[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]



 
 LANDS OF LOST OPPORTUNITY: WHAT CAN BE DONE TO SPUR REDEVELOPMENT AT 
                      AMERICA'S BROWNFIELD SITES?

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

                                HEARING

                               before the

                       SUBCOMMITTEE ON FEDERALISM
                             AND THE CENSUS

                                 of the

                              COMMITTEE ON
                           GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                               __________

                             APRIL 5, 2005

                               __________

                           Serial No. 109-63

                               __________

       Printed for the use of the Committee on Government Reform


  Available via the World Wide Web: http://www.gpoaccess.gov/congress/
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                      http://www.house.gov/reform



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                     COMMITTEE ON GOVERNMENT REFORM

                     TOM DAVIS, Virginia, Chairman
CHRISTOPHER SHAYS, Connecticut       HENRY A. WAXMAN, California
DAN BURTON, Indiana                  TOM LANTOS, California
ILEANA ROS-LEHTINEN, Florida         MAJOR R. OWENS, New York
JOHN M. McHUGH, New York             EDOLPHUS TOWNS, New York
JOHN L. MICA, Florida                PAUL E. KANJORSKI, Pennsylvania
GIL GUTKNECHT, Minnesota             CAROLYN B. MALONEY, New York
MARK E. SOUDER, Indiana              ELIJAH E. CUMMINGS, Maryland
STEVEN C. LaTOURETTE, Ohio           DENNIS J. KUCINICH, Ohio
TODD RUSSELL PLATTS, Pennsylvania    DANNY K. DAVIS, Illinois
CHRIS CANNON, Utah                   WM. LACY CLAY, Missouri
JOHN J. DUNCAN, Jr., Tennessee       DIANE E. WATSON, California
CANDICE S. MILLER, Michigan          STEPHEN F. LYNCH, Massachusetts
MICHAEL R. TURNER, Ohio              CHRIS VAN HOLLEN, Maryland
DARRELL E. ISSA, California          LINDA T. SANCHEZ, California
GINNY BROWN-WAITE, Florida           C.A. DUTCH RUPPERSBERGER, Maryland
JON C. PORTER, Nevada                BRIAN HIGGINS, New York
KENNY MARCHANT, Texas                ELEANOR HOLMES NORTON, District of 
LYNN A. WESTMORELAND, Georgia            Columbia
PATRICK T. McHENRY, North Carolina               ------
CHARLES W. DENT, Pennsylvania        BERNARD SANDERS, Vermont 
VIRGINIA FOXX, North Carolina            (Independent)
------ ------

                    Melissa Wojciak, Staff Director
       David Marin, Deputy Staff Director/Communications Director
                      Rob Borden, Parliamentarian
                       Teresa Austin, Chief Clerk
          Phil Barnett, Minority Chief of Staff/Chief Counsel

               Subcommittee on Federalism and the Census

                   MICHAEL R. TURNER, Ohio, Chairman
CHARLES W. DENT, Pennsylvania        WM. LACY CLAY, Missouri
CHRISTOPHER SHAYS, Connecticut       PAUL E. KANJORSKI, Pennsylvania
VIRGINIA FOXX, North Carolina        CAROLYN B. MALONEY, New York
------ ------

                               Ex Officio

TOM DAVIS, Virginia                  HENRY A. WAXMAN, California
                     John Cuaderes, Staff Director
                       Shannon Weinberg, Counsel
                         Juliana French, Clerk
            Adam Bordes, Minority Professional Staff Member
                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on April 5, 2005....................................     1
Statement of:
    Dunne, Thomas, Deputy Assistant Administrator in the Office 
      of Solid Waste and Emergency Response, Environmental 
      Protection Agency; and John Stephenson, Director, Natural 
      Resources and Environment, Government Accountability Office     6
        Dunne, Thomas............................................     6
        Stephenson, John.........................................    20
    Plusquellic, Don, president, U.S. Conference of Mayors; James 
      E. Maurin, chairman, International Council of Shopping 
      Centers, board member, the Real Estate Roundtable; Jonathan 
      Philips, senior director, Cherokee Investment Partners, 
      LLC; and Douglas L. Steidl, president, the American 
      Institute of Architects....................................    46
        Maurin, James E..........................................    59
        Philips, Jonathan........................................    81
        Plusquellic, Don.........................................    46
        Steidl, Douglas L........................................   119
Letters, statements, etc., submitted for the record by:
    Dent, Hon. Charles W., a Representative in Congress from the 
      State of Pennsylvania, prepared statement of...............   141
    Dunne, Thomas, Deputy Assistant Administrator in the Office 
      of Solid Waste and Emergency Response, Environmental 
      Protection Agency, prepared statement of...................     8
    Kanjorski, Hon. Paul E., a Representative in Congress from 
      the State of Pennsylvania, prepared statement of...........   144
    Maurin, James E., chairman, International Council of Shopping 
      Centers, board member, the Real Estate Roundtable, prepared 
      statement of...............................................    62
    Philips, Jonathan, senior director, Cherokee Investment 
      Partners, LLC, prepared statement of.......................    85
    Plusquellic, Don, president, U.S. Conference of Mayors, 
      prepared statement of......................................    50
    Steidl, Douglas L., president, the American Institute of 
      Architects, prepared statement of..........................   121
    Stephenson, John, Director, Natural Resources and 
      Environment, Government Accountability Office, prepared 
      statement of...............................................    22
    Turner, Hon. Michael R., a Representative in Congress from 
      the State of Ohio, prepared statement of...................     4


 LANDS OF LOST OPPORTUNITY: WHAT CAN BE DONE TO SPUR REDEVELOPMENT AT 
                      AMERICA'S BROWNFIELD SITES?

                              ----------                              


                         TUESDAY, APRIL 5, 2005

                  House of Representatives,
         Subcommittee on Federalism and the Census,
                            Committee on Government Reform,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10:17 a.m., in 
room 2154, Rayburn House Office Building, Hon. Michael R. 
Turner (chairman of the subcommittee) presiding.
    Present: Representatives Turner and Foxx.
    Staff present: John Cuaderes, staff director; Shannon 
Weinberg, counsel; Juliana French, clerk; Stacy Barton, 
Representative Turner/chief of staff; Neil Siefring, 
Representative Turner/legislative assistant; Adam Bordes, 
minority professional staff member; and Cecelia Morton, 
minority office manager.
    Mr. Turner. Good morning. A quorum being present, this 
hearing of the Subcommittee on federalism and the Census will 
come to order.
    Welcome to the Subcommittee on Federalism and the Census's 
oversight hearing entitled, ``Lands of Lost Opportunity: What 
Can Be Done to Spur Redevelopment at America's Brownfield 
Sites?''
    In every community across this Nation there are abandoned 
parcels of property marring the faces of our cities and towns. 
Behind rusted chain link fences are broken windows and 
crumbling buildings. Beneath the surface there are substances 
contaminating the local environment, robbing the communities in 
which they exist of new jobs and other economic opportunities.
    There are an estimated 450,000 to 1 million of those 
parcels, known as brownfields, across our Nation, contributing 
to community blight and thus lowering property values and 
decreasing tax revenues. These sites lay abandoned and unused 
due to Federal environmental laws and regulations that 
encourage abandonment of contaminated property by creating 
disincentives for cleanup and redevelopment.
    Current Federal law triggers liability for remediation of 
contaminated properties once landowners have knowledge of the 
contamination. If redevelopment begins and contamination is 
discovered, the owner may be liable for remediation costs. If 
an owner abandons the property without disturbing the 
contamination, remediation costs may be avoided. The net effect 
of these laws and loopholes is the encouragement of abandoning 
brownfields.
    If we are to achieve our goal of restoring these properties 
to productive use and redeveloping them into centers of 
economic and community vitality, we must craft a Federal 
response to a federally created problem. We cannot leave 
brownfields and abandoned factories as monuments to their once 
productive past. The redevelopment of brownfields will create 
jobs, new living and shopping options, and spur the improvement 
or development of transportation and infrastructure.
    If we make redevelopment of brownfields more attractive, we 
can also help reduce urban sprawl and save green space. In my 
home town of the city of Dayton, over 50 acres of land 
surrounding our downtown are brownfields that would attract 
jobs and spur economic expansion--if the city had assistance in 
addressing the environmental contamination from past use of the 
parcels.
    In 2002, the President signed the Small Business Liability 
Relief and Brownfields Revitalization Act of 2001. While the 
law codified and secured independent appropriations for the 
EPA's brownfields programs, the shining accomplishment of the 
act was providing some relief from the daunting amount of 
potential liability for acquiring and attempting to redevelop a 
brownfield site. Specifically, the act limits liability for 
owners of land that is contaminated by adjoining property as 
well as for prospective purchasers of known contaminated 
property.
    The act also clarified the CERCLA ``innocent landowner'' 
defense and created additional liability relief by forbidding 
the Federal Government from intervening at sites being cleaned 
up under a State program except in certain circumstances.
    These are strong first steps in encouraging brownfield 
redevelopment, and the subcommittee looks forward to hearing 
from the EPA on the effect of the program and the new liability 
relief and what it has achieved in this field.
    We also look forward to hearing from the Government 
Accountability Office. Last year, I, along with Chairman Tom 
Davis, requested that GAO study the status of brownfield 
redevelopment across the Nation. GAO's report shows that 
stakeholders are generally positive about EPA's brownfields 
program but that additional incentives, such as a tax credit, 
are needed to spur brownfield redevelopment and really make a 
difference in communities across our country.
    Last year, I introduced H.R. 4480, the Brownfields 
Revitalization Act of 2004, to address these two greatest 
impediments to redevelopment--liability and redevelopment 
costs. My bill proposed a tax credit of up to 50 percent for 
qualified remediation expenses of brownfields in certain 
poverty rated areas. Specifically, credits are available for 
redevelopment projects where a local government entity includes 
a census tract with poverty in excess of 20 percent, although 
the project need not be located within that tract.
    H.R. 4480 also provides additional liability relief by 
allowing potential responsible parties that contribute at least 
25 percent of the remediation costs to receive liability 
release for 100 percent of the approved remediation plan and 
demolition costs.
    I plan to introduce this bill in the near future with a few 
key improvements. The revised bill will clarify the liability 
relief provisions, making clear that the relief is limited to 
the approved remediation plan, while liability for other types 
of claims, such as liability to adjacent property owners or for 
outstanding health complaints, is unaffected. The bill also 
provides that an environmental remediation plan be approved by 
the State environmental agency.
    The EPA's brownfields program has assisted a number of 
communities in brownfields assessment and cleanup. Stakeholders 
are appreciative of EPA's brownfields program, especially with 
the easing of the regulatory regime. However, when choosing 
between brownfields, grayfields and greenfields for development 
projects, it still comes down to a cost-benefit analysis. 
Unless we significantly address the cost of redevelopment and 
cleanup of these sites, the EPA's brownfield program will 
continue to affect only a few thousand sites, leaving a major 
gap and burdening many communities with land that cannot be 
redeveloped and that remain a blighting influence.
    We have two panels of witnesses before us to help us 
understand the state of brownfields redevelopment efforts 
nationwide as well as the impact of the EPA's brownfields 
program, only 2 years into its statutory existence. We will 
also hear opinions from stakeholders on their ideas for 
improving and implementing the EPA's brownfields program in 
order to encourage more aggressive redevelopment.
    First, we will hear from Mr. Thomas Dunne, the Deputy 
Assistant Administrator in the Office of Solid Waste and 
Emergency Response at the Environmental Protection Agency. 
Second, we will hear from Mr. John Stephenson, Director of the 
National Resources and Environment team at the Government 
Accountability Office.
    The second panel of witnesses consists of representatives 
of the stakeholder community.
    First, we will hear from the Honorable Don Plusquellic, 
Mayor of Akron, OH, on behalf of the U.S. Conference of Mayors. 
Mayor Plusquellic, I understand that you have a plane to catch, 
and I hope that you will be able to stay for at least a little 
portion of the questions and answers, but I certainly know that 
you will be excusing yourself and will not be able to stay for 
the rest of the hearing.
    After Mayor Plusquellic's testimony, we will hear from Mr. 
James Maurin as chairman of the International Council of 
Shopping Centers and as a board member of the Real Estate 
Roundtable.
    Rounding out our second panel, we will hear from Mr. 
Jonathan Philips, senior director of Cherokee Investment 
Partners, and Mr. Doug Steidl, president of the American 
Institute of Architects.
    I look forward to the expert testimony that we have before 
us today on the panel of leaders that are present. I thank 
everyone for their time.
    As a reminder for those who want to view this hearing, it 
is on our Web cast of reform.house.gov.
    [The prepared statement of Hon. Michael R. Turner follows:]
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    Mr. Turner. I now recognize Ms. Foxx, if she has an opening 
statement.
    Ms. Foxx. Mr. Chairman, I do not have any opening 
statement. Thank you.
    Mr. Turner. I appreciate you being here today.
    We will now start with the witnesses. In this committee we 
do swear in our witnesses. If you gentlemen would stand and 
raise your right hands.
    [Witnesses sworn.]
    Mr. Turner. Let the record show that all witnesses 
responded in the affirmative.
    We will begin our testimony with Mr. Dunne, Deputy 
Assistant Administrator with the EPA.

