[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]



 
                       THE USE OF FEDERAL HOUSING

                        AND ECONOMIC DEVELOPMENT

                        FUNDS IN ST. LOUIS: FROM

                       ``TEAM 4'' INTO THE FUTURE

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

                             FIELD HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                   HOUSING AND COMMUNITY OPPORTUNITY

                                 OF THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 8, 2008

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 110-96



                        U.S. GOVERNMENT PRINTING OFFICE

41-727                         WASHINGTON : 2008
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Washington, DC 20402-0001



                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                 BARNEY FRANK, Massachusetts, Chairman

PAUL E. KANJORSKI, Pennsylvania      SPENCER BACHUS, Alabama
MAXINE WATERS, California            DEBORAH PRYCE, Ohio
CAROLYN B. MALONEY, New York         MICHAEL N. CASTLE, Delaware
LUIS V. GUTIERREZ, Illinois          PETER T. KING, New York
NYDIA M. VELAZQUEZ, New York         EDWARD R. ROYCE, California
MELVIN L. WATT, North Carolina       FRANK D. LUCAS, Oklahoma
GARY L. ACKERMAN, New York           RON PAUL, Texas
BRAD SHERMAN, California             STEVEN C. LaTOURETTE, Ohio
GREGORY W. MEEKS, New York           DONALD A. MANZULLO, Illinois
DENNIS MOORE, Kansas                 WALTER B. JONES, Jr., North 
MICHAEL E. CAPUANO, Massachusetts        Carolina
RUBEN HINOJOSA, Texas                JUDY BIGGERT, Illinois
WM. LACY CLAY, Missouri              CHRISTOPHER SHAYS, Connecticut
CAROLYN McCARTHY, New York           GARY G. MILLER, California
JOE BACA, California                 SHELLEY MOORE CAPITO, West 
STEPHEN F. LYNCH, Massachusetts          Virginia
BRAD MILLER, North Carolina          TOM FEENEY, Florida
DAVID SCOTT, Georgia                 JEB HENSARLING, Texas
AL GREEN, Texas                      SCOTT GARRETT, New Jersey
EMANUEL CLEAVER, Missouri            GINNY BROWN-WAITE, Florida
MELISSA L. BEAN, Illinois            J. GRESHAM BARRETT, South Carolina
GWEN MOORE, Wisconsin,               JIM GERLACH, Pennsylvania
LINCOLN DAVIS, Tennessee             STEVAN PEARCE, New Mexico
PAUL W. HODES, New Hampshire         RANDY NEUGEBAUER, Texas
KEITH ELLISON, Minnesota             TOM PRICE, Georgia
RON KLEIN, Florida                   GEOFF DAVIS, Kentucky
TIM MAHONEY, Florida                 PATRICK T. McHENRY, North Carolina
CHARLES A. WILSON, Ohio              JOHN CAMPBELL, California
ED PERLMUTTER, Colorado              ADAM PUTNAM, Florida
CHRISTOPHER S. MURPHY, Connecticut   MICHELE BACHMANN, Minnesota
JOE DONNELLY, Indiana                PETER J. ROSKAM, Illinois
ROBERT WEXLER, Florida               THADDEUS G. McCOTTER, Michigan
JIM MARSHALL, Georgia                KEVIN McCARTHY, California
DAN BOREN, Oklahoma                  DEAN HELLER, Nevada

        Jeanne M. Roslanowick, Staff Director and Chief Counsel
           Subcommittee on Housing and Community Opportunity

                 MAXINE WATERS, California, Chairwoman

NYDIA M. VELAZQUEZ, New York         SHELLEY MOORE CAPITO, West 
STEPHEN F. LYNCH, Massachusetts          Virginia
EMANUEL CLEAVER, Missouri            STEVAN PEARCE, New Mexico
AL GREEN, Texas                      PETER T. KING, New York
WM. LACY CLAY, Missouri              JUDY BIGGERT, Illinois
CAROLYN B. MALONEY, New York         CHRISTOPHER SHAYS, Connecticut
GWEN MOORE, Wisconsin,               GARY G. MILLER, California
KEITH ELLISON, Minnesota             SCOTT GARRETT, New Jersey
CHARLES A. WILSON, Ohio              RANDY NEUGEBAUER, Texas
CHRISTOPHER S. MURPHY, Connecticut   GEOFF DAVIS, Kentucky
JOE DONNELLY, Indiana                JOHN CAMPBELL, California
                                     THADDEUS G. McCOTTER, Michigan
                                     KEVIN McCARTHY, California


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    March 8, 2008................................................     1
Appendix:
    March 8, 2008................................................    43

                               WITNESSES
                        Saturday, March 8, 2008

Geisman, Barbara A., Executive Director for Community 
  Development, City of St. Louis, Missouri.......................     7
Gimont, Stanley, Acting Director, Office of Block Grant 
  Assistance, U.S. Department of Housing and Urban Development...     6
Jones, Michael, Senior Pastor, Friendly Temple Missionary Baptist 
  Church.........................................................    24
Kennedy, Hon. Terry, Alderman, 18th Ward, St. Louis Board of 
  Aldermen.......................................................    10
Mallory, Hon. Mark, Mayor of Cincinnati, Ohio....................    30
Rogers, Jamala, Chairperson, Organization for Black Struggle.....    23
Talmage, John, President and Chief Executive Officer, Social 
  Compact, Inc...................................................    26
Zuniga, Tom, Managing Director, DSG Community Marketing Services 
  LLC............................................................    28

                                APPENDIX

Prepared statements:
    Geisman, Barbara A...........................................    44
    Gimont, Stanley..............................................    63
    Jones, Michael...............................................    65
    Kennedy, Hon. Terry..........................................    69
    Mallory, Hon. Mark...........................................    73
    Rogers, Jamala...............................................    77
    Talmage, John................................................    82
    Zuniga, Tom..................................................    92

              Additional Material Submitted for the Record

Waters, Hon. Maxine:
    Written statement of Matt Fellowes, The Brookings Institution    97


                       THE USE OF FEDERAL HOUSING


                        AND ECONOMIC DEVELOPMENT


                        FUNDS IN ST. LOUIS: FROM


                       ``TEAM 4'' INTO THE FUTURE

                              ----------                              


                        Saturday, March 8, 2008

             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 12 p.m., at 
the St. Louis City Hall, 1200 Market Street, St. Louis, 
Missouri, Hon. Maxine Waters [chairwoman of the subcommittee] 
presiding.
    Members present: Representatives Waters, Green, and Clay.
    Chairwoman Waters. This hearing of the Subcommittee on 
Housing and Community Opportunity will come to order. Good 
afternoon, ladies and gentlemen. I am Congresswoman Maxine 
Waters, the Chairwoman of the Subcommittee on Housing and 
Community Opportunity. I would like to start by thanking the 
City of St. Louis for allowing us the use of this beautiful and 
historic building, the St. Louis City Hall.
    Today's hearing is titled, ``The Use of Federal Housing and 
Economic Development Funds in St. Louis: From `Team 4' Into the 
Future.'' And I would especially like to thank my friend and 
colleague, Representative Clay, who is a dedicated member of 
the subcommittee, for requesting and arranging for this hearing 
here today. I am very, very honored to serve on the overall 
Financial Services Committee and on this subcommittee with Mr. 
Clay. He has been not only a valuable member, but I depend on 
him to help us plan and organize all of the activities of this 
committee, not simply for St. Louis or Missouri, but for the 
entire United States of America. Thank you, Congressman Clay.
    Mr. Clay. Thank you.
    Chairwoman Waters. And, of course, I'm always pleased to be 
in the city of my birth and have the opportunity to visit with 
friends and family and just reminisce about old times, of which 
we did a lot last evening. I would also like to thank Mr. 
Cleaver who had wanted to be here today, had signed up to be 
here today, but found he could not come because he had an 
emergency. But he certainly wanted to be here to share with us 
in the learning curve that we have been afforded.
    He is not here, but we have with us Mr. Al Green. 
Representative Green is from Houston, Texas, and he took time 
from his busy schedule to come serve on the subcommittee today 
because he is interested not only in what is happening in the 
planning process and with housing and economic development here 
in St. Louis, but in his own city, and he, too, is one of the 
treasured members of the subcommittee.
    I worked very closely with him and Mr. Clay as we planned 
the activities of this subcommittee, and I have to tell you--
and I don't want to brag--that we're one of the hardest working 
committees in the Congress of the United States of America. We 
have passed out more legislation than any other committee, and 
we have many more bills in the hopper that we intend to get to 
the Floor of the House. Our bills always make it to the Senate 
side. They are a little slow over on that side of Congress, but 
we are putting the bills before them because we recognize so 
much work had not been done prior to us taking over the 
leadership of these committees.
    So I know that some of the circumstances and challenges 
that you have here in the City of St. Louis are the same ones 
that I have in the City of Los Angeles, and Mr. Green has in 
the City of Houston. We think that by being here today we can 
not only hear more and learn more about these opportunities and 
these challenges, but we can apply what we are learning to 
those problems and opportunities that we have in our own 
cities.
    I am from a city where the median price of a home is 
$529,000. The housing costs in Houston, where Mr. Green comes 
from, seem downright reasonable at nearly $400,000 median. And, 
of course, here in St. Louis, it is less than that to purchase 
a median priced home. On the other hand, reasonable does not 
necessarily mean affordable; 40 percent of owners with 
mortgages, 21 percent of owners without mortgages, and 51 
percent of renters in St. Louis City spend 30 percent or more 
of household income on housing, making them housing cost-
burdened, as defined by the Department of Housing and Urban 
Development.
    Almost a quarter of St. Louis City renters are severely 
housing cost burdened, meaning they pay more than 50 percent of 
their income in housing costs. As in every community in the 
country, work no longer guarantees being able to afford housing 
in St. Louis. The National Low Income Housing Coalition 
estimates that in order to afford a reasonable two-bedroom 
apartment here, a renter would have to earn at least $12.88 an 
hour, which is 2\1/2\ times the minimum wage. The affordability 
crisis is most pronounced among St. Louis' poor and disabled 
neighborhoods. Well over half of St. Louis City's poor 
households are severely cost burdened, including over 1,200 
households in the North St. Louis area.
    We're going to be talking a lot about that today. Disabled 
persons receiving supplemental security income, that is, SSI 
benefits, are particularly vulnerable to affordability 
concerns.
    The HUD fair market rent for a one-bedroom apartment in St. 
Louis, $711, was 118 percent of the monthly SSI benefit of 
$603.
    In addition, St. Louis has been hit hard by the foreclosure 
crisis, ranking 36th among American cities in foreclosure rates 
in 2007 with over 15,000 filings, a 58 percent increase over 
2006.
    And like most communities in the Nation, the Federal 
housing resources available in St. Louis don't come close to 
meeting the need. Thanks to 8 years of this Administration, and 
an assault on the HUD budget, only one out of four households 
eligible for Federal housing assistance actually receives it. 
Here this means that there are over 4,000 eligible families on 
the waiting list for public housing and over 5,000 eligible 
families await housing choice vouchers.
    Similarly, the City has had to make due with less in terms 
of CDBG and HOME dollars over the past few fiscal years, again 
due to this Administration's concerted efforts to cut these 
programs, efforts we in Congress manage largely, but not 
entirely, to defeat. As a consequence, the City's home 
allocation in Fiscal Year 2008 of $4.1 million is nearly 
$600,000 less than it received in Fiscal Year 2004, and the 
City's CDBG allocation of $19.6 million is nearly $5.5 million 
below its funding level 4 years ago.
    That is why it is especially critical for the City to spend 
these monies wisely, and it is equally important for us as 
Members of Congress to fight to maintain, and perhaps one day 
under new a situation we will actually increase, appropriations 
for these programs to really understand and influence how the 
City is targeting funds to help sustain and revitalize 
neighborhoods like those we toured this morning in North St. 
Louis.
    It is also essential that we acknowledge and learn from the 
often troubling history of prior initiatives to energize the 
urban core of America's great cities. I can tell you that even 
though I hail from here, I confess to not knowing a lot about 
the Team 4 plan before Mr. Clay approached me about holding 
this hearing. Indeed, I think the title of this hearing may 
have set a record of inquiries to my subcommittee staff from 
other offices, some wondering if they had missed some hearings 
in the past on Teams 1 through 3.
    But in learning about it from Mr. Clay, and through the 
materials his able staff provided, it became clear to me that 
this was another instance of the song titled, ``Been a little 
bit different,'' but the tune remained the same. When it comes 
to locating the bad stuff like pollution-generating factories 
or clearing out housing and breaking apart communities to make 
room for a highway, poor and predominantly minority 
neighborhoods have always seemed to get more than our share, 
but when it comes to resources like good transportation, 
affordable housing, and access to credit and key public 
services, somehow it has been historically difficult to get 
what is needed and what is deserved. Indeed, too often we are 
intentionally ignored and locked out.
    I want to know more about Team 4 and I want to know whether 
or not there has been an informal implementation of Team 4, 
because we hear that has not been a formal implementation, but 
I am very interested to know whether or not the kind of 
thinking that went into Team 4, in fact, is seen in what we saw 
on the tour today in North St. Louis.
    I look forward today to hearing about better ways to go 
about our oversight. That has certainly been a priority for me 
in my own district, but it brings a new set of challenges. 
Right now, for example, I face daily the question of how to 
bring in large scale businesses that want to explore the 
underserved markets and poor sections of South Los Angeles 
while ensuring that those businesses bring us good jobs as well 
as low prices and do not crowd out our local small 
businessowners.
    I know we have two panels of real experts on such 
questions, and I look forward to hearing from both panels. And 
with that, I will recognize now St. Louis' own, my colleague 
and good friend, Congressman Clay, for his opening statement.
    Mr. Clay. Thank you so much, Chairwoman Waters, and let me 
thank you for bringing the Subcommittee on Housing and 
Community Opportunity to St. Louis today to consider this 
important issue. Thank you for coming to my hometown, and 
welcome back to your hometown.
    I want to also thank my colleague from Texas, Al Green, for 
his attendance at today's hearing. And he is a star. If you 
ever--for you C-SPAN junkies, you will find him at every 
hearing before the Financial Services Committee, and we 
appreciate his diligence. We appreciate his commitment to 
helping turn this country around. So thank you, Mr. Green, for 
being here.
    Mr. Green. Thank you.
    Mr. Clay. Good morning and greetings to all of the 
witnesses and the members of the St. Louis community who are 
here today. I want to acknowledge the staff from the 
Subcommittee on Housing and Community Opportunity, as well as 
staffers from my office here in the District, as well as those 
who came here from Washington D.C. Thank you all for preparing 
for this hearing and for all of the hard work you have put in 
today.
    We completed a bus tour this morning around parts of the 
First Congressional District, and that long suffering--this 
part of the District has long suffered from many development-
related errors. Large sites like the abandoned Pruitt-Igoe 
housing projects and the old Carter Carburetor site on North 
Grand have not received the proper attention from either the 
government or the private sector.
    And, you know, growing up in this community, I remember 
this site. I remember Dr. King Drive being such a robust retail 
and commerce section. So that's--you know, you can never go 
back to the past, but you certainly can reflect on that and 
remember what the potential is for this community. 
Neighborhoods have experienced major economic development and 
housing decay steadily over the past 30 years and in some 
instances even longer than that.
    In the hearing this afternoon, we cannot place blame on a 
single person or government agency or even groups or 
individuals in government and government agencies. I mean, we 
are not here to play ``gotcha'' or the blame game today. What 
we can do today is listen to how we are supposed to attack 
these problems. We can listen to how citizens feel underserved 
by past policies, but most importantly, I hope we listen to new 
ideas and solutions and really try and figure out not so much 
what has gone wrong but figure out our respective roles in 
being part of real conclusions that benefit our constituents 
and fellow citizens' needs. And I hope that everyone is looking 
forward to today's hearing and this discussion with that 
perspective.
    Madam Chairwoman, I thank you very much again for 
conducting this hearing and I yield back.
    Chairwoman Waters. Thank you very much. Now we will hear 
from Representative Al Green for his opening statement.
    Mr. Green. Thank you, Madam Chairwoman. And I thank 
Representative Clay whom I will say more about in just a 
moment, but I especially thank the chairwoman. It was stated 
that she is one of the hardest working persons in Congress, and 
I am proud to tell you that it is said that the Congressional 
Black Caucus is the conscience of the Congress. And if this is 
true, the chairwoman is the conscience of the conscience. She 
really deserves an expression of appreciation for what she does 
for people all over the country.
    I am so honored to be here with my very good friend and 
colleague, Representative Clay, which is an appropriate name 
for him because he is somewhat of a sculptor of ideas. He is 
very creative. He doesn't think out of the box because he has 
never been in the box. See, he comes to us open-minded and 
always available to help a colleague with a new idea. I think 
that this area is indeed blessed to have him as a 
representative and I think he deserves a special thanks.
    I'm honored to be in this historic building on what I 
perceive to be an historic occasion. I think it's historic 
because this may be the first time that Congress has looked 
into Team 4. It seems to me that this is long overdue, and if 
not for Congressman Clay and a committee chairwoman who saw the 
need, we might not be here today. So I'm honored to be in this 
historic building on this historic occasion, and I trust that 
our results will be historic as well, because while plans are 
not always codified and put into motion, we have to find out 
whether there's an informal process of putting into motion 
policies that can work to the detriment of communities.
    We want to make sure tax dollars are fairly allocated and 
that taxpayers get a fair amount of their tax dollars returned 
to their community. It is my belief that we sleep in houses and 
we live in neighborhoods. I went through your neighborhoods on 
the north side today, and I'm concerned about where you live. 
And I'm honored to be here with my colleagues to hear from this 
august panel and another so that we can do what we can in the 
United States Congress to make a difference. I yield back the 
balance of my time.
    Chairwoman Waters. Thank you very much. Now we will hear 
from our panel. We have a panel of witnesses, the first of 
which is Mr. Stanley Gimont, Acting Director, Office of Block 
Grant Assistance, U.S. Department of Housing and Urban 
Development. And I would ask Congressman Clay to introduce the 
other witnesses on this panel.
    Mr. Clay. Thank you, Madam Chairwoman. Also on the first 
panel, we are joined by a person whom I have known for over 20 
years. She has been a fixture in city government, and she is 
now the executive director for community development for the 
City of St. Louis, Ms. Barbara Geisman. Thank you for being 
here today.
    Ms. Geisman. Thank you.
    Mr. Clay. Also on this list is someone else whom I have 
known for 25 years, whose father has been honored with the 
naming of this room by--of his father, and he is the Alderman 
of the 18th Ward, Alderman Terry Kennedy. Thank you also for 
being here.
    Mr. Kennedy. Thank you.
    Mr. Clay. Thank you very much. I would like to thank all of 
you for appearing before the subcommittee today. Without 
objection, your written statements will be made a part of the 
record, and you will now be recognized for a 5-minute summary 
of your testimony, starting with Mr. Gimont.

