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




 
                      STRENGTHENING RURAL OHIO:
                   A REVIEW OF COMMUNITY DEVELOPMENT
                          BLOCK GRANT PROGRAMS

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

                             FIELD HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                   HOUSING AND COMMUNITY OPPORTUNITY

                                 OF THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 25, 2006

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 109-79



                    U.S. GOVERNMENT PRINTING OFFICE
30-175                      WASHINGTON : 2006
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                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                    MICHAEL G. OXLEY, Ohio, Chairman

JAMES A. LEACH, Iowa                 BARNEY FRANK, Massachusetts
RICHARD H. BAKER, Louisiana          PAUL E. KANJORSKI, Pennsylvania
DEBORAH PRYCE, Ohio                  MAXINE WATERS, California
SPENCER BACHUS, Alabama              CAROLYN B. MALONEY, New York
MICHAEL N. CASTLE, Delaware          LUIS V. GUTIERREZ, Illinois
EDWARD R. ROYCE, California          NYDIA M. VELAZQUEZ, New York
FRANK D. LUCAS, Oklahoma             MELVIN L. WATT, North Carolina
ROBERT W. NEY, Ohio                  GARY L. ACKERMAN, New York
SUE W. KELLY, New York, Vice Chair   DARLENE HOOLEY, Oregon
RON PAUL, Texas                      JULIA CARSON, Indiana
PAUL E. GILLMOR, Ohio                BRAD SHERMAN, California
JIM RYUN, Kansas                     GREGORY W. MEEKS, New York
STEVEN C. LaTOURETTE, Ohio           BARBARA LEE, California
DONALD A. MANZULLO, Illinois         DENNIS MOORE, Kansas
WALTER B. JONES, Jr., North          MICHAEL E. CAPUANO, Massachusetts
    Carolina                         HAROLD E. FORD, Jr., Tennessee
JUDY BIGGERT, Illinois               RUBEN HINOJOSA, Texas
CHRISTOPHER SHAYS, Connecticut       JOSEPH CROWLEY, New York
VITO FOSSELLA, New York              WM. LACY CLAY, Missouri
GARY G. MILLER, California           STEVE ISRAEL, New York
PATRICK J. TIBERI, Ohio              CAROLYN McCARTHY, New York
MARK R. KENNEDY, Minnesota           JOE BACA, California
TOM FEENEY, Florida                  JIM MATHESON, Utah
JEB HENSARLING, Texas                STEPHEN F. LYNCH, Massachusetts
SCOTT GARRETT, New Jersey            BRAD MILLER, North Carolina
GINNY BROWN-WAITE, Florida           DAVID SCOTT, Georgia
J. GRESHAM BARRETT, South Carolina   ARTUR DAVIS, Alabama
KATHERINE HARRIS, Florida            AL GREEN, Texas
RICK RENZI, Arizona                  EMANUEL CLEAVER, Missouri
JIM GERLACH, Pennsylvania            MELISSA L. BEAN, Illinois
STEVAN PEARCE, New Mexico            DEBBIE WASSERMAN SCHULTZ, Florida
RANDY NEUGEBAUER, Texas              GWEN MOORE, Wisconsin,
TOM PRICE, Georgia                    
MICHAEL G. FITZPATRICK,              BERNARD SANDERS, Vermont
    Pennsylvania
GEOFF DAVIS, Kentucky
PATRICK T. McHENRY, North Carolina
CAMPBELL, JOHN, California

                 Robert U. Foster, III, Staff Director
           Subcommittee on Housing and Community Opportunity

                     ROBERT W. NEY, Ohio, Chairman

GARY G. MILLER, California, Vice     MAXINE WATERS, California
    Chairman                         NYDIA M. VELAZQUEZ, New York
RICHARD H. BAKER, Louisiana          JULIA CARSON, Indiana
WALTER B. JONES, Jr., North          BARBARA LEE, California
    Carolina                         MICHAEL E. CAPUANO, Massachusetts
CHRISTOPHER SHAYS, Connecticut       BERNARD SANDERS, Vermont
PATRICK J. TIBERI, Ohio              STEPHEN F. LYNCH, Massachusetts
GINNY BROWN-WAITE, Florida           BRAD MILLER, North Carolina
KATHERINE HARRIS, Florida            DAVID SCOTT, Georgia
RICK RENZI, Arizona                  ARTUR DAVIS, Alabama
STEVAN, PEARCE, New Mexico           EMANUEL CLEAVER, Missouri
RANDY NEUGEBAUER, Texas              AL GREEN, Texas
MICHAEL G. FITZPATRICK,              BARNEY FRANK, Massachusetts
    Pennsylvania
GEOFF DAVIS, Kentucky
CAMPBELL, JOHN, California
MICHAEL G. OXLEY, Ohio


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    March 25, 2006...............................................     1
Appendix:
    March 25, 2006...............................................    33

                               WITNESSES
                        Saturday, March 25, 2006

Barnes, Patricia, Executive Director, Ohio CDC Association.......     7
Brightbill, David E., Executive Director, Washington-Morgan 
  Community Action...............................................     9
Cain, Hon. Dean, Commissioner, Morgan County Board of 
  Commissioners..................................................     4
Hepburn, Dustin, Village Councilman of Bellaire, Ohio............    21
Justice, T.J., Director, Governor's Office of Appalachia State 
  Alternate, Appalachian Regional Commission.....................    12
Reed, Ken, Development Director, Vinton County Commissioners.....    14
Riordan, John, Development Specialist, Ohio Conference of 
  Community Development..........................................    14
Stroh, Jessica, Hocking-Athens-Perry Community Action............    17
Thiessen, Cheryl, Executive Director, Jackson-Vinton Community 
  Action, Inc....................................................    19
Walker, Hon. John, Hocking County Commissioner...................     6

                                APPENDIX

Prepared statements:
    Ney, Hon. Robert.............................................    34
    Barnes, Patricia.............................................    36
    Brightbill, David E..........................................    40
    Cain, Hon. Dean..............................................    44
    Justice, T.J.................................................    46
    Reed, Ken....................................................    50
    Riordan, John................................................    51
    Stroh, Jessica...............................................    68
    Thiessen, Cheryl.............................................    72


                       STRENGTHENING RURAL OHIO:
                   A REVIEW OF COMMUNITY DEVELOPMENT
                          BLOCK GRANT PROGRAMS