 STATEMENTS OF THOMAS DUNNE, DEPUTY ASSISTANT ADMINISTRATOR IN 
THE OFFICE OF SOLID WASTE AND EMERGENCY RESPONSE, ENVIRONMENTAL 
   PROTECTION AGENCY; AND JOHN STEPHENSON, DIRECTOR, NATURAL 
  RESOURCES AND ENVIRONMENT, GOVERNMENT ACCOUNTABILITY OFFICE

                   STATEMENT OF THOMAS DUNNE

    Mr. Dunne. Thank you, Mr. Chairman and Ms. Foxx.
    I am appearing today to discuss EPA's Brownfield program 
and address the recommendations made in the Government 
Accountability Office's report on brownfield redevelopment. I 
will summarize my statement, but I would also ask my statement 
be included in the record.
    More than a decade ago, EPA identified a problem facing 
local communities in their efforts to develop properties that 
are contaminated or potentially contaminated by hazardous 
substances. The private and public sector were extremely 
hesitant to get involved in these sites, now known as 
brownfields.
    Ten years ago, EPA began providing seed money through 
grants to local communities to inventory and assess 
contamination at brownfield properties. Congress also enacted 
legislation that provided tax incentives to promote private 
sector cleanup and development at brownfields. Over the years, 
EPA added grants to capitalize revolving loan funds for clean 
up. The Agency also provided job training grants to promote 
employment opportunities in brownfield communities.
    Since EPA's initial efforts, States, tribes, local 
governments, and nonprofit organizations have begun to focus on 
brownfields cleanup and development. In the year 2002, 
President Bush signed into law the Small Business Liability 
Relief and Brownfields Revitalization Act. This new Brownfields 
Law broadened the reach of EPA's brownfield program and 
provided statutory liability protection to promote private 
sector participation in brownfields cleanup and development.
    Under the new Brownfields Law, EPA can now award direct 
cleanup grants to public sector and nonprofit property owners. 
The new law also broadened the definition of what could be 
considered a brownfields property. EPA can now award its 
brownfields grants for petroleum-contaminated properties, mine-
scarred lands, and sites contaminated with controlled 
substances.
    I am pleased to report that EPA's brownfields program has 
been able to produce significant results. As of March 2005, EPA 
and its grant recipients have performed more than 6,800 
property assessments; and as of March 2005, brownfield grantees 
have leveraged $6.6 billion in cleanup and redevelopment 
dollars, which has also leveraged more than 30,000 jobs.
    The public investment in brownfields has proven to be a 
wise investment. Studies show that for every public dollar 
spent on brownfields cleanup and redevelopment, $2.50 is 
leveraged in private investment.
    One thing is clear, that, notwithstanding all the efforts 
of Federal, State and local governments, we will never be able 
to clean up the many hundreds of thousands of brownfield 
properties scattered throughout our country without the funding 
and know-how of the private sector.
    I would like to take a minute now to comment on the GAO 
report.
    EPA agrees with GAO that more had to be done to develop 
additional measures to quantify brownfields program 
accomplishments. EPA has developed a new data collection 
mechanism, the Property Profile Form, to collect information 
from site assessment, cleanup and revolving loan fund grantees. 
Further, a nationwide data collection effort is under way that 
will collect data from the years 2003 and 2004 grantees. We 
believe that this new data will enable EPA to tie program 
results with property-specific activities to better gauge 
brownfields program progress.
    EPA is also working with State and tribal officials to 
develop performance measures to gauge the impact of the EPA's 
funding on the results produced by their voluntary cleanup 
programs. The performance measures will tie performance to the 
number of acres cleaned up and made ready for reuse or 
anticipated reuse.
    In addition, EPA agrees with GAO that more efforts are 
needed to monitor revolving loan fund grants to determine why 
they have been underutilized. EPA is committed to improving 
revolving loan fund performance and ensuring that, if grant 
funds are not being used, those grant funds will be closed out 
or grantees will be required to transition old loan fund grants 
to the new Brownfields Law program authority. To that end, I 
issued a memorandum to EPA regions in September 2004 to contact 
revolving loan fund grantees and request that they transition 
or close out old loan funds.
    Mr. Chairman, that completes my statement. I will be 
pleased to answer any questions that you and other members of 
the subcommittee have.
    Mr. Turner. Thank you.
    [The prepared statement of Mr. Dunne follows:]
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    Mr. Turner. Mr. Stephenson.