 STATEMENT OF STANLEY GIMONT, ACTING DIRECTOR, OFFICE OF BLOCK 
    GRANT ASSISTANCE, U.S. DEPARTMENT OF HOUSING AND URBAN 
                          DEVELOPMENT

    Mr. Gimont. Good morning. My name is Stan Gimont, and I am 
pleased to be here in St. Louis on behalf of Secretary Alphonso 
Jackson. Thank you, Chairwoman Waters, for scheduling this 
field hearing to discuss the Community Development Block Grant 
program and the HOME Investment Partnership Program.
    Within the Office of Community Planning and Development at 
HUD, the Office of Block Grant Assistance is responsible for 
administration of the CDBG Program, while the Office of 
Affordable Housing Programs manages the HOME Program.
    The CDBG Program has been the Federal Government's primary 
vehicle for assisting State and local governments in 
undertaking the wide range of community development activities 
aimed at improving the lives of low- and moderate-income 
families. Since its inception in 1974, more than $123 billion 
has been appropriated for the CDBG Program. These funds provide 
a ready source of funding for housing rehabilitation, public 
services, infrastructure, and economic development activities.
    The President's Fiscal Year 2009 budget proposes a State 
funding level of $3 billion for CDBG with the recognition that 
the Program's impact has become diffused over time. An 
additional $1.9 billion is proposed for the HOME Program in FY 
2009. Concurrently, the Administration is again proposing CDBG 
reform legislation that would improve CDBG's ability to target 
funding to community development needs and demonstrate results.
    These revisions address the CDBG formula, implementation of 
the CDBG challenge grant, consolidation of duplicative 
programs. and improved performance measurement requirements 
that will enable HUD and its grantees to demonstrate the 
benefits of the CDBG program.
    One of the distinguishing features of both the CDBG and 
HOME Programs is the importance of local decisionmaking. The 
CDBG authorizing statute requires citizen participation in the 
development of plans for the use of CDBG funds and enables 
local officials to make the final funding decisions. HUD's 
focus is on the question of whether the activities funded by 
the local government meet applicable requirements with the 
particular focus on whether they are eligible for CDBG funding 
and meet a CDBG national objective. HUD's monitoring processes 
are intended to ensure that the requirements are met by 
grantees in the course of administering their CDBG and HOME 
Programs.
    HUD collects extensive data on the use of CDBG, HOME and 
other formula program funds through its Integrated Disbursement 
and Information System (IDIS). HUD provides detailed 
disbursement information from each CDBG and HOME grantee on its 
Web site and aggregates the data to provide a nationwide 
snapshot on the uses of the CDBG and HOME funds.
    Looking over the past 7 years, we see little change in the 
percentage of CDBG funds disbursed nationwide on a year-to-year 
basis for activities such as public improvements, housing, 
public services, and economic development. Public improvements 
represent the largest use of CDBG funds nationally, accounting 
for approximately 32 percent of annual disbursements in each of 
the past 7 years. The dollar amount associated with these 
disbursements is in excess of $1.5 billion annually, and 
through IDIS, HUD tracks disbursements for 24 different 
categories of public facilities.
    With regard to housing, the single largest use of CDBG 
funds nationally is for rehabilitation of single residential 
units. In FY 2007, more than $582 million or 12.75 percent of 
all CDBG funds were disbursed for single family rehab purposes. 
This resulted in assistance to more than 117,000 units 
nationwide. Since the inception of the HOME Program in 1992, 53 
percent of the HOME funds have been spent on rental housing 
development, 27 percent to assist new home buyers, and 20 
percent for single family rehabilitation. In FY 2007, 28,000 
rental units were produced using HOME funds, 29,000 new home 
buyers were assisted, and over 11,000 single family homes were 
rehabbed to Code.
    Economic development is another focus of this hearing, and 
over the past several years, CDBG grantees have spent between 8 
and 9 percent of their funds annually for economic development 
activities, such as financial assistance to for-profit entities 
and commercial and industrial infrastructure development. It 
should be noted that most economic development activities 
funded with CDBG dollars are carried out through the State CDBG 
Program. Over the past several years, the CDBG disbursement 
pattern for St. Louis is approximately 20 percent on housing 
activities, 20 percent for repayment of Section 108 loans, 17 
percent for administrative and planning expenses, 15 percent 
for economic development activities, and 13 percent for public 
services.
    Chairwoman Waters. I'm sorry. What did you say the 
percentage was for administrative?
    Mr. Gimont. 17 percent. Annually, pursuant to the 
Appropriations legislation, there is a 20 percent cap.
    HUD is pleased with the initial results of the new 
performance measurement framework that establishes clear 
measurable goals and community progress indicators for our 
formula programs. The collaborative effort to develop the 
framework stretched over 2 years and involved grantees, public 
interest groups and the Office of Management and Budget. 
Grantees were requested to begin entering data for all 
activities open in IDIS as of October 1, 2006. Fiscal Year 2007 
represented the first full year of data from the framework, and 
HUD has been reviewing those data with an eye towards improving 
our reporting guidance and ultimately enhancing the data that 
we receive from our grantees.
    I thank you for this opportunity to speak with you about 
the CDBG and HOME Programs and I look forward to answering any 
questions that you might have.
    [The prepared statement of Mr. Gimont can be found on page 
63 of the appendix.]
    Chairwoman Waters. Thank you very much. Ms. Geisman.

    STATEMENT OF BARBARA A. GEISMAN, EXECUTIVE DIRECTOR FOR 
       COMMUNITY DEVELOPMENT, CITY OF ST. LOUIS, MISSOURI

    Ms. Geisman. Thank you. I'm going to turn my computer on, 
and would it be a terrible thing if I talked from over there?
    Chairwoman Waters. No. Go ahead.
    Ms. Geisman. Thank you. Congresswoman and Congressmen, 
thank you very, very much for this opportunity to be present 
today. As Congressman Clay said, I am Mayor Slay's director for 
community development, and I am in charge of monitoring the 
agencies that work with the Community Development Projects.
    First, I want to say that I am extremely pleased that you 
have given me the opportunity to talk today, and also I hope to 
learn something from all you other panelists, and I hope that 
if I ever get my computer working, you will learn from me.
    The first thing I want to say is that the Team 4 report is 
3 decades old and that I was in college when it was written. I 
have never read it and I don't know anybody else who has ever 
read it, and it really isn't relevant to anything that we have 
been doing for the past 7 years.
    First of all, Mayor Slay has been in office since 2001, and 
what I'd like to do is just take a little bit to tell you about 
where we were in 2001 and where we are today. St. Louis is a 
city not within a county. It is landlocked by its 1876 
boundaries of 62 square miles, and we have no way to annex 
other geographic areas, as some other cities do.
    We were continuing to lose jobs and businesses, continuing 
to lose people, and we have lost more than 60 percent of our 
population since 1950. In 1950, we had 850,000 people, and over 
the last 5 decades, that has shrunk to approximately 350,000 
people, or 60 percent of the population. And, as you might 
imagine, the fleeing population left behind wholesale 
abandonment of residences and business property, particularly 
in North St. Louis, and when property came up for sale, there 
was no one who wanted to buy it. There was no internal or 
external confidence in the City's ability to make progress and 
very little help.
    In 2001, we established a series of goals. Those involved 
making the City a place where people affirmatively choose to 
live, choose to work, value physical diversity and, most 
importantly, value cultural diversity. We are working to 
rebuild the market for real estate throughout the City so that 
when a property comes up for sale, there is someone there to 
buy it and it does not get abandoned. We are working to retain 
and attract businesses, to rebuild our tax base, and to improve 
housing quality for our low- and moderate-income residents and 
our special needs residents all across the City.
    Some of the strategies that we employed--and I could give 
more detail if there was more time--were to provide clear 
direction. One of the first things we did when Mayor Slay took 
office was to do the City's first land use plan since 1947. We 
did this in partnership with each of our 28 Aldermen and 
identified throughout the City areas where we wanted to 
encourage new development, areas where we wanted to preserve 
the physical assets that were there, and areas where we did not 
quite know yet what we wanted to do but there were 
opportunities for new stuff.
    We wanted to capitalize on the City's unique historic 
properties, and to that end, we have been making more historic 
districts all across the City. We wanted to identify and build 
critical mass from neighborhood and City anchors, preserve and 
grow the City's revenue base, provide a wide variety of housing 
opportunities--affordable, luxury, rental, homeownership, 
historic, new construction, and single and multi-family.
    We also--and this is a very important part of our 
strategy--as Chairwoman Waters mentioned, the block grant money 
has been strengthening, so we needed to expand the pool of 
incentives that we could use to augment scarce block grant and 
HOME funds. Federal and State historic tax credits, State 
Brownfields tax credits, tax increment financing, special 
Federal grants, low-income housing tax credits, and the City's 
own Affordable Housing Trust Fund are the tools that we have 
been using to make progress.
    We also want to make more neighborhoods eligible for these 
incentives, like historic districts, so that we can save the 
scarce block grant and HOME funds for neighborhoods where they 
are necessary because the market does not exist anymore. We 
want to leverage private dollars, and a key component of our 
strategy is teamwork with the City's 28 aldermen whom we 
consider our very important partners in Mayor Slay's drive to 
make St. Louis a great city again.
    Now, after 7 years, the City's population is growing again 
for the first time in 50 years. We have produced, in 
partnership with our aldermen, 26,000 new and substantially 
rehabilitated housing units, and that is approximately 15 
percent of the housing stock, 176,000 units that existed at the 
time of the Census. We have stabilized our job base at 220,000. 
Our revenues are growing. Vacant buildings are declining, and 
development is occurring throughout the City.
    We have 12 wards that are led by African Americans. These 
wards include approximately 41 percent of the City's 
population, 47 percent of the City's land area, 55 percent of 
the City's low- and moderate-income population, and 54 percent 
of the City's population in poverty. It's also important to 
note that the City's African-American population is now 
scattered throughout the City and, according to a study by the 
University of Wisconsin, we are one of the most integrated 
cities in the country on a block-by-block basis. We have 
focused in this presentation on the wards that are led by 
African Americans because there was a short timeframe to do 
this and because we have been working closely with them to make 
progress.
    An average of 59.3 percent of the combined HOME and block 
grant funds used in specific geographic areas was used in wards 
led by African-American aldermen, then that percentage was 69.4 
percent in 2007. I have some more stats here, but I won't take 
the time to go through them.
    I will tell you, however, that an average of 64.3 percent 
of our dollars that are allocated for housing production went 
to wards led by African Americans, and that grew to 68.6 
percent in what we budgeted for 2008. In these wards, there has 
been $1.7 billion in physical investment, according to the 
City's building permit records, over the last 7 years, and 
8,200 new and substantially rehabilitated homes. That 
investment is throughout--there is investment throughout the 
north side in the City, and it's growing north and south from 
the central corridor because the central corridor is the 
anchor--the primary anchor from which we grow.
    I also want to point out that less than half of 1 percent 
of our block grant funds were spent downtown in the last 7 
years. It was approximately a half-a-million dollars, and these 
went for loans to start up new businesses. We have, you know, 
almost exclusively reserved our block grant funds for use in 
neighborhoods.
    And in the top ten wards for investment in the last 7 
years, 6 of those 10 wards are led by African Americans. We 
believe that those facts and figures show that we have made a 
lot of progress, both in North St. Louis and throughout the 
City, but as you saw on your tour this morning, we know we have 
a long way to go, particularly in the most distressed parts of 
North St. Louis. That is why we have been working closely in 
partnership with the City's African-American aldermen to 
identify major residential development initiatives, to develop 
a 5-year plan to fund those initiatives and to focus our block 
grant and HOME money and other limited cash incentives on 
projects of sufficient scale to engender long-term 
revitalization.
    These projects involve $141 million in residential 
development to produce 350 homes, using $54 million from a 
variety of incentive mechanisms, HOME and block grants 
certainly, but also the Affordable Housing Trust Fund, capital 
improvement sales tax money, City demolition and parks money 
and a variety of other incentives. And our goal is to produce a 
major project in each of the City's wards.
    We also have--and I have a list of them in my handout that 
the Congressmen have--a number of other initiatives.
    And the final point that I want to make is that all of this 
revitalization, particularly in the most distressed 
neighborhoods, is expensive, and if we had more block grant and 
HOME funds, we could certainly do a lot more. As Congresswoman 
Waters pointed out, our block grant funding since 2001 has 
dropped 30 percent and we lost $2.2 million--
    Chairwoman Waters. Your time is up. Thank you very much.
    Ms. Geisman. Thank you.
    [The prepared statement of Ms. Geisman can be found on page 
44 of the appendix.]
    Chairwoman Waters. We will move on. Alderman Kennedy.