                              ----------                              


                        Saturday, March 25, 2006

             U.S. House of Representatives,
                        Subcommittee on Housing and
                             Community Opportunity,
                           Committee on Financial Services,
                                                   Washington, D.C.
    The subcommittee met, pursuant to notice, at 10:00 a.m., in 
the Hocking County Emergency Management Agency Conference Room, 
52 East Second Street, Logan, Ohio, Hon. Bob Ney [chairman of 
the subcommittee] presiding.
    Present: Representative Ney.
    Chairman Ney. The subcommittee will come to order. You are 
tougher to get to order than Congress.
    It is a pleasure to have time with you here today. Also, I 
wanted to thank Peggy Warren over here, she is a court reporter 
and she has been to probably six hearings. She was down in New 
Orleans with us, she has traveled to Ohio, so I just wanted to 
let you know she has been so good with our committee.
    This is the Subcommittee on Housing and Community 
Opportunity and today, without objection, it will serve as an 
official field hearing. I just want to explain to you why that 
is important, and why it is important to have you, and thank 
you for being here today.
    We have official hearings and that is why Peggy Warren is 
here, it will be transcribed, it will be entered into the 
record. We had one in Knox, one in Guernsey, one here in Logan, 
Hocking County, and the fourth one is going to be held in Los 
Angeles. So there are going to be four hearings, three in Ohio. 
I chair the subcommittee, so somebody asked me the other day, 
why are we having them here? Well, duh, I chair the 
subcommittee, it is a good place to have it. And it shows the 
rural side, it shows, you know, the differences of counties, 
and Los Angeles will show the large urban side. I predict to 
you, L.A. is going to agree with you here, with us. So, that is 
good. And this is all to help combat the 25 percent cut, so it 
is important. We will be able to go back with our colleagues 
and say for the record that we had the hearings, there is 
objection--unless somebody today supports the cut. But I doubt 
that will happen. But what I am trying to tell you is that this 
is very helpful on the whole issue.
    Clinton Jones is here, he is from the staff of the 
Financial Services Committee in Washington, D.C., which is 
chaired by Mike Oxley. And he is on the majority side. If you 
do not follow Congress, Republicans are in the majority, so--at 
least for this time. Might change, you never know. But anyway 
he is on the majority side. Cindy Chetti is also on the 
majority side. Jeff Riley is on the minority side, on the 
Democrat side. They are all good people, we have a lot of other 
staffers, they work together to help a lot of people, you might 
see on C-Span where people are thrashing each other up right 
and left, but I think our Housing Subcommittee--the ranking 
member is Maxine Waters of California and also the ranking 
member for the Full Committee is Barney Frank of Massachusetts. 
I think they have all done a good job to try to help people 
with Community Development Block Grants. Both parties have 
worked together, so I am very proud of all the members of the 
committee.
    Jeff, do you want to say something?
    Mr. Riley. No, just thanks for having us today, and 
greetings from Mr. Frank and Ms. Waters.
    Chairman Ney. Clinton, you want to say anything?
    Mr. Jones. Glad to be here, I enjoy Ohio a lot, so it is 
good to be back.
    Chairman Ney. And so, again, I want to welcome you here and 
I want to thank auditor Ken Wilson and the Hocking County 
Emergency Management Agency for allowing this subcommittee to 
use the conference room here for today's important discussions 
regarding HUD's Community Development Block Grant.
    The CDBG program, is administered, of course, by HUD, and 
it is a widely available source of financial assistance to 
support our neighborhoods and local governments; redirect 
neighborhoods; revitalization; housing rehabilitation; economic 
development activities; and helping the fire services. There 
are a lot of good ways it helps, I think; communities and 
formula base grants allocated more than 1,100 entitlement 
communities, metropolitan cities with populations of 50,000 or 
more, urban counties, rural areas, the 50 States, Puerto Rico, 
and the insular areas of American Samoa, Guam, the Virgin 
Islands, and the Northern Mariana Islands. Grants are used to 
implement plans intended to address, again, local housing 
issues, neighborhood revitalization, public services, 
infrastructure needs. And it is determined by local officials 
and citizens, which I think is the greatest thing about CDBG. 
You can see a lot of the benefits of CDBG in Morgan County; 
Commissioner Cain is here, of course and it has played a vital 
role in that county. You know, there are a lot of different 
projects; it was used for water and sewer, the Chesterhill 
Theater, and a lot of different things that have been done 
there.
    I also wanted to note Dave Brightbill, who is here with 
Washington/Morgan Counties Community Action. He will discuss 
today cuts in CDBG funding. Morgan County received 80,000 
formula dollars in 2006, which is down from $94,000 in 2004. 
The proposed cuts from the President's budget would cut funding 
to $60,000, it would be a 36 percent decrease I think, as Dave 
has provided us statistics. These types of reductions will be 
disastrous to communities' abilities to continue to rebuild and 
renovate their areas.
    The budget proposal raises some interesting and serious 
questions as the process runs. This is the Administration's 
budget proposal, it has now come into the House. Our 
subcommittee has jurisdiction over what is called the 
authorizing, the language of the CDBG. There are appropriators 
in the U.S. House who actually put the money into it. We, of 
course, will take our findings and go to the appropriators to 
say we would support restoring funding. Then it goes over to 
the Senate. So, this cut is not in the House-introduced 
version, this cut is within the Administration's budget, which 
would be the President's. And again, it raises some serious 
questions about what role Community Development Block Grants 
should play in helping local and State governments provide safe 
and affordable housing to its constituents.
    In addition to recommending a new formula change for CDBG 
that focuses more on the neediest communities, the 
Administration recommended a funding level for fiscal year 2007 
that is 27 percent below last year's enacted levels. I would 
also note to you the struggle last year was whether Community 
Development Block Grants remained within HUD or moved to 
Commerce. And we won that battle, because moving to Commerce 
would have created all new rules, changed the whole structure 
across the United States, so we were against that. So we won 
that battle.
    However, at the end of the year a budget reconciliation--
which I did not support--passed and there were percentage cuts. 
So, CDBG actually, if you look at it, took a 10 percent cut 
last year. If you take this 25 percent proposed, that would be 
35 percent over 2 years. So, I just wanted to note a little bit 
of the history of that.
    So, our goal is to continue to focus on housing and 
community development and make sure the communities have the 
tools to provide for the communities. I just want to also, you 
know, say that as this process continues, we will continue to 
communicate with the local officials and citizens on this 
important CDBG issue.
    Before we start if you want to, especially because we have 
officials who are here, elected officials, citizens, if you 
would like to start--and if you do not want to, that is fine, 
but, start and stand up and go ahead and just say who you are 
and we will start over here and go across. You want to say who 
you are?
    Ms. Stroh. Okay, hi, I am Jessica Stroh and I work with 
Hocking-Athens-Perry Community Action.
    Mr. Stroh. I am Dan Stroh and I am Jessica's husband.
    [Laughter]
    Ms. Johnson. I am Sandra Johnson and I also work with 
Hocking-Athens-Perry Community Action.
    Ms. Walker. Karen Walker and I am the wife of John Walker, 
county commissioner.
    Mr. Green. Greg Green, Hocking County commissioner.
    Mr. Spencer. David Spencer, reporting for Logan Daily News.
    Ms. Roberts. Mary Roberts, Athens resident.
    Mr. Brightbill. David Brightbill, Washington/Morgan County 
Community Action.
    Ms. Barnes. Patricia Barnes, the Ohio Community Development 
Corporation.
    Ms. Smith. I am Mary Jo Smith. I am the City of Lancaster, 
Ohio's, Community Development Department director and this is 
my husband, Patrick.
    Mr. Riggins. Terry Riggins, Perry Township trustee here in 
Hocking County.
    Ms. Thiessen. My name is Cheryl Thiessen and I work for 
Jackson-Vinton Community Action, and this my husband Don.
    Chairman Ney. I like seeing all these women running the 
show.
    Mr. Bearden. I am Jack Bearden and I am with the Ohio 
Conference of Community Development.
    Mr. Reed. My name is Ken Reed. I am the director of 
Development for the Vinton County Board of Commissioners.
    Mr. Wilds. I am Robert Wilds, president of the Ross County 
Township Association.
    Ms. Sexton. I am Sarah Sexton and I am an intern in the 
Governor's Office of Appalachia.
    Mr. Justice. T.J. Justice, director, Governor's Office of 
Appalachia, here in Ohio.
    Mr. Mahaffey. Danny Mahaffey, a resident of Hocking County.
    Mr. Dunkel. I am Hubert Dunkel, a resident of Hocking 
County.
    Mr. Moorhead. Charlie Moorhead, a resident of Hocking 
County.
    Mr. Hepburn. I am Dustin Hepburn, Village Council, 
Bellaire, in Belmont County.
    Chairman Ney. Guess who had the furthest travel. I was 
raised in that city. I knew his father, he is a brand new 
council member.
    Ms. Saunders. I am Barbie L. Saunders from Chesterhill. I 
am on the Village Council.
    Mr. Wilson. Good morning, I am Ken Wilson, Hocking County 
auditor. I am pleased to welcome everyone here and, 
Congressman, we appreciate having you here in our community.
    Mr. Denton. Larry Denton, Washington Township trustee in 
Hocking County.
    Mr. Garbo. Bob Garbo, director of Hocking County Community 
Action.
    Chairman Ney. I will introduce two more people. Carrie 
Mittinger does a wonderful job as a field rep. She really cares 
a lot about the area and she is local, from Chillicothe. Dave 
Pappas is in from Washington, D.C.
    With that I want to thank you all. If you have statements, 
by the way, without objection, for the record your statements 
can be part of the record. We were limited on how many people 
we could pick to testify, but if you have statements, we have 
30 days open, so if you can get the statements to us, it would 
become part of the official record in Washington for the 
hearing.
    And with that we will begin with Commissioner Cain, 
welcome.

  STATEMENT OF THE HONORABLE DEAN CAIN, COMMISSIONER, MORGAN 
                 COUNTY BOARD OF COMMISSIONERS

    Mr. Cain. Good morning. Congressman Ney, Subcommittee on 
Housing and Community Opportunity representatives, elected 
officials, and concerned citizens:
    It is with great pleasure that I, Dean Cain, vice president 
of the Morgan County Board of Commissioners, am able to sit in 
on the field hearing with you today and represent Morgan 
County. The Community Development Block Grant Program has been 
an important funding source for Morgan County and played a key 
role in the community development over the last several 
decades.
    Morgan County, Ohio, is one of the 29 counties designated 
Appalachia and is titled a transitional county by the 
Appalachia Regional Commission. Our county, although called 
transitional, has one of the highest unemployment rates in the 
State, low income, and a declining tax base.
    With a population of nearly 15,000, over 52 percent of our 
entire population is considered to be low to moderate income, 
according to the 2000 census. With programs benefitting the low 
to moderate income population, CDBG is critical to the future 
success of Morgan County in continuing the community 
development projects. Over the last 4 years, the Community 
Development Block Grant has aided our community in a wide array 
of projects.
    Since 2000, Morgan County has received over $500,000 of 
funding through the formula program, receiving one of the 
lowest yearly allocations in the State. Formula funding has 
allowed us to improve our fire department facilities and 
equipment which they have to operate with when emergencies 
arise. It is very difficult for rural fire departments to 
receive the adequate funding they need to survive and CDBG 
plays a critical role for our rural fire departments. Over the 
last 4 years, 29 percent of Morgan County's CDBG formula 
dollars has assisted our six rural fire departments.
    Other areas of interest that formula fund has enabled 
Morgan Country to fund include 21 percent to the water and 
sewer projects. Several of our rural water districts rely quite 
heavily on formula funds to assist in water line extensions and 
acquisitions, and many planning projects. Morgan County's four 
villages have been working hard to improve the water and sewer 
facility via formula funds that serve many low to moderate 
income populations.
    Over 25 percent of the formula funds have provided for our 
neighborhood facilities for public rehabilitation projects. For 
example, those include renovation of a county senior center, 
township buildings, recreation facilities, community centers, 
and the historic theater. The historic Union Hall Theater just 
recently reopened in the village of Chesterhill as a direct 
result of CDBG funding. According to the chairperson of the 
Union Hall Committee, ``We are trying to breathe life back into 
our town through this theater.'' The Mayor of Chesterhill feels 
the theater is going to be a very important part of the 
economic development of the village, which has a low to 
moderate income percentage of over 41 percent.
    As you look back at the various programs that assist our 
community, and that fall under the umbrella of Community 
Development Block Grants, it is hard to imagine where we could 
afford to lose or sacrifice any of the funds that we have 
previously received. Every program is working to benefit low to 
moderate income populations in different ways. We just learned 
about our formula allocation for 2006 and we are incurring a 
10.2 percent reduction in the coming year; our allocation was 
reduced from $89,000 in 2005, to $80,000 in 2006. If next 
year's budget reflects another 25 percent reduction in this 
program, activities for the future will be receiving such a 
minimal amount, by the time that we divide it into the various 
programs, it will not amount to much.
    It has been a pleasure to get to be here today and 
represent Morgan County. It is my hope that the 
Administration's proposal for the President's fiscal 2007 
budget takes this information presented in these field hearings 
from the rural communities such as ours and reconsiders the 
reform.
    Thank you.
    [The prepared statement of Mr. Cain can be found on page 44 
of the appendix.]
    Chairman Ney. Thank you.
    Commissioner Walker.

    STATEMENT OF THE HONORABLE JOHN WALKER, HOCKING COUNTY 
                          COMMISSIONER

    Mr. Walker. Thank you. I became aware of the CDBG funding 
in 2003 when, as a Falls Township trustee, we applied for a 
grant. As a trustee and now as a commissioner, I have seen 
firsthand the need to continue these grants due to the limited 
source of funds that townships, cities, and villages have to 
assist with the many projects that are in dire need for the 
people of Hocking County.
    I believe in 2002, Hocking County received approximately 
$160,000, compared to $138,000 in 2005. As our State and 
Federal funds are cut, the cost of services and materials 
continue to escalate.
    During the past years, the money received by Hocking County 
has funded numerous projects for townships and the City of 
Logan. Some of these projects have included guardrails, fire 
stations, fire equipment, curbs, sidewalks, storm sewer 
improvements, vehicles, water lines, and resurfacing of roads, 
along with rehab of buildings.
    If this funding is cut, the township would suffer greatly--
townships, I should say.
    So on behalf of the citizens of Hocking County, I strongly 
urge you to continue this much needed program.
    Thank you.
    Chairman Ney. Thank you, Commissioner.
    I just have a couple of questions. Have either of the 
counties dealt with any of the brownfields? We passed a bill 
for brownfield economic development in December of 2005, which 
would have been the old buildings. I know down here, there 
weren't the steel mills like in the eastern part of the State, 
but have you ever had any experience with brownfields?
    Mr. Walker. Yes, we are kind of in the process right now of 
working with that. The county has purchased the old General 
Clay Brick Yard. And we are in the process of working with 
that. So, that is something that we definitely need to see.
    Chairman Ney. Let us say that if we are able to restore the 
cuts that are put into this budget, is there anything else that 
you think should be revamped or changed, or maybe not, with the 
way CDBG works. I am talking about the process. We, of course, 
send the money down to the State, you work with the Small 
Cities, is there anything or maybe not?
    Mr. Walker. I think the main thing with 11 townships and 
two villages and a city, you know, the amount of money we 
receive, it is very difficult to try to give it to each one on 
an equal basis, to decide which projects will receive it.
    Chairman Ney. The one thing that I like about CDBG is it 
goes all the way down to the local level, but I can imagine if 
you have $200,000 worth of requests, and $100,000 worth of 
money, it has to cause some problems.
    I do not have any other questions. But I sure appreciate 
your time and I know that the committee does, and I appreciate 
the help that you are giving. People like yourselves across the 
country and your associations will be networking, I know, to 
try to stop these cuts.
    Thanks a lot.
    We will move to the second panel and we have Patricia 
Barnes--just take a few minutes, if somebody wants to get 
coffee. Patricia Barnes, David Brightbill, T.J. Justice, Ken 
Reed, John Riordan, Jessica Stroh, and Cheryl Thiessen.
    [Brief recess]
    Chairman Ney. We are going to add for the record, Dustin 
Hepburn, councilman from Bellaire on the record. And we will 
begin with Patricia Barnes, executive director of the Ohio CDC 
Association.
    Let me just give the titles of all the panel, we said the 
names: David Brightbill, executive director, Washington-Morgan 
Community Action; T.J. Justice, director, Governor's Office of 
Appalachia, State Alternate, Appalachian Regional Commission; 
Ken Reed, development director, Vinton County Commissioners; 
Mr. John Riordan, development specialist, Ohio Conference of 
Community Development. Also, we have Ms. Jessica Stroh, 
Hocking-Athens-Perry Community Action; Cheryl Thiessen, 
executive director, Jackson-Vinton Community Action, Inc.; and 
Dustin Hepburn, councilman from Bellaire, Ohio. And we will 
start with Ms. Barnes.

