[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 24, 2006

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 109-78


                                 _____

                 U.S. GOVERNMENT PRINTING OFFICE

30-176 PDF              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 24, 2006--Morning Session..............................     1
    March 24, 2006--Afternoon Session............................    31
Appendix:
    March 24, 2006...............................................    73

                               WITNESSES
       Friday, March 24, 2006--Morning Session--Mount Vernon, OH

Calhoun, David, Director, Department of Community Development, 
  City of Newark, Ohio...........................................    13
Crow, Patrick L., Inspector, Community Housing Improvement 
  Program, City of Mount Vernon and Knox County..................    15
Dupps, Hon. Daniel L., Mayor, City of Heath, Ohio................     3
Glass, Dave, Safety-Service Director, City of Mount Vernon, Ohio.    17
Graves, William J., Deputy Director of Development, City of 
  Columbus, Ohio.................................................    20
Hall, Hon. David, Holmes County Commissioner.....................     5
Schocken, Amy W., partner, CDC of Ohio, Inc......................    18
Stockberger, Hon. Allen, President, Knox County Board of 
  Commissioners..................................................     6

        Friday, March 24, 2006--Afternoon Session--Cambridge, OH

Aaby, Aane, President, Ohio Conference of Community Development..    49
Downing, Philip H., Local Office Director, Columbus Enterprise 
  Community Partners.............................................    52
Gadd, Hon. Donald J., Mayor, Village of Byesville, Ohio..........    33
Grefe, Hugh, Senior Program Director, Toledo, Local Initiative 
  Support........................................................    55
Henry, Oren J., Community Development Administrator, City of 
  Cincinnati, Ohio...............................................    58
Laughman, Hon. Thomas J., President, Guernsey County 
  Commissioners..................................................    36
Metzger, Hon. Kerry, President, Tuscarawas County Commissioners..    37
Montgomery, Hon. Dorothy, President, Muskingum County 
  Commissioners..................................................    38
Myers, Donald R., Executive Director, Ohio Mideastern Government 
  Association....................................................    60
Ricer, Gary W., Executive Director, Guernsey, Morgan, Noble Tri-
  county Community action Committee..............................    61
Salupo, Hon. Samuel A., Mayor, City of Cambridge.................    39
Wesel, Charmel, Acting Development Director, City of Marietta, 
  Ohio...........................................................    63
Zwelling, Hon. Howard S., Mayor, City of Zanesville..............    41

                                APPENDIX

Prepared statements from the morning session:
    Ney, Hon. Robert.............................................    74
    Calhoun, David...............................................    76
    Crow, Patrick L..............................................    80
    Dupps, Hon. Daniel L.........................................    85
    Glass, Dave..................................................    93
    Graves, William J............................................    97
    Hall, Hon. David.............................................   101
    Schocken, Amy W..............................................   117
    Stockberger, Hon. Allen......................................   122

     Additional Material Submitted for the Record--Morning Session

Hon. Robert Ney:
    Letter from Naomi Mattingly Compton..........................   124
    Letter from Evelyn Warr-Cummings.............................   125
    Letter from Dale Hartle......................................   127
    Letter from Robert M. Wiles..................................   128
    Position Statement from the Ross County Trustees.............   129
    Letter from Hon. Clifford L. Mason...........................   130

Prepared statements from the afternoon session:
    Ney, Hon. Robert.............................................   133
    Aaby, Aane...................................................   135
    Downing, Philip H............................................   164
    Gadd, Hon. Donald J..........................................   169
    Grefe, Hugh..................................................   172
    Henry, Oren J................................................   177
    Laughman, Hon. Thomas J......................................   179
    Metzger, Hon. Kerry..........................................   186
    Montgomery, Hon. Dorothy.....................................   189
    Myers, Donald R..............................................   195
    Ricer, Gary W................................................   198
    Salupo, Hon. Samuel A........................................   199
    Wesel, Charmel...............................................   207
    Zwelling, Hon. Howard S......................................   203

    Additional Material Submitted for the Record--Afternoon Session

Ney, Hon. Robert:
    Letter from the Coshocton County Commissioners...............   205
    Letter from Hon. Michael Mullen..............................   206
    Letter from Douglas R. Davis.................................   210
    Letter from David Brightbill.................................   212


                       STRENGTHENING RURAL OHIO:



                   A REVIEW OF COMMUNITY DEVELOPMENT



                          BLOCK GRANT PROGRAMS

                              ----------                              


                         Friday, March 24, 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 8:00 a.m., in 
the Knox County Commission Hearing Room, 117 East High Street, 
Suite 161, Mount Vernon, Ohio, Hon. Bob Ney [chairman of the 
subcommittee] presiding.
    Present: Representative Ney.
    Chairman Ney. The hearing will come to order. This is a 
field hearing of the Subcommittee on Housing and Community 
Opportunity.
    And I did want to introduce the staff people here today. 
Clinton Jones is here, and Jeff Riley. Clinton is with the 
majority staff and Jeff is with the minority staff of the 
Financial Services Committee. But they obviously work together 
for the betterment of what we should do as a subcommittee. Our 
ranking member, Maxine Waters of California, sends her regrets.
    We have two panels today and in holding with--this is an 
official House hearing, there being no objection, this is an 
official House hearing, so the testimony that you will--that we 
will take back from here will be valuable. We are going to do 
three hearings within Ohio, and then we are going to do one in 
Los Angles in Representative Maxine Waters' area. And I think 
that shows you no matter how large the city, or no matter how 
small the town, this issue is important. And we will take this 
back for the record and share it with our colleagues, so this 
will help--if you support Community Development Block Grants, 
then this will help to hopefully stave off the things that are 
happening right now with it.
    So, I would like to welcome you this morning to Mount 
Vernon. And I want to thank, first of all, the Knox County 
Board of Commissioners for allowing the subcommittee to use its 
public hearing room for today's important discussions regarding 
the CDBG or Community Development Block Grant. So again, thanks 
to the Commissioners and a special thanks to Rochelle Shackle. 
I do not know if Rochelle is here but she does so many things 
for the county.
    The CDBG program, administered by the Department of Housing 
and Urban Development, is the Federal Government's largest and 
most widely available source of financial assistance to support 
State and local government-directed neighborhood 
revitalization, housing rehab, and economic development 
activities. These formula-based grants are allocated to more 
than 1,100 entitlement communities (metropolitan cities with 
populations of 50,000 or more and urban areas), the 50 States, 
Puerto Rico, and the insular area of American Samoa, Guam, the 
Virgin Islands, and the Northern Mariana Islands. Grants are 
used to implement plans intended to address local housing, 
neighborhood revitalization, public services, and 
infrastructure needs, as determined by local officials, of 
course, with citizens' input.
    The benefits of CDBG funding can be seen in local 
communities across the 18th District, which I represent. Here 
in Knox County, CDBG funding has allowed for the revitalization 
of several downtown streets such as in Mount Vernon. The 
rehabilitation of the Mount Vernon streetscape has brought a 
lot of new life, and residents and visitors alike can enjoy the 
renovated shops and the restaurants. And none of this would be 
possible without CDBG.
    CDBG funding is also vital to our small towns because it 
provides necessary resources to build sidewalks and pathways 
for residents to access local parks and recreation areas.
    Mayor Mason, by the way, sends his regrets that he could 
not be here with us today.
    President Bush's fiscal year 2007 budget proposal raises 
some interesting and serious questions about what role 
community development should play in helping local and State 
government to provide safe and affordable housing to its 
constituents. In addition to recommending a new formula change 
for the Community Development Block Grant 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. And for those of you familiar with 
CDBG, it had a cut at the end of the day, last year.
    The proposal also last year, which was fought back in the 
House and the Senate, would have shifted CDBG into the 
Department of Commerce, which would have totally changed the 
rules, the regulations, there would probably have to be new 
rules and regs crafted. It would have changed--I think in the 
opinion of most Members of Congress, would have changed the 
total thrust of the CDBG program into something that would not 
be good and would not help with the quality of life.
    So our goal, or my goal, as chairman of the Housing 
Subcommittee is to make certain that the Department of Housing 
and Urban Development remains focused on housing and community 
development and that it has the tools necessary to continue to 
provide safe, decent, economically viable communities for our 
citizens. With such a significant decrease in CDBG funding 
levels, I question whether the Department will be able to 
continue these goals that have been set forth by the Congress.
    Last year, I was very vocal, again as I mentioned, in my 
opposition to the ill-fated proposal to move it to the 
Department of Commerce. And I think CDBG importantly is based 
on the concept that local communities and States can determine 
priority community development needs and then develop 
strategies and programs to address those needs. The program 
helps to create a web of programs designed to strengthen our 
communities and also to help with adequate funding.
    And with that, is there anything you would like to say?
    Mr. Riley. No, thank you, sir, for having us today. Mr. 
Frank and Ms. Waters send their greetings.
    Chairman Ney. Thank you. And with that--usually the general 
rule of the House, because this is a hearing of the House, two 
things--in hearings in the House, no one in the House is 
commissioned to express yea or nays--not to use my name as a 
part of it--not to express clapping or booing. It is just a 
rule of the House which would apply to the hearing today. And 
we have 5 minutes per panel, panel member and then 5 minutes of 
questions, and hopefully we will not take up all the time, so 
we would have a little bit more time, a little more relaxed 
about it.
    So, I want to thank you again, everyone, for being here 
today and we will begin with panel one. And we have the 
Honorable Daniel Dupps, Mayor, City of Heath, Ohio, who 
provides great service. I should put in a promotional plug here 
for Heath, Ohio; I live there, so that is why, it is a real 
good place, as all the communities are. And of course the 
Honorable Dave Hall, Holmes County Commissioner. And the 
Honorable Allen Stockberger, President of Knox County Board of 
Commissioners. And we will begin with you, Mayor Dupps.

  STATEMENT OF THE HONORABLE DANIEL L. DUPPS, MAYOR, CITY OF 
                          HEATH, OHIO

    Mr. Dupps. Thank you, Chairman Ney. I appreciate the 
opportunity to testify today and share some information with 
you and the panel. You have my written statement. I would like 
to read portions of that, but also go to the past Community 
Development Block Grants in Licking County. And they represent 
small communities, villages, and townships, as well as the City 
of Newark, City of Heath, Pataskala whose mayor is here today. 
And then also in the last two pages, which gives you an idea of 
the fiscal year projects and where they are located in Licking 
County. And also the final page is a little highway map so you 
can also see the major thoroughfares.
    But in terms of the City of Heath, Heath is considered an 
acquired city under Licking County Small Cities Community 
Development Block Grant program. As an acquired city, we 
automatically receive roughly $47,000 per year in CDBG funds 
for infrastructure improvements. Since the City of Heath 
started receiving these funds in 1985, we have been very 
fortunate to receive $657,000; of that, $538,000 was expended. 
With the $538,000 we were able to leverage an additional 
$43,000 from other sources to upgrade our low-moderate 
neighborhoods with tornado sirens, fire hydrants, curbs, 
sidewalks, and street improvements. Without these funds we 
would not have been able to do many of these projects, much 
less leverage for bigger projects.
    It goes without saying, if there is a reduction in funds, 
every county, city, and village in the United States including 
the City of Heath will lose a valuable and much needed funding 
source. And I am glad, Congressman, you pointed out Los Angles 
and other cities; this is a nationwide issue. Also if the funds 
are reduced, then across the board, everyone's funds will be 
reduced. Less funds equals fewer projects, and less projects 
means more deterioration, in our particular case.
    One final point: Heath has been able to attract numerous 
businesses to our community in the past 20 years, thereby 
providing thousands of jobs for our citizens, as well as 
bringing in other residents. I believe, when a business 
considers moving into an area, one of the questions posed would 
be, is this a progressive community or is this a community in 
decline? If the community is declining, the businesses will go 
elsewhere.
    Bottom line for us: I think I can speak for all in Licking 
County as well, the Community Development Block Grant program 
helps us grow. To reduce or eliminate it will only cause our 
communities to deteriorate further and that is not what our 
citizens want or need. It is not good for us, nor is it good 
for Ohio.
    If I could just go to the following pages, the communities 
are Buckeye Lake, a very struggling community and a new village 
in our county. You can see a township, Eaton Township. And you 
can see some of the projects that we have, if you turn to the 
third page, Heath is listed there. And you can see from 1985 up 
to 2004 or 2005 some of the projects that we have done, plus 
all the other communities. Hebron is here as well today. But 
they range from curb cuts to handicapped playgrounds, to fire 
hydrants, to tornado sirens, to park furniture, to playground 
services. These are projects that have made Heath--Heath is a 
community of 8,500 people; it was incorporated in 1965--
appealing to people.
    If I can note a couple of very important ones in terms of 
Licking County. And I do not speak for these communities, this 
is on page two, again the second page. But you will see the 
Hartford Wastewater Treatment Plant and Collection System. 
Hartford is where we have our county fair. Again, a small 
village, but without these funds, the small village of Hartford 
would not be able to have a wastewater treatment program.
    That is true of another small community in Licking County, 
Hanover. I think this particular list really emphasizes the 
broad range of projects in our communities. It is substantial 
and it is very, very important.
    Finally, the last two figures, the last two sheets show you 
the color coded years of the projects. The kinds of communities 
that we are using these block grants for, and then finally 
their locations. You can read the material, I cannot emphasize 
more on how important they are. They are more than the icing on 
the cake. They are the difference between a deteriorating 
community and a progressive community.
    I thank you very much for your time, sir.
    [The prepared statement of Mayor Dupps can be found on page 
85 of the appendix.]
    Chairman Ney. Thank you.
    Commissioner Hall.

     STATEMENT OF THE HONORABLE DAVID HALL, HOLMES COUNTY 
                          COMMISSIONER

    Mr. Hall. Thank you, Mr. Chairman. I appreciate the 
opportunity to testify in front of this group. I am the 
president of Holmes County Commissioners, and also president of 
Ohio Mid Eastern Government Association. But I will be speaking 
on behalf of the Holmes County Commissioners and my county.
    I would like to start my testimony by saying our 
Commissioners are in strong support of the CDBG program. These 
local programs have been vital for local project development in 
Holmes County. Through the past 24 years, Holmes County has had 
a partnership with our villages, township, fire departments, 
senior centers, and county transportation projects.
    Holmes County has a population of approximately 43,000. We 
are a very rural county. We have six villages with the largest 
village having a population of less than 5,000 people. We have 
10 unincorporated villages. These villages are under local 
township rule. With a 24-year history of Holmes County CDBG 
projects, I have Exhibit A, which starts on my third page, and 
is the history of Holmes County CDBG project program from 
fiscal year 1982 to fiscal year 2005.
    Holmes County, over those years, has received over 
$3,670,781 in total formula funds, of which $3,266,900 was used 
for local projects. On page two, you will see the breakdown of 
the projects. Starting on page 4, and ending on page 10, you 
will see projects from 1982 to 2005. In the left column is the 
total project cost. In the right column you will see the CDBG 
funds that were used in the project. So, you will see that 
there was local funds in some of these projects committed by 
local entities.
    As you see in many of these projects, there are local 
jurisdictions and different jurisdictions. We use these CDBG 
funds for sidewalk projects in our township villages, in our 
little villages. We have used it for sewer projects, water 
projects, and vans for seniors and low-income residents on our 
transportation side. Street improvements, EMS equipment, 
defibrillators, and other minor equipment that they could not 
find and could not fund.
    Early warning sirens have been vital in our county. We were 
able to do a project on that level, but we still are not 
finished.
    Park improvement projects, water studies, money to the 
senior centers for improvement, county home, sewer plan, storm 
drains, and projects for the village hall, local village hall, 
these funds are small in size but they are important to locals 
in Holmes County.
    Each year we receive over $1 million worth of requests in 
project funding. Unfortunately we had $200,000 last year to 
work with.
    CDBG funds are very important in my county in the State of 
Ohio and if asked, I would say level funding is not enough. We 
cannot afford to take any decreases. Just as added--the last 
two pages of my testimony here, I added, I just received a 
letter from the Ohio Department of Development; it states that 
Holmes County will receive a cut. I received that letter 
yesterday. Receiving a 10 percent cut, so now we will be 
receiving $179,000. So we are going backwards. Actually, we 
need CDBG funding to be increased for the future of Ohio and 
our communities.
    We know our community, and this program has helped 
Commissioners to help locals to help themselves. We are 
starting our CDBG projects for 2006 and I have been out to 
villages with my fellow Commissioners, and townships, and I 
have to say we have already looked over $500,000 worth of 
requests just now and we have not even started our hearing 
process.
    On page 11, you will see my breakdown on the Community 
Housing Improvement Program. This program helps consumers to 
buy homes and it also helps in improvements and repairs.
    I would like to thank you for your time.
    Just to add a few things. We also, on the economic 
development level, our largest business in Holmes County is 
looking for the CDBG program to help to do some sewer and water 
projects. As you will see Wayne-Dalton, which is Wayne Door, a 
nationally known company, we were able to get them in the 
process of adding on and building on, with the editors on my 
back project list we have added Merillat Corp, the park 
projects and a few others to the CDBG funding.
    Finally, this program is vital, but not complete--its 
mission is not complete.
    I thank you.
    [The prepared statement of Mr. Hall can be found on page 
101 of the appendix.]
    Chairman Ney. Thank you, Commissioner.
    Commissioner Stockberger.