                  STATEMENT OF JOHN STEPHENSON

    Mr. Stephenson. Mr. Chairman, thank you for this 
opportunity to discuss our report and recommendations on EPA's 
brownfields program. The report, as you know, was issued to you 
and Chairman Davis on December 2004.
    Over half a million brownfield sites, such as former 
industrial properties, gas stations and warehouses, sit 
abandoned or unused across the country. These sites have 
remained undeveloped for a number of reasons, including 
uncertainty about contamination, limited resources and fear of 
liability for cleanup costs. Cleaning up and redeveloping these 
sites cannot only protect human health and the environment but 
also improve local tax bases and encourage smart growth by 
slowing development of open land.
    While EPA has the lead Federal role in encouraging 
brownfields development, other Federal agencies, State and 
local governments, commercial lending institutions and real 
estate developers also fund activities to help redevelop 
brownfields. EPA provides grants that support efforts to 
assess, clean up and redevelop properties, help create jobs 
through new economic development and leverage cleanup and 
redevelopment funding from other sources. While the total 
amount of EPA's grant funds is small, about $400 million since 
the program began, this investment is intended to leverage more 
than $10 billion in investments from other sources.
    In developing our report, we spoke to numerous grant 
recipients, State and local government officials, real estate 
developers and other stakeholders, and they all agreed that 
EPA's program provides an important contribution to brownfields 
cleanup and redevelopment. According to them, EPA grants often 
provide seed money during the initial stages of brownfields 
redevelopment for activities such as identifying the extent of 
contamination and estimating the cleanup costs that private 
lenders typically will not fund.
    Stakeholders also said that EPA grants support 
redevelopment of sites with complex cleanup requirements, less 
desirable locations or liability issues, sites that might not 
be redeveloped if left to normal market forces. In addition, 
State officials told us that EPA grants have been crucial to 
establishing and expanding the scope of their programs to 
encourage voluntary cleanup of brownfield properties.
    While stakeholders generally praised the EPA's program, we 
believe that the Agency could do a better job in providing to 
the Congress more useful information on the program's 
accomplishments, information needed to determine whether the 
program is in fact achieving its goals. For example, EPA does 
not currently report program results like the number of acres 
cleaned up or the impact of grants to States for their 
voluntary cleanup programs.
    Finally, stakeholders identified three options to improve 
or compliment EPA's brownfield program.
    First, they suggested eliminating the provision of the 
brownfield act that makes landowners who purchased the 
brownfields property before January 2002 ineligible for grants. 
Stakeholders strongly believe that this clause discourages 
brownfields redevelopment by limiting the number of potential 
grant recipients.
    Second, grant recipients and other stakeholders suggested 
changes to expand the use of EPA's revolving loan funds. As of 
November 2004, States had loaned out about $29 million or only 
about 17 percent of the $168 million provided for this purpose. 
According to stakeholders, the stringent technical and 
administrative requirements to establish a revolving loan fund 
have discouraged its use.
    Additionally, stakeholders believe that EPA could achieve 
greater results by giving priority to applicants with proven 
administrative expertise or to coalitions of agencies that 
could consolidate administrative functions. This could produce 
economies of scale by spreading the up-front administrative 
costs associated with setting up a fund over a greater number 
of loans.
    Third, stakeholders supported a brownfield tax credit 
allowing developers to offset a portion of their Federal income 
tax with cleanup expenditures. Grant recipients, developers and 
other groups with brownfield expertise generally agree that 
such a tax credit could attract developers to brownfield sites 
on a number of national issues. I am sure you will hear more 
about these stakeholder ideas on your second panel.
    To enhance Federal efforts to support brownfields 
redevelopment, we recommended in our December 2004, report to 
you that EPA, one, develop additional performance measures to 
gauge program achievements; two, weigh the merits of revising 
the eligibility date provisions of the brownfield act; three, 
monitor and determine why revolving loan funds have been 
underutilized; and, four, consider giving priority to entities 
with revolving loan fund expertise when awarding these grants. 
And, as you have heard, EPA agreed with our recommendations and 
is taking actions to implement them.
    Mr. Chairman, that concludes my summary; and I will be 
happy to answer questions as well.
    Mr. Turner. Thank you.
    [The prepared statement of Mr. Stephenson follows:]
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    Mr. Turner. I thank both of you for being here and for the 
time that you have put into this and again for EPA the effort 
that you continue to put into what is an important issue for 
our communities. As you know, not only do brownfields represent 
an economic opportunity, they are many times a blighting 
influence for people who either own property near them or for 
families that live around them.
    What I would like to focus today in the area of questions 
really are issues of economics of brownfield redevelopment. It 
strikes me in reading both the GAO report and the testimony 
from EPA that many of the things that we talk about in the two 
testimonies do not quite hit the economics that we have in many 
of brownfield sites where the cost of cleanup and demolition of 
buildings that are a nuisance upon the real estate might exceed 
the value of the property and that the economic marketability 
for these properties to be addressed and redeveloped just is 
not there. So I want to go through a series of questions that 
really look to the economic problem and then the gap that we 
have in being able to address it.
    My first question is really to ask that I think both of you 
would agree that brownfields are a federally created problem, 
that the issue of the brownfields being areas where a 
potentially responsible party or a landowner has disincentives 
for its redevelopment, that our current laws and regulations 
actually encourage abandonment of the property; and I want to 
know if both of you agree with that.
    Mr. Stephenson. Because of potential liabilities, you mean?
    Mr. Turner. Correct.
    Mr. Stephenson. The liability requirements established in 
the CERCLA and the Superfund program?
    Mr. Turner. Yes.
    Mr. Stephenson. Those liabilities were created in fact by 
Federal law, yes.
    Mr. Dunne. I would agree with that.
    Mr. Turner. In situations where the costs of cleanup of the 
property exceed its market value and where there is no 
potentially responsible party that currently exists, either 
they have ceased operating as a business or if they are an 
individual corporate entity that is no longer able to be 
identified as a successor entity and the costs exceed the 
cleanup, would you both agree that there is no private sector 
incentive, there currently is no ability for the private sector 
to come in and address the redevelopment of that property?
    Mr. Dunne. I would agree with that.
    Mr. Stephenson. Yes.
    Mr. Turner. In looking at the EPA's loan fund program--and, 
first off, let me tell you that I think everyone agrees, as the 
GAO report identifies, that the EPA's programs are very 
important and have assisted a number of communities. However, I 
do believe that, as the GAO report identifies, there is a gap 
in our ability to address the need.
    The loan fund itself, does recognize that the funds are 
going to be returned in some way; somehow the property or 
project or the individual receiving the loan is going to 
economically have a way to return the funds. Could you discuss 
that, Mr. Dunne, for just a moment as to how that might not be 
able to assist people who have a property that isn't going to 
be market viable as it is redeveloped, that is not going to 
produce the proceeds that would be able to be applied to the 
loan? Has that been an impediment perhaps in some of the loans 
being applied to some of the more difficult sites?
    Mr. Dunne. I don't think it's the repayment ability so far 
that has surfaced as a problem. Banks do have bad loans that 
they have to cover. I think it is in the early stages of EPA's 
working on revolving loan funds that it probably wasn't 
stringent enough in terms of looking at a business plan. We are 
an environmental agency. We are not a banking agency. And one 
of the things that we have learned and agree with GAO is that 
we have to look at our criteria and take a look at 
organizations that have the ability to manage the loan and also 
manage a Federal grant because it is a grant. But the term 
revolving loan fund is significant in terms of what it says. 
The money will be returned to a fund that can be loaned out 
later.
    So I think that it's a good idea for us to not only tighten 
the criteria in terms of a business plan but make sure that the 
organizations that are going to be the recipients of these 
grants have a great opportunity to be able to be successful at 
making loans so they can have a viable revolving fund.
    Mr. Turner. Mr. Stephenson, your report addressed some of 
the difficulty in the loan fund's success.
    Mr. Stephenson. What we heard from stakeholders were a lot 
of the up-front costs associated with establishing the fund and 
administering the fund itself was, in fact, an impediment. You 
have set up a payment schedule, an interest rate, etc. This is 
a relatively new fund, so it's not yet self-sustaining. You 
receive payments over a period of time, and so there isn't a 
funds per se. It's all been loaned out to the extent that they 
can loan it out. But what we heard from stakeholders was it's 
primarily that up-front expertise you need to establish the 
funds itself which discourages its use. Frankly, some 
developers found it easier just to go to the bank and get a 
loan.
    Mr. Turner. Mr. Dunne, in your testimony you indicate that 
the assessment grants that have been provided have resulted in 
more than 6,800 assessments. The grant programs, the 
assessments, the loan program, do you have any quantification 
that you can provide that would tell how many brownfield sites 
have gone through an EPA process where they have received 
financial assistance and have resulted in cleaned up and viable 
redeveloped property?
    Mr. Dunne. Currently, as I mentioned, Mr. Chairman, we are 
putting together a property profile of which I think we will 
have for 2003 and 2004 fairly quantifiable information that 
will demonstrate the performance of the program. We recognize 
the fact that there are so many brownfield sites in this 
country that the number of assessments we do is fairly minute 
compared to the overall number, but we also recognize the fact 
that we will never be able to deal with all 450,000 to a 
millionsites. Some of them just aren't going to be viable. But 
we are looking for more and more ways to quantify the positive 
nature of the program and the things that are successful so 
that we can look for more successful ways of providing these 
funds to the community so they can provide job opportunities 
and other benefits.
    Mr. Turner. As you go through the assessment process, does 
your program include any incentives for PRPs, potential 
responsible parties, to come to the table and participate in 
the assessment? So many times they have knowledge that would be 
very important for the success of the assessment and for 
determining any environmental remediation plan.
    Mr. Dunne. When you say potential responsible parties, in 
the Superfund context they are not eligible for brownfields, 
nor should they be in our lexicon right now. We generally want 
to provide the funds and let the local entities deal with the 
developers and the bankers and the other people who are 
involved. We don't want to be intrusive from EPA's position in 
trying to dictate from Washington how to sort out individual 
problems at the local level.
    Mr. Turner. You made an important point, and that is the 
difference between brownfield and Superfund. Could you 
elaborate on that for a moment? Because people frequently get 
concerned when we talk about trying to address the brownfield 
issue, that we might impact Superfund.
    Mr. Dunne. As you know, in Superfund law, if we know of 
responsible parties or even one party, they could be held 
liable for cleaning up a whole site. Usually, contamination is 
much worse at a Superfund site than it will be at a brownfield 
site. So I think we are talking about a magnitude of difference 
that's quite wide. And I think it's good that this law--
brownfield's-- emanated out of the Superfund law because we 
were running into the concern that there were a number of local 
governments who had this property but they wouldn't score high 
enough with the properties to be put on the national priority 
list. So if they are on the national priority list now they are 
not eligible whatsoever for brownfields funding. So, by and 
large, we are dealing with abandoned properties or you are 
dealing with private property owners who have this site who--
because of the liability--do not want to let go of the site.
    That has changed because of brownfields. There are people 
now that are willing to come in as prospective purchasers and 
take this property over and redevelop it if they assure that 
they are not going to be liable like they would be under a 
Superfund project.
    Mr. Stephenson. It does have to do with the seriousness of 
the contamination as well, but it is important to note that 
it's potential contamination on a brownfield site. And in fact 
a lot of EPA's assessments have shown that at least 30 percent 
of the sites assessed don't have any contamination at all.
    Mr. Turner. I thought that was encouraging in the 
information that we had. But, under brownfields, an individual 
property party that was responsible for the contamination of 
the brownfield site, they do have liability, do they not, for 
the cleanup?
    Mr. Dunne. Yes.
    Mr. Turner. Many times the fact that they have that 
liability can result in them trying to avoid the liability by 
the abandonment of the property or by not fully participating 
in the redevelopment or the remediation of the property; and in 
doing an assessment, I believe that many times if we could 
bring those parties to the table where they would participate 
in the assessment process, in the remediation process, that 
their knowledge could be very important for our success. I was 
wondering if, in your grant programs, your assessment programs, 
your revolving loan program, if you had any incentives that 
could be provided for those individuals to come to the table 
and participate? I understand your statement of you want the 
communities to be on the ground, so to speak, more involved, 
but is there any mechanism, recognizing that the liability that 
those individuals have, that EPA has to bring them and assist 
them in coming to the table?
    Mr. Dunne. Well, we don't have anything under the statute 
that is going to relieve them of the liability. So in that 
respect I guess the answer is no.
    Mr. Stephenson. Can I add something, Mr. Chairman?
    Mr. Turner. Please.
    Mr. Stephenson. Brownfields does add the innocent landowner 
defense which property owners on contiguous property, if they 
have exercised their due diligence and so forth, do have 
liability limitations. So you're not automatically liable for 
all the cleanup. Brownfields does afford additional liability 
limitations even beyond what was done under CERCLA. It sort of 
codifies the principles under CERCLA as well.
    Mr. Turner. Getting back to the individual that was 
responsible for the contamination, with the grant programs and 
with the revolving loan funds, does EPA in any way under the 
area of brownfields pursue those individuals to recapture the 
grant moneys that are provided or the loan funds that are 
provided?
    Mr. Dunne. No.
    Mr. Turner. Is there a statutory reason for that?
    Mr. Dunne. We don't have enforcement authority under 
brownfields to go do that.
    Mr. Turner. Who would have the responsibility for 
pursuing----
    Mr. Dunne. Well, States often have enforcement programs 
that they could invoke.
    Mr. Turner. I was very encouraged by the information in 
your testimony about the redevelopment of brownfields resulting 
in the saving of greenfields. Specifically, you cited the 
statistic for every acre of brownfields reused you are saving 
4\1/2\ acres of green space. Could you tell me how those 
figures were arrived at? Because I think this is an important 
aspect for us to focus on, that it's not just the issue of 
cleaning up these sites and bringing economic opportunity back 
to these sites but it's also the opportunity to conserve, which 
is certainly an environmentally conscious way to proceed.
    Mr. Dunne. We had a study done by George Washington 
University that defined this problem and the successes in terms 
of saving these acreages. So we would be happy to supply you 
with any of that background.
    Mr. Turner. Mr. Stephenson, you had indicated that, in 
looking to stakeholders, that you did find a degree of support 
for a tax credit for addressing the remediation costs. My bill, 
House bill 4480, would provide a tax credit that could help 
address those properties where the cost of contamination 
exceeds the value of the property, giving them more--a 
marketability. Could you tell me, as you pursued your study and 
report of the feedback you received, why is it that you believe 
that a tax credit was something that is welcomed?
    Mr. Stephenson. Well, any incentive like that to offset the 
initial cost of investment in a property is welcomed; and the 
tax credit certainly falls into that vein.
    Mr. Turner. And from EPA's perspective a tax credit is a 
vehicle that you believe would also be able to accomplish 
subsidizing that economic viability for the properties.
    Mr. Dunne. EPA is not in the tax policy business, Mr. 
Chairman, so I'll be careful about how I answer that. Maybe you 
should have a Treasury Department official up here. But 
certainly if it furthers the objectives of the brownfield 
program, tax incentives would be a very viable tool to have.
    Mr. Turner. Gentlemen, do you have anything else you would 
like to add before we conclude our first panel?
    Mr. Stephenson. No, we're just encouraged that EPA has 
accepted our recommendation as implementing them; and we think 
the brownfields program has a lot of promise.
    Mr. Turner. Gentlemen, thank you very much.
    We will go then to our second panel.
    Gentlemen, I appreciate you being here. We have on our 
second panel the Honorable Don Plusquellic, president, U.S. 
Conference of Mayors; James E. Maurin, chairman, International 
Council of Shopping Centers; Jonathan Philips, senior director, 
Cherokee Investment Partners; and Douglas Steidl, president, 
the American Institute of Architects.
    Gentlemen, would you please stand to receive the oath.
    [Witnesses sworn.]
    Mr. Turner. Let the record show that all the witnesses have 
responded in the affirmative.
    Since we understand that the mayor has a plane to catch, we 
are going to let him give his testimony and answer questions, 
and I understand that he will be leaving us. Mayor.

