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




 
  THE PITTSBURGH EXPERIENCE: HOW HAS THE COMMUNITY DEVELOPMENT BLOCK 
                  GRANT PROGRAM SHAPED THE STEEL CITY?

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

                                HEARING

                               before the

                       SUBCOMMITTEE ON FEDERALISM
                             AND THE CENSUS

                                 of the

                              COMMITTEE ON
                           GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                               __________

                             JULY 18, 2005

                               __________

                           Serial No. 109-76

                               __________

       Printed for the use of the Committee on Government Reform


  Available via the World Wide Web: http://www.gpoaccess.gov/congress/
                               index.html
                      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
                          Jon Heroux, Counsel
            Ursula Wojciechowski, Professional Staff Member
                         Juliana French, Clerk


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on July 18, 2005....................................     1
Statement of:
    Gorski, Stanley, executive director, South Hills Area Council 
      of Governments; William McGowen, executive director, 
      Redevelopment Authority, county of Washington; William E. 
      Mitchell II, assistant director, planning and development, 
      Westmoreland County Industrial Development Corp.; and Diana 
      Reitz, community development coordinator, city of 
      Jeannette, PA..............................................    34
        Gorski, Stanley..........................................    34
        McGowen, William.........................................    43
        Mitchell, William E., II.................................    74
        Reitz, Diana.............................................    81
    Patenaude, Pamela Hughes, Assistant Secretary, Office of 
      Community Planning and Development, U.S. Department of 
      Housing and Urban Development; Dorothy Kelly, 
      councilmember, borough of Carnegie; and Diana Irey, county 
      commissioner, Washington County, PA........................    11
        Irey, Diana..............................................    22
        Kelly, Dorothy...........................................    17
        Patenaude, Pamela Hughes.................................    11
Letters, statements, etc., submitted for the record by:
    Gorski, Stanley, executive director, South Hills Area Council 
      of Governments, prepared statement of......................    37
    Irey, Diana, county commissioner, Washington County, PA, 
      prepared statement of......................................    24
    Kelly, Dorothy, councilmember, borough of Carnegie, prepared 
      statement of...............................................    20
    McGowen, William, executive director, Redevelopment 
      Authority, county of Washington, prepared statement of.....    46
    Mitchell, William E., II, assistant director, planning and 
      development, Westmoreland County Industrial Development 
      Corp., prepared statement of...............................    76
    Murphy, Hon. Tim, a Representative in Congress from the State 
      of Pennsylvania, prepared statement of.....................     8
    Patenaude, Pamela Hughes, Assistant Secretary, Office of 
      Community Planning and Development, U.S. Department of 
      Housing and Urban Development, prepared statement of.......    14
    Reitz, Diana, community development coordinator, city of 
      Jeannette, PA, prepared statement of.......................    83
    Turner, Hon. Michael R., a Representative in Congress from 
      the State of Ohio, prepared statement of...................     4


  THE PITTSBURGH EXPERIENCE: HOW HAS THE COMMUNITY DEVELOPMENT BLOCK 
                  GRANT PROGRAM SHAPED THE STEEL CITY?

                              ----------                              MO
NDAY, JULY 18, 2005

                  House of Representatives,
         Subcommittee on Federalism and the Census,
                            Committee on Government Reform,
                                                      Carnegie, PA.
    The subcommittee met, pursuant to notice, at 10:15 a.m., in 
the Carnegie Municipal Building, One Veterans Way, Carnegie, 
PA, Hon. Michael Turner (chairman of the subcommittee) 
presiding.
    Members present: Representatives Turner and Dent.
    Also present: Representative Murphy.
    Staff present: John Cuaderes, staff director; Jon Heroux, 
counsel; and Ursula Wojciechowski, professional staff member.
    Mr. Turner. I am going to call to order the subcommittee 
hearing, noting that a forum is present for this Subcommittee 
on Federalism and Census. And before we begin I want to note 
that today with this subcommittee hearing we have, with Mr. 
Dent and Mr. Murphy, two members in addition to the 
Subcommittee on Federalism and Census, but an initiative that 
Speaker Dennis Hastert pulled together called ``Saving 
America's Cities.'' The Speaker looked within the Republican 
conference for Members that had experience in economic 
development and community development. He appointed 24 Members 
to this important working group, and the working group's 
function is to look both into their communities and to their 
experiences that they have had in working on issues of economic 
development and advise the Speaker on ways that Federal 
programs can be improved or ways that we need to respond to 
assist our communities to create jobs.
    And Mr. Murphy and Mr. Dent, two Members from Pennsylvania, 
were recognized as having expertise in economic development and 
were appointed by the Speaker to be part of the advisory 
working group for him in addition to their important work on 
the Federalism and Census Subcommittee, which Mr. Murphy, I am 
certain, will highlight his efforts to make certain that we 
preserve community development block grants and the effects 
that they have on our community is one of the things we will be 
looking at today to help us in that process to making certain 
we strengthen and improve the program.
    I would like to welcome all of you to the Subcommittee on 
Federalism and the Census in this field hearing. This is a 
followup to three hearings the subcommittee has held in 
Washington, DC, on this topic. As a former mayor, I understand 
that in order to comprehend the benefits and shortcomings of 
national programs, one should go to where the real action takes 
place. Field hearings allow us to do just that, to reach out to 
you and hear your views, your concerns, and your suggestions.
    CDBG is one of the largest Federal block grant programs in 
existence. State and local governments use CDBG grant moneys to 
fund various housing, community development, neighborhood 
revitalization, economic development, and public service 
provision projects. CDBG is one the largest Federal-direct 
block grant programs in existence. For over 30 years the CDBG 
program has been a critical tool in the arsenal of cities to 
help create livable communities for individuals and families. 
Without question, the program provides vital funds for 
addressing poverty and other community development needs.
    However, in recent months the effectiveness of the program 
has been called into question. Much of this scrutiny has been 
related to the mechanisms used for delivering CDBG funds to 
grantees and whether those grantees have ultimately spent those 
funds in the most effective way. That is why we are here in 
Carnegie, to hear how you at the local level have used these 
funds and how your citizens have benefited from the CDBG 
program. In general, we are interested in learning from you 
what works in the program and what does not.
    I am very pleased with the response to this hearing, 
especially from the number and quality of witnesses seeking to 
testify today and the number of people who are in attendance. I 
would like to express my appreciation to the Borough of 
Carnegie for hosting us today, and especially for allowing us 
to use these Council Chambers today. Moreover, I would like to 
give my thanks to Congressman Tim Murphy for inviting us to his 
district and for his efforts in facilitating this hearing.
    We have two panels of witnesses before us to help us 
understand how the CDBG program has benefited the Pittsburgh 
metropolitan area, as well as what can be done better in the 
future. Our first panel consists of 3 witnesses from the 
national and local elected official perspective. They are the 
Honorable Pamela Hughes Patenaude, Assistant Secretary for 
Community Development and Planning at U.S. Department of 
Housing and Urban Development; the Honorable Dorothy Kelly, 
councilmember for the Borough of Carnegie; and the Honorable 
Diana Irey, county commissioner for Washington County, 
Pennsylvania.
    The second panel of witnesses consists of four 
representatives from the Pittsburgh area community development 
practitioner community. They are Stanley Gorski, executive 
director of the South Hills Area Council of Governments; Rear 
Admiral William McGowen, executive director of Redevelopment 
Authority of the county of Washington; William Mitchell, 
assistant director of planning and development, Westmoreland 
County Industrial Development Corp.; and Diana Reitz, community 
development coordinator for the city of Jeannette, PA.
    I look forward to hearing our expert testimony of our 
distinguished panel of leaders, which will be provided to us 
today, and I thank you all for your time and for coming today.
    In addition to our witnesses, I am pleased to have two of 
my colleagues with me here today. And I now yield to the 
gentleman from the 18th District of Pennsylvania, the Honorable 
Tim Murphy, for any opening remarks.
    [The prepared statement of Hon. Michael R. Turner follows:]

    [GRAPHIC] [TIFF OMITTED] T3851.001
    
    [GRAPHIC] [TIFF OMITTED] T3851.002
    
    Mr. Murphy. Thank you, Mr. Chairman, and thank you for 
having this congressional hearing here in the fine borough of 
Carnegie. I want to make sure everybody knows how to pronounce 
it in case any people here are from out of town. Andrew 
Carnegie is the way we say it here.
    I also want to thank the borough and thank everybody who 
are going to be witnesses and talking today on this very 
important issue of the Community Development Block Grant 
Program, which was established back in 1974 to provide low and 
moderate-income communities with supplemental resources for 
projects such as infrastructure improvements, rehabilitation of 
blighted areas, public services, and other economic development 
projects.
    Over its more than 30-year lifespan, CDBG, as administered 
through the Department of Housing and Urban Development [HUD], 
has provided the largest and one of the most reliable sources 
of Federal funds for our States, counties, and towns to draw 
upon for community-improvement programs. Today, 1,168 State and 
local governments considered ``entitlement communities'' 
receive direct allocations of CDBG moneys based on one of two 
formulas. These funds are then redistributed by the governments 
for various activities, including commercial and industrial 
improvements, acquisition of property, financial assistance for 
local businesses, residential property rehabilitation, and 
public facilities improvements.
    In the 18th Congressional District, which includes parts of 
Washington, Allegheny, Westmoreland, and Beaver Counties, much 
of the CDBG funds have been used for water and sewer 
improvements, street improvements, and assistance to local 
businesses.
    Last fall, southwestern Pennsylvania experienced 
devastating flood damage as a result of Hurricanes Frances and 
Ivan, some that we just saw on our walking tour of town. It 
resulted in $60 million in losses to communities in the region 
and damaged 30,000 homes and businesses. Ten months later, as 
you can see, many of these towns are still struggling to clean 
up and rebuild.
    Last week, HUD announced the release of $150 million in 
CDBG disaster recovery assistance grants for disaster relief, 
long-term recovery, and mitigation for communities across the 
country hit by hurricanes. Pennsylvania will receive $2\1/2\ 
million to help alleviate still unmet housing, business, and 
public assistance needs that develop due to this flooding.
    This morning, I had the privilege to escort my colleagues, 
Congressman Turner and Congressman Dent, on a tour of Carnegie, 
one of our local communities hit hardest by the floods. And I 
believe it is crucial that Members of Congress with oversight 
responsibilities over CDBG see firsthand both the needs of 
these communities and how the funds will be utilized.
    That is why I am grateful this subcommittee has decided to 
hold this hearing today in Pittsburgh, away from the Washington 
beltway bureaucracy, to experience the positive impact CDBG has 
had on towns in real America.
    As most of us in this room know, earlier this year 
President Bush proposed that several Federal community and 
economic development programs, including the Community 
Development Block Grant Program, be consolidated with the 
Department of Commerce. While the administration has not sent a 
formal legislative proposal to the Hill, and the House has 
continued to fund CDBG and HUD, Chairman Turner has held 
several hearings to examine the appropriateness and feasibility 
of this recommendation.
    The administration's review of CDBG is not completely 
without warrant. The relatively broad mission of the program 
has led to concern that some dollars have been spent on 
projects that may not significantly contribute to the well-
being of low and moderate-income urban areas. Criticisms have 
also been raised regarding the fairness of the funding formula, 
which can lead to less needy communities receiving more funding 
per person than communities with larger low-income populations. 
These are both issues Congress should consider as it evaluates 
the President's proposal. However, shifting of CDBG to a new 
Federal agency could significantly impact thousands of local 
governments and businesses and millions of people across the 
Nation that have come to rely on the positive contributions 
this program has had over the last three decades.
    I believe it is vitally important Congress go beyond the 
beltway and hear a firsthand account of people who know best, 
our local elected officials and economic development 
coordinators--how CDBG has worked, how it hasn't worked, and 
suggestions for how to make the program better.
    These moneys are real dollars which have a very real impact 
on real communities. The wholesale consolidation of CDBG with 
other programs is not a decision that should be made from 
30,000 feet, but is a decision that should be made only after 
substantial feedback and consultation with individuals here on 
the ground.
    I can think of no better place to learn about the 
contributions the program has made on the average American 
community than right here in southwestern Pennsylvania, and I 
am pleased that the chairman and the Government Reform 
Committee has agreed to hold this hearing.
    I want to join you in welcoming all our witnesses and 
Congressman Turner, the former mayor of Dayton, OH, who has 
firsthand encountered a number of the issues involved with 
these grants, and also Congressman Dent, a former colleague of 
mine in the State Senate as well, from Allentown, PA. And I 
yield back the balance of my time. Thank you, Mr. Chairman.
    [The prepared statement of Hon. Tim Murphy follows:]

