Well, what good are you?
    [Laughter.]
    I am joking. Really, I am. I am just having fun this 
morning.
    Mr. Bregon. I understand.
    Mrs. Jones. I do not want you all to take me too seriously.
    OK, Mr. Secretary, let's go to another page of your 
testimony. You are going to get something back to me so that we 
can have a real discussion about CDBG programs?
    Mr. Bernardi. Yes.
    Mrs. Jones. In your statement, you say that just yesterday, 
you submitted to the Appropriations Committee--this is at page 
five: ``In addition, the Department was asked by Congress to 
submit a study of targeting of CDBG funds and HUD's 
administrative oversight of the program. That study was 
delivered yesterday.'' Did you happen to bring a copy along for 
us?
    Mr. Bernardi. Yes, we have copies here.
    Mrs. Jones. OK. It says the report emphasized three things: 
targeting of funds, the program that requires 70 percent and 
activity. I am not reading all of this, this is for the record. 
``And three, activities identified as principally benefiting 
persons of low- and moderate-income generally assist persons of 
whom at least 51 percent are low- and moderate-income.'' This 
is page six of the report.
    I do not want to spend all of our time--because I probably 
do not have any time left actually--on this. But for future, it 
would be nice for us to have something like that before the day 
before the hearing so we could spend some time reviewing it to 
be able to make some reasoned inquiry into some of those 
things. Is that something you could facilitate for us, sir?
    Mr. Bernardi. We would be happy to do so. The Congress 
asked us to give it to the Appropriations Committee.
    Mrs. Jones. I understand.
    Mr. Bernardi. Double check with the Appropriations 
Committee. If they are fine with it, we are fine with it.
    Mrs. Jones. OK.
    But this is the Housing Subcommittee on Banking, over which 
we do have oversight.
    Chairwoman Kelly. Financial Services. You are fined $1.
    Mrs. Jones. Right. Financial Services Committee. And this 
is the Housing Subcommittee. And we do have jurisdiction over 
HUD. So I do not think you have to get the Appropriations 
Committee approval to give us information that is applicable to 
that department.
    Somebody else is whispering in your ear. Go ahead, tell me 
your name.
    Mr. Frank. He has already identified himself.
    Mr. Bernardi. That is OK.
    Mrs. Jones. OK. Great. Thank you very much.
    Chairwoman Kelly. Ms. Waters, have you a question?
    Ms. Waters. Yes, I guess I do. And I guess what I am saying 
to you is what is the likelihood of us--is it too late? Well, 
no, it is not too late--of us working at some formula changes 
to accommodate the loss of population, so that we can make up 
for the dollars that are lost in these cities where they have 
lost money, maybe due to population changes? And at the same 
time, not touching the communities where you are talking about 
taking this meager amount anyway, that will not really make up 
for that loss?
    I mean, I think that is where we need to be going with 
this. Increase above and beyond what appears to be about a two 
percent increase in CDBG, so that that increase will 
accommodate the population losses that are changing the formula 
and leave those other communities alone.
    What is the likelihood that we may be able to advocate in 
that way?
    Chairwoman Kelly. We spoke with Mr. Bernardi just now. And 
he indicated he would work with us. Because part of the problem 
is not just the formula, but the criteria used within that 
formula. And we need to work together.
    That is part of the reason why I am very happy to have him 
here in front of us today, because I think it is very clear, 
from what we have all heard in this room so far, that there is 
a need for us to take a look at the criteria, take a look at 
the formula. And based on the 2002 census figures, then they 
will come up with a new formula.
    The problem is they are trying to do something now without 
that new formula, without the new criteria. And so that is 
where we are going. That is exactly where we are heading. And 
your question is very appropriate and a good one.
    Mr. Bernardi. When we look at the formula, and have all of 
the information from the 1990 census, we will come back to you 
to discuss what the information is, what it shows and look for 
your input as well as to how we can improve it.
    Ms. Waters. I guess what I am saying is, just my initial 
review of this, it may require a small increase to cover what 
needs to be covered. So that I do not want to see anything that 
is done to try and not support an increase so that it would 
leave those communities intact.
    Chairwoman Kelly. Mr. Israel, we have been called for a 
vote. I am going to ask Mr. Israel to present his questions, 
then I will recess.
    Mr. Israel. Thank you, Madam Chair. In the interest of time 
and because we have a vote, I will be very brief.
    Mr. Bernardi, did you have a chance to read Secretary 
Martinez' testimony to this subcommittee on the budget several 
weeks ago?
    Mr. Bernardi. Yes, I looked at it.
    Mr. Israel. You did read it? Do you recall reading that 
portion of the testimony where I asked him if HUD would 
reevaluate the formulas that are being used as a basis to 
reduce CDBG allocations in so-called wealthy communities with 
pockets of poverty?
    Mr. Bernardi. The Secretary is committed to working with 
the Members of Congress on this. This is not unilateral. We are 
just making a proposal here.
    Mr. Israel. Do you recall that in the testimony, the 
Secretary did, in fact, commit that he would work with my 
office and other offices to revisit that issue?
    Mr. Bernardi. I did not see the testimony. But I know the 
Secretary, the person that he is. Of course, he would do that.
    Mr. Israel. He did, in fact, commit to that. I would just 
comment to your attention that my office has been trying to 
contact the Secretary's office in order to begin to shape that 
dialogue. And we have been rebuffed every step of the way. Was 