  STATEMENT OF PATRICIA BARNES, EXECUTIVE DIRECTOR, OHIO CDC 
                          ASSOCIATION

    Ms. Barnes. Thank you. Good morning. My name is Patricia 
Barnes and I am the executive director of the Ohio CDC 
Association located in Columbus, Ohio. The Association is a 
statewide trade association of non-profit community development 
corporations that includes neighborhood organizations, rural 
and urban community action agencies, and other non-profit 
development organizations. Approximately 175 community 
development corporations and their partners form the membership 
of the Association.
    The Ohio CDC Association has been in operation since 1984 
and provides training, technical assistance, public policy 
development and advocacy, and special projects that benefit 
community development corporations. For example, the 
Association provides both entry level and intermediate level 
training in affordable housing development, workshops in 
community economic development and micro-enterprise, and onsite 
technical assistance in all of these areas. The Association is 
also active in the area of Individual Development Accounts and 
works with 18 organizations, including 10 rural organizations. 
It also sponsors an annual conference on technology and 
community development, planned for July 13th of this year, and 
an annual membership conference on a variety of topics planned 
for September 21st through 22nd.
    Many Association members receive Community Development 
Block Grant funds for their affordable housing, economic 
development, and community development activities. In this 
testimony, I would like to highlight the CDBG activities of 
three rural members in the areas of micro-enterprise, 
affordable housing development, home repair, and essential 
services.
    The Community Action Agency of Columbiana County is 
administering a CDBG funded micro-enterprise program for the 
Columbiana County Board of Commissioners for 2006. Funding was 
received from the Small Cities CDBG program administered by the 
Ohio Department of Development. This program provided 
entrepreneurship training and loan resources for Columbiana 
County residents interested in starting or expanding a small 
business. Participants must complete the small business 
training and a business plan, and meet all eligibility 
requirements. A five member Micro-enterprise Loan Review Board 
reviews all loan requests and determines the terms and 
conditions. The maximum loan amount is $15,000 to be used for 
purposes such as inventory, advertising, insurance cost, 
equipment purchases, and working capital. Participants also 
receive personal development counseling to address budgeting 
and credit repair.
    In 2005, the CAC provided financing to 17 individuals for 
new business start-up and expansion in Columbiana County for a 
total of $149,000 in loan funds. I believe that is actually 
their to-date activities; that is a lot for one year. A total 
of 269 individuals have received small business and personal 
development training through the Micro-enterprise program. The 
CAC has a low 5 percent default rate on its micro loan fund, an 
outstanding achievement given the fact that most loans are made 
to individuals who have suffered credit or financial hardships 
prior to participating in the program. More than half of the 
businesses are owned by women, and 6 percent are minority 
owned. All of the individuals are low to moderate income as 
defined by the HUD Section 8 limits, all of the businesses were 
in Columbiana County, and all of the loan recipients were 
Columbiana County residents. A few examples of the types of 
businesses that the CAC has assisted include a home health care 
provider, a printer, home repair and lawn services, excavating 
services, home daycare, construction, solid waste collection, 
and crafts.
    The Ohio Department of Development provided similar micro-
enterprise grants from the CDBG program to five other rural 
micro-enterprise programs in 2004-2005. Total funding for the 
six grantees was $289,300 for a total of 271 beneficiaries 
located in Columbiana, Logan, Noble, Portage, Van Wert, and 
Vinton Counties.
    In the area of housing and community development, HHWP 
Community Action Commission, serving Hancock, Hardin, Wyandot, 
and Putnam Counties, recently received a $356,070 Community 
Housing Improvement Program (CHIP) grant awarded to Hancock 
County from the Small Cities's CDBG program of the Ohio 
Department of Development. Under the grant, HHWP will construct 
four homes for low to moderate income people in Findlay, Ohio 
and provide home buyer training. In addition, they will provide 
15 very low income homeowners with emergency home repairs.
    Other examples of their CDBG activities include emergency 
rent and utility payment for low income households in Putnam 
County, repairs to the parking lot, ceiling, and furnace of 
their child development center that houses six Head Start 
classrooms and two child daycare classrooms, serving a total of 
145 children, and to their WIC program offices. These services 
and repairs would not have taken place without the support of 
the CDBG program.
    Logan-Belle H.A.N.D. and that is Housing and Neighborhood 
Development, an affordable housing organization located in 
Bellefontaine, Logan County, and a subsidiary of Logan 
Metropolitan Housing Authority, has received $45,000 in 
affordable housing subsidy for three low income families to 
purchase homes through two different CHIP grants received 
through Logan County. Each family will be able to receive up to 
$15,000 towards their home purchase. In Bellefontaine, the CHIP 
program has provided $30,000 in affordable housing subsidy for 
two low income families to purchase homes. The CHIP program in 
both Logan County and Bellefontaine have also provided funding 
for financial literacy and home buyer education classes for 
prospective home buyers in Logan County and Bellefontaine.
    In each of the above cases, CDBG funds provide critical 
support for the creation of jobs, home ownership, and important 
services such home repair, emergency rent and utility payments 
to prevent homelessness, home buyer counseling, and repair 
facilities for essential services such as child care.
    In fiscal year 2006, Ohio's Small Cities CDBG program 
received a 10 percent reduction in funding, and, as we have all 
discussed, in fiscal year 2007, the President's budget proposes 
an additional 25 percent reduction. In addition, proposed 
formula changes in CDBG would reduce Ohio's allocation by a 
range of 9 percent to 21 percent. When combined with the 
proposed reduction in funding, the formula change could result 
in Ohio losing as much as 46 percent of its current 
allocations. This change would harm thousands of low income 
Ohio residents in need of jobs and housing and hurt the Ohio 
economy at a time when Ohio is not experiencing the economic 
growth witnessed in the rest of the country. Given the 
importance of the CDBG program to Ohio, we urge you to find 
ways to sustain the CDBG program at its current level. We ask 
you to give the ongoing reform efforts adequate time to see 
results and to reject any changes to the formula that would 
disadvantage Ohio.
    Thank you for the opportunity to testify today. I would be 
happy to answer any questions.
    [The prepared statement of Ms. Barnes can be found on page 
36 of the appendix.]
    Chairman Ney. Thank you very much.
    Mr. Brightbill.