 STATEMENT OF THE HONORABLE ALLEN STOCKBERGER, PRESIDENT, KNOX 
                 COUNTY BOARD OF COMMISSIONERS

    Mr. Stockberger. First of all, I would like to address the 
Formula Community Development Block Grants. I also received the 
notice yesterday of the cut. Knox County's amount is a little 
bit less than Holmes County and I think as I understand the 
program, that's because we have a city over 5,000, so they get 
additional monies that the county does not receive. But 
nevertheless, it does reflect a 10 percent cut.
    We in Knox County, Ohio, have appreciated the flexibility 
of the formula program. We have used these dollars to bring 
buildings into American Disabilities Act compliance. Without 
these funds being available some of the political subdivisions 
would not have been able to complete these much needed and 
mandated improvements. And we have looked on CDBG as a funding 
source to comply with the ADA mandates. And granted at this 
point in time we are approaching compliance with ADA, but we 
still have some improvements needed.
    We have also used these dollars to complete projects such 
as parks and improvements, sidewalks, stormwater drainage, our 
local domestic abuse shelter known as New Directions, and our 
local substance abuse facility known as the Freedom Center. All 
these community improvements are benefitting the low-moderate 
income members of our community.
    The next area of testimony I wish to speak to is the 
communities--the county's Community Housing Improvement 
Project. My favorite component of the CHIP program is the same 
as the President's. To expand home ownership and opportunity, 
although I might add even though that may be my favorite, it 
has been under-utilized in Knox County. We have not been able 
to get the participation in the home ownership programs that we 
would like. I am not completely sure why that is. But we have 
had great participation in the rental assistance program 
component of the CHIP program and we are not quite as 
supportive of that, because philosophically we believe that it 
is like giving the people a fish every day to sustain them, 
rather than teaching them how to fish. And we believe the other 
home ownership program is more of a teaching how to fish 
example.
    Now, another area of that that has worked well for us, the 
home ownership concept, is that we have had several Habitat for 
Humanity projects. And we really embrace those here in Knox 
County and we believe it is an excellent opportunity for people 
to become homeowners.
    We have also utilized the CHIP monies to do some water and 
sewer projects in under-served--unserved low-income 
communities.
    In conclusion, Knox County has appreciated the CDBG 
programs. We recognize the need to be fiscally responsible. We 
would suggest that if budget cuts must be made, we request that 
you please save the flexibility of the programs and the brick 
and mortar components of the various CDBG programs.
    I appreciate this opportunity you have granted Knox County 
in testifying at this hearing. Thank you.
    [The prepared statement of Mr. Stockberger can be found on 
page 122 of the appendix.]
    Chairman Ney. Thank you.
    If anybody would like to answer this, all three or one of 
you. What about--I think you kind of made this statement at the 
end of your testimony. Any attempts to target these funds more 
stringently? In other words, into certain categories where you 
could fund only certain items. In other words, more stringent 
attachment to the funds. Do you have an opinion on that, if 
that were to happen?
    Mr. Stockberger. Yes, I do have an opinion on that. In Knox 
County, our Board of Commissioners would support more 
flexibility rather than less--if I understood your question 
correctly. I think more stringent would mean less flexibility. 
Now, I understand that to use our local State Representative's 
terminology, ``the sheckles come with shackles.'' And I 
understand the reason for that, obviously the Federal 
Government is not going to just spray money out here in the 
local communities, and we appreciate that. You have to be 
responsible for the tax dollars, as we do. But we certainly 
would appreciate whatever flexibility we can be afforded. 
Because there are times when certain components might fit one 
community very well, but they may not work as well in our 
community. So, if we had that flexibility, then it gives us the 
opportunity to match the needs of our communities better.
    Chairman Ney. Thank you. Anyone else?
    Mr. Hall. I agree with my fellow Commissioner to my left. I 
agree that flexibility as a county commissioner is vital. Each 
community is different. I look at my community where I have--on 
the eastern part of the county I have an Amish development, the 
Amish settlement. On the western, it is a lot more of the 
Appalachia areas. So flexibility in my county is vital.
    Mr. Dupps. I would agree as well. That's why I tried to 
list so many projects in our county. They are quite diverse and 
they are different in many ways, but yet they are the same. 
They tend to be basic infrastructure needs, if you really look 
at the list. And I would be surprised if you would see many 
grants throughout the country misused. Most of them tend to be 
the guts and meat of infrastructure needs in small towns and 
large communities as well.
    Chairman Ney. I should also mention Representative Collier. 
I do not know if he is here--in the hall--Representative 
Collier, the local representative is here and has been so 
helpful to us and helpful with also arranging this, so I wanted 
to give him credit, with the shackles or without the shackles.
    I raised this question--I wanted to let you know--why about 
stringent, and I hear this from Washington. I will have people 
that will come up to me and they will say well, they are using 
this money for fire trucks. Yes, okay, and what's the next 
question? But some people would say it is supposed to be more 
of complete housing or it is supposed to be this or that. But I 
do try to explain a lot and that's why I think this is good for 
the record, to a lot of people, that it is a quality of life 
issue here too in the communities. But also you have a lot of 
community and if they do not have a certain piece of safety 
equipment and that volunteer fire organization goes away, 
people will not be in that area, because they would not have 
necessarily a paid service that will come into it. So, I think 
the quality of life does tie into jobs, in my opinion. So, I 
have tried to stress that, because people say well, maybe we 
should not allow it to use for fire equipment. Or maybe we 
should not allow it to be used for certain things that maybe 
does not make sense to them but might make sense to a 
community. I think your testimony has provided that.
    Would anyone like to comment on--I know Commissioner Hall 
mentioned about the cut. What explanation has been given to you 
regarding the cut? You said you got a letter from the State, 
but have you had any explanation on it?
    Mr. Hall. We were told in the letter addressed to the Board 
of County Commissioners, March 23, 2006, that, ``Dear 
Commissioner Hall, In fiscal year 2006, the Office of Housing 
and Community Partnership expects to distribute approximately 
$21.9 million of Ohio Small Cities Community Development Block 
Grant Program funds to eligible communities through the 
Community Development Program, which includes the formula 
allocation...'', basically in the level that there was a--``Due 
to a 10.2 percent reduction in the Community Block Grant 
Program at the Federal level, the fiscal year 2006 Community 
Development Program allocations were reduced by 10 percent.'' 
So we are saying that the level of cuts have now bled down and 
been passed on to the locals.
    Chairman Ney. I wanted to clarify, because that is the 10 
percent I talked about last year. These people are saying well, 
CDBG in the President's proposal is going to be cut 25 percent 
and then the goal might be, well, let us get it down to a 15 
percent cut. Now, if you take 15 percent and 10 percent last 
year, it is still 25 percent. If the current cut is in 
existence, it is 35 over a 2-year period, so we always like to 
tell people, the goal is--in my opinion and some people will 
disagree, some people will support the cut, but the goal is to 
get it back to 25 percent, because we are already at 10 percent 
from the previous time. And I think that directly reflects how 
the dollars change down to an area.
    Would anybody like to comment on how CDBG funds have 
leveraged private sector funds for a community?
    Mr. Dupps. On my list here, you will notice that there are 
a number of categories. There is the grant request. There is 
the actual expenditures, there is other and there is the total, 
and the total entity. And the other is the numbers of dollars 
that have been leveraged by various communities. So, you can 
take a look at each bottom line in terms of Licking County or 
Utica or other small areas in our county, what has been 
leveraged. In our particular case, we have an opportunity, if 
we do a bike path or if we do a park or something like that, we 
can go to a foundation. If we--we do have a grant writer and we 
try to match as many of our other grants with private sector 
grants. And that is across the board, whether it is a Licking 
County foundation or State foundation, actually the State 
capital--Capital Improvements Fund is another area that we go 
to.
    One of the things that we did was we saved our oldest home 
in our community, an 1860 home designed by Andrew Jackson 
Downing, one of the gentleman who laid out some of the areas of 
Washington, D.C.; it was important to us. But we were able to 
leverage some money from this particular fund and then with the 
State Community Capital Improvement Fund.
    So it is important and that is why the list is there. It 
shows you the amount of money that is leveraged elsewhere. And 
without that I do not know how we would do that. Because we 
have to have, you know, a certain amount of funding anyway in 
terms of going out for grants. We have to show that we are 
contributing. We contribute our own financial monies from the 
cities. We get this particular grant and then we go out and 
leverage it elsewhere. We have been very, very fortunate in 
Heath to do that. And you can see other communities in Licking 
County have done the same thing.
    Mr. Hall. On our last 2 years, just looking at 2004 and 
2005, we have leveraged dollars from other State programs. If 
you look at our transportation, we were able to receive $93,600 
through the State ODOT program. And in 2005, we were able to, 
in our program, the Ohio Public Works Program, on a road--I 
mean, on a water and sewer project, we were able to use the old 
Issue Two program, which will now be the Issue One program. So 
we have not received anything from the private, but we have 
from the other public entities, we have received matching 
dollars.
    Mr. Stockberger. I believe that we have also, however, I do 
not have the data with me.
    Chairman Ney. The final question that I have is on the 15 
percent public service cap, the limitation is 15 percent. Does 
anybody think that should be raised? Or has that been an issue? 
Where you could use it for health care sector, there is a cap 
of 15 percent. Maybe you have not dealt with that, okay.
    Mr. Stockberger. No, we have not done that.
    Chairman Ney. I wanted to make a comment because you said 
some interesting things about local flexibility and about the 
funds and the process. And I imagine the State process is 
pretty old hat for you. It has been around awhile, I assume. 
You know people talk these days, you hear it across the county 
about earmarks and we have to do away with earmarks. In a way, 
the monies come down and then you make decisions and, you know, 
different levels of government and people from communities work 
with their local officials. You are taking the money down and 
it is more of a local flavor to that decision. It can be a 
controversial decision or not, but it is more local flavor. 
This whole type of earmarks in Washington and let us do away 
with earmarks, I have no problem putting our name on the 
earmarks. We earmarked a cancer hospital addition here in Knox 
County, a road project, $52 million worth, so I have no problem 
putting the names on them. You can electronically surf any of 
these bills and see whose names are in there. But this whole 
phase to not to do earmarks to return taxpayers dollars means, 
at the end of the day, the reverse of CDBG in a sense. It will 
be a decision made in Washington. So you are going to have the 
bureaucracy of Washington, D.C., saying hmm, I think maybe 
Holmes County needs this. Or I think Knox County or Heath, 
Ohio, needs these improvements, I do not think it is going to 
happen. So, in my opinion, the earmark is a way where you hear 
local opinions from local mayors and township trustees, 
commissioners, State reps, and citizens, you know, everywhere. 
And then that money comes back down through. So I just wanted 
to say as you read this earmark fever, let us do away with 
them, in a way, it is taking away the local people's desires to 
have certain things in their communities. Which I think block 
grants, I know you solicit opinions, I know you have tough 
decisions too, on how do you chose.
    Mr. Dupps. I would like to comment on it, because we talk 
about that often in our deliberation with the council and, as 
you know, we have been the recipients of money because of your 
efforts on State Route 79. And people have asked me about that. 
And without--when you have a State route through your community 
whether it be a State route like 79 through my community or a 
State route like 16 or 161 through Pataskala, once you have 
that, that road is our responsibility to maintain, that's 
everyday, you plow it, you patch it, you widen it, you do it 
all. Unless you have the urban repaving, and urban repaving 
comes along every 10, 20 years or so. So you are maintaining 
that. The widening is almost impossible for a small 
municipality in some of these. So you do need this help.
    When we widened State route 79, we were dealing with 
literally the Erie Canal, if you are familiar with our 
community. So we had some real structural issues to deal with. 
We couldn't have done that without that help. So, again, one of 
the things that I would say is if people in the United States 
complain about earmarking, then they have a right to vote. And 
they--the system is that way. They change or, you know, 
support, whatever they do. But the facts are, most communities 
cannot deal with all the new infrastructure problems and 
maintenance issues without the help of ODOT, without the help 
of the State government, without the help of the Federal 
Government.
    When you talk about the wastewater treatment plants--you 
know, I am talking about very small communities, Hanover and 
Hartford, dealing with millions of dollars of wastewater 
improvement needs. And it is very, very difficult without 
higher and higher rates to put into savings for 10 or 15 years 
for replacement funds when those facilities wear out, or when 
they need to be upgraded for a new environmental protection 
agency regulation, you must do that.
    So, again, in terms of earmarks, I kiddingly say--I heard 
this, but I kiddingly say to reporters, pork barrel backwards 
spells infrastructure in my community. The reason I say that is 
we cannot handle all of the needs and the necessities of 
running these major water treatment plants, these major 
wastewater plants and also maintain these highways.
    Most communities are struggling without--our neighbor 
Newark is struggling mightily with surface stormwater. They 
have a combined plant that has been--it is a real problem for 
them. They are going to have a real problem.
    So that is my response. You know, we have a system here in 
the United States and while I am satisfied with it, it is up to 
the citizens to vote for a particular candidate or not for a 
particular candidate. But without some earmarked funds, I think 
we would have a real struggle. And I also trust local officials 
and I trust other officials to do the right thing. Most of the 
time they do the right thing for our citizens. So, I thank you 
that, Congressman.
    Chairman Ney. I just wanted to raise that issue. I think 
again, you should have to put your name on the appropriation, 
no problem, make it public. Here is your name, here is who 
asked for the money, all through the bills versus being silent 
on it. I think that is the way to handle it and then, you know, 
this is the person that did that appropriation and then they 
have to justify, you know, what they did and who they 
appropriated on behalf of. So, I think that's probably the 
solution versus the generic let us do away with them. So, I 
just thought I would raise that.
    I want to thank you for your testimony today. And we are 
going to move on to panel two. But I want to thank you so much, 
because this does allow us and like I said we have staff on 
both sides of the aisle here. It allows us to go back and take 
this testimony for the record. And I think it will have an 
impact and I hope it does and the letters coming from across 
the country on important issues. So, I want to thank panel one 
and move on to panel two.
    And then as we begin to move on to panel two, we move on 
now. If you want to start around the room, if you are an 
elected official and you would like to introduce yourself and 
if you have statements for the record and you are not on a 
panel, we will take the statements for the record. If you are a 
citizen and you want to introduce yourself. I just thought we 
would start, how about we start here.
    Mr. Booth. John Booth, president of the city council. I 
want to go on record in support of CDBG, and the council 
recently passed a resolution and it has been sent to your 
office and to other Representatives in support of all that. The 
Mayor's report, and Amy Schocken is here today in support of 
their reports today.
    Chairman Ney. Anybody else? Go ahead down the row. If you 
do not want to, that is fine. Now, the panel can come forward, 
if you want to do that.
    Mr. Calhoun, Mr. Crow, Mr. Glass, Mr. Graves, and Ms. 
Schocken.
    Anybody else in the room would like--yes, sir.
    Audience Participant. Mayor of the City of Pataskala. We 
looked at the numbers in the last 24 hours and saw that 10 
percent cut as well. And I would like to make this a public 
record statement that we are particularly a city that would be 
taken out of the local share under that formula with a 25 
percent cut. That is a great example of residents in our 
community that would receive no services with local decision 
making in order to solve a problem. And we are right in the 
midst of an example, a water project in a low-income housing 
area. The last 3- or 4-year plan was through CDBG funds, so I 
would ask for any support we can get in order to keep the 
funding where it is at.
    Chairman Ney. The Mayor of Delaware, I know, has a 
statement.
    Audience Participant. I'm not the mayor, I am the city 
manager.
    Chairman Ney. I am sorry.
    Audience Participant. We support the CDBG program as well. 
We have a written statement that we would like to submit.
    Chairman Ney. For the record. Anyone who has written 
statements you would like to submit for the record, we will be 
glad to take those. Any other officials would like--please 
identify yourself, if you are an elected official.
    Mr. Wise. Bob Wise, Knox County Commissioner, I just want 
to go on record that we wholeheartedly support everything that 
Allen presented here today. He did a fine job. Thank you.
    Mr. Pfeifer. Gary Pfeifer, Holmes County Commissioner. I 
just wanted to go on the record to say that, again, I support 
my fellow Commissioner Dave Hall and his statement and the 
local governments know what local government needs and we need 
to have to that access available to assess that a whole lot 
better than what Washington does.
    Chairman Ney. And if there is no one else. Anybody else who 
has a statement for the record, we will be glad to take it.
    We will have panel two and we have Mr. David Calhoun, the 
director of the Department of Community Development, City of 
Newark. And Mr. Patrick Crow, Community Housing Improvement 
Program CHIP inspector, Knox County in Mount Vernon. Mr. David 
Glass, safety service director, City of Mount Vernon. Mr. 
Graves, William Graves, housing administrator, City of 
Columbus. And Ms. Amy Schocken, partner, CDC of Ohio, Inc. 
Thank you. And we will begin with Mr. Graves.
    Actually, we will begin with Mr. Calhoun. I need to 
introduce Cindy Chetti. Cindy is also one of the fine staff 
people at Financial Services and as you can see runs the three 
of us in Washington, D.C. Cindy has done a great service all 
this time out there. Mr. Calhoun.

 STATEMENT OF DAVID CALHOUN, DIRECTOR, DEPARTMENT OF COMMUNITY 
               DEVELOPMENT, CITY OF NEWARK, OHIO

    Mr. Calhoun. Good morning, Mr. Chairman and the members of 
the committee. I'm the director of the Newark Community 
Development Department. On behalf of Mayor Bruce Bain, I 
appreciate the opportunity to address the importance of CDBG 
and the potential impact that cuts will have on Newark, Ohio.
    Our community is a community of 46,000 people. It is the 
county seat of Licking County.
    Newark is a community comprised of 51 percent low and 
moderate income people. HUD categorizes us as an entitlement 
community. Our Five-Year Consolidated Plan guides our use of 
CDBG funds and reflects the high priority needs of our 
community. And those needs were the result of an intensive 
comprehensive assessment involving many facets of the 
community.
    Clearly, the cornerstone of the CDBG program is that it is 
based on the needs assessments conducted at the local level. 
This is vital in developing and implementing a strategic plan. 
We, at the local level, can best assess the challenges facing 
our citizens and service providers. Too many Federal and State 
programs have homogenized mandates that force square pegs into 
round holes to access funding. That has never been the case 
with CDBG and that characteristic is key to its effectiveness 
and value. Washington does not know the specific needs of 
Newark, Ohio. The flexibility inherent in the makeup of CDBG 
allows us to make the most effective use of Federal dollars.
    In Newark, over half our housing stock was built prior to 
World War II. For many years, the focus has been on preserving 
existing housing stock, assisting development of affordable 
housing, and preventing homelessness. Over 70 percent of our 
housing was built prior to 1978, therefore we are implementing 
lead hazard removal programs so that we can save our older 
housing and prevent disabilities in children who are 
unknowingly at risk due to lead based paint.
    Perhaps one of the most understated aspects of CDBG is the 
collaboration that it encourages. We work with numerous social 
service agencies and non-profits in order to maximize resources 
that help people with a variety of needs. Without it, many 
people will suffer and so will our community's overall ability 
to address major issues in housing, economic development, and 
the prevention of slum and blight.
    Local governments, private non-profit entities, and social 
service agencies cannot absorb these cuts. The City of Newark 
has just gone through a layoff of city employees, that has 
included basic services such as police and fire. There is just 
no chance that our local budget will be able to absorb cuts in 
the CDBG program.
    Removing setasides, such as Brownfields Economic 
Redevelopment Initiative, Rural Housing, and Section 108 loans, 
and pushing them into the CDBG program will have the same 
effect. A forced combination as recommended by the President's 
plan essentially forces the elimination of these programs.
    In addition, the Administration's push for home ownership 
does not necessarily meet the need of every community. Home 
ownership is not the best option for everyone. Frequently, low-
income individuals and the elderly do not have adequate 
resources to maintain their homes. Blindly leading them down a 
path of home ownership can set them up for failure and 
exacerbate our property maintenance problems.
    An even larger problem is the increased rate of mortgage 
foreclosures and predatory lending practices. Ohio has a 
terrible rate of defaults. In Licking County, the number of 
foreclosure filings increased by 549 percent between 1994 and 
2004. That problem needs to be addressed instead of using CDBG 
bonus funding to increase home ownership opportunities. 
Sustainability of home ownership is far more important in 
Newark than inflating the numbers of new home buyers.
    Again, Newark, not Washington or Columbus, develops our 
comprehensive multi-year plan. The strategy to identify local 
needs, prioritize them, and implement programs to achieve 
measured objectives and results is an important part of the 
CDBG system.
    I would like to just mention a few of the important 
programs that Newark will--that will suffer in Newark if we 
incur the cuts. There is nothing to fill the gap for home 
rehabilitation for low and moderate income people if these 
funds are reduced. We help persons stay in their homes through 
our deferred loan--low interest loan program. Newark CDBG has 
helped the elderly and persons with disabilities to live in 
sanitary and safe housing. We just completed an emergency home 
repair for a blind couple, including roofing and electrical 
repairs. As a result of those repairs, they can maintain their 
independence and live in a safe environment. Without our 
intervention, this home would have deteriorated and eventually 
become uninhabitable.
    Last year the city established a partnership with Mound 
Builders Guidance Center to develop a job tryout program for 
persons with disabilities. This alliance resulted in 18 people 
with disabilities gaining permanent employment. Without CDBG, 
the community would not have had the resources to implement 
such a creative endeavor.
    Public services also play a key role in our CDBG program. 
For example, we have leveraged funding of CDBG with Issue Two 
dollars from the State of Ohio for several sanitary sewer 
projects. Approximately 450 homes now have sanitary sewer 
services that could not have been accomplished without this 
funding.
    The ability to leverage funding cannot be overstated. Every 
dollar invested in CDBG has a multiple rate of return. Our 
local homeless prevention agency has obtained multi-million 
dollar grants because the City of Newark has provided CDBG 
dollars as local match.
    CDBG has already incurred significant cuts over the past 3 
years. The impact of those cuts have had--inflicts long term 
damage to communities nationwide. An additional cut as 
mentioned of about 27 percent would be devastating for Newark.
    CDBG has a 30-year history of reaching out and delivering 
services to millions. CDBG has helped Newark assist members of 
the community who would have fallen through the cracks. CDBG is 
not a handout, it is a helping hand and I hope Congress and the 
Administration will not slap that hand, but continue to extend 
it to the people of Newark.
    Thank you for the opportunity.
    [The prepared statement of Mr. Calhoun can be found on page 
76 of the appendix.]
    Chairman Ney. Thank you. Thank you, Mr. Calhoun. Mr. Crow.

  STATEMENT OF PATRICK L. CROW, INSPECTOR, COMMUNITY HOUSING 
   IMPROVEMENT PROGRAM, CITY OF MOUNT VERNON AND KNOX COUNTY

    Mr. Crow. Good morning, Mr. Chairman, and members of the 
committee. I thank you for the opportunity to testify this 
morning. My name is Pat Crow. I reside in Danville, Ohio, a 
small community of approximately 1,000 people, where I served 
as mayor for 12 years. I have been working in Knox County area 
community service and development positions for 20 years. My 
wife Sandy and I operate a family business. We are self-
employed. The name of the company is Downtown Options and we 
provide management services on projects such as the Woodward 
Opera House, the Downtown Revitalization of Mount Vernon, and 
many local CHIP funded projects.
    I am currently the housing inspector for the local 
Community Housing Improvement Program, also known as CHIP. And 
this is a Community Development Block Grant funded program.
    In my spare time, I am the executive director of the 
Convention and Visitors Bureau for Knox County, a part-time 
job.
    I would like to quickly summarize the areas for which I 
have had personal experience and the resulting impact of the 
history of the CDBG dollars spent in Knox County.
    In downtown Mount Vernon, three major CDBG revitalization 
projects were implemented and completed including parking 
improvements, streetscape improvements, and over 60 downtown 
building rehab projects. In addition, many other projects were 
stimulated not using funds from CDBG, but I believe the result 
of, including our conference center and hotel that we currently 
have in our downtown.
    The overall work utilized approximately $1 million in CDBG 
funds. This investment stimulated directly over $4 million in 
other public and private development dollars being spent. These 
efforts have also resulted in recent heavy investments by local 
developers committed to the long haul type efforts needed to 
assure the continued economic growth of the downtown well into 
the 21st Century.
    The initiative that started the Woodward Opera House 
restoration had its beginnings within a community development 
block grant. Once the Woodward restoration is complete, it is 
projected that the programming and retail expansion will 
stimulate over an additional $1 million annually in increased 
economic benefit to the community.
    As I served as the Mayor of Danville, I recognized that 
there are literally millions of dollars that have been invested 
over the years in the aging and decaying infrastructure 
throughout Knox County. More specifically, I have recently been 
the inspector and construction coordinator on over 60 
individual CHIP projects in Knox County and in Mount Vernon. 
These programs are designed to assist needy property owners. 
Perhaps this defines the essence of the CDBG program. This has 
been a most humbling experience for me. I often see folks in 
circumstances that cry out for relief. Some examples, I found a 
hole in one roof so large you could stand by the client's bed 
and see blue sky through the fallen down plaster ceiling and 
the gaping hole in the slate roof shingles. In several cases, 
we have found ourselves contracting to clean up lead-based 
paint contamination in homes where little children were 
potentially being poisoned by this harmful substance so 
plentiful in many old houses. We have, for just a few dollars, 
moved appliances to the upstairs of houses so that the elderly 
can continue to live at home and not be a burden to their 
family or to the government. We have replaced dangerous 
furnaces, leaking hot water heaters, and collapsing basement 
walls in homes with single mothers working full time to support 
their children. We have replaced and repaired countless roof 
leaks, fallen gutters, and installed toppers so the elderly 
would not have to climb ladders to remove the fallen leaves 
that plug the downspouts resulting in future severe home 
deterioration.
    We have helped young couples buy their first home and made 
certain that the current building standards are met to assure 
the longevity of their stay. We have helped the handicapped 
build ramps, constructed fire exits to assure the safety of 
children living in upstairs apartments, and repaired plumbing 
and replaced floors to eliminate the health hazards from 
dangerous sewage soup holes in deteriorated basements.
    We have replaced frayed electrical wiring and electrical 
boxes hot from overloads, to bring clients' homes up to safe 
living conditions. We have covered, contained, and re-sided a 
home recently that was shedding lead based paint particles all 
over a neighborhood full of children playing nearby. We 
installed a new furnace to assure winter heat for a couple 
where the young wife was going through the excruciating 
experience of chemotherapy treatments for her cancer.
    I could go on, but if you want to know how important this 
CDBG program is, I would like for you to have a chance to go 
talk to these folks. Almost without exception, they are the 
most grateful group of Americans that I have ever known, 
thankful for these seemingly small and insignificant grants. I 
believe that we all have a responsibility to make a difference 
in these people's lives, in these kids' lives, in these 
grandmothers' lives, in the lives of the sick, the ailing, and 
the frail.
    This important CDBG program has had a huge impact on those 
that are being served and it must continue. Mr. Chairman, 
members of this committee, please campaign for the continued 
support of the Community Development Block Grant Program at 
least at its currently funded levels. But more money is needed.
    In addition, please do not allow the dilution of this 
program through the inclusion of unrelated programs that have 
previously have been funded otherwise.
    I thank you for the opportunity to address you this day. 
Thank you.
    [The prepared statement of Mr. Crow can be found on page 80 
of the appendix.]
    Chairman Ney. Mr. Glass.