 STATEMENTS OF DON PLUSQUELLIC, PRESIDENT, U.S. CONFERENCE OF 
  MAYORS; JAMES E. MAURIN, CHAIRMAN, INTERNATIONAL COUNCIL OF 
  SHOPPING CENTERS, BOARD MEMBER, THE REAL ESTATE ROUNDTABLE; 
    JONATHAN PHILIPS, SENIOR DIRECTOR, CHEROKEE INVESTMENT 
 PARTNERS, LLC; AND DOUGLAS L. STEIDL, PRESIDENT, THE AMERICAN 
                    INSTITUTE OF ARCHITECTS

                  STATEMENT OF DON PLUSQUELLIC

    Mr. Plusquellic. Thank you, Congressman. I'm very pleased 
to be here on behalf of the U.S. Conference of Mayors and the 
citizens of my city, Akron, OH.
    I want to thank my good friend, Congressman Mike Turner, 
who invited me here to speak. Many of us throughout the world 
of mayors across the country as well as many of us in Ohio know 
of the great job that you did as mayor of Dayton, and I am 
proud that you have not forgotten your roots and your 
background as you joined this fine group of individuals here as 
a Congressman. You remembered the problems that face cities 
across this country, and we appreciate very much your support 
of the community development block grant program, the 
brownfields issue that you have been so engaged in discussing 
and attempting to find solutions as well as other urban issues.
    I want to acknowledge all of the fellow panelists. In one 
way or another they have all helped or assisted the U.S. 
Conference of Mayors and the many issues that face us in 
particular in brownfields over the past number of years.
    I want to give sort of a personal perspective here. Thirty-
two years ago I was elected city councilman in Akron; and at 
that time, watching the mayor and his activities, I can tell 
you that, for the most part, mayors, pretty much indicative of 
mayors across the country, we are sort of cheerleaders with 
economic development. The private sector was over here and did 
their thing. The public sector was over here. But as we 
transitioned in a terrible process that we went through, 
unfortunately, with the loss of 35,00 rubber jobs, we on the 
public side, the mayors and council members and community 
leaders almost on every level have had to be directly engaged 
and involved in what we call economic development.
    Akron has repositioned itself as a diverse manufacturing, 
technology, education and research center; and a couple of 
years ago Newsweek magazine picked Akron as one of America's 
top 10 hot tech cities.
    When I became mayor, I realized early on the importance of 
being directly involved in the redevelopment efforts of our 
community, and now I spend more than half of my time dealing 
directly with businesses, business leaders. I think the 
question remains, what is the proper role for local, State and 
the Federal Government to play in facilitating the economic 
development and specifically brownfields redevelopment?
    Mayors and local governments are responsible, I think, in 
today's complex and competitive world, this global marketplace 
we all live in, to facilitate and be responsible for assisting 
businesses to retain and create jobs. We are always actively 
recruiting and trying to work to retain jobs as well as 
facilitate new expansions. As a matter of fact, the plane I 
have to catch is to go overseas where I will be attending at 
least two different trade missions or participating in at least 
two different trade missions.
    But in our cities we find it impossible to get the job done 
without the proper tools and resources, and many of those are 
not directly related to the public side. Regarding the benefits 
of brownfields, for instance, or the redevelopment of 
brownfields in our communities, our U.S. Conference of Mayors 
last survey shows that 121 cities have successfully redeveloped 
close to 1,200 brownfield sites consisting of nearly 11,000 
acres of land and the creation of over 117,000 jobs.
    While that is very commendable and those successes are 
wonderful examples of what local governments have had to do or 
forced to do, there's an estimated 500,000 brownfield sites 
that could be redeveloped, saving greenfields and providing 
opportunities for more job opportunities in our community.
    Many cities, I would argue, have done a good job of 
developing what might be described as low-hanging fruit or what 
we might describe as light tan brownfields, those areas that 
are not completely contaminated or with little contamination or 
in a very desirable location, making it beneficial for 
businesses to take a chance on developing. But this is 
certainly not applicable to some cities--Youngstown, OH would 
be one--where the difficulties of hemorrhaging of jobs out of 
their communities is so overwhelming or the population loss or 
the difficulties in bringing back economic development is so 
great or in those cases where the brownfields are so 
contaminated that we literally have people walking away from 
them. Those sites are very difficult to get people to 
redevelop, and those tough cases are really what I think your 
bill will help to address.
    The current market conditions really make it impossible for 
a private business person to want to take on that liability 
issue in particular. Even if the idea of cleaning up the site 
is something that they can take within their budget or within 
their timeframe, most developers just aren't anxious to take 
the chance on those environmentally contaminated sites; and 
without those extra incentives it's impossible to get those 
developers back.
    The mothballing of sites is probably the greatest problem 
that we face, where companies realize that it's so expensive 
and the liability so great that they just decide to wall it 
off, fence it off, and leave it. And in cities across this 
country there's really no motivation without some kind of an 
incentive.
    As I address the future, I want to say that the Nation's 
mayors very much appreciate President Bush's leadership by 
signing the brownfields bill into law. The law has resulted in 
a boost in our efforts to redevelop some of those sites. This 
program needs to continue and needs to be fully funded, 
especially the money that is targeted toward local governments 
efforts.
    Other programs that have been successful include the 
Brownfields Showcase Communities program and the EDA program 
that targets brownfields as well as HUD's BEDI program.
    But the one thing that has been missing is this incentive 
that you discussed with the first panel for the private sector 
themselves to spur their interest in redeveloping these sites, 
and that's why we are extremely pleased and excited about your 
bill, Congressman, with the tax incentive. It is very similar 
to a program already existing in the Federal Government, the 
Historic Tax Credit Program, which has seen considerable 
success in Akron in reusing our older commercial and industrial 
buildings.
    A key component that I want to talk about is the incentive 
for the original responsible polluter to participate. Even if 
that company only contributes 25 percent of the remediation 
costs, they receive liability release for 100 percent of the 
approved plan demo and remediation costs. I think this is a 
particularly important issue, and I want to say and I have 
stated this before to you publicly, that it is one that the 
Conference of Mayors supports.
    We have always believed in this general rule that the 
polluters should pay, and at first blush that always seems to 
be the right position to take. We know the result, though, is 
that companies mothball sites and walk away; and we need to 
have something that motivates the holder of the land to at 
least provide an assessment of the property and determine 
whether or not we can participate in helping to bring it back.
    I want to also say that many of those sites are in the most 
economically disadvantaged areas. To me, that means the people 
who need the jobs the most are at a disadvantage because they 
have sites close to them that could be redeveloped if we had 
something that really provided that incentive. So I am very 
much excited about that part of your proposal, and we want to 
work with you from the Conference of Mayors.
    We understand the difficulty in not only the legal 
liabilities issues, many of the other issues that both extremes 
talk about when they talk about a bill dealing with these 
environmental issues, but in a time when we really need to be 
focusing on creating jobs, reutilizing resources and, I would 
add, preserving our green spaces, that the brownfields 
redevelopment is a way to accomplish these goals in our 
metropolitan economies that mean so much to the Nation's 
economy.
    I want to take just a moment before I answer questions to 
sincerely thank you for the opportunity to quickly share with 
you my perspective as mayor regarding the importance of 
brownfields redevelopment and your creative way of trying to 
address the issues that you know all too well, coming from an 
older, industrialized city, the importance that brownfield 
redevelopment can have not only to our general areas of concern 
like tax base but truly in redevelopment of neighborhoods and 
providing job opportunities where they were needed. So we look 
forward to working with you to continue this work to bring back 
our communities, our neighborhoods, and I will be happy to 
answer any questions that you might have.
    [The prepared statement of Mr. Plusquellic follows:]
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    Mr. Turner. Mayor, the EPA, when they were addressing us, 
talked about acknowledging that this is a federally created 
problem. They acknowledged that the current Federal laws and 
regulations encourage abandonment, and they acknowledged that 
the current programs that provide assistance for assessment or 
cleanup are having what they classified as a minuscule impact 
on the number of brownfields that are out there.
    You talked about tax base and, knowing that cities are not 
structured in a tax revenue collection manner to bring in 
dollars that are solely for economic development, you are 
focusing on fire, police, providing basic services. Since the 
Federal dollars there are minimal and the problem is federally 
created, what do you do as a mayor when you're going out and 
identify a site, you are trying to bring jobs to your 
community? You have, as most cities do, an issue of the 
availability of land. You have a parcel that has all the 
infrastructure that's there. It's an attractive site, 
locationwise. There aren't Federal resources available to you. 
How do you go about trying to find funds to environmentally 
remediate and address these sites for redevelopment?
    Mr. Plusquellic. Well, in this difficult time, I would 
remind everyone in Washington and Columbus, OH, and all the 
State capitals around the country that we're all suffering the 
consequences of whatever it is that our country is going 
through. It's not just the Federal level and State level. So 
local governments are even more impacted by the economic 
conditions; and in cities where older industrial properties 
have supplied the economic strength of our country, the jobs, 
the tax base for our countries but have been left behind in 
this migration, in this global competition, it is even more 
difficult for those communities to find the local resources, 
which is why this is a very difficult issue for many of us.
    In some instances, it is so absolutely necessary that we've 
gone out--I have personally on behalf of the city--to get 
involved with sites because they have such a negative impact on 
the surrounding area that we've started a process of trying to 
clean up or clear up or at least make the initial assessment of 
the property because it has such a devastating effect to the 
property around it.
    I would suggest the biggest eyesore in Summit County, maybe 
in northeast Ohio, was located in the northernmost building of 
the former B.F. Goodrich complex. The B.F. Goodrich complex 
itself had been sold and was starting to undergo a 
revitalization. Meanwhile, there were two buildings left in the 
northern end, closest to downtown, closest to our local 
newspaper and the folks who looked at it every day out the 
window, and it had an impact from everybody coming into town on 
that side, the south side of downtown Akron. We started out 
spending our own money trying to start to assess, first of all, 
what the cleanup cost would be.
    We finally received an inquiry from a company that wanted 
to move to Akron from outside of the State. So we spent our own 
dollars, over $3 million in cleanup costs, and didn't have time 
to wait for a Federal program or a State program to kick in. We 
had an opportunity to bring in 200 to 300 new jobs, for the 
most part, to Akron, so we ended up ourselves finding a way, 
struggling with our budget difficulties, to come up with the 
local dollars that were needed. And we accepted the liability 
because, at that time, it was questionable whether or not we 
were going to have the State system in place to get the letter 
of no further action and the covenant not to sue. So we found a 
way to make it work.
    But in many cities that just isn't possible, and in many 
instances we don't have companies that can wait for us to go 
and do the assessment when we have a real, live businessperson 
ready to go on a site, which is another part of this process 
that personally I think it would be worthwhile to have a system 
where people are involved early on in not only identifying but 
doing the assessment so that you know what the costs are and 
you know the time period that you are dealing with. That delay 
when you do have a businessperson who you finally find who's 
willing to take that risk and the unknown of how long it might 
take and the costs they might incur or the city it might incur 
makes it more difficult to find businesses to locate in those 
areas. That's just an added problem, I think, that needs to be 
addressed as well.
    Mr. Turner. Being a mayor, you have sat across the table 
from potential developers that are coming in and you're 
discussing with them a site. There has been a change in the 
law, obviously, with respect to liability. If someone comes in 
and buys a site, they may be able to avoid the liability for 
the cleanup of the site.
    But one thing that seems to me to be still a disincentive, 
because we don't have a vehicle like the tax credits that will 
subsidize the cleanup, is that an individual who looks at 
redeveloping a site still has to weigh the possibility that 
they would lose their capital investment, that the value of the 
property, once it is redeveloped, if contamination is 
discovered to be more expensive than was thought or further 
contamination is found after they have undertaken investment in 
the property, that risk which they don't have in a greenfield, 
which is separate from the issue of just them being personally 
liable for the cleanup, but that their value that they have 
invested in the property might be lost or devalued is also a 
disincentive. Have you had individuals when you are sitting 
across the table trying to encourage them to go into a site 
that have raised the issue of that risk?
    Mr. Plusquellic. Well, the other added part is getting a 
construction loan and then permanent financing for a project. 
And something that a developer normally does--I have actually 
literally been in the same example that I used. The developer 
was an Akron, committed, dedicated person who wanted to do the 
right thing, didn't have a lot of experience in redevelopment 
in brownfield sites, jumped in and started spending his own 
cash in anticipation of getting construction loans and 
literally had the bank pull out.
    I sat in this meeting and negotiated with the banks to get 
the loans available for him that I've never had to do before. 
But it was because of one overriding reason, and you just 
touched upon it. The potential for the liability was so great 
that the banks didn't want to have any part in loaning the 
money, either in a short-term construction loan or in permanent 
financing; and so we had to help them structure that. The city 
of Akron took on all of the liability in the future for any 
environmental cleanup that was required beyond the $3 to $4\1/
2\ million that we spent. We have continuing monitoring wells. 
We do a number of things to test and provide information to the 
State EPA.
    So we ended up taking the risk, but absolutely that is a 
problem for not only the developer but for anybody thinking 
about loaning money, the concern about the long-term liability.
    Mr. Turner. Mayor, I know that your time is limited, so I 
will end my questions at this point and ask you if there is any 
other item that you want to discuss or place on the record?
    Mr. Plusquellic. Other than just once again thank you. 
Obviously, having people here understand firsthand the 
difficulties that we have in redeveloping our communities helps 
considerably when you're debating and discussing bills; we are 
very hopeful that in this session you will be successful in 
getting your colleagues to support this.
    I think it is a real step forward that adds considerably to 
our ability to deal with these correctly stated, I think, in 
some circles, very difficult issues. We are all hung up on 
holding somebody accountable and liable for this. But, in many 
instances, these folks are long since gone. The folks who might 
have dumped something at the Firestone, the B.F. Goodrich, the 
Goodyear or the general sites I can tell you in Akron have long 
passed. And we have no idea what might be there but helping get 
a new business in to take the place of those major employers is 
really a great advantage to cities like Akron and Dayton and 
Youngstown and Cleveland and places around the country. So we 
appreciate your help, your understanding of this issue, and 
your continued commitment to work with us. Thank you, 
Congressman.
    Mr. Turner. Thank you, Mayor.
    And we will go on to receive the testimony then of the 
remainder of the panel.
    Mr. Maurin.