    [GRAPHIC] [TIFF OMITTED] T3851.003
    
    [GRAPHIC] [TIFF OMITTED] T3851.004
    
    Mr. Turner. Thank you, Mr. Murphy. I appreciate your 
leadership in the efforts to retain CDBG funding, not only to 
make certain that the funding is there, but also that it is 
retained as a program at HUD and its efforts to be able to make 
an impact in the lives of people in their communities. I now 
turn to Honorable Charlie Dent, the distinguished vice-chair of 
this committee who is from the 15th District of Pennsylvania. 
And I yield to him for his opening remarks.
    Mr. Dent. Thank you, Mr. Chairman, and thanks to my friend 
and colleague, Tim Murphy, whom I served with in the 
Pennsylvania Senate, as well as now Congress. I want to point 
out that I did serve in the Pennsylvania Senate as the Chair of 
the Senate Urban Affairs and Housing Committee, so I got to 
deal with a number of the issues that impact all of us.
    I am also struck by the similarities of the impacts of 
Hurricane Ivan on this community of Carnegie, just as it 
impacted many of the many of the communities in my area as 
well, not just with Ivan, but the succeeding flood a few months 
ago. We experienced similar damage along the streams and also 
the Delaware River, and we are still recovering as well.
    With respect to the CDBG program, the beauty of this 
program is its flexibility, and I suspect that in southwestern 
Pennsylvania, we spend the moneys in similar ways that we spend 
it in eastern Pennsylvania. You use this money for site 
improvements, you use it for demolition, you use it for 
mediation, in some cases you may use it to pay for staff, 
personnel in some cases where I live. You use it for a variety 
of purposes to advance the betterment of your communities.
    And I am just excited to be here today to hear the 
testimony of all the presenters about just how you utilize 
those dollars and what you think we can do to make the program 
better. As was stated by Congressman Murphy, a lot of us in 
Congress have a great deal of concerns and reservations with 
respect to the President's program that would have consolidated 
CDBG and 17 other programs into the Department of Commerce. 
CDBG will not move to Commerce. You know, we would make sure of 
that. But we want to hear from you just specifically as to what 
you think we can do to make this program better and to better 
serve the needs of people in the region. So with that, I yield 
back the balance of my time. Thank you, Mr. Chairman.
    Mr. Murphy. Mr. Chairman, can I just interrupt for one 
moment if you would yield? I am not sure how well known it is 
that recently, CDBG disaster assistance grants just came to 
this area, Allegheny County, receiving $388,000 to rebuild 
homes damaged by the storm and purchase and demolish homes no 
longer available. Also Washington County received $400,000, and 
Penn Hills, another part of my district, received $115,000. 
Penn Hills is one of those communities which is identified as 
being eligible for those. For residents that may be watching 
this, it is a matter of contacting the proper authorities from 
the county or my office to find out how they can obtain some of 
those funds. So I yield back. I am sorry.
    Mr. Turner. OK. Thank you all for participating again in 
the field hearing today. And we will now start with the 
witnesses. Each witness has kindly prepared written testimony, 
which will be included in the record of this hearing. Each 
witness has also prepared an oral statement summarizing their 
written testimony. Witnesses will notice that there is a timer 
with a light at the witness table. The green light indicates 
that you should begin your remarks, and the red light indicates 
that your time has expired. In order to be sensitive to 
everyone's time schedule, we ask that you adhere to the 5-
minute time allowance for your oral presentation. We will 
follow that with a question-and-answer period from the Members. 
It is the policy of this committee that all witnesses be sworn 
in before they testify. So if you would please rise to accept 
the oath and raise your right hands. I will now swear in our 
panel of witnesses.
    [Witnesses sworn.]
    Mr. Turner. Let the record show that all witnesses have 
responded in the affirmative. And we begin our testimony with 
Pamela Patenaude.

  STATEMENTS OF PAMELA HUGHES PATENAUDE, ASSISTANT SECRETARY, 
 OFFICE OF COMMUNITY PLANNING AND DEVELOPMENT, U.S. DEPARTMENT 
OF HOUSING AND URBAN DEVELOPMENT; DOROTHY KELLY, COUNCILMEMBER, 
   BOROUGH OF CARNEGIE; AND DIANA IREY, COUNTY COMMISSIONER, 
                     WASHINGTON COUNTY, PA

              STATEMENT OF PAMELA HUGHES PATENAUDE

    Ms. Patenaude. Good morning. I am Pamela Hughes Patenaude, 
Assistant Secretary for the Office of Community Planning and 
Development at the Department of Housing and Urban Development.
    I am pleased to be here today in Carnegie on behalf of 
Secretary Alfonso Jackson. Thank you, Mr. Chairman, Congressman 
Dent, and Congressman Murphy, for scheduling this field hearing 
to gather information on the performance of the Community 
Development Block Grant Program and its influence on the city 
of Pittsburgh and the surrounding area.
    I am pleased to be here before you today near my hometown 
of Upper Saint Clair alongside the Honorable Dorothy Kelly and 
the Honorable Diana Irey to discuss the impact of CDBG funding 
and hear from local recipients of CDBG assistance.
    As Assistant Secretary for Community Planning and 
Development, I am responsible for the administration of the 
CDBG program. My predecessor, now Deputy Secretary Roy 
Bernardi, last testified before the subcommittee on May 24, 
2005. During previous hearings, Mr. Bernardi testified on 
various CDBG issues, including the Grant Allocation Formula, 
eligible activities, and performance measures. We now have a 
unique opportunity to hear from local grantees and 
organizations assisted by CDBG.
    Let me also use this opportunity to note that the 
President, via his 2006 budget, has proposed to consolidate 18 
programs within the Department of Commerce, including the CDBG 
program. These programs would be consolidated into one 
program--the Strengthening America's Communities Initiative. 
This initiative would support communities' efforts to meet the 
goals of improving local economic conditions by simplifying 
access to Federal funds, increasing flexibility, improving 
targeting, and establishing strong accountability measure.
    However, let me begin with a brief overview of the CDBG 
program. The program has been the Federal Government's primary 
vehicle for assisting local governments and undertaking a wide 
variety of community development activities aimed toward 
improving the lives of low and moderate-income persons in the 
United States. In the course of its 30-year history, CDBG has 
provided a ready source of funding for housing rehabilitation 
programs, public services, public facilities and 
infrastructures, and economic development activities.
    The city of Pittsburgh has focused its planning and 
community efforts on economic development and the 
revitalization of its neighborhoods, transforming itself into 
one of America's leading 21st century cities.
    The city has used CDBG funds to address more traditional 
challenges found in former manufacturing centers such as aging 
housing stock and economic development. The city of Pittsburgh 
has reported that since 1974, CDBG has provided housing 
rehabilitation funding for approximately 18,000 units, the 
majority of which benefit low and moderate-income households. I 
would like to provide a couple of examples with respect to 
Pittsburgh's economic development. A small CDBG economic 
development loan in East Liberty led to the opening of a Whole 
Foods Market in a commercial district that had been declining 
for 40 years. Whole Foods has hired nearly 160 neighborhood 
residents to work in what was once an abandoned warehouse. This 
grocery store is expected to be a catalyst for additional 
commercial development nearby. Project officials indicate that 
the commitment of CDBG funds to this project was key in 
securing private investors.
    This city is also undertaking a major redevelopment effort 
to transform the 123-acre site of a former steel plant. I had 
the pleasure of touring this South Side Works last night. The 
redevelopment plans call for offices, shops, and housing 
onsite. Total investment in the project is estimated to be 
approximately $350 to $400 million with an expected 5,600 jobs 
created, many of which will go to low and moderate-income 
persons. CDBG-related funding in this project to this point 
includes construction financing for two parking structures and 
related infrastructure improvements. Upon completion of the 
projection, real estate taxes will be approximately $8 million 
annually.
    Another major CDBG grantee in the metropolitan area is 
Allegheny County. Allegheny County's fiscal year grant is more 
than $16 million and the county operates one of the largest 
urban county programs in the Nation with 126 cooperating 
jurisdictions.
    The county's CORE housing program combines funds from HUD's 
CDBG and HOME Investment Partnerships programs to support 
affordable housing developments throughout the county. Both 
non-profit and for-profit developers may access these funds for 
new construction or for the conversion of existing single and 
multi-family properties for the benefit of low and moderate-
income home buyers. The county's CORE program also provides 
funding for single-family owner-occupied rehabilitation 
activities. Over the past 6 1/2 years, Allegheny County has 
dedicated almost $3.2 million of CDBG funds that have provided 
294 housing rehabilitation loans for low and moderate-income 
home owners.
    CDBG helps communities across the Nation address a variety 
of needs and funds an array of activities. However, it is often 
difficult to measure results. Therefore, HUD is implementing a 
comprehensive performance measurement framework for all of our 
formula grant programs with a specific focus on CDBG. We 
anticipate that will help HUD improve performance and track 
results.
    Our partners--public interest groups representing cities, 
States, and counties across the country--are helping us to 
design a better performance measurement system. We will be 
conducting five forums around the country in the next few weeks 
to obtain input on how best to implement this proposed system. 
One of the forums will be held in Philadelphia this Wednesday. 
It is our belief that with better performance measurement 
tools, grantees such as Pittsburgh and Allegheny County will be 
able to design programs that maximize resources and results for 
low and moderate-income citizens. Cooperation with local 
communities will be essential to our success as we move 
forward, which is why this hearing today is so valuable.
    Thank you, Mr. Chairman, Congressman Murphy, Congressman 
Dent. I look forward to answering your questions.
    [The prepared statement of Ms. Patenaude follows:]

    [GRAPHIC] [TIFF OMITTED] T3851.005
    
    [GRAPHIC] [TIFF OMITTED] T3851.006
    
    [GRAPHIC] [TIFF OMITTED] T3851.007
    
    Mr. Turner. Thank you. Councilwoman Kelly.

