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

              H.R. 2941--BROWNFIELDS REDEVELOPMENT ENHANCEMENT ACT
    =======================================================================

                                    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 6, 2002
                                   __________

           Printed for the use of the Committee on Financial Services

                               Serial No. 107-59

                         U.S. GOVERNMENT PRINTING OFFICE
    78-502                       WASHINGTON : 2002
    ________________________________________________________________________
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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 6, 2002................................................     1
    Appendix:
        March 6, 2002................................................    35

                                   WITNESSES
                            Wednesday, March 6, 2002

    Bartsch, Charles, Director of Brownfield Financing Studies,
      Northeast-
      Midwest Institute..............................................    23
    Bernardi, Hon. Roy A., Assistant Secretary, U.S. Department of
      Housing and Urban Development..................................     9
    Colangelo, Robert, Executive Director, National Brownfield
      Association....................................................    27
    Kalisz, Frederick M., Jr., Mayor, City of New Bedford,
      Massachusetts..................................................    21
    Kasko, Charles, Regional Sales Manager, Avis America, on behalf
      of the National Association of Home Builders...................    29
    Murphy, John C., Executive Director, National Association for
      County
      Community and Economic Development, on behalf of the National
      Community Development Association..............................    26
    Reid, Hon. Lydia, Mayor, City of Mansfield, Ohio.................    19

                                    APPENDIX

    Prepared statements:
        Roukema, Hon. Marge..........................................    36
        Oxley, Hon. Michael G........................................    38
        Barr, Hon. Bob...............................................    40
        Carson, Hon. Julia...........................................    41
        Israel, Hon. Steve...........................................    42
        Kelly, Hon. Sue..............................................    43
        Bartsch, Charles.............................................    44
        Bernardi, Hon. Roy A.........................................    49
        Colangelo, Robert............................................    53
        Kalisz, Frederick M., Jr.....................................    55
        Kasko, Charles...............................................    60
        Murphy, John C...............................................    65
        Reid, Hon. Lydia.............................................    68