                  STATEMENT OF JAMES E. MAURIN

    Mr. Maurin. Mr. Chairman, thank you for the opportunity to 
appear before you today. And while the mayor of Akron is 
walking out, I just want to say, as a developer for the last 30 
years and having worked with city and county and, in Louisiana 
County, parish governments, I was inspired by your comments and 
particularly by your knowledge of this whole area and industry. 
The mayors are starting to get it, and they are starting to 
understand what it takes to be able to develop these types of 
properties. So I want to thank you for your comments, Mayor.
    My name is James E. Maurin, and I am founder and chairman 
of Stirling Properties in Covington, LA, a suburb of New 
Orleans. I have been a developer for 30 years in the gulf south 
and have redeveloped approximately half a dozen brownfield 
sites. I am testifying today on behalf of the International 
Council of Shopping Centers and the Real Estate Roundtable.
    ICSC is the global trade association of the shopping center 
industry. It has more than 50,000 members, and we represent 
owners, developers, retailers, lenders and other professionals 
active in the industry.
    Collectively, the Real Estate Roundtable members hold 
portfolios containing over 5 billion--that's with a 'b', 5 
billion square feet of developed property valued at over more 
than $700 billion.
    In recent years, changes in Federal laws have successfully 
addressed many of the barriers that inhibited private sector 
efforts to clean up and redevelop contaminated sites. As the 
threat of excessive environmental liability recedes, the 
remaining problem with most well located brownfield sites is a 
fairly simple one: Money. Other things being equal, it costs 
more to clean up and redevelop a brownfield than it does simply 
to buy and develop a greenfield. Properly conceived, brownfield 
redevelopments are investments, whether undertaken by the 
public or the private sector. And there are few investments of 
public dollars that produce such a positive economic and 
environmental dividend.
    A simple calculation of how much it costs the Federal 
Treasury to offer a grant, a loan or a tax incentive is 
incomplete without factoring into the equation the future jobs 
and tax revenues that will be created during and after a 
brownfield cleanup. Several members of this subcommittee must 
recognize this fact, because they are co-sponsors of H.R. 280, 
the Brownfields Redevelopment Enhancement Act. This bill would 
streamline the Federal grantmaking process for States and 
tribes, and make brownfield-related environmental cleanup and 
economic development activities eligible for community 
development block grant assistance. We are reviewing this bill 
now, and I feel certain that ICSC and the Roundtable will be 
able to formally endorse this legislation in the near future.
    Last year, ICSC and the Roundtable endorsed a proposal 
originated by Chairman Turner. The Brownfields Revitalization 
Act, formally H.R. 4480, would dedicate a limited dollar amount 
for tax credits tied to the cost of remediating brownfield 
contamination.
    Congress is generally reluctant to create new tax credits. 
There is a well-founded worry that excessively generous tax 
credits would distort a healthy market. But that is not to say 
that tax credits cannot be carefully designed and targeted to 
address specific problems. As with the low-income housing tax 
credit program, the private sector would still provide much of 
the necessary funds for cleanup, but the availability of tax 
credits could tip the scales in favor of proceeding with a 
project rather than passing over an otherwise promising site.
    Under Mr. Turner's proposal, which we understand will soon 
be reintroduced, the tax credits would only be available under 
projects conducted pursuant to a State-approved remediation 
plan. The bill helps leverage the capital necessary for 
cleanups by making these credits transferrable to third parties 
such as banks. The tax credits would be available for up to 50 
percent of the remediation costs, including both demolition 
costs and the cost of cleaning up petroleum contamination. In 
my written statement, I go into more detail as to why these two 
aspects are so vitally important.
    While the tax credit approach could benefit even large-
scale remediation projects, I suspect that it would prove most 
valuable to small and medium scale cleanups where funding 
options can be even more limited. We should not underestimate 
the contribution that small-scale projects can make to the 
economic vitality of a community.
    Another bill that we encourage Congress to pass is H.R. 
877, introduced by Representative Weller, Representative 
Becerra and Representative Johnson of Connecticut. H.R. 877 
would do three things to encourage brownfield cleanups. It 
would make Internal Revenue Code Section 198 permanent. Section 
198 allows the expensing of brownfield cleanup costs, but it is 
currently scheduled to sunset at the end of this year. It would 
broaden the definition of hazardous substances in Section 198 
so it covers petroleum, pesticides, lead paints and asbestos 
contaminants. Again, my written statement provides greater 
detail on why this is important. It would repeal the provision 
in the law requiring the recapture of the Section 198 deduction 
when the property is sold. Without this change, there is no 
real incentive.
    In conclusion, the ICSC and Real Estate Roundtable urge 
Congress and this committee to explore tax incentives to induce 
the private sector to clean up and redevelop contaminated 
sites. We believe that a tax credit approach would stimulate 
economic revivals in numerous communities, and we encourage 
this committee to seriously consider such an approach.
    In addition, we specifically endorse H.R. 877 and the 
Brownfield Revitalization Act of 2005, formerly H.R. 4480. If 
Congress passes these sound incentive proposals, the results 
will be the injection of new capital into rehabilitation 
projects. Many small urban-centered businesses will benefit 
resulting in substantial job creation and economic 
revitalization. Also, the viability of existing sites will 
improve and thus ease the pressure to develop greenfields, 
allowing for the preservation of more open space.
    I thank the chairman and the members of the committee for 
this opportunity to appear before you today and look forward to 
your questions. Thank you.
    [The prepared statement of Mr. Maurin follows:]
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    Mr. Turner. Thank you.
    Mr. Philips.