     STATEMENT OF DAVID E. BRIGHTBILL, EXECUTIVE DIRECTOR, 
               WASHINGTON-MORGAN COMMUNITY ACTION

    Mr. Brightbill. Chairman Ney, thank you very much for 
holding these hearings. We certainly appreciate it, and before 
I start on these remarks, I should mention that I am also on 
the council of the village of Lower Salem, which is a massive 
110 people with a budget of about $40,000 a year.
    Chairman Ney. You are telling your election size. Then you 
are going to have the town--
    Mr. Brightbill. No, we have more trouble finding people to 
run. But no, that has never been an issue in Lower Salem. And 
we have received CDBG funds over the years from the county. In 
fact, in just the past year, we replaced our sidewalks using 
CDBG formula money.
    Washington-Morgan County Community Action has been in 
business since 1967, and operates a variety of programs 
designed to help low and moderate income families. In 1990, 
Washington-Morgan received its first housing rehabilitation 
program funded with Community Development Block Grant funds 
through the Washington County Commissioners. In addition to 
that partnership, we now work with the Morgan County 
Commissioners and the City of Marietta to rehabilitate homes in 
all three communities. CDBG funds are used in conjunction with 
HOME dollars to provide comprehensive housing rehabilitation 
services to low and moderate income families. Each local 
community develops a Comprehensive Housing Improvement--
Investment Strategy, a CHIS, which serves as a basis for 
allocation of funds, assuring that housing funds including CDBG 
are used according to well-thought-out goals and objectives. 
CDBG funds have contributed significantly to lengthening the 
useful life of housing stock in our two counties and improved 
the lives of dozens of families.
    The CDBG has been, and continues to be, a very valuable 
tool for governmental subdivisions and non-profit organizations 
in our area of Appalachian Ohio. CDBG funds an array of 
important economic and community development projects. Ohio and 
its Appalachian region are not feeling the effects of the 
economic recovery that is being reported in the rest of the 
country. Our area continues to lose good paying manufacturing 
jobs. We struggle to replace those jobs and in most cases 
replacements are lower wage service jobs or require traveling 
great distances, and Morgan County is a great example of people 
who have had to find jobs in communities outside of Morgan 
County, as far away as Columbus actually. CDBG provides local 
government flexible money to help provide needed infrastructure 
such as water and sewer, access roads, revolving loan funds, 
and matching funds for non-profits and rural emergency 
services. As you know, infrastructure improvements are a 
necessary factor in job creation, especially in rural areas 
such as ours.
    As I mentioned above, Washington-Morgan Counties Community 
Action works with commissioners in both Washington and Morgan 
Counties. Their CDBG funds come through the State of Ohio, both 
through formula allocations and its competitive grants for 
water and sewer projects, housing programs, and economic 
development. Our agency also works with the City of Marietta, 
which as an entitlement community, receives its CDBG allocation 
directly from HUD.
    The Morgan County Commissioners, because of the relatively 
small amount, as Commissioner Cain just mentioned, of formula 
CDBG funds available to the county, have not been able to 
provide matching funds for the Comprehensive Housing 
Improvement Program, the CHIP. They have, however, been the 
grantee and an active partner in several CHIP grants. Their 
partnership with our agency has generated $215,000 in CDBG in 
the Office of Housing and Community Partnerships over the past 
4 years. Those CDBG dollars, along with HOME funds, resulted in 
four home ownership opportunities, 24 owner occupied rehabs, 9 
rental rehabs, and 15 minor home repairs in the last 4 years 
alone. For a county that often ranks at the top of Ohio's 
unemployment statistics, and finds local resources stretched 
even further than most Appalachian counties, these outside 
resources not only prolong the life of existing housing stock, 
they also provide opportunities for local contractors and jobs 
for the local workforce.
    In Washington County, the Commissioners have utilized some 
of their CDBG funds to provide matching funds for the CHIP. 
Again, the assistance provided by this program provides owner-
occupied housing rehabilitation, down payment assistance along 
with rehabilitation, rental rehabilitation with landlords 
contributing 40 percent of the cost. The flexibility--and this 
is certainly a key--the flexibility of CDBG also allows for 
minor repairs such as ramps, septic systems, electrical 
systems, and heating units. HOME dollars cannot be used on--can 
be, but because of the requirements that are tied to that, it 
is almost impossible to really use it in reality. Thirty-eight 
families in Washington County have been assisted with CDBG and 
HOME funds. The Office of Housing and Community Partnership has 
provided $209,000 in CDBG dollars and the county has added 
about $40,000 in formula dollars. Again, this is over the last 
4 years.
    Marietta, as an entitlement community, receives its CDBG 
funds directly from HUD. They also use their funds for 
community and economic development activities. Our partnership 
with Marietta has resulted in $40,000 worth of CDBG entitlement 
funds being committed to the CHIP program. These funds have 
helped generate over $400,000, my written testimony says $4 
million--I should wish, but that is not right. Just an extra 
zero, zero here zero there. This has allowed for one home 
ownership opportunity with rehab, two rental rehabs, and 12 
owner occupied homes being rehabilitated in the last year-and-
a-half.
    The over $5.5 million in CDBG cuts Ohio received this year 
obviously will have a negative impact on activities such as 
those listed above. Local dollars are already stretched to the 
breaking point. It is not possible for Appalachian counties or 
cities to make up these dollars. Projects which would have 
provided housing and other infrastructure needs will not be 
done and the jobs which would have been created by these 
projects would not be filled. If the President's proposed 25-27 
percent cut is maintained in the fiscal year 2007 budget, the 
impact will be staggering. Ohio could lose an additional 
thirteen and a quarter million dollars in CDBG funds. And that 
is just in the non-entitlement areas, that is not factoring in 
the cities, making the overall 2-year cut almost 40 percent.
    As an example, Morgan County, as Chairman Ney mentioned, 
received $80,000 in formula dollars in 2006, which is down from 
$94,000 in 2004, and if the President's budget numbers are 
adopted, they would fall to $60,000, a 36 percent cut. And 
again, in a county that is certainly struggling in terms of 
finances and unemployment. Another example is the water and 
sewer fund the State sets aside for non-entitlement 
communities, currently $9.8 million has been allocated for 
these types of projects and these funds are normally utilized 
long before the end of the fiscal year. A 27 percent cut to 
CDBG would of necessity lead to cuts in this set-aside, further 
reducing important infrastructure investments. These dollars 
will not be made up. State and local governments certainly do 
not have the funds to replace them. An economy which is barely 
making any progress toward recovery will be set back even 
further.
    Given the nature and benefits of CDBG, I would advocate for 
additional funds, not less. The flexibility and local spending 
of the dollars not only enhances housing and infrastructure, it 
generates direct jobs and indirect jobs through the projects 
completed.
    I urge you to look for ways to increase, not decrease, the 
funds for this program and to maintain its targeting to low and 
moderate income individuals and families. Our counties, cities, 
and non-profits need help in turning local economies around, 
not more obstacles and less funding.
    Again, thank you for allowing me to testify and I will be 
happy to answer any questions.
    [The prepared statement of Mr. Brightbill can be found on 
page 40 of the appendix.]
    Chairman Ney. Thank you very much.
    Also, for the record, without objection, I wanted to enter 
Robert Wilds, president of the Jefferson Township Board of 
Trustees--and he has signatures of other township trustees who 
oppose the 25 percent cut. I will enter that into the record.
    Mr. Justice.

   STATEMENT OF T.J. JUSTICE, DIRECTOR, GOVERNOR'S OFFICE OF 
  APPALACHIA STATE ALTERNATE, APPALACHIAN REGIONAL COMMISSION

    Mr. Justice. Thank you, Mr. Chairman. Good morning. I, too, 
would like to thank you for holding this hearing here in Logan, 
Ohio, as well some of the other hearings you have held 
throughout our wonderful State.
    In my position as director of the Governor's Office of 
Appalachia, I know firsthand the benefits that Community 
Development Block Grant funds bring to the communities of 
Appalachian Ohio. I also know the crushing impact that the 
proposed cuts of this funding could have on our part of the 
State.
    I think it is important to point out that CDBG funding is 
oftentimes a partner with many other State or Federal programs 
in order to make projects happen. The fact that it is a partner 
oftentimes allows communities to borrow less, assume less debt, 
and allow projects to move forward.
    To capture this somewhat, in the past 3 years, as the 
result of CDBG funding, 2,568 jobs have been created, 1,290 
more jobs retained, that is the direct result of 71 Economic 
Development Program grants and 16 Micro-enterprise Business 
Development Program grants being provided through the CDBG 
program. In my opinion, this is a calculated, measurable return 
on investments being made by the Federal Government that is 
replicated not just here in Ohio, but across this great 
country. However, with the proposed 10 percent reduction of 
CDBG for fiscal year 2006, the State of Ohio anticipates that, 
at a minimum, 86 less jobs will be created, 43 less jobs 
retained, and $13.3 million not leveraged. Looking forward to 
fiscal year 2007 with a proposed 25 percent reduction, we 
believe another 192 jobs will not be created, 97 jobs not 
retained, and $29.3 million will not be leveraged. Now the job 
creation numbers may not sound staggering, but I think it is 
important to keep in mind that one job in rural Appalachian 
Ohio may well be the equivalent of 100 jobs in Columbus, 
Cincinnati, Indianapolis, or elsewhere.
    And I would like the record indicate a typographical error 
in my testimony. It does state 500 jobs; it should be 100.
    Chairman Ney. Well, that is the goal.
    Mr. Justice. Aside from the economic development 
components, CDBG provides very critical funding for public 
infrastructure in smaller communities, for example--more 
numbers--1.2 million linear feet of street improvements have 
been installed over the past 3 years, that is significant. When 
we look at the proposed reductions in CDBG funds, the figures 
are alarming. Over the next year, a 10 percent reduction would 
cause the following to not happen here in Ohio:
    40,000 linear feet of street improvement will not be 
improved or installed;
    12,986 linear feet of curbs and sidewalks will not be 
improved or installed; and
    103,333 linear feet of water and sewer lines will not be 
installed or improved.
    In 2007, with a 25 percent reduction, we will see the 
following not be improved or installed:
    90,000 linear feet of street improvement;
    29,000 linear feet of curbs and sidewalks; and
    232,500 linear feet of water and sewer lines.
    Those are staggering numbers.
    Per the committee's request, I would like to provide one 
specific example of a project here in the region that had a 
tremendous impact, and would not have happened had it not been 
for CDBG. Back in 2002, the Le-Ax water line extension project 
received $600,000 in CDBG funds. That leveraged additional 
dollars to allow a multi-million dollar water line extension 
project to occur. The end result of that investment was 353 
households in four counties receiving reliable water service. 
Those counties include Vinton, Athens, Meigs, and here in 
Hocking counties. That is a large number of homes receiving 
water service that otherwise would not have. I personally can 
think of no other Federal program that is as powerful and 
effective than CDBG. I do represent the Appalachian Regional 
Commission as well. But I am here today to urge the United 
States Congress to restore funding, which would allow our 
communities to continue to grow and be competitive.
    In closing, I do want to applaud President Bush for his 
proposed level of $66 million in funding for the Appalachian 
Regional Commission, which also provides monumental economic 
impacts here in Ohio. And I am hopeful that the Bush 
Administration and Congress will equally recognize the 
importance of the Community Development Block Program, while 
maintaining its successful protection of our great country, 
which it has accomplished since arguably our worst day of 
tragedy on September 11, 2001.
    [The prepared statement of Mr. Justice can be found on page 
46 of the appendix.]
    Chairman Ney. Thank you.
    Mr. Reed.

  STATEMENT OF KEN REED, DEVELOPMENT DIRECTOR, VINTON COUNTY 
                         COMMISSIONERS

    Mr. Reed. Good morning. Again, thank you for holding this 
hearing. My name is Ken Reed and I am the director of the 
Vinton County Board of Commissioners Development Department. My 
17 years of experience in this position has given me a ground 
level perspective on the efficacy of individual Federal 
programs.
    The Community Development Block Grant program is, I 
believe, an effective program, that has made a demonstrable 
difference in the quality of life in Vinton County. Without 
CDBG funds, many persons in my community would not have access 
to reliable affordable source of potable water, our elderly 
would not have transportation to doctor appointments, our 
volunteer fire fighters would not have adequate protection 
gear, our local entrepreneurs would not have access to 
affordable capital, and our community would not have 911 
service. If time would permit, I could list other essential 
needs that are being addressed in Vinton Count through the CDBG 
program.
    Being the most rural, most economically distressed county 
in Ohio, Vinton County faces some unique challenges. The CDBG 
program, with its emphasis on local planning, its flexibility, 
and its targeting the low to moderate income households is a 
vital resource that helps us to make up for a lack of local 
resources.
    The bottom line is that the CDBG program, as it is 
currently structured, works. Reduction in CDBG funding and 
changes in the allocation formula concerns me. As the old adage 
says, ``if it ain't broke don't fix it.''
    Thank you.
    [The prepared statement of Mr. Reed can be found on page 50 
of the appendix.]
    Chairman Ney. Thank you very much.
    Mr. Riordan.