                   STATEMENT OF DOROTHY KELLY

    Ms. Kelly. Thank you. I would like to first state that I 
have been councilperson for 1\1/2\ years, and I have been 
president of the council for about 11 months. Carnegie has 
applied for and been the recipient of CDBG funds over a period 
of 30 years. However the Federal records I was able to access 
were sketchy prior to 1989. So for that period of time, the 
grants that I looked at fell into two main categories--safety 
and recreation. Under safety or handicap access included the 
ramps, curb cuts, and walkways, and all of those things that we 
needed as a result of the American Disability Act.
    We had retaining walls, and there is one for which a grant 
is pending. These walls were needed to prevent the road from 
falling onto business patrons' parking lot below and one to 
keep the road from collapsing into homes below. The road now, 
the grant is pending, is to prevent the entire road from 
collapsing, thereby closing off the only exit/entry to that 
road.
    There were catch basins that were part of these grants, 
concrete steps to replace the wooden deteriorated ones for 
residents that live on the hill so they might have access by 
foot into the town.
    An important one for us is the demolition of structures. 
The old municipal building was badly impacted by the flood, and 
as I speak, demolition is continuing there. There are 5 
abandoned buildings that are in the process of being razed.
    Chartiers Creek channel slope was corrected in 1999. The 
problem that exists in the creek today, however, are very 
complex. The 52-mile creek flows downhill to Carnegie. No laws 
prevent upstream communities from degrading land for 
residential and commercial development. The channel slope 
correction helped until Hurricane Ivan struck.
    There have a been a great deal of storm and sanitary work 
as a result of the grants, and with road construction, there 
was one road for the Busway, and if you note, there is a Busway 
to the side of this building, and there is another one down the 
road a quarter of a mile.
    The second category of projects relate to recreation. There 
was park lighting, hockey pads, volleyball court, park restroom 
renovation, tennis court and basketball court. Carnegie is 
grateful for the grants much needed in an old community.
    In the present year, five grants are pending. The total of 
all the grants for both granted and pending is about $2 
million. The total of all grants received, however, is about 
$329,000. If all the grants pending are approved, Carnegie will 
have received approximately 17 percent of the grants applied 
for. The grant money that we receive comes at a cost to us. We 
pay dues to COG, and that went up 20 percent this year. Much 
employee time is required in writing for the grants, the 
manager, the secretary, public works, and often services of an 
engineer.
    I would like to give you a holistic approach to better 
understand the needs of Carnegie; 9 months after the flood, 
flood victims are still in need of help, and it is the Church 
Ministerial Association that is helping these people. There was 
not enough money given to them through FEMA. After the flood, 
Senator Specter, Santorum, Secretary of Commerce, Donald Evans, 
all visited Carnegie, but no money was forthcoming. Residents 
did not receive enough FEMA money to cover their needs. FEMA 
offered a floodplain buyout for those who have water on the 
first floor. The buyout was not feasible for the borough. The 
Small Business Association did very little for businesses in 
this town.
    Allegheny County reduced the assessments of properties 
affected by the floodplain 25 percent. The reduced assessment 
has further eroded the tax base in this town. There is not 
adequate revenue to support the reasons for the very existence 
of local government, and that is the safety, the roads, and the 
sewers.
    The consent order mandated by EPA, DEP, and Allegheny 
County will cost the borough $1 million over 3 years. Liquid 
fuel tax money for road paving is not enough to resurface roads 
made worse from the flood. PennDOT maintains the State road 
here, and there were moneys to cover the loss, so those roads 
are in good condition. But other than that, they are in very 
poor condition. Section 8 housing at the 10-story Carnegie 
Towers continues to create problems for the fire and police 
departments and depressed property values in the area. And 
there are abandoned homes that were not cleaned after the 
flood. Owners simply closed the door and walked away. You can 
do an Internet search for Section 8 and properties, and they 
are being bought up in this town by some landlords. They just 
jump at the opportunity.
    Carnegie is a town worth saving. Its location, close 
proximity to the city, to the airport, and to the two 
interstates and with a direct Busway to Pittsburgh, which is 
where the universities are located. Assets of the town include 
the Carnegie Library Music Hall, which is undergoing 
renovation. It will cost about $8 million. They have foundation 
and other grants, and they did receive one gallery grant. Three 
art galleries in town, music, Pittsburgh Music Academy, two 
ballet companies, two resident theater groups, a recently 
opened upscale nightclub restaurant, historical society, Honus 
Wagner Museum, and a very active Carnegie Renaissance group 
that takes care of the planters in this town, the banners that 
you saw in front of businesses. They also have business mixers. 
They do everything they can to promote business in this town. 
There is a group seeking to develop a trail to connect to the 
Panhandle Trail, and this trail eventually, if it is connected 
through Carnegie and the other areas, will go directly to 
Washington, DC.
    So you can see that even with the creek having been such a 
damaging force in town, it could become an asset for boating 
for this town because the creek goes all the way to the Ohio 
River. Carnegie has all the ingredients for a viable community. 
Only the funds are needed to make it grow again to a 
destination town.
    There were two recent events that make me optimistic that 
Carnegie will become a vibrant community. Otherwise, it could 
decay into a slum. The Carnegie Mellon University, in working 
with them, I was able to have them use Carnegie for their urban 
land. Senior students who are in the School of Architecture and 
Urban Planning will come to this town and they will draw up 
their vision of it. This will cost us nothing, and possibly we 
will have some good ideas for this town.
    Another event that gives me hope, I submitted a lengthy 
proposal to the FHL Bank system, and just in the last week and 
a half I received word that we were selected as 1 of 10 
communities in western Pennsylvania. This will give us 
technical assistance, training, and assistance in locating 
other kinds of funding.
    I would like to end with a quote of Thomas Friedman, the 
journalist and political writer who has said, ``If you don't 
visit a bad neighborhood, it will visit you.'' And we are all 
losers if Carnegie is not revitalized. Thank you.
    [The prepared statement of Ms. Kelly follows:]

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    [GRAPHIC] [TIFF OMITTED] T3851.009
    
    Mr. Turner. Thank you. Ms. Irey.

                   STATEMENT OF DIANA L. IREY

    Ms. Irey. Thank you. Good morning, Chairman Turner, 
Congressman Murphy, and Congressman Dent. I appreciate the 
opportunity you have provided to all of us today to speak to 
you about the importance of the CDBG program.
    The Community Development Block Grant provides invaluable 
assistance to our municipal governments in Washington County 
for a myriad of projects that would otherwise not be completed. 
The funds are distributed on a rotational basis, and it allows 
our local officials to plan their budgets accordingly. 
Municipal governments are charged with numerous 
responsibilities, and they serve on extremely limited budgets. 
So many of the projects that CDBG has come alongside to help 
fund would not be completed. They are used for road and bridge 
projects, gap funding, redevelopment/revitalization studies, 
plans, and constructions, and comprehensive planning and 
implementation of ordinances.
    CDBG program truly benefits our senior population. The home 
rehabilitation program has provided assistance to low-income 
and moderate-income households. Predominantly, our elderly are 
affected. This helped to complete repairs on our homes, which 
result in a higher quality of housing stock, and more 
importantly, has allowed our seniors to stay in their homes. 
Approximately 25 percent of the projects that have been 
completed in Washington County have directly benefited our 
senior citizens.
    I want to mention three recent cases that resulted in 
allowing our seniors to stay in their homes. Robert and Joan 
Golbraith of Canonsburg had the exterior of their house painted 
and their back porch fully rebuilt. LouAnn and Eugene Clark of 
Washington received new siding, new windows, and a garage roof. 
Joyce Carroll and Francis Vennon of Washington now live in a 
home with a new roof, a new porch, a repaired bedroom that had 
suffered water damage.
    On a larger scale in the New Eagle Borough, we had an 
abandoned, dilapidated hospital that was acquired, demolished, 
and remediated with CDBG funding. In its place was built a 42-
apartment low-income senior high-rise. The nearest facility for 
our seniors, only approximately a mile and a half away, had a 
waiting list of over 5 years. So this was a very, very needed 
housing facility for our seniors.
    Many of the fire departments in Washington County could not 
purchase the equipment that they need without the CDBG moneys. 
Water and sanitary sewer service has been provided and roads 
and bridges have been improved, including a major slide and a 
repair in Carroll Township resulting from an underground spring 
in an abandoned mine shaft. And due to the complexity of the 
stabilization process and road reconstruction, that project 
alone would have severely impacted Carroll Township's budget. 
That is the township in which I live. School buses travel that 
road. It was reduced to a one-lane road, and had been so for 
quite a while because no one could find the money to repair the 
road. Without the CDBG funds, it put our children at risk as 
they traveled that on the school bus, and also many people 
utilizing the road.
    We have a development at the new Head Start facility to 
provide better educational opportunities for our low-income 
children. And that is a wonderful program. That, again, would 
not have been possible without CDBG funding. This program is 
all-encompassing, and it is difficult to provide just a 
thumbnail sketch in 5 minutes of what this program has done for 
Washington County.
    This program has benefited our children directly with 
educational opportunities, our seniors with housing 
opportunities, our citizens with traveling opportunities. It 
has provided safe water and sewage. It has helped with our 
safety, and with our fire departments. So we are very much 
interested in seeing this program continue. In Washington 
County in 2002 we received $5.6 million in CDBG funding. It has 
reduced now to 2005 to $4.9 million. We would like to see this 
program restored. This program is critical in Washington 
County.
    And we thank you for taking the time to come hear from us, 
the local residents and elected officials and economic 
development leaders in our communities, to know exactly what we 
are using this money for. We are pleased with how the program 
is working, and we ask that you please help us to continue. 
Thank you very much.
    [The prepared statement of Ms. Irey follows:]

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    [GRAPHIC] [TIFF OMITTED] T3851.011
    