              H.R. 2941--BROWNFIELDS REDEVELOPMENT ENHANCEMENT ACT

                                  ----------

                            WEDNESDAY, MARCH 6, 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 10:05 a.m. in
    room 2128, Rayburn House Office Building, Hon. Marge Roukema,
    [chairwoman of the subcommittee], presiding.
        Present: Chairwoman Roukema; Representatives Kelly, Oxley,
    Miller, Grucci, Tiberi, Frank, Carson, Jones, Capuano, Clay,
    Israel, and C. Maloney of New York.
        Chairwoman Roukema. May I have your attention? I apologize
    for the delay here, but I believe that we should wait a few
    more minutes. I am told that some Members on the Democratic
    side of the panel will be here, but let's be patient and have
    another minute or two or three, hopefully before we get
    started. Thank you, I appreciate your patience.
        The hearing will come to order. I will open the hearing
    with opening statements and then greet the panelists and
    introduce those panelists. I certainly thank all of you for
    coming today and I would hope that other Members will be here.
    I know there is intense interest on this legislation. It's not
    highly controversial, but there is intense interest, not only
    on a regional basis, but across the country, and I want to
    especially state that it's important for the State of New
    Jersey, but that's only one of 50. But I will be working with
    all of you to deal with the problems, the technicalities, not
    the problems, but the technicalities as they may arise.
        This hearing today on H.R. 2941, Brownfields Redevelopment
    Enhancement Act, was introduced by our colleague and panel
    member here, Congressman Gary Miller from California, and we do
    appreciate his leadership here.
        Today, local communities and States are eagerly looking for
    ways to clean up and redevelop their brownfield sites and
    certainly it's an idea whose time has come and perhaps overdue.
    It's incredible to think that there are an estimated 500,000
    brownfields in existence today across the country. That's a
    horrific number, a number that you can hardly comprehend. But
    the brownfield sites are sites where redevelopment is
    complicated by potential environmental contamination, but that
    are less seriously contaminated than those that are covered
    under the Superfund Act. And may I just say parenthetically
    here I am a strong environmentalist and certainly in a State
    like New Jersey I am strong, so I don't want anything here to
    be considered as anti-environmental. We have to be intelligent
    about how we deal with this subject and protect all sides of
    the issue.
        No matter how these areas are classified, there are
    possible health hazards and eyesores in the communities that
    can be cleaned up, but redevelopment of these sites will go a
    long way toward revitalizing the communities around. And as I
    say, they are not mutually exclusive. It's our job here in this
    legislation to accommodate and get the best of both worlds so
    to speak.
        While some States have established programs to encourage
    brownfields cleanup and redevelopment, the liability involving
    the sites remain controlled by the strict standards of the
    Superfund law. Investors and developers have therefore been
    reluctant to purchase brownfield sites out of concern that they
    will become entangled in legal disputes and be forced to pay
    for the unexpected cleanups.
        On January 11th of this year, President Bush signed the
    Small Business Liability Relief and Brownfields Revitalization
    Act, which provides for up to $200 million a year to States,
    local governments and Indian tribes for brownfield cleanups.
    That legislation more than doubles the $92 million spent
    annually for cleanups up to this point.
        The liability measure within the bill--now this is
    important--the liability measure within the bill protects the
    new owners of restored brownfields from having to pay any
    future cleanup costs. The legislation also calls for the
    creation of a public record of brownfield sites and encourages
    community involvement in cleanup and reuse. It authorizes $50
    million a year for grants to local and State governments to
    start and enhance brownfield programs.
        While this bill that was signed by the President has been
    widely hailed as a valuable step forward. H.R. 2449, the
    legislation under review today, is complementary and
    supplementary legislation which addresses another facet of the
    brownfields redevelopment needs. H.R. 2941, introduced again by
    our colleague, Congressman Miller of California, focuses on
    providing access to capital for local entities that
    traditionally have had trouble obtaining financing for
    brownfield redevelopment activities. Most notably, this bill
    authorizes appropriations for BEDI, Brownfields Economic
    Development Initiative. This program, for the first time,
    eliminates the requirement that local governments obtain
    Section 108 loan guarantees as a condition for receiving the
    BEDI grant funding.
        Delinking brownfields economic development initiative
    grants from Section 108 loan guarantees is important because
    some cities, some small cities, that is, have great difficulty
    in securing and are unable to secure those guarantees, the
    Section 108 guarantees. The current requirement that cities
    must leverage their CDBG funds in order to receive brownfields
    grants has discouraged many of our smaller communities from
    applying for the grants.
        H.R. 2941 takes at least two other important steps. First,
    the bill authorizes appropriation for BEDI program for the
    first time, and second the bill establishes what's known as the
    quote: ``Pilot Program for National Redevelopment of
    Brownfields.'' This will enable the HUD Secretary, and I would
    hope that our representative from HUD here, Mr. Bernardi, will
    help me understand this need here, will enable the HUD
    Secretary to fund a common loan pool for brownfields and
    economic development loans to be distributed on a competitive
    basis. By that, I mean I don't fully understand the need for
    its so-called pilot program, but you can tell me how that gets
    integrated.
        Because the newly passed Small Business Liability Relief
    and Brownfields Revitalization Act authorizes only $200 million
    with a $1 million cap on funds to any individual locality, the
    pilot program funds, as I understand it, will fill the gap for
    potential developers of the other hundreds of thousands of
    brownfields across the country. Again, I just don't understand
    that separation, but there must be a temporary need for this
    proposal.
        Significantly, the HUD 2003 proposed budget request
    submitted to the President proposes decoupling the brownfield
    programs from the Section 108 loan guarantee program to attract
    more participants. This reflects, of course, what we are
    proposing here in this legislation. And it's assuming, of
    course, that we're going to be successful in getting this
    through.
        I certainly would like to take time again to commend
    Congressman Miller and the Northeast/Midwest Coalition, of
    which New Jersey is an active participant, for their work on
    this issue. They have worked closely with HUD officials to look
    for ways to make this program more efficient and effective so
    that we can provide State and local governments another source
    of funding for brownfield cleanup and redevelopment.
        I also want to thank Congressman Jack Quinn of New York and
    Marty Meehan of Massachusetts for their work on this important
    issue.
        And with that, I would like to acknowledge Congressman
    Frank, the Ranking Minority Member on the subcommittee, and
    look forward to his comments.
        [The prepared statement of Hon. Marge Roukema can be found
    on page 36 in the appendix.]
        Mr. Frank. Thank you, Madam Chairwoman. I want to express
    my appreciation to Mr. Miller and Mrs. Maloney who worked with
    him in bringing this forward. This is a very important step. We
    will be marking this up actually next week. We had a couple of
    questions, but they do not go to the fundamental heart of the
    bill, and I am confident that we will get a unanimous vote out
    of the Committee I believe on this. Certainly on the basic
    principle, there is no good reason--I can't even think of a bad
    reason--why it should be Section 108 dependent requiring this
    to be part of a loan program as well as a grant.
        I note that the Administration has taken a position with
    which I am in substantial agreement that we should, with regard
    to the International Development Association, which helps very
    poor countries, we want to switch from loans to grants, and if
    we can do that overseas, which I think we should, I think I can
    support doing it for a lot of American cities. So I want to
    work on this.
        I'm particularly pleased that we will be hearing later from
    the Mayor of the City of New Bedford in the district that I'm
    able to represent, because New Bedford is one of those American
    cities which carried the burden of industrialization for this
    country for a very long time, and then found national policy
    somewhat neglectful of the needs of its citizens, including
    leaving behind as the result of some of this industrial
    activity, brownfields. Brownfields, I must say, is the nicest
    word for a pretty nasty group of places that anybody has ever
    coined. And helping the municipalities deal with the brownfield
    situation is a very important one, so I am very supportive of
    this.
        I would note that the one set of questions we have deals in
    part with the implications of ending the linkage with the
    Community Development Block Grant Program. It's the wrong kind
    of linkage to Section 108 and I raise that, Madam Chairwoman,
    because I want to renew my request, which I've made several
    times before, that we have a hearing on the whole question of
    Community Development Block Grants and particularly on the low-
    and moderate-income impact. That's very important to a number
    of our colleagues. Congresswoman Meek from Florida and others,
    and it's an issue that came up when we debated the
    appropriations bill people will remember, and the question was
    making certain firefighting activities eligible. So while I
    want to go ahead with this hearing, I hope that this will be
    the precursor to a hearing in which we consider the broader
    implications of the CDBG program, although there's no reason to
    hold up this bill as we go forward.
        The only other point I would make is this. The purpose of
    this bill is to give more Federal money to municipalities so
    they can do something very good. That's important to note,
    because we have this strange dichotomy in America in which
    almost everybody in this House of Representatives is for, from
    time to time, giving people more Federal money to do good
    things, but in general we think the Federal Government
    shouldn't have any money. People need to understand that there
    is a disconnect. You cannot keep reducing the amount of revenue
    the Federal Government takes in and expand the amount of
    revenue the Federal Government gives out. And this is an
    example of Government. People should understand this. This is
    bureaucracy, this is Government. The people sitting at this
    table are two public employees of great distinction who intend
    to administer a program in which we take tax revenues and give
    it to other public employees so that they can do good things.
    In the abstract, this whole process of taxing the private
    sector so that one group of public employees can give another
    group of public employees money to do something is often
    demonized. In particular, everybody's for it. And there really
    is a limitation intellectually in the extent to which you can
    be opposed to something in general and then be all in favor of
    it in the particular. And I hope that this strong support for
    the particular will ooze out a little bit, maybe leaching would
    be the term in terms of brownfields. Maybe a little of this
    support for this particular Government activity will leach over
    the people's views about whether or not the Federal Government
    is a bad thing, and whether or not having Federal revenue is a
    bad thing.
        The last the thing I have to say is a bit of an apology.
    The House Judiciary Committee will be going into session at
    10:30, fortunately not far away, to mark up a couple of
    important pieces of legislation, and one of the consequences of
    legislative scheduling is it has become fashionable for Members
    to get elected to Congress and spend a great deal of time
    expressing their horror at the very notion of association with
    other Members of Congress. That is it has become a mark of your
    being good at the job that you spend as little time in the
    place where the job is carried on as is humanly possible. So we
    have this situation where Congress now exists from 6:00 p.m. on
    Tuesday to 6:00 p.m. on Thursday, and if it starts getting to
    6:00 p.m. on Thursday, the Members get cranky and want to get
    out early. And the result is that we have two days, two working
    days so that too many things have to be crammed into too few
    days and we do not have enough time to do them adequately. And
    thus I will have to be at both the Judiciary Committee and here
    and that will mean that I will not be here for this full
    hearing. It's not the chair's fault. She was very gracious in
    the scheduling, and I appreciate her accommodating us in that
    regard. It's just that you can only, I guess limitations is the
    theme of today's sermon. The more you limit the Government's
    money, the less you can do with it, and the more you limit the
    number of days Congress is in session, the fewer things people
    can accomplish. And having said that and knowing that, at least
    in the current situation, it will fall almost entirely on deaf
    ears, I conclude my statement.
        Chairwoman Roukema. Well, I do thank you for that
    bipartisan approach to action here in the Congress. My
    colleague, I appreciate your support for brownfields, but we
    will not have a debate on the other subject that you've raised
    as to how we spend our money, whether or not we need taxes, and
    whether or not we need a 5-day week here in Congress.
        Mr. Frank. No, I appreciate that. What are the consequences
    of a 2-day week is you don't have any time for debates.
        Chairwoman Roukema. I'm going to recognize now the Chairman
    of the Full Committee, Mr. Oxley, who has honored us with his
    presence today. It's indication of an intense interest on this
    subject. Chairman Oxley.
        Mr. Oxley. Thank you, Madam Chairman, and thank you for
    your leadership on this issue, and I want to associate myself
    with most of the remarks of the gentleman from Massachusetts.
    I'll be in more detail later in my submission to the
    subcommittee, but we appreciate his leadership on this as well.
        Madam Chairman, it seems that brownfields keep following me
    around. As some of you may know, in a prior congressional life,
    I spent a lot of time trying to reform the Superfund program
    for the clean up of toxic waste sites. As a matter of fact, it
    was just across the hall. Superfund has a broad liability
    system. People are interested in redeveloping a contaminated
    site fear that without legal protection, they could be sued to
    pay for part or all of an expensive cleanup even if they had
    nothing to do with the original pollution.
        And what we saw emerge was the brownfield phenomenon.
    Developers would shy away from even slightly contaminated sites
    like old factories and gas stations and build instead on
    pristine greenfields in the country. Cities lost jobs and their
    tax base. Rural communities complained about urban creep. This
    hit industrial States like Ohio especially hard. There are
    thousands of abandoned brownfields in Ohio that have the
    potential to contribute to the economy. I recall holding a
    field hearing at a brownfield site in Columbus several years
    ago. The true test of how persuasive you are with your
    congressional colleagues is if you can convince them to traipse
    over a frozen waste site in Ohio in 20 degree weather on
    Valentine's Day, which I somehow managed to do. A few Members
    still haven't forgiven me for that exercise.
        The threat of brownfield life became so great that people
    were moved to action. States like Ohio and Pennsylvania
    pioneered voluntary cleanup programs providing more legal
    certainty and flexible cleanup standards. Thanks to the good
    work of our friend, Paul Gillmor, we now have a Federal law
    clarifying liability at brownfield sites.
        Today, we turn our attention to the Department of Housing
    and Urban Development, HUD's brownfields and community
    development programs are going to become more important as more
    brownfields projects get underway. These programs need to be
    user friendly, especially for communities that are new to this
    specialized area. I'm pleased to be a co-sponsor of H.R. 2941
    introduced by the Vice Chairman of this subcommittee, Gary
    Miller, who has shown great leadership and vision on this issue
    and the tenacity that can only be attributed to a weight
    lifter.
        This legislation will authorize HUD's brownfields programs
    for the first time. It will make more communities eligible for
    grants, make it clear that brownfield redevelopment is a
    community development block grant eligible activity and permit
    HUD to set up a pilot revolving loan program to maximize the
    impact of Federal dollars.
        Ultimately, the vast majority of the funding for brownfield
    projects must come from the private sector. This subcommittee
    is working to assure the banks and insurance companies under
    our jurisdiction that brownfields projects are good business
    investments. We want to remove the stigma and turn these into
    normal real estate deals that have a manageable environmental
    component.
        I want to welcome HUD Assistant Secretary Roy Bernardi, who
    was the former mayor of Syracuse and is well versed in the
    community development issues. The Northwest/Midwest Institute
    co-chaired by our good friend Jack Quinn, from Buffalo, has
    been a source of innovative thinking about brownfields and
    helpful in developing H.R. 2941. Charlie Bartsch has always
    been able to see the big picture and of course I'm especially
    honored to greet the Mayor of Mansfield, Ohio, Lydia Reid.
    Mayor Reid and I have worked on a variety of development
    projects over the years for Mansfield. Mansfield has a vigorous
    revitalization program that has won national awards. Mayor Reid
    has a great story to tell on the second panel, and we look
    forward to her testimony, and want to thank her for taking the
    time to come out here and share her vision on this important
    issue.
        Brownfields redevelopment should unite Republicans and
    Democrats, city mayors and farmers. Our subcommittee has a role
    to play by highlighting and fine-tuning HUD's vital programs.
    Having toiled in the vineyards on this, I am very happy to see
    brownfield legislation finally bearing fruit in this Congress.
        Madam Chairwoman, thank you again for your patience, and I
    yield back the balance of my time.
        [The prepared statement of Hon. Michael Oxley can be found
    on page 38 in the appendix.]
        Chairwoman Roukema. I thank the Chairman. May I observe
    that I'm told that we may be shortly having a vote on the
    floor, but in any case, with that in mind, let us move as
    quickly as possible with the opening statements.
        All right, Mrs. Maloney, you're not a Member of this
    subcommittee, so let me go on to Mr. Miller first. Thank you in
    consideration of the time restraints.
        Mr. Miller. Thank you, Chairwoman. I'd like to begin by
    thanking Chairwoman Roukema and Ranking Member Frank also for
    calling this hearing on H.R. 2941, the Brownfields
    Redevelopment Enhancement Act.
        My mike is awful loud, isn't it? Excuse me.
        I would also like to thank the hardworking people of the
    staff of this subcommittee who worked so hard to improve the
    bill, and Chairman Oxley, you've been very supportive on this
    issue and I want to thank you personally for that.
        My personal knowledge of brownfields is rooted in a few
    different experiences. As a developer and builder for over 30
    years in Southern California, I've seen the interest in
    redeveloping brownfields grow and grow each year. This has been
    a response to the rising land value and the shrinking
    undeveloped available property that we have in our communities.
    Moreover, because brownfields tend to be located in developed
    areas, they are close to the infrastructure and potential
    markets private developers are often seeking.
        However, I'm also very familiar with the liability issues
    associated with brownfields. Although many of these concerns
    were addressed with the passage of H.R. 2869, this issue still
    merits attention. Lenders should not be scared away due to
    liability issues.
        As the Mayor and Councilman of the City of Diamond Bar, I
    learned about the critical issues of financing brownfields
    developments as I watched several neighboring cities analyze
    the feasibility of redeveloping local contaminated sites.
        Today's hearing focuses on the critical issue of financing
    and there is where the Department of Housing and Urban
    Development has a constructive role to play. HUD's financing
    comes in after the environmental issues have been addressed and
    communities need some assistance to close the deal. About a
    year ago, I began discussions with HUD to try to remedy some of
    the problems I was familiar with in regards to brownfields,
    specifically the ability of communities to obtain capital
    needed to develop these sites. I was pleased to learn that
    HUD's Section 108 Loan Grant program has been trying to address
    this issue for over 25 years. But I believe that in its current
    form, 108 Loan Guarantee programs for the Brownfield Economic
    Development Initiative--or BEDI--grants, are not flexible
    enough. This finding is echoed by Secretary Martinez' budget
    which proposes delinking these two programs.
        In addition to delinking the BEDI grants from the Section
    108 Loan Guarantee program, H.R. 2941 authorizes, for the first
    time, the BEDI program and creates a pilot program for the
    national redevelopment of brownfields. Moreover, this bill
    clarifies that CDBG funds can be used for brownfields
    redevelopment and it's not an attempt to reduce or to restrict
    CDBG funding in any way.
        By making HUD's programs more flexible and thereby
    accessible to more communities, brownfields redevelopment will
    become a more attractive option for communities of all sizes.
    Again, I'd like to thank Chairwoman Roukema for her support and
    co-sponsorship on this, as well as Congresswoman Maloney. I'm
    looking forward to hearing the views of today's panel and I
    hope we'll basically be able to resolve some of the issues that
    local agencies deal with, and I'm delighted to hear that Mr.
    Frank is not grouchy today. I've never seen him that way
    before. But thank you for calling this hearing, Madam
    Chairwoman.
        Chairwoman Roukema. All right, thank you.
        Mr. Tiberi. No? All right.
        Congresswoman Maloney.
        Mrs. Maloney. Thank you very much, Chairwoman Roukema and
    also Ranking Member Barney Frank. I want to certainly welcome
    from the great State of New York, the Honorable Bernardi,
    Assistant Secretary and compliment him on the fine work that he
    did in Syracuse. I know you're very familiar with this program.
    You've had some successes in Syracuse.
        I also thank my colleague, Gary Miller from California, for
    working so hard on this for a very long time. I want to
    emphasize that this work has been shared by many Members in
    Congress. It has been very much a bipartisan effort. On the
    House side, Jack Quinn, Marty Meehan, James McGovern and John
    McHugh have introduced H.R. 2064, which also addresses the
    decoupling issue, and on the Senate side, Senators Levin and
    Jeffords have introduced S.1078 with a similar objective. And
    the support for this legislation is significant, because it is
    needed and it is bipartisan. As the Chairwoman pointed out, we
    have over 500,000 brownfield sites in our country, it is a drag
    on our economic development, and Congress really needs to
    support and seek creative approaches that match the large
    number of needs with the financing to redevelop contaminated
    sites.
        Obviously, one of the most critical obstacles in cleaning
    up brownfields is funding and the financial resources that are
    needed for a large number of potential jobs. This bill
    allocates $25 million, and also will allow working with the
    $200 million revolving loan.
        The BEDI initiative has been successfully funded since
    1998, and I support the flexibility of funding and the
    streamlining, which is in this legislation, which will make it
    easier to access. At the same time, there are many existing
    BEDI success stories and Assistant Secretary Bernardi can
    certainly tell you about the success in Syracuse where New York
    State received over $800,000 in BEDI funds and a $2.19 million
    Section 108 loan guarantee that are being used, as we speak, at
    the Crossroads project by the City of Syracuse to create 200
    new jobs for low- and moderate-income workers. And as this
    legislation moves forward, I hope we can meet the dual goals of
    streamlining the funding and the approval process and making
    these funds available quickly to the needy communities such as
    the Syracuse project.
        I welcome all efforts to review HUD brownfields activity
    and all efforts to increase the number and effectiveness of
    projects that the Department funds. I want to note that this is
    for State and local entities, it is not for private developers
    and our State and local entities desperately need this help.
    Even the City of New York has a number of brownfields areas
    that are just really fallow and sitting there not serving or
    helping anyone. And with this program, hopefully we can build a
    community center or a park or something that people can use.
        I thank everyone for their efforts on it. I look forward to
    working with the Minority staff and the Majority staff as we
    move forward to a mark-up, and thank you very much,
    particularly Congressman Gary Miller.
        Chairwoman Roukema. I thank the Congresswoman. We are going
    to be having a vote, as you can tell, or maybe you don't know.
    Those lights mean that we're having a vote on the floor, so if
    the panelists will excuse us, we'll go to vote on the floor and
    I understand that more Members are expected to return right
    after the vote, and we will begin immediately following this
    vote.
        Thank you.
        [Recess.]
        Chairwoman Roukema. The hearing will come to order. I
    believe we will have to proceed. Oh, here, I was just going to
    announce that Mr. Frank was in a mark-up of the Judiciary
    Committee, and he's back here now, and I think with that, we
    can proceed and hopefully we will have a period of time without
    voting interruption to hear our panels today.
        I do want to welcome the Honorable Roy Bernardi, Assistant
    Secretary for Community Planning and Development at HUD. We
    appreciate your being here today, and certainly you bring
    extensive experience on this subject sa well as a whole range
    of subjects relating to housing needs in this country. So Mr.
    Bernardi, I welcome you and with that, I will hold it open for
    your statement. I will also inform you that any statement can
    be included in the record. By unanimous consent, your full
    statement will be included in the record and anything
    supplementary that you want to include, if you just mention it,
    it will be included in the record. Thank you and the microphone
    is yours.