the Secretary being inconsistent when he pledged that he would 
meet with us?
    Mr. Bernardi. No, not at all.
    Mr. Israel. Can we get a meeting with him?
    Mr. Bernardi. Let me get back to you as to working with 
that particular program. I think you have some of the gentlemen 
right here at the table that we would be happy to meet with 
you.
    Mr. Israel. Can we get a meeting with somebody at HUD to 
discuss this? A human being?
    Mr. Bernardi. Sure, I will meet with you.
    Mr. Israel. You will?
    Mr. Bernardi. Yes.
    Mr. Israel. Thank you. I appreciate it.
    In the interest of time, Madam Chair, I will yield back.
    Chairwoman Kelly. Thank you, Mr. Israel.
    Mr. Bernardi, as you can see, there is a tremendous amount 
of concern and a strong need that we feel to be able to be a 
part of the process. So I would urge you to please meet with 
all of us. You could meet with people as requested. But more 
importantly, I think that what we are asking for is a certain 
amount of transparency in the process of what you are doing 
with regard to this formula and the criteria that are being a 
part of the formula.
    You have withstood our questions very well. This has been a 
tough panel. And you are new at the job. And we appreciate very 
much the fact that you were here, you were open, as honest as 
you possibly could be.
    And with that, I am going to excuse this panel. And I am 
going to ask the third panel to be seated. We are going to go 
for our vote. We have a 15-minute vote and then a 5-minute 
vote. So we will be back in approximately 20 to 25 minutes.
    Mr. Bernardi. Thank you, Madam Chair.
    Chairwoman Kelly. And I will keep this record open for 30 
days for the written questions and statements by the Members of 
the subcommittee.
    [Recess.]
    Chairwoman Kelly. Will people please take their seats?
    We welcome our panelists for this panel. We have before us 
the Honorable Andrew Spano, who was elected in 1998 as County 
Executive for Westchester County, New York. Prior to his 
election, he was the Westchester County clerk.
    As County Executive, Mr. Spano has streamlined government 
services by restructuring the county's department of social 
services and creating a new Office of Economic Development. He 
believes that state-of-the-art technology can be used to 
deliver more services at less cost.
    Next, we have the Honorable George Oros, who was elected to 
the Westchester County Board of Legislators in 1995. He chairs 
the board's Special Committee on Economic Development. Known as 
a determined tax cutter and fiscal reformer, Mr. Oros has a 
long record of community service, having served as Cortland 
town councilman, chair of the Cortland Zoning Board of Appeals 
and as Cortland's Assistant Town Attorney.
    They also happen to come--both of them--from Westchester 
County, where I reside. And I welcome both of them.
    We follow that with Mr. David Cohen, currently serving in 
his second term as Mayor of Newton, Massachusetts, having 
previously been a member of the Massachusetts House of 
Representatives for more than 20 years. Since becoming Mayor in 
1998, Mr. Cohen has promoted efficient and cost effective 
delivery of public services. He has a strong interest in 
affordable housing.
    We have next Ms. Josephine McNeil. She is the Executive 
Director of CAN-DO, an affordable housing development 
organization in Newton, Massachusetts. As a real estate 
attorney, Ms. McNeil's practice focused on affordable housing. 
She also served as the project manager for a for-profit housing 
development.
    Following her is Yvonne Gonzalez, the CEO of the Rio Grande 
Valley Empowerment Zone Corporation in Mercedes, Texas. The 
corporation was founded in 1994, one of only three rural 
empowerment zones in the Nation.
    Following that, we have Ed Gramlich, who is a Research and 
Community Development Specialist with the Center for Community 
Change in Washington, DC. He joined the center since 1979 and 
since then, has become a noted authority on the CDBG Block 
Grant program and other programs at HUD, providing low-income 
community organizations with technical assistance. He has 
lectured widely and written numerous guidebooks for local 
organizations on UDAGs, enterprise zones and CDBG.
    Following him, we have Mr. Greg Hoover, who is the Director 
of Development of Davenport, Iowa's Housing and Neighborhood 
Development Department. He currently serves as President of the 
National Community Development Association. The association is 
a national, non-profit organization comprised of more than 550 
local governments across the country that administer federally-
supported community and economic development housing and human 
services programs.
    I want to welcome this panel. We look forward to your 
testimony. And we would begin with you----
    Mr. Frank. Madam Chair, just before you do, let me 
particularly welcome the Mayor of my hometown, David Cohen, 
with whom I had the pleasure, 24 years ago, of serving in the 
Massachusetts Legislature before I came here. And he and 
Josephine McNeil have both distinguished themselves by their 
advocacy in a generally wealthy community, on average, for the 
kind of inclusive housing and other policies that I believe are 
at issue here.
    So I am particularly pleased that Mayor Cohen and Ms. 
McNeil were able to join us. Thank you.
    Chairwoman Kelly. Thank you. If there are no other opening 
statements, we are going to begin with our witnesses on our 
first panel. We thank all of you for joining us here today to 
share your thoughts on these issues.
    Without objection, your written statements will be made 
part of the record. You will each now be recognized for a 5-
minute summary of your testimony.
    There is a light here in front of you that will indicate 
how much time you have. The green light means that you have 4 
minutes in your summary. The yellow light means you have 1 
minute remaining. When the red light turns on, it means your 
time has expired and we would appreciate your ending the 
testimony.
    We will begin with you, Mr. Spano.