    Mr. Turner. Commissioner, thank you so much. And again, I 
thank each of you for your time and your preparation for this 
important hearing. And we will begin our questions and comments 
with Mr. Murphy.
    Mr. Murphy. Mr. Chairman, how much time do we have, each of 
us, for questions?
    Mr. Turner. Let me do a round of 5 minutes and then see how 
that goes, and if we need additional time, we can do either a 
second round or extend that.
    Mr. Murphy. Thank you, Mr. Chairman. First of all, I would 
like the witnesses to know and also the audience to know that 
as far as some of the money, in addition to some of the grants 
that we work with CDBG to help out the county, and if people 
still have needs in Washington and Allegheny County, they can 
certainly contact the county. I don't know if there is a 
specific place in Washington County folks can apply for some of 
that $400,000 that just came through. Is it a matter of calling 
the commissioner's offices or----
    Ms. Irey. We are having them go through our human services 
director.
    Mr. Murphy. OK.
    Ms. Irey. They can call the commissioner's office, and we 
have a list of unmet needs that we are very appreciative that 
you were able to provide that funding for us.
    Mr. Murphy. And someone here in Allegheny County, they can 
contact our office, and we will give them the right number as 
well. And I should also say, we are working on some other 
appropriations to help here. We recognize that FEMA and the SBA 
programs are made to provide that quick response to residents, 
but something still needs to take place in the appropriations 
process, and we are working at that, as well as Army Corps of 
Engineers funding to help with dealing with the flood problems 
over time.
    But I want to ask about a couple other things about the 
CDBG funding here. Madam Secretary, I guess part of the 
question is how does HUD monitor whether the grantees, for 
example, use at least 70 percent of the funds awarded for 
activities that really benefit low and moderate-income persons? 
What is the process used and do you feel that some improvements 
need to be made, or is it working adequately?
    Ms. Patenaude. Thank you, Congressman Murphy. First of all, 
a consolidated plan, a 3 or a 5-year plan is required by the 
grantees to be submitted to HUD. Our CDB representatives in our 
field offices review those plans. The second report that is 
required of the grantees is an annual action plan. Again, the 
CDB field reps review the annual action to plan to see that it 
is in concert with the 3 to 5-year strategic plan; 90 days 
after the end of the program here, the grantees submit a 
CAPERS, a performance evaluation report. Our CDB reps have a 
risk analysis that they use to determine which grantees would 
be monitoring onsite with the grantee. We are certain with the 
process that is in place right now that we are doing a good job 
of monitoring CDBG grantees, but, of course, there is always 
room for improvement, and we are very hopeful that our 
performance measurement system will be that source of 
improvement.
    Mr. Murphy. Thank you. Also, let me ask about with regard 
to when you monitor that performance, because some of the 
criticism has come across country that I am concerned has been 
unfairly targeted CDBG for some changes here, has been that 
some communities and some States have misused that, for 
example, using funds just to balance the books at the end of 
the year. What do you do when that occurs? What kind of 
accountability is put into place?
    Ms. Patenaude. If a grantee has misused the funds or not 
used the funds for eligible activity, the department does have 
the ability to reduce the grantee's allocation. In the case of 
a grantee that is not spending--we have a one and a half time 
is the goal that we have for grantees drawing down their funds. 
In that situation we also have the ability to recapture those 
funds from the grantee.
    Mr. Murphy. OK. And Commissioner Irey, thank you for being 
here today. But a question with regard to if you could use 
these funds on a rotational basis through communities----
    Ms. Irey. Yes, we do.
    Mr. Murphy [continuing]. How do you determine that? That is 
a policy that Washington County has alone? Is that how you do 
that?
    Ms. Irey. I believe it is Washington County's policy, and 
we determine it based on the needs in the communities and the 
population in the communities. We do have a formula established 
for that. It has been working that way for 10 years, since I 
have been in office, and I know that it is going very well.
    Mr. Murphy. But are there difficulties you encounter when 
using the CDBG funds or applying for them? Are there 
recommendations that you might want to make to this panel in 
terms of how we could make it smoother, easier, quicker, any of 
the above?
    Ms. Irey. Allowing more money to be used for emergency 
projects such as the road slide that we had in Carroll Township 
would be helpful to allow a little more room to move.
    Mr. Murphy. So some formula changes on that?
    Ms. Irey. Yes.
    Mr. Murphy. OK. And to Councilwoman Kelly, you had named a 
number of projects that were used here----
    Ms. Kelly. Right.
    Mr. Murphy [continuing]. In Carnegie. I am sure you are 
aware other communities are also using some of these, so I 
don't expect you to represent other communities out here too. I 
don't know if you were aware before about this, this money we 
talked about, this CDBG money just coming through for emergency 
assistance. Is that something you are going to be able to 
notify your local residents here of some of that funding to be 
able to help them? Do you have a mechanism to do that?
    Ms. Kelly. Well, our borough manager has done this sort of 
thing, although I do think that some of us should become more 
involved in it. I think that is one of the secrets to obtaining 
funding is to have these searched out and taken care of in a 
timely fashion. They are publicized some of the things that are 
done in our local paper and sometimes in the Pittsburgh 
newspaper.
    Mr. Murphy. OK. Thank you. And one final question for you. 
You had mentioned that there were some recordkeeping changes 
since 1989. You don't have the records prior to that? It is not 
clear what was done before?
    Ms. Kelly. I was not able to locate them. And as I would 
point out to you, I called to get the information, and it is 
out of my hands in a sense that I can only rely on the people 
that are maintaining these records. They moved from the old 
building 3 years ago and some records never made it up here.
    Mr. Murphy. Does that get in the way of future grants in 
terms of them being able to get these records? Is that not 
necessarily a problem then for you?
    Ms. Kelly. I don't think that would be a problem. I think 
we just start with where we are and write for grants as they 
are needed.
    Mr. Murphy. All right. Thank you. Thank you, Mr. Chairman.
    Mr. Turner. Mr. Dent.
    Mr. Dent. Thank you, Mr. Chairman. And I guess just an 
observation, Commissioner, I just noticed that it seems in 
Washington County you use a great deal of your CDBG money for 
infrastructure improvements?
    Ms. Irey. Yes, we do. It is a very rural county.
    Mr. Dent. And it is a little bit of a contrast from where I 
am, a more heavily urbanized area where you see a lot of 
downtown business redevelopment, remediation, demolition, that 
kind of work. I also noticed too you use money for Head Start?
    Ms. Irey. Yes.
    Mr. Dent. Did you build a Head Start facility?
    Ms. Irey. Yes, we did.
    Mr. Dent. That was just an interested use. And I was just 
curious to ask the secretary, what have you noticed in terms of 
best practices or problems that you have identified in various 
field offices about how these CDBG dollars are being spent? 
Could you give us any suggestion or some thoughts as to what 
are the best practices here in this region for example? Do you 
have any examples here in the Pittsburgh region?
    Ms. Patenaude. An example of the best practice here in 
Pittsburgh?
    Mr. Dent. Yes. Or problem for that matter.
    Ms. Patenaude. The 123-acre site that they are developing, 
they use for economic development.
    Mr. Dent. That was in Pittsburgh?
    Ms. Patenaude. In Pittsburgh.
    Mr. Dent. Yes. I have no further questions. I was just 
struck by the amount of money being used for infrastructure in 
Washington County which is--again, I can understand why you 
would do that there, a more rural county. And just contrasts to 
my experience. So thank you. Mr. Chairman.
    Mr. Turner. One of the exciting things about CDBG is that 
you get visible results. Things change in a community and 
things happen in a community. The excitement of the hard work 
that goes into both the community planning, the grassroots 
efforts, many times to identify projects, and then also the 
leveraging aspect of CDBG really does, I think, give a 
community a sense that these dollars, once placed into a 
project, attract other types of investment and commitment.
    And Commissioner and Councilwoman Kelly, I am going to ask 
you if you guys could talk for a moment about two aspects of 
your work with CDBG, and really, your work about economic and 
community development. Because CDBG goes beyond just the issue 
of what did you spend the moneys on? It goes to the issue of 
what are your needs in your community that you are looking at 
with economic development and how can CDBG be used to help 
assist that.
    So if we could talk about two things. One, if you could 
talk about the leveraging aspect. The funds that you have spent 
generally are not the only funds that go into a project, and 
usually there is a tremendous amount of hard work to find those 
other funds, to marry them to CDBG programs. So the leveraging 
aspect is one. And the second thing I would like to have you 
talk about is--and I know, certainly, in your community, 
Councilwoman Kelly, and the things that you have talked about, 
there is a tremendous amount of grassroots support for your 
economic and community development efforts. And if you could 
talk about your community's response to your efforts to use 
these funds for the projects that you identified and how they 
have been received. And why don't we start with Commissioner 
Irey.
    Ms. Irey. Thank you. From a leveraging aspect, we have had 
downtown revitalizations in the major cities and boroughs in 
Washington County that if we did not have the CDBG moneys to 
leverage, we have no starting point. And we have revitalization 
projects in the city of Washington, which is where our county 
seat is, and the borough of Canonsburg. We have had them in the 
past in the city of Charleroi and the city of Monongahela. Many 
of our smaller communities, which are actually larger 
communities for our county, have been able to use these for 
leveraging funds. So they are a starting point.
    And for grassroots support, boy, I couldn't tell you, if 
you had this in Washington County, I think you would have a lot 
more people attending, only because this is so critical for our 
county. People are very excited about the CDBG program because 
it does allow them the opportunity to do things they could not 
otherwise do. We hear back from constituents all the time. We 
get thank you notes, which is a little surprising, but we 
actually do because of the program. And I don't know what the 
response would be if we didn't have that. I would imagine that 
another type of program to be funded in another way would have 
to take its place because our local government simply could not 
provide the revitalization programs and help to seniors and our 
children that the CDBG program provides.
    Mr. Turner. Thank you. Councilwoman Kelly.
    Ms. Kelly. Yes, as far as leveraging aspect, I know that 
Main Street was the important issue here, and there were two 
pedestrian laws in this town that had been there for many 
years, and actually, they helped destroy the town because there 
was such limited parking and people just wouldn't want to walk 
through there. But that was all taken care of, and I think on 
the walking tour you notice that area had been made attractive 
right there. And I don't know what all grants went into that, 
and perhaps Congressman Murphy would know better than I as to 
which grants went into it. But certainly, there was a great 
deal of money that came into it for that.
    However, we hardly had time to get started until this flood 
hit the town, and we are almost to base one again. And so there 
is a great deal that needs to be done with revitalization of 
the business district. Without that, this is not a town any 
longer. We pointed out that even the drugstore in town had 
closed and we do have a group in town, the Carnegie Community 
Development Corp., and they were involved in bringing 
businesses into town. However, I don't think there was any real 
coordination between them and some of us who serve on council. 
And that has kind of fallen apart, and now it has been 
reorganized, and I have high hopes that the person that is 
executive director will get us started in that direction to try 
to bring businesses into this town. I think that is one of our 
prime concerns at the moment.
    And, of course, the other is demolition of these old 
structures. I mean they are absolute slums after a while if 
they are not demolished and removed. And we do need the money 
for that. And we did get I think $38,000 for some, but that is 
not adequate to take care of all the other buildings. You did 
not see those areas on the streets below, which were in very 
bad shape. The road is like a washboard. And there are slum 
landlords that come in and they don't even follow the 
guidelines of the county. They somehow evade all of that and 
they slap a coat of paint on them, and there is mold growing 
behind that. So that is indeed a problem.
    Mr. Turner. Certainly.
    Mr. Dent. Just for either of you, Dottie or Diana. Do 
either of you use CDBG dollars to pay for staff? Like in one of 
my communities----
    Ms. Kelly. No.
    Mr. Dent [continuing]. We use some dollars to pay for code 
enforcement, for example, which is a good use I think. But do 
you use----
    Ms. Kelly. To my knowledge none of that money has been used 
for staff. That is why I am saying even with the 17 percent, it 
is not clear money to us because we then pay employees and an 
engineer to go out onsite for some of these grants. And we do 
pay COG and we pay dues to COG, and I pointed out that went up 
20 percent this year. We did not pay it because we could not 
afford to do that.
    Mr. Dent. Do you have a Main Street manager down here in 
Carnegie, Department of State program? Have you participated in 
that?
    Ms. Kelly. No, but I am hoping with this one proposal 
through the FHL Banks that we will get their assistance. I mean 
we need someone that is very knowledgeable. I don't think we 
have people here that are quite that knowledgeable on how to 
handle that.
    Mr. Dent. Thank you.
    Ms. Irey. To my knowledge we did use some for the 
administration of the program. We use the CDBG program through 
our redevelopment authority, so they actually manage the 
program. And they also provide support staff because some of 
our local governments don't have the staffing capabilities or 
expertise to even know how to go about applying for matching 
grant funds or other things for the projects, even filling out 
the paperwork. So they assist in local governments.
    And one thing I forgot to mention earlier was when it came 
to leveraging funding, some of our non-profits like Head Start 
that are able to receive some CDBG fundings are able to use 
that to leverage foundation money as well.
    Mr. Dent. Thank you. That was interesting too. In my area I 
haven't seen as much use of the money for human service related 
program. I am on a Head Start Board where I live, use State 
capitol funds and a variety of sources. I am going to suggest 
that they look at CDBG to help their program. Thank you.
    Mr. Turner. Very good. One of the criticisms of CDBG when 
the administration brought forth the Strengthening America's 
Communities program, which would have consolidated 18 grant 
programs and moved them into Commerce, in effect eliminating 
CDBG, was an allegation that the program duplicated other 
efforts on the Federal level. When I hear the types of 
activities that you have undertaken, I am not aware of other 
Federal sources that duplicate the types of seed money and 
economic development assistance that CDBG would provide or has 
provided to your projects. So I want to ask you, is CDBG your 
second source that you go to or is it the primary source? Are 
there other sources that you are aware of or is this the only 
source that you would find in order to be able to fill that gap 
and make a difference in these projects?
    Ms. Irey. To my knowledge, in 10 years this is the only 
source. This is such a huge program in Washington County, I 
can't even begin to tell you. Everybody looks forward to every 
year when we get a list of the projects that CDBG is going to 
fund. So I don't know of any duplication there could possibly 
be or any overlap from any other government with this program.
    Ms. Kelly. The same is true here. It is our main source, 
and it is not a great deal when you consider the 10 years, 
roughly $330,000--or, no, what was the figure I gave you? About 
$330,000. We really don't have any foundation money for this. 
And I know they did for the library, which is quite an asset. 
It is the gem, the beacon up on the hill. And there was some 
government funding for that. I don't know all the details in 
that, but most of that money was from foundations and from 
outright donations of people. People have been very generous to 
this town actually. It is just like after the flooding with 
their donations.
    Ms. Irey. Mr. Chairman, I would also like you to know that 
we don't seek projects for CDBG. Elected officials seek us with 
projects to find funding for. And CDBG happens to be one that 
allows a lot of funding for their projects. So there is never a 
shortfall of needs or programs that we need helping with.
    Mr. Turner. Excellent. Thank you. Ms. Patenaude, I 
apologize if I have mispronounced your name. There are two 
things that I am interested in if you could speak about. One, 
obviously, is the benefits of the CDBG program and its 
leveraging. To what extent does HUD monitor or track leveraging 
so that they can be viewed as an item that supports the CDBG 
program? We certainly hear about it from every community that 
we go to, and that ability to attract other dollars to 
important economic development projects for communities, I 
think, is one of the greatest things of CDBG. So leveraging is 
something that is very important, and I am very interested in 
learning from you about, and how HUD might track that.
    Another item that I think is interesting is that, in 
hearing from the different communities, just even the two we 
have today, the differences in the need and the differences in 
the uses are very wide. And that is true across the country. 
But many times the types of projects that a community might be 
undertaking may be somewhat similar to something another 
community has done. And the opportunity to share information 
about best practices with a little bit just of technical 
assistance and advice of what has worked or what has not 
worked, I think CDBG projects can be made more successful. And 
I know there is a lot of national associations that people 
participate in that share best practices information. But I am 
not quite certain at the HUD level that the best practices 
information is being collected and distributed. I would like 
your thoughts on that.
    Ms. Patenaude. Thank you, Mr. Chairman. My understanding of 
best practices is that they are available to the public on our 
Web site. The 30th anniversary of CDBG in last September there 
was an effort underway at HUD to highlight some of the very 
successful programs. But I do agree that we could do a much 
better job with technical assistance by sharing best practices 
with other communities.
    To answer your question on leveraging, I don't know the 
answer to that. The IDIS system is the information and funding 
system that we use. And I am not sure that we track leveraging 
dollars. So I would have to defer to my staff and get back to 
you.
    Mr. Turner. OK. I know that HUD has such a tremendous 
amount of expertise in the projects that are being undertaken 
as you review the strategic plans, the comprehensive plans that 
communities put together and then looking at the issue of how 
the funds are spent and their compliance to those plans. And it 
just would be great if we could look at how to harness that 
great expertise in HUD to make certain it is available to these 
communities. Thank you. Are any other questions from the 
Members?
    Mr. Murphy. Mr. Chairman, I have one for the secretary. And 
I was asked by a reporter and haven't been able to find an 
answer yet, but is there any data kept on overall the number of 
jobs that have been assisted--not necessarily directly created 
because I don't think government creates jobs--but certainly 
have come out of some of these CDBG grants? Any job count?
    Ms. Patenaude. I believe that the IBIS system does track 
jobs created to benefit low and moderate income.
    Mr. Murphy. Do we have any idea what that overall number 
is?
    Ms. Patenaude. I don't know the number but we can get back 
to you.
    Mr. Murphy. I appreciate that. How about you had mentioned 
something about economic return in terms of one of the projects 
in Pittsburg would yield $8 million in tax revenue coming 
through, but does that system also track overall dollars 
generated and overall economic impact? For example, business, 
the amount of sales, and other developments that come through 
then?
    Ms. Patenaude. No, I don't believe we have the ability to 
track that, and that is one of the efforts underway is to 
create a performance measurement system that will actually 
capture the outcomes. My staff just sent a note to me here, 
sir, on the number of jobs created in fiscal year 2004, 75,000 
jobs were created.
    Mr. Murphy. Nationwide?
    Ms. Patenaude. Yes.
    Mr. Murphy. Is there any requirement of parts of 
communities to report back after they have used some of the 
money to give any information of what this has led to, local 
job development, economic impact?
    Ms. Patenaude. I believe in the annual--the CAPERS, that is 
the performance evaluation report that information is 
requested. We don't have the ability to track it, though----
    Mr. Murphy. So we don't audit that afterwards?
    Ms. Patenaude. We do. We do audit by doing the monitoring. 
And the grantees also input data into the IDIS system as well. 
We don't have the ability at this time, though, to compare the 
CAPERS and the IDIS system.
    Mr. Murphy. OK. Thank you. And thank you, Mr. Chairman.
    Mr. Turner. Good. Thank you. Just one last question for the 
commissioner and Councilwoman Kelly. Is there anything you can 
tell us that would be helpful for the program to be changed now 
that you have had the additional thoughts and the testimony 
that you have given today that you would like to leave us with 
in how we might be able to more assist your economic 
development efforts?
    Ms. Irey. More flexibility in the program.
    Mr. Turner. Thank you.
    Ms. Kelly. I would reiterate that is the case. I think when 
we need the emergency funds, it is an awfully long time to wait 
by the time you submit these and by the time we receive the 
moneys and put it out for bid. It is very time-consuming, and 
the residents begin to question their government when they have 
to wait so long. But we just follow whatever track we have to 
follow.
    Mr. Turner. Well, I want to recognize that from what I 
understand this is Ms. Patenaude's first House congressional 
hearing, is that correct?
    Ms. Patenaude. Yes.
    Mr. Turner. So we appreciate you coming here and 
participating in this as your first. I do want to thank all of 
you for the time that you have given us, the time in 
preparation, the time for your staff, and I want to give you 
just one last opportunity if there is anything that any one of 
you would like to add to this record for a closing statement 
with us, I give you the opportunity now.
    Ms. Patenaude. Mr. Chairman, I want to thank you for 
holding this field hearing today in Carnegie. Am I pronouncing 
it correctly?
    Ms. Kelly. Carnegie.
    Ms. Patenaude. Carnegie. OK, I will go home with the 
correct pronunciation. And Congressman Murphy, it is nice to 
meet somebody from Upper Saint Clair.
    Mr. Murphy. Me too. I didn't know you were from my town. 
Nice to see you.
    Ms. Patenaude. Thank you, Congressman Dent.
    Ms. Kelly. Yes, I would just like to thank you for the 
opportunity of having this. It is an eye-opener to me. I am a 
novice at this sort of thing, and there will be other thoughts 
that will accompany. Perhaps I can be in contact with the 
offices after this.
    Mr. Turner. Absolutely.
    Ms. Irey. I would also like to thank you for allowing us to 
testify, to make our needs known in our counties and 
municipalities, and also that you have allowed our economic 
staff. You will be hearing later from our director of 
Redevelopment Authority, and he will be giving you some more 
details about the program. So I thank you for taking your time 
out of your busy schedules to travel so far and to hear what 
our needs are in our district. Thank you.
    Mr. Turner. Thank you for your comments, and we certainly 
wish you great success. If there are additional comments that 
you would like to make, please submit them to the committee and 
we will help make certain that we have them. We are going to 
take a short 2-minute recess while the second panel is seated. 
Thank you.
    [Recess.]
    Mr. Turner. Call to order the second portion of the hearing 
of the Subcommittee on Federalism and the Census. On our second 
panel I would like to welcome Mr. Stanley ``Lou'' Gorski, 
executive director of the South Hills Area Council of 
Governments; Mr. William McGowen, executive director of 
Redevelopment Authority of the county of Washington; Mr. 
William E. Mitchell II, assistant director of planning and 
development, Westmoreland County Industrial Development Corp.; 
and Ms. Diana Reitz, Community Development Coordinator, city of 
Jeannette, PA. We appreciate all of your efforts to provide us 
written testimony. We also appreciate your appearing today and 
the work that you are doing in providing us additional 
information on the CDBG program. As you would have heard with 
panel one, on the table there are lights that will appear. The 
green light indicates for you to commence your testimony. The 
red light means that your time has expired. As is the custom of 
this committee, we do swear in all of our witnesses. So if you 
would please stand and raise your right hands.
    [Witnesses sworn].
    Mr. Turner. Let the record show that all the witnesses have 
responded in the affirmative, and we begin this second panel 
with Mr. Gorski, if you would begin your testimony.