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

        Mr. Bernardi. Good morning, Chairwoman Roukema. I really
    appreciate the opportunity be here with Ranking Member Frank
    and the distinguished Members of the subcommittee.
        My name is Roy Bernardi. I am the Assistant Secretary for
    Community Planning and Development for the Department of
    Housing and Urban Development, and I have the responsibility
    for the management, the operation, and oversight of
    approximately $8 billion in Federal funds, most of which are
    distributed by formula to our communities for economic
    development and housing activities.
        As the former Mayor of Syracuse, New York, as Congresswoman
    Maloney mentioned, I was a recipient at one time of HUD funding
    and I can tell you all first hand that the programs are very,
    very important to the communities around the Nation.
        I'm pleased to appear before you to discuss a common
    interest, brownfields remediation and revitalization.
    Brownfields is a subject that has received a good deal of
    attention these last few years. And President Bush indicated
    clearly that brownfields revitalization is high on his domestic
    agenda. Given the shared goals of the Congress and the
    Administration, I think we have the makings of a good, solid
    partnership. That potential was demonstrated only a few weeks
    ago when President Bush signed the legislation that the
    Congress crafted and that being the Small Business Liability
    Relief and Brownfields Revitalization Act.
        The redevelopment of brownfields may be framed in two ways.
    One as an environmental cleanup issue and two as a community
    redevelopment issue. Framed as an environmental issue, the
    central concerns are an assessment, the cleanup, and potential
    liability and the principal players are environmental
    specialists and engineers. Framed as a community development
    issue, the central concern is the issue of creating a community
    asset and the principal players are economic development
    specialists and financiers.
        Experience has taught us that both approaches are relevant,
    especially when they are harnessed together. For a variety of
    reasons, coordinating remediation and redevelopment into an
    integrated approach does not always happen seamlessly. At the
    Federal level, HUD, the Environmental Protection Agency, the
    EPA, and the Economic Development Administration, the EDA, are
    the primary agencies that assist communities with addressing
    brownfields issues. Given the different funding mechanisms that
    exist within these agencies, their various regulatory
    responsibilities, their own internal priorities, their unique
    field structures, and certainly the well-established operating
    cultures within each agency, the coordination of HUD with EPA
    and with EDA is not always an easy task.
        As we move from the Federal to the State and local levels,
    the complexity of this obviously sometimes only increases. All
    over America today, big cities, small cities and medium cities
    are engaged in building cities on old industrial and
    manufacturing sites that were left soiled by our heavy
    industries of the early and mid-20th century. The General
    Accounting Office has estimated that 450,000 brownfields sites
    exist, the vast majority of which are located in urban areas.
        We at HUD, along with our colleagues from EPA and EDA and
    the other 20-plus Federal agencies involved in the interagency
    brownfields efforts, strive daily to achieve the maximum result
    at the minimum cost and in the shortest time.
        Secretary Martinez and I are committed that HUD will
    fulfill its mission as the principal vehicle for the
    redevelopment of these brownfields.
        Let me turn to H.R. 4921, the Brownfields Redevelopment
    Act. As we understand it, the purposes of this Act are to:
    first, provide more flexibility to communities; second,
    increase accessibility to funds; third, increase capacity to
    coordinate and collaborate. It does this by providing
    additional incentives for remediation and redevelopment and by
    delinking the Brownfield Economic Development Initiative grants
    from the Community Development Loan Guarantee program. Further,
    this bill clarifies that activities associated with brownfields
    redevelopment are eligible activities under the Community
    Development Block Grant program. Finally, it permits the
    Secretary to establish a pilot program, a common loan pool
    which may be securitized.
        We are interested in working with you on this, and other
    approaches to brownfield revitalization, that will enhance the
    well being of affected communities.
        A survey of over 200 cities by the U.S. Conference of
    Mayors estimated that brownfield redevelopment could add up to
    $2.7 billion in additional tax revenues and create 675,000 new
    jobs if these sites were returned to productive use. We, as an
    Administration, are committed to what I am calling the Three R
    approach; remediation plus redevelopment equals revitalization.
        Just as Governor Whitman has brought a new level of
    commitment to EPA, to address and resolve brownfield
    remediation, Secretary Martinez and I bring a renewed
    commitment to HUD's focus on redevelopment. Brownfields include
    real property with real or perceived contamination. Therefore
    significant remediation is not always necessary or required. As
    always, HUD's role as the catalyst and contributor is to
    leverage adequate private financial resources along with other
    public funds to enable redevelopment to take place. We are
    confident that our brownfields effort will, over the long term,
    provide for neighborhoods to attract better housing, and will
    lead to better quality living environments for moderate and low
    income residents.
        I'd like to tell you just a little bit about my experience
    as Mayor of the City of Syracuse. Back in 1989, we had a scrap
    yard on the northern section of our city. And that scrap yard
    was 75 acres. That was remediated and now what sits there is a
    1.5 million square foot shopping mall called the Carrousel
    Center accomplished by the Pyramid Company.
        Presently, just before I left in July to assume this
    position as Assistant Secretary for CPD at HUD, we were able to
    negotiate with this developer to reclaim the 60 acres that are
    adjacent to that site. And on those 60 acres were approximately
    75 oil tanks. It was known as ``oil city.'' If you fly around
    this country, as I know most of you do, as you go into an
    airport, usually you'll see the oil tanks right in the
    periphery of the city. Well, through eminent domain and through
    negotiation, these oil tanks were moved. That site was
    remediated and right now the plan is to construct another 3.5
    million square feet and call it Destiny USA, not just a
    shopping mall. And I bring this up because the first phase of
    that created thousands and thousands of jobs, permanent jobs,
    temporary construction jobs, tremendous sales tax income, and
    it really revitalized that area.
        And the tens of thousands of jobs, the property taxes that
    eventually are going to accrue from that project is going to
    enhance the City of Syracuse and the County of Onondaga. But it
    was a partnership. It was a partnership of the Federal
    Government, the State government. Syracuse is now an
    empowerment zone using tax incentives. That developer, you
    provide a business person with the opportunities to make money
    and make sure that that bottom line is going to obviously do
    what it needs to do for a business person to be successful, you
    can create the kind of atmosphere, the kind of remediation off
    those brownfield sites, the redevelopment of those brownfield
    sites so that everyone benefits, and the purpose here is to
    preserve the environment, take care of the environment, create
    economic activity, create jobs. And we at HUD play a small part
    in that, and the Bush Administration understands that there are
    opportunities to improve the revitalization process, to speed
    redevelopment while still achieving remediation of risks to
    human health and the environment. We can improve the
    administration of our brownfield efforts without sacrificing
    either redevelopment or remediation. We really, really believe
    that and the cooperation between EPA and HUD in the short 6 or
    7 months that I've been there is improving, and I feel very
    good about that. So Madam Chairwoman and Members of the
    subcommittee, we thank you for your leadership and as we look
    at this bill, and Congressman Miller, thank you for all of your
    efforts in putting this together. Congressman Frank, you talked
    about limitations. Well, we want to take those limitations
    away. We want more people to have access to the limited amount
    of funding that we have for brownfields. Thank you.
        [The prepared statement of Hon. Roy A. Bernardi can be
    found on page 49 in the appendix.]
        Chairwoman Roukema. I thank you, Secretary Bernardi. Let
    me, and I do commend you for outlining very nicely the positive
    and the comprehensive approach that is being take here. It's
    not only the environment, it's jobs and housing, and I think
    you made an excellent case.
        But I do have to go back to the question I introduced in my
    opening statement, and you referenced the Pilot Program for
    National Redevelopment of Brownfields. Why does that have to be
    supplementary? Cannot that be integrated? I don't really
    understand the reason for the separation and why it's not the
    common pool, or is it a common pool?
        Mr. Bernardi. Well, the pilot program for the
    redevelopment, as I understand it, it's a common loan pool for
    economic development and it's going to be geared toward a
    common underwriting approach. It's going to serve as a credit
    enhancement for private loans.
        Chairwoman Roukema. Why should that be separated, however,
    from the overall BEDI program, the Relief from Brownfields
    Revitalization Act? I don't quite understand the reason for the
    separation.
        Mr. Bernardi. Well, we're planning to separate the 108 from
    the BEDI obviously to have communities that can't participate
    in the process, non-entitlement communities, for example, that
    receive their CDBG dollars from the State. We want more
    participation, but at the same time this is a pilot program
    that I believe our staff is working in conjunction with your
    staffs to try to put it together so that we an create another
    avenue for communities to be able to participate in brownfield
    remediation.
        Chairwoman Roukema. Well, I'm going to have to submit a
    question in writing to you for more explicit explanation of
    this, and I don't believe it's going to be contradictory to the
    total--it won't be contradictory to the total bill and we will
    be able to deal with it, but I just don't understand the
    technicality.
        Mr. Miller. Madam Chairwoman.
        Chairwoman Roukema. I yield to the Congressman.
        Mr. Miller. The difference is currently in order to get a
    BEDI grant, you have to apply for the loan and it's guaranteed
    through CDBG fund repayment, which virtually blocks the use of
    CDBG funds locally. This takes and sets up a new pool and says
    you can apply for a BEDI grant without even getting a loan, and
    it doesn't impact your CDBG funds, or if you want to get the
    loan through the guarantee program and the CDBG fund, there's
    no locking in the CDBG funds for the guarantee so you can
    virtually go get a loan for the redevelopment of a brownfield
    site plus a grant, and yet have your CDBG funds be used for
    purposes in the community that they're currently used for.
        Chairwoman Roukema. I guess what confuses me is the
    terminology ``pilot program.''
        Mr. Miller. Because it's a limited program. And the $25
    million can be used----
        Chairwoman Roukema. By time? By time?
        Mr. Miller. Well, no. It can be increased next year by
    appropriations if they want to. The bill allows each year they
    can increase the program if they want to, but this year it
    starts up with the $25 million and that's leveraged funds which
    could equate $100 million worth of loans or $200 million worth
    of loans.
        Chairwoman Roukema. We won't take up more time on this, but
    I guess my definition of pilot program is different from what
    is being defined in this bill. But it's not going to be
    contradictory to our mutual goals here.
        Mr. Bernardi. As Congressman Miller indicated, there are
    communities that were just averse to pledging their CDBG
    dollars to be involved in the BEDI program, so we wanted to
    take that away by delinking it with 108. Now the pilot program
    for the common loan pool is not a substitute for that, but I
    think it gives additional impetus, it gives additional
    opportunities for communities, but I'll be more than happy to
    have our people look at it and get back to you in detail.
        Chairwoman Roukema. I would appreciate that. Thank you very
    much.
        Mrs. Jones. Thank you. First of all, good morning. Glad to
    have you here before the subcommittee. I hail from the City of
    Cleveland where there are a lot of issues with regard to
    brownfields. We have, in fact, right now a juvenile justice
    center being built on an old facility that was like a Carling's
    Brewery facility and the possibility of a job corps facility
    being built on an old facility that used to be a Ford Motor
    Company place. So the issue of brownfields is prevalent,
    particularly in cities like the City of Cleveland and other
    industrial areas where we still have a number of former urban
    filling stations, as they used to call them. They now call them
    gas stations. I'm laughing, because the other day I was walking
    with my dad, who's 80 years old, and he said ``filling
    station.'' I said to myself, ``Boy, I haven't heard that term
    in a long time.''
        So there are a lot of places and I am very much supportive
    of options or opportunities for communities to use dollars for
    brownfields in innovative ways, particularly as we begin to
    talk about housing. My question would be directed to assuring,
    and this is the issue that continues to come up in my
    community, why are we building juvenile detention facilities?
    Why are we building job corps facilities on locations that were
    brownfields? What do you believe that we can do to assure the
    communities across the board that the locations that we clean
    up are going to be redeveloped for other purposes and are going
    to be cleaned up for other purposes. Surely clean to the extent
    that children would not be put in jeopardy, people moving into
    housing would not be put in jeopardy. How do we get that
    message out to them?
        Mr. Bernardi. In the BEDI application, the Brownfield
    Economic Development Initiative Application, there is a grading
    system to make sure that the environmental work is done so that
    we don't have a property, once the money has been expended,
    that will cause harm to children. It can be residential, it can
    be a playground, it can be obviously the community puts forth
    in the application what they want to use the property for once
    the remediation takes place. But in the application process,
    there's a scoring system. That scoring system indicates that we
    need to be assured that the remediation will take place so it
    won't have a harmful effect on its reuse.
        Mrs. Jones. What else do I want to ask? I'm usually not
    speechless. The question just came to me so quickly, I think it
    was going to ride on top of some other questions. One of the
    suggestions--I also serve on the Small Business Committee,
    Subcommittee On Empowerment--a suggestion that the Small
    Business administrator and HUD administrator begin to have a
    discussion about what can we do collectively to continue to
    build communities by encouraging small business and encouraging
    housing to happen in the same development. Do you have any
    ideas in your capacity that you serve whether we might be able
    to do that? Because in my opinion, a community is more than a
    house or housing. A community is having the ability to have
    businesses operating right there with that housing.
        Mr. Bernardi. As I indicated earlier, I was Mayor of