 STATEMENT OF HON. ANDREW SPANO, COUNTY EXECUTIVE, WESTCHESTER 
                           COUNTY, NY

    Mr. Spano. Madam Chair, Congressman Frank, Members of the 
subcommittee, I would like to thank you for the opportunity to 
testify here today on the importance of retaining the Community 
Development Block Grant formula as it is. As you know, a 
proposal has been made to cut Westchester County's CDBG grant 
in half to $3.5 million and use the savings for infrastructure 
improvements near the Texas-Mexican border, at least that is, I 
thought, where that was going.
    It has been suggested that we in Westchester, New York 
City's northern neighbor, are too rich to deserve this money 
and should have our CDBG funds cut. If this proposal goes 
through, we would be the only county in the United States and 
the only municipality in New York State to be so cut.
    Indeed, only nine of 1,000 entities nationwide that receive 
money from the $4.75 billion CDBG program are targeted for 
cuts. And our consortium of 40 Westchester communities is being 
asked to shoulder the burden of more than one-third of the 
total cut.
    I have a quick way to make sure that funding for 
Westchester's consortium is not slashed. I can ask three of our 
wealthiest communities--Scarsdale, Bronxville and Pound Ridge--
to leave our consortium. If you take them out of the group, we 
are no longer double the national average in income. But to 
omit from the consortium our longtime partners make no sense 
and punishes people in those communities who need our help.
    I am talking here about senior citizens on fixed incomes, 
whose homes have been rehabilitated with the help of this 
money, who without this help would be forced to either live in 
an unsafe home or move. The CDBG funds that have gone to these 
communities have been used to help people who need this help.
    I do not think omitting these three communities from our 
program is just a solution. Instead, it is a Hobson's choice: 
which needy people should you cut? I believe that forcing 
Westchester to bear the cuts being proposed unfairly singles us 
out and would severely hurt people in our county, people of 
limited or modest means who need and rely on the kinds of 
neighborhood revitalization, housing and job creation programs 
that these funds go to.
    It will hurt our senior citizens, thousands of whom each 
day use senior centers that have been built with the help of 
these funds. Without this money, some of these seniors would 
have to place to go for companionship and a hot meal, or help 
with housing, counseling and other referral services.
    It will hurt our youth, about 1,000 of whom have a safe 
place to go for daycare after school because this money has 
helped build youth centers and playgrounds. Without this money, 
some of these teens and preteens would be out on the streets in 
trouble.
    It will hurt our families, thousands of low- and moderate-
income households that have been helped by these funds that 
have rehabilitated dilapidated housing units to make them 
decent and safe. Without this money, some of these people might 
have been homeless.
    It will hurt our low- and mid-income workers, many of whom 
are working today because of economic opportunities created by 
these funds that have revitalized neighborhoods and business 
districts or because of daycare, senior centers and subsidies 
that have allowed them to feel comfortable, knowing their 
children and their elderly parents were in safe places while 
they worked. Without this money, some of these people might be 
on welfare today.
    People who do not know Westchester think we have the 
proverbial streets of gold. And the proposal to cut our funding 
reflects this false notion.
    Let me give you the facts. Eighty-seven thousand people in 
Westchester live below the poverty level. And that number 
increased by 50 percent since 1990. Almost 40,000 of these 
people are children. Our average salaries may be high relative 
to much of the Nation, but so too are our housing costs.
    Take a two-income Westchester family of four with a 
moderate income of $73,000. With that income, the family could 
qualify for a $200,000 mortgage in Westchester. Elsewhere in 
the Nation, that might buy a luxurious home. Here in 
Westchester, where the median cost of housing last year was 
$450,000, that home might be nonexistent. And if that house is 
found, the chances are it will be in great need of repair.
    And it is just not our houses that are costly, but our 
rental units as well. Someone working minimum wage has to work 
27 hours a day to be able to afford a two-bedroom apartment at 
fair market rent.
    It is no surprise to us that the National Low Income 
Housing Coalition gives us the dubious distinction of being 
sixth on the list of the least-affordable places to live. Maybe 
that is why we have the highest per capita rate of homelessness 
in the United States. And almost 30 percent of the housing 
stock in our consortium was built before 1940; meaning unless 
we renovate, our housing shortage will get even worse and 
possibly our homeless population even larger.
    Our population is aging as well. One in every five of our 
county residents is over 60, putting us 50 years ahead of the 
national average, placing us on an increased demand for 
services. And while yes, we have perhaps more of our share of 
millionaires, we also have 17,000 families with low-income 
enough to qualify for food stamps and over 40,000 families 
receiving medical assistance. And last year, there were five 
million visits by our residents to local food pantries and soup 
kitchens.
    Our consortium is made up of 40 diverse communities, some 
of them very urban, some suburban and others more rural. But 
our poverty is dispersed within them all. And our anti-poverty 
programs must recognize this.
    Our county is composed of 15 percent African-American and 
16 percent of the people are of Hispanic origin.
    Chairwoman Kelly. Mr. Spano.
    Mr. Spano. Yes?
    Chairwoman Kelly. I am going to have to ask you to sum up.
    Mr. Spano. That is our fastest growing segment of the 
population. If you withdraw these funds from us, which 
represents half of the money we are getting now, it will cause 
a severe hardship on the people of Westchester County. And I 
urge you not to do that.
    Thank you very much.
    [The prepared statement of Hon. Andrew Spano can be found 
on page XX in the appendix.]
    Chairwoman Kelly. Thank you very much.
    Next we have Mr. Oros. And please gentlemen and Mr. Cohen, 
Ms. McNeil, just make sure that the microphone is very close to 
your mouth. These are not particularly good microphones.

  STATEMENT OF HON. GEORGE OROS, MINORITY LEADER, WESTCHESTER 
             COUNTY, NEW YORK, BOARD OF LEGISLATORS

    Mr. Oros. Chairwoman Kelly and Ranking Member Frank, thank 
you for this opportunity to share with you and the subcommittee 
a perspective of what Community Block Grants mean to the 
communities I represent as a member of the Westchester County 
Board of Legislators. During my tenure on the board, I have 
served as Chairman of the Board and now Minority leader. During 
the 1998-99 session, I was appointed Chair of our Committee on 
Community Affairs and Housing, which oversees and votes on the 
annual CDBG appropriations.
    Now earlier, I was struck by Congresswoman Waters and 
Congressman Frank and Congresswoman Kelly joining hands and 
saying this joins hands. And I want to point out, the county 
executive is here. He is the executive branch. I am the 
legislative branch.
    He is a Democrat. I am the Minority leader, the Republican 
Minority leader of our legislature. So clearly, in our county, 
we have crossed and joined hands as well on this issue.
    In this limited timeframe, allow me to focus on several key 
points. The vernacular of a block grant is somewhat of a 
misnomer. These funds are more of an investment than a grant or 
an expenditure.
    And they are an investment not only in housing, 
infrastructure and services, but an investment in people. The 
City of Peekskill, one of three municipalities I represent, was 
the only city in New York State to actually gain population in 
the last census, after losing population in the 1980s and 1990s 
as business and industry left.
    That growth in population was due in part to the wise 
investment over the past 20 years of almost $12 million in CDBG 
money. That investment, leveraged with other Federal, State and 
county funds and matched with Peekskill's own dollars, is 
improving a community that has a median income of $16,589, a 
minority population of 25 percent, substantial unemployment and 
stagnant economic growth.
    In two of the block groups, the low- to moderate-income 
population exceeds 70 percent. Unemployment in this area 
amongst adults over 16 is 45 percent. And 72 percent of the 
housing is rental.
    CDBG has made Peekskill a more desirable community. People 
have stopped fleeing and are actually moving into the city and 
investing their future there. In making that choice, they 
continue to revitalize an economy and become more productive 
citizens. But more needs to be done.
    Peekskill is a HUD-approved Neighborhood Revitalization 
Strategy Area, having in place a 5-year plan to undertake 
comprehensive infrastructure and community projects with CDBG 
funds. These projects include housing, streetscapes, a 
neighborhood facility and park improvements for the 7,108 
residents that live in the strategy area.
    This strategy includes a gateway off the Hudson River 
leading into the downtown. The uninhabitable houses, boarded up 
stores and vacant lots will be turned into affordable homes, 
busy shops where people can work and a safe community center to 
keep our children off the streets.
    But that will happen only if you in Congress decide to 
continue this important investment in CDBG funds. Should 
Congress approve the proposal that is on the table here, this 
strategy would be stopped dead in its tracks.
    Another example. The Hudson River Health Center used a 
$125,000 Community Development Block Grant and a $300,000 CDBG 
loan to fundraise another $580,000. And this is only the second 
phase of a $3.2 million dollar project. This investment will 
allow the Hudson River Health Center to expand its service 
beyond the current 40,680 patient visits it handles each year. 
These are people who otherwise could not afford appropriate 
healthcare or would needlessly clog emergency rooms at area 
hospitals.
    Fifty nine percent of the population they serve is 
uninsured. The preventive medicine, counseling and drug 
rehabilitation programs run at this facility ultimately save 
all taxpayers by improving the quality of health and life. But 
again, CDBG is crucial to the success of this project.
    Peekskill is only one community that I represent. And I am 
only one of 17 county legislators. If time permitted, each my 
colleagues could tell you firsthand the needs of the other 39 
municipalities that utilize the investment dollars of CDBG.
    Earlier, I referenced that CDBGs and the word grants is a 
misnomer. I think another misnomer is the idea that Westchester 
is a wealthy community.
    On behalf of my constituents and all the taxpayers of 
Westchester County, it is respectfully requested that you do 
not adopt this proposed change in the CDBG formulas. Thank you 
for your time.
    [The prepared statement of Hon. George Oros can be found on 
page XX in the appendix.]
    Chairwoman Kelly. Thank you, Mr. Oros. And thank you for 
watching your own time.
    [Laughter.]
    Next, we go to Mayor Cohen.