STATEMENT OF DAVE GLASS, SAFETY-SERVICE DIRECTOR, CITY OF MOUNT 
                          VERNON, OHIO

    Mr. Glass. Good morning. I am Dave Glass, Safety Service 
Director for the City of Mount Vernon. And I am going to read a 
prepared statement from the Mayor who could not be here this 
morning.
    Prior to that though, I would like to tell that I worked 
for the city for 27 years and been involved in these grants for 
that entire time, and they are extremely beneficial to all the 
residents of the community.
    We are pleased to give testimony to the Subcommittee on 
Housing and Community Opportunity at the field hearing held 
here in Mount Vernon, Ohio.
    We understand that the public hearing is entitled, 
``Strengthening Rural Ohio: A Review of the Community Block 
Grant Program.'' The City of Mount Vernon has received many 
grants since the CDBG program was created in 1974. The city has 
identified specific target areas in the city that have low to 
moderate income neighborhoods. We have offered home 
rehabilitation projects, home repair projects, home buyer 
assistance programs, and rental rehab programs. Along with 
these private sector programs we have used CDBG funds combined 
with city funds for the improvement of sidewalks, curbs and 
gutters, storm drainage, and public handicapped restrooms all 
located in these target areas. The CDBG program is a prime 
example of how private-public partnership can improve low and 
moderate income segments of the community. Citizens of all ages 
who are in compliance with the income guidelines can fix up 
their homes and have input on the general improvement of their 
neighborhood.
    The City of Mount Vernon also participated in what Pat said 
before, the three downtown revitalization programs. Like most 
cities, both large and small, our central business district has 
been impacted by the strip malls being located on the perimeter 
of the cities. Mom and Pop businesses that we knew as we grew 
up disappeared because of their inability to compete with the 
large merchandisers. However, many of these small businesses 
were able to make the transition to meet the needs and demands 
of today's consumers. The downtown revitalization program 
allowed both the landowner and the tenant to fix up their store 
fronts, the interior, and, in some cases, the roofs of the 
downtown buildings. This enabled the entire central business 
district to take on a new look. It has energized the downtown 
area.
    The private-public partnership was received with a great 
deal of enthusiasm in the central business district. In the 
last funded project, the City of Mount Vernon did a complete 
rehab of the streetscape, and new sidewalks, flowerbeds, street 
lighting, and storm drainage were all added to improve the 
downtown area. This would not have been possible without the 
Community Development Block Grant Program.
    We have also been the recipient of the CDBG Competitive 
Grants. In the north end of our city, we were able to go in and 
improve storm drainage, and put in sidewalks that allowed 
residents from several apartment complexes catering to low and 
moderate income residents to walk more safely from their 
apartments to the community swimming pool and playground and to 
the shopping areas. Prior to this construction project, the 
road they were located on was narrow and had a deep ditch 
making it necessary to jump into the ditch to avoid cars. The 
construction of the drainage and the new sidewalks and the 
crosswalks made it a much safer area for the children and 
adults to walk.
    We have recently been awarded another competitive grant 
that will be used in the west side of our city to improve 
streets and gutters, storm water drainage, and improve 
handicapped access to Riverside Park. All of these projects 
have had a positive impact on our city for over 30 years. As 
you can see, a 27 percent decrease in funding, which we believe 
is only the beginning of a plan, will have a negative impact on 
our ability to rehabilitate these low to moderate income 
neighborhoods.
    Over the years, I have talked with senior citizens living 
primarily on Social Security who were able to procure a new 
roof with the CDBG helping hand enabling them to live 
additional years in a safe, dry home. I have also talked to 
people who lived in substandard housing with faulty septic 
tanks, who were able to connect to the central sewage systems 
as part of the rehab program. I have talked to young and old 
people alike who lived in areas of the city that were built 
before storm sewers were the responsibility of the developers. 
After every rainstorm, the areas of their house, and driveways, 
and sidewalks if they had them, were all submerged for hours or 
even days until the water would evaporate. The storm sewers 
that we have been able to build with this program have dried 
out numerous areas of the community.
    In conclusion, I believe the continuation of a fully funded 
Community Development Block Grant Program is necessary to 
maintain small businesses, assist seniors to stay in their 
homes longer, assist young people who have limited income to 
rehab older homes, to improve property values, and make 
roadways and sidewalks safer in target neighborhoods. Also, the 
improvement of handicap accessibility in the public parks and 
restrooms have all been a very positive impact on the City of 
Mount Vernon and the surrounding area.
    [The prepared statement of Mr. Glass can be found on page 
93 of the appendix.]
    Chairman Ney. Thank you.
    Ms. Schocken.

    STATEMENT OF AMY W. SCHOCKEN, PARTNER, CDC OF OHIO, INC.

    Ms. Schocken. I am Amy Schocken, and I want to thank you 
very much for the opportunity to speak today. I am a partner in 
a community development consulting firm that assists rural 
communities throughout Ohio with their CDBG programs. And in 
the 22 years that I have been in this business, I have seen an 
invaluable resource with the CDBG funds.
    And I have been very fortunate to work with Knox County and 
Mount Vernon for several years. And to expand a bit on the 
programs that we have done in Mount Vernon and Knox County, 
Dave was just talking about the Taylor, Wooster, McGibney Road 
project. And that was a wonderful collaboration between Knox 
County, Mount Vernon, and Clinton Township in identifying a 
great need of a neighborhood of over 730 people, of whom 93 
percent were low to moderate income. There is a municipal 
swimming pool on one side of the neighborhood, an elementary 
school and ball parks on the other side. There were no 
sidewalks for the kids to get from one to the other, they had 
to walk either in the middle of the road with no room or on the 
berm of a State highway. And with the use of city, township, 
county, and CDBG funds as well as State Issue Two Funds, we 
were able to use $452,460 in CDBG funds which leveraged 
$357,920 in other funds to complete this project and now 
everyone has a safe place to walk.
    Another project was the rehabilitation of the New 
Directions Domestic Abuse Shelter. They house over 75 people a 
year and they benefit approximately 500 people annually with 
their services. This building was in great need of 
rehabilitation and the county used $31,000 of their CDBG funds 
to leverage over $41,000 in county general funds, local mental 
health funds, and also local United Way funds to rehabilitate 
this place so that there is a safe place for these people to go 
in Knox County.
    The City of Mount Vernon is currently undergoing major 
rehabilitation in their west end neighborhood. A total of 
$670,000 in CDBG funds are leveraging $746,000 in other funds 
to make vast improvements to this neighborhood. The 
neighborhood contains 2,747 people, of whom 63 percent are low 
to moderate income. Improvements underway include storm sewers, 
curb cuts, street paving, improvements to the neighborhood 
park, rehabilitation of an old train station into a community 
center, and home repairs for 14 low to moderate income 
homeowners. Also, Habitat is building one new home.
    In addition, the village of Danville is undergoing a 
substantial improvement. This is a small rural village of about 
1,100 people, of whom 58 percent are low to moderate income. In 
this village the county is utilizing over--almost $631,000 of 
CDBG funds to leverage $310,000 other funds to undertake 31 low 
to moderate income homeowner home repairs, Habitat is building 
two houses, storm sewers, fire protection and water line 
improvements.
    And this is just a very short list of what has happened in 
the last few years in Knox County and Mount Vernon. And much of 
what they accomplished is due to competitive programs that the 
State offers. Unfortunately, they only can fund about ten 
community distress grants a year, which are $300,000 grants to 
do State-community revitalization projects. They also have a 
housing program that funds about 60 communities a year. And in 
order to undertake any of these programs, communities are 
required to do two planning studies. One is a community housing 
assessment, community housing improvement strategy which 
focuses on the housing needs of a community. And the other is a 
community assessment strategy that focuses on the 
infrastructure, public service, public facility needs. And 
those studies have to look at the community as a whole and 
target what areas of low income population have the most needs 
and put their money toward the most distressed areas.
    And the other way that--with the housing programs in Ohio, 
they also, the State of Ohio has small communities access 
housing funds, through what they call the CHIP Program, which 
you have heard. And that is a combination of CDBG Home 
Investment Partnership funds and Ohio Housing Trust funds. It 
enables communities to utilize the flexibility, and what all 
three of those programs have to offer in a comprehensive manner 
to address the individual needs of that community and it really 
builds on the flexibility that is needed. Each community, as 
you have heard, has completely different needs. Some may need a 
park improvement. Some may need economic development. Some have 
housing, almost all have housing needs. You can get sanitary 
sewer lines, where there is raw sewage running down the street. 
You can help a ball field. So, these are all greatly needed 
quality of life issues.
    In addition to the competitive programs, the State of Ohio 
funds the CDBG program through the Small Cities Program. And 
since 2004, these funds have been cut over 14 percent. The 
proposed cuts will reduce it another 27 percent. The proposed 
formula changes would reduce the amount Ohio receives 
significantly more. In 2004, Ohio had 116 small cities that 
received a direct allocation of CDBG funds. In 2006, that 
number is down to 84. The proposed cuts would take that number 
down to 58; that is a 50 percent reduction in the number of 
small cities that would get direct allocation since 2004.
    In Knox County and Mount Vernon, in 2004, they received 
direct allocations of $148,000, and $85,000, respectively. The 
proposed cuts would reduce these allocations to $95,000 and 
$54,000 which is a 36 percent decrease since 2004. These cuts 
would just be devastating to rural Ohio. These small 
communities have the smallest budgets, and the least 
opportunities to find other resources to fund the low income 
neighborhood community revitalization activities. And I 
seriously believe that any further cuts in this program would 
just basically eliminate any kind of targeted low income 
housing and low income revitalization in Ohio.
    And I think if you really want to see the benefits of the 
program, you just need to take a walk in downtown Mount Vernon 
and see the revitalization needs or walk on McGibney Road and 
see where these kids used to have to walk, or talk to any of 
the social service providers and--or any of the individual 
homeowners that we have assisted. It is just a remarkable 
program and a vital role in the community development. Thank 
you.
    [The prepared statement of Ms. Schocken can be found on 
page 117 of the appendix.]
    Chairman Ney. Thank you.
    Mr. Graves.

STATEMENT OF WILLIAM J. GRAVES, DEPUTY DIRECTOR OF DEVELOPMENT, 
                        CITY OF COLUMBUS

    Mr. Graves. Thank you, Mr. Chairman for the opportunity to 
testify today; it is most appreciated. I am here on behalf of 
Michael Coleman, Mayor of the City of Columbus. Unfortunately 
he could not attend today and he sends his regrets.
    My name is William Graves and I serve as the housing 
administrator for the City of Columbus. The City of Columbus is 
an entitlement community receiving Community Development Block 
Grant funds from HUD. I have worked with CDBG and other HUD 
funded programs since 1981.
    CDBG has a proven track record for helping local government 
to address specific needs and focus on community issues as 
identified in the communities consolidated plan process. Of 
critical importance is that the CDBG program enables 
communities to identify and target these Federal resources to 
needs that are most critical to the community. The broad range 
of eligible activities within the CDBG program and the flexible 
approach of HUD in allowing communities to target these dollars 
enables recipients to use this program to maximize assistance 
to low income families. As such, CDBG continues to be an 
essential asset to help communities fight blight, improve 
neighborhoods, and focus on activities that benefit low income 
individuals and pockets of poverty.
    The Administration's current budget proposal will 
drastically reduce CDBG, and to give bonuses to communities 
that succeeded, would leave thousands of communities unable to 
address the basic needs of low and moderate income people. 
Essentially the Administration is proposing to strip $1 billion 
out of the program by proposing the lowest level of funding for 
CDBG since 1990. The proposed reduction in CDBG is further 
evidence of the Administration's reverse Robin Hood approach to 
budget making. The CDBG program was already reduced by 15 
percent over the past 3 years and the President's budget 
proposal would further cut the program by another 25 percent. 
Again, further evidence of the President's mission to reduce 
all funding for low income Americans. This reverse Robin Hood 
approach comes at a time when the needs of urban America is at 
a critical juncture requires increased funding not funding 
reductions. As such, I urge anyone interested in community 
development as a means to assist low income households and 
preserve neighborhoods to advocate for at least $4.5 billion in 
formula funding for CDBG in fiscal year 2007. The President's 
budget calls for $2.7 billion for formula grants for cities and 
States. This is reduced from $3.7 billion in Federal fiscal 
year 2006. Certainly the City of Columbus, as does a broad 
coalition of community development advocates--and I attached 
that coalition to the written testimony--sees these cuts as 
evidence that the Administration is abandoning its commitment 
to America's communities in the guise of reform. The coalition 
members also expressed concerns, as mentioned above, that the 
25 percent reduction would pose serious threats to communities' 
abilities to provide important services and economic recovery 
for low income citizens.
    For the City of Columbus, this continual erosion is 
extremely critical and is evidenced by the sharp reductions 
during the past several years. In 2003, the City received $8.7 
million. In 2006, the allocation was only $6.6 million, a 
reduction of 24 percent during this period. Another interesting 
point is that the administrative oversight requirements for the 
CDBG and other HUD funded programs continues to go up while 
funding goes down. Such a situation not only creates 
frustration for grantees but also erodes the ability of 
recipients to undertake projects as more and more time is spent 
handling administrative and reporting requirements while 
funding for projects to benefit low income housing is reduced.
    The City of Columbus targets its block grant resources in 
order to focus investment and create impact. Certainly, given 
the small amount of CDBG dollars received this is the best 
method for an entitlement recipient such as Columbus. 
Typically, the city selects six neighborhood pride areas each 
year and these locations serve as the target zones for housing 
rehab and other activities that benefit low income households. 
The city also selected 11 neighborhood commercial 
revitalization districts to focus block grant economic 
development activities. In addition, the city creates or uses a 
CDBG service area to determine, based on demographics and 
housing standards, which is then used to focus code enforcement 
and other initiatives to improve the quality of life for the 
residents.
    Outcomes for a portion of the housing related activities 
benefitting low income households, are as follows:
    In 2003, the city was able to assist 131 low income 
households through housing rehabilitation activities to provide 
decent, safe, and sanitary housing; 143 low income elderly 
households received minor home repair, preserving the housing 
quality and enabling those homeowners to remain in their homes; 
28 disabled individuals were provided with accessibility 
modifications; 583 low income households received emergency 
repair assistance to correct substandard conditions protecting 
their health and safety, and again, allowing these low income 
citizens to remain in their houses.
    In 2004, 78 low income households received housing 
rehabilitation assistance; 172 low income elderly households 
received home repair; 12 disabled individuals were provided 
with accessibility modifications; and 553 low income homeowners 
received emergency repair assistance. Again, to correct unsafe, 
substandard conditions and protecting the health and safety of 
those individuals.
    In 2005, 55 low income households received housing 
rehabilitation; 247 low income elderly households received 
minor home repair assistance; we had 22 disabled individuals 
receiving home accessibility modifications and 53 deaf 
individuals received assistance to enable them to live 
independently; and 583 households received emergency repair 
assistance.
    As demonstrated above, these reductions in funding are 
impacting the city's ability to provide housing rehab 
assistance. There are continually more and more households 
denied assistance due to a lack of CDBG dollars. Such a 
situation is extremely frustrating, creating a tenuous 
situation. As housing stock deteriorates, low income households 
must make dire choices on where to spend limited resources--fix 
the house, pay the medical bills, pay utility bills, or eat.
    The City of Columbus urges Congress to not reduce this much 
needed program and strongly requests that funding for Federal 
fiscal year 2007 for CDBG should be $4.5 billion.
    Thank you for the opportunity to testify, Mr. Chairman.
    [The prepared statement of Mr. Graves can be found on page 
97 of the appendix.]
    Chairman Ney. Thank you very much.
    Starting with Mr. Calhoun, I think you raised some 
interesting issues, today we have talked about CDBG in a lot of 
different ways, which is the way the program is supposed to 
work. You focused a lot on housing and, you know, there is an 
attempt to, of course, get as many people into housing as 
possible in the country. It used to be about 68 percent of 
Americans had a house, now it is about 72 percent. The minority 
rate is still low. It is about 50 percent or less, which is 
unacceptable. So there is a lot of effort to help anyone with 
housing, but also to focus on helping minorities to be able to 
acquire housing. You raise a different picture too about the 
predatory lending, which is interesting. Senator Padgett has 
passed a bill and we have a bill--I have a bill with Paul 
Kanjorski and also we are proud to have a lot of significant 
and important members of the Black Caucus Democrats on that 
bill. So, I think it is a good beginning point. There is going 
to be another hearing or a markup coming up this week with 
Spencer Bachus on predatory lending.
    So, the goal is to have some standards across the country 
where they do not exist in a lot of States, but North Carolina 
seems to be something that everybody is looking at. So you 
bring in another aspect to it too of trying to stop flipping, 
to have counseling and the government can put money in 
programs, but you have got to have counseling and education on 
the issues so the people know to the best of their ability what 
they are signing. I just thought you brought an interesting 
component that, you know, people would think, well, here is 
CDBG and here is the funding. But there is other aspects the 
community has to watch. I just thought that was--
    Mr. Calhoun. Well, we are in the process of putting 
together with our local housing coalition group a counseling 
program that ties the people that we serve into resources for 
mentoring and a financial literacy program. And I think it is 
important that we are able to use what we are doing in the 
housing rehab and tie that to some counseling services and CDBG 
allows the flexibility to bring those resources together. They 
received an AmeriCorp Grant to provide the financial literacy 
program, we can tie into that with the CDBG program. And we 
have families all the time in foreclosure and it is a major 
concern I think, statewide, to address the foreclosure rate and 
predatory lending practices.
    Chairman Ney. Are communities also active with brownfields 
elimination and do you have any thoughts on brownfields in the 
smaller community when we look at it?
    Mr. Calhoun. We were very close to obtaining a brownfield 
grant. The project basically got stalled, but it is an 
important program and providing the redevelopment of that kind 
of area and bringing in jobs makes the rest of the efforts that 
we do worthwhile. It helps solve the problem. Jobs in the 
community are a basic function. If we cannot do that, then the 
housing problems, the other problems just multiply. So I think 
it is an important program to preserve. Putting it into CDBG 
just dissolves and dilutes the program. It does not provide the 
same benefit.
    Chairman Ney. There is an effort to change the CDBG 
formula, which now recognizes older housing stock. Do you have 
any views about the need to change that?
    Mr. Calhoun. I think changing the formula needs to be done 
carefully and within the context of the current CDBG program. 
We should identify the most important needs and recognize 
differences in communities to do some targeting. But I would be 
very concerned about that formula penalizing smaller 
communities and putting all the money into the major 
metropolitan areas. If that formula--and we have seen that in 
some other cases where the number of problems outweighs the 
percentage of concentration of problems and we lose funding as 
a result of that. But I think equalization and a review of the 
funding formula may need to be done, but it needs to be done 
carefully.
    Chairman Ney. The other aspect you raise, again, you know, 
it is important to get people into homes, we have the American 
Dream down payment that we passed, overwhelming vote on that to 
help with up to $5,000. Something else the House has done and 
we worked with Congressman Barney Frank, Congresswoman Maxine 
Waters, Chairman Oxley who chairs the committee, and myself and 
others, passed--I am trying to remember what--we passed the 
Affordable Housing Fund and GSC reform, Fannie Mae and Freddie 
Mac had to have a reform and we put into their fund. And we 
took, I think it was up to 5 percent of Fannie Mae and Freddie 
Mac's profit and put it into a fund that would help the poorest 
of the poor and some of that, there was also some amendments 
about some, you know, Katrina-related issues or if you had a 
catastrophic event. But the bottom line is we put that in 
there. And one of the reasons we did that is not everybody will 
have the availability to own a house. And so therefore, I think 
the housing fund that we created, which I hope the Senate will 
act on, we passed it in the House, is a wonderful thing to 
help, again, the poorest of the poor. Section 8 is something 
that we look at all the time, because our subcommittee is the 
authorizer for HUD so we oversee HUD and the language part of 
it. We always look at Section 8 and the housing authorities.
    I just think that you raised a good point, you know, with 
CDBG and what you can utilize. Then the other types of housing 
you utilized. And Habitat for Humanity was mentioned here 
earlier. It is not a one-size-fits-all for the community and 
the more we can recognize that you have to help people who have 
different needs is good. So folks--home ownership is an 
absolute must. But there are other ways that you help people 
with their living conditions that may not be able to own a 
home. This is, I think, an important thing for CDBG.
    Mr. Calhoun. We have both programs in existence in our 
program, assisting our program. Assisting in home ownership and 
a down payment assistance program. But it needs to fit within 
the strategy that we are trying to implement. If you change the 
funding formula to provide bonus funding for that kind of 
thing, you may disrupt the balance of that strategy and 
overemphasize a need that may not fit in the community as well.
    Chairman Ney. Thank you. Mr. Crow, you mentioned when you 
were the Mayor of Danville, you witnessed firsthand the 
neediest residents, is there any other message that we should 
give Washington on their desire to change CDBG. Things that 
maybe they want to do, that you may not be happy with? Or are 
there other things maybe that should be done within the 
program?
    Mr. Crow. Well, I believe, and I cannot speak for the 
village, I am no longer the Mayor, but I am still a resident 
and familiar with what is going on. I would echo what we have 
heard from several here; the distress that is in the smaller 
communities is because of loss of business, because of the 
socio-economic changes that happen in America where business 
flees the little towns and moves to the larger communities. And 
the need to improve the sewer and water and keep them up to 
date with the changing EPA regulations that are Federal 
mandates is impossible without the CDBG funding. It is just--
well, what we will see is communities like the village going 
into violations with the EPA because they do not have the money 
and funding. The answer sometimes we get from--no disrespect--
but from bureaucrats and the EPA is just raise your rates. 
Well, when water rates and sewer rates in the village of 
Danville climb to $100 to $200 a month for a family of three, 
we are reaching beyond the ability of these people to pay the 
bills. So, the termination of CDBG funding for those kinds of 
activities would be devastating to the communities like the 
village of Danville, both water, sewer, and infrastructure 
improvement projects.
    We need to be focusing not only on just infrastructure, we 
have heard a lot about that today, but you mentioned earmarks 
earlier, and I have a great concern about only focusing on 
helping people--I think Commissioner Stockberger mentioned 
giving them fish versus teaching them how to fish. We need to 
focus on asset creation kind of investments and you have helped 
us with the Woodward Opera House project, a prime example of a 
community development project, which is not just a quality of 
life issue with respect to performing arts, but also an 
investment in the downtown district where there is a commercial 
element to it that would create jobs, it will keep jobs 
downtown, and spawn other development in the central business 
district. So, there are many aspects to CDBG that are really 
subtle and hidden that are benefits to the community.
    Chairman Ney. Thank you. You never offend me if you 
complain about overzealous bureaucrats.
    [Laughter]
    Chairman Ney. Mr. Glass, do you want to elaborate on the 
CDBG money, because you have mentioned a lot of different 
projects where it was utilized when you had a public-private 
partnership development as a result of the project.
    Mr. Glass. Well, I mean I can just echo what we have done 
in Mount Vernon, for the last, like I said, I have worked here 
for 27 years in the engineering department before I took this 
position. And I have been involved in these block grants the 
entire time. And we have just done tremendous amounts of 
beneficial things for the neighborhood, the storm sewers 
especially, when we put the storm sewers into different 
neighborhoods to resolve these water problems. I do not get 
involved in the day-to-day housing rehab, those kind of things.
    I would like to change my hat a little bit. I am on the 
village council in Fredericktown and I would echo the past 
sentiment. We have a $6 million sewer improvement coming up, a 
sewer plan improvement coming up there that there is just no 
way that we will ever be able to afford it.
    Chairman Ney. We have communities all over this district--
    Mr. Glass. Oh, I understand.
    Chairman Ney. --been working with them for years and we 
will try to comply and EPA will come in and, you know, 
basically maybe sometimes obviously say drinking water would 
not meet a certain standard so then they are going to put the 
people to the point where they do not have water. So, there has 
to be a sound science and a balance there. Or in a community 
that is so impoverished where it simply is not going to be able 
to get the money, there has to be a way, you know, and we try 
to do that, work with communities to help out to alleviate 
the--
    Mr. Glass. It is a very difficult situation, for the real 
small communities.
    Chairman Ney. Ms. Schocken, you mentioned about the low 
income, well, low and moderate income benefits of CDBG. Is 
there anything that you would like to elaborate on--on the low 
income?
    Ms. Schocken. Well, one of things that I know President 
Bush is pushing for is targeting of funds and maybe targeting 
to the lowest of income. And these programs, you know, most 
neighborhoods, if you target a neighborhood in Knox County, you 
are not going to find the whole neighborhood is 35 percent or 
less of county median income. There is going to be a mix there 
and as we talked about the McGibney Road project, that area is 
93 percent low to moderate income. And there are a lot of 
apartment complexes that are Section 8 subsidized that are very 
low. But there are also homeowners in that area, too. And they 
are also more moderate but still in the low to moderate income 
range. And I think that if you get rid of the moderate income 
element of the CDBG beneficiaries, you are going to get away 
from the home ownership activities. Those are the people who 
can afford to purchase a home.
    You are going to get away from benefitting a village that 
overall is low income, yet it is not very, very low income. And 
so the vast majority of the needs in our State are in, you 
know, there are things that help the very low income like 
tenant rental assistance program, Habitat for Humanity, which 
tend to be within the CDBG umbrella but not directly CDBG 
funds, they're part of, as I spoke earlier with the housing 
programs that we can fund with, Ohio Housing Trust Fund dollars 
and Home Investment Partnership Funds as well as CDBG.
    So I think that, you know it's very important, with the 
flexibility and with actually meeting targeted needs to be able 
to keep the low to moderate income and not just focus on the 
very low income.
    Chairman Ney. That is a point--Clint had made some notes, 
we make notes to each other, there was a question that he 
wanted to ask, which I think is very pertinent, as the 
President wants to change this saying that CDBG funds or the 
White House is insinuating or saying that basically they are 
used for higher level or maybe not the lowest of the low and 
they want to change that. But in order to change that and I 
hear that you are already doing projects for the neediest. So 
that change may revert that money from 200 different cities as 
I understand it, when you are already trying to target the 
neediest. What you are saying is that is not necessarily a good 
move?
    Ms. Schocken. Right.
    Chairman Ney. It sounds good, when they take the money and 
move it to the neediest, but when there is already service 
being done to the neediest and that move will affect the 
general program.
    Ms. Schocken. Right, and what we talked--I mentioned that 
in Ohio, which I think is a little different than maybe some 
communities, they are really stressing that communities do 
planning. And they have to put together five-year comprehensive 
housing and infrastructure plans that do result in targeting 
the most distressed areas and the populations with the most 
needs. Be it housing for MRDD people or work with Habitat or 
doing a major sanitary sewer project in a village. So, you have 
to--they are requiring communities to really examine and target 
their funds to the most distressed areas. So, I think that is 
being done in Ohio already.
    Chairman Ney. Before we move on with the other question, I 
have, just for the record. Naomi Mattingly Compton, Alexandria 
Village Council has a statement for the record. Clifford Mason, 
Mayor of the Village of Hebron, who sends his regrets--he could 
not be here-- has a statement for the record. Evelyn Moore 
Cummings, Marion County Regional Planning Commission, has a 
statement for the record. And Dale Harris, Director of the Ohio 
Regional Development Corporation has a statement for the 
record. So, without objection, the statements will be entered 
into the record.
    And also, I wanted to note that the written statements of 
all of the second panel and the first panel, will be made part 
of the record. And also that the record will be left open, 
without objection, for people to ask additional questions of 
you, or additional material be entered by Members of Congress 
who are not here today. Without objection, we will leave the 
record open. Just a piece of business.
    Mr. Graves, in your previous position you were involved and 
director of the State CDBG program and now that you are out of 
that position, do you have any reflections about the Small 
Cities Program?
    Mr. Graves. Mr. Chairman, regarding that program, the one 
thing the State does is use the money extremely wisely and I 
think Ms. Schocken talked about that, the reduction in the 
direct assistance provided. The formula program and also CHIP, 
there are a number of other programs, community distress, and 
water and sewer that is used out of the State's CDBG program 
that I believe if, it is just my opinion looking back it drives 
a lot of development in those small rural communities to link 
with public works money, USDA money, other resources for 
infrastructure, water and sewer that but for the State's CDBG 
money would not happen. It would be a continual standoff 
between EPA and these small communities to meet the water 
requirements, it is critical. And then coupled with the CHIP, 
it continues to erode the ability of small communities to 
survive, quite frankly. That is not my hat now, but, that is 
looking back as you said, Mr. Chairman. That is kind of what I 
am seeing.
    Chairman Ney. Do you want to elaborate any of--I have dealt 
with a lot of issues and worked with Mayor Coleman as we do our 
district and mayors from across the State, any reflections on 
some of the housing, the importance of the housing aspects of 
the CDBG?
    Mr. Graves. Simply that, Mr. Chairman, that the CDBG--the 
prime issue is the flexibility and the ability of communities 
to target those resources. Whether in small areas where there 
is infrastructure needs or a city like Columbus where we have 
adequate infrastructure dollars but we really need to target 
resources to preserve housing stock and help low income. The 
HOME money does a lot of the housing development activities and 
the home buyer assistance activities to buy a home. Without 
CDBG we could not preserve the existing housing stock, which is 
critical in neighborhood development. It lets the current 
units, when folks are, especially the elderly, they cannot 
maintain their properties. We can go in with small amount of 
money from block grants and stabilize that structure and enable 
them to stay in their home. And we do that in a targeted way. 
And I think that is extremely critical for a block grant. I 
will, as a side note, indicate that we do also with our block 
grant money pay three agencies to do home buyer education. We 
train them to educate the individual in foreclosure prevention 
and then we use the HOME money, the America Dream down payment 
initiative to actually assist them in buying that house.
    Last year, the ADDI program was cut like 50 percent. So, I 
am not certain why that happened, but I am more sure what is 
happening in 2007. But certainly home ownership and that whole 
initiative and I appreciate what Mr. Calhoun said, because we 
do a lot of other activities besides homeowner. But certainly 
that is an extremely important component.
    Chairman Ney. Just a question for curiosity, we also had 
the first, this subcommittee with Congresswoman Maxine Waters 
and the staff and the members went down to New Orleans, and 
Gulfport, Mississippi. We actually had the first hearing of the 
U.S. House, official hearing, down there and it was a pretty 
intense 2 days--11 hours total between the 2 days. We had about 
9 or 10 members who were down there. And so we looked at the 
whole issue with Hurricane Katrina. How has it been about 
Section 8, maybe you don't know about this situation, but I 
assume maybe you would. Section 8 and people who have come from 
the Gulf, from New Orleans, up into Columbus, have you dealt 
with that?
    Mr. Graves. Mr. Chairman, yes, we have an agency called 
Southside Settlement that does a lot of the work with the 
Katrina victims and also the housing finance--the housing 
finance agency set up a strategy statewide, targeting 
resources, keeping database referrals. The situation with 
Section 8, as you said, Columbus Metropolitan Housing Authority 
is doing what we can to help them move through the system. I am 
not sure of the numbers that have come in. It certainly gets 
dicey as far as the waiting list and what have you. I mean, 
right now there are 9,000 individuals on the waiting list for 
Section 8 vouchers in the City of Columbus. So, while we are 
moving and assisting in that and actually landlords and 
apartment owners are helping too, the ability to get vouchers 
is not as strong as one would like. But it is moving through 
and they are doing the best that they can.
    Chairman Ney. Has there been--were you able to get the 
emergency vouchers to follow the residents from the Gulf?
    Mr. Graves. Mr. Chairman, I do not know that. I would have 
to ask Dennis Guest from CMHA, but I do not know off the top of 
my head.
    Chairman Ney. I am just curious, we met with the housing 
authorities from here in Ohio, last week in Washington and we 
just continue to look at that issue, because it affects the 
community here. We passed emergency vouchers and supported 
them. I do have a concern and then there was FEMA money, which 
we did take some of that money and we put it in to what, Hope 
VI, several different programs, because we felt it needed to be 
directed versus FEMA having a free hand to just spend it at 
certain places. But I think that the Section 8, we need to 
watch that because, that should be paid out of emergency monies 
and that is to locate people. Personally, I think people ought 
have an option. I do not think you give an option when you say, 
why do not you know go to a different city across the United 
States and then that is your option. Because for example, in 
Mississippi there are 30,000 trailers with electric and people 
were able to stay home. It would be like something catastrophic 
happened in Knox County, and they said, your option is to go to 
Seattle, Washington, or New York City, but options to go to 
Holmes County is not one. You know, obviously you know what you 
would try to choose.
    But I mention the Section 8 and for the communities, 
because I do think that as these emergency vouchers are 
created, which they have to be to help these people that are 
scattered across the United States to have their housing until 
they hopefully can back home, we have to watch that at the end 
of the day FEMA--or I mean HUD--is not instructed to then take 
it out of the hide of the existing Section 8, which would mean, 
well, we do not have enough money to continue these emergency 
vouchers so guess what, we are going to take it out of Section 
8, which would impact, you know, communities on housing. And 
that is something that I want you to know we are cognizant of 
and trying to deal with.
    Ms. Schocken. Just for the record, Knox County has used 
some of their CHIP tenant based rental systems Section 8 
voucher programs for one displaced family from Katrina.
    Chairman Ney. Oh, they have.
    Ms. Schocken. Yes.
    Chairman Ney. Let me just say that I really appreciate--do 
you have any questions?
    Mr. Riley. No, thank you for having us today. I have 
enjoyed it and the ranking members, of course, look forward to 
working with Mr. Ney and keeping the CDBG funding at least at 
last year's levels or higher.
    Chairman Ney. You know you may hear that the--that the 
Democrats and Republicans are ripping each other apart every 
single hour. And there are disputes, and disputes within 
parties, but we have, I think, with Chairman Oxley, the 
Republican from Ohio who chairs the committee, Barney Frank 
from Massachusetts, the ranking member of the Full Committee, 
myself, and Maxine Waters, our subcommittee ranking member, 
actually been able to work together to come to a lot of 
agreements. So, I think we all sang the same tune to try to 
protect the communities.
    And that is the other thing, we have to balance, I 
understand that we have a deficit. But if you look into the 
budget presented to us now by the Administration and then the 
House has to do something and the Senate. But if you look at 
that particular budget, you will see increases in some areas of 
$100 million or $1 billion, but yet you will see decreases in 
the CDBG of 25 percent so that does not seem to be a fair way 
to balance, to take it out and to one aspect.
    I want to thank you again for all of your time and your 
testimony is helpful. The committee is adjourned, thank you.
    [Whereupon at 9:50 a.m., the subcommittee was adjourned.]