    Syracuse, New York and like most northeastern cities and other
    cities around the country in the 1960s and 1970s and 1980s,
    everyone pushed out into the suburbs and left the city behind
    with a significant number of brownfields sites and
    neighborhoods that were in blight. My belief and Secretary
    Martinez I know feels very strongly about this, is we need to
    have more people owning their own homes. Right now, there's
    67.7 percentage of homeowners overall in this country. When we
    look at minorities, we look at African Americans, I believe
    it's about 49 percent. We look at Hispanics, it's about 48
    percent. And home ownership in the center cities is only 52
    percent. Initiatives such as this, the Brownfield Economic
    Development Initiative, our HOME program, our CDBG program,
    what we strive to do is not only to build housing, to refurbish
    housing to provide rental assistance, but at the same time the
    UD, Urban Development, has to take place.
        To me, it's a very simple process. You need economic
    development--you need jobs so that people can buy homes, people
    can live in a neighborhood, people can have a good quality of
    life and send their children to school, so it's a combined
    effort.
        What I think we're doing with EPA right now, the
    opportunity to work together where they will do the
    remediation, we will do the redevelopment. I'm very pleased, as
    I know all of you are, that the budget at EPA has been doubled
    to $200 million, up to a maximum of $250 million. This is the
    first time I believe that EPA is actually doing direct grants
    for remediation. There's an awful lot of unused property in a
    lot of our neighborhoods in our central cities that programs,
    such as this, are going to help. Not just for businesses,
    that's the primary part of it, obviously. We want to redevelop
    and we want to create jobs, but at the same time on the
    periphery of those businesses, we need to continue parallel
    roads to build our neighborhoods so people who are in those
    neighborhoods can work in those businesses.
        Mrs. Jones. My time is up. I can't ask any more questions,
    but I look forward to having the opportunity to work with you
    and your administration on this issue, particularly in the City
    of Cleveland. Thank you, Madam Chairwoman.
        Mr. Bernardi. My pleasure.
        Chairwoman Roukema. I thank you.
        And now, Congressman Miller.
        Mr. Miller. Thank you, Madam Chairwoman.
        It's good to have you here today. When I started meeting
    with the Secretary the first part of last year, right after he
    was sworn in, we had an agreement on the issue of redevelopment
    and housing issues and specifically brownfields and looking for
    opportunities to be able to provide local assistance. I know a
    lot of local cities have a lot of political pressure placed on
    them, especially when it comes to CDBG funds, because there are
    so many groups pulling at them for those dollars.
        So under the current program, for them to go out and really
    use funds for redevelopment purposes, many cities were unable
    to do that because of the obligation of historically giving
    those funds to certain groups within the community. That's
    where I became interested in this legislation. We looked for
    areas and we thought how can we take and provide opportunities
    to revitalize communities, eliminate brownfields and put them
    to purposes, whether they be parks or community centers or
    commercial use or residential use, and yet free up the
    opportunity for cities that still have CDBG funds to use with
    those local groups that they've historically dealt with. I
    think this bill does a good job at that.
        The Chairwoman had a concern because of the term ``pilot
    program'' and I understand that. But the way the bill is
    drafted, it says $25 million this year, but the appropriators
    can, if it's a successful program, can increase that to $50
    million or $100 million or $200 million if they want to as the
    years progress. So it's a program that I believe will justify
    itself, and if it does justify that it's benefited the
    communities, which I believe it will, then the appropriators
    have the opportunity to increase the program and help HUD in
    working with that. And the site of a loan guarantee being able
    to receive a BEDI grant, if you can do that now before these
    projects based on this bill, without having to borrow money,
    which you couldn't do before, plus if you want to go out and
    get a loan, and then get a BEDI grant. At the same time, these
    funds can be used to leverage, if the Secretary chooses, $12.5
    million. That might leverage $100 million worth of loans or
    $200 million, depending on the amount they're able to leverage.
        This is a program that, although it's considered a pilot
    program, I think can be a very beneficial program nationally
    and can really produce great benefit, and I applaud you for
    being here today. I have no questions. I've worked with the
    Secretary and your staff. You have just been excellent trying
    to resolve the issues and resolve the concerns. I've worked
    with the Democrat staff also to try to deal with some of the
    issues. A big concern that the staff on the Democrat side has
    with the way CDBG funds are being locked up. That's why we made
    sure, through the bill, that it said no, this is really going
    to enhance current programs. If you want to go get a loan under
    the current program, you still can using 108 funds, and then a
    loan under BEDI, a grant under BEDI, or you can take and go
    this direction, or you can get a loan guarantee, you can get a
    BEDI grant and yet not involve your CDBG funds in any way. So I
    want to thank you for working with us, working with my staff
    and the Ranking Member's staff here and the Chairwoman's staff.
    They've been just excellent. I applaud you for your efforts in
    this area.
        Mr. Bernardi. Thank you, Congressman. I know of what you
    speak when you talk about the CDBG grants. In many communities,
    before they get there, they're already spent. And the groups
    that vie for that money it becomes very difficult, but there's
    also the old adage that success breeds more success. If we go
    with this program, and we've enjoyed working with your staff
    putting it together, CDBG dollars can be used for brownfield
    redevelopment. Some communities do it obviously more so than
    others. As I mentioned earlier, we do this redevelopment. We
    give businesses the opportunity to expand or to locate into an
    area where all the infrastructure is already there and has been
    there for years. We create jobs, then they're creating jobs for
    the people that need them the most.
        Mr. Miller. Your goal has tried to create accessibility and
    create an environment where there can be more funds in the
    market to solve this problem and I believe this bill goes a
    long way to doing that. Thank you for your help.
        Chairwoman Roukema. Thank you.
        Now I want to recognize Congresswoman Maloney and
    acknowledge the fact that she is an original co-sponsor of this
    bill. I thank her for her leadership.
        Mrs. Maloney. Thank you, Madam Chairperson.
        Do you have a listing now at HUD of brownfields sites. In
    the past, there's always been a reluctance in New York to
    designate anything brownfields, because of the problems or
    challenges that come out of that. Do you have a listing now?
        Mr. Bernardi. EPA would have a listing. I'm sure we have an
    identification of them, but they have a listing that I think
    would be more exact.
        Mrs. Maloney. What is the criteria for brownfields?
        Mr. Bernardi. Real or perceived contamination. That's a
    good phrase, real or perceived. Perceived sometimes is you look
    at a property and perhaps it's unkempt and it just looks bad
    and you feel there's contamination there, but I think as you go
    through the phases, Phase I tells you whether there's
    contamination, and then that requires a Phase II.
        Mrs. Maloney. Today we will hear testimony on the second
    panel about how the delinking of the Section 108 guarantee and
    the BEDI funds will allow more access. It certainly is my
    desire to get as much money as quickly as possible to the
    communities that need it. The bill also states that the
    Secretary shall establish criteria for awarding grants. Could
    you share with us what those criteria will be?
        Mr. Bernardi. Well, I think we have it here chapter and
    verse.
        Mrs. Maloney. Will this be done by a panel or just by the
    Secretary? I would assume you're going to have many more
    requests for the $25 million in the pilot program than the
    funding will be available.
        Mr. Bernardi. As I mentioned earlier, the application
    process is competitive, and there's points for different
    categories and it's quite detailed. There's a program overview,
    eligible activities, national objectives.
        Mrs. Roukema. Will the gentlelady yield? That's an
    excellent question, and I'd just like to refer back to the fact
    that the record is open and I think this is the kind of
    information that HUD, that you, Mr. Secretary, should be
    submitting in writing for the record, because it's an excellent
    question.
        Mrs. Maloney. I just know that the prior criteria was need
    soundness of approach leverage capacity of the administering
    organization and cooperation of the proposed project with
    community development objectives.
        I wonder if the criteria is going to change or will it be
    the same criteria.
        Mr. Bernardi. Not appreciably. The Secretary will make the
    final decision, but I'll get everything back to you in this
    booklet that tells you what the procedure is now and any
    perceived changes.
        Mrs. Maloney. In addition to the legislation we're
    considering today, what other proposals is the Bush
    Administration considering that would increase available
    funding, actual money, to clean up brownfields through HUD?
        Mr. Bernardi. Our budget for 2003 is $25 million for the
    Brownfield Economic Development Initiative.
        Mrs. Maloney. But it will also be able to tap into the
    Gilmore initiative of the $250 million in loans, is that
    correct?
        Mr. Bernardi. That's EPA, as I understand it.
        Mrs. Maloney. But this could work with that program and
    leverage more money for this initiative?
        Mr. Bernardi. Absolutely.
        Mrs. Maloney. That's very good. Do you see any problem in
    the de-linking?
        Mr. Bernardi. Not at all. It would still allow a community
    the opportunity to use a 108 if they so choose, but by
    delinking it, it's going to give other communities, smaller
    communities if you will, the opportunity to participate in the
    competition.
        Mrs. Maloney. Syracuse is a small community and you got
    through the de-linking. Why is it such a problem to be linked
    with a Section 108?
        Mr. Bernardi. There are smaller communities in New York
    State, for example, Congresswoman, that the State basically
    they're not entitlement communities so they have to depend on
    the State to pledge their CDBG dollars, and in some instances,
    many instances, the State doesn't want to do that for the
    community, so it gives the community a little more independence
    and flexibility, smaller communities. In Syracuse, we use the
    108s.
        Mrs. Maloney. Then it will release the CDBG, because then
    you don't have to use the CDBG?
        Mr. Bernardi. That's right.
        Mrs. Maloney. That also is a benefit. Well, I find it
    exciting. I think it's an important program and I'm glad you're
    in the position you are bringing the experience that you bring
    from Syracuse successfully implementing prior programs in this
    area. Thank you very much.
        Mr. Bernardi. Thank you.
        Chairwoman Roukema. Thank you.
        Congresswoman Kelly.
        Mrs. Kelly. Thank you, Madam Chairwoman.
        We welcome you, and we're delighted to have you here. Mr.
    Bernardi, I am just very excited about what you did in
    Syracuse. I've seen it. It works. And the beautiful thing is it
    puts back onto the tax rolls and thereby relieves the taxes, a
    certain tax burden from the local citizens. When you do the
    kind of thing that you do in Syracuse with brownfields, you've
    moved them from useless areas of the community into something
    that's very useful. People enjoy going there.
        A similar thing actually happened in my home town of
    Katonah, New York. We had oil tanks in the middle of the town.
    It became a brownfield and we moved the oil tank. I was very
    interested in your saying you moved oil tanks and redeveloped
    the area into a shopping mall. In this little village of
    Katonah, New York, we had oil tanks and we now have a three
    story attractive group of small businesses in there that range
    everywhere from a toy store to a podiatrist. All of those
    people are bringing individuals into our community. It's really
    an excellent idea. I'm a co-sponsor of the bill, and I really
    do feel very strongly that we need to make progress. I'm
    delighted that we have, if we can get a piece of it out for a
    demonstration project, I think it's really important.
        I do think though you've pointed something very important
    out. That is that you've got to have State and local as well as
    the Federal Government working together to make anything
    happen. I'm very excited about the possibility also that we're
    actually going to put money into the communities instead of
    into one more study of something. It's wonderful to think that
    there will actually be money put into an applied process that
    will actually bring communities back in the same way that
    happened in the community that you represented and my home
    town.
        So I welcome you here. I thank you for your testimony.
    Thank you, Madam Chairman. I turn back the balance of my time.
        Mr. Bernardi. Thank you.
        Chairwoman Roukema. Thank you.
        Mr. Bernardi, is there anything you would like to say in
    summary? I believe we've concluded the questioning and are
    ready for the second panel, but I don't want to cut you off if
    there's some follow-up that you would like?
        Mr. Bernardi. Just to say that it's a pleasure to be here
    representing the Bush Administration and Secretary Martinez. Be
    assured that we at HUD, all of us, working together with all of
    your staffs, whatever builds up that we forge, we'll do it
    together we'll do it in a combined way, and I welcome the
    opportunity and I know the other speakers are going to provide
    information and thoughts and ideas that we'll perhaps
    incorporate into the process, so the process, as I understand
    it, is to come out with the best possible bill that will enable
    us to do what we need to do to help the poor people in our
    country. I thank you.
        Chairwoman Roukema. And I might repeat the inference or the
    reference that I had in my opening statement that the Members,
    yourself as well as Members, will have 30 days in which to
    submit written questions. You will have that time period in
    which to submit further information that we've requested and/or
    anything additionally that you think is appropriate for the
    record, and it will be an open record for the next 30 days.
    Thank you again. Will the next panel take their positions at
    the table.
        I welcome all of you panelists here today. I will
    acknowledge you by name as you testify, but I would like to
    make the observation that all of you have extensive experience
    in the field. You're not speaking hypothetically, you're
    speaking from ground zero, so to speak. We do appreciate having
    the benefit of your experience and long history of experience
    at many different levels, both the local, State and regional,
    as well as the national level.
        That having been said, I recognize first the Honorable
    Lydia Reid, Mayor of Mansfield, Ohio. And as we've all heard
    that region has extensive experience in this area. We thank you
    for your leadership and your presence here today. Mayor Reid. I
    would simply ask you in the interest of time that you try to
    limit your statements to 5 minutes. I'll use some discretion
    here, but be aware of the time limitations. Thank you.