    STATEMENT OF JOHN RIORDAN, DEVELOPMENT SPECIALIST, OHIO 
              CONFERENCE OF COMMUNITY DEVELOPMENT

    Mr. Riordan. Thank you very much. My name is Jack, and 
currently, I am the development specialist for the Ohio 
Conference of Community Development. But before I begin, I 
would like to formally thank Congressman Ney for his support 
and endorsement of the CDBG program last year. I think we were 
heading for a disaster and your help really paid off last year. 
I think that these hearings are a great way to get a clear 
picture of the value of this program in Ohio.
    As I indicated I am currently a development specialist for 
the Ohio Conference of Community Development (OCCD). It is an 
organization of 166 local governments and related entities that 
administer State and Federal community development programs to 
the people of Ohio. OCCD was founded in 1964 and has provided 
training and assistance to local governments in their community 
and economic development efforts to improve the quality of life 
of their citizens. Attached to my testimony is a brief history 
of the organization, an explanation of our objectives and 
purposes, as well as a list of our members.
    Formerly, I was the Director of Community and Economic 
Development for the Department of Housing and Urban 
Development, and it was my pleasure to be associated with the 
Community Development Block Grant Program from its conception 
in the Nixon Administration and saw its development in the 
1970's, 1980's, and 1990's. Following my retirement from the 
Department, I was appointed by then-Governor George Voinovitch 
to be deputy director for community and economic development 
for the Department of Development in the State of Ohio. 
Attached is my resume of 40 years of public service.
    CDBG has a proven track record of helping local governments 
address and focus on community needs that result from the 
concentrations of low and moderate income people who do not 
have sufficient income to pay local taxes to cover the cost of 
providing themselves with local services. Limited local public 
revenues cause communities to focus only on the most critical 
needs to maintain their communities as decent, safe, and 
sanitary places to live. The lack of resources deteriorates 
public infrastructure and fosters a decline in the housing 
stock and commercial facilities which typifies the areas where 
low and moderate income people are forced to live.
    CDBG has been an essential asset to communities in their 
fight against blight that flows from this deterioration. The 
changes in CDBG that the Administration proposes for 2007 
cannot be separated from the 27.5 percent reduction in funding. 
The changes reflected the Administration's effort in 2005 to 
consolidate all local community assistance programs into an 
economic development program to be administered by the 
Department of Commerce.
    Now, we all know that good paying jobs with health benefits 
would be the long term solution for many low and moderate 
income families. The problem is that the vast majority of jobs 
being generated are not good paying jobs and do not match the 
number of good jobs lost in Ohio. Communities are thus faced 
with trying to deliver basic services without sufficient local 
tax revenues from the employers and citizens.
    Without CDBG funds in sufficient amounts, Ohio communities 
will continue to deteriorate, blight will go unchecked, and the 
quality of life will erode for more and more Ohioans.
    CDBG focuses on basic needs of low and moderate income 
people. Attached are reports by the State of Ohio on the 
effects of these cuts.
    First is a list of reductions to the 197 counties and 
communities in Ohio which were helped by the CDBG program 
through the State's Office of Housing and Community Partnership 
of the Ohio Department of Development.
    Second is a narrative report, ``Community Development Block 
Grant Program Funding Reductions Effects on Ohio''.
    And third, is an earlier memo from the chief of that 
office, ``Funding Reduction Effects on Ohio''.
    These reports tell what jobs, facilities, and improvements 
will be lost. For example, just down Highway 93 in Jackson 
County, there is a lady who can enjoy a cool, cold drink of 
water from her kitchen sink. No big deal you might say, but 
there are 150 other people in Jackson and Washington Township 
who also now have safe water because of CDBG. In the 
unincorporated villages of Ray and Byer, 19 wells were 
determined to be contaminated with arsenic. CDBG was the source 
of $535,000 to help provide 62,000 linear feet of water lines 
to connect 55 low income households.
    I want to take a moment to reinforce this letter that was 
given to you yesterday by Mayor Clifford L. Mason. He talks 
about little things, but that is the important problem that 
local governments are facing. Sidewalks do not seem too 
important, but if you have a kid walking down next to the 
highway, a sidewalk can save that kid's life.
    CDBG is often a GAP financing that makes basic needs 
possible. For example, 3 years of CDBG money made possible over 
three million feet of water and sewer lines. That is three 
million--that is not an error.
    [Laughter]
    Mr. Riordan. The 10 percent cut in funding for this year 
will reduce that by at least 100,000 feet. The Administration's 
proposed 27.5 percent cut would cut that by 230,000 feet. If 
these cuts persist, each year hundreds of poor families will be 
left with contaminated wells, and costly trucked or bottled 
water.
    CDBG also constructs, rehabs, and helps finance thousands 
of homes for poor people. Last year--this is statewide--8,293 
families became homeowners because of CDBG. 12,698 rental units 
were built or rehabbed with CDBG GAP financing. 22,397 single 
family homes were rehabbed. In total a little over $68.8 
million of these CDBG funds went into housing. In addition to 
the housing that these funds provided, these expenditures 
generated over 200,000 good jobs. That is often forgotten, that 
housing creates jobs.
    CDBG has not in the past, and does not now, provide 
sufficient funds to address the comprehensive total needs of 
low and moderate income people, but it has made a bad condition 
a little better. CDBG provides local communities the 
flexibility, within parameters, to focus on aspects of total 
comprehensive need that it determines are the most critical 
through a local planning process with its citizens.
    CDBG could and should be more efficient and effective in 
addressing these needs. Some CDBG recipients used their funds 
for things that they should not. Some CDBG recipients get more 
funds than they should. CDBG needs to be changed.
    Changing the formula that determines who gets how much 
money without a comprehensive analysis of the totality of 
CDBG's role with local government in their fight against 
deterioration and blight will lead to massive unanticipated 
outcomes and unequal consequences. The Needs Index created to 
revamp the CDBG program is a good approach, but it needs 
further input and analysis. HUD's funds for research and 
technology are being cut at the time when meaningful data is 
most needed to determine what communities should get how much 
money, for what purposes.
    A few years ago OMB declared that CDBG was ineffective. OMB 
independently developed a score-keeping method by which the 
success would be determined. It was like deciding in the middle 
of the football season that teams were going to win by the 
number of total yards gained, rather than the number of points 
scored. The comprehensive method that ultimately was worked out 
with HUD, OMB, and the organizations representing State and 
local government entities that produced the Outcomes 
Measurement System is a good way to address the needed change. 
However, even this process needs more input from local 
government administrators and even the HUD field staff should 
be involved in the process.
    Our small towns and cities and the poor people who live in 
them are not going away because of the budget deficit. It is 
wrong to make them pay to balance the budget.
    The Administration's proposal to drastically reduce CDBG 
and all the other local government assistance programs and to 
give bonuses to communities that it determines succeeded, gain 
more yards, while thousands of communities cannot address the 
basic needs of low and moderate income people is wrong.
    Congressional setasides of CDBG funds for pet projects 
which further reduce the efforts of local governments to 
address these needs are also wrong.
    I wish to thank you for this opportunity to express my 
frustration and hope that it will lead to wisdom and justice in 
the halls of Congress.
    [The prepared statement of Mr. Riordan can be found on page 
51 of the appendix.]
    Chairman Ney. Thank you, Mr. Riordan.
    Ms. Stroh.

  STATEMENT OF JESSICA STROH, HOCKING-ATHENS-PERRY COMMUNITY 
                             ACTION

    Ms. Stroh. Hi. Again, my name is Jessica Stroh and I am the 
community development coordinator at Hocking-Athens-Perry 
Community Action, also known as HAPCAP, based in Athens, Ohio. 
And before I get started, I just want to thank Congressman Ney, 
and the entire Subcommittee on Housing and Community 
Opportunity, for allowing a small rural community to have a 
voice in the proposed changes to the Community Development 
Block Grant program.
    CDBG funding is unique and vital to our rural region. It is 
the only source of flexibile funding that communities can 
access to address critical needs for low to moderate income 
neighborhoods and residents. CDBG leverages other funding for 
projects that could not otherwise be completed and the citizen 
participation component allows for projects to be selected and 
prioritized at a local level. CDBG funds provide the basic 
necessities of human life and are the building blocks needed 
for attracting businesses to our area. Safe, clean, and 
sanitary water and sewer systems, affordable housing, and basic 
infrastructure are the driving force behind economic 
development in our region.
    Unfortunately, since 2002, each county we serve has faced a 
steadily decreasing formula allocation resulting in a 25 
percent total reduction. An additional 25 percent cut, as 
proposed in the President's 2007 budget, would further 
devastate low income communities and residents. Rural areas are 
already at a disadvantage because they receive one-third less 
Federal funding for community resources as do urban areas. 
Continued reduction in CDBG would further limit opportunities 
for poverty-stricken rural communities to create economic 
development opportunities.
    In order to illustrate the impact of this cut, I would 
first like to offer some insight into each of our counties' 
programs.
    From 2000 to 2004, Athens County received more than $3.2 
million in total CDBG funding leveraging an additional $14.7 
million that would not otherwise have been available to the 
county. However, the countless needs in the county far outweigh 
the money available.
    Athens County averages over $1 million in requests from 
township trustees, village officials, and community 
organizations for their yearly formula allocation. And with the 
proposed cuts, Athens County would receive only $155,000 in 
2007, which would be down from $276,000 in 2002. Already there 
is a major gap between the need and the money available to meet 
that need. Basic infrastructure should not be a luxury. Safe 
and sanitary water and sewer systems are a basic human right 
that each county strives to provide residents by utilizing CDBG 
funding. As one resident in the Sunday Creek Valley Water 
District in Athens County wrote to her representative last 
year, ``We desperately need water. Until you have to live this 
way, you do not realize what a gift water is. My family can be 
poverty level and get by. We, however, cannot keep going 
without water.''
    Perry County was able to undertake 29 community development 
projects leveraging an additional $8.5 million between 2000 and 
2004. And I would like to share one story with you today. After 
being awarded funds to create a park, a resident of the 
community of Congo, population 47, wrote, ``CDBG is a wonderful 
program created by the government, because it does such a great 
deal of good for the smaller, forgotten communities that have 
suffered from coal mining, logging, strip mining, and in later 
years were left to die. Slowly, we hope to rebuild our 
community to make a better place for our children to raise 
their children. I am glad that you are helping to make our 
families and community struggle a little easier to maintain our 
heritage and the love for our community.''
    As you can hear in her own words, CDBG helps residents gain 
a sense of pride in their communities.
    Hocking County was able to complete 28 projects with the 
almost $800,000 in formula funding they received between 2000 
and 2004. If the cuts take effect, Hocking County would receive 
a mere $94,000 in fiscal year 2007. Southeastern Ohio counties 
already face larger challenges and higher costs when installing 
and maintaining critical infrastructure because of the unique 
topography of the area and the rural nature of the communities. 
And once administration costs are paid and higher construction 
material expenses are taken into consideration, there will be 
little left. Hocking County would be devastated by the proposed 
cuts.
    If these cuts are allowed to stand, housing stock and 
infrastructure like water and sewer systems will continue to 
deteriorate, communities will not be able to attract needed 
businesses, construction companies throughout the region and 
administrative agencies like HAPCAP will have to lay off staff 
and finally, communities like the little town of Congo that I 
mentioned, will lose hope and may fade away.
    I know that the outcome of this funding and its impact are 
not easily measured on paper. However, I witness the outcomes 
firsthand everyday. I get to see the impact a shelter house has 
on a community, the way a contractor goes the extra mile so 
that funding can be stretched, and the faces of a family when 
they are finally able to purchase a home or access clean water.
    Just last year, we struggled to protect this money from 
cuts. On behalf of the County Commissioners and other local 
officials, contractors, and residents of Hocking, Athens and 
Perry Counties, I urge you to make CDBG a priority in the 2007 
budget by not only maintaining the funding, but by restoring it 
to its highest funding levels so that we do not have to fight 
year after year to save this critical program.
    Thank you very much for your time and I would be happy to 
answer any questions.
    [The prepared statement of Ms. Stroh can be found on page 
68 of the appendix.]
    Chairman Ney. Thank you.
    And we have Ms. Thiessen, who is a recipient of one of the 
water projects.