        STATEMENT OF HON. DAVID COHEN, MAYOR, NEWTON, MA

    Mr. Cohen. Chairwoman Kelly and Ranking Member Frank and 
Members of the subcommittee, thank you very much for this 
opportunity to speak before you today. My name is David Cohen. 
I am the Mayor of Newton, Massachusetts, which is a community 
of approximately 82,000, just west of Boston.
    I want to urge you to oppose the proposal to cut CDBG 
funding to communities whose per capita income is twice the 
national average. Newton is such a city. And over the past 
decade, the low- and moderate-income people living in the city 
of Newton have benefited greatly from the generosity of the 
Federal Government.
    Since 1991, the city has used $3.7 million in CDBG funds 
and $1.3 million in HOME funds to help leverage construction of 
605 units of affordable housing. Now I know that 605 units over 
10 years may not seem like a lot. But Newton is a community 
with almost no vacant land.
    In excess of 99 percent of the land is in use. And the 
construction of 600 units represents a huge effort in terms of 
finding sites and putting together packages.
    And it has made a difference. Some 1,000 people are living 
in good homes in Newton. Many of those people might otherwise 
not have a place to live at all. And almost all of those people 
would not have a place to live in Newton, but for your program.
    The City of Newton cares very much about diversity. The 
diversity of its population enriches all of us, giving a 
greater understanding and respect for the traditions of our 
neighbors and a deeper appreciation of our own heritage. The 
availability of affordable housing is critical to our 
maintaining a degree of income diversity.
    And over the years, the city of Newton has taken many steps 
to increase that diversity. In the early 1970s, when I was a 
member of the Board of Aldermen, we enacted the first 
legislation in the State to require developers to provide 10 
percent of their units for low- and moderate-income housing.
    And this past fall, the city of Newton people, in a 
referendum voted on by the entire city, chose to increase their 
annual taxes in order to build more affordable housing. And 
last year, the city approved the largest ever affordable 
housing development in its history. And it was passed 
unanimously and with the active support of the residents in the 
surrounding neighborhood.
    The city of Newton has also put CDBG money to use over the 
years in making sure that eligible residents in housing lived 
in housing that meets applicable building codes. Since 1991, we 
have used some $5 million of your money to do 220 major rehabs 
of substandard units and 750 minor ones.
    I think it is very important that those people needing 
affordable housing have access to a wide range of communities 
in our metropolitan area. Low- and moderate-income individuals 
should not be restricted to living in the core cities for lack 
of affordable housing elsewhere.
    The best tool that we have available to us in order to 
achieve this very important end is the CDBG program. And I hope 
our access to these funds will not be reduced.
    Although Newton is a community that is well-off--indeed, 
wealthy by many standards--not every individual living in the 
city of Newton is wealthy. In fact, there are many low- and 
moderate-income people who live in our city. According to the 
1990 census, of the 29,000 households, some 7,500 fall below 80 
percent of the median income.
    If you are the State or a private funding source not from 
Newton, it is easy to overlook these families. After all, 
Newton has so much.
    So in the competition for these funds, we have not fared 
well. The one place Newton's low- and moderate-income 
population has received support has been from the Federal 
Government in CDBG. We have tried to expend those funds wisely 
in order to provide suitable living environments for low-income 
people.
    We believe that our full participation in this program 
furthers the purposes of this Act in an important way. We ask 
only that we be allowed to continue at that same level of 
participation.
    Thank you.
    [The prepared statement of Hon. David Cohen can be found on 
page XX in the appendix.]
    Chairwoman Kelly. We thank you, Mr. Cohen.
    Next we move to Ms. McNeil.