 STATEMENTS OF STANLEY GORSKI, EXECUTIVE DIRECTOR, SOUTH HILLS 
    AREA COUNCIL OF GOVERNMENTS; WILLIAM MCGOWEN, EXECUTIVE 
   DIRECTOR, REDEVELOPMENT AUTHORITY, COUNTY OF WASHINGTON; 
   WILLIAM E. MITCHELL II, ASSISTANT DIRECTOR, PLANNING AND 
DEVELOPMENT, WESTMORELAND COUNTY INDUSTRIAL DEVELOPMENT CORP.; 
  AND DIANA REITZ, COMMUNITY DEVELOPMENT COORDINATOR, CITY OF 
                         JEANNETTE, PA

                  STATEMENT OF STANLEY GORSKI

    Mr. Gorski. Good morning. I would like to thank the 
subcommittee for the opportunity to speak with you today about 
the impact of the CDBG program and its funding on helping 
municipalities in this area. Notwithstanding the President's 
proposal, I would encourage retention of the program in its 
current form, and I would like to address current uses of CDBG 
funding at the local level, the supplemental benefits accrued 
to the participants in the program, as well as the consequences 
of the President's proposal in consolidating the programs, as 
he has suggested.
    With respect to current uses, I would like to offer the 
perspective of 14 years of municipal service as a municipal 
manager in a municipality that was aggressively pursuing and 
successful in received CDBG funds for more than 14 years, and 
as a current administrator of the program in my current 
capacity.
    Although constrained by the statutory requirements that the 
money be committed to low to moderate-income people, 
municipalities in this area have developed a wide array of 
strategies to both participate in the statutory objective. 
Common uses include infrastructure improvements, recreation 
enhancements, demolition activities, development and 
enhancement of senior citizen facilities, planning studies, 
commercial and economic revitalization, and public safety 
support.
    By way of one brief example, I am going to call your 
attention to how the program can directly impact a community, 
and it is one in which I was involved several years ago, 
wherein an infusion of $800,000 in CDBG funds over a 6-year 
period prompted an additional commitment from the Commonwealth 
of Pennsylvania in the amount of $100,000, $500,000 from the 
local government, as well as $600,000 from the participants in 
the program. This was a commercial revitalization area that saw 
the business district eliminate blighted conditions, see 
infrastructure improvements, and most importantly, preserve 
jobs.
    Notwithstanding the impact of that type of program, the 
supplemental benefits of the program cannot be ignored. As a 
matter of fact, if you do not appreciate the supplemental 
benefits, you will probably lose an appreciation for the 
program as a whole. First and foremost is what you mentioned 
earlier, Congressman, and that was leveraging ability of the 
dollars. We have the situation in most of the programs I 
administer now where the local governments are bringing in a 
local match, which means that the dollar value of the program 
is more than just the dollar value of the CDBG grant. You are 
looking at a situation where communities most often would not 
even be able to undertake the program or project without the 
CDBG money, which means you are helping to stabilize the 
financial base of the community as a whole, in addition to 
achieving the target objective.
    In addition, you have the leveraging ability to take that 
dollar into the community that has other dollars available, be 
it the non-profit corporation arena or other funding agencies 
through government. I am working on an application right now, 
for example, where the ratio is 5 to 1 CDBG with everything 
else coming in from other sources.
    An additional benefit is the general stabilization of the 
community because you are enhancing the tax base, you are 
improving the general conditions, and thereby bringing benefit 
not only to the target community, but also to the municipality 
as a whole.
    Not to be forgotten is the contractor community as well. We 
are in a situation where most of this activity is competitively 
bid, so you are looking at a whole host of small contractors 
being able to effectively compete for jobs that would otherwise 
not be available to them. Keep in mind that they, in turn, are 
providing employment at prevailing wages, they are buying goods 
and services, as well as hiring subcontractors. We are not able 
to quantify this at our level, but we are looking at a 
situation or a discussion with these individuals really brings 
concern to their mind with the threat of this program 
disappearing, because the ability for them to participate means 
jobs; it means their very survival.
    And last would be a focus on the President's proposal. 
Notwithstanding what he is attempting to do, whether it is 
either good or bad from our perspective, it means the 
termination of the program. And that would be absolutely 
devastating. Nobody in this room, I would suspect, would 
encourage the idea of a reduction in funding, but as difficult 
as a reduction would be, it would be preferable to have the 
dollars reduced and retain the program in its current form 
within HUD, as opposed to consolidating and moving it or 
whatever vestige is left into the Department of Commerce.
    In short, the program is an important mainstay to the 
viability of fiscality and for the future of municipal 
governments, as well as the contractor community. If there is a 
problem with the program, fix it. Don't eliminate it. Thank you 
for the opportunity, and I welcome any questions.
    [The prepared statement of Mr. Gorski follows:]

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    Mr. Turner. Thank you, Mr. Gorski. Mr. McGowen.