   STATEMENT OF CHERYL THIESSEN, EXECUTIVE DIRECTOR, JACKSON-
                 VINTON COMMUNITY ACTION, INC.

    Ms. Thiessen. Yes, I am. I am a resident of Washington--or 
Washington Township in Jackson County. And about 8 years ago, 
the Washington Township trustees were successful in getting 
water to us. I had always had to haul water in the summer time 
and through the rest of the year, I had to deal with iron. When 
you filled up your washer you had to make sure not to put your 
white clothes in there until the washer was filled up. So I can 
testify personally to that. Anyway, I did not know that was 
going to happen.
    Chairman Ney and members of the committee, I do appreciate 
this opportunity to testify today. I am Cheryl Thiessen, 
executive director, Jackson-Vinton Community Action. And our 
agency serves the counties of Jackson and Vinton, which are two 
small rural counties in the southeastern part of Ohio. Although 
we do not administer the CDBG funding, we have utilized the 
funding through our local resources.
    Our agency is a private non-profit organization and we have 
provided services for over 40 years and we strive to address 
the needs of low income families and individuals in our 
community. With shrinking resources and growing need due to the 
tough economic hardships including high unemployment in our 
counties, low skilled labor and higher cost of living, many of 
our families struggle daily to meet their basic needs.
    Our agency provides a wide range of services to the poorest 
of the poor in our community. We have several programs and I 
have them listed in my testimony. Since 1998, our agency has 
been involved in construction of single family housing as 
defined by HUD's definition of low income households. In 2001, 
we were successful in securing a 3-year Rural Housing and 
Economic Development Grant for $150,000, and in 2004, we 
secured a second round of the grant funding for an additional 
$150,000. And this was utilized for increasing staff capacity 
in our housing department, that is funded in part with the RHED 
funding. The role of the staff is to work with local entities 
to improve the housing quality within Jackson and Vinton 
counties and promote home ownership opportunities to low income 
families by providing education and information on the various 
programs so that they can achieve the American Dream.
    We provide emergency home repairs to low income homeowners, 
the majority of these being elderly households, because a lot 
of the younger people cannot afford to own their own homes. We 
work closely with local entities such as CHIP, UDSA-Rural 
Development, Habitat for Humanity, and the Ohio Department of 
Development. Utilizing HUD resources, we provide counseling for 
credit issues, including budgeting and resolving outstanding 
debt. We provide counseling on predatory lending, and the 
selection of a lender. We also instruct the families on the 
importance of home maintenance and other housing related 
issues. Since 1998, our agency has constructed 18 single family 
households and currently has 5 units in progress. We provide 
economic development opportunities by utilizing local vendors 
and contractors for the emergency home repairs and construction 
of our housing units.
    Since being certified a CHDO in 1993 by the State of Ohio, 
we have access to funding targeted to rural areas. However, 
many of the grants do not provide administrative or operational 
funding to support the staff while completing the project. 
Without funding such as the Rural Housing and Economic 
Development program, our agency would not be able to sustain 
our housing staff or complete the projects as we have in the 
past.
    In 2004, we submitted an application for $55,000 to the 
Jackson County Commissioners for funding through the Community 
Development Block Grant Program for a water line that would 
supply six low income families along Dan T. Davis Road outside 
the Village of Oak Hill, and the houses that were in our 
projected project funded by the Ohio Department of Development. 
Our project was a ten unit single family, stick built 
subdivision marketed to families at 52 to 73 percent of area 
median income. Without the water supply from an approved source 
by the Ohio EPA, our subdivision would be stalled.
    We contacted several resources to assist with the funding 
needed for the water line project on Dan T. Davis Road. And one 
of the things I will mention is that our budget had increased 
because we had dealt with Hurricane Andrew and the housing 
costs at that time had increased significantly, so it had 
increased our project cost because our houses, to construct 
them had raised from when we submitted the project until we 
actually started construction process. Many of the resources 
that we contacted such as USDA Rural Development, the Ohio 
Valley Regional Development Commission, and the Economic 
Development Revolving Loan Program, offered funds for water 
lines and sewer, but most of those had regulations connected to 
economic development which had to either increase jobs or 
retain jobs. And since this was a home ownership project, we 
could not meet that criteria. Some of the other resources such 
as the local Community Housing Improvement Program, they were 
already earmarked for other areas in the county, because of the 
great need.
    With the current flexibility of the Community Development 
Block Grant, the Jackson County Commissioners were able to fund 
a total of four projects for various activities. This included 
nearly $50,000 for the water line for our subdivision, with our 
agency covering the balance of the cost. The Jackson County 
Commissioners also assisted the Village of Oak Hill with funds 
for the extension of a sewer system, the Jackson County Rural 
Water for a pumping station which served low income families in 
the rural area, and another small project within the county.
    In a rural community with no public transit system, 
substandard housing stock, high unemployment, lack of health 
care coverage, and a shortage of living wage jobs, many of our 
families have limited choices as to where they are able to 
live. If they have credit issues--many of the public housing 
authorities are now doing credit checks and families with any 
credit issues are denied affordable housing in that housing 
authority. Many of these changes would make the local resources 
have to compete against each other for the funding, instead of 
working together as an alliance.
    The needs of our low income families are growing every day. 
Many of our programs have long waiting list such as our 
Emergency Home Repair and our Weatherization Programs, because 
the funding level is inadequate. We need to increase funding 
resources to increase affordable housing opportunities for low 
income families, not reduce it. Many of the local resources are 
already stretched too thin. Our staff would be willing to set 
up a tour of our poorest communities so you can see firsthand 
the conditions that many of our families are forced to live in.
    I thank Congressman Ney and the members of the Housing and 
Community Opportunity Subcommittee for their hard work and 
commitment. And I would be glad to answer questions.
    [The prepared statement of Ms. Thiessen can be found on 
page 72 of the appendix.]
    Chairman Ney. Thank you.
    Mr. Hepburn.