 STATEMENT OF JOSEPHINE McNEIL, DIRECTOR, CITIZENS AFFORDABLE 
         HOUSING DEVELOPMENT ORGANIZATION OF NEWTON, MA

    Ms. McNeil. Thank you, Madam Chairwoman Kelly, Ranking 
Member Congressman Frank, who is--I am happy to say--my 
congressman. I am thankful for the opportunity to speak to you 
today about the issue that is before us with respect to 
reducing the allocation of monies to so-called wealthier 
communities.
    We live in an area in metro Boston where housing costs are 
beyond belief. A person would have to make $50,000 in order to 
afford a two-bedroom apartment in metro Boston. And in Newton, 
I would daresay that they have to earn even more.
    So people in our community are very concerned about the 
issue of affordable housing. Newton has had a history--as the 
mayor mentioned--of supporting affordable housing in many ways.
    I am the director of an affordable housing organization 
known as CAN-DO. And we were created by the city as part of the 
HOME program, which requires municipalities that receive HOME 
funding to establish what is called a CHDO, which means that a 
third of the people on our board are people who could be 
recipients of the housing which we create.
    We started off in 1994 and developed our first project with 
the help of consultant in 1996. When the city began to realize 
how the increase in the real estate market, the detrimental 
impact that was having on the community and, in terms of 
maintaining the economic diversity, which the mayor has 
referred to, the city decided that one way that they could use 
the CDBG funds, which is an acceptable use, is to increase the 
capacity of our organization.
    And in 1999, I became the executive director of that 
program.
    In the subsequent years, we have continued to advocate and 
to try to develop housing. The real estate market is so hot 
that it is very difficult for us to compete with private 
developers. And there has been a lot of development going on in 
the community.
    And indeed, as I said, the community has become very 
concerned. And 2 years ago now--it is hard to believe it was 
that long--Congressman Frank actually came to a meeting that we 
sponsored. We, CAN-DO, is a part of an advocacy group called 
Uniting Citizens for Housing Affordability in Newton.
    We had standing room only. We had people outside of the 
doors. And the information we shared with people, people were 
just utterly surprised. People who had lived in the community 
for a long time had no idea that it was so expensive to live in 
the city.
    I would like to share with you some information about one 
program or project that we are currently engaged in that uses 
CDBG money. And we are renovating an existing historic property 
to create five units of housing for single mothers and 
children.
    And we are working with one of the social service agencies 
in the city, known as the Young Parent Program. And that 
program provides some supportive services and we will provide 
supportive services for the women and children who will be 
living in the house.
    So we are providing housing and helping people to become 
more self-sufficient so that, in the future, they will not need 
assistance. And for me and my board, one of our goals is to 
move people out of the need for subsidized housing and into an 
environment where they will be able to take care of themselves.
    So funding for CDBG is important. And I guess my biggest 
concern is that we are going to, if this proposal is enacted, 
we are relocating poor people from a wealthy community, where 
there are good schools, where there is a good quality of life, 
into perhaps poorer communities and exacerbating the conditions 
for the people who are living in those communities.
    And I thank you for the opportunity.
    [The prepared statement of Josephine McNeil can be found on 
page XX in the appendix.]
    Chairwoman Kelly. I thank you, Ms. McNeil.
    Ms. Gonzalez.

     STATEMENT OF YVONNE GONZALEZ, CEO, RIO GRANDE VALLEY 
           EMPOWERMENT ZONE CORPORATION, MERCEDES, TX

    Ms. Gonzalez. Thank you and good morning. Chairwoman Kelly, 
Ranking Member Frank and Members of the subcommittee, who 
apparently are not quite here this morning. They are voting and 
out.
    Chairwoman Kelly. They went to the vote and there are many 
other hearings.
    Ms. Gonzalez. Right. Right.
    Chairwoman Kelly. So that is where a lot of people are.
    Ms. Gonzalez. Yes, ma'am.
    Mr. Frank. Right. And there are also airplanes.
    Ms. Gonzalez. I am sorry?
    Mr. Frank. And there are also airplanes.
    Ms. Gonzalez. Oh, yes, yes. I currently serve as the Chief 
Executive Officer of the Rio Grande Valley Empowerment Zone 
Corporation. And I have been with the Empowerment Zone 
Corporation since 1995. The Rio Grande Valley Empowerment Zone 
Corporation is a 501c3, a non-profit corporation. And we are 
one of what I call the ``original old fogies.'' We are one of 
the original Round I Rural Empowerment Zone designations.
    On behalf of the RGVEZC and other numerous public-private 
partner sectors, I would like to thank you for the opportunity 
to address this subcommittee. I also serve as one of the co-
chairs of a group called the Southwest Border Region 
Partnership. This is a network representing over 84 counties 
along the U.S.-Mexican border, from Brownsville, Texas to San 
Diego, California.
    The SBRP, the Southwest Border Region Partnership, realized 
that in order to have true sustainable community economic 
development, the private sector needed to be at the table. And 
I will speak to you about our relationships in leveraging those 
dollars with the private sector.
    There is a group that is called the Border Trade Alliance. 
And they have relationships with both borders. Actually, they 
like to say they have relationships with one border, which is 
one border around the United States. But they have 
relationships in the northern border and in the southern 
border.
    They are a trade and commerce advocacy organization. And 
they have worked with grass roots communities to address the 
issue of sustainable economic development.
    You know--I am not saying anything new--the Community 
Development Block Grant program works largely to ensure decent 
affordable housing, provide services to the most vulnerable of 
our communities, to create jobs and expand business 
opportunity. CDBG funds have made considerable differences in 
the lives of generally distressed communities, as so witnessed 
by these witnesses this morning.
    The RGVEZC itself, the Empowerment Zone Corporation, does 
not receive CDBG funding. But the communities that we work 
with, in our specific census tracts, do.
    The housing and economic development work that we engage in 
is structured so that the original SSBG dollars are only a seed 
investment. We busily go about creating partnerships. We 
believe very strongly--very strongly--that communities 
themselves must feel a sense of ownership and accountability to 
the project in order for it to succeed and be sustainable.
    With the Empowerment Zone dollars and leveraging CDBG 
dollars and private investment dollars, we have implemented and 
have expanded on water wastewater treatment plants, boys & 
girls clubs, health clinics, rural health clinics, have 
assisted in revolving loan programs so that we have businesses 
that have been created. Noted in our successful record is the 
fact that out of the original $40 million, we have contracted 
and/or allocated $38.5 million and have leveraged an additional 
$416 million dollars into these communities.
    Through the support of Senator Hutchison and Congressman 
Hinojosa, the Border Trade Alliance and the Southwest Border 
Region Partnership came together, created an assessment of 
communities and centered on best practices in these 
communities, identified two issues: small business development, 
affordable housing and looking at bridging the digital divide.
    I cannot speak to all or about all of the communities on 
the border. I am only the CEO of the Rio Grande Valley 
Empowerment Zone. But I can tell you that the work that we do 
as a corporation is centered on some very key principles: 
community participation, a bottoms-up approach; establishment 
of public-private partnerships; fiscal and programmatic 
accountability; leveraging of other dollars; and 
sustainability.
    In a time of limited resources and critical community 
challenges, we do not have the luxury of reinventing the wheel. 
It is our belief that these common issues can be addressed by 
continued investment in programs and organizations that have a 
proven track record.
    Thank you.
    [The prepared statement of Yvonne Gonzalez can be found on 
page XX in the appendix.]
    Chairwoman Kelly. Thank you, Ms. Gonzalez.
    We go now to Mr. Gramlich.