STATEMENT OF THE HONORABLE TERRY KENNEDY, ALDERMAN, 18th WARD, 
                  ST. LOUIS BOARD OF ALDERMEN

    Mr. Kennedy. Thank you, Madam Chairwoman, and members of 
the subcommittee. You know, I'm also the chairman of the 
African-American caucus, and on behalf of that caucus, we 
welcome you here. This is an historic occasion, and we are 
happy to be here. We have a number of our members also out in 
the audience.
    It is difficult to talk about the expenditures of money 
without talking about the culture from which it emanates. The 
story is that St. Louis is in the Midwest. We must keep in mind 
that if it is, it is one of the few Midwestern cities that had 
slavery. That gives you some notion of the culture that is 
here, my point being that St. Louis has a history of the 
illness that has also affected other portions of this country 
that, in my opinion, has yet to be either fully diagnosed or 
remedied, this illness that says one person is less than 
another or that one person deserves less than another and the 
same illness that causes people to oppress one and not the 
other. Frederick Douglas said if you put a chain on one person, 
the other side of that chain is on the person who chained them. 
Ultimately this kind of oppression and discrimination hurts 
everyone, those who are the victims as well as the ones who are 
applying the victimization.
    In that context grew the Team 4 plan. We are taught that 
this plan developed around 1974. For me it is history. For some 
of the other aldermen who are here it is memory. They were in 
office at the time that the plan was created. You must 
recognize the context. At that particular time St. Louis was 
losing population. Its height of population around 1950 was 
around 900,000 people; by 1970, it was around 700,000. Its 
African-American community was growing. Its poor underclass was 
also growing. That population primarily resided in North St. 
Louis, the white population primarily in South St. Louis. The 
central corridor itself primarily held the major institutions, 
businesses, and factories throughout the City. This is a 
corridor that runs straight through the middle of the City. 
You'll find your major universities there; Washington 
University, St. Louis University; your major hospitals; 
downtown St. Louis; the Central West End, and it extends all 
the way out to Clayton to the county. They call it the east/
west corridor, the central corridor.
    The Team 4 plan grew out of that time period of the change 
in population, as well as the context of the Civil Rights 
movement, the growing black cultural movement, the women's 
movement, and the anti-war movement. Out of all of that, grew 
this Team 4 plan in 1974. It basically put forth that the City, 
in terms of its development, should categorize itself in three 
major portions: conservation; redevelopment; and in transition.
    The conservation area was to receive a significant amount 
of Federal dollars for development, as well as concentrated 
City services. The areas that they say were for redevelopment 
were areas that were essential not only to the City but 
possibly to the region, and that area also deserved, in the 
opinion of public Team 4 plan, to be--to receive a significant 
amount of dollars and concentrated City services. The area that 
was called conservation itself was a relatively stable area 
from good to, in some cases, very excellent housing. The area 
that was considered for redevelopment, primarily the central 
corridor, did require some work, but it still had good housing 
stock.
    And then the area in transition was primarily the area 
where African Americans found themselves, and that was in North 
St. Louis. The notion for that area is that the land would be 
able to--the area basically would be allowed to die.
    City services would be somewhat relaxed, and the response 
time would not be as great as other parts of the City. And then 
ultimately the notion would be that people would move and the 
land would be banked for future endeavors or future 
development.
    Though the City--now, you can imagine that in 1974 with the 
activity and all the kinds of movements that were going on at 
that time that when people heard this, it created a fire storm, 
certainly it did. Elected officials, people in the community 
all raised up against it. The City at that time did not 
officially adopt this plan; however, if you put it in the 
context of the culture of the mentality of the City, then of 
course you can recognize that it became a natural step for many 
to continue in that direction.
    Recognizing that is not an indictment on any one 
individual, I'm trying to put it in the context so that we 
recognize that even the ones who may be implementing this are 
also suffering. They suffer in that this kind of 
discrimination, in my opinion, limits everybody. To think about 
discriminating against another is a limiting act.
    You carry that and you limit yourself. We all suffer from 
it. And I believe that St. Louis is suffering from that.
    Ultimately, it has seen what we see today, large tracts of 
land that are in North St. Louis.
    The central corridor down through the years has received 
significant amount of monies for development. The north side 
has not seen that. And South St. Louis for the greater part has 
seen the stabilizing kinds of actions.
    Now, even if you could statistically prove that was not the 
case, the negotiation of Team 4 itself is still this specter in 
the minds of people, and that itself can cause the kind of 
distrust that you can presently feel in the City of St. Louis. 
I have to put it also in this context, because St. Louis, 
though it was a city in a State, Missouri State, that had 
slavery, it did not, in my opinion, benefit from the 
reconstruction that other parts of the United States in the 
South received when the North occupied and reconstructed the 
economic and political systems. So the South did have its 
problems. I mean, even the St. Louis Police Department has been 
controlled by the State since 1861 when the war broke out. 
Again I'm just trying to put it in the context of understanding 
how these dollars have been spent and why they have gone in 
those directions, and therefore when you traveled in those 
areas, you saw the result of that.
    That is not an indictment of this particular 
Administration; it is the culture, in my opinion, that also it 
emanates out of that we also must address. That is more 
difficult, but certainly legislation, very solid legislation, 
can begin to address it.
    There are certainly more monies that are needed. We're 
beginning a dialogue in a way that we have not had a dialogue 
before, even with the present Administration, that we're 
feeling is moving to some benefit, but if we're going to 
ultimately end this specter, then the whole thing, in your 
opinion, needs to be reorganized and significant amounts of 
dollars, not just portions of the block grant but major 
portions, if not the entire piece, comes into the areas of the 
greatest in need. These are the areas that generate the 
dollars. These are where the dollars should be directed. Thank 
you.
    [The prepared statement of Mr. Kennedy can be found on page 
69 of the appendix.]
    Chairwoman Waters. Thank you very much. I would like to now 
begin our question and answer period. I had organized a few 
questions based on the voluminous material that I had reviewed, 
but since hearing your testimony, I think I'm going to reduce 
these rather academic questions to some very pointed ones, 
recognizing that our colleague here, Mr. Clay, has set the tone 
by saying we're not out to blame anybody, that we're here to 
see what we can do about finding out how resources are 
allocated and how we can better plan, if that's a need.
    Let me ask Ms. Geisman, why has the Pruitt-Igoe site been 
left undeveloped and basically in the middle of the City in 
ruins and, as I understand it, become a dumping site and even 
have animals that are there? Why hasn't something been done 
with that?
    Ms. Geisman. The Pruitt-Igoe site--I believe Pruitt-Igoe 
was demolished in the late 1960's, early 1970's, and through 
the years--and, again, you know, this has gone on for a really 
long time--it has become a repository for people in the middle 
of the night dumping--
    Chairwoman Waters. We know all of that. What is the plan?
    Ms. Geisman. The environmental clean-up cost is in the 
neighborhood of $15- to $30 million. So the St. Louis 
Development Corporation, Otis Williams and Rodney Crim, whom I 
believe some of you met, have been working over the last 5 or 6 
years on getting a handle on what the environmental conditions 
on that site are, because it's 33 acres, there is a whole bunch 
of different stuff scattered all over it, and once that 
characterization is complete, we could begin to figure out what 
we can do to reuse it.
    Chairwoman Waters. So you don't have any real concrete 
plans?
    Ms. Geisman. No.
    Chairwoman Waters. At this time?
    Ms. Geisman. No.
    Chairwoman Waters. No identification of resources or 
dollars, not even an assessment of the property to talk about 
what the clean-up really, really should be? It's just sitting 
there, as it has been for the past 30 years or so.
    Ms. Geisman. Yes. And I'm sure you all know, there are 
different clean-up standards for different uses. That's why I 
gave the range of $15- to $30 million. I think we believe that 
the best use of the site would be a commercial use that would 
produce jobs and not require the--
    Chairwoman Waters. What about the Carter Carburetor site?
    Ms. Geisman. Carter Carburetor is another problem, and let 
me take a second to explain that. Carter Carburetor was a 
building that was sold to a private, quote, ``re-developer'' 
probably about 15 years ago. That private re-developer took a 
backhoe and broke up all the electrical transformers, which 
were PCB transformers at the time. He dragged that stuff all 
over not just the building but over the acreage adjacent to it, 
and Otis and Rodney have been working again diligently for 5 
years with the EPA and with the previous owner of that 
property, ACF, Carl Icahn's company, to clean up the site.
    Chairwoman Waters. Did anybody file a lawsuit?
    Ms. Geisman. I think the--it's a Superfund site, so it's in 
the EPA's hands, and we are just attempting to cooperate with 
the EPA. The problem is--and I think finally he might be ready 
to do so--the guy who owns it won't let the EPA and the, you 
know, ACF people who do have money on the site to clean it up. 
So--
    Chairwoman Waters. Am I left to believe that the City of 
St. Louis does not have the ability, the authority, the 
wherewithal to confront that kind of resistance?
    Ms. Geisman. One thing that has changed recently is that 
the gentleman was way behind in his property taxes, and we had 
been encouraging the former collector of revenue to file a tax 
suit on him for a number of years. The new collector of 
revenue, when he got elected, was ready to jump on that, but 
then the guy magically came up with the tax payment. So--
    Chairwoman Waters. So someone who has been sitting on such 
a property in the middle of the City has been able to outfox, 
outsmart, and elude all of the smart people in the City?
    Ms. Geisman. Unfortunately, that is correct.
    Chairwoman Waters. Mr. Gimont, I know that you attempted to 
describe HUD's responsibility and you attempted to make it 
clear that the decisions are made locally and that you have 
only limited authority to put the money out there, etc., but I 
want to make sure that we understand what you're saying, 
because this oversight committee is taking a look at CDBG 
management and the relationship to the Feds, to the cities, to 
see what we may be able to do in the future. Would you quickly 
tell me what you think is your responsibility for the 
management of CDBG funds in the City?
    Mr. Gimont. First off, HUD's primary responsibility on the 
front end is to ensure the equitable distribution of money to 
the local governments pursuant to the statutory formula, so the 
distributions to the local government are driven by that 
formula which is written into the law. Once we notify the 
grantees as to what their allocations are, they go through 
their annual planning processes to identify on a 3- to 5-year 
period the broad uses that they would like to achieve with 
those funds and then they file an annual update to that, an 
action plan, which gives a little bit more specificity with 
regard to the activities--
    Chairwoman Waters. Are you familiar with St. Louis' plan?
    Mr. Gimont. Personally I am not, but I do have with me Ms. 
Deanne Ducote, who is our CPD director here in our St. Louis 
office, and I would like to direct any question to her, if I 
might, with regard to specifics on the St. Louis plan.
    Chairwoman Waters. All right. I'm going to hold off on 
that, because I want my colleagues to have an opportunity to 
get their questions in, but I'm going to go to Mr. Kennedy.
    I thank you for the historical background and for putting 
it in a context that may help us to understand that it just may 
be in some instances benign neglect. Knowing what you know and 
us having seen what we have seen and understanding what some of 
the problems are as they have been identified; diminishing 
population, of course never enough resources, etc., do you 
think that the resources of CDBG and HOME, Section 108 and 
other kinds of Federal programs have been spent adequately and 
equitably?
    Mr. Kennedy. No. In the City of St. Louis, no.
    Chairwoman Waters. In the City of St. Louis?
    Mr. Kennedy. No. No. It primarily went--as I said, again, 
though the Team 4 plan was not adopted, the money still 
followed that kind of pattern.
    Chairwoman Waters. Does that have anything to do with the 
so-called initiatives of my past colleague, Mr. Gephardt?
    Mr. Kennedy. Yes.
    Chairwoman Waters. And his colleague at the time, as they 
talked about, development of the south side.
    Mr. Kennedy. Yes.
    Chairwoman Waters. Would we be able to track that, the 
resources of these programs being directed--
    Mr. Kennedy. Yes.
    Chairwoman Waters. --to the south side over a period of 
time over--
    Mr. Kennedy. Yes, you should be able to. Now, that is not 
to say that according to the guidelines that they did not all 
qualify, my point being that those were not the areas of the 
greatest need. And that can be a significant difference. They 
might have qualified, but were they areas that needed the 
greatest input of dollars? No.
    Chairwoman Waters. Then in your estimation, is the input of 
the aldermen such that between the aldermen and the public do 
you have the opportunity to take a look at and be a part of the 
plan for the expenditure, for example, of CDBG and to make sure 
that the plan that emerges is paying attention to all parts of 
the City? How does that work here?
    Mr. Kennedy. Well, here primarily we generally--the process 
is that we propose projects. And, of course, to have a project, 
you need to have a developer. And that's part of the problem in 
our areas, having those with the capacity to be able to do the 
projects. And when you've had a--a community of years of 
disenfranchisement, you have to build that capacity. So that's 
one problem.
    So we basically go in and we propose projects and we 
negotiate whether or not we can get those funded. That has been 
since I've been in office since 1989.
    Chairwoman Waters. Whom do you negotiate with?
    Mr. Kennedy. We negotiate with the Mayor's office and their 
representatives.
    Chairwoman Waters. So does the process go through the Board 
of Aldermen and subcommittees hear it and the community 
proposes projects that could end up before some committee or 
subcommittee? Does the Mayor have the ultimate say on these? I 
mean, how does it work?
    Mr. Kennedy. Well, you have--in anything here, you have to 
have 15 votes to get it passed. It does have to come through 
the Board of Alderman. And so then it's a matter of garnering 
those votes. Now, we are, in terms of the African-American 
community, out of 28 alderpeople and a president, 29 
individuals, we are 12, so we do not have the majority. And 
that has been the case down through the years. There have been 
even less aldermen in earlier years.
    Chairwoman Waters. The votes go on racial lines.
    Mr. Kennedy. Oftentimes, yes. Because, again, if you keep 
it in the context of the history and the culture, then you can 
understand that usually being the case. We go in, we propose 
projects if we have them. That means we have to have a 
developer with the capacity to do it. If you're able to do that 
and garner that, then you go in and negotiate on those 
particular projects in relationship to the other projects and 
then we try to get that passed. It is a relatively very 
politicized process. Depending upon who is in office at a given 
time, they may or may not want to hear what you have to say, 
whether you have someone there or not. And unfortunately the 
way the guidelines are written it does allow for that, you 
know, at this kind of level. So there may be some other things 
to be proposed at that point.
    Which brings me to the point that, again, these other 
projects may have qualified, but they are not the areas with 
the greatest need.
    Chairwoman Waters. Thank you very much. Mr. Clay.
    Mr. Clay. Thank you so much, Madam Chairwoman. Let me start 
with Mr. Gimont and Ms. Geisman, and Mr. Kennedy can respond 
also. We understand that St. Louis is presently under 
investigation from HUD because a recent audit showed that the 
City has misspent CDBG funds. The allegation is that the City 
lent block grant funds to businesses that should in turn hire 
low- and moderate-income residents. These businesses did not 
hire the low- and moderate-income residents. This is an example 
of the types of local decisionmaking that is so disturbing to 
so many residents. Can you explain how this can happen and what 
are you going to do to turn that around? Let's start with you, 
Mr. Gimont.
    Mr. Gimont. Certainly. The audit that you speak of was done 
by the Department's Office of Inspector General, I believe, and 
they went out and did their audit and turned that back over to 
the Office of Community Planning and Development here in our 
St. Louis office for further resolution. CPD goes out and 
monitors grantees periodically with regard to the activities 
that they have carried out.
    Again, on the front end we are looking to see that what 
they are proposing is permissible, then we go out on the back 
end and monitor for compliance. And the Inspector General steps 
in wherever they feel that they have a role to play or that 
there's an issue for them to investigate. I know that our CPD 
staff here in St. Louis have been reviewing these issues with 
the City in an effort to try and resolve the outstanding 
findings on the City's economic development program. We give 
the grantee the opportunity to present information which would 
explain the findings of the audit, and then we work with the 
Inspector General to resolve the issues.