 STATEMENT OF DUSTIN HEPBURN, VILLAGE COUNCILMAN OF BELLAIRE, 
                              OHIO

    Mr. Hepburn. My name is Dustin Hepburn and I am on the 
Village Council for Bellaire, Ohio.
    First off, I would like to thank Mr. Ney and the 
subcommittee for the invitation to speak here today. I am going 
to start off by saying something that I am sure you are all 
aware of. But, all towns and cities throughout some part of 
their history have gone through, for a lack of a better word, a 
downfall--decrease in population, loss of community growth and 
all around deterioration of community infrastructure.
    Now with that said, most of these towns and cities are able 
to make some sort of a comeback. One of the major reasons for 
these comebacks is because of government funding such as the 
HUD program and CDBG. These programs are necessary to 
rebuilding the community infrastructure. The community that I 
am representing, Bellaire, unfortunately is one of these 
communities that is currently in a major downfall. Sadly, we 
are not alone. So many communities in the Ohio Valley and the 
Appalachian region are in dire need of government funding, more 
likely more--now so than ever.
    A cut now in our immediate future would have a devastating 
effect on all of our communities. And I believe that all we are 
asking for today is the opportunities that past communities 
were given. I know if given that chance, we would be able to 
turn a downfall around.
    With that said I would like to thank everybody for coming 
out today and showing their support. I thank you again, Mr. Ney 
and the subcommittee, for letting me speak.
    Chairman Ney. Thank you. I have a few questions and a 
couple of generics if we could do that. I am very fascinated 
about--I appreciate all of your testimonies--the micro, I ran 
into a foundation, there was a--the name escapes me, a lady 
from New York who called me up and offered--she has a 
foundation, you might know, it is pretty famous I guess--she 
offered to come into our area and we brought her down here and 
had a few meetings a few years ago. Linked her up with people 
and they, as an act of charity, fund these micro loans. And you 
know--the name escapes me.
    Ms. Barnes. The Minx Foundation does and Axeon is also in 
New York. Axeon is in South America, Central America also.
    Chairman Ney. Okay, but I am very interested in those micro 
loans. A micro loan may not create a whole lot of jobs, we aim 
to, you know, create lots of jobs. We brought in prisons or 
factories, Colgate Palmolive, I can go back years back when I 
was a State senator, and you can see where we created 300, 400, 
but the micro loans may not create multiple jobs at one time, 
but you want to just further comment a little bit more, maybe 
about why it is a success or not?
    Ms. Barnes. Well, the State of Ohio has used both CDBG 
funds and also funds from the Housing Trust Fund to help create 
Micro Enterprise Programs, and actually one of the foremost 
practitioners for Micro Enterprises is right here, Ken Reed, in 
Vinton County, they have probably one of the best track records 
in the State of creating jobs, and in one of the most 
distressed communities. I wondered if I might just ask Ken if 
you would say a few words about what you have been doing.
    Mr. Reed. Yes, the Micro Enterprise Program has made a big 
difference in our community. Because we are in a community with 
only two financial institutions, very conservative banks, that 
are not very aggressive when it comes to commercial lending. We 
get these entrepreneurs that want to start a small business and 
they do not have that access to affordable capital. They might 
be able to run up their credit limit on a credit card for the 
$15,000 they need, but that is usually not affordable. We can 
provide them through the Micro Enterprise Program access to 
that $15,000 at an affordable interest rate.
    We also have a technical assistance component, to sit down 
and help them develop business plans, figure out cash flow 
projections, and even after the loan to do some follow up 
assistance to help them succeed. It has made a big difference 
in our community. We have quite a few success stories. And I 
would put our success rate up or default rate up against the 
banks any day.
    Chairman Ney. That is where I think, using some of these 
monies--and a lot of people do not know about micro loans. I 
helped to create the Ohio Housing Trust fund when I was a State 
senator. Senator Ray came to me, Representative Barry at the 
time, they are both gone from the legislature as I am. But when 
I was a State senator, he came to me, there is a lot of 
disputes on that trust fund, I can tell you that. You know 
that, you had people that said that it is terrible. You should 
not do it. But it was a private-public partnership, we had to 
beg to get $5 million if I remember correctly.
    Ms. Barnes. At the beginning.
    Chairman Ney. To begin it and I knew that would come out to 
be a good thing, and we followed the lead and helped Senator 
Ray, it went through my committee at the time. And those things 
may not be looked at right in front, and realize how good they 
are, and it is like the micro/mini loans, the same way.
    I also want to note, when I visited troops in Afghanistan, 
I went to Kabul twice, and Bahrain twice, met with the Afghani 
government. We pushed the micro loans, because woman were not 
allowed to read for 35 years, if they read they would cut their 
fingers off publicly to show everybody else not to read. And 
everybody was talking about how do you help Afghanistan, with 
the Taliban and how poor it was and we talked to U.S. Commerce, 
and when they were talking to the Afghani's, focus on micro 
loans, it is a way to help within the individual and a 
community, that has even been used, that theory over there, 
with success.
    Ms. Barnes. That is great.
    Chairman Ney. I wanted to mention I think it is a great 
thing. David, what I would like to ask you is to focus kind of 
on the neediest of the needy, because I know you--I have known 
you for years and Bob Garbo and you have worked with, to quote 
my colleague Congressman Green sometimes, the least, the lost, 
and the last, the poorest of the poor people that need help, 
and I know you work with all levels to improve communities, but 
you and Bob Garbo have done that for years.
    And the White House has a proposal, the Administration 
does, to take and rechange some of this formula to help the 
neediest of the needy at the expense of 200 different people 
who have been trying to achieve or entities to achieve success, 
and cities. I just wanted to know if you wanted to comment on 
that.
    Mr. Brightbill. Well, you know, I guess I view getting 
communities and getting people out of poverty on a continuum. 
And communities have to be totally healthy if those jobs are 
going to be created. I have been in this business for almost 40 
years, and I have believed since day one, and I believe today, 
nobody will not be poor until they have a job that pays enough 
for them to live on. I mean, we are never going to--I am not 
necessarily talking about individuals with severe disabilities 
and that sort of thing, but the average person, is going to 
have to work, and if they are going to work, they are going to 
need jobs. And that means that the community as a whole--now, I 
am not suggesting that Beverly Hills is entitled to the same 
share as or should be treated the same as Appalachian Ohio. But 
I think that overall targeting, in my opinion at least, with 
CDBG toward low and moderate is a pretty fair method of doing 
it. You know, as Jack said, I guess you could always look at 
ways that you might tweak it to target those activities a 
little bit more. Because I know that local governments, county 
commissioners and mayors sometimes--always--have a very 
difficult task as the requests come in. I mean, they are trying 
to deal with a lot of constituencies. So, you might want to 
target that a little bit.
    But I think that all communities need, you know--well the 
majorities of the communities need to have that continuum 
there, so that you are helping the poorest of the poor and yet 
you also have to help, as they move forward, they need to have 
resources available to them also, housing is a good example.
    Chairman Ney. The point was made yesterday, is why I wanted 
to ask you the question we asked up in Knox County, and asked 
it in Guernsey County, is it sounds good to help the poorest of 
the poor, and changing that formula, but what we are finding 
and I am sure that you can give us 100 examples, you all are 
trying to help the poorest of the poor. Changing that formula 
is not necessarily going to have an effect but may be actually 
a detriment is what we are up against.
    Mr. Brightbill. As they move up a little bit, they still, I 
mean, theirs is a continuum to, they get a little bit more 
income, but they still do not--so yeah, I think we need to 
maintain that continuum.
    Chairman Ney. Also, T.J. Justice, first of all I want to 
thank you and the Governor for your fight for Appalachia, 
fighting for the funds, Joey Padgett is now a State senator, 
before, he was a big champion of that. Ann Pope has helped us 
from ARC, you have done a great job, also, Mr. Justice and the 
Governor promoting that. We kind of won that battle in a sense 
that it is coming in at decent funding this time at the ARC.
    From your perspective at the State's end of it, is there 
anything or does it run fine, the process, the money comes to 
the State, is there anything there, you want to comment on the 
process?
    Mr. Justice. Well, we are very comfortable with the 
process. We think it works very well. I agree with, I believe 
it was Mr. Reed's statement, you know, if it is not broke, do 
not fix it. It's grassroots, local-based with systems in place, 
checks and balances are there. So, from the State of Ohio's 
perspective, we are very pleased with the current process and 
evaluation mechanisms.
    Chairman Ney. Thank you.
    Mr. Reed, how about any of the CDBG, I was just trying to 
take the housing end of it in Vinton County, any of the CDBG 
has been applied to housing?
    Mr. Reed. Yes, we use a lot of CDBG through the CHIP 
program. We have been fortunate to have continuous CHIP funding 
for a number of years. We have local administrative capacity. 
In other words, through our office, we have the staff to 
implement the program. We have all local contractors and we are 
still putting in flush toilets for people out here. We have 
widow women living on $400 to $500 a month, and we are putting 
them in bathrooms and eliminating the privies. So there are 
some basic housing needs. And one thing about CDBG that has not 
been mentioned is the administrative dollars that go through 
CDBG.
    I live in a community where the county commissioners cannot 
afford to even have a clerk for the commissioners, let alone to 
have a staff person. And the administrative dollars in the CDBG 
program helps to pay my salary and keep the lights on and pay 
our staff. It makes a difference in a small rural community. 
Because those administrative dollars then, we are on board to 
be able to access other funding using this CDBG, as T.J. said, 
to leverage other funds. And without the CDBG program, we would 
not have the local administrative capacity to go out after the 
EDA and the USDA and the ARC funding.
    Chairman Ney. It has a cap. I think it is valuable because 
it is not like Franklin County, where you have Columbus, which 
is this huge, you know, powerhouse, has development entities. 
Even littler towns outside Columbus should have the development 
entities.
    Mr. Reed. Yes.
    Chairman Ney. If we did not have development entities in a 
county the size of Morgan or Vinton, your end result is nobody 
is going to be able to sit there and say, I think you ought to 
do this. That would be Washington telling you what to do and 
nobody is going to write the grant and that will be the end of 
it.
    Mr. Reed. Right. That is why the administrative dollars on 
the CDBG are very invaluable in getting that done.
    Chairman Ney. Mr. Riordan, you are a powerhouse on 
development.
    Mr. Riordan. Thank you.
    Chairman Ney. You are. I want to thank you for what you did 
before, with the trying to shift that to Commerce and stopping 
that. And I think you have a real good perspective how, you 
know, you are able to look at all these groups that, you know, 
you represent and how they are working in different parts of 
the State. The one thing I wanted to--the OMB, you raised that 
issue. We were talking about that, we have talked about that 
before. OMB--some of the ways--and this maybe reflects on this.
    Mr. Riordan. Sure.
    Chairman Ney. Some of the ways you look at what you do, how 
it helps the community can be an abstract too. Somebody 
mentioned the park. I think you mentioned the park. If we had 
to go back and say the park created this amount of jobs, it did 
not, but it brought a quality of life into the community and, 
you have to have some quality of life too. That is why people 
live in communities also.
    But the OMB does not, it cannot get it hands on the 
abstract, it just says that this is the amount it created, CDBG 
is not that good. But I happen to know from cases where you do 
a CDBG project, jobs are created we will never know about. You 
will never know about.
    Mr. Riordan. That is right.
    Chairman Ney. Locals would not know about. I just want--if 
you just want to reflect a little bit more on that OMB study?
    Mr. Riordan. Well, I think what OMB is trying to be able to 
do is to make value judgments on the expenditure of all 
government funds. So in doing that, you kind of begin to set 
aside, well, these are the things that we are going to do. Now, 
they can deal with feet of sewer and water line, that kind of 
stuff, but when you get into the kinds of activities that do 
not have a definitive brick and mortar kind of result, they 
cannot make that valuation. One of the things that came out at 
that time, they were saying, okay, well now the community has 
spent all that money in a neighborhood. Well, what happened to 
the school enrollment? What happened to the police reports? 
Well, yeah, you can do that, but I mean, do you set up a 
national system for gathering that data in order to be able to 
answer that question or do you go back in and say if that is a 
question, you do not make every community in the country go 
through and fill out those reports, you go back and you do some 
sampling to get your information. And I think part of the issue 
was that they were trying to get at this information, which is 
good information. If I were them, I would want to do that. But 
the thing about this kind of thing is that, good ideas are 
cheap, implementation is very dear. And the question is, 
sometimes you get people coming through there and they are able 
to drive their own particular idea on what the end result ought 
to be and they forget the basic premise of this program was to 
take the money and let the local community determine what it 
wanted to do.
    Now, the problem that happened for awhile was that HUD was 
not given the administrative wherewithal to be able to oversee 
the grantees. So when you had somebody that was really screwing 
off with the money, you know, you could not deal with that. I 
mean, it was just not possible.
    The other problem that we have is, you have a program that 
has grown over time. The conditions that existed at the time of 
its creation do not exist today. So you have a lot of 
communities that have grown in population to be able to get 
entitled under the program. And that is really, you know, every 
community has some pocket of low income people, but not the--
there are some suburban communities now that are entitled 
because of their population, but they do not really have 
anywhere near the problem that Vinton County has. So it is that 
kind of a problem.
    But OMB needs to be kind of reined in and say you can not 
have one game plan for the whole thing. And you cannot come 
down and say, after you got the program started we are going to 
change the rules.
    Chairman Ney. You also said something interesting about set 
asides, you can call them earmarks. You know, everybody talks 