 STATEMENT OF ED GRAMLICH, RESEARCH AND COMMUNITY DEVELOPMENT 
            SPECIALIST, CENTER FOR COMMUNITY CHANGE

    Mr. Gramlich. Good afternoon. I am Ed Gramlich. I am from 
the Center for Community Change, which is a national non-profit 
organization that provides free technical assistance to low-
income community organizations all around the country.
    Since the beginning of the CDBG program, both CCC and I 
have helped to inform low-income community groups all about the 
CDBG program--the law, the regulations and HUD policy.
    Based on the CDBG problems that CCC observes in its daily 
work with low-income community groups, we know that these CDBG 
problems exist in jurisdictions large and small all across the 
country. Therefore, we fully support endorse H.R. 1191.
    We think that H.R. 1191 is an excellent bipartisan approach 
to addressing CDBG problems; bipartisan because two of the 
important features of H.R. 1191 are redolent of changes that 
were suggested in 1989 by HUD Assistant Secretary Anna 
Kondratas.
    The modifications that H.R. 1191 seeks are not radical. 
They are firmly rooted in CDBG's primary objective which, as 
you have heard today, is to principally benefit low- and 
moderate-income people.
    But the CDBG program has diverged from the primary 
objective. It has become too place-based, forgetting the law's 
goal of making places better principally for low- and moderate-
income people.
    CDBG is a great potential resource for helping to address 
the affordable housing and other needs of low- and moderate-
income people. But it is too often used in ways that do not 
benefit low- and moderate-income people. It does not meet their 
needs.
    One of the key provisions of H.R. 1191 would raise the 
primary benefit to low- and moderate-income people from 70 
percent to 80 percent of the funds. Since most jurisdictions 
have reported that they already meet a 90 percent benefit 
level, there should not really be any objection to making this 
simple change now.
    In addition to the jurisdictions not taking low-income 
benefits seriously, there are five technical reasons why 90 
percent of CDBG money does not really benefit low-income 
people. These technical problems give the impression that low- 
and moderate-income people are benefiting.
    My written testimony goes into great detail about these 
technical things. But I would especially urge you to read about 
the proportionate accounting provisions. Without them, low-
income benefit reporting is greatly inflated.
    H.R. 1191's fixes to the statute are not dramatic. Three or 
four of them actually use existing language from HUD's own 
regulations.
    Probably the most important provision of H.R. 1191 is the 
introduction of a second tier of targeting; that is, ensuring 
that, at a minimum, 40 percent of CDBG funds go to directly 
benefit people whose incomes are below 50 percent of the 
median, roughly $27,200 this year. Jurisdictions consolidated 
plans universally identify the needs of those with incomes 
below 50 percent of the median as being by far the greatest. 
Yet, advocates all around the Nation note that CDBG money is 
not allocated to low-income households commensurate with their 
needs.
    Now some opponents of H.R. 1191 might worry that a second 
tier of targeting would destroy the flexibility of the CDBG 
program. We disagree.
    Jurisdictions will still have 60 percent of their money to 
use for meeting the housing and community development needs of 
those whose incomes are $54,400 a year. Even within that second 
tier of targeting, that 40 percent, jurisdictions will have a 
great deal of flexibility. The types of activities that could 
be funded remain largely unchanged.
    And then finally, some might argue that a second tier of 
targeting would convert the CDBG program into an anti-poverty 
program. Our response to that is that the law has always sought 
to principally benefit moderate and low-income people. However, 
low-income people have not seen their fair share of the 
program's funds.
    A second tier of targeting would not be a fundamental shift 
in the program. On the contrary, a second tier would help to 
reestablish a kind of balance within the program, a balance 
which is consonant with the primary objective and as well as 
with the program's weighted allocation formula.
    Thank you very much.
    [The prepared statement of Ed Gramlich can be found on page 
XX in the appendix.]
    Chairwoman Kelly. We thank you.
    Mr. Hoover.

    STATEMENT OF GREG HOOVER, PRESIDENT, NATIONAL COMMUNITY 
  DEVELOPMENT ASSOCIATION; DIRECTOR, HOUSING AND NEIGHBORHOOD 
         DEVELOPMENT DEPARTMENT, CITY OF DAVENPORT, IA