    If we find that what the Inspector General has come up with 
is sustainable and that there is no support for the activity in 
the sense of the national objectives, that the jobs were not 
created, then we are in a position to take a range of sanctions 
against the City for that shortcoming.
    Mr. Clay. And in this case, how do you remedy this? I mean, 
do you do it in the next cycle of CDBG funding where they have 
to also offset what damage was done initially.
    Mr. Gimont. Again, we have a range of sanctions that we can 
go to, depending on the nature of the infraction. In some 
cases, we require the grantee to put in place better processes 
and procedures. In other cases, we would require the grantee to 
reimburse its line of credit for the cost of activities that 
did not meet the programatic requirements. We have not reached 
the point yet with that audit as to what we are going to do.
    Mr. Clay. Okay. Ms. Geisman, what's going to happen?
    Ms. Geisman. First of all, I believe that the audit--I'm 
not quite sure what the exact language was, but the issue was 
that the St. Louis Development Corporation did not have 
adequate records to document the job creation, or job retention 
as the case may be. Since the time of the audit, SLDC's staff 
has gone back and collected all of the records from all of the 
businesses that are still in business.
    Several of the businesses actually went out of business, 
and so there may be one or two where the records could not be 
collected.
    So I think that then the other thing we did immediately, 
even while the audit was going on, is put a new system in place 
and hire new staff to make sure that the records were 
maintained in the future, because I for one was thoroughly 
disgusted that, you know, maybe you can't make a business stay 
in business, but you can certainly keep the records that you're 
supposed to keep. So we now have a whole new system, whole new 
people monitoring it, and we collected all the records that we 
could from the previous businesses. And I think that we have 
responded through HUD's--
    Mr. Clay. Well, wait a minute, now. You understand that 
there has been some damage caused here because the jobs were 
not created?
    Ms. Geisman. Yes, they were.
    Mr. Clay. The lower- and moderate-income people did not 
receive that employment opportunity--
    Ms. Geisman. They were created in accordance with HUD's 
regulations.
    Mr. Clay. Wait a minute, now. That's not what happened 
here. You said the companies went out of business, so there 
weren't jobs created there. You said that your recordkeeping 
was not good, so you cannot document the creation of those 
jobs. Now, understand that there has been damage done here.
    People did not get those economic opportunities like the 
law required and like we assumed, we the Federal Government and 
HUD assumed, so going forward, the City should make the extra 
effort to actually create those economic opportunities, create 
those jobs based on every $50,000 of CDBG funding that you give 
in the form of a loan to a company. Would you all go forward 
and do that and make up for the jobs you didn't create in the 
previous cycle.
    Ms. Geisman. I think we did document that we created at 
least one job for every--
    Mr. Clay. Well, wait a minute, now. Hold on. That's not 
what happened. I know you have your local person here, but it 
didn't happen. It didn't happen like that, Ms. Geisman.
    Ms. Geisman. We documented it after the fact, though, which 
was a problem--
    Mr. Clay. But you didn't create the jobs. If the company 
closed, you didn't get the job anyway.
    You know? It didn't happen like that. You have to realize 
that you have to move forward and you have to be sincere about 
what these dollars are for, that they are there to create 
economic opportunities for the low- and moderate-income 
citizens that we all represent. And we have to move forward and 
you have to tie that funding to actually creating those jobs. 
If you're going to have this loan program, it has to be done 
this way.
    Ms. Geisman. And we understand that and are doing it.
    Mr. Clay. Let me go to Alderman Kennedy. According to Ms. 
Geisman, the issues raised by the team for the plan are not 
relevant. Can you give the subcommittee another perspective? 
Have development policies treated all sections of the City 
equally and does North St. Louis receive the same attention as 
other sections of the City?
    Mr. Kennedy. That's your question?
    Mr. Clay. That is the question.
    Mr. Kennedy. Again the answer is no, from our opinion. My 
comments also included some of the thoughts and ideas from 
other members of our caucus, so I was not just speaking from my 
thoughts. No, we do not feel that those dollars have been spent 
adequately. We feel that North St. Louis is the area of the 
greatest need. Now, that has been since the Team 4 plan and 
before, and it is--the Team 4 plan did not create the notion of 
moving blocks and blocks of people of color. I mean, the City--
that had been done before then with Mill Creek. That was before 
Team 4. So this notion existed before Team 4. Team 4 simply put 
it in more modern terms in 1974, a document that was created by 
a group of consultants that spelled out those specific three 
areas. No. In our opinion, the dollars have followed the intent 
of that plan, and therefore the bulk of that money went in the 
central corridor and south.
    Mr. Clay. I have another question, Madam Chairwoman, for 
Ms. Geisman. You say that the Carter Carburetor site would cost 
$15- to $30 million in clean-up cost. When you look at that 
site in the City, I cannot find a similar site in any other 
part of the City. I wouldn't find it in the Skinker-DeBaliviere 
neighborhood. I wouldn't find it on the Gravois Boulevard. I 
wouldn't find it in any other part of the City. And if it were 
in another part of the City, it would be a major undertaking by 
the City Government, and I think that the Carter Carburetor 
site should be a major undertaking by this government and by 
this community. Do you agree with that?
    Ms. Geisman. I do.
    Mr. Clay. Okay. And then we will now direct your resources 
to tackle that issue, like Ms. Waters said, that we may need to 
consider a lawsuit.
    Ms. Geisman. Well, let's see. On Carter Carburetor, I do 
not know what the cost to clean that up is. Pruitt-Igoe was the 
one--
    Mr. Clay. Well, you said $15- to $30 million.
    Ms. Geisman. Yes.
    Mr. Clay. Okay. Let me ask you one other thing about the 
LRA property. You talk about access to property and how easy it 
is for residents to buy or lease this property. When we rode 
through North St. Louis--you have been there, too, and you have 
seen these huge squabs of vacant lots and boarded-up buildings. 
You know that LRA owns quite a bit of that property.
    Ms. Geisman. Yes, they do.
    Mr. Clay. How easy is it for residents of the surrounding 
community to actually purchase those lots, to purchase that 
property, or even to lease it? I know you do long-term leases, 
too. How easy is it for my constituents to actually come down 
to your office and to say, I want to purchase this lot? What 
happens? What is the process?
    Ms. Geisman. It is very easy for any owner to purchase a 
side lot next to their home where they live that is not part of 
something that we consider a development site. Ideally what we 
want is for the abandoned areas of North St. Louis to be 
rebuilt with new homes. In those instances where it is part of 
a development site, then we will give the owner/occupant who 
lives next door a garden lease on a year-to-year basis so they 
have total control of the property until and unless there's a 
development that comes along.
    Mr. Clay. What is the timespan--
    Ms. Geisman. The timespan of that should be 45 days.
    Mr. Clay. 45 days, all right. Madam Chairwoman, I yield 
back.
    Chairwoman Waters. Thank you very much. Mr. Green.
    Mr. Green. Thank you, Madam Chairwoman. And I thank the 
witnesses for the testimony. Let me start with a commentary. We 
live in a world where it is not enough for things to be right; 
they must also look right.
    And it doesn't look right--even if it is right, it doesn't 
look right for a Team 4 plan to surface and for us to say that 
it has not been adopted but to see all of the evidence of its 
adoption. There's something wrong. I have some grave concerns 
that I cannot go into because I'm going to honor the spirit of 
this hearing, but we're talking about lives that have been 
impacted adversely. Team 4 may not have been adopted, but it 
appears that the spirit lives on. It may have died, but that 
spirit lives on.
    Now, let's talk about Carter Carburetor first. Is it true 
that there's a school near this site?
    Ms. Geisman. What there is, as far as I know, is the 
Herbert Hoover Boys Club.
    Mr. Green. Is it true that it is near the site?
    Ms. Geisman. That club is across the street from the site.
    Mr. Green. Is it true that it is within 100 yards of the 
site?
    Ms. Geisman. I believe it is.
    Mr. Green. Now, is it true that the City has a legal 
department?
    Ms. Geisman. It is true.
    Mr. Green. Is it true that the City's legal department 
files lawsuits?
    Ms. Geisman. That is true also.
    Mr. Green. Is it true or not true that the City's legal 
department has filed a lawsuit against Carter Carburetor, given 
its juxtaposition to children?
    Ms. Geisman. I do not believe that the City has filed a 
lawsuit against the owner of the property. Carter Carburetor 
has not owned that property for many, many years.
    Mr. Green. Is it also true that the City has not petitioned 
the Federal Government for clean-up funds?
    Ms. Geisman. That is not true. We have been working for at 
least 5 years that I know of.
    Mr. Green. You mentioned the Superfund.
    Ms. Geisman. I'm sorry.
    Mr. Green. You mentioned the Superfund.
    Ms. Geisman. Yes. The EPA meets with--
    Mr. Green. Let me mention another type of petition. What 
about something called an earmark? Have you requested an 
earmark to help you with this?
    Ms. Geisman. I do not believe that we have.
    Mr. Green. We have bridges going to nowhere with earmark 
backing. It just seems to me that the City would request that 
we spend some Federal dollars. And we want the request to come 
from you on this type of project.
    Let's talk about now the Pruitt-Igoe matter. I hope I'm 
pronouncing this correctly, Pruitt-Igoe?
    Ms. Geisman. Yes.
    Mr. Green. Have you asked the Federal Government to provide 
clean-up funds for that project?
    Ms. Geisman. I believe that we have received money from the 
Federal Government to do the environmental characterization, 
which is a process of testing each area of the site and 
analyzing what the contaminants are.
    Mr. Green. And without a long statement, what is the 
timeline on this process?
    Ms. Geisman. I would have to check. I don't think that it 
should be too long before that's completed, but I don't know.
    Mr. Green. Has the City developed a plan for the north 
side, a revitalization plan for the north side?
    Ms. Geisman. What we have done is develop a plan working 
with the aldermen that identifies where we want to keep and 
revitalize the existing housing stock and businesses, where we 
want to attract new construction of both residential and retail 
to support the residential, where we want to do large scale 
commercial development to serve the people that live on the 
City's north side and where we want to seek opportunities or 
seek, you know, creative ideas for what to do with particular 
locations that we think have a lot of potential but don't have 
any, I guess, directive vision for them yet.
    Mr. Green. Does that mean in some other language, perhaps, 
that you're kind of working on it?
    Ms. Geisman. No. 90 percent of the north side is in a 
definitive area where we are working diligently to make 
progress. Now, that does not mean that we're going to fix 
everything overnight. For example, the North Riverfront area, I 
think, provides jobs for a lot of north side residents. There 
are many businesses in that area. We are working closely with 
the aldermen and alderwomen to revitalize that business area. 
Similarly, we are working with Alderman Bosley in the third 
ward to revitalize and rehabilitate and use historic tax 
credits to redo--
    Mr. Green. Permit me to move to Mr. Kennedy before my time 
is up. I appreciate your response.
    Mr. Kennedy, from your perch, does there appear to be a 
revitalization plan for the north side?
    Mr. Kennedy. It is in progress. As I said earlier in my 
opening remarks, that is a new dialogue that we have begun with 
the Mayor's office, that we have worked on for the past several 
months. That does not, of course, answer all the decades of 
problems before then. So in answer to your question, no, there 
is no overall plan for North St. Louis.
    Mr. Green. No disrespect to anyone. Let me say this: I love 
all of you, not in a romantic sense, but in a sense that I have 
a deep abiding affection for you and I care about you as human 
beings, so having said that, I think I can make this comment:
    In Texas, what you have just said is what we call, ``fixin' 
to do.'' Sounds like you fixin' to do something for the last 
few months, which is not a long period of time to fix to do, 
and it is my hope that we can continue to work with Congressman 
Clay, who really has done this community a favor today. I'll 
give it back to you, Madam Chairwoman.
    Chairwoman Waters. I want to make sure that I have my notes 
correct prior to leaving. Ms. Geisman, you have been in City 
development for quite some time, not just the past, what, 8 
years?
    Ms. Geisman. I started out as an architect with the Public 
Works Department in 19--
    Chairwoman Waters. How many years ago?
    Ms. Geisman. --1978. Then I was an architect for the 
Community Development Agency for 5 years after that.
    Chairwoman Waters. So you know this City pretty well.
    Ms. Geisman. I hope so.
    Chairwoman Waters. And in knowing the City pretty well, you 
are quite familiar with not only the sites we have identified 
today as problem sites but all the others.
    Ms. Geisman. Yes.
    Chairwoman Waters. You know where all of them--
    Ms. Geisman. Well, I don't know where all of them are.
    Chairwoman Waters. You know and understand the vacant, 
boarded-up properties and what has happened over the years, you 
know these toxic sites and these abandoned sites, you know all 
of this as well as anybody, right?
    Ms. Geisman. Probably as well as anybody.
    Ms. Waters. Why is it this has only been a conversation for 
the past few months?
    Ms. Geisman. I don't think it has only been a conversation 
for the past 2 months. I think we have been having 
conversations with individual aldermen for the past 7 years. It 
is only recently that we have been meeting with the African-
American aldermen as a group. Every year before we do our block 
grant budget that goes to the Board of Aldermen, I have met 
personally with each of the City's 28 aldermen to discuss what 
is in that budget for their wards and to discuss initiatives 
that they might be pursuing.
    Chairwoman Waters. Is it safe to say that given the 
aggressiveness maybe of Mr. Gephardt and others and attention 
that they have paid to the south side that they have done a 
better job, they have gotten more resources, and they have been 
able to do the development much better on the south side?
    Ms. Geisman. I think that might be true for when the people 
were, you know, in office then and in charge of things then, 
that may have been true then, but for the past 7 years, it is 
certainly not true.
    Chairwoman Waters. Certainly not true, meaning that you 
have demonstrable achievements that you can point to on the 
north side.
    Ms. Geisman. Yes. Definitely.
    Chairwoman Waters. I'd like to thank you all for your 
testimony. Thank you for your patience. Thank you for 
attempting to answer our questions. And I'm going to dismiss 
this panel, but I'll leave you with this: There are some new 
people in charge now, and we have new committee members who 
come from communities that were denied and we have the 
experiences to bring to Congress in ways that they have not 
been brought before. And you'll find that there are children of 
slaves and grandchildren of slaves and great great-
grandchildren of slaves who now are going to make some 
decisions. And so we would like to share that information with 
you because we want you to be in a cooperative mode as we try 
and work out these problems. Okay? Thank you very much.
    We would like to ask our second panel to come forward. 
Let's see. The Chair notes that some Members may have 
additional questions for this panel which they may wish to 
submit in writing. Without objection, the hearing record will 
remain open for 30 days for Members to submit written questions 
to these witnesses and to place their responses in the record. 
Thank you very much, panel.
    I welcome the second panel. And Mr. Clay will be right back 
to introduce the second panel. Thank you very much.
    Okay. Mr. Clay will introduce our second panel.
    Mr. Clay. Thank you, Madam Chairwoman. On our second 
distinguished panel, starting off, we have Ms. Jamala Rogers, 
who is the chairperson for the Organization of Black Struggle. 
She is also a noted journalist. Thank you for being here, Ms. 
Rogers.
    Second we have, whom you have also met, Mr. Michael Jones, 
the senior pastor of Friendly Temple Missionary Baptist Church, 
and we have seen some of his development today. Thank you so 
much for giving us your Saturday, Pastor Jones. We appreciate 
it.
    Third we have Mr. John Talmage. John is the president and 
CEO of Social Compact, Inc.; he is going on this journey with 
us as far as how we find solutions to some of the issues that 
impact this community.
    Fourth we have Mr. Tom Zuniga, the managing director of DSG 
Community Marketing Services, L.L.C., and he went on our bus 
tour today with us and he was just--I think he was totally 
amazed today. We thank you. Welcome to St. Louis. Thank you for 
being here.
    Mr. Zuniga. Thank you, Congressman.
    Mr. Clay. We look forward to your testimony.
    And last, but not least, a young man whom I met a couple of 
years ago once he was elected as the Mayor of Cincinnati, Ohio, 
the Honorable Mark Mallory. Welcome to St. Louis, Mayor 
Mallory.
    Mr. Mallory. Thank you.
    Mr. Clay. He was also on the tour today. And we look 
forward to the entire panel's testimony.
    Thank you.
    Chairwoman Waters. Thank you very much. And without 
objection, your written statements will be made a part of the 
record. I'm going to call on each member of the panel for 5 
minutes, and normally I would ask the Mayor to speak first--I 
think that would be the correct protocol--except, Mr. Mayor, I 
would like for you to really wrap it up and tell us about some 
of your positive experiences after we hear all of this.
    Mr. Mallory. That sounds great.
    Chairwoman Waters. So if you don't mind, I would like to 
start with Ms. Rogers.
    Mr. Mallory. Absolutely.