                 STATEMENT OF JONATHAN PHILIPS

    Mr. Philips. Mr. Chairman, my name is Jonathan Philips, and 
I represent Cherokee Investment Partners, based in Raleigh, NC. 
Thank you for the opportunity to testify today.
    I would like to cover three basic topics. First, I want to 
provide you with an introduction of Cherokee, who we are and 
what we do. Second, I want to share with you some of the 
lessons learned regarding brownfield revitalization in 
communities all across this country. Finally, I want to comment 
on two critical pieces of brownfield legislation introduced 
during the 108th Congress. Cherokee is the world's largest 
brownfield investor. We currently manage over $1 billion of 
assets and have acquired over 330 sites across 35 States, 
Canada and Europe since inception. Our investors, consisting of 
public pension funds and other institutional investors, have 
entrusted us to deploy over $1\1/2\ billion of equity and debt 
capital toward brownfield revitalization. We will spend 
hundreds of millions to clean up pollution at the sites in our 
current portfolio unlocking a potential of over $4 billion of 
further redevelopment. Our projects range in size from cleanup 
and redevelopment of a portfolio of 68 gas station pads, with 
extensive petroleum hydrocarbon contamination, to redevelopment 
of the Meadowlands in New Jersey, a 1,300 acre site with eight 
former landfills with remediation expenses of $230 million and 
a total project cost of $1 billion.
    In fairness, though, we rarely undertake a project alone. 
One of the key factors of Cherokee's success has been our 
willingness to enter into public-private partnerships to 
achieve larger community goals. An example is the announcement 
of the national joint initiative between the U.S. Conference of 
Mayors and Cherokee to help mayors identify contaminated 
properties with the greatest potential for redevelopment and 
match them with capital, risk management experience and 
revitalization expertise.
    In partnership with the U.S. EPA and local governments, we 
have made strides toward cleaning up America's contaminated 
lands. However, significant barriers prevent the revitalization 
of the vast majority of this Nation's brownfields. 
Historically, owners of contaminated real estate often have 
focused resources on avoiding liability rather than site 
cleanup. As the true cost of mothballed sites have become 
known, the public and private sectors have worked together to 
create new mechanisms to revitalize brownfields. These 
stakeholders have effectuated important changes in court 
rulings, environmental laws, regulations and enforcement 
action, urbanization, insurance, and availability of financing 
vehicles to address the cleanup and reuse of these properties. 
Just as our Nation required the public and private sectors, 
working together, to produce the important reforms of the past 
several years, a similar partnership will continue to be 
important to ensure an acceleration of the rate of cleanups 
across the country. The economic drivers of brownfield 
redevelopment are similar to those found in typical greenfield 
development, but environmental contamination introduces several 
costs, timing and liability hurdles to success. Adding to the 
complexity and costs associated with cleaning up existing 
contamination, brownfield developers have difficulty using 
financial leverage, as has been addressed already today in this 
panel, because brownfield appraisal is generally low and banks 
require lower loan-to-value ratios to protect themselves from 
the risk of having to own and manage stigmatized properties 
with questionable value. For this reason, the availability of 
public debt financing can be critical to making projects 
numbers work. High equity requirements combined with increased 
expenses due to remediation costs can lead to low-return 
investment. In 1998, the Urban Land Institute reported that the 
average rate of return for brownfields was under 3 percent, 
well below that of greenfield projects.
    When assessing how brownfield investment compares with 
other real estate investment decisions, it is clear that 
brownfields fall within the upper range of the risk return 
spectrum. One of the lessons of this data is that, if we wish 
to foster a more active private sector participation in the 
cleanup of our Nation's polluted land, we have two levers to 
adjust. One can either lower the risk associated with tackling 
a brownfield project or increase the potential project return. 
Absent one or both of these factors, most traditional 
developers will follow the easy road: content to make sizable 
returns converting the next farmstead to suburban sprawl on 
that proverbial edge of the town.
    Given what we know about the causes of the problem, how do 
we move beyond our current situation where some sites are being 
redeveloped while literally hundreds of thousands of others 
continue to languish? A friend once told me that, for every 
complex difficult problem, there is usually a simple solution, 
and it is usually wrong. I think that is true for the 
brownfield issue. If there were one simple solution, we 
probably would have found it and enacted it long ago. It is 
clear to me that the brownfield problem is a complex continuum 
and merits some categorization. Some sites are already 
economically above water; that is to say that, without 
additional incentives, those sites will likely be revitalized.
    Other sites are marginally under water, and with some 
coordinated efforts, creativity and a modest economic push, 
these sites would likely be redeveloped within a reasonable 
period of time. And then there are substantial underwater sites 
typically located in less attractive markets involving 
unusually large risks and/or requiring more substantial 
economic partnership.
    When identifying a national prioritization of these 
categories, policymakers have certainly differed. Regardless of 
one's views, we would be doing our country a disservice by not 
understanding this brownfield market segmentation and crafting 
policies that target them appropriately. Given the complexity 
of this problem, the solution must also be multifaceted with a 
mix of Federal, State and local incentives focused on both 
reducing risk and increasing project returns. Fortunately, 
America has built a solid foundation over the past few years to 
attack this problem. The EPA grants program has been an asset 
to communities across this Nation. In addition, programs such 
as Section 198 enacted in 1997 and the provisions of the 
brownfield law enacted in 2002 provide creative tools to crack 
the brownfield problem. But as good as these tools are, we know 
that we need to do more if we are to solve this problem in our 
lifetimes. Today, the Federal Government's challenge should be 
to build on this foundation and to look for bold, innovative 
ways to reduce barriers and create market-based incentives to 
attract significant volumes of private capital to help 
remediate and redevelop our Nation's brownfields.
    In the last year, Congress has considered two critical 
pieces of tax legislation that do just that. These bills are 
H.R. 3527, sponsored by Congresswoman Nancy Johnson and co-
sponsored by Chairman Turner, and H.R. 4480, sponsored, too, by 
Chairman Turner. The first bill, H.R. 3527, was signed into law 
last year as part of the Jobs Act. This bill amends the Tax 
Code to encourage investment in contaminated lands by allowing 
tax exempt entities to invest in the revitalization of highly 
contaminated sites without the risk of incurring unrelated 
business income tax penalties. These penalties had driven our 
largest real estate investors away from brownfields. This law 
eliminates the unintended penalties and makes brownfield 
investment more attractive for the managers of an estimated 60 
percent of the institutional capital in this country, tax 
exempt investors such as pension funds, endowments and 
foundations.
    The second bill, H.R. 4480, establishes a transferrable tax 
credit that would create a critical early financing solution 
and allow pioneering developers to attract more capital with 
the equity created by that credit and revitalize otherwise 
economically marginal projects. Such a transferrable credit 
will serve to further unlock the large quantity of 
environmentally impaired sites around the Nation and will 
dramatically accelerate the rate at which brownfield sites are 
revitalized in America. Taken together, these two pieces of tax 
legislation have the potential to prompt cleanup of more 
brownfield sites in the next 5 years than in the last 50 years 
combined.
    Allow me to conclude with a startling statistic: The U.S. 
Chamber of Commerce estimates that, at the current rate of 
remediation, it will take 10,000 years to clean up our Nation's 
brownfields. Clearly, we can and must do better. I sit before 
you today as testament to the fact that with perseverance, 
patience, integrity and prudent financial and risk management, 
the private sector can play a substantial role in cleaning up 
the pollution of this country's industrial past. This problem 
is too big for any one organization, government or market 
sector to take on single handedly, that is, if we want to have 
a chance at solving this problem in our lifetimes. Congress 
must be bold, and we commend Chairman Turner's leadership. The 
transferrable tax credit provisions in Chairman Turner's 
legislation will dramatically accelerate the rate and 
geographic scope of brownfield revitalization in America. 
Nearly every Member of Congress struggles with the problem of 
brownfields within their own district. I know many of you--many 
of your colleagues also do as well. We look forward to working 
with Chairman Turner and the members of this subcommittee to 
continue to explore new ways to accelerate brownfield cleanups. 
Please do not hesitate to call upon us for these legislative 
endeavors or for assistance with specific sites that come to 
your attention.
    Mr. Chairman, members of the committee, it has been an 
honor and a privilege to testify here today. I am happy to 
answer any questions. Thank you.
    [The prepared statement of Mr. Philips follows:]
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    Mr. Turner. Thank you, Mr. Philips.
    Mr. Steidl.