                       STRENGTHENING RURAL OHIO:



                   A REVIEW OF COMMUNITY DEVELOPMENT



                          BLOCK GRANT PROGRAMS

                              ----------                              


                         Friday, March 24, 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 2:00 p.m., in 
the Guernsey County Commission Conference Room, 627 Wheeling 
Avenue, Cambridge, Ohio, Hon. Bob Ney [chairman of the 
subcommittee] presiding.
    Present: Representative Ney.
    Chairman Ney. Okay, the subcommittee will come to order. I 
want to thank--we have a wonderful turn out. I see a lot of 
faces in the crowd from different areas.
    We have two panels and I want to welcome everybody to 
Cambridge. We just left Knox County this morning with a 
hearing. I want to thank Commissioner Tom Laughman and the 
Guernsey County Commissioners, all of them, for allowing this 
subcommittee to use this public hearing room here for today's, 
I think, very important discussions. Probably more important 
than in past years about the Community Development Block Grant 
Program.
    The Community Development Block Grant Program--most of you 
would know what it is--but there are some people I am sure, 
here in the room, and in the public, who may not be completely 
familiar with it. But it is administered by the Department of 
Housing and Urban Development, HUD. It is the Federal 
Government's largest and most widely available source of 
financial assistance to support State and local government 
directed neighborhood revitalization, housing programs, rehab, 
economic development activities, and the formula-based grants 
which are allocated to more than 1,100 entitlement communities 
(metropolitan cities with populations of 50,000 or more, and 
urban counties). The 50 States, Puerto Rico, and the insular 
areas of American Samoa, Guam, the Virgin Islands, and the 
Northern Mariana Islands are also included. Grants are used to 
implement plans intended to address local housing, neighborhood 
revitalization, public services, and infrastructure needs as 
determined by local officials with citizen input. I think that 
is an important point too. These monies come from Washington, 
but they are arriving at the local level, and you have a lot of 
input. It is a better way than the one-size-fits-all of 
Washington telling you what to do.
    The results and benefits of the CDBG funding can be seen 
throughout this district. Right here in Guernsey County, the 
City of Byesville has used CDBG. Mayor Gadd of Byesville uses 
it to create new jobs, create economic growth, and maintain the 
safety of the community. Mayor Gadd of Byesville will discuss, 
I am sure, in his testimony, how CDBG purchased fire trucks and 
emergency vehicles, an expense that small towns and villages 
cannot afford on their own. Mayor Salupo, of course, is here 
and discusses in his testimony how Cambridge used a $400,000 
grant to revitalize and renovate their downtown. Today, this 
downtown area is the center of bustling economic activity and a 
great place for residents.
    We have the County Commissioner from Muskingum County and 
the mayor. Tuscarawas County, of course everybody has worked 
with these funds to better ways of life in their counties.
    Now, in the President's budget for 2007, it raises some 
interesting and serious questions about what role community 
development should play in helping local and State governments 
to provide safe and affordable housing to its constituents. In 
addition to recommending a new formula change for CDBG, which 
the President's budget does, that change focuses on more of the 
neediest communities. The Administration recommended a funding 
level in fiscal year 2007 that is 27 percent below last year's 
enacted levels. The struggle last year was this program going 
to the United States Department of Commerce, and the House and 
Senate stopped that, but there was still a 10 percent cut. So 
this year, the issue is not as much the program going to 
Commerce, but it is trying to save the money. So, the 10 
percent cuts there, if you add the 25 percent, that is a 35 
percent cut over a 2-year period of time, if this cut was 
successful.
    HUD's Community Development and Housing Program has built 
home ownership, supported neighborhood revitalization, and also 
increases access to affordable housing. These activities not 
only help individual communities, but they also strengthen our 
Nation's economy as a whole. Last year, over a billion dollars 
of Community Development Block Grant funds were used for 
housing, resulting in homeowners receiving assistance to 
rehabilitate their homes, families becoming first time home 
buyers, and rental housing units being rehabilitated. In 
addition to housing, CDBG serves as a valuable tool for 
infrastructure enhancement, job creation, economic development, 
and public service projects. Without adequate funding from 
CDBG, critical improvements such as new storm sewers, road 
widening, and job development programs simply would not have 
taken place.
    So our goal, and I am chairman of the Housing Subcommittee, 
is to make certain that the Department of Housing and Urban 
Development, known as HUD of course, remains focused on housing 
and community development and that it has the tools necessary 
to provide safe, decent, economically viable communities. But 
with such a significant decrease in these funding levels, I 
question whether the Department will be able to meet the goal 
that the Congress has actually laid out for it.
    Let me just say that this is an official hearing of the 
House. It will be recorded and transcribed, and taken back to 
Washington, as the Knox County hearing was. So everything will 
be on the record, and of course, distributed to members. We 
have another hearing; the fourth hearing that we are going to 
have is in Los Angeles. The ranking member of our subcommittee 
is Maxine Waters, and she has asked for a hearing in Los 
Angeles. We are going to go there. I would venture to say that 
Los Angeles is going to equal, no matter that it is a size 
larger than us, exactly what you say. So we are going to drum 
up support that way.
    So, the hearing is important, it allows us to go back to 
D.C., and say; this is what people think.
    With us today, we have Clinton Jones, our counsel; he is on 
the majority side, so he is a Republican. We did not sit him to 
the right because of that. And we did not sit our good friend, 
Jeff Riley, who is with the minority, Democrat side, and he 
works for Congressman Barney Frank of Massachusetts, who is our 
ranking member. And Congressman Mike Oxley of Ohio is our 
chairman. And I do assure you, as I said earlier, you might see 
how we all battle each other, but actually we do work together. 
This committee might have some differences, but Barney Frank, 
Maxine Waters, Mike Oxley, and myself, as well as the Members 
on both sides of the aisle have done some productive things for 
housing. And so, you know, you might see disagreements, but 
once in awhile, we do work together, believe it or not.
    So I am happy to have the staff. They are an important 
element. Cindy Chetti is also here, from Washington, D.C. So I 
took them and got them a good local meal and they are very 
happy. And with that, Jeff, do you want to make any comments?
    Mr. Riley. No. Thank you for having us today. Greetings 
from Mr. Frank and Ms. Waters.
    Chairman Ney. Also, for the record we have a joint petition 
from the Coshocton County Commission, by the county 
commissioners. And Dana Schrock, Kathy Thompson, Rick 
Dougherty, and Douglas Davis, the county engineer from 
Muskingum County, also have statements. Without objection, we 
will enter them as a part of the record.
    And if there are any other statements for the record that 
you have, also from people in the audience, we will be glad to 
accept those.
    Panel one, we have the Honorable Don Gadd, Mayor, Village 
of Byesville; and on the panel too, the Honorable Tom Laughman, 
president, Guernsey County Commissioners; the Honorable Kerry 
Metzger, president, Tuscarawas County Commissioners; the 
Honorable Dorothy Montgomery, president, Muskingum County 
Commissioners; the Honorable Samuel A. Salupo, Mayor, City of 
Cambridge; and the Honorable Howard Zwelling, Mayor, City of 
Zanesville.
    And welcome to all of you and we will start--and the way 
the House rules run, basically you have 5 minutes, everybody 
gets 5 minutes, then we have questions and other comments that 
you might have. And then for the audience, the way the House 
rules operate, we do not show signs of clapping or booing, even 
though you might want to. Just a protocol that we use in the 
House. It does not offend me too much if you do a little bit, 
but, you know, not too much. With that we will start with Mayor 
Gadd.

   STATEMENT OF THE HONORABLE DONALD GADD, MAYOR, VILLAGE OF 
                        BYESVILLE, OHIO

    Mr. Gadd. Mr. Chairman, gentlemen. Thank you for the 
opportunity to address this hearing today. As I know your 
schedule is busy and we all have pressing issues, I will keep 
my comments as succinct as possible.
    As with the proposed budget cuts in the Local Government 
Fund by the State a couple of years ago, no issue will probably 
impact local governments more than the CDBG cuts in the 
Administration's current budget proposal.
    At that time, local officials from all over Ohio convened 
at the statehouse to impress upon our legislators the absolute 
importance of Local Government Funds and informed them that the 
lack of same would have a significant impact on our grassroots 
government here in Ohio. Because, here in the heartland, at the 
local level, we work hard to get a dollar's worth of progress 
for a dollar's worth of grant money. With community support, we 
get much more than that dollar.
    Additionally, I lobbied hard for the passage and approval 
by the voters of the State of Issue I, formerly called Issue 
II, as it is at the core of Ohio's ability to rebuild roads and 
bridges needed to compete with today's modal industry. Ohioans 
recognized its importance and passed this issue overwhelmingly.
    As you know, I have been the mayor of a small village here 
in southeastern Ohio for several years. During those years, we 
have seen a significant renewal of job opportunities and 
replacement of a blighted downtown due, in part, to the 
securing of CDBG grants.
    Currently, we are working on tier grants for an additional 
$400,000; that, along with the engineering and architectural 
design will redevelop our downtown into a stop along the 
Nation's tourism highway. A local initiative creating a 501C3 
corp will provide a tourist train with historic renditions of 
our coal mining heritage and eventually end up at the Wilds, 
the largest game preserve of its type in North America. These 
grants will be the catalyst to get the owner operators to buy 
into our economic future. Job creation at the local level is 
grassroots America and this buy in is not possible, in most 
cases, without a grant incentive.
    Over the next 18 months, the village will be involved in 
securing grants for a new wastewater plant, working with the 
Ohio Department of Development and others to secure grants, 
including CDBG, for approximately $27- to $30 million worth of 
industrial and commercial expansion in my town of 3,000 people. 
The job opportunities and expanded local economy alone will 
more than pay for the initial monies put forward by these 
projects.
    As I have traveled much of rural Ohio, being in the energy 
business, let me assure you that each and every small town, 
township, and county has something to point to that was 
initiated, supplemented, or completed because of the Community 
Development Block Grants. From fire trucks, to infrastructure, 
to enhancement projects these competitive funds have been a 
source of creating a better America that would not have 
otherwise been possible. To take this away would end rural 
Ohioans' dreams of making a better place to live and work.
    On another note, being one, much like yourself, with deep 
roots in this area, I am involved in other activities that are 
sometimes off the scope of my being mayor, and sometimes within 
my jurisdiction, so I can help out. I am speaking of the local 
Habitat for Humanity, of which I have been the president these 
last 3 years, and the Community Housing Improvement Program, 
both of which have created dramatic improvements in the 
community and for the individuals benefitting therefrom.
    I am well aware of the chairman's help in securing funding 
from the House for the one new house Habitat built in 
Byesville, as I was the one who got the land donated for it. 
The recipient of that home now sits on our local Habitat Board 
and is involved in getting others the home that they could only 
dream about a few short years ago.
    Since then, the local chapter has solved most of its 
funding issues over the last several years. We have received 
CDBG grants for $50,000 each year that go to build not one, but 
two homes each year, each home bringing pride of ownership and 
the American dream to those who did not even envision it for 
themselves or their family. One such case is a local man whom I 
have asked to share a story.
    This man is the ``American Dream'' and his story is the 
essence of all we do and what we believe in as public servants 
and people responsible and caring about those around us. For 
you see, when he first applied to Habitat, he lived in a very 
small and old, two bedroom home on a relative's acreage. He was 
a divorced father of five, including one with physical 
handicaps, with some learning disabilities of his own. He had 
held down the same job for 20-plus years, but couldn't afford 
to believe his life would change.
    On the initial visit to this home, we found the wringer 
washer on the back porch, the windows all caulked shut as best 
as possible, the vents missing in the floor because the trailer 
was too old to find replacements, and the floor moved up and 
down as we walked through it.
    However, on that initial visit, and subsequent visits, the 
home was always neat and clean down to the kid's mementos and 
play things pinned or shelved on the walls. As the place was 
too small to store their individual things, each child had 
space on the wall for his or her things.
    Today, that man and his children live in a split level, six 
bedroom home that they put more than their required sweat 
equity into. Their home cost was $39,000. $25,000 by CDBG 
grant, and the rest through local contributions and help.
    They participate in our other projects, and he was 
extremely proud to tell me that he has found a new job that 
pays more and provides better for his family. His outlook on 
life is much brighter now, and he, like the others, has hope 
for himself and his children's future.
    Mr. Chairman, this would not have happened without CDBG 
grants. Nor would have home ownership happened for others 
without the CHIP program, nor would have local enhancement 
projects solely or partially funded by CDBG. As with the Local 
Government Funds, grassroot local government gets much more 
done with a buck than just spending it. We create jobs, 
households, social wellbeing, and improvements in the 
communities in which we live. I urge you and your fellow 
Congressmen to keep the CDBG intact, as it adds to our great 
country at its very roots and simply put, from a small town 
mayor, that's where America starts and that's what government 
is all about.
    Thank you for the pleasure of addressing you.
    [The prepared statement of Mayor Gadd can be found on page 
169 of the appendix.]
    Chairman Ney. Thank you, Mayor.
    Commissioner.