                  STATEMENT OF WILLIAM MCGOWEN

    Mr. McGowen. OK. I am going to do a PowerPoint 
presentation. Thank you for the opportunity to address you. It 
is going to be 20 minutes in 5 minutes, so hold on.
    We feel that this is the most successful program in 
existence from the Federal standpoint. It keeps urban 
communities viable. It really is key in helping low-income 
people. Go ahead to the next slide.
    And you can follow along or you can follow the slides, 
either one. If you follow the slides, you can followup with the 
other later.
    It does revitalize and redevelop blighted areas--and, of 
course, we have plenty of those in Washington County from the 
past--maintains housing stock. Again, you don't want sprawl; 
you want to fix up what we have, especially in the downtowns. 
And from an economic standpoint, the small towns, this program 
is run at a county level, but the municipalities get all the 
benefit. Next slide.
    There are some of the major areas where we feel that CDBG 
is key. Again, those top two, the sewer and the parks and the 
citizens' facilities, low-income census tracks, the low-income 
neighborhoods, that is direct help to those that are in need. 
It keeps and puts people in homes instead of having them go 
someplace that they shouldn't be.
    Let me give you a bunch of examples here real quick and we 
will run through these. Let us take a look at downtown business 
districts. This program more than any other that I know of 
helps downtowns. It leverages many different kinds of moneys. 
In the case of Washington, we leveraged over $10 million. 
PennDOT, T-21 moneys, private moneys of businesses contributing 
to keep the downtown where it is supposed to be, very close 
coordination with Main Street Program. Charleroi is the same 
way down in the Mon Valley, you can see the facts there. The 
city of Monongahela the same way. It keeps and puts small towns 
back in business. Next slide.
    The Head Start program has already been mentioned. It is a 
superb example. It took empty public housing, empty public 
housing, and put it where it needed to be in a very nice 
partnership with Community Action Southwest and the Housing 
Authority. We have done two of these and we are going to do one 
more of them. Next slide.
    That shows you the before and after that you can see in 
doing that Head Start building in Washington. Next slide.
    Another fine example, a neighborhood example, Highland 
Ridge neighborhood revitalization. We have acquired 42 
properties and we are building 25 new single-family homes for 
very low-income people. Again, partnership and leverage. Now, 
Highland Ridge CDC was formed, banks giving money, PHFA 
contributing, and we, the Redevelopment Authority, provide the 
leadership and the staff to make it all happen. Next slide.
    You can see the Highland Ridge example. The top one is a 
new home, and you can see the bottom one is what they were. We 
built energy-efficient homes for low-income, and we actually 
trained the homeowner to be a good homeowner in terms of making 
payments. Next slide.
    Another great example. For individuals without this 
program, the house becomes unlivable and the owners cannot 
afford to buy or live elsewhere. 1,800 homes so far over the 
years, code deficiencies, lead-based paint now has increased 
the cost of the program, but it is an excellent program. You 
can see 640 on the waiting list, so we need a lot more 
assistance in this area. Next slide.
    These are some examples of before and after, before the 
rehab program. Next slide.
    Elderly housing, this is a demand which will increase 
substantially in the future, obviously, with the baby-boomers, 
and we take between 7 and 8 facilities, 503 units, put people 
in there, low-income, and it has taken vacant, hazardous 
structures, taken then either to go away or remodel, and it 
puts these things on the tax roles. We paid full taxes on those 
elderly facilities. We, ourselves, own six facilities, 461 
units. It is a very, very successful program. Again, there is 
some examples there. You can see the before and after of what 
it was and what it became. Next slide.
    Demolition and clearance. This has been mentioned several 
times. It helps towns tremendously, and the cleared lots are 
used for all kinds of things, parks, new homes. Charleroi is 
now doing an open market with two buildings that we are tearing 
down. Elderly facilities, commercial, it removes blighted 
structures. And let me point out very strongly, without this 
kind of money, it doesn't happen. Those structures stay there. 
They don't go away. Again, a very successful business that you 
saw down in--this used to be Braydenville, and tear down a 
bunch of houses there. OK, go on to the next slide.
    OK. Special help for special facilities. These are just two 
examples of many to help these kind of facilities so that they 
can put a new roof on or whatever and stay in business so that 
they can provide for the low-income people. Another one is we 
help the Housing Authority itself in a lot of ways, building 
new elevators, etc. Next one.
    Recreation, this speaks for itself. And, again, 
partnerships with communities. Next one.
    Again, these are other examples that we have and, again, 
they are older communities. They have older sewer systems, etc. 
The bottom one there, accessibility, that is key for the 
buildings. Next slide.
    And to wrap up here a little bit, I could give you hundreds 
and hundreds of examples. We could write books of testimony. We 
could get books of testimony from the people that have gotten 
help through these programs. But let me point out that just 
since 2002 we have gone down 12 percent already in the CDBG 
funding. That doesn't take into account inflation or the rise 
in building costs, etc. So we should not go down anymore. It 
will hurt, and it will hurt the wrong people. It will also slow 
the economic growth. Next slide.
    We feel that it is an excellent Federal program that is run 
correctly on the local level. We run it for the whole county. 
We have nobody that has opted out in any of the time we have 
been with it. If there is less CDBG money, then you are going 
to see more rundown, vacant homes and building and more people 
homeless and living off the State, living off the Federal 
moneys. So the small downtowns would, and if the funding goes 
down, do exactly what you don't want them to, and that is to 
deteriorate. This program helps the downtowns tremendously. 
There is no substitute. If this goes down, then the examples 
that I have given you just won't happen. Thank you.
    [The prepared statement of Mr. McGowen follows:]

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    Mr. Turner. OK, Mr. Mitchell.

                 STATEMENT OF WILLIAM MITCHELL

    Mr. Mitchell. Mr. Chairman, from the text of the letter 
that we received from you, your subcommittee is seeking input 
from practitioners involved in the day-to-day operations of the 
Community Development Block Grant programs in the Pittsburgh 
region. I am delighted you invited Westmoreland County to 
participate in this endeavor because I believe that the county 
is truly representative of the region as a whole.
    And I am especially pleased to be here because I firmly 
believe that the regional rise or fall on economic vitality of 
the central city and how that central city interacts with the 
surrounding region, whether the outlying areas of the region 
are in agreement with this presumption is sometimes 
questionable, but the fact remains that the city of Pittsburgh 
and the outlying areas are one in the same economically. Since 
1974, CDBG has been a valuable tool in assisting local 
governments of all sizes to remain viable, but more could be 
done to further enhance the region's vitality.
    CDBG has proven to be an asset to the region and 
Westmoreland County in particular because this program has 
served this county for over 30 years as a resource to help 
cities, boroughs, townships, etc., meet their community 
development, affordable housing, and economic development 
needs. It is not just a tool for concentrated urban areas. It 
is a valued resource for our outlying areas as well. In 
Congressman Murphy's district alone in Westmoreland County over 
3,600 people benefit from the activities, programs of fiscal 
year 2005 moneys.
    Another often-overlooked benefit of the CDBG program is the 
professional staffs that are developed under its auspices. If 
the program should be eliminated, a number of the staff would 
be laid off, and this would negatively impact the region. 
Because of the nature of many other Federal programs and State 
programs, the loss of these experienced employees will mean 
that many of the regions local governments will no longer be 
capable of administrating complex programs.
    The region is also blessed with partners in the U.S. 
Department of Housing and Urban Development at the Pittsburgh 
Area Office that possess many years of experience in 
administration of the CDBG program. But just as importantly, 
the local HUD staff is a source of technical assistance in 
other related areas. Our office consults with the local HUD 
staff extensively, and these consultations are not always 
related to CDBG, but include other Federal, State, and even 
private foundation resources. Disseminating ideas that assist 
constituents may not be quantifiable, but that service is just 
as important as passing out checks, and that is one of the 
services provided to all the local practitioners by the 
Pittsburgh HUD staff. It is not just the money; it is the 
people. And that tends to be overlooked.
    That is not to say that Westmoreland County has always 
enjoyed harmonious relations with HUD in general. In the past 
there have been difficult times because over the life of many 
programs, the process of the program becomes paramount in some 
minds, while the delivery of the services to the constituencies 
intended to be benefited becomes secondary. There is one 
instance in particular in our program history that reflects 
that attitude, and most of the problem generated was the 
creation of the central office in Washington. I won't further 
pursue that unless you all want to.
    All in all, HUD has been a positive force for the bettering 
of CDBG's intended constituencies. Last year CDBG celebrated 
its 30th anniversary since being signed into law by President 
Ford in 1974. The program still has widespread bipartisan 
support within the Nation and in Congress. Just look at the 
number of House and Senate Members signed the letters to the 
Budget Appropriations Committees urging those committees to 
preserve their program, keep it at HUD, and fund it at $4.7 
billion.
    There is a lot that is right about the CDBG program. It is 
a tool that allows grantees to leverage other public and 
private resources. This year the county will provide $1.7 
million in CDBG Section 108 assistance toward the city of 
Greensburg's downtown revitalization efforts. The inclusion of 
the CDBG funds will be leveraging approximately $19.8 million 
other funds. This project is also in Congressman Murphy's 
district.
    CDBG has been achieving results nationwide similar to those 
obtained in the Pennsylvania 18th Congressional District 
throughout its history. An analysis performed by an economist 
at the George Mason University showed that for the first 25 
years of the program, CDBG funded projects, created 2 million 
jobs--you knew that before, right--and contributed over $129 
billion to the gross domestic product. The program does not 
lack focus as intimated by the program assessment rating tool 
utilized by the Office of Management and Budget. Congress 
stated in its purpose in a 1974 act, ``The primary objective of 
this title is the development of viable urban communities by 
providing decent housing in a suitable living environment and 
expanding economic opportunities principally for persons below 
moderate income.'' Moderate income is moderate income, not 
extremely low income. This broad statement of congressional 
intent provides grantees flexibility in their implementation of 
the program so that their sometimes unique development goals 
are addressed, not a goal created by a bureaucrat in Washington 
with no local knowledge. This program creates and nurtures 
local initiative. This region needs more, not less, of that.
    The Pittsburgh region, in my opinion, is a depressed area. 
Additional assistance is needed. In the last decade this region 
lost 212,500 in population. This is a 1\1/2\ percent loss 
compared to a 1.4 percent gain for the Commonwealth as a whole. 
Just think of the gain for the rest of the State that did not 
include this area.
    Mr. Turner. Mr. Mitchell, we have your written testimony, 
and I think the Members have reviewed it.
    Mr. Mitchell. OK.
    Mr. Turner. Since we are going to be short on time, if you 
might summarize the rest of your testimony if there are any 
additional oral comments that you would like to make in 
conclusion.
    Mr. Mitchell. Thank you. I will just stand there. You all 
got it in written form.
    [The prepared statement of Mr. Mitchell follows:]

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    Mr. Turner. OK, and we will look forward to your 
participation in the question/answer portion.
    Mr. Mitchell. Thank you.
    Mr. Turner. Ms. Reitz.