                 STATEMENT OF DOUGLAS L. STEIDL

    Mr. Steidl. Mr. Chairman, good morning. I'm Doug Steidl, 
president of the American Institute of Architects. On behalf of 
our 75,000 members nationwide, I wish to congratulate you and 
this subcommittee's insights into our most strategic issue for 
our communities, and to thank you for the opportunity to appear 
today as you begin your deliberation on the state of designated 
brownfield sites across America.
    Architects have some unique talents. Our most formidable 
skill is our ability to capture abstract goals and turn them 
into tangible form. We also integrate multi-disciplinary teams 
to work efficiently for a common goal, and as a result of that, 
it usually is that we are the first professional brought on 
board to address a project site. Bricks and mortar are the 
physical result of our work, but architects do more than create 
buildings; we believe we create communities. Through our 
understanding of people and how they interact with their 
physical environment, we add vision and value to our citizens' 
lives. In addition, architects are leaders in their communities 
and help drive the design construction sector of our national 
economy. That sector accounts for 8 percent of our gross 
domestic product. For these reasons, I believe, we are uniquely 
qualified to testify on the issue of brownfields. The American 
Institute of Architects is intensely concerned about making the 
Nation's communities healthy, safe, livable, and sustainable 
places. As a result, we have long had an interest in finding 
imaginative and constructive uses for urban land that now lies 
fallow because of the residual contamination that is part of 
its industrial heritage.
    In 2001, the AIA took a strong position favoring H.R. 2869, 
Congressman Paul Gillmor's brownfields bill, which became the 
Small Business Liability Relief and Brownfields Revitalization 
Act. That statute established the U.S. Environmental Protection 
Agency's current brownfields program and has led the way in 
changing the Nation's perception about abandoned real estate. 
The AIA is heartened by the progress that has been made under 
that program but believes that more rapid progress is both 
possible and necessary.
    I come here today commending you for holding this hearing. 
I also come with a message: The time is now for Congress to 
enact new brownfields legislation. The AIA has a position. Our 
interest in brownfields redevelopment springs from our 
commitment to fostering vital, healthy communities. The AIA is 
concerned that abandoned industrial sites in every State 
threaten local citizens with exposure to toxins. They serve as 
dead zones in the midst of neighborhoods drastically in need of 
revitalization, and they isolate and divide people and cities. 
The contamination is thus responsible for stymieing 
redevelopment and limiting economic investment and job 
creation. It often leads to sprawl and uncontrolled growth as 
land is sought elsewhere in greenfields.
    The U.S. EPA's use of Federal dollars to remedy such sites 
has had notable results. Unfortunately, as the Government 
Accountability Office's brownfields report of last December 
points out, there are far more brownfield sites requiring 
remediation than the U.S. EPA program could ever hope to 
address in our lifetimes. As a result, Federal legislation is 
needed to expedite site cleanup and foster economic 
redevelopment of these properties. At a time when our Nation is 
searching for solutions to sprawl and pollution, these sites 
are the new frontier, bursting with community potential and 
economic hope. I might add that, in general, and in my personal 
practice, the responsible party has not been the party to 
mitigate brownfields; it's either the local government and 
institutional clients, such as a university, and, in some very 
rare circumstances with minor mitigation requirements, the new 
landowner. These properties are often in central urban 
locations where costly utilities are already in place. This 
represents a real opportunity for sustainable development that 
helps the economy and the environment.
    In addition, brownfield cleanup offers an opportunity to 
improve human health. Though I am not a health expert, I 
believe that, without incentives for cleanup and redevelopment, 
contaminated properties will continue to pose public health 
hazards long into the future. According to the AIA, brownfield 
reuse will increase the local tax base, create jobs, revitalize 
neighborhoods, link vital city services and extend 
environmental protection for all citizens.
    The GAO reports, between fiscal years 1995 and 2004, the 
U.S. EPA awarded over 1,200 brownfield grants, totaling about 
$400 million. Unfortunately, an estimated 450,000 to as many as 
1 millionsites remain. More must be done to promote 
revitalization, and the most creative way to address this need 
is to harness the power of private capital.
    There are success stories. Many American cities are 
undergoing a renaissance. Young professionals and empty nesters 
have begun to migrate to cities and continue to make them the 
location of first choice. Brownfield redevelopment capitalizes 
on this trend and helps the urban revitalization momentum 
going. I have included three detailed success stories, Glen 
Cove, NY; Charlotte, NC; and Pittsburgh, PA, for this 
subcommittee's consideration. These are but three of many. They 
appear in the copy of my remarks that was submitted for the 
record.
    In conclusion, the American Institute of Architects 
believes that Federal tax credits for remediation expenditures 
at brownfield sites will provide the needed incentive to induce 
private parties to undertake the cleanup and rebuilding of 
these sites. The AIA supported H.R. 4480, the chairman's 
legislative effort in the 108th Congress, which would have 
allowed taxpayers a credit against income tax for expenditures 
to remediate contaminated sites. The AIA is pleased to see that 
he has improved and reintroduced that legislation again in the 
109th Congress. We look forward to working with you and your 
growing contingent of co-sponsors. We believe that it is 
necessary that these incentives be enacted during this session 
of Congress. Thank you.
    [The prepared statement of Mr. Steidl follows:]
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    Mr. Turner. Gentlemen, I thank you for your testimony and 
your insight that you bring, but I also thank you for your 
commitment to this issue. Because one of the things that is 
very clear in your testimony is a love of your communities and 
a love of the projects you have undertaken that has brought you 
to participate in brownfield redevelopment, because, as you all 
testified, certainly greenfield redevelopment is easier and has 
a greater potential many times for return. Your dedicating 
yourself to brownfield redevelopment, we all know, is both a 
philanthropic as well as a business dedication.
    And I wanted to talk a minute about the issue of the cost. 
We focus many times on the liability issue, but in undertaking 
brownfield redevelopment, each of you have to have a level of 
expertise that you would not find in the average developer or 
someone who might want to undertake a redevelopment project 
that includes the bureaucratic processes of environmental 
remediation.
    Mr. Philips, you talked about the private/public 
partnerships many times that have to be brought together. Many 
times there are grant programs or other types of financial 
assistance to address some of the costs which themselves are 
complex. The bureaucratic processes in getting approvals for 
the undertaking of the environmental remediation, I believe, is 
a very complex process. Could you talk about the cost, your 
experiences there and addressing the bureaucratic processes and 
working with EPA, State EPAs, some of the things that you see 
that are working there, some of the things that you see that 
need to be improved? Start with Mr. Maurin.
    Mr. Maurin. Yes. Again, my personal experience is limited 
to probably a half a dozen sites, and these sites have been in 
the States of Louisiana and Mississippi. And where I've heard, 
quite honestly, that there have been in the past issues with 
regard to the EPA we have found in both States that, working 
with their local DER, DEQ, both States have enacted brownfields 
legislation. And for the most part, quite honestly, we have 
been able to be very successful in working with the States 
directly themselves and have had little or no interference or 
problems or issues with the EPA.
    Now, my experience is really the last 4 or 5 years, and 
then only in two limited States. But I must say that the States 
do get it. In the case of Mississippi, we had a very large 
project in which they did not have a brownfield law which, as a 
result of our project, we induced the State to actually pass a 
brownfield law about 4 or 5 years ago. So I've had very good 
experiences working with the States and have had little or no 
problems on the EPA side.
    Mr. Turner. Mr. Philips, again, also addressing the issue 
of the increased costs in going through those processes as you 
put your projects together.
    Mr. Philips. Sure. First, though, on the EPA question. We 
found that, when we come into a situation, we're generally 
proposing to do something that no one has ever proposed to do 
before. We walk into a regulator's office and say we want to 
aggressively clean up this site, and we want to do it now and 
we want to use our own money to do it. And it's a very 
different reception than I imagine others might receive. And we 
applaud that the EPA recently maybe not so recently has taken a 
fairly targeted and focused approach toward reuse of sites 
under EPA jurisdiction. And that has also been a great program 
and great to work with them. But the time that it takes to 
engage in the regulatory process and to engage in the 
permitting onsite is a critical, critical issue, and I'm glad 
you asked about it, Congressman. Time is the biggest enemy of a 
viable return on investment for us, and we are putting money, 
our investors' capital, in from day one for cleanup. We want to 
make sure that permitting process, that regulatory process can 
occur quickly, and that usually happens through the education 
of the States and local jurisdictions. And I will just give you 
a very short case study on this.
    A few years ago, we bought a portfolio of sites. Some were 
in San Francisco, another was in Georgia. And we engaged in the 
redevelopment process concurrently for both sites. By the time 
we had cleaned up and redeveloped and permitted the properties 
in California, the Georgia property had not yet begun to be 
permitted because we were still engaging in the regulatory 
process. That is not necessarily a criticism of Georgia, but it 
may be just an issue of resource allocation or a familiarity 
with these sorts of projects, but it goes to show you how much 
of a difference States can make, at least on this level, in the 
regulatory and permitting process that you have raised.
    Mr. Turner. Mr. Steidl.
    Mr. Steidl. Approvals are generally not a problem if you 
have all your data together. The problem we see with many of 
our clients, especially in the private sector, is that they 
want to move yesterday; and in moving yesterday, they don't 
have a timeframe in order to allow for investigation and 
approvals. So the risk factor goes up, but it's primarily a 
time issue. They make the decision before they get to totally 
evaluating the dollars. The decision's made. We can't do it 
time wise, let's go to the greenfield.
    Where we have had projects that moved forward in a 
brownfield, they've primarily either been institutional, such 
as a university. We have a project with a university right now 
that they have a 5-year plan, so they started investigating the 
initial cost, the contamination assessment and everything 5 
years ago. When they got to the project, they had to increase 
their budget by $800,000 on an $11 million project, and that is 
a 2-acre site, and it's an urban site that is not--it's 
basically minor contamination. So, 7 percent for minor 
contamination.
    The other projects where we've had private developers work 
have been a negotiated process with the municipal government. 
And what usually happens is the municipal government will 
guarantee so many dollars in order to abate whatever the 
materials are, and then the developer does anything that's new 
construction. That is a real burden on the local citizen, the 
government, the taxpayer. The public/private cooperation has to 
work in a different way, and I think your bill, if the statutes 
are set up on how it can be done and it can be simplified in 
the approval process, will be a real plus.
    Mr. Turner. Having been a mayor, and then, obviously, any 
mayor is active in economic development in their community. 
When I look at abandoned properties, I see them differently 
sometimes than many others. If I drive by an abandoned house, I 
don't think, someone wants to live there anymore--no one wants 
to live there anymore. I think, gee, the title must be pretty 
messed up. I wonder why no one can acquire that house and 
redevelop and refurbish it.
    Similarly with brownfields. When I drive by an abandoned 
factory site, I think of the environmental contamination, the 
impediments, the risk, the risk of capital, the liability 
risks. But there are many people who think differently. When 
they drive by an abandoned factory, they think that the 
usefulness of that property has passed, that the location is no 
longer desirable, that economic development as a wave has moved 
on; and then, if the property is located in the central city, 
that it is no longer desirable for someone to redevelop and 
bring back to productive use.
    You all obviously are active in environmental remediation 
projects for redevelopment. What is your perspective? Do you 
believe that if we did provide an incentive, that these 
properties would become attractive? That it's not just that 
there is more than just the environmental contamination that's 
keeping them from being redeveloped? Or if we address the issue 
of subsidizing that remediation, will we in fact see an engine 
for economic development in these areas?
    Mr. Maurin.
    Mr. Maurin. Well, Mr. Philips made a comment in his 
testimony kind of categorizing brownfield sites into three 
categories. And those that clearly need no incentive 
whatsoever, the benefit and the cost are there. And of course, 
most of those have been done already. Most of those have 
happened. The second category needs slight incentives to make 
them profitable. And then there is that third category that we 
all have to ultimately focus on if we are going to solve the 
problems of the cities, and those are the ones that are just 
really under water, is the term that was used. And I think 
that, as a private developer, when we look at a redevelopment 
project, we will essentially put it into one of those three 
categories.
    I think that the best thing that we see in the cities, 
however, particularly with the old factories or whatever, is 
the adaptive reuse of those properties; i.e., a developer 
stepping forward and saying that, in the eyes of the people of 
Akron, for example, that has been a factory for 80 years or 90 
years. But a developer walks in, looks at the city, looks at 
the revitalization, and he sees a residential development. He 
sees a condominium project. He sees something entirely 
different. And I think that's where the marriage between the 
private development community together with the local 
government, I think that's really where the ideas are coming 
from. There's kind of an entrepreneurism in this whole area 
right now in the area of adaptive reuse. And I think that in 
some of the tougher ones that we have to work with, that's 
where we have to be thinking.
    Mr. Turner. Mr. Philips.
    Mr. Philips. Yes. I believe in certain cases is more than 
merely environmental contamination cost. To use a case study, 
in our experience, we are leading the largest investment in the 
history of the city of Camden, NJ, a city where, like many 
other cities, there are a number of brownfield sites. But there 
are also other problems. There are economic development 
problems, there is blight, and there is perceived stigma, and 
there are questions of assemblage: How does one assemble enough 
property in one mass to really make a critical difference to 
the residents of a community, and to encourage a true 
revitalization of that area? Those are the things that we 