   STATEMENT OF THE HONORABLE THOMAS J. LAUGHMAN, PRESIDENT, 
                 GUERNSEY COUNTY COMMISSIONERS

    Mr. Laughman. Thank you, Congressman Ney. Before I begin, I 
just want to welcome, on behalf of Guernsey County, you and 
your staff, and the other guests that we have here today. I 
would also like to say that we, as a county, are very, very 
appreciative for everything that you are doing for us here in 
Guernsey County, especially in the area of the water line 
improvements that you have given us. That certainly is not 
forgotten.
    Community Development Block Grants are, and have been, very 
crucial for Guernsey County in the 19 townships and 10 villages 
of which we are comprised. Since the year 2000, block grants 
have provided $354,000 in street paving projects for local 
governments within Guernsey County. Since the year 2000, block 
grants have provided over $132,000 in much needed fire 
protection for the volunteer fire departments located within 
our county. Since the year 2000, block grants have provided 
$42,000 for recreational facilities in the various parks within 
our county. I have attached an itemized breakdown of this as 
part of my testimony.
    Since 1999, block grant funds have provided over $375,000 
in emergency home repairs in Guernsey County, excluding the 
City of Cambridge, which would not have been possible without 
these very vital dollars.
    Under the cuts proposed for Community Development Block 
Grants in the year 2007, Guernsey County will receive $110,000. 
Were that to happen, using the figures from the 2005 projects, 
the village of Quaker City would not receive the needed funds 
for a new fire engine used in the protection of life and 
property. Again, using these same figures, the villages of Old 
Washington and Valley Township would not see much needed street 
paving for the benefit of the residents residing there as well 
as for the traveling public.
    All local government funds are dwindling. Expenses are on a 
constant rise while at the same time revenues are at a 
standstill, if not decreasing.
    Several years ago revenue sharing was the answer for local 
governments. That was eliminated and replaced with Community 
Development Block Grants. Now is not the time to remove or 
replace this most important program.
    This is rather the time, under the current budgetary 
climate, to not only increase block grant funding, but also to 
change the rules in order that townships may use these funds 
for much needed CHIP and SEAL projects for their township 
roads. This action would not only continue to improve our proud 
quality of life here in Guernsey County, but at the same time 
provide for a base for future paving projects within our 
townships. As you know the current block grant program must 
have a life of at least 7 years, CHIP and SEAL simply does not 
do that. It just does not go that long, but it would be a real 
savings to our township.
    We ask that this program not be altered to a lesser degree, 
but rather to a much higher and much better standard.
    Thank you.
    [The prepared statement of Mr. Laughman can be found on 
page 179 of the appendix.]
    Chairman Ney. Thank you, Commissioner.
    Commissioner Metzger.

STATEMENT OF THE HONORABLE KERRY METZGER, PRESIDENT, TUSCARAWAS 
                      COUNTY COMMISSIONERS

    Mr. Metzger. Thank you, Congressman Ney, for the 
opportunity to speak before the committee today. You know, 
while we realize that Congress and the President have a shared 
responsibility as stewards of the Nation's financial resources, 
it is difficult to imagine any other Federal program that 
touches as many lives as the Community Development Block Grant 
Program. It must be understood that in today's budgeting 
environment, there is no local revenue source to replace the 
proposed 27 percent cut in the CDBG appropriation. The fiscal 
year 2007 budget plan would require tightening of low income 
targeting to communities with little resources, which would 
necessarily channel those reduced CDBG funds to the lowest of 
the low income communities, even though those projects may not 
dramatically affect as many people. It is not difficult to 
imagine a scenario where funds best used to develop the 
infrastructure to support housing and/or an economic project in 
one community, would need to be diverted to a community with 
less development potential just to meet a CDBG program 
guideline. We feel that our county and the other CDBG 
recipients across the Nation are best qualified to determine 
the proper use of these funds under current guidelines and we 
would like to share with you our experience in Tuscarawas 
County with the CDBG program.
    The program has been an integral part of all phases of 
community development within Tuscarawas County for close to 3 
decades. The program is unique in that it allows, and in fact, 
requires county government to assist in the planning and 
development of projects that have been identified by local 
political subdivision officials as important to the growth, 
stability, and wellbeing of their communities. The opportunity 
for communities to share in the benefits of the program is 
guaranteed by a mandatory and closely monitored citizens' 
participation plan and a series of public hearings. It is 
perhaps the best example of direct citizen involvement in the 
expenditure of tax dollars.
    The program can be used for many things. In our county the 
most pressing need is for improvements to existing, or the 
construction of new, infrastructure. This could be something as 
basic as a street and sidewalk improvement or could involve 
more important health issues such as safe drinking water or the 
proper treatment and disposal of sanitary sewage. The CDBG 
program makes these improvements possible by leveraging very 
limited local funds with Federal dollars. We can also achieve 
maximum effect from both Federal and local dollars by combining 
similar projects, such as paving, into one large project, 
thereby ensuring more cost effective bids on these projects.
    The end result of these efforts goes beyond the mere 
infrastructure improvements. They bring about a sense of 
community pride and with reliable infrastructure in place often 
lead to more housing and economic opportunities.
    Perhaps the key to success in the program is in the word 
community. Over the years we have completed a number of 
projects that have become the focal point of a community. One 
of the best examples in our county started with the drilling of 
a water well for one of our rural townships. In times of 
drought that well became the only public source of potable 
water available to the residents of the township. A few years 
later, right next to that well, we built a senior center and a 
community center and it quickly became a source of pride for 
the people of the community and a place where residents of all 
ages come together. Today, in addition to its original 
purposes, that center is used for food distribution, medical 
screenings, educational instruction, voting, and it is a 
distribution center for the Tuscarawas County Public Library 
and bookmobile. The facility is now being supported by a 
special tax levy. The seed that was planted here by the 
Community Development Block Grant program has germinated and 
the fruit that has developed helps feed a community.
    This is only one of the many success stories in our CDBG 
experience. Unfortunately, we believe that such dramatic 
results will become an exception rather than the norm under the 
proposed budget cuts and tightened guidelines.
    Thank you for the opportunity to testify.
    [The prepared statement of Mr. Metzger can be found on page 
186 of the appendix.]
    Chairman Ney. We thank you, Commissioner Metzger.
    Commissioner Montgomery, welcome.

   STATEMENT OF THE HONORABLE DOROTHY MONTGOMERY, PRESIDENT, 
                 MUSKINGUM COUNTY COMMISSIONERS

    Ms. Montgomery. Thank you, Congressman Ney, for the 
opportunity to testify before your today. It is a pleasure to 
speak to you about the use of the CDBG funds in Muskingum 
County. My fellow county commissioners and I are concerned 
about the proposed cuts to the program and I would like to 
share some of those concerns today.
    In Muskingum County, we have been fortunate to have 
completed many worthwhile projects with CDBG funds. Just since 
2000, we have installed water lines, completed storm sewer 
improvements and sanitary sewer improvements, paved roads, 
installed and repaired sidewalks, renovated parks, and repaired 
and installed culverts.
    With the approximately $200,000 that Muskingum County 
receives each year, we are able to reach out to various 
townships and villages in the county to address some of their 
most urgent needs. These areas, which are struggling 
economically, would not be able to complete the majority of 
these very necessary projects without the assistance of CDBG 
funds. This year, we are planning to complete six projects in 
six different parts of the county. And these infrastructure 
improvements will have an effect on hundreds of Muskingum 
County residents.
    Infrastructure is not the only area where CDBG funding has 
an impact. CDBG programs also stimulate the domestic economy by 
creating jobs and expanding home ownership, which empowers 
struggling neighborhoods. This is important, since there is a 
direct correlation between the condition of housing and the 
performance of our youth in school which has a long-lasting 
impact upon society as a whole.
    The reduction in the amount of allocated funds granted to 
Muskingum County will certainly affect the nature, scope, and 
number of projects that we will be able to undertake in the 
future. From expanding water lines to repairing roads and 
sidewalks, CDBG funds have been used to improve neighborhoods 
and change lives. Our community will most certainly feel the 
ill effects as a result of these proposed cuts.
    My fellow County Commissioners and I, along with our CDBG 
coordinator, would greatly encourage you to support the CDBG 
program in its current state and reject any proposed funding 
cuts.
    Thank you for the opportunity.
    [The prepared statement of Ms. Montgomery can be found on 
page 189 of the appendix.]
    Chairman Ney. Thank you.
    Mayor Salupo.

  STATEMENT OF THE HONORABLE SAMUEL A. SALUPO, MAYOR, CITY OF 
                           CAMBRIDGE

    Mr. Salupo. Excuse me. Thank you, Congressman, for giving 
us the opportunity to testify here today. I would also like to 
echo Commissioner Laughman in saying that we are grateful to 
you; you have been a loyal friend to all of us here in 
southeastern Ohio and serve as an outstanding representative 
for all of us, both Republican and Democrat, so thank you very 
much.
    Having said that, the Community Development Block Grant 
Program was developed by a Republican President and a 
Democratic Congress over 30 years ago. It replaced a hodgepodge 
of specific grant programs which were designed and approved 
according to the dictates of bureaucrats in Washington. CDBG 
put funds and decision making at the State and local level. It 
permitted communities to try and deal with their needs locally 
through locally developed programs and activities. This program 
has served the country well in most places. CDBG, and attendant 
programs such as ARC, EDA, HOME, etc., have improved housing, 
local economies, and infrastructure primarily for lower income 
households and communities. They have done this with local 
rather than Federal decision making.
    CDBG funding over the past 10 years has been stagnant. It 
has not even kept up with inflation, and last year it was cut 
in real terms by 10 percent. Given the good this program has 
done in Cambridge and hundreds of other communities, this 
simply is not acceptable. It is not acceptable to balance the 
budget on the backs of lower income households. To believe this 
program can survive another 25 percent cut and continue to 
serve hundreds of thousands nationwide is simply folly. What is 
needed, and what we would like to see, is full funding for the 
CDBG program at no less than $4.5 billion. Even this does not 
begin to make up for the year's budget amounts not covering 
inflation.
    CDBG remains crucial for rural areas such as Cambridge. For 
decades, the Federal Government has been a strong partner for 
our community to ensure that our city can provide housing, 
community and economic development opportunities, and other 
things for our residents. This partnership has resulted in 
lasting and positive changes for our community by producing 
affordable housing and creating jobs through business and 
commercial development. These programs have greatly benefitted 
our city, and to a greater more specific extent, our elderly, 
our children, and our low to moderate income population.
    It is critical for our Federal Government to remain a 
strong partner, to keep CDBG as a Housing and Urban Development 
administered program, and to retain the current funding levels. 
The Federal, State, and local governments have a duty to ensure 
that all residents have safe and sanitary housing, adequate 
public infrastructure, and access to employment opportunities. 
Our community deserves a better quality of life, a quality of 
life made possible through the assistance of CDBG funds.
    To many who do not understand the program, CDBG represents 
a Federal Government slush fund. I submit to you today, that it 
is a comparatively small amount of public dollars to leverage a 
huge amount of private sector funding. As has been said many 
times by others, CDBG is truly a leg up, and not a handout.
    Let me try to illustrate some of the important projects 
that the CDBG has made possible in our community for the past 
few years, and is demonstrative of the programs made possible 
through CDBG throughout its 30-year history.
    We now enjoy a beautiful, vibrant downtown area, made 
possible by the Downtown Revitalization Grant totaling 
$400,000, with an additional $150,000 of discretionary funds 
through the Ohio Department of Development Office of Community 
Partnerships grant programs. These funds made it possible to 
save a dying downtown, which has, in turn, encouraged the 
private sector to invest heavily in our efforts to preserve a 
historic piece of small town U.S.A.
    Our community, as many throughout the Nation, has directly 
benefitted from CDBG formula funding, in the amount of $498,000 
over the past 5 years. We have been able to fund projects such 
as street improvements, renovation of our fire department 
facilities, curb and sidewalk replacement, and street 
surfacing, just to mention a few.
    The water and sewer CDBG funded program through the 
Department of Development has provided $450,000 of critical 
funding to replace two lift stations and 4,600 linear feet of 
sewer lines, which benefitted 1,273 households.
    CDBG, HOME, and the Ohio Housing Trust Funds make up the 
funding for the Ohio Department of Development Comprehensive 
Housing Improvement Program, the CHIP program. The CHIP funding 
from the last three 2-year grants totaled $1,655,000, and has 
greatly assisted the City of Cambridge with its neighborhoods--
in preserving our neighborhoods. CDBG has provided home 
ownership opportunities for low to moderate income population 
with new construction programs, it has assisted our elderly, 
single mothers, and large families with emergency repairs that 
otherwise would not have been possible, and allowed for the 
rehabilitation of current housing stock for homeowners who 
cannot obtain conventional financing. CDBG has helped create 
partnerships with rental property owners to renovate rental 
units, providing safe rental housing, while allowing rent 
amounts to remain at an affordable level. Additionally, the 
funds provided a strong partnership between our local Habitat 
for Humanity and the city for creation of new housing.
    The Appalachian Regional Commission further provided CDBG 
funding in the amount of $460,000 for sewer and water projects, 
for rail improvements, paving projects, and funding to support 
our Community Improvement Corporation, or CIC, efforts to 
strengthen and attract economic development and job creation 
for our area.
    So, in conclusion, CDBG is a program that serves 
communities and lower income households well. It has made a 
significant difference in the City of Cambridge, and has 
improved living conditions for numerous lower income 
households. We ask that Congress fund this program at a level 
of no less than the $4.5 billion in the coming fiscal year 2007 
Federal budget.
    [The prepared statement of Mayor Salupo can be found on 
page 199 of the appendix.]
    Chairman Ney. Thank you very much, Mayor.
    Mayor Zwelling.