        STATEMENT OF HON. LYDIA J. REID, MAYOR, MANSFIELD, OHIO

        Ms. Reid. Thank you, Congresswoman. Again I appreciate the
    opportunity to talk about House Bill 2941. I also appreciate
    Congressman Miller's initiating the bill. It is long awaited
    and we very much appreciate it. I'd also like to say hello to
    my friend, Stephanie Tubbs Jones from Cleveland. Nice to see
    you.
        Mansfield, Ohio is the 19th largest city in the State of
    Ohio. We're the county seat. We have a population of 50,793
    people. We've gone through struggling times. We have a labor
    surplus area with a poverty rate of 17.8. Our unemployment rate
    is 9 percent. Our median household income is $22,591; 48.2
    percent of our population is low-to-moderate income.
        Over the years, as any typical Rust Belt city, we have lost
    a lot of industry. As they closed up, a third generation did
    not continue on in the process that their parents had
    initiated. Our downtown was deteriorating. In 1989, we all
    pulled together. Our downtown was absolutely gutted. We took
    everybody, and this was Government, it was community, and
    private developers, and as a result, we have a showcase
    downtown called the Carousel District. We have the first hand-
    carved carousel in the United States since the 1930s. We now
    have over a million visitors a year, and we won the National
    Mainstreet Award last year. That's just a little history of how
    we have been able to do some things with our downtown area to
    further emphasize the brownfields, which is what we're here
    about today.
        The City of Mansfield recently was awarded a grant for a
    pilot project for a brownfield redevelopment master plan called
    the PR Project Path Revitalization, and the key components of
    that are identification of potential brownfield sites,
    assessment of brownfield sites, remediation of brownfield
    sites, redevelopment and prevention.
        The City's PR project is a mixed redevelopment linear zone
    with new commercial and industrial properties. The city also
    includes large, under-utilized vacant parcels of land where
    economic development is low or absent.
        In this corridor, there's numerous abandoned and obsolete
    buildings of all sizes and shapes that are just sitting there
    waiting for the City to come and try to do something with them.
    They no longer meet the operating efficiencies demanded by
    modern manufacturing processes. The numerous brownfield sites
    have depressed our inner city core. The property values are
    going down. Community values in those adjoining neighborhoods
    are down. Depressed real estate values, people don't want to
    invest where everything does not look like it will ever rise
    again.
        What we did, we initiated a multifaceted undertaking. We
    said, OK, we've got this site. We communicated with local and
    State regulatory agencies that were our public partners. We
    continued dialogue with them to establish a foundation for the
    Brownfield Initiative. Then we went to the industrial
    facilities. We said we would secure the services of the
    contractor, which we have been using McCabe Engineering as our
    consultant who has been excellent that had worked the
    industrial arena, because you need consultants that know what
    they're doing when you go into these projects.
        The private partner offered first hand knowledge of the
    working complications, then the current and past owners were
    contacted and we said to them, you have to be a part of this,
    this was your doing, it was on your watch that this occurred.
    You will have to come very apprehensively into the process to
    contribute dollars to help us put this plan together. Obviously
    we were faced with how are we going to fund the entire issue
    once we had an estimate of what the cost was. And subsequently
    we secured required funds. We did not go to 108 dollars for a
    very good reason. We didn't want to tie up our precious CDBG
    dollars into 108 commitments, because as all of you well know,
    when you borrow 108 dollars, you've got to take that chunk out
    of your CDBG money and say we pledge this and then if we
    develop the site and we don't get our money back in the
    timeframe that we have to pay the 108 back, we are then stuck
    with taking that out, the precious dollars that we used to
    revitalize homes, to provide housing for the elderly, for
    demolition, for all the other things you do with CDBG money.
        So what we did, the first big project we did, we got a
    pilot grant of $200,000, we got a revolving cleanup, revolving
    loan fund of $1 million, which is a grant from the U.S. EPA. We
    went to the Ohio Department of Development Urban and Rural
    Initiatives, and we got another grant, $750,000, and then we
    went to the potential responsible parties and got another
    $570,000. So that project was $2,820,000. We were able to do
    this without getting into our 108 dollars because we found
    other ways, with the help of the State, and our consultant and
    the EPA in order to do those things.
        Now the challenges are obvious and I'd like to bring up a
    little bit about----
        Chairwoman Roukema. Mayor Reid, can you summarize. I'm
    going to extend your time period, but your time is up.
        Ms. Reid. Let me just conclude, Congresswoman. The city is
    fortunate to have had success with our brownfields program. In
    an effort to spur development, the city has taken ownership of
    the brownfield sites, became the banker, secured the funds,
    secured the loans to assess and remediate the sites. Our
    brownfields cost $50,000 to $100,000 an acre, but greenfields
    are $10,000 to $20,000, so in summary, we need to be able to
    have more accessibility to funds that are like Section 108
    dollars that we don't have to worry about whether or not we're
    going to pay back, because the city doesn't have enough money
    to do it all.
        In summary, we totally support the bill and look forward to
    its passage. Thank you, Congresswoman.
        [The prepared statement of Hon. Lydia J. Reid can be found
    on page 68 in the appendix.]
        Chairwoman Roukema. Mayor, may I just ask one tiny
    question? It may not be so tiny. But when you made those
    decisions, were you and the counsel free to make those
    decisions at your own pace? You weren't limited either by State
    or Federal legislation? You had that latitude?
        Ms. Reid. We did have the latitude. We took the initiative.
    We looked at our Ohio Brass site, for example, which was really
    the critical one, coming right into town, terrible looking
    sight, and we took the initiative to go out to the people that
    owned the buildings before. We took the initiative. It was our
    decision. EPA was not hammering us over the head, if you will.
        Chairwoman Roukema. And your local zoning ordinances or
    State were not restrictive?
        Ms. Reid. They were not. We worked very closely with all of
    them.
        Chairwoman Roukema. Thank you.
        The second panelist is the Honorable Mayor of New Bedford,
    Massachusetts, Frederick M. Kalisz. Mayor Kalisz from New
    Bedford, Massachusetts.