STATEMENT OF JAMALA ROGERS, CHAIRPERSON, ORGANIZATION FOR BLACK 
                            STRUGGLE

    Ms. Rogers. Thank you. Good afternoon. I'd like to thank 
the subcommittee for hosting this very, very important hearing 
and particularly the office of Congressman Clay for seeing the 
importance of it as well. I'd like to also acknowledge that 
today is International Women's Day which I think is appropriate 
because as we look at the impact, the negative impact, of Team 
4 and its policies, it has disproportionately affected women 
and children in the Team 4 area.
    This has been an intergenerational struggle, in that when I 
hear somebody like a young Alderman Kennedy--I worked with his 
father around the Team 4. Kennedy was at Howard University in 
school, and now he's here dealing with the same issue. The same 
holds true for the young Congressman whose father was working 
on this initiative at the time, and when I looked at some of 
our organizational archives, it was Congressman Clay who sort 
of led the charge against Team 4 during that era. So I think 
that you have an obligation, Congressman Clay, to continue that 
legacy and to really try to bring some remedies to the 
situation that the north side has been hemorrhaging since the 
Team 4 plan.
    And although I agree that some of this was going on prior 
to the Team 4, Team 4 certainly attempted to codify some of the 
racist and economically unjust housing and economic plans that 
we still see today. I find it interesting that the Mayor's 
representative of, quote, ``development'' had not read the Team 
4 plan, and not only had not read it but had already deemed it 
irrelevant. I think that is the kind of arrogance and 
insensitivity that we have seen from this administration for 
the years that the Mayor has served, and I think you would be--
at least I'm offended by that kind of arrogance and 
insensibility. But it gives you a sense of what we have to deal 
with here in St. Louis.
    I want to add a little bit to what Alderman Kennedy talked 
about in terms of giving you some historical context, because, 
again, he was away at school; we were right here in the center 
of it. I will first start off and talk about the Kerner Report, 
which coincidentally celebrated its 40th anniversary last 
month. In the Kerner Report, many people thought that was also 
a way to acknowledge the kinds of conditions and life, quality 
of life, that African Americans had in this country in the 
urban cities across the country, and they included chronic 
poverty, police violence, high unemployment, poor schools, and 
the lack of access to health care, all of those things 
aggravated by racism, and true enough, that was also affirmed 
in the Kerner Report, but many of us also know that it was a 
clearing call for city fathers, particularly those cities where 
there was concern about what was going to happen to middle 
class--upper middle class white people, that they needed to 
understand what was about to happen.
    Because the Kerner report basically said that given the 
circumstances, and given the circumstances that there's not 
going to be very much intervention into these particular 
factors, that we can expect more rebellions coming out of the 
1960's and they would be even more deadly so that there needed 
to some way of disbursing concentrations of black people so 
that that would never happen again. So the backdrop really is 
the Kerner Report. Several months after that, Dr. Martin Luther 
King was assassinated, and we saw the kind of rebellion that 
hit the country--the cities across the country.
    But the stage was set for Team 4 based on that in 1973 when 
you had Mayor Alfonzo Cervantes who was responsible for the 
creation of the Land Utilization Authority which later became 
one of the greatest and largest landowners in the City of St. 
Louis of abandoned buildings. You also had that same year 
Alderman Richard Gephardt, at the time alderperson, and John 
Roach passing bills that were to demolish several thousand 
buildings on the north side but preserve that same number of 
buildings on the south side.
    Ironically, John Roach then went on to become head of the 
City's first community development ABT, and we know what 
happened to Congressman Gephardt. So things were pretty much 
buzzing around that time. And we also had that there was the 
Team 4 plan where a number of developers were asked to look at 
all that was going on and come up with a plan.
    You also had probably one of the biggest declines in the 
City's population from 1970 to 1980, and what we would have 
seen if we had followed the trajectory was that the numbers of 
African Americans should have been increasing, if we were to 
look into the trajectories, at that time. And so we started to 
see that that was not going to be the case, and we didn't see 
it in the 1980 Census, the 1990 Census, and we certainly didn't 
see it in the 2000 Census. And as we know, those kinds of 
housing patterns, that kind of population, has a lot to do with 
political power that's going to be consolidated in terms of 
African Americans.
    One thing I would like to correct in terms of what Alderman 
Kennedy said is that the initial language for Team 4 was 
consecration, redevelopment, but the other piece was depletion. 
It wasn't just in transition. And I think that word has some 
more negative connotation than ``in transition,'' because that 
means you're really going from one place to another, as opposed 
to you're going to be left to die.
    I have included in my written testimony some very specific 
proposals. One is that I think we need to have the Office of 
Community Development be a resource to the alderpeople in terms 
of actually planning and that there be transparency up and down 
through this so that the community knows how those funds are 
being spent and how it is going to affect their immediate 
community. There are a number of elder citizens who left this 
world thinking that somehow they didn't do due diligence as 
homeowners when they couldn't get home loans because of red 
lines and other kinds of obstacles. So I'd like to see those 
kinds of things addressed or given consideration as part of a 
continuing effort of this particular panel.
    [The prepared statement of Ms. Rogers can be found on page 
77 of the appendix.]
    Chairwoman Waters. Thank you very much. Mr. Jones?