 STATEMENT OF THE HONORABLE HOWARD S. ZWELLING, MAYOR, CITY OF 
                           ZANESVILLE

    Mr. Zwelling. We welcome you also, and we appreciate what 
you have done for Zanesville in the past years. You are a 
Congressman who sincerely takes his constituents to heart and 
we appreciate you for it.
    Being last is not unusual to me, and I said to Mayor 
Salupo, did they save the best for last? He said, no, it was 
alphabetical order.
    [Laughter]
    Mr. Zwelling. In this climate of deficits and budget cuts, 
the Community Development Block Grant Program has been 
criticized for lack of measurable impact. I strongly disagree. 
I am prepared to give you many examples about the positive 
impact these funds have had on our citizens and community, but 
I also want to note the devastating impact that the reduction 
or the elimination of these funds would have on us as well. To 
make cuts in this program is to ask the most from those who 
have the least to give.
    Nearly 57 percent of the population of Zanesville is low to 
moderate income. CDBG funds have helped us address the needs of 
our citizens who do not have the sufficient income to pay local 
taxes to cover the cost of providing themselves with the basic 
services. Each year, we have the Citizens Advisory Committee 
review applications from city departments and local non-
profits. After reviewing this information and the city's 
community and housing assessment plans, they make 
recommendations to me as to which projects to fund. This is an 
example of home rule functioning at its best. Local citizens 
are prioritizing projects in their own community. Since 2000, 
we have been able to make the following improvements with these 
funds:
    1,439 linear feet of sewer lines and repairs; 5,300 linear 
feet of water lines and repairs;
    7,680 linear feet of curbs and sidewalks in the City of 
Zanesville;
    5,291 linear feet of street repairs; home repairs for 48 
low-moderate income owner-occupied households;
    And we purchased over 2,300 pieces of electronic equipment 
and supplies for local non-profit organizations dedicated to 
community outreach.
    Often, we have utilized matching funds from other sources 
like HOME and the Ohio Housing Trust Fund to get the maximum 
benefit from this investment.
    It is important to note that CDBG has not, and does not, 
provide sufficient funds to address the comprehensive total 
needs of low and moderate income people. Each year, we have to 
deny applications for very worthy projects because there is no 
money. These include new water lines, sewer separation 
projects, equipment purchase, and capital improvement projects 
for non-profits.
    Over the past 6 years, the City of Zanesville has spent, on 
average, approximately $184,000 on projects dedicated to 
assisting individuals living in low or moderate income homes 
and communities. However, with the projected reductions in CDBG 
funding, many more projects may be limited or eliminated 
entirely. Looking at these reductions in 2004, the City of 
Zanesville received full CDBG funding of $175,000. Since then, 
CDBG funding has been reduced by 5 percent in 2005 to $165,000, 
10 percent in 2006 to $149,000, and a projected 25 percent 
reduction in 2007 to $112,000.
    With this proposed reduction in place, our ability to 
assist those living in these targeted areas is drastically 
reduced and instead of performing four or five projects every 
fiscal year, we would only be able to execute one, possibly two 
projects per year while crippling our ability to aid those in 
the greatest need of assistance.
    In conclusion, looking at both President Bush's comments 
for reducing the funding for CDBG's as well as the stated 
purpose of those block grants, what the City of Zanesville, as 
well as many other communities around the Nation, is doing is 
implementing policies mirroring these stated goals by the 
Administration. CDBG funding is going directly to community 
outreach programs as well as infrastructure and home repairs in 
many low or moderate income communities. By restructuring and 
reducing this funding, the Administration is only perpetuating 
this dire situation already in place in many communities as 
well as limiting the accessibility of these funds to 
individuals who need the assistance the most.
    Thank you.
    [The prepared statement of Mayor Zwelling can be found on 
page 203 of the appendix.]
    Chairman Ney. Thank you, Mayor. I appreciate your time. I 
have a question, if somebody would want to answer it. Just, if 
somebody could just elaborate on your experience that you had 
with the administration of CDBG and the State's Small Cities 
program. Are they good? Are there any things that needs to be 
refined in regard to the Small Cities program, anybody?
    Mr. Zwelling. The money crunch that has gone from 
Washington down to the small communities has had its impact on 
all of us. And the projects still remain lined up and ready to 
go, but the cutting in the funding seems to be cutting to the 
core some of the projects that are most direly needed by areas 
that cannot otherwise afford it.
    Chairman Ney. Does the process still work? I mean the money 
has been cut like 10 percent, but is the process still a good 
process?
    Mr. Zwelling. Yes, it is.
    Chairman Ney. Not the money side, but the process seems to 
work?
    Mr. Zwelling. The process works.
    Chairman Ney. Mayor Gadd, in your testimony you mentioned 
the largest game area, of course the Wilds. And I think it is 
interesting if you have an example or anybody else had an 
example of something where you used Community Development Block 
Grant monies to leverage private sector money?
    Mr. Gadd. That is what we have done. We did a block grant 
that was in 1997-1998 for the exterior in the downtown. If you 
are familiar with Byesville, it was pretty run down at that 
time. And we have been trying to get ourselves around an idea 
to redevelop and have a buy in of downtown. And a couple years 
ago we went around town, believe it or not, in 9 days with a 
hat and raised $11,000 and brought a little railroad to town, 
which still sits there and around that railroad we have had a 
lot of enthusiasm. We have about 35 to 40 busloads of people 
now coming to ride our railroad every year. And what we are 
trying to do is enhance it and make it, instead of a weekend 
operation, a 6-day-a-week operation.
    By having the Tier Two Grant and enhancing the downtown--
this area was one of the largest areas for coal mining around 
the turn of the century. They said the coal taken out between 
Guernsey County--there were 13 mines between us and the town 
just south of us--the pull cars will stretch from Washington, 
D.C., to San Francisco, and back to Chicago, so we were big in 
coal mining. And we have explored that heritage on our train, 
by redeveloping downtown into the small quaint shops and the 
chocolate shops and the soda things. People are willing to 
reinvest into downtown.
    The future is bright doing that because tourism is a good 
dollar, for every dollar you bring into your area, it revolves 
around your economy 7 times. So, we are hoping that all the 
dollars that we attract to this area creates additional jobs.
    Mr. Salupo. I am sorry, Congressman, I just want to add 
onto that. I could probably go on for about 45 minutes about 
the impact that CDBG has made to our community. Just take the 
downtown for example, about 4 or 5 years ago, like most small 
rural cities, downtown was dying, and all around us some of 
them are having a difficult time. With the help of the downtown 
revitalization grant of $450,000, and I am not exaggerating, 
literally millions of dollars of private investments over the 
last several years. We have virtually no empty stores downtown. 
We have competed with the--terrifically with the Wal-mart 
expansion and the retail expansion down on 209. We have added 
over a dozen new businesses in our downtown area. It is growing 
and flourishing right now, as a direct result of CDBG.
    Also, just recently a county program, the FedEx expansion 
down on 209, not to mention the millions of dollars of the 
expansion with Detroit Diesel and the Ridge Tool area down 
there. So, this has made a tremendous impact on our local 
community. And I can even go back 7 years to the cooperation 
between Byesville and the City of Cambridge and Jackson 
Township, CDBG was also instrumental in the expansion of the 
newly annexed area down by the Wal-mart complex, which has 
generated dozens of new retail businesses and I might add that, 
probably the largest employer in our community in one specific 
area is in the retail area, $37 million of payroll directly 
related to the retail industry. So, it has made a terrific 
impact on our local community. A small amount that is 
generated, that, millions literally, millions of dollars of 
private investments, which has increased our employment. We 
reduced our unemployment rate and we have about 2,000 more 
people working today than we did 6 years ago. So, this can all 
be attributed to this partnership.
    Chairman Ney. I had another question, it came up in Knox 
County and the second panel also might want to comment on this, 
but, the Administration's proposal has a change in it to take 
some of the money and redirect the formula to the neediest of 
the needy. That takes away from 200 other recipients of this 
and then switches it down. The question that I had though and 
the kind of answer I want to take back to Washington of your 
feelings, do you also--I mean, you try to service everybody, I 
understand, but do you also have things you can point to where 
you are trying to take care of the needy and the neediest and 
that way we maybe do not have to adjust this formula. Because 
at the end of the day, if you adjust the formula everybody will 
lose some. I just wondered if anybody had any comments on 
trying to take care, you know, the poorest of the poor?
    Mr. Laughman. For us, it is the emergency vehicle program 
that we are doing, I see that as really taking care of the 
needy because a lot of these volunteer fire departments just 
simply cannot afford to replace equipment and we are not only 
going with fire trucks, we are going with ambulances also. I 
mean, you have been around, you see some of the conditions of 
some of those vehicles that they are forced to use. I am afraid 
if cuts are made that is going to cut right into those kinds of 
things. And we do, we try and hit every village and township 
that we can, but it is like everything else, you know, $350,000 
worth of requests for $170,000 is there.
    Mr. Gadd. We do that in my certification in every 4 or 5 
years, my guys go around and do it; a lot of the towns, 
especially the older the town is there is a lot that are 
covered under the low to moderate income. And the focus is not 
so much the neediest of the needy because by working for 
everybody you actually enhance the needy also. And what Mayor 
Salupo and the Commissioners talked about, we tried to provide 
an avenue that will enhance everybody's life and bring up 
everybody's standard of life, but if you just focus on one 
group and leave other projects go, it is not enhancing 
everybody that way.
    Ms. Montgomery. Well, I think is covered by the roads that 
are provided so that the fire trucks and the EMS vehicles can 
get to, and I can testify that sometimes the rides in those 
ambulances are not very comfortable. And we will not go there, 
as far as bumps are concerned.
    But I think Mayor Salupo mentioned about the coal mining 
that has taken place in this area, and the horrible water 
conditions that some people have, they either have none or 
perhaps what they have is really not drinkable, and we have 
been allowed to lay a lot of water lines and the sewer 
situation is certainly no better. So, I really think we are not 
only reaching the poorest of the poor, but in doing so, 
inspiring and helping those along the way who are in those same 
neighborhoods.
    Mr. Metzger. Well, one of the things we do in Tuscarawas 
County is, we routinely, with our CDBG funding, always set 
aside some money for what we call SEA, which is Society for 
Equal Access. My concern would be, if the rules were changed, 
that they would not be able to utilize those CDBG funds and 
maybe they might be able to fund some of those folks who just 
need access to transportation needs. And you would limit the 
number of people who actually need that particular help. That 
would be a large concern there. So, by changing the rules, I 
mean, we may be--if the rules end up being changed you may end 
up in a situation, as I said in the testimony, where you may 
focus on helping, maybe one or two individuals, when there are 
still people who are needy who may rise a little bit above the 
lowest of the low income, but they would not be able to access 
those dollars, the CDBG dollars to help them. Because that is 
what we look at in Tuscarawas County, is not only just the 
income, but the number of people who are helped by that CDBG 
funding. So, you know, we take both of those things into 
consideration when we decide where those funds are distributed.
    Mr. Salupo. Just to expand on what everybody has already 
said. My fear would be that if we change the way we are doing 
the formula right now that it would take away local discretion 
and what we have been able to work through our community 
assessment strategies of a comprehensive plan that ultimately 
benefits everybody. You are allowing a local community to 
determine what the needs are and how to affect the quality of 
life for everybody totally, in the whole community. And so I 
think it would be critical to continue to leave it the way it 
is so that we can make the decisions locally.
    Chairman Ney. Mayor Zwelling.
    Mr. Zwelling. I think it is hard, perhaps difficult for the 
President to realize that there are still a lot of areas in 
this country where people do not have adequate water and 
sewage. Zanesville is such a place and CDBG funds are sorely 
needed to get these bare necessities to the people who need 
them the most.
    Chairman Ney. I have one final question, and then if you 
have anything else you want to add. But I have one final 
question. It was geared towards housing. This subcommittee that 
I chair is Housing and Community Opportunity, and so we look a 
lot at the housing issues. In the housing spectrum, about 72 
percent of Americans own a house; I believe that is a pretty 
accurate figure. The minority rate is way lower, it is about 50 
percent, which is unacceptable, it needs to be raised up. And 
you look at different, you know, aspects of housing, when you 
say housing, the ownership of the house, we have some great 
building statistics. But also, not everybody can own a house, 
this was pointed out too up in Knox County today, not everybody 
can own a house, or maybe not everybody will ever qualify. 
Maybe there are situations where it is not the way to go for 
them. So, you have other types, of course your apartments, 
Habitat for Humanity, as Mayor Gadd mentioned, Section 8 
Housing under HUD, and a lot of Community Development Block 
Grant monies have been utilized, obviously CDBG, for housing.
    And if anybody had any brief comments you want to make on 
the housing aspect of this, how the programs are working or not 
working.
    Mr. Zwelling. We partner with Habitat also, as somebody 
else mentioned, and the very type of housing that you just 
mentioned, we use CDBG funds for that; it is very crucial to 
us.
    Ms. Montgomery. Several have mentioned the CHIP program 
and, you know, the roofs or maybe a heating system, just a 
multitude of things that--and it does not have to be a senior 
citizen who is in need. But there are just a lot of poor 
situations out there.
    Chairman Ney. Yes.
    Mr. Laughman. Our CHIP and housing programs are 
administered through the City of Cambridge, through Steve 
Gerhard, and Evelyn and their assistants and they do an 
excellent job. That has really made a difference here in 
Cambridge.
    Mr. Salupo. It has, and it has provided an opportunity for 
people who might not have been able to own their own home. That 
is without question, but in addition to that, it has improved 
the aesthetics and the quality of our neighborhoods. The 
partnership with Habitat has all combined to provide other 
assets to the community. So that has also been, the CHIP 
program is an outstanding program.
    Chairman Ney. Yes.
    Mr. Gadd. We are doing three CHIP homes in Byesville this 
year. The ones that they built previously were sold quickly, 
because of the write down, the way that they could do it. We 
found, what we were talking about earlier, there are some 
people qualified for those homes, because they, well, I think 
one of my police officers applied for a home this year. But 
they qualified, because they have an income and stuff. Through 
our Habitat for Humanity, which we still get money through the 
CHIP program, we are finding people who never even dreamed of 
having a house or that opportunity. When you take $39,000 
across 20 years, you are talking maybe $225 or $275 a month 
that family is paying for that house. But it is their house, 
their dream, their future. And they have been wonderful with 
it. It makes such a difference to see a family who now has a 
place that is their home. There is nothing more important in 
this world than having a family home that you can go to, even 
as you grow up. You go back and see Mom and Dad, that is their 
home, it is not a rental, it is not someplace that they keep 
moving around to. That is their family home and that is 
important, especially here in rural America.
    Chairman Ney. Yes. On the housing aspect, we passed the 
American Dream down payment bill, which I think was a good 
bill, carried by Katherine Harris; Congressmen Oxley and Frank, 
and Congresswoman Maxine Waters were instrumental. We worked 
with them and passed that out of our subcommittee and that is a 
bill that will help down the road. Also, we did just--I think 
it is really important to a lot of people--we also did a 
housing fund that we created, we took 5 percent, I think it 
was, it was Fannie and Freddie, Fannie May, Freddie Mac, put it 
into a fund so that they will carry out their charter mission 
of Congress, and I do not know how much that fund was.
    Mr. Riley. $500 million the first year.
    Mr. Jones. $500 or $600 million the first year.
    Chairman Ney. $500 to $600 million the first year and it 
will grow into the billions from there, 5 percent of their 
profits basically. That is a good fund. And it is to be used to 
help the poorest of the poor and for different housing 
initiatives throughout the country. You know, we have to look 
to the other body, in Washington you cannot say the word 
Senate, believe it or not, on the Floor of the House, here you 
can, we do not have metal detectors or C-Span so we can say all 
manner of things. But we are hoping the Senate will come along 
and will help us on this. I think it is a really important 
thing that communities will be able to utilize.
    With that, I do not have any other things except, do you 
have any questions?
    Mr. Riley. No.
    Mr. Jones. No.
    Chairman Ney. I do want to say one thing because we are 
going to go to the second panel. If there are elected officials 
in the room who just want to give your name and your title, we 
can do that as we are shifting panels here.
    But I want to thank all the elected officials. And I also 
wanted to address something about earmarks. You are hearing 
about earmarks all the time now in Washington, D.C., we have to 
stop the earmarks. You know, if they want to put our names to 
the earmarks, and our name is attached, then that is fine. They 
can print it all day long, our name will be attached to 
earmarks, I have no problem with that. And it will be in the 
bill, they can put our names in parenthesis so that they know 
who did an earmark. You know, this has all started with 
Congressman Cunningham and the earmarks. But if they want to 
put our names to them, I think that is just fine I think with 
most members.
    But the thing here I think people have to remember, they 
are saying do away with earmarks. CDBG, what we are talking 
about today, you cannot--that money comes down from Washington 
goes to the State and you all sit and have your hearings where 
you are getting requests of $700,000, you only have $100,000 to 
spend. You have your hearings and you have your input, citizens 
are available to have their say here. If we would do away with 
earmarks I can tell you that a lot of projects, I look around 
the room of projects that we have done, I see people and faces 
and I see dollars too of projects we have done.
    I promise you that the United States Government would not 
have returned taxpayers dollars by saying let us build a cancer 
center over in Knox County. They would not have said, let us 
put $100,000 in a Tuscarawas County study to see about raising 
those roads. I mean, I can go on and on and on, water and sewer 
systems. And I just think that the earmarks are still local 
because we do not sit there and make those things up. Local 
officials tell us, we need that, we need this, citizens, local 
development districts tell us. So in this great fever of 
earmarks, if we want to make it fully open and shut, the sun is 
shining, transparent, I have no problem. But to just say let us 
stop and let the unelected people in Washington, who are 
Cabinet Members of any President, whether it is the previous, 
the current, or the next, who make those decisions, I do not 
think we want to do that. And so, I just want to assure you, I 
still think earmarks are a real honestly local way. It comes 
from here out to us to bring it back.
    Thanks for your time and all that you do for your 
communities. And we will go on to panel two, which will be Mr. 
Aane Aaby, president, Ohio Conference of Community Development. 
Mr. Philip Downing, local office director, Columbus Enterprise 
Community Partners. Mr. Hugh Grefe, senior program director, 
Toledo, Local Initiative Support. Mr. Oren Henry, community 
development administrator, City of Cincinnati. Mr. Don Myers, 
executive director of OMEGA, and Mr. Gary Ricer, executive 
director, Guernsey, Morgan, Noble Tri-county Community Action.
    Some of the people in the audience if you want to or if you 
are just a citizen and you want to say hello and give your 
title, I mean, go ahead. Why do we not start in the audience.
    Mr. Heard. John Heard, Noble County commissioner.
    Ms. Carter. I am Linda Carter and I administer the CDBG 
program for the Noble County Commission.
    Chairman Ney. Okay, can we start over back here.
    Mr. Lace. Ken Lace, Washington County.
    Mr. Stein. Henry Stein, director of development, City of 
Matins Ferry.
    Mr. Warner. Russ Warner, I am the office chief for the Ohio 
Department of Development's Housing and Community Partnerships. 
We administer the CDBG, HOME, and ESG.
    Mr. Moore. John Moore, township trustee, Harrison County.
    Mr. Norton. Gene Norton, township trustee in Muskingum 
County. I have received CDBG funds regularly.
    Chairman Ney. Anybody else?
    Voice. Township trustee.
    Voice. I am her husband.
    [Laughter]
    Chairman Ney. Why do not we start over here.
    Mr. Gromont. Tom Gromont, director of Neighborhoods 
Department for the City of Toledo.
    Mr. Davis. Doug Davis, the county engineer for Muskingum 
County.
    Ms. Montgomery. Dorothy Montgomery.
    Voice. We receive CDBG.
    Voice. Jefferson Newspaper here in Cambridge.
    Voice. Township president, Muskingum County.
    Chairman Ney. And J.P. Dutton, raise your hand. J.P. is 
with our office He is working out of Zanesville; he covers most 
of your counties, and he does appropriations and general office 
work. and also David Popton from Washington works for us. He 
used to work for John Kerry, Senator John Kerry. The Ohio 
Senator John Kerry. Got you.
    We will start, Mr. Aaby, go ahead.

STATEMENT OF AANE AABY, PRESIDENT, OHIO CONFERENCE OF COMMUNITY 
                          DEVELOPMENT

    Mr. Aaby. Thank you, Congressman Ney. My name is Aane Aaby 
and I am the community development director for the City of 
Massillon, Ohio. I have been employed by the City of Massillon 
since 1973, when I was hired as a project coordinator for the 
City's Neighborhood Development Program, or NDP. An NDP was a 
type of categorical grant program administered by the U.S. 
Department of HUD and was a type of limited purpose urban 
renewal program. It is with a sense of some irony that I report 
that on the very day that I was hired by the City of Massillon 
in 1973, then-President Nixon had imposed a moratorium 
suspending all HUD categorical grant programs. So I had been 
hired to administer a program whose future funding was in 
limbo.
    However, President Nixon, and later President Ford, had a 
plan for local communities to return to them some of their tax 
dollars in the form of block grants, giving local communities 
the flexibility and discretion to use these dollars as we saw 
fit, provided these dollars were used wisely to achieve certain 
federally mandated objectives, namely the provision of decent 
affordable housing, the creation of a suitable living 
environment, and the expansion of economic opportunity, all 
objectives primarily for the benefit of low and moderate income 
persons. Initially called the Better Communities Act, the 
program eventually passed Congress as the Housing and Community 
Development Act of 1974.
    In 1975, I was appointed assistant planning director for 
Massillon and given the responsibility for administering the 
City's Hold Harmless CDBG Entitlement. Massillon was designated 
a Hold Harmless community because although we were not large 
enough at the time to qualify as an entitlement grantee, we had 
previously received categorical grants from HUD and were 
allocated CDBG funds to maintain the continuity of our efforts.
    In 1985, Massillon was officially designated by HUD as an 
entitlement community, and in 1988 I was named community 
development director for the City, a position that I still 
hold.
    However, I am also appearing before this subcommittee as a 
representative of another organization. I am currently the 
president of the Ohio Conference of Community Development, 
OCCD, a 165-member organization of local government community 
development officials. OCCD has a broad membership representing 
the spectrum of communities in Ohio from large urban areas such 
as Cleveland, Columbus, and Cincinnati to some of our most 
rural villages and counties. Four times a year, our membership 
gathers for a day and a half to meet with HUD, Ohio Department 
of Development representatives and others to learn about the 
newest initiatives at the Federal and State level, to hear 
presentations on topics of interest in the field including best 
practices and award winning projects, and to receive training 
and instruction on important programmatic elements involving 
housing and community development issues. We are now in the 
process of instituting a statewide training and certification 
program for community development officials. OCCD is an 
important organization for Ohio communities and I am pleased to 
be able to serve the members as their current president.
    So, I am here before the subcommittee wearing two hats, 
representing both the City of Massillon and the Ohio Conference 
of Community Development. But I am here with one purpose, to 
advocate for the restoration of full funding for the Community 
Development Block Grant Program.
    The last 5 years have seen dramatic decreases in CDBG 
funding for Ohio communities. In 2001, Massillon's entitlement 
grant was $956,000. In 2006, our CDBG grant will be $749,597 a 
decrease of over $200,000, or a 21 percent loss of funding over 
a 5-year period. This year will be especially difficult as our 
entitlement amount for this year alone was reduced by almost 11 
percent.
    For all 43 Ohio entitlement communities, the total loss of 
CDBG funding over the 5-year period from 2001, is more than $26 
million, $12 million in the last year alone. The State of Ohio 
is responsible for administering and allocating CDBG funding to 
Ohio's small cities and non-urban counties. During the last 5-
year period the State's CDBG program has lost over $8 million 
in CDBG funding with a $5.5 million reduction in the last year.
    And now we read that President Bush has proposed further 
cuts for 2007, effectively reducing funding for community 
development by another 27 percent. I have estimated that Ohio 
communities will lose an additional $30 million and the State 
of Ohio would lose another $13 million. If the budget is 
enacted as proposed, Massillon's CDBG program would have 
suffered a total loss of 42 percent of its block grant funding 
from 2001 levels.
    But how do these funding reductions affect my community? 
How are Massillon's programs being impacted? In Massillon, we 
use CDBG block grants to operate such programs as housing 
rehabilitation, code enforcement, neighborhood street 
improvement, demolition and clearance, and youth recreation. We 
also provide funding to a variety of local organizations, 
including: Massillon Main Street which provides exterior 
renovation and facade restoration grants to downtown commercial 
buildings; the Walnut Hills Residents Association, a 
neighborhood based organization designed to promote the 
revitalization of their neighborhood; the Massillon Urban 
League, which provides housing counseling services and teen 
pregnancy prevention classes; Stark County Community Services, 
which operates the Family Living Homeless Shelter in Massillon; 
the Domestic Violence Project, which operates a domestic 
violence shelter in Massillon; West Stark Medical Clinic, which 
provides free health services for low income uninsured 
households; West Stark Family Services, which provide homemaker 
services to elderly and handicapped households; the YWCA of 
Massillon, which helps pay for child care services for families 
in crisis; the Massillon Commission to Advance Literacy, which 
provides adult literacy training; Faith in Action of Western 
Stark County, a faith-based organization which provides 
caregiver services to the frail elderly; and Lighthouse 
Visions, which provides life skills education classes for 
foster children.
    Reductions in funding inevitably lead to loss of services. 
Every $5,000 reduction for housing rehabilitation programs in 
Massillon means one less home repair project that will assist a 
single parent household or elderly homeowner. Every $5,000 
reduction for demolition and clearance activities means one 
less vacant dilapidated structure can be torn down resulting in 
the continuation of blight in low income neighborhoods.
    Reductions in funding also mean loss of funding to local 
organizations for their programs, meaning less funding for 
homeless shelters, domestic violence shelters, free medical 
clinics, housing counseling, child care, and elderly services.
    The city does not put together its CDBG program in any sort 
of arbitrary fashion. We put a lot of time and effort in the 
preparation of a 5-year plan called a Consolidated Plan for 
Community Improvement. The Consolidated Plan provides an in-
depth analysis of the city's housing, homeless and community 
development needs and establishes objectives to be achieved. A 
strategic plan is prepared to achieve our objectives and after 
that an annual plan is prepared each year to allocate our CDBG 
dollars to specific projects and activities designed to reach 
these objectives.
    All of this planning is done through a citizen 
participation process designed to provide input from local 
groups and organizations. These steep funding reductions, both 
real and proposed, which we are facing are causing a number of 
problems locally. Loss of funding means fewer activities, less 
funding or no funding for local organizations. We identify all 
of these housing, homeless, and community development needs in 
our Consolidated Plan, and then with Federal cuts we are denied 
the monies needed to make meaningful progress in addressing 
these problems. We ask for community input from local 
organizations on one hand, and then are forced to offer only 
limited, or maybe even no funding, for their programs. The 
proposed 27 percent funding reduction for 2007, will in all 
likelihood, if enacted, mean the end of funding to any local 
organizations in Massillon. Loss of such funding will 
definitely impact the quality of services available to serve 
the neediest of Massillon residents. Those elderly and single 
parent households living in substandard housing, those families 
in crisis facing homelessness, in need of child care, or in 
need of medical services, and those elderly in need of 
homemaker and caregiver services.
    Cities like Massillon need these community development 
dollars. The activities provided with these funds cannot be 
carried out with general fund dollars. The city has no local 
funding for housing rehabilitation, home repair assistance, or 
for local public services. Economic downturns have strapped our 
city budget, making it extremely difficult to provide for such 
services as police and fire protection, pothole repair, snow 
removal, and the like. CDBG is part of the implied pact between 
local and Federal Governments returning a portion of Federal 
tax dollars back to local communities, giving local governments 
the flexibility to use these dollars as needed to meet real 
identified community needs, while still adhering to a federally 
mandated framework of regulation and oversight. The institution 
of performance measurements is an important step in the ongoing 
process of monitoring and evaluation needed to better document 
the results and the benefits from the expenditure of CDBG 
dollars.
    Massive funding reductions will not destroy CDBG, it will 
only--will not reform CDBG, it will only destroy the program, 
signaling the Federal Government's abandonment of local 
communities and the neediest populations within our 
communities, leaving local government lacking the very 
resources needed to help solve some of the Nation's most 
difficult problems. And ultimately that is what it is really 
all about. These are not just Massillon's problems. They are 
Cleveland's, Dayton's, Cambridge's, Guernsey County's. 
Collectively, these are the Nation's problems and that is why 
we need a national program to address them. That is why we need 
a fully funded Community Development Block Grant Program.
    Thank you for your attention.
    [The prepared statement of Mr. Aaby can be found on page 
135 of the appendix.]
    Chairman Ney. Thank you so much.
    Mr. Downing.

STATEMENT OF PHILIP H. DOWNING, LOCAL OFFICE DIRECTOR, COLUMBUS 
                 ENTERPRISE COMMUNITY PARTNERS

    Mr. Downing. Good afternoon, thank you, Chairman Ney. 
Before I proceed, I just wanted to let everyone know, although 
it does state that I am a local office director of Enterprise 
Columbus, I actually hail from Wapakoneta, Ohio. So I have a 
rural connection and I spent probably half of my professional 
life working in rural communities. So, I have kind of an odd 
mix of urban and rural.
    Chairman Ney. One of Neal Armstrong's--
    Mr. Downing. Yes, as matter of fact, I lived on Neal 
Armstrong Drive. That is a very small town. Well, thank you, I 
appreciate that.
    Thank you for the opportunity to discuss the Community 
Development Block Grant Program, and other key Department of 
Housing and Urban Development programs that facilitate the 
production of affordable housing and community improvements 
nationwide.
    Enterprise is a leading provider of the development capital 
and expertise required to create decent, affordable homes and 
rebuild communities. For more than 2 decades, Enterprise has 
pioneered neighborhood solutions through public-private 
partnerships with financial institutions, local governments, 
community organizations and others that share our vision. 
Enterprise has raised and invested $7 billion in equity grants 
and loans, and is currently investing in communities at the 
rate of $1 billion a year. Enterprise's two Ohio offices 
located in Cleveland and Columbus, work statewide with a host 
of urban, suburban and rural community development partners.
    Enterprise plays an important role in the housing and 
community development finance system. To our grassroots 
partners, we provide resources, expertise, and access to 
additional capital. To our philanthropic and corporate 
partners, we offer assurances that funds are invested with the 
maximum impact. To the Federal Government, we ensure taxpayer 
dollars are appropriately targeted, efficiently used, and 
leveraged to the greatest extent possible.
    In fiscal year 2006, Congress recognized the value of the 
Community Development Block Grant, and nearly unanimously 
rejecting the proposals in the budget to eliminate the program 
entirely and transfer authority to the Department of Commerce. 
This year, while the proposal would leave the program authority 
at HUD, the proposed budget significantly reduces funding for 
the program. For the second year running, the Administration 
has proposed to cut funding for CDBG and several other programs 
under the auspices of the Strengthening America's Communities 
Initiative.
    The fiscal year 2007 budget proposes just $2.7 billion in 
formula funding for CDBG. This is a reduction of $936 million 
compared to the appropriated level for fiscal year 2006. To 
make matters worse, the fiscal year 2006 funding level 
represents a 10 percent reduction in the funding from the 
appropriated level in the fiscal year 2005 budget. Since fiscal 
year 2001, CDBG formula funding has declined by nearly 16 
percent. We have grave concerns about these funding levels and 
the trend that they represent. These reductions have real and 
harmful consequences for communities across the country.
    The CDBG program represents the glue in the community 
development tool box. Without these flexible dollars that CDBG 
brings to affordable housing and community development 
facilities projects in both urban and rural areas, these 
developments often would not be able to come to fruition.
    The CDBG statute is very clear, the program's three 
national objectives are the elimination of slum and blight, 
addressing urgent needs that pose imminent threat to health and 
welfare of a community, and addressing the needs of low 
income--low and moderate income families. We have made great 
strides in the past 30 years towards these objectives, but we 
by no means have achieved them. CDBG is an essential tool in 
rebuilding of communities. Without it much of the progress we 
have made is in jeopardy.
    Even as the CDBG program was slashed in the budget request, 
both Congress and the Administration have recognized its 
flexibility and strong past performance and have channeled 
$11.5 billion in Gulf Coast rebuilding funds through this 
program via supplemental appropriation bills. After the trio of 
hurricanes devastated the Gulf region, America's housing crisis 
was unveiled for the world to see, and for our own citizens to 
recognize. The budget proposal looks the other way as families 
across our country, seeking stability, struggle to find fit, 
affordable housing.
    This committee and many of your colleagues in the House and 
Senate deserve the thanks of the community development industry 
and the low and moderate income families we serve for 
preserving CDBG last year. We hope that you will again join 
with us to ensure that this program can continue a strong track 
record of success. Accordingly, we urge Congress to fully fund 
the Community Development Block Grant program in the fiscal 
year 2007 budget at $4.5 billion.
    In additions to cuts in the CDBG program, we are also 
concerned about the eliminations to the brownfields program, 
Section 108 loan guarantees, and rural housing and economic 
development programs. Each of these programs meets a specific 
need that communities face when tackling their affordable 
housing and community development problems. We encourage 
Congress to reject proposals to eliminate these essential 
programs, as well as to reject proposals to cut funding for the 
Section 202 elderly housing program and the Section 811 
disabled housing program.
    Another key program slated for elimination in the fiscal 
year 2007 budget request is the Section 4 affordable housing 
and capacity building program. The Section 4 program is another 
critical instrument for revitalizing communities. It equips 
community development corporations and other neighborhood based 
non-profit organizations with the tools and resources that they 
need to address local issues.
    The Section 4 program provides seed capital that community 
and faith-based groups use to attract private investment for 
housing, economic development, and other revitalization 
activities. It helps local communities use programs like block 
grants much more effectively. In 2005, each Federal Section 4 
dollar generated $67 in community activities. I think that 
speaks to the leverage issue you were talking about earlier, 
Mr. Chairman. It is a very effective program, leveraging 
private sector dollars. As you are aware, HUD administers 
Section 4 primarily through Enterprise and the local initiative 
support corporations, Mr. Grefe, representing them to my side 
here. The Nation's two largest non-profit community 
intermediaries. In 2005, Enterprise and LISC used $30 million 
in Section 4 investments to help grassroots groups generate $2 
billion to produce more than 12,000 affordable homes with a 
wide range of other economic development activities.
    To provide one example, in Fayette and Fairfield Counties, 
the Section 4 program supported training that enabled Community 
Action to expand its service area and self-help housing program 
from Fayette and Fairfield Counties into Ross County and to 
complete the second phase of Arbor Village in Washington Court 
House. Arbor Village is a community of 30 new affordable for-
sale homes made possible in part by the buyer's sweat equity. 
Additionally, Section 4 funding assisted Fairfield Affordable 
housing in developing 50 apartments, as well as providing case 
management and supportive services for low-income seniors.
    Additionally, in Columbus, Section 4 has provided capital 
to our local funding intermediary, the Community Development 
Collaborative of Greater Columbus, leveraging significant 
resources from financial institutions and philanthropies. This 
effective private-public partnership from financial 
institutions has proven effective in building capacities in 
over 15 local community development organizations, catalyzing 
construction of thousands of affordable homes and 120,000 
square feet of commercial and retail space in Columbus. Recent 
evaluations by OMB and GAO point to the effectiveness of the 
program.
    The bottom line is that community based organizations 
across the country are building affordable homes, starting 
small businesses, developing commercial and community 
facilities. They are connecting people to jobs, providing child 
care and other services, and making streets safer. They are 
building that better world, quite literally, by providing the 
economic tools people need to pull themselves out of poverty. 
But they cannot do it alone, they need our help.
    We at Enterprise strongly believe that Congress should 
demand performance and accountability of Federal programs. We 
are committed to working with Congress and the Administration 
to improve the performance of these policies and programs. We 
encourage Congress to continue to support and fund innovative 
models, test new approaches, and preserve successful programs.
    We are pleased that the subcommittee has brought this panel 
together today and I hope this dialogue will continue. We look 
forward to working with you to ensure that the best possible 
outcomes occur for not only the expenditures of public dollars, 
but also for the low and moderate income families struggling to 
find affordable housing in safe neighborhoods across our 
country.
    [The prepared statement of Mr. Downing can be found on page 
164 of the appendix.]
    Chairman Ney. Thank you, sir.
    Mr. Grefe.