struggle with, and we look to public-private partnership, 
again, to try to help solve.
    Mr. Turner. Mr. Steidl.
    Mr. Steidl. I think the three tiers of classification is a 
good example, and that the middle tier will be addressed by 
this issue. Geographic issues and economic issues of a region 
also play in. Mayor Plusquellic mentioned Youngstown, OH. I 
think Youngstown, OH, will have a tough time just because of 
the overall demand placed by the city. But there is a tendency 
by singles, young professionals and retirees to enjoy the city 
again, to go back to a pedestrian lifestyle and to look at the 
cultural levels that happen in a city. And I can tell you that 
two examples, one in Akron, OH, the city is essentially out of 
downtown land. It's framed in by some highways hills, and 
ravines; I know that Mayor Plusquellic has proposed tearing out 
a highway in order to provide land in the downtown area. And I 
think there are many cities where these types of sites are 
available adjacent to a downtown area that would really 
stimulate the economy.
    I just visited Richmond, VA, and their adaptive reuse of 
warehouse buildings and storage facilities into housing is at 
an end or very near to an end because they are out of the 
buildings. They've run out of adaptive reuse positions. And I 
think that these types of incentives will create in that second 
tier a great deal of enthusiasm. People want to be in cities 
and see that as a viable alternative to their lifestyle now.
    Mr. Turner. In the brownfields tax credit bill which I 
proposed, 4480, there is a provision that allows those who were 
responsible for the contamination to step forward and 
participate in the cost of environmental remediation in 
exchange for a release for the remainder of the cost for the 
redevelopment plan that the tax credit is applied to. There has 
been some concern about providing that release. I view it as an 
incentive to get them to the table. They have a significant 
amount of knowledge that's important for putting together the 
assessment and the redevelopment plan. Also, their contribution 
to the overall costs are important.
    Mr. Steidl, I believe you had said that many times, that 
the past contaminator is not involved in the redevelopment. I 
would like, if you would, from your experience, to speak about 
that issue; whether or not, when you have undertaken the 
redevelopment, if the past contaminator has been to the table, 
has worked with you, if there is any incentives that you have 
seen that brings them to the table. If you believe that the 
incentive of a release that's provided in the bill would be 
helpful in bringing them to the table and bringing their 
capital to the table. Could you speak to that issue, Mr. 
Maurin?
    Mr. Maurin. You know, it's a very good question, and I'm 
just personally thinking here, and I'm not sure. I will say 
that the original superfund law passed well over 20 years ago, 
quite frankly, I think in hindsight we look--all of us look at 
it and say on one hand it got the attention. It really got our 
attention. It got everyone's attention, particularly if you 
were in the chain of title on a contaminated property. But in 
many ways, it tried to deal with the issue of contaminated 
properties with one cut, one way, only one way. And I think 
that what has happened in subsequent legislation that's 
occurred is being able to look at some of the things that 
didn't work in superfund and basically getting some properties 
really out of that category and moving it into another 
category, the brownfield category. And I think that's been a 
tremendous help. I think that the incentives certainly very 
well may help some of these mothballed sites, as the mayor 
talked about, that the owners have simply mothballed them, and 
they continue to still be a blight on the cities of America. So 
I think the incentives will help. I think that we have to look 
back upon the last 20-plus years of that rule, literally, that 
the polluter pay rule and what success we've had, what limited 
success we've had on it and possibly look at incentives to get 
those folks that were involved with that to the table. So I 
think this is a move in the right direction.
    Mr. Turner. Mr. Philips.
    Mr. Philips. We regularly deal with the question of how to, 
so to speak, pry open the vault, how to see what's behind the 
doors of a potential seller. How do we persuade a seller to 
allow testing when that seller has never assessed their 
property, and has never done so out of fear, frankly, of being 
put on notice legally that they would be liable then for 
cleanup and potentially other penalties?
    In an ideal world, there ought to be a way to conduct an 
assessment even if it's by a third party that is not so 
punitive to the owner of the property who may have had no 
responsibility other than through corporate secession, to 
encourage them to allow a third party to assess their property 
and not trigger some of the penalties and enforcement.
    I do on the other hand understand the concern that some 
have that they don't want to completely eviscerate the 
disincentive for future bad actors to perform--to allow 
contamination to occur on their sites. And so that seems to be 
the tension.
    But I think we need to be progressive thinking and realize 
that right now, if we want to clean up these sites, we have to 
look for new solutions. And, Mr. Chairman, you have offered a 
very intriguing solution that we have been working with you to 
support and help, and we applaud your efforts in figuring out 
ways to bring PRPs to the table. And one of the comments that I 
didn't include in my oral testimony, but I think it's really 
important for the private sector to be more involved on the 
Federal level. The EPA has a multi-agency brownfields program. 
There ought to be private sector individuals or entities 
involved in that, talking about the latest brownfield evolving 
changes in climate, and I think that will help get the PRPs 
more comfortable. And with some innovative solutions like the 
ones you have proposed, we will be able to see some of these 
sites unlocked for future reuse or redevelopment.
    Mr. Turner. Mr. Steidl.
    Mr. Steidl. This is obviously opinion and not based on 
fact. I have one fact, and that fact is that I've never been 
involved in a project that looked at a brownfield where the 
principally responsible parties were involved. And so I think 
that your proposal is a creative way of testing the waters at 
this point as to whether that motivation will bring principally 
responsible parties back into the formula, perhaps with 
information on the site. But that limitation of liability or 
elimination of risk is a creative solution that I believe 
should be explored.
    Mr. Turner. One of the things that I'm repeatedly asked 
when we talk about the number of brownfields that are out 
there, if there is a rule of thumb on evaluating the costs for 
addressing remediation of these sites. Each of you have 
experience in this. I wonder if you have a rule of thumb that 
you look to on an acreage basis or a project basis that can 
give people an understanding of a way to work toward an 
estimate of the cost of addressing these sites. Mr. Maurin.
    Mr. Maurin. We really don't. And what we find as we 
evaluate these sites--and much of our development of these 
types of sites have been tenant driven. We have had a 
developer, an interested user that wants to be there, and it 
just happens to be a contaminated site. And what we as 
developers do, quite honestly, is evaluate the site, look at 
the cost that it's going to take to get that site to kind of 
back to zero to get the contamination cleaned up, and we look 
at our user, we look at--and then we also meet with the local 
authority, with the mayor and look at them. And, quite 
honestly, we have been involved with some sites that were, in 
terms of the value of the site were very expensive, but the 
city was willing to participate in some form or fashion, in 
some sort of grant or some sort of inducement. So, on our own, 
we would have passed that site. In other cases, between we as 
the developer and our user, we were able to fully pick up the 
cost of the remediation of that site and move on and redevelop 
it. So, quite honestly, there is no real simple formula, I 
don't believe, for coming up with what makes one feasible and 
another not feasible.
    Mr. Turner. Mr. Philips.
    Mr. Philips. Mr. Chairman, I would echo that sentiment. 
We've looked into quantitative indicators, and they all seem 
fairly imperfect. The per-acre measure doesn't reconcile the 
rural situation with the urban situation or the coastal 
situation. Likewise, on a per-square-foot basis, it's difficult 
to quantify with a rule of thumb what the likely cost of the 
cleanup might be. It's so particular to each site and also to 
the eventual reuse. Is the site going to be reused? Is it going 
to be an industrial facility again that needs to be cleaned up 
to industrial standards? Or is it going to be a residential 
facility? That's going to greatly impact what kind of costs we 
are going to assess or calculate as part of the formula for 
making these decisions. So each site is so unique.
    If I had to guess--this is my own personal opinion, a 
number like 25 percent to 40 percent may not be too far off the 
mark. I would be willing, if the committee were interested, to 
research our own internal data and report back the findings.
    Mr. Turner. That would be excellent. I would appreciate it.
    Mr. Philips. Sure.
    Mr. Turner. Mr. Steidl.
    Mr. Steidl. I have no figures. I don't think there's a 
formula. We've never been able to find one. I mean, there are 
things for some individual specifics, but each site's so 
unique. I concur with what's been said previously.
    Mr. Turner. One final question. When I served as mayor I 
had the opportunity to travel with the American Institute of 
Architects as part of the U.S. Conference of Mayors to look at 
brownfield sites in Europe and what they were doing there to 
address redevelopment and cleanup. So I'm certainly aware from 
that, that what other countries are doing in addressing this 
both in the manner of cleanup and in liability provisions may 
be different. I wondered if any of you would like to speak on 
the issue of what other countries may be doing so we can also 
look at that as opportunities for us. Mr. Steidl.
    Mr. Steidl. Well, that tour was made I believe in 2001, and 
there were some fantastic examples of what can be done that 
came out of it. I personally do not have that data, but we can 
go back as the American Institute of Architects and collect 
some of those examples and get them to you. Europe has a 
different approach or atmosphere that allows some of those 
items to be executed as opposed to what might happen in this 
country. But we will be glad to get back to you.
    Mr. Turner. Excellent.
    Mr. Philips. We at Cherokee buy sites in other countries 
and have some desire to expand our program, started in the 
United States, to other areas of the globe. And our experience 
has been mostly in Europe, and it has been telling. In some 
European countries, the national government has actually 
approached us to assist with a particular site. That was 
something that surprised us, frankly, and it was a breath of 
fresh air. Clearly, brownfields have plagued Europe as much or 
more than our own Nation, and the leadership there has 
recognized the problem. But beyond a recognition, European 
countries have taken some bold steps. Our London office has 
marveled at the legislation that was passed in the United 
Kingdom which required that 60 percent of all new development--
I believe this is correct, 60 percent of all new development 
shall occur on brownfield sites. Imagine what that mandate has 
done to educate the traditional development community about 
brownfields.
    In places like the African continent, cleanup may encounter 
more hurdles. Our pro bono projects in Ethiopia, for example, 
encountered a legal system that did not adequately support the 
core concept of property rights, individual property rights. 
And this makes it difficult to make bets on how and when the 
future value of what you're going to clean up and revitalize is 
going to pay back, or to know the costs associated with the 
cleanup and the other project costs.
    So I think it varies drastically depending where on the 
globe one looks. But we certainly have plenty to learn from 
other countries, although I believe our country may be leading 
the pack in many respects.
    Mr. Turner. Excellent point. We want to ask if anyone has 
anything else that they would like to add?
    Mr. Maurin. No. Not really. Again, I've had no personal 
experience on that. I would only say that, just with my travels 
with the International Council of Shopping Centers this year, 
where we do have some 90 countries that are members, in my 
travels around the world, I have seen a wide variety on the 
issues of redevelopment and cleanup, particularly inner city. 
When you go from China all the way to Western Europe, and even 
within Western Europe you see a wide variety of rules and 
levels of concern on this. So I agree with the comment made 
here that I think the United States is probably kind of the 
leader of the pack right now with regard to, on a Federal 
level, being able to be as involved and as focused on the 
cleanup of our environmentally contaminated sites. I've found 
no other examples that might be ones that we could follow.
    Mr. Turner. Excellent. Well, are there any other additional 
comments that any of you would like to put on the record before 
we conclude?
    Great. Well, before we adjourn, I would like to thank each 
of you for participating, and both of our panels, for their 
participation today. I appreciate your willingness to share 
your knowledge and experiences and thoughts with us today. I 
also would like to thank the participation of the staff and the 
members of the committee for their support for us undertaking 
this hearing.
    Clearly, there are numerous remediation redevelopment 
success stories, thanks to EPA's brownfields program, and I 
commend the EPA for their accomplishments thus far. With 
450,000 to 1 million brownsites lying idle across the Nation, 
we must recognize that there remains room for improvement. I am 
encouraged by the EPA's continued work in the area of 
performance measures development. We cannot effectively evolve 
this program unless we know where improvements may be 
necessary.
    One area we already know needs improvement is aid in the 
post-assessment and cleanup phase. That's why we need to 
address the redevelopment phase. According to landowners and 
developers, the two largest impediments to redevelopment of 
brownfields are liability and the high cost of redevelopment. 
The Brownfields Act addressed liability by providing some 
relief from the superfund law. We must now address the 
remaining gap. Without reasonable financial incentives, we may 
be looking at a problem that is too big to address through 
regulation and grant programs alone. As we have heard from both 
GAO and the representative stakeholders on our panel, a tax 
credit for remediation costs would go a long way toward 
encouraging more aggressive redevelopment of these blighted 
properties. Redevelopment brings new economic vitality to areas 
that badly need jobs, new or improved infrastructure, and the 
economic activity of new shopping services and living choices. 
As I mentioned at the beginning of today's hearing, in the very 
near future, I will be introducing the legislation directly on 
point here. At the same time, the subcommittee will continue 
its oversight of the many issues discussed before us today. In 
early May, I plan on holding hearings in Ohio on the subject of 
brownfields. I believe the perspective from stakeholders 
outside the Beltway will give the subcommittee a better 
understanding of this issue. It is my hope that we will hear 
from those who are faced with the issue on a day-to-day basis 
at those hearings.
    Again, I want to express my thanks for the witnesses for 
their time today. In the event there may be additional 
questions that we don't have time for, I appreciate your 
willingness to answer additional questions, and the record will 
remain open for 2 weeks for submitted questions and answers by 
other members of the subcommittee. Thank you.
    [Whereupon, at 12:08 p.m., the subcommittee was adjourned.]
    [The prepared statements of Hon. Charles W. Dent and Hon. 
Paul E. Kanjorski follow:]
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