  STATEMENT OF MICHAEL JONES, SENIOR PASTOR, FRIENDLY TEMPLE 
                   MISSIONARY BAPTIST CHURCH

    Mr. Jones. Thank you, Chairwoman Waters, Congressman Clay, 
and Congressman Green, for this opportunity to discuss our 
community development accomplishments for the Temple Missionary 
Baptist Church with you. FTMBC is a faith-based organization 
committed to leveraging resources and building relationships to 
revitalize this community. With the establishment of nonprofit 
corporations, development of several properties, coordination 
of congregational members, and the collaboration with various 
community partners, FTMBC has been able to make a significant 
impact on the community it serves.
    FTMBC is located in the heart of the inner city of St. 
Louis, Missouri. Our surrounding area is characterized as one 
of the most deficient areas in the City of St. Louis. We're 
located in an area which many of you are all too familiar with 
that represents America's disinvested community. Some sobering 
statistics include 38 percent unemployment, approximately 23 
percent adults and children living below the poverty line, 
substandard housing, and many tracts of vacant, abandoned, and 
boarded-up homes. And it has been reported by the Census that 
there are 8,000 incidents of crime in our area.
    But we took the gavel by the hand and determined that we 
were not going to leave our community. We had an investment 
there and we were made to stay. So we developed our own 
outreach community development corporation and developed six 
components: Children and youth development; education; health 
services; counseling; food and clothing; and affordable 
housing. And we also have drug and alcohol programs, homework 
assistance, abstinence programs, clothing, financial literacy, 
and counseling.
    Of all of these, we get very few Federal dollars, if any, 
but yet we were determined from a volunteer base, a community 
base with partners, to forge a coalition to work.
    So we have people volunteering their time from the areas of 
counseling, education, law, accounting, carpentry, general 
maintenance, child care development, and we have pooled our 
resources to make sure that this community will be a viable 
community in the future. We serve about 4,000 or more families 
within this community. We have 21 affordable housing units that 
we have developed on our own. They were dilapidated buildings. 
We took our own dollars and renovated these communities, or 
these houses--took a 40,000-square-foot building that was left 
abandoned and we used our resources, even when the bank did not 
want to give us a loan. They told us to demolish it. We took 
our resources, got our people in there together. We renovated 
it and slid the appraisal on the banker's desk, and they wanted 
to give us as much money as we wanted. We told them we didn't 
want their money. We renovated it, and at the time of 
completion it was worth $5 million, and now they're really 
ready to give us the bank. We have done that. We have built a 
community center and office space in this building as well.
    One of the fortunate things that we did get from the 
Federal Government is at least $10 million on the 202 program 
that affords us the ability to serve senior citizens within 
this community, and we appreciate HUD for that, but in this 
disinvested area we have invested at least almost $40 million 
worth of value within this community. We want to do more. We 
have a plan to build houses. We have a plan to build a 
commercial development center, bring businesses back.
    We have about 4,000 members who are ready to relocate, 
bring their resources in. We have approached the City for 
housing. It's on the Board now, if you will. They're planning, 
they're talking about it. You've heard some of that discussion 
here today. We want to build about 300 to 400 new homes in our 
community. We're telling them that we have the members with the 
wherewithal to relocate.
    We're starting our own school as well so that we can give 
some balance to the community. But what we need is we need 
acquisition dollars. We need that. We need monies to fill the 
gap, if you will, to make it affordable for these families to 
relocate. And I just hope that this kind of discussion here 
today will enable possibilities of us receiving those dollars, 
because who better can manage it than the people who are living 
in this community, who have been in this community for over 40-
plus years or more and have shown the ability to develop and to 
manage it and have a stake within this community? I appreciate 
the opportunity to share and answer any questions that may 
follow.
    [The prepared statement of Pastor Jones can be found on 
page 65 of the appendix.]
    Chairwoman Waters. Thank you very much. Mr. Talmage.

   STATEMENT OF JOHN TALMAGE, PRESIDENT AND CHIEF EXECUTIVE 
                 OFFICER, SOCIAL COMPACT, INC.

    Mr. Talmage. Congresswoman Waters and members of the 
subcommittee, thank you very much for this opportunity today. 
Let me start with a horrible cliche, and that is that 
information is power. It's a cliche we use all the time. We 
don't necessarily know what it means all the time, but we use 
it. But the corollary of that also is that the lack of 
information leads to a void and misinformation can lead to 
absolute destruction. And so community developments we have 
known to today really have grown from a trajectory of 50 years 
of planning that has captured the good and ill will of people, 
the prejudices and insights of people, but a lot of the 
programs as we know them today started 50 years ago and follow 
in this trajectory. So whether it's the war on poverty and 
urban renewal where it started to today's downtown development, 
there's a continuum there that has to be acknowledged. And I 
think that's part of the conversation we're having today.
    This is--from a benign point of view, this has led to 
misunderstanding of neighborhoods. From a less benign point of 
view, if you look at New York City in 1970, the mid 1970's, Los 
Angeles in the early 1970's, Detroit, Philadelphia, there were 
many plans to decommission parts of cities. Mayor Koch 
advocated a plan in 1978 to decommission the South Bronx, to 
take it out of commission. And so it wasn't just post-Katrina 
New Orleans where we began to hear about decommissioning large 
parts of cities; this is something that has been in urban 
planning for the last 30 or 40 years.
    And so there's a context in urban planning that has 
occurred that we have to address.
    We at Social Compact come at this from the point of view of 
how do we capture accurate information? How do we look for the 
missed population? Mayor Villaraigosa in Los Angeles estimates 
that the 2000 Census undercounted Los Angeles by 180,000 
people. Mayor Booker in Newark estimates that for the last 30 
years the undercount of Newark has averaged 19 percent. And our 
work, by the time we finish, 30 cities that they did this year, 
beginning of next year, we will have expected to have found 
3\1/2\ million people missed in low- and moderate-income 
neighborhoods in only 30 cities in the United States. Those 
3\1/2\ million people and the people who have been counted 
represent almost $600 billion unrecognized and recognized 
economic income, but $120 billlion of that has just been 
unrecognized--$120 billion. That's a market.
    In your own district and parts of your district in south 
central--in south LA, we have found 52,000 people missed by the 
U.S. Census in 2000 and 2000 estimates. In Congressman Green's 
district, we found 78,000.
    And maybe more importantly than the missed population is 
that the households in your district earn 30 percent more than 
the U.S. Census documented. That's 40 percent that the site 
selectors in Los Angeles or in Charlotte, North Carolina, they 
aren't capturing that. And so what maybe you're seeing as a 
benign undercount is actually an informational barrier and an 
investment barrier to try and address and readdress some of the 
disinvestment that has happened over the last 40 years.
    To put this in a different way, we don't have a public 
policy construction to support this kind of investment. And I 
will give you two examples before my 5 minutes runs out.
    First, downtown Detroit. No city has taken more body blows 
than Detroit. The greater downtown Detroit area has income that 
is 51 percent higher than the Census has documented. Putting 
that into a market anomaly perspective, there are 22 stores 
that count themselves as grocery stores in the greater downtown 
Detroit area. None of them are larger than 5,000 square feet, 
but they are functioning at $855 a square foot. The 
International Council of Shopping Centers says that the average 
delta square foot nationwide is $355 a square foot. That's a 
$500 spread in downtown Detroit. That's a market. That's a 
market for 120,000 square feet of grocery stores. But it's not 
just, wouldn't it be nice to have a grocery store, but the 
public policy imperatively correlates rates of obesity and 
diabetes to the saturation of fast food restaurants and the 
lack of access to full-service grocery.
    There is a public policy imperative based on research that 
states that African-American families live a mile-and-a-half 
further from grocery stores than their white counterparts, but 
35 percent don't have cars. We have condemned that portion of 
the community to poor public health output because we don't 
support advanced--a correct type of incentive to build grocery 
stores in communities that are disinvested.
    In the case of the financial services as well, Santa Ana, 
California, a community of about 100,000 people off the 
downtown, the Census said the average household income was 
$47,000. It is actually $62,000. Not only that, the median home 
value is $420,000. Also, 52 percent of the homes are owner-
occupied, but 69 percent of the homes don't have credit 
records. How do you have 52 percent of the homes owner-occupied 
and 69 percent of the houses don't have credit records.
    And it's not that credit records are important just per se. 
Your utility deposit is determined often by your credit score. 
Your automobile insurance rate is often determined by your 
credit score. You can't rent an apartment in Washington, D.C., 
without a credit score. So you're paying a poverty tax for not 
having a credit score.
    So the fact of the matter is it shouldn't surprise people 
this correlation between incidence of crime and alternative 
financial services, such as check cashers and payday lenders. 
So when we go through North St. Louis as we did today and we 
see so many check cashers, so many payday lenders, so few 
financial services, so few grocery stores, it's not a matter of 
what is the next silver bullet to try to change the 
landscaping. Let's just try to fix the numbers so that both 
public and private investment can find some way there 
appropriately.
    And just to conclude on one point--Congressman Clay made a 
very, very good point about a Home Depot they wanted to open 
there. They said that they told him that they weren't going to 
come because of shrinkage. Now, it may surprise everyone here 
in the audience that there is no shrinkage in the suburbs. The 
fact of the matter is, there is no quantitative evidence that 
shows that shrinkage and crime is an investment competitor to a 
Home Depot or other big box retailers in communities. In fact, 
in our own surveys with the International Council of Shopping 
Centers, crime and shrinkage is not even a top indicator for 
the site in the community. It's market.
    What we have to do with information that we have to be very 
careful with is that if you say, I want you in my neighborhood 
and I say, oh, you don't have the market for my investment and 
you say, yes, I do, then what am I really saying is your 
customers don't look like my residents or there are other sort 
of things that we have to--information to address.
    And so I'm just here to conclude that information is 
important. Information is available in U.S. cities and 
underserved cities in every one of your congressional 
districts, but we just had to create the tools, the adjustment 
bridges for investment, the adjustment bridges for information, 
to try to make sure that that's not what the barrier to 
investment is.
    [The prepared statement of Mr. Talmage can be found on page 
82 of the appendix.]
    Chairwoman Waters. Thank you very much. Mr. Zuniga.


   STATEMENT OF TOM ZUNIGA, MANAGING DIRECTOR, DSG COMMUNITY 
                     MARKETING SERVICES LLC

    Mr. Zuniga. Madam Chairwoman, Congressman Clay, Congressman 
Green, and distinguished staff and members of the Subcommittee 
on Housing and Community Opportunity, thank you for this 
invitation to offer testimony about innovative strategies and 
programs that are needed to bring about important changes in 
community development. I would like at the outset to 
acknowledge the leadership in community economic development of 
this subcommittee's chairperson. I admire and wish to 
congratulate you, Congresswoman Maxine Waters, on your 
commitment to improving the wellbeing of low-income and 
minority communities. Thank you for shining the spotlight on 
St. Louis.
    I am excited as a professor, as a student of community 
development, and as a real estate developer to be part of 
today's historic proceedings. In my remarks today, I hope to 
encourage local communities to adopt economic development 
policies that engage in public/private partnerships that rely 
on market information, such as John Talmage has mentioned, to 
drive investment in low- to moderate-income communities.
    In that regard, I hope to identify strategies and 
approaches that seek to rectify mistakes in programs of the 
past. I am grateful, by the way, for the relationship that I 
have with John Talmage and his staff at Social Compact who have 
provided us new possibilities through information for 
understanding the incredible market potential and untapped 
purchasing power of inner city residents. Social Compact has 
truly been a catalyst in infusing new energy and significant 
investment to communities. As a former resident of Washington, 
D.C., I'd say a former public official who by the way at one 
point I had the responsibility for cleaning up Columbia 
Heights, I'm very familiar with what has now happened. I know 
what has been accomplished in Columbia Heights as a result of 
the work of Social Compact.
    Let me also, just to put things in perspective, acknowledge 
that some of the past practices that we've now kind of heard 
about, some of the legislative and regulatory actions that 
precede us that may appear wrong-handed, were not always, 
underline the word always, willful mistakes. Many of our 
predecessors in community development were problem solvers in 
search of solutions and answers to problems, in much the same 
way we are doing today. The older I get, the more willing I am 
to acknowledge that economic development is more art than 
science and that smart, well-meaning people in search of 
answers arrived at solutions that may have solved some 
immediate short-term problems but resulted in unintended 
consequences in long-term.
    And that's part of what we're dealing with today.
    The value of a forum, Madam Chairwoman, is that, like this 
that you're having today, is that it enables us to think about 
what has gone before us and to reflect on what has worked, what 
has not worked, and why. Now, in the past we know we placed 
much emphasis on physical development. Oh, we remember the 
language; slum clearance, urban renewal, model cities. 
Solutions aimed at reversing decline of urban neighborhoods. 
The solution to the problem was to remove it. We adopted 
community development strategies that relied on top-down 
massive infusion of Federal dollars, and to a degree we still 
do. The unintended consequence, although some would argue 
otherwise, was the displacement of families as their homes were 
destroyed to make way for commercial redevelopment.
    In trying to signal community renewal, most of these 
commercial revitalization efforts were not enough to create the 
new vibrant neighborhoods that their creators envisioned, nor 
did they stem the flight of businesses and families from the 
inner city. Well, there are several paradigm shifts now in 
community development that suggest a bottom-up kind of an 
approach, and to just summarize it, a significant change that 
you all see in community development is a new emphasis on 
opportunity. I hear John talking about it.
    Our language is changing from distressed communities to 
underserved neighborhoods to communities of opportunity. 
Language is an important signal of change. Community 
development strategies are evolving to focus on community 
assets rather than on community needs. In other words, instead 
of describing a neighborhood by its problems, we have begun to 
emphasize the hidden assets, the market potential. We look at 
things like historic architecture, etc. In a speech last year, 
Federal Reserve Chairman Ben Bernanke said that quantifying 
these assets and helping investors become aware of the 
opportunities in underserved neighborhoods can help enlist 
market forces in the service of community development.
    And I want to be clear when I say help investors. That's my 
next point. The shift that we are experiencing by development 
by the numbers requires a concurrent change in the attitudes of 
indigenous community leaders who in the absence of market 
information have in the past and for a long time depended on 
ideology and a government grant driven focus which emphasizes 
neighborhood deficiencies and weaknesses rather than assets and 
market opportunities as a way to attract capital for their 
various projects. There is a culture of poverty that has become 
associated with people of color, particularly African 
Americans. Inner city residents are not only surrounded by 
crime and drugs and homelessness and poverty; they are blamed 
for it.
    Residents have come to believe that unless an initiative 
comes with a low-income tag, it is not intended for their 
community betterment. That has to change. There's also an 
underlying assumption that residents of underserved 
neighborhoods are unwilling to or do not, even if given a 
chance, want to participate in the rebuilding and the 
revitalization of their communities. During a recent consulting 
assignment I had arranged for a supermarket located in inner 
city neighborhood Richmond, Virginia, I described how our 
consulting team had assembled a capital to build a supermarket, 
all outside capital, of course, and thankfully I was 
reprimanded by a long-term resident of the area that I had not 
presented residents of the community a chance to invest in the 
supermarket, which without a doubt promised to be a cabinet for 
further evaluation.
    We need to challenge ourselves to create investment 
vehicles that are investments by residents, stakeholders who 
may only have $100 or $1,000 of their savings to invest, but 
would like to be and need to be a part of the community 
development fabric as investors. Madam Chairwoman, I thank you 
for the time.
    Chairwoman Waters. Thank you. Thank you very much.
    [The prepared statement of Mr. Zuniga can be found on page 
92 of the appendix.]
    Chairwoman Waters. Mr. Mayor, what's happening in 
Cincinnati?