about earmarks today. And a couple of things on that. I did not 
realize and we want to work--I did not realize that there were 
set asides and earmarks in the CDBG. I knew Appalachia, and I 
promise to not go after them myself. Highway Bill, sure, as 
many as I can get.
    I want to comment, Appalachian Regional Commission, we have 
always kind of had a gentlemen and gentleladies agreement in 
Washington, this is ARC money. It comes down through, and I 
know how, because for Governor Rhodes, I was the Education and 
Health Care Program Manager. So, I was Governor Rhodes' person 
up in Appalachia, in the Governor's office. They came down to 
me, we worked with the LDD's, the three LDD's at the time, of 
course they are there, Buckeye Hills, Hocking Valley and OERDC, 
also OMEGA of course. And so those all come down through, and 
we always had the deal that you did not earmark those. So they 
just flow right down through. This time they were earmarked and 
I will be candid with you, I was offered some earmarks and I 
did not take them. Because these are funds that kind of always 
have been sanctity at the top and they come down through and 
the locals decide. And the earmarking erodes that.
    Now in a highway bill, where that is not the case, sure, 
everybody should be a free-for-all to go get those monies. And 
I can say that publicly. That can be printed. Nothing you can 
print can hurt me these days. So I do not worry about it. But 
these funds I did not know there were some set asides. And that 
is not a good thing.
    Mr. Riordan. No.
    Chairman Ney. I do not even know who did them, I am sure 
both sides do it. Well, that is not a good thing. So I 
appreciate you pointing that out.
    I want to say one other things about earmarks if I could 
while I am on that rant. You know, everybody talks about the 
earmarks, because they put these contractor things in and one 
Congressman got Persian rugs in toilets and $2.7 million or 
whatever. Changing the earmark system does not change that, if 
somebody is going to get somehow cash in their pocket. But 
the--but this fever of earmarks, I think our names ought to be 
put on them. I think it ought to be publicly known, who is 
doing the earmarks. They can put it in the bill and put my name 
and others in there. Ought to have transparency, media can see 
it, people can see it. Then you can say well, this is who did 
that. And then if there was anything to be tracked back, they 
know, because sometimes we do not know who did them.
    But this business of trying to sell to the public these 
earmarks are so bad--I did an earmark for a cancer hospital. I 
called down to Vinton County, we wanted an earmark for the 
dental clinic. Highway monies, that frankly the Federal and 
State would never have done these highways we have done, And if 
you take this no earmark attitude, now I believe in it with 
CDBG. If you take that attitude, you are going to say to the 
United States Government, whoever is President, this time it is 
Bush, next time it might be a D or an R, and their executive 
cabinet members are going to say, I think I just ought to give 
Vinton County or Morgan County or Hocking County this little 
item--that is not going to happen. Ninety nine percent of what 
the Democrats or Republicans in Congress hear comes from that 
community out to us.
    So, in my opinion, if you ban all the earmarks--make them 
transparent, I do not care--you ban all the earmarks, you are 
going to reverse CDBG. It is all going to be Washington, D.C., 
deciding and I will be frank with you, with delegations it will 
go to New York, Los Angele,s and it will be pretty well 
centered to one place.
    Mr. Riordan. With big populations.
    Chairman Ney. So I just wanted to--but I do think you are 
right, earmarks within the CDBG are not good for the system.
    Mr. Riordan. You asked a question of the earlier panel 
about the brownfields, and T.J. and I have been working on 
those for years and years and years, and one of the things that 
people do not realize in brownfields is, in trying to use an 
old facility, you have got a number of disadvantages first, in 
trying to get someone to locate in that area. If you get 
somebody who is interested in locating in that area, you have 
increased costs associated with preparing that site for 
development that make it very diseconomical to locate there. 
And you have not only the economic cost of demolishing what is 
there, but many times these old facilities had industrial 
processes that contaminated the soil upon which they stand. So 
that you cannot just go in there and start to mess up that soil 
and try to get something there or you end up hurting the 
environment. So there has got to be a greenfield program that 
kind of counters that extra cost on these lands or we are going 
to sit in Ohio with all kinds of old industrial sites that we 
are just not going to be able to deal with. And those are 
blighting influences on that community.
    Chairman Ney. Thank you.
    Ms. Stroh if you could just comment on--and I know you work 
with a lot of people to help them through job creation and 
different things you do to help their quality of life too. I 
just wondered if you want to talk a little bit about CDBG used 
as a quality of life project.
    Ms. Stroh. Sure, one of the programs that the State has 
developed is a community distress program and counties can 
apply for them on behalf of villages, neighborhoods, cities, 
parts of townships. For a setaside from the formula program for 
$300,000 to target one neighborhood, and instead of being 51 
percent low to moderate income, these communities have to be 60 
percent low to moderate income. And we have been able to work 
with about five different communities in our three counties, 
targeting this $300,000 just to one community, they have to 
leverage some additional funding and it is really unbelievable 
to see what this can do to a community, especially with the 
citizen participation component. We have to have a series of 
meetings and have residents come and do surveys and they start 
to feel ownership over what is going on in their community and 
these improvements. And then when they are awarded it, it is 
just, you know, one of the most exciting phone calls for me to 
make to call them to tell them that they got this funding. And 
then to go and start it up. And normally, in Hocking County 
here we did one in the village of Murray City and they were 
able to build a new fire department, their old fire department 
was in the flood plain; and do water line improvements. In the 
village of Corrine in Perry Counties, we were able to undertake 
like seven or eight different projects, sidewalks, parks, fire 
equipment, window replacement, and furniture replacement on 
their main civic community center. And a lot of times, I mean 
the residents, it is really moving to see them rally around it. 
And I really believe that that helps inspire them and give them 
hope and improve their quality of life in, you know, many 
different ways, not only just benefitting from all the 
different activities, but to take part in that citizen 
participation process.
    So, I definitely think that the community distress program 
here in the State of Ohio has a huge impact in benefitting the 
quality of life.
    Chairman Ney. Thank you. I wanted to ask a follow up 
question with Ms. Thiessen about, you said costs increased 
because of Hurricane Andrew?
    Ms. Thiessen. Yes.
    Chairman Ney. Would you like to explain that further?
    Ms. Thiessen. Well, whenever we submitted our project in 
2003, we had an estimate, we had to get the cost certified by a 
local contractor of what our housing cost was going to be. And 
then whenever we submitted the application, it took almost a 
year to get the approval and the funding. During that time 
period, we had Hurricane Andrew and of course, just like it did 
with the hurricanes this time, Katrina, it raises your housing 
costs. And we were in the middle of another subdivision and our 
housing costs for like plumbing--
    Chairman Ney. So the materials that are used down in--
    Ms. Thiessen. And the gasoline cost. Where the gasoline was 
affected also, any of your products that is made with 
petroleum, like your plumbing and things like that. So we have 
experienced that not once, but twice with our subdivisions with 
the hurricane costs. So, I mean, it makes an impact. And then 
of course the local gas cost and the heating cost and stuff, 
all that gets added on as a surtax.
    Chairman Ney. The gas and heating of course we knew about. 
Our subcommittee, by the way, was the first committee of the 
U.S. House to go to New Orleans, no other committee went. The 
subcommittee went down there with Maxine Waters and the staff 
and also down to Gulfport, Mississippi. And I knew about the 
petroleum cost because it was coming down to where the milk 
cartons were going to be cut off and the dairy called us in the 
district to say that they could not get these cartons, they 
could not get milk out to people. So, I knew Louisiana was 
affecting us, but I did not, you know, really realize about the 
piping and you know, maybe it had not been preordered, so 
getting it now, it has a cost increase in it.
    Ms. Thiessen. Just the heating cost or doing the walls and 
the roofing cost. Any of this cost was increased. And I mean, 
whenever you submit your proposal, you know, you cannot go back 
and ask them for more money. So we have run into that, not once 
but twice on this small job.
    Chairman Ney. Well thanks. I just want to thank you for 
your sincerity and integrity and how you care, you and all the 
people on this panel. And I know a lot of you, some of you 
better than others. And whether you are elected or down doing 
this development, I think there is things that have been done, 
nobody is going to know your name in 30 years, or anybody 
else's, but there is going to be some quality or somebody is 
going to have a home due to you and other people that have 
worked on it. So, I appreciate that.
    Ms. Thiessen. At my age, I will probably still be here 
working.
    [Laughter]
    Chairman Ney. Add 30 on to 25 years old.
    Ms. Thiessen. Yeah, I will still be here.
    Chairman Ney. I just wanted to comment, because Councilman 
Hepburn has come up from Bellaire. Bellaire was a town that 
had, and maybe I could just give this perspective, I think you 
gave some of it. I was raised in Bellaire and we had about 
11,000 people when I was there, now it is 4,900. There was a 
glass house there and I was a full-time glass worker, AFL/CIO, 
glass workers union, by the way. And I was full-time glass 
worker and it allowed me to go to Ohio University Eastern. That 
is gone because of Czechoslovakian imports that came in and 
Rutherford Glass and all the things that we had down there. And 
some of the water lines are 100 years old. They are wood still. 
I mean, they still have water but they are dealing with wooden 
water lines. And so Bellaire is a community that has had, like 
a lot of places in Appalachia, has had a real--it is a city 
that had a horrific time and I am just wondering if--if the 
CDBG's cut, if that cut encourages you trying to rebuild 
Bellaire? This would be, add the 10 to 25, that is 35 percent, 
a third. Where Bellaire seek its ability to repair itself?
    Mr. Hepburn. Right now, as far as water lines go, we are 
looking for a lot of help. The EPA does a lot of matching funds 
for emergency work. Right now, the town is supposed to be 
running on--I will give an example, four water treatment 
plants, one is actually completely down and two more are just 
about ready to go. Right now, we are on the EPA water lines. So 
if another one of those storage goes out, let us say in the 
next so many months or so, we are going to be in a world of 
hurt not only in the quality of drinking water, but there is 
also the scenario where since the filter is completely out, the 
tank cannot be filled. And if there is a major fire, things are 
going to be dry.
    We are also looking to the Appalachian Regional Committee 
for some help. I think our district office is out of Cambridge.
    Chairman Ney. He is right there.
    Mr. Hepburn. All the matching funds.
    Chairman Ney. Grab him before you get out of here.
    Mr. Justice. Thanks, Congressman.
    Mr. Hepburn. Our entire sanitation system is taking a major 
hit, mostly from what you said, from the old water lines. I 
mean, I go personally back to the west Bellaire where you were 
raised, there is three water breaks probably a week out there. 
I mean it is bad.
    Chairman Ney. My parents live out there. I know I hear it, 
I tell them to call their councilman.
    [Laughter]
    Chairman Ney. Well, thank you, and this is very valuable 
for us, it really is. It will allow us to go back to 
Washington. We have a nice bipartisan effort to try to stop 
this. Here is the other thing, this is a very difficult year 
and I want to say something about the budget, look, I know we 
have to balance the Nation's budget. I know we were in pretty 
decent condition doing that. After 9/11 whether we liked it, to 
bail out the airlines, because the domestic airline industry 
was going to go out. Money to the intelligence forces to try to 
stop these monsters and find out about them before they 
attacked us. Two wars, whether you agree with the war or not, 
we have got to help, the troops are there we have to fund them 
and, you know, you name it, it has happened in the country. And 
so there is a balance; but, what I think is unfair is, first 
there are two things.
    One, these funds, you do not go in in a bad time and a bad 
economy, especially our area, and take out the force that 
creates the jobs so the mom and dad can get on their feet, help 
the kids, support school levies, etc. That is the reverse way 
to go. It is times like this you go into other programs. By the 
way, the beginning budget, I looked through and it has three or 
four, I looked just in the State Department alone, it has three 
or four programs that have a $100 million increase, a billion 
dollar increase. So you look around there. I like research, but 
we do not need to be sending anybody to Mars or the Moon right 
now. This is a time so let us hold that and save $32 billion. 
There is a fair way to do this.
    The problem, I think, that we have with this, it is not 
just to save your favorite program, although we all try to do 
that. But there are other entities in this budget that have not 
taken a hit at all. You know, the administrative ends of 
things, the EPA, the highway department, you name it, the 
Federal transportation, Commerce, they can scale a little bit 
back at their levels within the bureaucracy of the government. 
There is a better way to do this.
    But, here is what I fear on this, to be right up front with 
you, oh well, we were going to get a 25 percent cut, gee, we 
got it down to a 10 percent cut. Well, 10 percent and the 
previous 10 percent is 20 percent. We are going to keep 
sliding. To me this is a big do or die with the Congress, of 
its attitude where it weighs in on this.
    So, I do appreciate an awful lot your participation, 
believe me it will help. I also like to come to a place where 
we have a hearing that you do not have to go through a metal 
detector to come see us.
    [Laughter]
    Chairman Ney. With that, I will leave the record open 
without objections for 30 days. Is there anything you want to 
say before we close?
    Mr. Riley. No, thank you, for having us.
    Chairman Ney. Again, thank you, I want to thank Chairman 
Oxley, who chairs the committee, again from Ohio. Barney Frank 
is the ranking member for the Full Committee from 
Massachusetts. I chair the Subcommittee on Housing, and Maxine 
Waters is our ranking member from California.
    And without objection the record will be left open for 30 
days. People may have additional questions they want to ask you 
or additional things to be entered to the record, and again 
thank you for your time. And thank you again to all the locals 
that have helped us set this up.
    [Whereupon at 11:42 a.m., the subcommittee was adjourned.]


                            A P P E N D I X



                             March 25, 2006


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