                    STATEMENT OF DIANA REITZ

    Ms. Reitz. Thank you, Mr. Chairman, for inviting me here 
today to testify before the subcommittee. Mr. Chairman, 
Jeannette is a small city in an urban county. The city is 
located in southwestern Pennsylvania approximately 25 miles 
east of Pittsburgh, and our population is roughly 10,500 
without 22 percent of the population over the age of 62. Our 
median family income is $37,000 and our city is one of the few 
remaining that still supports their own fire and police 
departments. Up until the mid to late 1970's, Jeannette's 
economy was centered around four glass manufacturing plants and 
was originally dubbed the ``Glass City.''
    Initially, the city of Jeannette received its Community 
Development Block Grant funds through Westmoreland County's 
Urban County program. However, it soon became apparent that the 
city would be able to undertake additional projects if the city 
applied for CDBG funding directly from the State. So in the 
early 1980's the city fathers decided to opt out of the Urban 
County program in Westmoreland County and apply to the State 
for CDBG funds.
    Mr. Chairman, this action by the City Council was very 
successful. Over the past 10 years or so, the city of Jeannette 
has received over $4 million in Community Development Block 
Grant funds. However, there are some problems that small cities 
like Jeannette are facing, and the following is a list of 
those: there is a loss of population; there is an aging 
population; there is a loss of tax revenue and financial 
resources; an aging housing stock; deteriorated infrastructure; 
deteriorated buildings, commercial and industrial; and a 
declining business district.
    The following are some ways cities like Jeannette are able 
to battle these problems. Below is a list of activities and 
projects the Community Development Block Grant funds support, 
especially in our community. They supported recreation 
improvements, street and road improvements, clearance and 
removal and slums and blights, emergency radios, code 
enforcement, removal of architectural barriers under ADA, 
homeownership program--which is a rehab for vacant dwellings 
for resale to low and moderate-income families that the city 
has partnered with the local non-profit to administer a facade 
improvement program, a first-time homebuyer program for 
individuals and families that have never been homeowners 
before, that they have been renters, purchase of a fire truck, 
a Commercial Property Improvement program to support and assist 
commercial business owners to upgrade their buildings, a 
Revitalization Activity program that is currently supporting a 
major redevelopment project in our city, and, of course, 
Housing Rehabilitation program, which is benefiting low and 
moderate-income homeowners.
    Mr. Chairman, here are some of the problems that we see 
that are affecting cities like Jeannette and that Congress 
should address regarding Community Development Block Grants. 
Our Housing Rehabilitation program, our program has been very 
successful. Over the past years, the city could rehabilitate 
approximately 20 to 25 homes in 1 year. Unfortunately, now, 
with the implementation of the lead-based paint regulations, 
the city doesn't have the list of contractors to bid on the 
job. The cost of the jobs has skyrocketed, and it is just too 
time-consuming. The city has dropped down to completing around 
3 homes a year under our Housing Rehab program because of these 
problems. We have difficulty getting contractors, qualified 
contractors to bid, and when they do, the cost has doubled from 
years past. Many communities are dropping the Housing Rehab 
from their list of activities due to these hardships of the 
lead-based paint requirements.
    Another issue that we find that we are battling is the 
implementation of the Davis-Bacon wage rates. With the 
implementation of the Davis-Bacon wage rates with any contract 
over $2,000, several problems have been encountered by our 
city. Small communities like ours do not have large contracting 
firms, and the smaller firms do not pay Davis-Bacon prevailing 
wage. Generally, our contractors are employing two, maybe three 
employees. They are just small companies. They cannot bid on 
our jobs or it raises the cost of the job too much. And it 
certainly doesn't help the local economies of cities like 
Jeannette where we have to go outside of the area for our 
contractors.
    Another concern is an overall State historic preservation 
clearance that I find in particular with respect to the State, 
it makes it difficult to improve aging communities like the 
city of Jeannette whenever we must adhere to historic 
preservation requirements, especially in areas that have no 
value left.
    The following, Mr. Chairman, is a list of some of our 
future projects. We have a construction of a new access road in 
the city of Jeannette. We have removal, hopefully, of a 
deteriorated glass factory, improvement to our central business 
district, and improvement to our housing stock overall.
    So in conclusion, Mr. Chairman, without Community 
Development Block Grant funds, small cities like Jeannette 
would not be able to financially address their problems and 
their needs. Thank you.
    [The prepared statement of Ms. Reitz follows:]