STATEMENT OF HUGH GREFE, SENIOR PROGRAM DIRECTOR, TOLEDO, LOCAL 
                       INITIATIVE SUPPORT

    Mr. Grefe. Thank you, very much, Chairman Ney, and thank 
you for assuring that Ohio is the home for these hearings this 
year; we deeply appreciate it.
    My name is Hugh Grefe and I am the senior program director 
for the Toledo office of the Local Initiatives Support 
Corporation. LISC is a national non-profit community 
development support organization working through our 34 local 
offices in over 100 cities and 80 rural communities across the 
United States. Each year we invest close to $900 million in low 
income neighborhoods and rural areas. Since 1980, LISC has 
raised over $6 billion in grants, loans, and equity from 
supporters and has invested it to generate over $14 billion in 
community development. These funds have created over 160,000 
homes, 25 million square feet of business and service 
facilities, and helped to employ 60,000 people. LISC works 
through local non-profit community development corporations and 
other non-profit community based development organizations 
along with local government and local private sector partners. 
Our financing includes investments, loans, loan guarantees, and 
grants. Organizational assistance includes advice, training, 
management analysis, and operational support.
    In Toledo, I have been responsible for leading LISC work in 
community development for 12 years, and previously served as a 
senior executive at a local hospital serving Toledo's oldest 
and poorest neighborhoods. In Ohio, LISC has local offices in 
three cities; Toledo, Cleveland, and Cincinnati. We also work 
through our rural LISC office working with program partners and 
two rural non-profit developers, the Adams/Brown Counties 
Economic Opportunities, Inc. and with WSOS Community Action 
Agency in northwest Ohio.
    LISC's work with our non-profit community development 
partners is structured around efficient and strategic use of 
public funds. One of the critical building blocks of community 
development is the Community Development Block Grant Program.
    In Toledo, a weak market city with a struggling economy and 
a continuing loss of population and loss of jobs, CDBG is a key 
resource. With few local private foundations, CDBG is the main 
source of operating and public investment funds for community 
development and human services organizations. Significant goals 
to build new neighborhoods around new schools and a major job-
producing riverfront development must have CDBG investment to 
succeed in the coming years. As an example, the Pontiac and 
Ontario Place development provides a wonderful study of a 
broad-based neighborhood revitalization aided by the CDBG. 
Forty new and rehabilitated homes for low income families have 
been built within sight of the location of the new Chase 
Elementary School. The use of CDBG in this first project in 
Pontiac/Ontario has now attracted $3.5 million in new, private 
investment to the neighborhood and created the basis for the 
next steps in the new schools, new neighborhood program.
    In Cincinnati, Ohio, CDBG supports the infrastructure of 
community development corporations which are the backbone of 
neighborhood-based development in that city. Working with our 
partner, Cincinnati Housing Partners, 18 blighted properties in 
the Carthage neighborhood have either been rehabilitated or 
have seen new constructed homes and sold--who have built them 
and sold to working families creating equity for first time 
home buyers and hope for a whole neighborhood. The CDBG program 
was key to this neighborhood turnaround through its flexible 
uses in acquisition and infrastructure improvements.
    In Cleveland, CDBG funds have been extremely important 
tools in strengthening community economic development. Funds 
are used to repair homes, provide operating support to CDCs, 
provide shelter and care for the homeless, repair neighborhood 
storefronts, and provide supportive care for those living with 
AIDS. In Cleveland, along with the LISC grant, CDBG funds were 
used to support the Spanish American Committee, Ohio's oldest 
Hispanic non-profit organization, to develop the only HUD 
certified bilingual housing counseling program in the City of 
Cleveland, to increase home ownership in the fast growing 
Hispanic community. This relatively new program has been 
amazingly successful in helping to increase home ownership 
among Cleveland's growing Hispanic community.
    In rural Ohio, through our partner organizations, Adams/
Brown Counties Economic Opportunities, serving Adams and Brown 
County and WSOS Community Action serving Ottawa, Sandusky, 
Seneca, and Wood counties, affordable rental housing and home 
ownership is being built for low and moderate income families, 
senior housing is in the planning stages, businesses are being 
assisted using critical job-producing strategies through micro 
enterprise development and IDA initiatives, child care centers 
are being built, homeless are being assisted and more, all with 
the assistance of CDBG funds.
    Along with other specialized Federal programs including the 
HOME program, the Section 8 tenant assistance program, the 
Community Service Block Grant programs, Section 4 and others, 
CDBG plays an extremely important role as one of the most 
flexible of all programs in the tool box created to support 
community revitalization and support. Among its strengths are 
the following: CDBG is the venture capital of change, 
leveraging significant private capital into communities that 
have had difficulty attracting new investment. For example, in 
Toledo, over the last 10 years, CDBG commitments from the City 
of Toledo entitlement have resulted in $5.00 for every single 
dollar of CDBG, just from LISC alone. And when the project 
financing commitments that the CDC's have been able to attract 
is added, it brings it to nearly $9 in total leveraging impact 
from the City of Toledo's commitment.
    CDBG encourages local elected leaders to work with 
community based and run organizations to set priorities for 
investments that produce results in difficult-to-develop areas.
    CDBG allows communities to take the long view and develop 
strategies to address the corrosive effects of decades of 
negative economic and social trends.
    Because it is flexible, CDBG can be carefully targeted in 
ways that enhance the effectiveness of more focused investments 
of HOME funds, Section 8, Section 202, and other Federal funds.
    Overall, CDBG allows local communities to develop and carry 
out neighborhood and community transformation plans that make 
the project or transactional work supported by HOME, Section 8, 
Section 202, and other funds have more long term and lasting 
impact.
    CDBG is a 30-year old program and it works. From LISC's 
national perspective we have seen the benefit of the 
flexibility of the program in cities as diverse as Los Angeles, 
California and Duluth, Minnesota. In rural America we have seen 
the usefulness of small cities grants funded by CDBG which 
helped to jump start the revitalization of a faltering main 
street as we just heard about here in Cambridge or the 
acquisition of land in order to start a self-help home 
ownership program in a community that had not seen new 
construction in decades.
    We thank Congress for your past support, particularly last 
year, and applaud your vision and partnership with local 
communities in supporting CDBG.
    If reform is to happen to the CDBG program, we urge 
Congress to include community-based stakeholders, both rural 
and urban, in this decision making process. We understand that 
times are tough in Washington. Tough decisions must be made 
over competing priorities. CDBG works, it helps communities 
work. Deep cuts will strike at the very heart of communities 
reinventing themselves. Discussions concerning changes to the 
CDBG program or how the allocation program or formula is 
determined must not be kept within the Beltway but to be 
brought here, as you have done today, where we are, to be 
discussed.
    I appreciate the opportunity to testify before this 
committee. I am happy to answer questions. And I wanted to 
comment on your question about direct support for low income 
persons, as a result of that. In Toledo, Ohio, every year the 
City of Toledo's allocation of CDBG to family resource centers 
and other non-profits including homeless shelters, soup 
kitchens and other feeding programs, etc., amounts to about $1 
million a year and it is direct service to the very lowest of 
low in our community.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Grefe can be found on page 
172 of the appendix.]
    Chairman Ney. Thank you.
    Before we go on I wanted to, the Mayor of Vincennes is in 
the room. We introduced everybody, so the Mayor of Vincennes is 
here. I just wanted to say that.
    He was my mayor for 13 years, so I wanted to introduce him.
    Voice. He used to be my resident and I could tell him that 
he may have his power in Washington, but on weekends he 
belonged to me.
    [Laughter]
    Chairman Ney. We got redistricted and we had to move, I 
might get redistricted and have to move back.
    Voice. That is important.
    Chairman Ney. He was good when I lived there.
    Mr. Henry.

       STATEMENT OF OREN J. HENRY, COMMUNITY DEVELOPMENT 
            ADMINISTRATOR, CITY OF CINCINNATI, OHIO

    Mr. Henry. Thank you, Mr. Chairman, thank you. Before I 
begin my comments, I want to thank you for having this hearing 
and it is nice to be back in this part of the State. I live in 
Cincinnati now, but I was born and raised in Newark, Ohio.
    Chairman Ney. Okay.
    Mr. Henry. I was their community development director for 
16 years and had many successes there with the block grant 
program, and then moved on to the Ohio Department of 
Development, and was the deputy director of the community 
development division there. I currently sit on the board of the 
Ohio Housing and Finance Agency, but I am wearing a different 
hat today. So I will begin my comments.
    Okay, thank you, Chairman Ney and the members of the 
subcommittee, for allowing me to testify today on the 
importance of the HUD Community Development Block Grant Program 
to our communities, and the need for continued stable funding 
for the program.
    I am the Community Development Administrator for the City 
of Cincinnati and I have held that position for approximately 5 
years. In that time I have seen Cincinnati's annual CDBG 
allocation decrease 21 percent from $17,343,000 in 2002 to less 
than $13,742,000 in 2006. The substantial annual cuts in 
funding are increasingly making it difficult to administer 
effective programs to add new and sustain existing jobs, 
provide decent affordable housing in safe neighborhoods, and to 
offer needed public services for our citizens. In order to 
maintain effective programs, please fund the Community 
Development Block Grant formula program at a minimum of $4.3 
billion for 2007 and beyond.
    We are very concerned about the President's proposed cuts 
in the fiscal year 2007 budget proposal that would reduce 
overall CDBG program funding by 27 percent and would provide 
for dramatic changes in the funding formula. I understand HUD 
will be pursuing a new formula that would cut the CDBG 
allocation for Cincinnati by an additional 25 percent. If all 
these so-called reforms are enacted as proposed, the city could 
see its CDBG allocation shrink from a high of $17,343,000 in 
2002 to only $7,523,000 or 43 percent of what was received just 
5 years ago. Add in the effects of inflation and Cincinnati 
will be operating with only about a third of the resources the 
city recently received.
    Like all cities, Cincinnati has a unique history. In 1880, 
Cincinnati was the sixth largest city in the United States and 
had a solid industrial base. As the city matures, it finds 
itself landlocked and with one of the lowest home ownership 
rates in the Nation at just 39 percent. And it is only 29 
percent for minority populations. As manufacturing is still a 
large part of the economy, many of the old factories and sites 
need serious brownfield remediation to be marketed and reused 
for new industry and jobs. Obsolete, old neighborhoods need new 
approaches and well designed infill redevelopment to meet the 
needs of existing citizens, to halt the exodus to sprawling 
suburbs, and to offer exciting and innovative alternatives to 
attract new residents into a mixed income and diverse 
environment.
    While pursuing a number of redevelopment initiatives, our 
leadership currently is taking bold action to address the 
ongoing problem of vacated buildings. There are documented 
complaints on over 1,700 vacated buildings that contribute to 
the blight, harbor illegal activities, and provide an incentive 
for disinvestment. The city is dramatically increasing fees and 
fines on negligent property owners. Our goal is to cut the 
number of vacated structures and to motivate owners to 
immediately address safety issues and to rehabilitate and reuse 
their vacated building. The owner may also sell their building 
or donate it to the city and neighborhood-based redevelopment 
groups. CDBG funding is a key part to this effort by enabling 
us to have ample resources to pursue all of these buildings in 
a reasonable time frame. When the transition of these blighted, 
vacated structures begins, CDBG will continue to be a strong 
element. CDBG funding will be utilized to demolish, clean up, 
and rebuild some sites or will leverage funding in the 
renovation of others. Our strong actions in dealing with 
vacated buildings will be a tremendous start to the 
revitalization of some of our most challenged areas.
    But the proposed funding cuts and formula reallocations 
threaten new initiatives as well as our existing community 
redevelopment efforts. The 21 percent cut in funding we have 
experienced over the past 5 years has meant cuts in 
neighborhood programs and public services in all areas. Of 
significance, CDBG regulations generally limit expenditures of 
CDBG funding for public service activities to 15 percent of the 
grant including program income. As the CDBG program has been 
cut 21 percent, a corresponding cut has been made in public 
service activities, such as youth development programs or drug 
elimination activities. At the same time, CDBG funded programs 
are under increased scrutiny, and more reporting information is 
requested, increasing staff time. We have no issue with being 
held accountable for the expenditure of public funding, but we 
cannot continue to offer high quality programs that truly 
address the needs of our neighborhoods with significant annual 
cuts.
    In order to maintain effective programs, please fund the 
CDBG formula program at a minimum of $4.3 billion for 2007 and 
beyond. We understand the periodic need to examine formulas to 
ensure they are fair, but for a city with a declining 
population base, large numbers of vacated building of which 
many are historically significant, numerous brownfield 
industrial sites, and extremely low home ownership rates, it 
does not seem plausible that a cut of 25 percent is a 
reasonable adjustment. Ideally, formula funding could be 
increased to maintain funding to existing cities while boosting 
those that seem to have unmet needs. In today's budget 
environment that may seem unrealistic, but to not reinvest in 
our neighborhoods and communities seems totally unrealistic.
    Thank you for your consideration and thanks so much for 
your support of the programs over the years.
    [The prepared statement of Mr. Henry can be found on page 
177 of the appendix.]
    Chairman Ney. Thank you.
    Mr. Myers.

    STATEMENT OF DONALD R. MYERS, EXECUTIVE DIRECTOR, OHIO 
               MIDEASTERN GOVERNMENT ASSOCIATION

    Mr. Myers. Thank you, Congressman Ney. Before I start, I 
just would like to note, as you are well aware, four of the 
board members on the original panel were OMEGA members which I 
represent and we are honored for that privilege and that 
invitation. It is also good to have the Honorable Congressman 
Frank, the ranking member of this important subcommittee, here 
today. And for this privilege of testifying before this 
committee today, and to you we thank you.
    I testify to express my comments and those of the Ohio Mid-
Eastern Governments Association Board in its entirety, to seek 
your consideration and support to fully restore funding to the 
HUD Community Development Block Grant Program in the amount of 
fiscal year 2004 levels of $4.3 billion. In addition and most 
importantly, we ask that you and the committee support 
retraining--retaining the original mission of the program as a 
flexible local-driven program that provides valuable assistance 
to county commissioners, mayors and development directors 
working to improve local communities and the economic 
development initiatives needed in our region.
    As executive director of OMEGA, I represent a Council of 
Governments, a local development district, and an economic 
development district serving 593,221 people.
    At our most recent annual board meeting, 92 officials were 
in attendance, from a variety of walks of life, and all of them 
spoke of the critical importance of the CDBG program. At our 
most recent meeting held 2 days ago, March 22, 2006, we spoke 
of this subcommittee hearing, its importance. And the board in 
its entirety asked that we express no in uncertain terms the 
importance of the Community Development Block Grant Program to 
rural Ohio and to our region.
    As a former development director in Belmont County, I have 
had the privilege, Congressman, of working with you on three 
very important projects to me and to you. You were both a state 
senator and a United States Congressman. We worked on $80 
million Electrolytic Tin Plating Plant, called Ohio Coatings. 
We worked on the Shadyside Stamping Plant in Shadyside, Ohio, 
together at a cost of $32 million. The Electrolytic Tin Plating 
Plant was at $80 million and we worked on the Belmont 
Correctional Institution together at a cost of $38 million.
    When I left Belmont County as its development director in 
2001, these three projects alone had created 900 jobs, and they 
had a payroll and fringe benefit package in excess of $35 
million. Belmont County and its people today benefit because of 
these developments. These projects could not have happened, and 
would not have happened, without the Community Development 
Block Grant Program, which you are very familiar with.
    Records in our office, the OMEGA office, and we do not have 
all records for the HUD program, but what we have found is, 
just in the year 2004 we had $3,015,000 for 15 county and city 
formula grants, $885,000 for two water and sewer grants, and 
$5,839,000 for 12 CHIP grants. These CDBG grants are so 
important to our region and to the individual counties and 
cities that they benefit and serve.
    Our infrastructure needs today are many, not only here in 
rural Ohio, but throughout the country. Last year, the American 
Society of Civil Engineers prepared a report that addressed the 
12 primary categories of infrastructure in America. The grade 
given by this quality group of people was a D. Both drinking 
water and wastewater received a grade of D. The report further 
states that the Nation's 54,000 drinking water systems are 
aging rapidly and some sewer systems are in excess of 100 years 
of age. And Congressman, you personally know one in our region 
that is 100 years of age, your former hometown. We need quality 
programs like Community Development Block Grant that address 
these issues of concern and importance.
    You have done much for the people of Ohio and for the 
economic disadvantaged citizens throughout the United States. 
We ask that you continue to look out for those in need and in 
the shadows of life. With a very sluggish economy and three 
major floods that have hit our area recently, our 10-member 
counties need your help and that of Congress more than ever. We 
ask that you support these quality programs and restore funding 
of the CDBG program to the fiscal year 2004 level of $4.3 
billion.
    Again, for this privilege and this honor to speak of this 
important program, and on behalf of OMEGA, we thank you for 
this consideration.
    [The prepared statement of Mr. Myers can be found on page 
195 of the appendix.]
    Chairman Ney. Thank you very much.
    Mr. Ricer.

   STATEMENT OF GARY W. RICER, EXECUTIVE DIRECTOR, GUERNSEY, 
           MORGAN, NOBLE TRI-COUNTY COMMUNITY ACTION

    Mr. Ricer. Thank you very much. My name is Gary Ricer and I 
am the CEO of Guernsey, Monroe, and Noble Tri-County Community 
Action, Inc. On behalf of the residents of Guernsey, Monroe, 
and Noble counties, I would like to submit this testimony of 
the need for the continuation of funding for the Community 
Development Block Grant Program. GMN Tri-County CAC has 
administered the CDBG program for the Noble County 
Commissioners for the past 12 years. This program is 
discretionary funding, which permits the local elected 
officials to complete much needed projects within a local 
jurisdiction, which they could not do without the critically 
needed CDBG funds.
    During the past years, we have been able to complete the 
following projects in Noble County:
    Help purchase fire trucks for volunteer fire departments;
    Purchase needed supplies for the fire departments;
    Install sidewalks;
    Install water lines;
    Dry fire hydrants;
    Demolish buildings;
    Renovate buildings;
    Help purchase senior citizen vans;
    Purchase park equipment for small villages; and
    Pay engineering fees for proposed sewer lines, just to name 
a few.
    We have received a significant reduction in grant funds 
over the past 3 years, and for this rural area it went, in 2004 
from $67,000, 2005 $63,000, 2006 $57,000. So you see the 
pattern. I am urging your support of the continued funding for 
the Community Development Block Grant Program.
    And in summary, I would just like to say as a former county 
commissioner, as well, that I think it is really critical when 
you look at--this is the last of the discretionary monies, that 
I feel for the rural communities. And with all due respect, 
many times when State and Federal Government has allocations of 
funds available for disbursement they pretty much direct or 
tell you where those monies are going to go. But I think in 
this case with the CDBG and with the public's input, it really 
does give the voter, the taxpayer, the resident, and the 
communities a strong voice on exactly where that discretionary 
money is going. Of course we all know that it is generally ten 
to one the request of the monies that is available for what is 
to be actually disbursed, but it is really important, I know to 
a lot of these public and--public organization service and 
civic youth groups and such.
    I know in the past, historically from e-squad 
defibrillators, to sidewalks in slum and blight areas, and from 
a new roof for community centers to replacing a pumper on a 
fire engine; that is really critically important for the 
locals. And what you said earlier, Congressman, to the first 
panel about if the guidelines are changed to look more at the 
poorest of the poor so to speak, the hardest to serve, the 
under-served and under-privileged, I feel that it would have a 
detrimental effect, because what that actually is going to do 
is, let us say hypothetically, you take 200 that were funded 
and you cut that back to 20 of the hardest to serve, then 
before you know it, the moderate income is going to be the low 
income. Because they are going to be affected as well. So I 
think it is critical if you would, with all due respect, be 
mindful of that fact as well.
    Again, I thank you on behalf of the citizens of Guernsey, 
Monroe, Noble Tri-County. And I appreciate your efforts; I know 
the work for all of you, you have kind of got your work cut out 
for you as well. We are always asked to do more with less 
funding. So good luck and I appreciate the opportunity to 
testify.
    [The prepared statement of Mr. Ricer can be found on page 
198 of the appendix.]
    Chairman Ney. Thank you.
    Ms. Wesel.