    Mr. Hoover. Thank you, Madam Chairwoman, Ranking Member 
Frank.
    I am Greg Hoover, Manager, Housing and Neighborhood 
Development for the city of Davenport, Iowa, which is--until 
recently with redistricting--the home of Congressman Leach and 
will be the district of Congressman Nussle, should he be 
successful in next year's elections.
    I am here representing the National Community Development 
Association as their president, but also here on behalf of the 
U.S. Conference of Mayors, the National Association of 
Counties, the National Association for County Community and 
Economic Development and the Council of State Community 
Development Agencies. I am here to speak in strong opposition 
to H.R. 1191.
    I dispensed my remarks to a few sheets here, but I am even 
going to divert from that.
    I want to give a very quick history lesson, because what 
you have heard this morning is some informed and a lot of 
misinformed conceptions about CDBG. CDBG was not an anti-
poverty program that grew out of the 1968 Johnson 
Administration. It began in 1974 with the Model Cities Program 
and of the Nixon Administration.
    It is a program that is designed to benefit communities--
yes, principally low- and moderate-income people. And there 
seems to be a disagreement on the definition of what 
principally means. But I will tell you that in our city and the 
communities that NCDA represents, it has been a tool for 
economic change. It has been a tool that will allow us to move 
people, to de-concentrate those folks who are low- and 
moderate-income people from those areas in which they currently 
live to other, better, more affluent areas and also to bring in 
people of higher and moderate income into those poorer, 
distressed neighborhoods.
    If you would continue and pass this bill, I can tell you, 
as a practitioner, the real-life effect will be that you will 
concentrate low- and moderate-income people in the 
neighborhoods in which they are currently living. And that 
flies in the face of other Federal legislation of affirmatively 
furthering fair housing. So this bill would put us in conflict 
with another--and I think higher--authority bill.
    Excuse me. I would like to also address the issue of 
raising the aggregate amount of CDBG. In Davenport, we have 
done an excellent job, I believe. And 50 percent of our people 
over the last 5 years--or 3 years--have been at those 50 
percent or below. So we can do those things.
    But what you are doing is decreasing the flexibility of the 
local governments. Additionally, in H.R. 1191, there is a 
provision that would disallow claiming of low-mod benefit to 
areas that are not primarily residential. That would hurt 
downtown redevelopment.
    In Davenport, we have approximately $113 million 
revitalization project going on, of which CDBG will be a small, 
but important part. And the downtown is right now the locus of 
a lot of elderly housing and a lot of services that are down 
there. So if you are telling me that the city of Davenport 
cannot use our funds down there, then what you are telling me 
is we cannot serve the low- and moderate-income people that are 
intended to be served by the program.
    I would like to quickly address the what I call ``anti-
wealthy community'' proposal by HUD. I think that is very much 
akin to saying to wealthy people, ``Sorry. When you get to the 
age where you can get Medicare, you cannot participate in that 
because you have enough money to provide that yourself.'' It 
just does not make sense.
    As Lewis Carroll said at one time, ``If it were so, it 
might be. If it was so, it would be. As it is not, it ain't.'' 
And that is logic. And I do not think there is any logic to 
HUD's proposal.
    We would also strongly endorse what I have heard here today 
by the subcommittee of increasing HUD's budget. That is the way 
to get a lot of these changes.
    And lastly, I would conclude by saying you have already 
received--albeit late--a report from HUD. There is another 
study that is coming out on the formula. We would encourage you 
to delay any action on these two proposals until you get those 
studies, have a chance to review them and make informed 
decisions.
    And NCDA and the other groups that I am representing would 
pledge our support to working on that formula committee. In 
fact, NCDA--and I hope your communities are members; Mr. Frank, 
I know that Newton is--that they would join with our committee 
that we have in NCDA on the formula allocation.
    Thank you for your time.
    [The prepared statement of Greg Hoover can be found on page 
XX in the appendix.]
    Chairwoman Kelly. We thank you, Mr. Hoover.
    Mr. Hoover, what you testified to just now was somewhat 
contrary to what Mr. Gramlich said. And Mr. Gramlich, I wonder 
if you would like to focus on a response of some sort with Mr. 
Hoover. I know I am sort of catching you unawares here. But I 
would like some clarification.
    Mr. Frank. Oh, I do not think you have caught him unawares.
    [Laughter.]
    Mr. Gramlich. We could do this in our sleep because our 
organizations have been battling.
    Mr. Frank. Yes, just do not do it in our sleep.
    Mr. Gramlich. Are you saying I am boring? Having done CDBG 
for 27 years, I think I probably am boring.
    One of the misconceptions that he talked about was the 
notion that one could no longer use CDBG money in downtown 
areas. First of all, HUD--in its regulations--has long 
proscribed the use of the area-wide benefit test in areas that 
are not primarily residential in character, precisely because 
some downtown areas might--they have few people who live there. 
They are primarily business oriented. But in terms of the 
census tracts, they are low-income.
    So what you have are decorative lighting, fancy brick 
streetscapes and things of that nature, which do not really 
benefit low- or moderate-income people. So HUD, at least as far 
back as 1988, said, ``Well, in those cases, that does not meet 
the idea of benefiting low- and moderate-income people. We will 
not allow that in an area that is not primarily residential in 
character.''
    Now there are a lot of neighborhood commercial strips, and 
small town central business districts that do serve lower 
income people who live around that. And HUD's service area test 
would certainly allow the use of the area-wide benefit test in 
those cases.
    Mr. Hoover talked about housing in a downtown area. I got 
my start in CDBG in 1974 in Davenport. I recall 202 down there. 
I cannot remember the street anymore, however.
    You could use CDBG money for housing. That is not a part of 
the area-wide benefit test.
    So there are a whole lot of misconceptions that I think if 
one carefully looked at the proposed statute, H.R. 1191, you 
would find that things are not quite as scary and dire as has 
been proposed here. And of course, if you read my lengthy 
written testimony, you will find that out.
    Chairwoman Kelly. Thank you very much.
    It sounds to me as though what we are coming out with here 
is a need for the people who are allowing the CDBG grants to go 
forward to assess exactly what they are doing with regard to 
their intended purpose.
    That takes me to Mr. Oros, because I know the City of 
Peekskill well. This is a poor community in many ways.
    The way that the city has been able to bring itself back 
has been able to allow loft living above commercial development 
there. It has been extremely important to try to bring this 
almost moribund city back into play as a modern city, to allow 
that intermix between housing--and that is low-income housing, 
some of it--and a better downtown. And actually, in fact, in 
this instance, the repaving of the streets and providing better 
streetlights stopped the types of things that were going on on 
the streets and allowed people to be able to live in the lofts.
    And I am wondering, Mr. Oros, if Peekskill is forced to 
apply for the CDBG grants as an individual municipality, what 
effects on Peekskill would you anticipate?
    Mr. Oros. Well, thank you. I think the simple answer to 
that is something that many of you in Washington hear all the 
time, is the money will not get to the use it needs. Instead, 
what we have been successful in doing in Westchester County 
with our consortium is having a central administrative office 
so that, for every dollar we get from this program, more of it 
gets to the programs to be spent on the bricks and mortars and 
the other things it needs to be spent on, rather than--dare I 
say this word here?--bureaucracy.
    So I think what would happen is that you would end up 
having many of the communities of Westchester County having to 
build their own internal staff and bureaucracy and planning 
departments and so forth to do this, rather than relying on the 
county where we have a central staff. They are well attuned to 
everything that is going on. They are able to work with the 
local communities. But to keep up with all the Federal 