    STATEMENT OF HON. FREDERICK M. KALISZ, JR., MAYOR, NEW BEDFORD,
                             MASSACHUSETTS

        Mr. Kalisz. Thank you very much, Madam Chairperson. We
    certainly appreciate the opportunity to address you and the
    Members of the subcommittee today.
        New Bedford is a city of 95,000 people. We are also this
    year recognized as a brownfields showcase community among the
    Federal agencies of the United States Government. The
    brownfields program has spearheaded an economic development
    program that it has proved that it can provide jobs and
    business opportunities. Today I hope to provide in this brief
    period a perspective of local government to you in your
    deliberations process.
        My purpose is twofold to describe some of the extensive
    experiences and successes as well as second to comment
    specifically on H.R. 2941 and how we might benefit in the
    future municipalities, such as mine.
        As mayor, I took over just a little over 4 years ago. We
    had realized a job loss in our community of some 11,000 jobs,
    mostly from the industrial and manufacturing complex that
    Congressman Frank had made reference to a little bit earlier.
    Unemployment was high, real estate values were dropping, and
    tax revenues were in a free fall. We reversed that trend to a
    degree. Our unemployment rate went from 15.6 percent down to a
    low of 5.3. Assessed valuations have begun to rise in the
    community, and the fishing industry, which has been a mainstay
    of our economy is once again beginning to thrive.
        The Port of New Bedford is the largest-value port of
    fishing anywhere in the United States. Last year, 3,600 jobs
    were maintained and over $700 million in seafood-related sales
    were earned. We've created a tourism industry at the same time,
    and this year some 30 cruise ships will arrive in the port that
    Melville once referred to in Moby Dick as the ``most fairest
    place of all of New England.''
        We have a national whaling museum, a national park and
    we're developing a marine science center that will truly
    enhance and recognize the God-given resources that we have.
        Our many environmental challenges over the decades have
    spawned new environmental management opportunities and
    management industries. The brownfields program has been a major
    help in reversing our economic decline and beginning our
    economic and cultural revitalization. Our job training program,
    funded by one of the early brownfields programs, has allowed
    individuals not only to learn new job trades in hazardous waste
    management, but has provided them with meaningful compensation
    opportunities, enhanced benefits, and in many cases the
    opportunity to continue their formal education past the post-
    secondary level.
        The brownfields pilot program funded a comprehensive
    evaluation program of all of our brownfields sites, permitting
    us to evaluate and formulate a plan for the future. Our
    targeted site assessment allowed us to take funds and put them
    into a waterfront development over land that had earlier been
    made reference to by the Secretary, was unappealing and deemed
    to be a brownfield just because of the lack of understanding of
    what could possibly happen.
        As I made reference to earlier, we've been named recently a
    Brownfield Showcase Community. That allows for Federal
    representation in our community to manage potentially dozens of
    projects within the City of New Bedford and allow for the
    coordinations of agencies' efforts to ensure that a fast
    tracking takes place, and the re-utilization and use of
    properties to become economically viable. We need the
    brownfields program. We are identifying and remediating
    hazardous situations, removing the cloud of concern and
    liability which has been inhibiting new development for
    decades.
        I enthusiastically support H.R. 2941. We believe that the
    BEDI grants at the same time should be decoupled from the
    Section 108s. I'd like to explain a little bit about that with
    regard to the funding situation. New Bedford's experience has
    demonstrated that small public investment in cleaning up and
    redeveloping abandoned and under used properties yield large
    returns of tax revenues and employment. The brownfields
    programs spell hope to communities such as ours. I respectfully
    suggest to you that you not diminish the BEDI program by
    deducting the BEDI funds from the Community Development Block
    Grant program. And I'd specifically like to talk about the
    flexibility of what is so important and I understand my time is
    drawing to an end.
        We have been able to take a program, such as an oceanarium
    in the City of New Bedford, a $100 million investment, and the
    city has taken the lead. We've been able to get a $2 million
    BEDI on top of a $3 million section 108 which has then
    stimulated State, local and private investment to the tune of
    some $80 million. The shovel will be going in the ground this
    year, this July, to what will be an extensive project. That's
    where it works when it's coupled together. But where there are
    non-revenue generating projects, such as the reenhancement of
    parks in urban mill settings where housing has been the
    predominant mainstay of what has been left, the mills have been
    taken away. You don't have the revenue generating capacity.
    Park development that could benefit from a BEDI grant will then
    stimulate the private sector to look at an environment that has
    been enhanced, and allow for them economic development at that
    point.
        My final comment has to do, just very simply, with the fact
    that there are other programs in ports such as ours with
    homeland security issues and other issues that cannot generate
    revenue of and by themselves. But the value of the BEDI a
    brownfield economic initiative program can help to stimulate
    that type of economy. The loan programs that were spoken of by
    HUD I believe as well are a good move into the future. HUD has
    demonstrated themselves in a good loan management program with
    municipalities. EPA has done a wonderful job with grant
    administration. HUD has been the expert with the loan programs.
    And it rightfully belongs with an agency that has a track
    record of these types of successes.
        I thank you for the opportunity to have been able to
    address you and look to you for support for the future sa this
    legislation advances.
        [The prepared statement of Hon. Frederick M. Kalisz Jr. can
    be found on page 55 in the appendix.]
        Chairwoman Roukema. Thank you very much. You brought your
    practical experience to the fore here.
        Mr. Bartsch, Director of Brownfield Financing Studies, the
    Northeast-Midwest Institute. You're speaking for a large
    component of those of us intensely interested in this subject.

    STATEMENT OF CHARLES BARTSCH, DIRECTOR OF BROWNFIELD FINANCING
                  STUDIES, NORTHEAST-MIDWEST INSTITUTE

        Madam Chairwoman and Members of the Housing and Community
    Opportunity Subcommittee, I appreciate the opportunity to
    testify today on this proposal. It reflects the next wave of
    congressional interest and activity in the brownfields arena.
    Since 1991, the Institute has analyzed activities in nearly 100
    jurisdictions of all sizes across the country, and as you
    pointed out, we work very closely with the bipartisan
    Northeast-Midwest Congressional Coalition to examine the
    relationship between environmental contamination and economic
    development. A key part of that effort has been identifying
    ways in which existing Federal financing programs could be more
    creatively and usefully linked with the resource needs of
    brownfield sites.
        There's a clear and critical role for agencies such as HUD
    to play to take the next step to help fill the brownfields
    capital gap and improve the market conditions for these
    properties. The BEDI program was put in place to respond to
    this redevelopment challenge, and H.R. 2941 would make
    important changes to enhance this effort. For those communities
    that are able to tap the existing program, BEDI is one of the
    most flexible Federal resources available for brownfield
    purposes.
        Unlike EPA's grant programs, BEDI funds can be used for the
    full range of redevelopment activities, everything from cleanup
    to construction. BEDI funds can address petroleum and other
    types of contaminants that are still problematic for EPA, even
    with the new brownfields law. And my prepared statement gives
    examples of how BEDI has brought significant benefits to cities
    like Camden and Syracuse and Lorraine, Ohio. There's no
    question that BEDI has been a vital component of brownfield
    revitalization strategies in those cities that have been able
    to access the program and its resources.
        Those successes notwithstanding, HUD has not seen the level
    of grant application activity that one would expect, given the
    tremendous need. And as is clear from today's hearing, the most
    critical issue, and the one that H.R. 2941 addresses, is the
    required linkage of BEDI to the HUD Section 108 loan guarantee
    programs.
        By decoupling these programs, H.R. 2941 would make a
    significant change to this program, with good potential
    benefits. Clearly, this decoupling is needed. As you know, BEDI
    grants can't be awarded unless communities also apply for and
    receive a companion Section 108 loan guarantee. In practice,
    this adds complexity and time demands to projects. These are
    key disincentives for small and mid-sized cities that just
    don't have the staff capacity to prepare and push dual
    applications, and it also discourages small projects, because
    the effort and cost of structuring and securing a Section 108
    loan guarantee reduces its usefulness. This linkage requirement
    has proven difficult for many entitlement cities and counties
    to meet, as we've heard from other witnesses. Even if they
    haven't reached their legal limit on 108, economic and
    political constraints effectively prohibit their use of this
    program, and this makes needed BEDI resources inaccessible.
        There are several reasons for this, and I just want to
    briefly touch on them. From a fiscal standpoint, bond rating
    agencies have viewed Section 108 loans as municipal debt, and
    this is a sensitive issue in many places. Some cities have debt
    caps, which are defined by statute or financial rules, and this
    helps to discourage the use of 108. And in other communities,
    as Mayor Reid has pointed out, using the 108 proceeds for local
    loan funds or infrastructure development forces cities to rely
    on CDBG as backstop to pay down their Section 108 debt, and a
    lot of cities just don't have the capacity to take on this kind
    of debt without jeopardizing their basic block grant
    activities.
        As we have heard, from a practical political standpoint in
    many cases, mayors and city councils find it impossible to
    pledge future CDBG grants as collateral for these projects,
    even though we know that HUD has an outstanding record of
    application review and underwriting.
        I want to focus on the issue of small cities, because they
    face insurmountable obstacles to accessing BEDI resources,
    again first and foremost, because of this required connection
    to Section 108. By law, they don't get their own entitlement
    grants. They can't offer anything to meet the 108 collateral
    pledge. And while in theory they can work through their States
    or urban counties, in practice, those entities are resistant or
    even hostile to these kinds of efforts.
        To date, only a handful of small cities have been able to
    make the Section 108 brownfield connection. This is even as the
    need for brownfield financing resources in smaller and mid-
    sized cities grows. A couple of States, notably Connecticut and
    Washington, are trying to make an effort to work with their
    small cities, but I want to give you an example from one State,
    Massachusetts, which is really very typical of the national
    situation. Massachusetts has 370 incorporated non-entitlement
    towns. Many of these have brownfield sites, but none of them
    have ever gotten a Section 108 or a BEDI, so decoupling is
    really the critical issue that H.R. 2941 would address. It
    would open up the program to thousands of communities with
    significant brownfield reuse opportunities. I would urge the
    subcommittee, as this goes forward, and this comes into place,
    to really keep an eye on the changing demand for BEDI
    resources, because I really believe that a more flexible, more
    widely accessible BEDI program will intensify interest in this
    program.
        I have pointed out other benefits in my prepared statement.
    I know my time is running out. I just want to focus on one last
    point. H.R. 2941 specifically authorizes appropriations for
    BEDI. This is critical, because it will reiterate Congress's
    support for this key initiative. I would like to emphasize, as
    several Members have suggested, that the resources dedicated
    for BEDI should not be taken from the larger CDBG program.
    Since BEDI was first funded, it has been defined as a separate
    item in the budget and carried out in accordance with HUD's
    mission, and I think this approach is the right one to take. So
    to close I just want to again reiterate what Congresswoman
    Maloney said, the ideas put forward in H.R. 2941 are shared by
    many other Members of Congress. Representatives Quinn, Meehan,
    Mcovern, and McHugh have introduced H.R. 2064, which would also
    address the decoupling issue. On the Senate side, Senators
    Levin and Jeffords have introduced S. 1078 with a similar
    objective. This all shows that support for this kind of change
    to BEDI is bipartisan, it's significant, and I thank you for
    the time.
        [The prepared statement of Charles Bartsch can be found on
    page 44 in the appendix.]
        Chairwoman Roukema. Thank you.
        Now we have Mr. John Murphy, Executive Director of the
    National Association for County Community and Economic
    Development.