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    Mr. Turner. Thank you. Now, we will go for comments and 
questions and begin with Mr. Murphy.
    Mr. Murphy. Thank you, Mr. Chairman. I just have a couple 
brief ones because I know we are short on time here. But I 
wanted to ask in general the panel a couple things. Mr. 
Mitchell, you had in your written testimony--you didn't get to 
talk about this--was the anti-pirating component.
    Mr. Mitchell. Yes.
    Mr. Murphy. Talk about pretty fascinating. Could you just 
elaborate on that? Is that a problem now in the communities 
that you see occurring that one community may leverage money 
that ends up simply moving the job from one county to another?
    Mr. Mitchell. I think it happens more in Western 
Pennsylvania than it does in most of the other regions. The 
anti-pirating rule was part of the old Urban Development Action 
Grant program. It essentially says you will not use--in this 
case it would be CDBG funds--to entice or use as a method of 
enticement to take one company from one area and move it to 
another. It is something I think Congress ought to look at. I 
mean you did have it in the UDAG program. Maybe it is time to 
revisit this.
    Mr. Murphy. For any of the rest of you, Mr. Gorski or 
Admiral McGowen or Diana Reitz, any of you see this as an issue 
too, that some of this money is sometimes used to move a 
business from one town to another?
    Mr. McGowen. We don't see it as an issue in Washington 
County. We do see a lot of growth in Washington County coming 
south from Pittsburgh downtown or the Pittsburgh area.
    Mr. Murphy. That is probably more a property tax issue.
    Mr. McGowen. Well, that is part of it. And the part is that 
we are growing. The whole Pittsburgh area and the region is 
growing, and people want to move out where it is cheaper.
    Mr. Murphy. All right. That is all I am going to ask for 
now.
    Mr. Turner. Mr. Dent.
    Mr. Dent. Thank you, Mr. Chairman. Admiral McGowen, I 
enjoyed your presentation. You talked a little bit about 
homeowner assistance. I guess you are trying to help people in 
Washington County, move from a rental situation to an ownership 
of owner-occupied situation. Have you had any experience with 
de-converting rental units back to owner-occupied settings? 
There were always row homes and they were owner-occupied. In 
the 1970's many of them became rental units. So it was once a 
one-family unit now has--owner-occupied, it now has three 
rental units. And do you use any of your CDBG funds for that 
kind of de-conversion to take those rental units back to owner-
occupied situations?
    Mr. McGowen. Not that I am aware of. Brenda--yes--we have 
not done that, no. We have enough people, as you can see in the 
waiting list, of both the homebuyer program, and especially the 
home rehab to keep the owner there, that, I mean, those two are 
very, very viable programs.
    Mr. Dent. You talk about your homeownership program. Do you 
provide counseling services support with down payments for that 
money?
    Mr. McGowen. Yes.
    Mr. Dent. What do you do in terms of----
    Mr. McGowen. Yes, help with the down payment, help with 
closing costs----
    Mr. Dent. Kind of like helping them with the process, hand-
holding to a certain extent----
    Mr. McGowen. Yes.
    Mr. Dent [continuing]. To get them through the----
    Mr. McGowen. Absolutely. Highland Ridge is a wonderful 
example of that. We actually have set up with a non-profit to 
help these people make sure that they understand house payments 
and proper budgeting and they actually--we are very key about 
making sure that they are qualified and go through that before 
we----
    Mr. Dent. Yes, and I concur with what you said--you don't 
have to comment on this--on what you said earlier too about the 
need for these CDBG dollars for demolition purposes. I found 
the same thing in my community. If you don't have----
    Mr. McGowen. Yes.
    Mr. Dent [continuing]. Public funds, whether it be CDBG or 
some other public fund, the project is not going to move until 
you get that site cleared and remediated and really you are 
swimming upstream so to speak. And it is interesting that is in 
your observation as well.
    Mr. McGowen. Yes, and there is so many small towns in this 
southwestern Pennsylvania to let it become that way, and you 
have to revitalize the whole downtown.
    Mr. Dent. And it is ready to go.
    Mr. McGowen. Yes.
    Mr. Dent. And the private sector doesn't want to throw 
their money to knocking down buildings.
    Mr. McGowen. No, that is right.
    Mr. Dent. Right.
    Mr. McGowen. But the private sector will step in if they 
see it is being done.
    Mr. Dent. Absolutely. That is my experience. And Ms. 
Reitz--in Allentown they would say Reitz--but the question--you 
talked a little bit about Davis-Bacon and that you are having a 
hard time basically getting contractors to bid for that type of 
work because the terms are too small. And do you have the same 
problem with the State minimum wage law too? The threshold for 
hiring is $25,000 or something that extensive?
    Ms. Reitz. Yes, we do. Part of the problem is we have 
smaller jobs going out. We have a facade program that is a 
matching program up to $5,000 to be able to do facade work to 
commercial buildings. And if I have a gentleman or a contractor 
that wants to bid on that job, and his job, say it is only 
signage or maybe some awnings and there is three employees 
under his wing, unfortunately, unless he pays that higher wage, 
he cannot bid on that job. So he decides not to bid entirely 
and walk away from the job.
    Mr. Dent. Is it fair to say that less work is being done 
because of that law?
    Ms. Reitz. Well, what happens is that I end up bumping out 
into the larger contracting firms, which the costs actually go 
up higher.
    Mr. Dent. So would you recommend raising those thresholds--
--
    Ms. Reitz. Raising the thresholds----
    Mr. Dent [continuing]. For both the Federal and State 
acts----
    Ms. Reitz. Yes, sir.
    Mr. Dent [continuing]. So that you can get more work done--
--
    Ms. Reitz. Yes, sir.
    Mr. Dent [continuing]. For less money?
    Ms. Reitz. And it would provide an opportunity to the 
smaller contracting firms to bid on these jobs. We are putting 
them out of business.
    Mr. Dent. And those are your local firms----
    Ms. Reitz. Yes.
    Mr. Dent [continuing]. In many cases and you have to go 
outside the community to get the larger firms----
    Ms. Reitz. Right.
    Mr. Dent [continuing]. To come in and----
    Ms. Reitz. That is correct.
    Mr. Dent. Thank you.
    Mr. Turner. Ms. Reitz, you mentioned in your written 
testimony and your oral testimony the State historic 
preservation offices and the requirements for historic review 
that have been, in your opinion, some impediment. Could you 
speak a little bit more about that in detail? Is it a State 
processing issue, a time issue, or are actually the 
requirements that are placed upon you difficult to comply with?
    Ms. Reitz. Well, Mr. Chairman, I think that it probably is 
first a State issue of another layer of regulations that are 
put on top of what we already have. When we are going out--for 
example, the city of Jeannette is in the process of doing two 
major projects within our downtown area. One is a downtown 
revitalization project, which we have set aside Community 
Development Block Grant moneys; we have gotten an EDI grant 
through the Federal Government and an RCAP through the State 
government to help support this project. And what I have seen 
is the problem is we couldn't come in and do the demolition 
because we had to jump through the hoops to clear the site of 
historic value.
    And please don't get me wrong; I certainly want to preserve 
the history of our community, but in some cases there is no 
history left. There is nothing of those buildings left. So it 
puts a timeframe on getting the jobs completed within a 
timeliness manner or, you know, delaying the project to jump 
through the hoops, and then there is the recordation process 
and, you know, what follows in putting the MLA together and 
putting the stipulations in the MLA and how you would preserve 
the history of that area. With respect to our project, we are 
definitely having some problems not only on the downtown area, 
but on the housing end where we have a large two-block area 
that we want to acquire, demolish with a non-profit. These are 
dilapidated buildings. There really is no value left. But we 
are delayed in doing that because of the regulations that have 
been attached into preserving the history of that general area 
and what the housing stock was back in the 1930's.
    Mr. Turner. Well, in addition to my responsibilities in 
this committee, I am also co-chair of the Historic Preservation 
Caucus. And having served as a past mayor, I share your 
concerns, both of the need to preserve our heritage, and at the 
same time, to provide a streamlined process so that economic 
development can occur. So I am always interested in hearing 
both the experience that people have and ideas that they have 
for improvement.
    We are currently looking on the Federal level of the 
reauthorization of the statutes under which these plans 
operate. And most of the information that I have experience 
with or that I have received relate not necessarily to the text 
itself and to the goals of the program, but to its 
administration and the timeliness----
    Ms. Reitz. Yes.
    Mr. Turner [continuing]. Of getting responses. So even 
after this hearing, if you have additional thoughts on the ways 
that on the Federal level this might be able to be addressed, 
please provide them to us because we are currently taking that 
up now.
    Ms. Reitz. Thank you.
    Mr. Turner. Mr. Gorski, Ms. Reitz had raised the issue of 
prevailing wage and you also had that in a statement in your 
testimony of the positiveness to the value of the wages that 
were being provided for these projects, these projects being an 
economic development initiative. Do you see an issue or a 
problem also with the cap level? Is the amount difficult for 
you or most of the projects you have undertaken not at a level 
where you have had difficulty with it?
    Mr. Gorski. Quite the contrary. There is a difficulty. The 
threshold is so low that what we are finding is when the 
estimates for the projects are placed on the application and 
then we see the real numbers as a result of the bid, there is 
often quite a discrepancy. In discussing the matter with 
contractors, we have discovered that several choose not to bid; 
others, especially some who gave the original guidance to the 
municipality in terms of pricing, are almost embarrassed to the 
number that they have to submit because the prevailing wage has 
afforded the premise under which they made the original 
submission. The threshold, if it was higher, probably would 
make an awful lot of sense. The statement that I made was the 
fact that the program is in fact compelling people to work at 
decent wages.
    We hear an awful lot, especially in the last few days, 
about what is happening at the State level about prompting an 
increase in minimum wage, which I understand is different. But 
nonetheless, we have contractors who understand what is 
involved, and we are looking at real, honest, good dollars, 
irrespective of prevailing wages being imposed. Once a 
prevailing wage comes along it does in fact drive up the cost 
of the job.
    Mr. Turner. Mr. Dent.
    Mr. Dent. This is a Federal hearing. I feel like I am 
wearing my State Senator hat at the moment, you talking about 
RCAP assistance. It is not something you would deal with in 
Ohio probably. But to your point--I have just forgotten my 
point now, but it was an important one. The issue of tax 
increment finance and in this State you have a problem with, 
you know, prevailing wage now being applied to private 
developments where tax increment financing is used. And many of 
you in the economic development business know what I am talking 
about. Has that presented problems for you in this end of the 
State? It has been a problem in eastern Pennsylvania that the 
prevailing wage, which previously had never been applied to 
those private developments when using tax increment financing, 
it was quite a problem. Is that a problem out here?
    Mr. Gorski. We haven't had any interplay between CDBG and 
the TIP project, so I can't comment.
    Mr. Dent. OK. Anything in the Westmoreland----
    Ms. Reitz. Any larger projects that we have done--and I am 
speaking on the larger end--it is never really a problem for 
us, Congressman. It is the smaller jobs that we find 
difficulties with.
    Mr. Dent. OK. Thank you.
    Mr. Turner. Mr. Mitchell, you made reference to a 
difficulty that you had with HUD and asked whether or not the 
committee would want you to elaborate. I would ask that if you 
would elaborate on the issues and the difficulties that you 
have had and also give you the opportunity to, if you would 
like to in more specific and greater detail, provide to the 
committee in writing a description of that. But I would like 
you to just speak for a moment on those issues.
    Mr. Mitchell. Well, this was sometime ago, and it involved 
handicap-accessibility issues and the rules and regulations 
that we operate under or did operate under at that time. It 
required you to provide accessibility to handicapped 
individuals to various public facilities, municipal buildings, 
public parks. And the idea was that you would use CDBG dollars, 
and I don't want to get too technical because it is involved in 
technicalities where handicapped people were generally at that 
time considered to be of low income by virtue of their 
handicap. So we did some accessibility improvements in several 
public parks. And the HUD folks at Washington took exception to 
that because other people could utilize those improvements, not 
just handicapped people.
    So being somewhat aggressive at some points, we pursued it 
and got them to end up actually changing the rules because of 
Westmoreland County. And now you will find the rules say that 
you can do handicapped accessibility improvements, as long as 
those improvements are for and considered to be low and 
moderate-income benefits as long as those improvements are for 
frail elderly as defined by the census or handicapped adults. 
However, it left out children, didn't it? So one of the 
things--in the settlement we had with HUD we had to have a sign 
that indicated that any project we did for these handicapped 
accessible improvements were for those particular protected 
classes. So what I did is I created an 8 x 10 sign and we are 
doing a ramp improvement at a public park for an amphitheater, 
and so I invited the HUD officials in Washington to attend a 
ribbon-cutting. And on that sign said this ramp is for the 
exclusive use of frail elderly and handicapped adults. 
Handicapped children are not permitted to utilize this 
improvement by order of the U.S. Department of Housing and 
Urban Development. And, of course, I invited those folks to 
come to the ribbon-cutting, and for some reason they turned me 
down.
    Mr. Turner. Mr. Mitchell, you clearly have an ability to 
make a point.
    Mr. Mitchell. We were just following the rules, sir. That 
was all. And those rules still exist today. For the life of me 
I can't understand why children, because they are considered 
wards of their parents, and if their parents are not low-
income, therefore, they are not. Well, there is no difference 
in my mind between a handicapped person my age or your age and 
a handicapped child.
    Mr. Turner. Well, I tell you what, what is important is 
that what you are describing is an attempt by your community to 
do something that is good and where you have tripped into 
Federal rules and regulations that can thwart that, those are 
the types of things that we want to learn, so we appreciate you 
bringing that to our attention today.
    Mr. Mitchell. Thank you.
    Mr. Turner. Mr. McGowen, the Admiral, I would appreciate 
your discussion of the issue of duplication. We had a great 
presentation by you of the effectiveness of this program in 
your community. We saw some great results in the photos that 
you presented. One of the criticisms that CDBG had to overcome 
this year was the allegation that it is a duplicative program, 
that there are other sources of funds for your community to 
seek to accomplish the tasks that you laid out for us. Could 
you talk about that for a moment?
    Mr. McGowen. I see there is absolutely no duplication at 
all. As Ms. Irey said, it is a jumpstart in my cases, 
especially in downtown revitalizations. I showed you the city 
of Washington, which is an example, that CDBG funds because of 
the low-income census track for the whole city, we were able to 
use that and it jumpstarts millions of dollars. Developers are 
now coming in with $100 million project in downtown Washington 
and 1,000 jobs, and that is because CDBG, no duplication; it 
wouldn't have happened if CDBG hadn't done it to start with.
    The same way with the home rehab program. There is no 
duplication there. You can't get that money anyplace else. And 
it provides keeping homes on the tax roles. The Head Start that 
I gave you an example of, the partnership. You wouldn't have 
had the people stepping up to the plate in terms of the CDC and 
the BHFA, etc. The Highland Ridge, we had a local bank give 
$125,000 to the program once it was established with CDBG. So 
there is absolutely no duplication. It is just a multiplier 
effect that is good.
    Mr. Turner. Thank you. Any questions?
    Mr. Murphy. No, I recognize we are out of time. I just want 
to ask this. I know we are out of time, but if you are willing 
to keep the record open because many of the communities in my 
district and around this region would still like to submit some 
written testimony. Without objection I would like to ask you to 
do that, sir.
    Mr. Turner. Excellent. We will leave the record open for a 
period to the end of this month, and if there are communities 
that want to provide it, then that would be very helpful to us.
    Mr. Dent. Mr. Chairman, I just want to thank you for 
holding the hearing here and appreciate this very good 
testimony. I feel very good about how you are using CDBG out 
here in southwestern Pennsylvania and realizing that your 
experiences in many respects are similar to mine. And I have 
really learned something now. We used our money for Head Start 
in my district with CDBG, so I have taken something back to my 
community.
    Mr. McGowen. That was partnership.
    Mr. Dent. Very clever. Thank you.
    Mr. Turner. Well, for those members of our second panel, I 
am going to give you the opportunity if there are any closing 
remarks that you would like to make or additional information 
that you would like to provide for us, go right ahead.
    Mr. McGowen. I would just like to reemphasize that it is an 
outstanding Federal program that is executed on the local level 
by a county to all the municipalities. And the municipalities 
do not have that expertise. They need it at a county level. The 
other thing is inner city, CDBG does help inner city 
revitalization. We don't want sprawl. We all know that. But you 
have to revitalize the inner cities in terms of low incomes, in 
terms of jobs. This program does that. If you do away with the 
CDBG, there is no raising of taxes at the local level or at the 
county level. That doesn't help. It is not going to happen. If 
you do away with CDBG, what has happened with that program 
stops. And, again, partnership and leverage is very obvious. We 
emphasize that very heavily in my organization, and it does 
work.
    Ms. Reitz. I would just like to say, chairman, thank you so 
much for inviting the city of Jeannette a community to speak 
today. Community Development Block Grant funding is very much 
needed in our community. And with the lack of that, we would 
continue to lose our housing stock, our population, our youth. 
I have major concerns that our community cannot financially 
support this--obviously, we went in through a pre-opt 47 just a 
couple months ago, so we have a very, very much needed need to 
continue the Community Development Block Grant funding for the 
city of Jeannette. So thank you.
    Mr. Turner. All right. Excellent. Well, with that I want to 
thank Mr. Murphy for asking us to come here and for his 
leadership on the national level, for preserving CDBG. The 
Community Development Block Grant program is one, of course, 
that he is intimately familiar with and has been a strong 
advocate of. And the efforts to save CDBG, certainly a 
coordinated effort between the House and the Senate, and Mr. 
Murphy was the leader on the House side to make certain that 
not only that the funding would be there, but that the program 
would be highlighted and preserved. Part of his efforts to do 
that, obviously, is to invite us into your community today to 
receive this testimony so as part of the written record of this 
subcommittee. We will have the testimony of your support and 
your effectiveness of the use of CDBG. Mr. Murphy, I want to 
thank you for your leadership in that and for having us today.
    Mr. Murphy. Thank you, Mr. Chairman. You are always welcome 
in Pennsylvania.
    Mr. Turner. Thank you. Before we adjourn I would like to 
thank our distinguished panels of witnesses for their 
participation today. I appreciate your willingness to share 
your knowledge, your experiences, and thoughts on the CDBG 
program. I would also like to thank both of my colleagues, Mr. 
Murphy and Mr. Dent, for allowing us to come into Pennsylvania 
to get this important additional information and to take it 
back to Washington, DC, in our efforts to continue to advocate 
for CDBG.
    Finally, I would like to express my appreciation to the 
borough of Carnegie for being our host. We owe a special thanks 
to Mr. Murphy for inviting us and for his arrangements today to 
make sure that we had a smooth and productive hearing.
    In the event that there may be additional questions that we 
did not have time today, we will also give Members the 
opportunity to submit written questions to you if you would be 
so kind as to answer them if one is posed to you.
    Thank you all. We stand adjourned.
    [Whereupon, at 12:15 p.m., the subcommittee was adjourned.]

                                 
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