 STATEMENT OF THE HONORABLE MARK MALLORY, MAYOR OF CINCINNATI, 
                              OHIO

    Mr. Mallory. Thank you. Thank you, Madam Chairwoman, 
Congressman Green, and Congressman Clay. Thank you for the 
opportunity to come here, not just to see St. Louis, but to 
share what we're doing in the City of Cincinnati as it relates 
to the proper use of accurate data. You all know that 
demographic data is routinely used by the private sector, by 
the public sector, and even by private individuals to make 
decisions about where they want to locate something, about 
where they're going to invest. In order to make certain that 
services are located where they are needed most, mayors in 
particular must have the most accurate data as it relates to 
their cities, and with the most accurate data in hand mayors 
can assess the most underserved part of their community and 
begin to drive investment to those areas.
    Let me tell you what we did in Cincinnati. In June of 2006, 
the Census Bureau released its 2005 population estimates, and 
those estimates claimed that Cincinnati had lost more 
population than any city in the United States, any major city 
in the United States, since the year 2000, making it the 
fastest shrinking city. The local media ran multiple high-
profile stories about the population decline. They included a 
lot of speculation about the cause of the loss of population, 
and our civic pride was at an all-time low.
    Nobody in the media questioned the validity of the Census 
Bureau's data. After all, you know, the Census data comes with 
a lot of credibility and believability. However, with all of 
the new development and housing starts and general energy that 
I witnessed in the City of Cincinnati since becoming Mayor, the 
data that we got from the Census just didn't make sense to me, 
so I decided to challenge those figures. We did that using a 
statistical analysis of City records, including building 
permits, demolition permits and conversions of commercial and 
industrial buildings into new housing, and we were able to 
prove that Cincinnati was not losing population at all. In 
fact, we were able to prove that Cincinnati was gaining 
population for the first time in 50 years. And that Census 
challenge began changing the perceptions about the City itself.
    Shortly after that I became aware of the Social Compact 
organization, a national nonprofit, and John Talmage you just 
heard from. They came into Cincinnati and did a drill-down of 
our population using 27 different pieces of data as it relates 
to income and other things. They were able to find almost 
47,000 additional people in the City of Cincinnati, and more 
importantly those additional people represented $2 billion in 
uncounted resources in the City of Cincinnati.
    So armed with this new information, I set out to change the 
way we look at our City. The first thing I did was I created 
Shop 52. There are 52 neighborhoods in the City of Cincinnati, 
so we have been using that data to help drive investment in 
those 52 neighborhoods. We're trying to get financial 
institutions to pay closer attention to what's going on, 
retailers, of course, and not long ago we held--I put together 
actually a retail attraction task force.
    I think John has mentioned this number a lot, but it's a 
number that people, I don't think, really cue into. 80 
percent--80 percent of the commercial retail decisions that are 
made in this country are made using Census-derived data. So if 
that number is wrong, they're making the wrong decisions about 
your city. So since I have this new information, we now go to 
the International Convention of Shopping Centers' annual 
convention out in Las Vegas. We use that information in an 
effort to attract retailers to the City of Cincinnati. We're 
selling the City armed with much more accurate information.
    In May of this year, I'm going to be working with the 
International Franchise Association, because one of the things 
we learned at that retailers convention is that they have 
trouble attracting people to buy franchises, so we're going to 
put together an education seminar that will encourage minority, 
women, and veteran-owned franchises in the City of Cincinnati, 
and that seminar is going to help connect individuals with--not 
just with franchises, but we're going to connect them with the 
financial resources to get those franchises going.
    In order to fill the need for increased services in under-
served communities, Cincinnati can't rely just on national 
retailers alone. Small businesses, small local-owned 
businesses, are actually vital to any city's growth. So this 
past February we put together 100 community leaders, community 
development experts, small business service providers, and 
banking professionals for an urban markets summit. Now, that 
discussion centered around barriers and opportunities in the 
local small business development environment, and the group 
looked at four specific underserved neighborhoods to discuss 
improvements in their individual business districts.
    I have always believed that any neighborhood development 
must be driven by community leaders with full input from the 
citizens of that neighborhood and the assistance from 
government. So with that in mind, I have been meeting with the 
representatives of all of the 52 communities in the City of 
Cincinnati. We have been sharing with them the Social Compact 
drill-down information that gives them a much clearer picture 
of the actual population and the buying power within each of 
those neighborhoods. They will now be better prepared to tell 
us what kinds of services they want and what kind of services 
they need in their communities.
    With the amount of emphasis that my administration has put 
on data-driven policy, the 2010 Census is going to be central 
for the development of the City of Cincinnati. Getting that 
number right is crucial. So the drill-down study taught us 
exactly how many people are in the City of Cincinnati. We're 
taking a new approach to the Census. We're not telling our 
Census takers to go out and count the people who are here. We 
know because Social Compact came to Cincinnati that there are 
378,259 people in Cincinnati. The new paradigm is to go find 
those people. That is our baseline number; there are at least 
378,000 people in our city.
    So this is an ongoing process for us.
    It's an evolving process for us. This concept of the better 
utilization of accurate data to drive investment in underserved 
communities, to drive a new focus into areas that need services 
and need help is a new way of thinking for the City of 
Cincinnati but is our new method of operation. And I'll tell 
you, I'm on a crusade. I'm telling everybody I can everywhere I 
can that this is the only way that you can intelligently and 
accurately redevelop cities throughout the United States of 
America.
    Thank you very much.
    [The prepared statement of Mayor Mallory can be found on 
page 73 of the appendix.]
    Chairwoman Waters. Thank you very much. I would like to 
thank you all for your testimony here today and I would like to 
just raise a few questions with some of you who have testified. 
Reverend Jones, I want to thank you for being on the tour with 
us this morning and showing us your tremendous accomplishments 
in the development of the much needed housing and the 
revitalization of that community.
    I'm now interested in how much support you have been given 
for the development of the infrastructure in and around the 
area, both a combination of services and other kind of 
infrastructure supports in order to keep that community going 
and vibrant and maintained. And because of this discussion 
about Team 4 and what I read, still not knowing whether or not 
it was implemented informally, tell me about police and crime. 
Do you get quick response? Do you meet with the captains? Do 
they interact with the residents? What kind of support do you 
have from the basic infrastructure that every community needs 
in order to be safe, secure and protected?
    Mr. Jones. We are blessed in our community to have an 
alderman who works with us. We are also blessed that he's a 
member of our church. That helps. So we--our relationship with 
the community, with the government, the agencies, are 
improving. There's a ways to go. The partnerships are there. 
We're moving aggressively towards bridging relationships, but--
and the alderman helps and others will provide assistance, and 
others do as well, but again, I must acknowledge and be frank, 
we have a ways to go.
    With relation to infrastructure and partnerships and 
services that we receive, we challenge these public servants 
whom we believe we help to pay their salaries that they ought 
to give our community a priority. We have seniors in our 
community. We have a health services center in our community. 
We have about 1,000 children who come into our church every 
week. And so we challenge them to be active and to be on-call 
and to respond aggressively and timely to our needs.
    Now, I will say that with that aggression that we have, the 
reality is it is a community that has a stigma of crime, of 
poverty, and there are occasions where they are not responding 
always as well as we would like, but I will say that when 
developing and building relationships to challenge them to do 
such--
    Chairwoman Waters. That's very important. When you complete 
development and you do your ribbon cuttings and all of that, 
are you blessed with the presence of the Mayor along with your 
alderman?
    Mr. Jones. The alderman certainly is there. The Mayor has 
been there in the past. He has been there. I think our most 
recent opening of our senior building, I'd have to recall 
whether he was present.
    I don't think he was present, I must say, at that occasion, 
but in most occasions he has been. He has recognized the 
strength of our church and our community, and I think it's 
incumbent upon him to show up on those occasions.
    Chairwoman Waters. Have you been offered any assistance in 
your economic and business development from the Office of 
Development? The vice mayor of development was here today and 
was being questioned by Congressman Clay about monies that have 
been given to businesses that were supposed to develop jobs who 
do not appear to be able to document that they have done that. 
Were you offered assistance with monies coming from CDBG or 
anyplace else to do business development?
    Mr. Jones. Madam Chairwoman, if we were, I'm not familiar 
with it. I will say that we did sit with her recently with our 
public and private developers and we placed an initiative 
before that office, and we're waiting a response now. And I 
hope and pray that it will be favorable, especially since this 
kind of setting is happening in the City.
    Chairwoman Waters. If you were afforded the opportunity to 
get some of the City money to help create jobs, would you be 
able to use that money to create jobs for people who need 
employment?
    Mr. Jones. No question. We're creating jobs without the 
City dollars now. What we tell them is that they will help 
accelerate our process. They will help us to maximize and do 
far better and far quicker with the resources we have. If they 
are to provide assistance, we can do far more, far better.
    Chairwoman Waters. And you said the banks have been 
cooperative. Usually in order to develop communities not only 
do you need government assistance, but you need a commitment 
from the financial sector. You need banks. Banks can determine 
whether or not communities get the resources they need to 
develop.
    Do you have the cooperation of any of the financial 
institutions or banks that are willing to put money into a 
community where you have demonstrated success?
    Mr. Jones. Well, I can speak on behalf of our church. We 
have learned the art of leveraging. We leverage our people, we 
leverage the resources we have. And not only that; everything 
we own is debt-free. And so banks line up for us under these 
circumstances. And so we're probably not typical, though, as I 
must say, but we haven't had a problem yet with getting a loan. 
It's just a matter of us negotiating what we want. But we 
challenge them.
    What we do, though, since we are favored in this position, 
we make sure that the next church, the next business, the next 
partner, we leverage our resources so they can also get a rate 
that they can also get the loan and also be blessed and 
benefited thereby.
    Chairwoman Waters. Do the streets get swept and the 
potholes fixed in the areas where you're doing all of this 
investment?
    Mr. Jones. Well, let me speak of snow. We have our own 
clean-up, snow removal. We--you know, it's a business 
investment for us to do such. We don't wait on the City. It's 
strange, odd, peculiar, but we happen to be in an area of the 
City where maybe the resources are depleted by the time it's 
time to enter into our section, so we have stopped waiting on 
them. We have our own snow removal because it's incumbent upon 
us--we have thousands of people and so it's an economic and a 
spiritual initiative for us to do it ourselves.
    Chairwoman Waters. The reason I asked that, Reverend--and I 
hate to interrupt you--is that part of what we're researching 
is whether or not the services are in these communities or 
whether or not there is a plan or just benign neglect of 
providing the support services, because you are not typical and 
others who would invest or develop need to have police and 
fire, they need to have the potholes fixed, they need to have 
the snow removed, they need to have the involvement of the 
Mayor, they need to have the fire department who will come out 
and let the kids climb up on the fire engines and trucks like 
they do in other neighborhoods; they need to have engagement. 
And without that, most development attempts will fail.
    And so this is what we're looking at here. If somehow 
through the processes of the City and the City plan, those 
resources have not been available, communities die. They 
literally die.
    And in addition to that, in addition to what you're doing--
and you have been very, very fortunate and visionary to make 
these acquisitions, this property, long before this crunch and 
so you have property that's valuable, that you're able to--
because most people can't purchase this land, it's just too 
costly, but in addition to your having done all of this, the 
properties adjacent to yours that people can't afford to keep 
up, you have to have a program in the City that will allow 
people to rehab their homes with no or low-interest rate loans.
    So all of this--and that's what we are kind of looking at. 
You are a model and you're a leader and you're unusual and 
you're doing something for the City, not only for your members, 
but you're providing services for yourself that the City really 
should be providing. And so we all love people like you who do 
this, I mean, we really do. Mr. Green loves everybody, but I 
don't. I love doers.
    And so I just want you to know that, first of all, let me 
just underscore this, that we appreciate what you showed us 
today and what you are doing, and we are hopeful that your 
vision, your full vision, is realized with the support of your 
City and your Federal Government and everybody else that you 
really should have.
    I have used up more than my time, and I have to let Mr. 
Clay have a turn.
    Mr. Clay. Just to follow up on what Chairwoman Waters was 
saying, Pastor Jones, if the faith community would get the 
collaboration, necessary funds they needed from the Government, 
as well as private entities, would they have the necessary 
resources and the will to actually create the schools that you 
talked about that would take us block by block in this process 
of rebuilding communities? Do you think the faith community 
would step up here in St. Louis and do that?
    Mr. Jones. Congressman, I believe that historically the 
faith community has shown the ability to build schools, 
businesses, to train individuals, to provide housing for people 
within the community as well. Our challenge again is an 
economic challenge. We have the management ability. We have the 
desire to do it, to accomplish it. Resources would help us 
tremendously. If we are afforded the opportunity to have the 
resources, I think there's no question at all that we can 
accomplish that.
    Mr. Clay. Thank you so much for that response. Mayor 
Mallory.
    Mr. Mallory. Yes.
    Mr. Clay. You talked about the additional $2 billion in 
Federal funds that you were able to capture because you found 
47,000 additional Cincinnatians and you also talked about a 
collaboration with Social Compact as far as the drill-down, as 
you called it. And just to make you aware, I do have the 
responsibility of the oversight over the Census Bureau and up 
to the 2010 Census, and you mentioned a new kind of approach 
with the Census and a new type of partnership, and I think you 
have the model that the rest of urban America has to get with. 
So I look forward to working with you in that respect as far as 
how we actually count the traditionally undercounted and want 
to hear more about your experiences with the Census Bureau.
    Mr. Mallory. Well, I appreciate that. You know, one of the 
things that I see that's critical as we move to 2010 is that 
for any major city in the United States the low hanging fruit 
is getting the Census count number right. There are 170 Federal 
programs that distribute billions and billions of dollars based 