       STATEMENT OF JOHN C. MURPHY, EXECUTIVE DIRECTOR, NATIONAL
       ASSOCIATION FOR COUNTY COMMUNITY AND ECONOMIC DEVELOPMENT

        Mr. Murphy. Thank you, Madam Chairwoman, for inviting my
    testimony here this morning. I am the Executive Director for
    the National Association for County Community and Economic
    Development, or as the acronym has it, NACCED. We are an
    association of practitioners that administer at the urban
    county level the community development block grant, HOME and
    other related programs. I'm also appearing today on behalf of
    the National Community Development Association, which is an
    affiliate of the U.S. Conference of Mayors. It includes city
    governments that administer those same programs. The mission of
    each of the organizations is to improve the technical
    capacities of cities and counties, to administer a whole range
    of affordable housing and neighborhood revitalization programs.
        So you have combined in our two membership really the bulk
    of the entitlement CDBG communities. I'd like, at the outset,
    to offer the enthusiastic support for this bill, in particular
    the decoupling of the Brownfield Economic Development
    Initiative Grants from the requirement that a community also
    apply for a Section 108 loan guarantee.
        I recently surveyed our NACCED members as to whether this
    created an impediment in their moving forward on brownfield
    activity, and, in fact, discouraged them from applying for a
    brownfield EDI Grant, because of the coupling with 108. I found
    at least nine counties across the country, ranging from
    Cuyahoga County and Hamilton County in Ohio to Westchester
    County, New York, to Clark County, Nevada. these counties had
    said that, because of the required coupling of the two
    programs, they had not applied for that assistance.
        I think the reasons are threefold. First, they didn't want
    to pledge future block grant dollars to pay for the 108.
    Second, they wanted to use perhaps other funding and it was
    non-HUD funding or non-CDBG or 108 guaranteed funding. Third, I
    think many communities have been discouraged from applying for
    108, quite frankly, because of the lengthy processing time that
    HUD takes in approving 108 loan guarantees. As you know, in
    financing many development projects, timing is everything.
        We also support the bill's language that would clarify that
    brownfield redevelopment and cleanup is an eligible CDBG
    activity.
        I must say, Madam Chairwoman, I'm as confused as you are
    about the provision that calls for the creation of a loan pool.
    I'm not sure whether that's a separate guarantee of private
    sector loans or whether it's an opportunity for HUD to buy
    these private sector loans and create, in effect, a secondary
    market. I think that provision, as you rightly point out, needs
    some clarification. I would urge the subcommittee to act
    expeditiously on this. We look forward to its enactment by the
    Congress.
        Thank you.
        [The prepared statement of John C. Murphy can be found on
    page 65 in the appendix.]
        Chairwoman Roukema. Thank you. I don't think we can get
    both in before we go for our vote on the floor, but we will
    hear Mr. Robert Colangelo. He is the Executive Director of the
    National Brownfields Association. You've see, I've learned
    something today. I didn't know there was such an association.
    We welcome you here.

      STATEMENT OF ROBERT COLANGELO, EXECUTIVE DIRECTOR, NATIONAL
                         BROWNFIELD ASSOCIATION

        Mr. Colangelo. Thank you, Madam Chairwoman and
    distinguished Members of the subcommittee for inviting me to
    present my views on H.R. 2941. In my capacity of Executive
    Director of the National Brownfield Association, I work with a
    wide range of property owners, investors, developers, service
    professionals and representatives of the public sector, and I
    hear their concerns daily about the issues regarding the
    redevelopment of brownfields. I also founded Brownfield News
    Magazine and I also manage Brownfield Development which holds
    title to a 26-acre industrial park, so I have firsthand
    knowledge and experience about the difficulties and
    complexities of financing and redeveloping brownfield
    properties.
        Simply put, I define a brownfield as a real estate
    transaction with environmental personality. And the structuring
    and the finance to acquire and clean up environmentally-
    impaired properties remains the primary obstacle in
    redeveloping brownfields. The lending community considers
    brownfields high risk transactions; therefore, they are not
    leveraged. And securing traditional sources of debt financing
    remains difficult at best. Banks will not lend on a brownfield
    until the risk is mitigated. That leaves equity and gray market
    sources of capital as the primary mechanism for financing these
    transactions. Both sources of capital are very expensive,
    typically requiring yields in excess of 30 percent.
        As the brownfield market matures, considerable experience
    has been gained by both the public and private sector about the
    redevelopment process. The maturing market has left few
    positive value properties available that can generate returns
    that warrant the use of high-priced capital. The current market
    condition has also left hundreds of thousands of sites within
    the confines of our cities undeveloped, due to the high cost of
    private capital, poor market conditions and difficulty in
    utilizing Government incentives.
        As the market evolves, Government incentives will continue
    to serve as a key mechanism to lower the cost of private
    capital by structuring the acquisition of a brownfield using a
    combination of equity, debt, and Government incentives, a
    blended lower cost of capital can be achieved. The lower cost
    of capital will allow more brownfield sites to be economically
    redeveloped.
        The government's, and particularly HUD's role in the
    brownfield redevelopment process will also increase as the
    market transitions from environmentally driven to real estate
    driven transactions.
        I've had the opportunity to work with a number of the
    cities and just recently I worked with the Brownfield Office of
    the City of Chattanooga, Tennessee. I think they're a great
    example of the real world difficulties in using the HUD's
    Section 108 Loan Guarantee and the companion EDI and BEDI
    grants to promote industrial and business recruitment and
    retention.
        The City of Chattanooga's Brownfield Office identified the
    redevelopment of abandoned industrial sites, brownfields, as an
    important economic objective of the city. Actions to facilitate
    this objective included the identification of projects to
    stimulate economic development using HUD's Section 108 Loan
    Guarantee and the companion EDI and BEDI grants to promote
    industrial and business recruitment and retention. However,
    implementation was stymied by four factors:
        Linking the Section 108 loan to EDI/BEDI funding;
        Unwillingness by the mayor's office to risk CDBG proceeds
    as collateral;
        Lack of local financial expertise to administer the Section
    108 loan; and
        Failure to produce a specific project that fits the HUD
    definition of economic development.
        This legislation appears to promote the responsible
    redevelopment and productive reuse of brownfield properties by
    removing unwarranted obstacles, specifically de-linking grants
    and loan guarantees for brownfield development from the pledge
    of the community development block grant funds. This proposed
    change will allow more communities to have access to funding
    which in turn should allow them to promote the cleanup,
    transfer, and economical use of more brownfields.
        Chairwoman Roukema. Mr. Colangelo, I'm sorry. You have
    about a minute left, or a little less than a minute, but we are
    going to have to go over for a vote now. We will return and
    hopefully we'll all be here to hear your one minute or 50
    seconds. Certainly the Home Builders, which we would be very
    interesting in hearing their perspective on this. We'll be
    returning very shortly. We have one or two votes. It's a
    question as to whether there are one or two votes, but we
    should be back within 15 minutes or less.
        [Recess.]
        Chairwoman Roukema. I believe we'll get started here, again
    resume our hearing. I feel compelled to make a comment to you,
    however. For the whole panel, the fact that there are so few of
    us here today is no indication that people are not interested
    in the subject or what you're saying; it's a competition with
    other committees. However, if it were highly controversial,
    they would all be here ready to question to you. It's a
    reflection of the fact that this has been so well-received by
    all Members of the subcommittee, but again I am confident and
    I'm assured that the Members and their staffs will be going
    over your testimony here today, but I didn't want you to feel
    as though the panel here was not important today. It's very
    important. But it's also a reflection that the Members are
    wholeheartedly for this legislation and supportive of what
    we're doing here today.
        With that having been said, Mr. Colangelo, I believe you
    have at least another minute to summarize your statement.
        Mr. Colangelo. Thank you. I guess in summary, this
    legislation is another step in the right direction toward
    fostering the participation of a wide range of stakeholders,
    the owners, the developers, the investors, service
    professionals and the public sector and community
    representatives in brownfield redevelopment.
        Moreover, the bill would allocate resources to promote
    partnerships between the public and private sector and
    encourage reuse of brownfield redevelopment. I think this bill
    puts HUD back into the brownfield business and whether you'd
    know it or not, part of the other positive benefit is we've
    really created a new market here, a domestic emerging market
    and that's the brownfield industry.
        Thank you very much for inviting me and listening to my
    comments.
        [The prepared statement of Robert Colangelo can be found on
    page 53 in the appendix.]
        Chairwoman Roukema. Thank you very much.
        Mr. Kasko, I believe is regional sales manager and has a
    lot of experience in real estate, and in home building, Avis
    America. But you're here today testifying on behalf of the
    National Association of Home Builders and I know we're all most
    anxious to hear your observations.

       STATEMENT OF CHARLES KASKO, REGIONAL SALES MANAGER, AVIS
    AMERICA, ON BEHALF OF THE NATIONAL ASSOCIATION OF HOME BUILDERS