guidelines, to make sure all the things are being filed 
properly would be an administrative nightmare for Peekskill.
    Peekskill is a city of 20,000. You know, ``city'' may be 
another misnomer here because only 20,000 people live in 
Peekskill. Most of them are under the median income. Most of 
them are in need of this.
    And the problem is you cannot have the type of--you do not 
have the type of tax base there to have a huge city government 
bureaucracy to take care of these things. So they do rely on 
the county.
    And that is, I think the county executive alluded to how he 
could take some of these communities out of here to fool around 
with this formula proposal. But that really does not serve a 
purpose, I do not think, for any of these communities.
    Chairwoman Kelly. Thank you.
    I have one other question, and that is for you, Mr. Spano. 
The HUD people spoke in their testimony of a 51 percent 
increase in Westchester County CDBG funding since 1980. I 
wonder if you would like to talk about that a little bit. Can 
you explain that?
    Mr. Spano. Well, they are going back to when there were 
about 21 communities in the consortium. We have increased our 
consortium from 21 to 40. So you can pick it up right there.
    Subsequent to the 1990 census, in the new census, we have 
also increased our population of minorities in Westchester 
County. So that would account for a lot of it.
    Chairwoman Kelly. Thank you. I have no more questions.
    Mr. Frank, have you a question?
    Mr. Frank. Yes, let me begin. And Mr. Spano understandably 
checked himself because HUD has changed its position. When you 
referred to the argument that this money was going to go to the 
colonias. Not that $8 million would go very far.
    Apparently, HUD has changed its position because there were 
two documents. The earlier document said it would go to the 
colonias. They reconsidered that. And in Mr. Bernardi's 
testimony, the colonias were involved only in the sense that 
the ankle bone is connected to the shoulder bone.
    [Laughter.]
    I mean, there was no direct transplant in that regard.
    I just want to make a couple of observations. First of all, 
I want to congratulate the most 5-minute observant witness 
panel we have ever had.
    [Laughter.]
    But you also showed collectively that you can within the 5 
minutes if you do not waste a lot of time, get a lot of meat on 
the bones.
    Yes, Mr. Mayor.
    Mr. Spano. We were intimidated.
    [Laughter.]
    Mr. Frank. But it is a good lesson for me.
    Mr. Spano. At least I was.
    Mr. Frank. But I just want to make a couple of comments. 
First of all, one of the problems we run into is because so 
many of the Government's other housing programs have been cut 
back, CDBG has been forced to be more of a low-income housing 
program than it was originally intended to be.
    Mr. Hoover alluded to the origins of CDBG. It was special 
revenue sharing. There was general and special revenue sharing 
back in the Nixon days.
    And part of the problem has been that CDBG has been forced 
to bear more weight in a different area. And I am hoping that 
we can get the Federal Government back in the business of some 
specific housing production programs, which would take some of 
this distorting pressure off CDBG.
    So I agree with Mr. Hoover's description there.
    Second, I do think--and we have gotten two proposals here. 
One which says take some money away from wealthy communities; 
another which says focus more on low-income legislatively. My 
view is--and I had a chance to speak with Ms. Meek about this, 
who has been a very staunch advocate of social justice.
    Part of the problem has been that HUD--and I do not mean to 
point to this HUD. No HUD in my memory, 22 years, has enforced 
these restrictions. And then I want to give some of the blame 
to us. Frankly, what would happen if they did try to enforce 
the restrictions is that the city would complain to their 
Representative or Senator.
    And I think one of the things that we need to do, Madam 
Chair, is I am ready to ask HUD to be tougher. And I am ready, 
among ourselves, to say we will back HUD up if they are 
tougher. And when some of our colleagues come complaining to us 
and say, ``Penalize HUD because they are doing this,'' that we 
have to be willing to say no. That is, I think if you looked at 
the rules--now, the one question I think we need to debate is 
the question of the accounting and whether or not you should do 
proportional accounting.
    It would seem to me that proportional accounting should not 
be objectionable, depending on what the requirements are, that 
if it is not in the service. You know, proportional accounting 
in the service of a 90 percent low-income requirement is going 
to be strongly resisted. But, proportional accounting in the 
service of this orientation to low- and moderate-income, in 
general, would be different.
    But I would like to say out of this--and it has been a very 
useful hearing. And I am grateful to the chair for the way she 
has conducted it and to all the participants, the HUD people 
and others.
    I see, on a tough issue frankly, the potential for 
consensus, which says we will agree at least to try for a while 
better enforcement than we have ever had of the existing low- 
and moderate-income restrictions, some better accounting that 
more accurately looks at that. At the same time, a recognition 
that this is not meant to be primarily a housing program or 
exclusively certainly a housing program, but that it ought to 
be able to provide some of the amenities that would go along 
with the housing.
    And our part in that would be to say to HUD, ``OK. And if 
and when you start enforcing this, we will be there to protect 
you against the inevitable complaints that are going to come 
from some of the members.'' And I frankly hope that maybe out 
of this whole set of kind of proposals could come that 
approach.
    And I want to say I appreciate that the Deputy Assistant 
Secretary is remaining, seriously. Because sometimes, you know, 
we get some hit and run. The Deputy Assistant Secretary has 
remained and has listened. And we appreciate that.
    So Madam Chairwoman, I look forward to all of us working 
together. Because I think out of this one, we may get some 
consensus.
    Let's be honest. I do not think any of the legislative 
proposals are going to pass. The Administration's bill is not 
going to pass. Carrie Meek--I strongly support a lot of what 
Carrie wants to do--that is not going to pass.
    I think my colleague, Ms. Waters, gave everybody a very 
good political science lecture in about 3 minutes. She ought to 
go on the internet for distance learning with it.
    [Laughter.]
    But I do think we could come together on at least a much 
better enforcement than we have ever had of the existing rules 
and work on that.
    Mr. Hoover, you wanted to comment on that?
    Mr. Hoover. Yes, thank you very much. I would just like to 
pledge the support of NCDA and the members that I am 
representing today to that effort.
    As you know, we work very closely with the Department of 
Housing and Urban Development to get the spend-down rate more 
in line. And we are committed to doing that.
    Mr. Frank. Good. Let me throw in here, both for NACO and 
for the Conference of Mayors, if we could get--and you, of 
course, NCDA is the primary advocate for this. If we could all 
agree that when HUD enforces, in fairness to HUD, they just do 
not just get jumped on and they are left alone, because they 
had the temerity to enforce the rules.
    If we could all agree to try and support such enforcement, 
I think we may be able to advance this.
    Madam Chair, I am finished. And I thank everybody for 
helping.
    Chairwoman Kelly. Thank you very much.
    Mr. Frank. Mr. Hoover had one more.
    Mr. Hoover. Just one more thing. In a quick aside, when we 
ask for money, I will tell you that what would be very 
beneficial would be technical assistance money directly----
    Mr. Frank. OK, Mr. Hoover. I have got to tell you this. If 
my district, if my community was about to go into the district 
of the guy who is now the Budget Chairman, I would not waste 
time talking to me and Kelly. So why don't you go there and go 
talk to him?
    [Laughter.]
    Mr. Hoover. I intend to do that.
    Chairwoman Kelly. If there are no more questions, then the 
chair notes that some Members may have additional questions, 
which they may wish to submit in writing. Without objection, 
the hearing record will remain open for 30 days for Members to 
submit written questions to these witnesses and place their 
responses in the record.
    This panel is excused with our great thanks for your 
patience and your testimony. And we appreciate your time.
    [Whereupon, at 1:37 p.m., the hearing was adjourned.]





                            A P P E N D I X



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