 STATEMENT OF CHARMEL WESEL, ACTING DEVELOPMENT DIRECTOR, CITY 
                       OF MARIETTA, OHIO

    Ms. Wesel. Thank you for allowing me to speak. My name is 
Charmel Wesel and I am the acting development director for the 
City of Marietta. We currently are an entitlement community for 
CDBG funding. Last year, we received $505,971. This year we 
will receive $450,554.
    To echo the sentiments that you have already heard, CDBG 
funds are an incredibly valuable tool in assisting our low 
income families. Here is just a brief rundown of a few of the 
programs, a few of the ways we have used our CDBG dollars. Last 
year we assisted 15 families with emergency home repairs. We 
have given 17 families the paint and supplies to paint the 
exterior of their homes. We helped 13 local businesses make 
improvements to their store fronts and provided more than 100 
children with summer playground program activities, while 
providing five local teens summer jobs. We awarded more than 
300 scholarships to families admitting them to our new Aquatic 
Center. We supplemented our local public transportation system 
with $40,000, and placed new playground equipment in two of our 
neighborhood playgrounds. We installed historic street lighting 
in a slum and blight area to provide residential safety and we 
assisted our local food pantry with the purchase of new 
refrigeration equipment. We hosted a building doctor clinic for 
our many residents living in older or historic homes. As you 
know, Marietta is the oldest city in the State of Ohio, so we 
have a lot of older homes. We also hosted a DART visit with 
Downtown Ohio Incorporated last summer that began an ongoing 
drive to the Main Street program in our downtown for 
revitalization efforts. We provided lead paint education for 
several families. We worked with our Washington County Career 
Center to create some new wrought iron trash receptacles that 
were placed throughout our downtown and our new bike path and 
planted more than 40 trees throughout a slum and blighted area. 
We completely reworked a city street and resurfaced a public 
basketball court. And in addition to that, thinking about 
leveraged funds, we worked with our community action program in 
Washington County, and supplemented their CHIP program with 
$40,000 of funds which go to help fund $400,000 to provide home 
rehabilitation efforts.
    This is not a complete listing of the projects we did last 
year, but it is very indicative of just how valuable the 
dollars are that we receive from CDBG every year. Please do 
keep in mind that all of these projects are done in areas that 
have been identified as low income or slum blighted areas, 
using census tract data.
    We are very fortunate to receive these funds. Their 
flexibility is crucial in allowing us to create the programs 
that will directly impact those low income residents who really 
do need our assistance.
    A brief example of the wonderful flexibility of the CDBG 
program came to light following the two devastating floods we 
suffered in September of 2004 and January of 2005. These floods 
ravaged our town affecting some 300 plus businesses and 
thousands of residents. Most of the residents affected were low 
income. It affected our trailer parks and some low income 
housing areas that were directly in the flood plain. A lot of 
trailers were destroyed; homes were completely flooded out. 
FEMA came to assist us but they could not really provide the 
adequate funding that we needed. We were, as a city, able to 
move funds in our CDBG program directly into our emergency 
repair program to assist those homeowners with new furnaces, 
new hot water tanks, new electrical, whatever they needed. We 
also created a new project in our CDBG funds to help flood-
affected businesses. We provided $1,000 apiece to over 35 local 
businesses to help them get back open as quickly as possible.
    I do not know of any other Federal program, and I am new to 
government, but I do not know of any other Federal program that 
would allow that flexibility with the same funding in such a 
short time frame. We were immediately able to react and respond 
to the needs of our citizens.
    One other issue to address is a little bit more specific to 
our region. Appalachian Ohio continues to lag behind the rest 
of the country in terms of economic growth. I hear every night 
on the nightly news that our country's economy is growing; our 
local economy, however, remains stagnant.
    We continue to have homeless issues resulting from the 
floods. Many of our homeless are going unreported; they are 
sleeping on their friends' sofas or sleeping in their cars. Gas 
prices continue to stick at $2.50 a gallon. Our population in 
Marietta is shrinking and our employer base is declining as 
well. Our manufacturing base has shrunk dramatically leaving 
what few job openings are available only in the service 
industry, which means lower wages and fewer benefits.
    These items affect our city government's pockets pretty 
deeply and that means we can provide fewer infrastructure 
improvements and services. CDBG is our strongest hope to 
provide much needed assistance to those in dire need. While I 
realize that our Federal Government has to be fiscally 
responsible, CDBG is not the area in which to make such drastic 
cuts. Unfortunately the reality of life for our low income 
citizens across the country is this, a one time assistance from 
a CDBG fund will not move them out of their low income lives. 
CDBG is, and must remain, an ongoing flexible funding program 
to allow communities to help those in need. Whether that is 
creating jobs, providing funding for home repairs, or 
maintaining an adequate infrastructure. CDBG answers all of 
those needs and more. I urge you to look for other alternatives 
to find the funding to balance the Federal budget. Do not take 
away from those who already have nothing to give.
    Thank you very much for your time, I appreciate it, thank 
you.
    [The prepared statement of Ms. Wesel can be found on page 
207 of the appendix.]
    Chairman Ney. Thank you. A very good panel and I appreciate 
all your time.
    I wanted to mention on the floods, we have, we meaning the 
staff in Washington, in fact had a hearing way ahead of the 
curve prior to Hurricane Katrina on flood insurance, was it in 
Tuscarawas County, I think?
    Mr. Riley. Last August.
    Chairman Ney. Last August, so we were ahead of the curve. 
We all know more than we want to know maybe about flood 
insurance laws now. And the House placed flood insurance with 
some reforms, I only mention this because in our area it is 
flooding too. You have not only got it in Cincinnati, you know, 
in other river areas, in Tuscarawas County, all over the place. 
But we put some reforms in that and the Senate did not move. 
Now, we did another round of flood insurance.
    But FEMA too, we are trying to find out, you know, what 
FEMA does and does not do to help and they do some things to 
help and some they do not. So, I wanted to mention one in 
particular, on Powhatan Point, Ohio, we--FEMA, the trailers 
would be moved, be pulled, trailers and not modular, would be 
pulled away and then the water would come up. And then when 
they went to bring them back, FEMA said, well, you can bring 
them back, but you are going to put them on 30 foot blocks and 
then you have to run the plumbing up, you have to spend 
thousands of dollars for the trailer.
    Well, the point was no, when we know it is going to flood, 
the river does not really flash flood, and--but we can just 
pull them out. And it just so happens, I just want to tell you, 
Clinton Jones, and Cindy, and anyone else who worked with Mr. 
Beerider at the time, they put the amendment in to force FEMA 
to let you pull those trailers out of Powhatan, across the 
United States.
    I just thought I would mention that. So, they did do that, 
so we try to look at some of the situations, the block grants 
are good too, for the flexibility of the flood. That is what we 
have done with the Gulf States now. They have an appropriation 
for block grants, they can use it in various ways. Some of them 
are using it maybe retroactively on flood insurance, and some 
are using it for direct payments for the houses. So, I think 
the flexibility aspect of the block grant, during Katrina, of 
the horrible thing--our subcommittee, by the way, went there. 
We were the first subcommittee of the House, period. Well, the 
first committee of any type to go down there and view it, you 
know, and to have the hearings down there. So, I think the 
flexibility of block grants and applied right into Katrina was 
the better, quicker way probably to do a lot of things to help.
    I was going to ask about Cincinnati and that is 39 percent, 
do the vacant buildings have something to do with the home 
ownership rates?
    Mr. Henry. While the city, as I mentioned, was the sixth 
largest in the country many years ago, but, you know, it is 
kind of down. It is not in a flood plain, but there is the flat 
area between the hills there, so the population is very dense 
and--and it led to the development of a lot of rental units, or 
older housing that is kind of obsolete and they have been 
turned into rentals. And as people earn more money and could 
afford a home, they moved out to the suburbs. So now, we have 
an inner city that only has a 39 percent home ownership rate 
and, you know, that is far below national average. I am forced 
to try to sustain a community, we have to do something about 
that. And that is why--
    Chairman Ney. That is why the District of Columbia, 
Washington, D.C., which is a very high cost area, obviously to 
buy and I think it is 50 percent--50 percent would be home 
owners, so I was just--
    Mr. Henry. Yes, and we are not that high of cost. I do want 
to mention the flexibility of block grants. We have a number of 
Katrina families who were relocated to Cincinnati that--and we 
are using block grants to help them through the transition and 
with their FEMA assistance, and we do have people now, in fact 
just yesterday I received a report of five families who have 
bought houses, so they are now going to be residents in 
Cincinnati from the Gulf.
    Chairman Ney. I saw something on television about that, 
too. The first families who came up, I saw something on TV, 
they came to Cincinnati, this was 6 months ago.
    Mr. Henry. It is helping reverse our population decline. We 
put them in homes.
    Chairman Ney. One thing we noted earlier too, for Section 8 
purposes that, you know, FEMA, we had stipulated that some of 
the funds would have to go to HOPE VI and some different ways 
they were going to spend their money. And Congress on a 
bipartisan basis had agreed that they would spend, I do not 
remember exactly what we appropriated, we had HOPE VI, what 
else was there, do you know?
    Mr. Riley. A variety of HUD programs.
    Chairman Ney. And we said, here is the FEMA money that is 
going to be spent down at the Gulf and here is how you are 
going to spend some of it. So we had directed it. And I think 
too, if you are dealing with Section 8, the Congress has to be 
careful because as emergency vouchers were provided for people 
to, you know, go across the United States and take that 
emergency voucher, go to Cincinnati, Columbus, or Seattle, 
wherever people went, although, I personally think people need 
options to remain there, if you want my opinion. I think that, 
you know, in Mississippi there are 30,000 trailers so people 
could remain there and rebuild and, in New Orleans, there are 
2,000 trailers. And there are a lot of reasons I can cast the 
third sin fed, third sin state, third sin local city. And if 
you wanted to do that, but I just think that if people, you 
know, did have to disperse across the country and did not have 
the option unfortunately to stay at home, they need that 
Section 8 and those vouchers to follow or as we create 
emergency vouchers, we have to be careful later on in future 
Congresses that somebody does not come back and say look it is 
a tight budget and those emergency vouchers came out originally 
out of this pot of money. Now we are going to make HUD assume 
that cost, and therefore, you short communities on your 
standard vouchers that were out there. I think in my opinion 
that is something that we have to watch.
    Anybody want to just mention anything else about the 
brownfields, do you work with the brownfields?
    Mr. Grefe. In Toledo, which is a classic midwestern 
industrial city, brownfields are dominant--they play the role 
as an immovable storm cloud that hangs over neighborhoods, and 
they can either be vacant land itself or simply abandoned 
buildings. So brownfield redevelopment is a profoundly 
important part of our rebirth. It represents an opportunity for 
very efficient and high impact use of the existing 
infrastructure, rather than--you know, I do not want to get 
into a big long discussion about sprawl versus--but when you 
can reinvest in those old parts of the community where you have 
already have an infrastructure that the public through its 
taxes and its local jurisdiction has to support anyway and you 
cannot not support it any more. It is very good government to 
promote the reinvestment in those areas where possible.
    One additional thing to consider about brownfields that we 
learn the hard way a lot of the time is, most of them seem to 
be 19th and early 20th century configurations. The 21st century 
economy has a different set of needs, and so when we think 
about rebuilding brownfields, we are actually talking about 
reinventing our industrial base. The kinds of industry that 
today would use something that was configured to be a factory 
in 1895 and its location and so forth, is going to be a very 
different kind of industry, but it represents opportunity for 
creativity. So it is very important not to lose that resource.
    Chairman Ney. Mr. Henry.
    Mr. Henry. Well, you know, going back to Cincinnati's 
history as an industrial community, we have lots of inner city 
brownfield sites and all that need to be redeveloped and, you 
know, all the good reasons about trying to eliminate sprawl and 
all that. Also, we have the infrastructures set up for it, you 
know, the Ohio River still transports a lot of commerce. We 
have two interstates, we have a very active airport, so it's 
important to continue to have the reinvestment there in the 
city.
    But one of the things you were asking earlier about private 
dollars being leveraged, we do not find a lot of difficulty in 
getting companies to come in and, whether they are doing 
manufacturing or, you know, whatever their business is, if we 
can come in and hand them a clean site. But it is getting those 
properties, getting them cleaned up, pulling in the resources 
and it takes a city to be able to do that. A private business 
just cannot take that risk of going in and acquiring a site and 
not knowing if they are going to run into PCB's or asbestos and 
get it tied up, that could be devastating. And so we have a 
very active brownfield program, we modeled it after one that 
has been very successful in Chicago and we are turning 
properties over regularly, large pieces so that we can attract 
people back in and put them right on route 50 or I-75 or 
whatever.
    And I find too, I mean, you know, it is not just 
Cincinnati, I had the same kind of problems in Newark, they 
were certainly on a smaller scale, but every community has some 
old mill or some old plant that dumped something and that land 
would be perfect to do something with. But a private business 
cannot go in and do it. It has to come in, you know, we have to 
be the ones that do the clean up.
    Chairman Ney. We found that out now in refineries. The bill 
that I supported in the past, the Federal Government will 
actually build the refinery, go through the permitting process 
etc., with itself. And then it will be sold to the private 
sector. We have not built a refinery since 1976, there is a 
reason, either government then mandates you, the company will 
build the refinery, which you cannot do or we build the 
refinery or we fast track it so that they will have an 
incentive to build a refinery. So, you run into these problems 
everywhere.
    New Orleans, the Army Corps was telling people that you 
need to, or here is what we want you to do with the levees. The 
companies came in, the companies got sued immediately by 
groups, and the companies said fine we do not have to be here. 
So, you know, you are running into this, and I think that the 
governments or the development groups give, you know, a bit of 
a push in there with a better feeling to be doing developing.
    Has anybody ran into problems of--I am just curious, about 
permitting, getting the studies done, the environmentals, or 
does that run pretty smooth?
    Mr. Myers. Congressman, they are difficult but in many 
cases they need to be difficult.
    Chairman Ney. Because of the past history?
    Mr. Myers. Exactly. It is a quality program and, you know, 
as it is right now it could be slightly better, but we also 
need the guidelines. And we will follow the guidelines believe 
me, just to have the worthiness of the programs.
    Mr. Grefe. We do not want to lose the resource.
    Chairman Ney. I want to ask about capacity building, you 
had mentioned that, is that the 1994 program?
    Mr. Downing. Correct.
    Chairman Ney. Senator Bond?
    Mr. Downing. Correct.
    Chairman Ney. Okay, so that is back in my youth, 1994.
    Mr. Downing. Yes.
    Chairman Ney. Yes, and it has certain provisions of, you 
know, who can be involved in it?
    Mr. Grefe. That is correct.
    Chairman Ney. Now you want to just expand on that a little 
bit?
    Mr. Downing. Sure. Basically the Section 4 program, as you 
mentioned, originated back in 1994. The program right now in 
the past year has contemplated $26.5 million, which is really 
divided between Enterprise and LISC to support specifically on-
the-ground capacity building activities. And what we do in 
Columbus is invest a great deal of the money in the capacity, 
the ongoing day-to-day activities of community development 
organizations. Those folks are the best, most in tune with the 
needs of their neighborhood, their communities. We in turn work 
with them to effect housing, to effect change, be it commercial 
revitalization or whatever they need. So that money really 
serves significantly and the leverage amount that I gave you 
was specifically for Section 4, and I think it is really 
prudent of--it is a highly effective program. Because we will 
use it with the private sector. We go to the banks and we show 
the investment that is being made by the government and then we 
leverage that at a minimum, three times. And then in our local 
programs we are seeing numbers that Hugh was talking about, the 
$7 to $8 being leveraged by a single dollar of Section 4 
funding.
    Mr. Grefe. As I think you are aware, the Section 4 program 
is the one that is scoring, the park scoring is rated as the 
highest performing HUD program, that may be a result of being a 
fairly modest one. So, without hoping to be argumentative at 
all, we would hope that this little $30 million, now $26 
million program would not get lost in the rounding somewhere. 
It is a highly effective program and it is the best rated 
program in the department. It is also powerful, because we are 
able to be value added with it.
    What Phil is saying is that, at least what we do with it in 
Toledo, is we are able to take the baseline, which the City of 
Toledo is willing to invest in CDC's, you do not have as much 
money as the cities block grant allocation makes available. But 
we are able to add an extra layer that we can be careful about 
targeting. So it can be all about whatever the necessary 
competitive edge is or moment of excellence, whether it is 
training, computer capacity, there is a whole lot of things we 
can do to help those get really first class impact.
    Chairman Ney. Don Myers mentioned about, and I was asking a 
question about wireless. I know that you had a project 
$300,000, I think it was, for that high speed wireless?
    Mr. Ricer. High speed wireless, $383,000.
    Chairman Ney. Two years ago. I just wondered for the more 
rural areas, or parts of the urban areas too that may not be 
up--up to speed. A lot of people and it is my opinion too, if 
you can wire and provide the high speed, you are ahead of the 
ball game there. There is a company in Wheeling, West Virginia, 
and a law firm has come from San Francisco and hired, I 
believe, 20-some people, paying an average of $46,000, which 
down here is a lot. And it may not be a lot to you all with the 
fortunes you pay for your houses and, I feel bad for you in 
D.C., but a lot of money. And they do all of their billing out 
of there right now. And they do payroll and the law firm in San 
Francisco is saving $4 million a year by doing it down here, 
because they would have had to pay a fortune on rent out there. 
A house that cost $100,000 here is $1 million out there. The 
cost of the salaries would go up because of the cost of the 
house. That is all because they got the wiring down there. And 
I just wondered if anybody use--yours was a direct grant?
    Mr. Ricer. USDA through Rural Utilities.
    Chairman Ney. Does anybody use CDBG in any way to--for 
wiring, I call it wiring. I am a teacher by degree, a history 
teacher, so I call it wiring. Getting it up to speed.
    Ms. Wesel. We did a weekend--we have a festival every fall, 
and we did just a trial run, we brought in a company and we 
used CDBG funds to actually purchase or loan a camera that we 
put right downtown at the levee, right where the festival is 
and also used CDBG funds to buy, I believe, some of the--I 
cannot recall exactly, that was right before I came on board. 
We bought some pieces of the puzzle to use for that weekend. 
And so that we could have that in place hopefully to expand and 
make this a permanent fit for us. Because we do not have, we 
are severely lacking in broadband and wireless.
    Chairman Ney. I just think with kind of the high tech 
industrial parks, and I want to close here. I do not want to 
hold you, but just a couple of things I think, I know you 
talked about with the LDD's, some of you. When we got--when 9/
11 occurred it made us start to think about our systems. When 
the U.S. House got anthrax and the three office buildings had 
to close and 10,000 people had to move around D.C., our 
computers were over in the Ford Building, and nobody could get 
in there because they were searching for whether it was anthrax 
or not. They developed leaks inside. And so they had to send 
the--the EPA detector people in to act as plumbers. And the 
leaks were coming down through the computer systems. We had no 
redundancy. There was no second grid. All the information at 
the U.S. House would have just evaporated or vanished if 
something happened within there. In fact we had to encase--
where the daycare center was had to be encased in concrete, 
because that was where the anthrax came through. So, it taught 
us a lesson about redundant systems. Then it taught--maybe I 
putting in much more information than you want to know.
    Mr. Myers. My son was going to daycare.
    Chairman Ney. His son went to daycare. It is gone, it has 
been encased and removed. I am sorry, Don, you are fine. And 
that is not classified information. No, it is fine down there. 
But anyway--I never talk about that, it would scare people. But 
we learned too, maybe things ought to not be all in D.C., or 
New York. You know, the trade center, or L.A. I think areas 
have opportunities in other cities, whether you are a large 
city or whether you are a small area. If you are wiring 
equipment there might be something in the future that the 
government might continue to have their systems outside of one 
central center.
    Mr. Ricer. In remote areas.
    Chairman Ney. I just thought I would throw that out there.
    And one other thing, Don Myers too, I will tell you, he 
said about the prison it is true. He was viciously attacked as 
were the commissioners for building onto that piece of land 
that sat there and nothing was on it. And all of a sudden 
somebody says, let us put 900 jobs on there. Well, the same 
thing happens today, if you go to a community sometimes and you 
build the system, well, what are you building it for. It is 
building it for a reason. So, you know it is a good thing to 
do, it is preventive.
    Mr. Myers. Could I bring up one item, we did not want to 
speak individually about line items, but after the last 
meeting, three mayors and two development directors came up to 
me and asked if I would report it today. A line item for 
demolition, you know, that is a tough issue, but we ask that 
and--and the mayors and the development directors wish that 
that line item, major importance on the riverfront, that that 
line item if possible stay in the CHIP program. There are tough 
guidelines on it. We are willing to follow the tough 
guidelines, but we need the right to tear down houses that are 
beyond repair using CHIP dollars if at all possible.
    Congressman, the final thing, your friend and mine, Ann 
Pope, donated $500,000 from Washington in discretionary for the 
three floods. And the floods we had in 2004, we are just 
starting to use those dollars right now. FEMA came in and did 
an environmental on each and every one of those damaged 
properties. And because it was ARC dollars coming to the State 
of Ohio we had to go out and do all new environmentals on 
activities that are just replacements. And, you know, those 
people needed that money. This act of kindness and it was, in 
getting the approval and everything else, and to help the 
Powhatans and Columbiana County, and Jefferson, and Belmont 
County, and the world of Mariettas, we are just starting to use 
those dollars now because we had to go out and do all new 
environmentals. We did not accept FEMA's environmentals. And, 
you know, I know that those are difficult times, but you know, 
sometimes we just shake our heads when action like that, we 
understand the importance of environmentals. But there are 
times when, if one government organization does it, why can we 
not accept it?
    Chairman Ney. Sure, I understand.
    I want to thank you all for your time. You have come long 
distances, and from a wide variety of backgrounds, which is the 
purpose of this hearing. And we have from larger cities, 
development corporations and everything, rural areas, that 
helps us. And I believe it helps us and I believe it helps us 
as a State, to go back, Mayor Coleman sent someone today to 
Knox County. So, I think it is a wonderful--we have the larger 
cities and I think it is a wonderful partnership with the rural 
areas. Our next hearing again will be in Los Angeles, we think 
Los Angeles will mimic here, although a larger place, and will 
help us and try to stop the cuts. I will also tell you in 
closing that it is not going to be easy. I looked through the 
budget, there are things that are funded with increases this 
year, so I do not understand why it all comes out of the CDBG. 
We have to push, because if it is a 25 percent cut and then 
they say well, we will only cut it 10 percent. Well, that is 10 
and 10 from the previous year, so that is 20.
    And the other thing adverse to this, if we are building our 
economy these are truly monies that go to build the economy. 
This is--not the place, you know, to cut back on.
    Ms. Wesel. Exactly.
    Chairman Ney. Maybe another mission to Mars in the next 2 
years we will not do that or something. I really believe a lot 
in these funds. You helped us a lot by making this official 
testimony, we can take it back. I want to thank all of the 
staff for your time and diligence, thank you.
    [Whereupon the hearing was adjourned at 4:25 p.m.]


                            A P P E N D I X



                             March 24, 2006
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