        Mr. Kasko. Thank you, Madam Chairwoman. I'd like to thank
    you and Members of the subcommittee and Congressman Miller for
    having us here today to address you on behalf of the more than
    205,000 members of the National Association of Home Builders to
    express our support for H.R. 2941, the Brownfields
    Redevelopment Enhancement Act.
        My name is Charlie Kasko. I'm a member of the association,
    and I'm also the Chairman of the Federal Government Affairs
    Committee for the National Association of Home Builders. I'm
    from Shaverton, Pennsylvania. I'm a regional sales manager for
    Avis American. We are a division of Excel Homes. We operate in
    20 States in the Northeast and build approximately 1,400 homes
    a year through a network of independent builders.
        Brownfields redevelopment, if it's done correctly, presents
    a unique opportunity to marry economic development with the
    principles of smart growth and environmental protection.
    Additionally, brownfields redevelopment is consistent with the
    notion of reestablishing our communities. Many brownfield sites
    are located in urban areas or close-in suburbs within walking
    distance or in close proximity to existing amenities such as
    restaurants, shops, and the arts. This proximity both fosters
    the sense of community and satisfies the increasing needs of
    our population while helping to satisfy the need for safe,
    affordable housing.
        For example, in my home State of Pennsylvania, the city of
    Pittsburgh has partnered with local builders and developers to
    redevelop a 42-acre site on the banks of the Allegheny River.
    Once a heavy industrial site, Washington's Landing will now be
    a stand-out in full community complete with townhomes, an
    office park, a rowing club, tennis courts, a marina, a public
    park and a bike path.
        NAHB has always held that the first priority when
    addressing brownfields redevelopment must be relief from
    Federal liability and enforcement for innocent parties under
    environmental statutes. The recently enacted Brownfields law
    was a good first step in meeting this priority. Unfortunately
    the new law fails to grant liability relief to innocent parties
    for sites contaminated with petroleum, because approximately
    half of the brownfield sites in this country are contaminated
    with petroleum. The absence of petroleum liability protection
    potentially leaves thousands of desirable sites undeveloped.
        While we remain hopeful that Congress will address this
    short-coming in the new law, we continue to be supportive of
    the efforts to provide Federal aid for the redevelopment of
    brownfield sites. NAHB is confident that H.R. 2941 will
    complement the new brownfields law by removing the barriers to
    valuable Department of Housing and Urban Development funding
    for brownfields projects.
        Grants under HUD's Brownfields Economic Development
    Initiative are designed to provide governments with a flexible
    source of funding to pursue the redevelopment of brownfields
    through acquisition of land, site preparation, economic
    development, and other activities. However, access to these
    funds under current law requires a local government to pledge
    future allocations of Community Development Block Grants as
    collateral. Many of the communities with the greatest potential
    for reclaiming brownfields are unable or unwilling to pledge
    their CDBG funds in this manner, as we've heard so many times
    here this morning.
        H.R. 2941 would remove these leveraging requirements and
    open the door to BEDI to spur much needed economic development
    and affordable housing production. In addition, 2941 would help
    clear up confusion and uncertainty regarding the eligibility of
    brownfield initiatives for CDBG funding. The bill would ensure
    that the redevelopment of brownfield sites is a permissible
    CDBG activity.
        This clarification is important. CDBG funds are the chief
    means used by State and local governments in harnessing public
    and private investment to address community development needs
    by explicitly listing brownfields redevelopment activities as a
    permissible activity for the CDBG funding. 2941 will ensure
    that they have the ability to integrate such efforts as part of
    a broader community development initiatives.
        Finally, H.R. 2941 gives the HUD Secretary the ability to
    establish a pilot program for the development of a loan pool
    that would provide economic development financing for eligible
    public entities. Cities will now be able to expand their
    redevelopment options by leveraging funding from private and
    public sources with the funds from the loan pool.
        Madam Chairwoman, on behalf of the homebuilding industry,
    I'm pleased to support H.R. 2941 and look forward to answering
    any questions that you may have.
        [The prepared statement of Charles Kasko can be found on
    page 60 in the appendix.]
        Chairwoman Roukema. Thank you very much. I do want to just
    restate the fact that I think that the way we have come
    together here is quite remarkable, but perhaps maybe we're long
    overdue. I want to again congratulate Mr. Miller, my colleague,
    for taking this initiative. Certainly all three of these
    issues, whether it's jobs, housing, and environmental concerns
    are a top priority of mine and I believe a top priority of the
    vast majority of people on this subcommittee, both the
    subcommittee and the Full Committee, and the fact that Mr.
    Oxley, our Chairman, has paid such close attention to testimony
    here today, is an indication I believe that we all want to move
    with Mr. Miller, with Mrs. Maloney, to move ahead and expedite
    consideration of this legislation in a form that can be taken
    to the floor.
        With that, I'll yield to my colleague, the prime sponsor of
    this legislation, Mr. Miller.
        Mr. Miller. Thank you, Madam Chairwoman.
        Mayors Reid and Kalisz, you both touched on something that
    I think is very important. That's the competition for CDBG
    funds within the community. I think, Mayor Reid, that you said
    that your median income is $22,000, so you have a lot of low-
    to moderate-income individuals and the need for those funds is
    tremendous within organizations and the linkage between CDBG
    funds, BEDI, the guarantees, have really impacted your ability
    to deal with brownfields.
        Do you see an opportunity, if this bill becomes law, for
    your implementation in dealing with brownfields locally?
        Ms. Reid. We absolutely do, Congressman Miller, because
    right now, we get $1,190,000 a year. Out of that you take admin
    of 20 percent. The balance of it right now, we do have a 108
    loan that we took out to buy 100 acres of land to develop out
    around our airport. The problem is it takes another $250,000 of
    our 108 dollars of our CDBG dollars to pay that back. Until we
    can continue to develop that land out there and get this paid
    back, we are stuck with that. That leaves us about $600,000 to
    do all of the rest of the city. We've almost got it paid off,
    but we would never do it again for that very reason, because
    we've got nine council people all vying for money for their
    wards where there's a lot of low, substandard housing, elderly
    housing projects, all of the things that we need to do in our
    city. We have a decaying inner core. We're an old Rust Belt
    city and taking that money and going back to my council again
    and asking them to do another 108 loan, Congressman, is not
    going to work. We can't afford to take that away from our
    citizens.
        Mr. Miller. So this program, if enacted, would benefit your
    city and would be something you would take advantage of?
        Ms. Reid. Absolutely. Just get it passed, sir.
        Mr. Miller. Mr. Murphy, you talked about the State of
    Massachusetts has never been able to use HUD grant funds for
    this program because of the complexity of the process of the
    loan application process in 108. Is that correct, with the
    National Association of Counties?
        Mr. Murphy. Actually I believe it was my colleague to my
    right here.
        Mr. Bartsch. It was actually me, but that is correct,
    Congressman. Again, it gets into decoupling issues. Again, in
    theory, small cities can take advantage of this because there
    is a process in the law that allows that, but again in practice
    at the State level, the same kind of constraints that Mayor
    Reid points out happen at the State level. States are concerned
    about the impact on their future allocations. They're concerned
    about how existing resources may be distributed to the many
    small cities within a State and many of those States, and again
    I use the example from Massachusetts, because I was able to get
    some numbers yesterday on that, many States just have decided
    that they can't do this, they can't do a 108 for brownfields
    for the very reasons that Mayor Reid pointed out.
        Mr. Miller. So eliminating that requirement and simplifying
    the process, as we're doing here, you see a major benefit?
        Mr. Bartsch. I see a major benefit. One of the things that
    I do is brownfields outreach for a variety of cities. In the
    last year, I probably have been to 20 cities mostly in New York
    and New Jersey, small cities, and when you talk about this
    issue, the inaccessibility of this program comes up almost
    every single time. I think there's tremendous demand for this
    once this gets through.
        Mr. Miller. So linking this between the agencies for home
    builders, once the contamination issue is resolved and the
    funds are there where a developer can come in then and purchase
    the site, which frees the local agencies up from the debt
    they're dealing with, there could be a benefit tremendously for
    jobs in this country too. Is that not true?
        Mr. Kasko. That's absolutely correct, Congressman. We're
    always looking for new sites and for development sites. This is
    great potential, especially in the affordable housing arena for
    us to look at the sites. But the funding as well as the
    liability are two major issues. We've addressed a portion of
    one. We need to continue on the same path.
        Mr. Miller. And moving in this direction in the areas that
    these would be used, most home builders have difficulty dealing
    with the process because they want to development mainly in
    green areas, let's say, that are undeveloped. Lacking
    infrastructure, the costs are tremendous. Many people in areas
    like that don't want growth to occur, but these are inner
    cities, blighted areas where growth is needed because you're
    basically cleaning the environment and putting it to a better
    use, and basically revitalizing the local government through
    taxation. Is that not correct?
        Mr. Kasko. That is absolutely correct. This is a large
    component of our smart growth plan. While it's not exclusive to
    it, but revitalizing and redevelopment of the urban centers it
    has been long understood that to encourage development within
    the Urban areas, there's a number of issues that have to be
    addressed on what I like to call livability, and brownfields is
    a major part of that livability aspect, not just the schools
    and the infrastructure, but also the environment in which the
    people are living, and if you start cleaning up these sites,
    you're going to change, if you will, the image of the urban
    centers and hopefully be able to revitalize them like so many
    of us are trying to do.
        Mr. Miller. I want to thank all of you for your testimony.
    It's been really helpful. As the Chairwoman said, the reason we
    don't have a lot of people here is because obviously they
    support the bill or they'd be here complaining, griping and
    bellyaching, so I want to applaud you for taking your time and
    coming here to Washington to give us this expert testimony.
    Thank you very much.
        Chairwoman Roukema. Thank you.
        Welcome back, Mr. Chairman. I acknowledged your intense
    interest in this in the context of hopefully being able to
    expedite this through the Committee, and caring for it. We'll
    leave that up to you to make your own statement and
    observations here.
        Mr. Oxley. Thank you, Madam Chairwoman.
        Again, welcome to all our panelists, particularly Mayor
    Reid. Mayor Reid, you are to be congratulated on receiving the
    Great American Mainstreet Award. That's quite an achievement.
    It clearly puts Mansfield in a position to be one of the
    leaders and continue to be one of the leaders in the whole
    development area.
        It was interesting that in your prepared testimony, you say
    under the heading of ``Challenges'' complex is synonymous with
    brownfield redevelopment, and indeed I suspect that everybody
    can share that same frustration as we try to work our way
    through some of these difficult issues with the various leaders
    of government and involvement of the private sector, and the
    like.
        I'm wondering, part of this bill deals with revolving loan
    funds. Has Mansfield had experience overall with revolving loan
    funds? If so, are they useful in putting financing projects
    together?
        Ms. Reid. We use revolving loan funds on two levels. We
    have revolving loan funds for our downtown redevelopment. As
    you know, we have been able to put together a pool with the
    local banks and with some city dollars. That is a loan to small
    business people trying to get started and do something
    downtown.
        Then we also, as you know, were awarded a million-dollar
    grant which will be a revolving loan fund for brownfield
    remediation. That one is just getting started. And Congressman,
    as you know, the paperwork to get through this is about this
    high. We are trying to wade our way through it. We had a very
    nice young man from EPA in Chicago come in and tell us this was
    going to be really easy, and we believe him. So we're going to
    hope for the best. But again that will be a revolving loan
    fund. We also use our CDBG dollars into a revolving loan fund
    for the purpose of loaning money to landlords to do rental
    rehab which then is paid back to us, which we use to loan to
    another landlord to rehab another house. So in the ways that we
    use our CDBG money, you can see how important it is that we
    don't tie it up with a commitment to 108 dollars.
        Mr. Oxley. That's a good point. Clearly, the impetus behind
    this legislation CDBG has been appropriate in many indications.
    For example, Holiday Inn at Mansfield was begun with CDBG money
    and obviously turned out to be quite successful and anchor that
    area downtown with a renaissance theater next door, it became a
    perfect opportunity for the city to really put its best foot
    forward. Yours and past administrations were involved in that
    area. It was most appreciated. It was also most helpful to look
    at the profile of the former Ohio Brass, just to use one
    example. And the income sources that you have laid out, would
    we expect, let's say that we were to start all over again with
    Ohio Brass, would the passage of this legislation and the
    legislation that passed earlier last year, Representative
    Gilmore's bill that I mentioned, what would change in that
    overall structure of financing and putting this package
    together.
        Ms. Reid. First of all, that project has been a long time
    coming. We've been working on it, as you know, almost ever
    since I've been Mayor. It's been a project that we've really
    had to struggle to get the dollars for. We are very proud of
    the fact that we were able to get the former owners to
    contribute dollars. The project would probably have been
    speeded up by a minimum of 2 years, and maybe a maximum of four
    if we could have had access to other funding that we wouldn't
    have had to pledge our precious dollars to.
        We did have to scratch for money out of our general fund to
    cover part of it. When we take money out of our general fund,
    as you know, Congressman, it means that we have to look
    somewhere else to find money to pay our police and fire and to
    run our city. So in reality, the Ohio Brass project, if we
    would have had in place what we are now talking about and what
    Congressman Gilmore's bill did a year ago, we would not have
    had to take our precious general fund dollars in order to make
    this. But we were so committed to getting this done that
    there's other things we could have done with that money. A new
    fire station would be nice. But, you know, we put those things
    off because we had to make a commitment to do what we did at
    Ohio Brass.
        Mr. Oxley. That's a great case example of what can be done,
    and obviously with passage of this legislation, and the Gilmore
    bill working together facilitates a lot of these things even
    better.
        Madam Chairwoman, I thank you for your time. And let me
    just say to you that this bill appears to have broad bipartisan
    support and we would plan to put it on a fast track. And it's
    important I think that we send a strong signal and get a bill
    over to the other body soon enough that they can act on it and
    we can get it to the President. Coupled with what has already
    been accomplished on the liability side, this is a natural, and
    we're planning to move with as much speed as we possibly can on
    that.
        And I yield back.
        Chairwoman Roukema. I thank the Chairman and I thank him
    for his exceptional leadership on the Committee of the whole as
    well as for the subcommittee. I do thank the panelists. You've
    made an excellent case and again I assure you that your
    testimony will be made readily available to every Member of the
    subcommittee and the Full Committee.
        If you have further comments or additions, you have a 30-
    day time period to put it in the official record. Thank you
    again. We look forward to this being a major piece of
    legislation in this Congress. Thank you.
        [Whereupon, at 12:40 p.m., the hearing was adjourned.]
                                A P P E N D I X

                                 March 6, 2002

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