on the Census count. So the low hanging fruit, the best 
opportunity that I think mayors have to garner additional 
resources for their cities in the next few years is to ensure 
that that number is right.
    I mean, we are lucky that we were able to find Social 
Compact and have them come in and do our drill-down analysis 
and discover those 47,000 extra people and discover that 
undercounted $2 billion in spending power. Our challenge now is 
going to be to ensure that we are counting absolutely as many 
people as possible in 2010 so that we can get not just the 
money that comes along with the Federal programs, but, again, 
all of these agencies, all these organizations, all of these 
businesses, all these financial institutions that use Census-
derived data have to have the most accurate information.
    We're in the middle of--in Cincinnati, we're in the middle 
of a school building process where the public schools are 
building 20 new buildings. Well, they're using outdated Census 
information, so they're putting the wrong schools in the wrong 
neighborhoods. It becomes very, very critical as you start to 
look at all of those decisions that are made around the use of 
that Census data that we get that number right.
    Mr. Clay. And that whole piece about franchisees and the 
International Council of Shopping Centers, all of that plays 
into that data. How successful has Cincinnati been as far as 
being able to attract new retail or needed services to 
particular communities.
    Mr. Mallory. Well, we went to the convention in Vegas in 
May of last year, May or June, and it was the first time that 
anybody from the City administration of Cincinnati had ever 
gone to that convention. It's very disappointing that the 
previous administrations did not recognize the need for it. We 
met with probably 15 or so different--
    Mr. Talmage. 22.
    Mr. Mallory. --22 different retailers, and we actually have 
had a few successes from that. We did get a retailer on 
Fountain Square as a result of that. There are several others 
that are taking a second look at Cincinnati because they 
already looked at us using the wrong information. We gave them 
the right information, and they are now taking a second look at 
us.
    But we're committing to going back to that year after year 
after year and making sure that retailers are paying attention 
to us. One of the pieces of feedback we did get is that we 
weren't on the radar screen for a lot of these retailers, but 
because of this information that we had and because of our 
approach and our organization, they're taking a second look at 
us and really seeing us as a possibility.
    Mr. Clay. Thank you so much. Ms. Rogers, we have heard a 
lot of testimony today, especially in the first panel, from 
HUD, as well as from Ms. Geisman and Alderman Kennedy. Given 
what we know that has occurred over the last 35 or so years, 
what we've heard today about how it seems as though the City 
wants to turn over a new leaf, adopt a new policy, if this 
community is given the opportunity to actually purchase those 
vacant lots and actually purchase those abandoned buildings and 
property owned by the LRA, do you think this community will 
take charge of its own destiny and move forward?
    Ms. Rogers. I think absolutely they will, but to me 
purchasing a lot is probably on the micro level. What I now 
think is even more important, and just hearing the panels 
discuss this, is a comprehensive long-range plan. And it's not 
a planning that's based on what your relationship--political 
relationship is to the Mayor or to the alderperson. I suspect 
that there is somebody like Reverend Jones in other 
communities, but because they don't have access to those people 
who have power, then somehow they get locked out of the 
process.
    And so to me, even what Mayor Mallory was talking about, I 
mean, it seems so logical that you would be operating in that 
level, but here it's very fragmented, it's very politicized, 
and I think Alderman Kennedy acknowledged that it's very 
racially motivated, and so when we look at who gets to be at 
the table--I mean, we have had empowerment zone planning where 
money specifically is supposed to go to the areas that we've 
talked about today, but yet year after year they continue to 
look the same. And I think we have to ask why is it that, why 
is it still looking the same or worse when dollars are supposed 
to be coming in.
    And so if we understand that there's a plan and people were 
a part of that plan, we won't have to ask those questions; 
we'll know. We'll have the understanding that it's not just 
going to go to the conservation areas. And we know from looking 
at this place, downtown is one of them, another one is the 
Central West End, so the depletion areas are pretty quickly--
you are able to quickly tell where those are. So they need to 
be brought into the plan, and it needs to be a comprehensive 
one where we're not just looking at little pieces of property 
but we're looking at overall what would the ward look like in 
20 years, what will the City look like in 20 years. It 
shouldn't be based on who has the money, or who is the closest 
to the Mayor or anybody else in political power.
    Mr. Clay. Mr. Zuniga, your testimony brought out the fact 
that you have quite a bit of experience all around this country 
in attracting and revitalizing neighborhoods. In your brief 
stay here today, do you see the potential for St. Louis? Do you 
see how we can actually go about turning around this community, 
turning around, tapping into the economic potential of this 
community, and just how difficult or easy would that be?
    Mr. Zuniga. Congressman, thank you. Just to follow up, it's 
one thing to have the numbers; it's one thing to attract 
retailers; it's one thing to attract investors. Part of my real 
concern is, how do we as disenfranchised residents of some of 
the communities we talked about participate in that 
revitalization process?
    There's an impediment by the way that really has to do with 
the infrastructure of our economic system. At the point that we 
gather up investors, more than 35 people requires a public 
offering. And I have to tell you something. It's strange, you 
know, you're dealing with high level, you know, high net worth 
individuals, but it was never designed for folks who have $100 
or $200. This lady in Richmond I told you about, she said that 
most of the time the only investment opportunity we have is we 
go on Friday evening to the liquor store, buy $50 worth of 
lottery tickets, and hope we get lucky. Well, it ought not to 
be that way. People like me need to start focusing on what do 
we do to create the new infrastructure for real indigenous 
community investment? It is $50 here, $100 there. We don't have 
that.
    But with that in mind, when we talk about acquiring 
available land--you know, the one who owns the land controls a 
lot of what happens. There was an earlier discussion today 
about bringing developers to the table as capacity. Being able 
to be an effective partner in community development has to do 
with being able to bring something. If we had a vehicle for 
investing in land and we can state a group of people who are, 
in fact, resident investors, you own this land, you can attract 
a development partner and it's a different kind of footing at 
that point. Okay? Those are the kinds of observations I have.
    Mr. Clay. Finally, let me just get to John. I don't know if 
you have done your initial study on St. Louis yet. Just what 
have you found so far? What are our potentials? What is our 
untapped purchasing power?
    Mr. Talmage. We have not done the drill-down yet, but based 
on the information gathering, some of the preliminary 
information, research we conduct, there are some things that 
strike me, that the Census from 2000 to 2006 estimates that in 
North St. Louis the population--you have lost 2.3 percent of 
the population. Just look at Federal data such as the U.S. 
public housing and IRS returns. That number is inaccurate just 
on the face of it so that we expect now to find a positive 
number because we have--we were never granted the foundation.
    The first--the income, the average income of first-time 
home buyers who bought homes in North St. Louis between 1998 
and 2005 was 40 percent higher--I'm sorry--60 percent higher 
than the Census had documented in 2000 so that the trend of 
investment is a very positive trend. That's not duplication 
trend. These are still middle income, you know, the cop and the 
teacher, but it's a strong indicator of sustainability.
    And finally, the percentage of owner-occupied units in 
North St. Louis is almost 40 percent higher than the national 
average, that people own--in many parts they own their own 
homes, so they have invested ownership in their community. So 
when we do the study itself to find the missed population, the 
missed purchasing power, we can put that together with the 
numbers that are already there to make the case that North St. 
Louis is a good place for investment, especially because of the 
sites we saw today. Put aside the environmental problems which 
you can't ignore, but there are large assemblages on wide 
streets adjacent to major highways with good utility access, 
and so in terms of a development site, you really can't have 
things teed up any better than they are right here.
    Mr. Clay. Thank you so much.
    Chairwoman Waters. Thank you very much. Congressman Green.
    Mr. Green. Thank you. I will be terse and laconic. Mr. 
Talmage, your diction was superb, but I do ask that you be a 
bit more pedestrian in explaining shortage and shrinkage, 
because some people may have missed the point.
    Mr. Talmage. And I should say that in a non-terse and 
laconic way?
    Mr. Green. Just be precise.
    Mr. Talmage. Shrinkage is a term that retailers use to 
describe what they--what we might call pilfering or employee 
theft or shoplifting; the amount of product that disappears 
from the store for any number of reasons.
    Mr. Green. Would a person who is less sophisticated, such 
as I am, use the term stealing?
    Mr. Talmage. You might use stealing, yes, sir. The 
policemen who arrest you might use stealing.
    Mr. Green. And let me ask you this as well: Assuming that 
you have a plethora of empirical evidence supporting a need, as 
well as supporting the ability to sustain a given business, if 
you have a depletion mindset, will empirical evidence offset a 
depletion mindset?
    Mr. Talmage. That's a very good point. One of the things we 
have been doing for the last year is working through the 
International Council Of Shopping Centers and other industry 
associations to make sure that the retail investors are 
prepared to use the information that we provide. And one of the 
reports where we are very interested in publishing in the very 
near future shows, using our national retailers' own score 
performance data, that--and I'm sorry for the technicality--
that the median income and the average income of a household is 
not correlatory to what households perform. It is the 
aggregated income that has the highest correlation of value.
    What that really means in simple English is that it's not 
monies that the suburban household is making $80,000; it's the 
aggregated neighborhood of--and so any neighborhood is the best 
indicator of performance.
    And so there's a whole variety of national retailers that 
are waiting to--
    Mr. Green. Just one quick intervention, and I'm really 
going beyond the time that I thought I would, but I want to ask 
you this: You do recall that the plan that they had was one 
that was encouraging depletion?
    Mr. Talmage. Yes.
    Mr. Green. And I'm not sure that empirical evidence would 
offset that type of mindset. I'm just not sure. Sometimes you 
have to use the adverse of the Elizabeth Barrett Browning 
process. She said, how do I love thee? Let me count the ways. 
Sometimes it literally has to be, how can I hurt thee? Let me 
show you the ways, in the political world. I'm not talking 
about physically hurting anyone. But Bishop Jones?
    Mr. Jones. Thank you for the promotion.
    Mr. Green. Excuse me. I was tempted to say ``prophet,'' but 
I scaled back. I do want to compliment you on understanding 
that we are blessed, that we may be a blessing, and you 
apparently have done well in your community and I thank you for 
what you have done.
    And I know, Mayor, you wanted to give a comment, so--I saw 
you pull the microphone over, so I'll give you the last word.
    Mr. Mallory. Thank you. I just wanted to emphasize on this 
conversation about data and empirical data and analysis. It 
only makes a difference if the leadership is willing to embrace 
it and drive it. It has to be driven by the leadership. One of 
the first things I did when I got the data from Social Compact 
about our new population estimates, I rounded the entire 
administration, said the new population for the City of 
Cincinnati is 378,000. That had better be the number I hear you 
use publicly. That had better be the number I see in every city 
document. That number is actually on Wikipedia's Web site. If 
you go and Google Cincinnati, it will show our population at 
378,000.
    So it has to be driven by the leadership, it has to be 
pushed by the leadership, and it has to be embraced by every 
member of the administration.
    Mr. Green. If I may just close with this, Madam Chairwoman, 
I want to thank Congressman Clay for hosting this hearing. And 
I say that because I have learned a lot.
    Chairwoman Waters. I want to thank the panels for coming 
here today and sharing this very important information. And I 
recognize that some of you have traveled from far away to be 
here today in the City, and we're very appreciative for that.
    And let me just say to the residents and the leaders of St. 
Louis that we recognize some of this is complicated. We are 
very strong believers in the possibilities. We believe that 
these communities, not only in St. Louis, but across this 
country, can be redeveloped, can be saved, and that people can 
have involvement in doing that. We have adopted some principles 
in our public policy work, and this is what's difficult for 
some of the redevelopment attempts. One of the principles that 
we have adopted is one-for-one replacement of all housing.
    That's important because, Mr. Zuniga, you're right, some of 
the developers who are coming along, big developers, have 
recognized that there is gold and then there are hills. And 
what they are looking at, for example, are public housing 
projects along certain transportation corridors that are very 
valuable, and they want them. But what they don't talk about is 
what happens to the people who occupy those units.
    And now we're in a situation where everybody's talking 
about these terrible public housing projects and how they 
don't, you know, meet the standards and how they need to be 
improved, when really the language is, get rid of them. That is 
the language that is underneath all of this. Those of us who 
are in these new leadership positions understand this language.
    And so we are saying that we support HOPE VI, but you 
cannot reduce the number of poor people with so-called market 
rate and ownership because not everybody wants to own a home. 
Some people just want to rent a decent place to live.
    And so we are trying to, in our public policy, embrace 
development, protect people and neighborhoods, and involve 
people in the decisionmaking to determine what's going to 
happen in these neighborhoods. Now that's a little bit 
different, but we can do this because, really, we came from 
these neighborhoods. You know what I'm saying? And we 
understand this. So we thank you for further educating us 
today.
    I'll look forward, Mr. Talmage, to seeing you. And we had 
talked before when you first came into the Los Angeles area. 
There is work to be done there.
    And finally, let me just say on the commercial development 
side of this, every major development, whether it is in my area 
of Inglewood along Century Boulevard that leads to the airport 
or Western Avenue near Slauson where Magic Johnson put in money 
or La Tierra where Magic is over there with TGIF and all of 
that, every one of those businesses surpass their counterparts 
in other parts of the United States. Our Starbucks makes more 
money than any other Starbucks, I believe, in the country, and 
we can identify other black commercial entities that do that.
    We know that there is money in our neighborhoods, and we 
know there are people who are willing to spend money if you 
treat it right, and we have decent services and all of that. So 
we need to marry the need for the investment with the 
infrastructure development and protection from the City and the 
involvement of the people. That's the formula. We get it. We 
know it. And we're going to do it. Thank you so very much.
    The Chair notes that some Members may have additional 
questions for this panel, which they may wish to submit in 
writing. Without objection, the hearing record will remain open 
for 30 days for Members to submit written questions to these 
witnesses and to place their responses in the record.
    Without objection, the written statement of Dr. Matthew 
Fellowes of the Brookings Institution will be made a part of 
the hearing record.
    Chairwoman Waters. This hearing is now adjourned.
    [Whereupon, at 2:40 p.m., the hearing was adjourned.]
                            A P P E N D I X



                             March 8, 2008
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