[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]


 
                THE ECONOMIC DEVELOPMENT ADMINISTRATION:
                  HOW TO IMPROVE EFFECTIVENESS THROUGH
                       REFORMS AND CONSOLIDATIONS

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

                                (112-50)

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
    ECONOMIC DEVELOPMENT, PUBLIC BUILDINGS, AND EMERGENCY MANAGEMENT

                                 OF THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                             JULY 27, 2011

                               __________

                       Printed for the use of the
             Committee on Transportation and Infrastructure


         Available online at: http://www.gpo.gov/fdsys/browse/
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             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                    JOHN L. MICA, Florida, Chairman

DON YOUNG, Alaska                    NICK J. RAHALL II, West Virginia
THOMAS E. PETRI, Wisconsin           PETER A. DeFAZIO, Oregon
HOWARD COBLE, North Carolina         JERRY F. COSTELLO, Illinois
JOHN J. DUNCAN, Jr., Tennessee       ELEANOR HOLMES NORTON, District of 
FRANK A. LoBIONDO, New Jersey        Columbia
GARY G. MILLER, California           JERROLD NADLER, New York
TIMOTHY V. JOHNSON, Illinois         CORRINE BROWN, Florida
SAM GRAVES, Missouri                 BOB FILNER, California
BILL SHUSTER, Pennsylvania           EDDIE BERNICE JOHNSON, Texas
SHELLEY MOORE CAPITO, West Virginia  ELIJAH E. CUMMINGS, Maryland
JEAN SCHMIDT, Ohio                   LEONARD L. BOSWELL, Iowa
CANDICE S. MILLER, Michigan          TIM HOLDEN, Pennsylvania
DUNCAN HUNTER, California            RICK LARSEN, Washington
ANDY HARRIS, Maryland                MICHAEL E. CAPUANO, Massachusetts
ERIC A. ``RICK'' CRAWFORD, Arkansas  TIMOTHY H. BISHOP, New York
JAIME HERRERA BEUTLER, Washington    MICHAEL H. MICHAUD, Maine
FRANK C. GUINTA, New Hampshire       RUSS CARNAHAN, Missouri
RANDY HULTGREN, Illinois             GRACE F. NAPOLITANO, California
LOU BARLETTA, Pennsylvania           DANIEL LIPINSKI, Illinois
CHIP CRAVAACK, Minnesota             MAZIE K. HIRONO, Hawaii
BLAKE FARENTHOLD, Texas              JASON ALTMIRE, Pennsylvania
LARRY BUCSHON, Indiana               TIMOTHY J. WALZ, Minnesota
BILLY LONG, Missouri                 HEATH SHULER, North Carolina
BOB GIBBS, Ohio                      STEVE COHEN, Tennessee
PATRICK MEEHAN, Pennsylvania         LAURA RICHARDSON, California
RICHARD L. HANNA, New York           ALBIO SIRES, New Jersey
JEFFREY M. LANDRY, Louisiana         DONNA F. EDWARDS, Maryland
STEVE SOUTHERLAND II, Florida
JEFF DENHAM, California
JAMES LANKFORD, Oklahoma
REID J. RIBBLE, Wisconsin
CHARLES J. ``CHUCK'' FLEISCHMANN, 
Tennessee

                                  (ii)

  
?

 Subcommittee on Economic Development, Public Buildings, and Emergency 
                               Management

                   JEFF DENHAM, California, Chairman

TIMOTHY V. JOHNSON, Illinois         ELEANOR HOLMES NORTON, District of 
ERIC A. ``RICK'' CRAWFORD,           Columbia
Arkansas,                            HEATH SHULER, North Carolina
  Vice Chair                         MICHAEL H. MICHAUD, Maine
RANDY HULTGREN, Illinois             RUSS CARNAHAN, Missouri
LOU BARLETTA, Pennsylvania           TIMOTHY J. WALZ, Minnesota
BOB GIBBS, Ohio                      DONNA F. EDWARDS, Maryland
PATRICK MEEHAN, Pennsylvania         BOB FILNER, California
RICHARD L. HANNA, New York           NICK J. RAHALL II, West Virginia
CHARLES J. ``CHUCK'' FLEISCHMANN,      (Ex Officio)
Tennessee
JOHN L. MICA, Florida (Ex Officio)

                                 (iii)

                                CONTENTS

                                                                   Page

Summary of Subject Matter........................................    vi

                               TESTIMONY
                               Panel One

John R. Fernandez, Assistant Secretary of Commerce for Economic 
  Development, U.S. Department of Commerce.......................     4
William B. Shear, Director, Financial Markets and Community 
  Investment, U.S. Government Accountability Office..............     4

                               Panel Two

David Baker, Senior Vice President, FutureFuel Chemical Company..    13
Steve Etcher, Executive Director, Boonslick Regional Planning 
  Commission, and Executive Committee Member, National 
  Association of Development Organizations.......................    13
David Spaur, President and CEO, Merced County Economic 
  Development Corporation........................................    13

          PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS

Carnahan, Hon. Russ, of Missouri.................................    24
Michaud, Hon. Michael H., of Maine...............................    27

               PREPARED STATEMENTS SUBMITTED BY WITNESSES

David Baker......................................................    28
Steve Etcher.....................................................    31
John R. Fernandez................................................    41
William B. Shear.................................................    49
David Spaur......................................................    64
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[GRAPHIC] [TIFF OMITTED] T7581.002

[GRAPHIC] [TIFF OMITTED] T7581.003

[GRAPHIC] [TIFF OMITTED] T7581.004



                        THE ECONOMIC DEVELOPMENT
                     ADMINISTRATION: HOW TO IMPROVE
                     EFFECTIVENESS THROUGH REFORMS
                           AND CONSOLIDATIONS

                              ----------                              


                        WEDNESDAY, JULY 27, 2011

                  House of Representatives,
              Subcommittee on Economic Development,
        Public Buildings, and Emergency Management,
            Committee on Transportation and Infrastructure,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10:43 a.m. in 
Room 2253, Rayburn House Office Building, Hon. Jeff Denham 
(Chairman of the subcommittee) presiding.
    Mr. Denham. The subcommittee will come to order. Today's 
hearing is on the Economic Development Administration, and how 
we can improve its effectiveness and maximize job creation. I 
appreciate Assistant Secretary Fernandez and Mr. Shear for 
being here today. I would also like to welcome our local and 
private sector witnesses who will testify later on this 
important topic.
    In particular, I am thankful for the participation of Mr. 
Spaur, who is president of Merced County Economic Development 
Corporation, which serves many of my constituents and the 
interest of the Central Valley. Mr. Spaur and the other 
witnesses have firsthand knowledge of the impact that this 
economy has had on many communities around our Nation.
    With high unemployment rates, large deficits, and an out-
of-control debt that we are trying to get a handle on, we must 
ensure Federal economic development programs that are targeted, 
streamlined, and effective. My home State of California has an 
unemployment rate over 11 percent, and parts of my district 
have rates exceeding 17 percent. Finding real ways to generate 
job growth, support the expansion of private industry into 
distressed areas, and ensure long-term economic development is 
critical in this economy.
    We hear talk about creating jobs through Federal spending. 
But all too often, these jobs never materialize, or they are 
short-lived. When EDA was created in 1965, its fundamental 
mission was to create jobs and generate economic growth in 
distressed areas of our Nation. Today EDA carries out that 
mission through a number of different grant programs. These 
programs leverage non-Federal and private sector dollars, 
recognizing that it is the private sector and, in particular, 
small businesses that are the engine of our economy. Studies 
have shown EDA's programs create jobs. For example, a study 
completed in 2008 by Grant Thornton indicates that EDA programs 
create jobs at an average cost of $4,000 per job.
    However, even given these studies, the GAO has raised key 
questions for consideration. In its March 2011 report, the GAO 
identified 80 programs and 4 different departments that did 
some form of economic development, including 8 EDA programs. 
The GAO found that these programs could be working better 
together to improve their service to their customers. The GAO 
also questioned EDA's process of auditing and accounting for 
the number of jobs created under its programs.
    It is critical, particularly in this economy, that we 
ensure Federal programs are as efficient as possible. It is 
also critical in programs like EDA's to ensure processes are 
streamlined. With many Federal programs focusing on economic 
development, Congress must look at each program and find ways 
to streamline reform and, where necessary, consolidate.
    With that said, EDA is the only Federal agency whose sole 
mission is to create jobs and spur economic growth nationally. 
While other agencies may have similar goals, those goals are 
typically tied to other policy objectives. And EDA tends to 
have the greatest flexibility in ensuring its dollars are spent 
to maximize job growth. That's why I am pleased to know EDA has 
been taking steps to enter into agreements with other agencies 
to improve coordination among some of the programs.
    However, these partnerships take significant time and 
effort, because of inconsistencies in regulations and policies. 
We must find a way to either consolidate programs or cut the 
bureaucratic hurdles to better and efficient coordination.
    I look forward to hearing from our witnesses today on these 
important issues. I would now like to recognize Ranking Member 
Norton from the District of Columbia for 5 minutes to make any 
opening statements she may have.
    Ms. Norton. Thank you very much, Chairman Denham. I 
particularly appreciate this hearing that you have called on 
the reauthorization of the Economic Development Administration, 
and I welcome today's witnesses.
    Created over 45 years ago to alleviate substantial and 
persistent unemployment in economically distressed areas, EDA 
has helped retain and create jobs, reduce poverty, increase 
personal income, and improve the livelihoods of local 
communities, mostly from funds from private and other non-
Federal sources. From funding research to business incubators, 
to workforce development, to small business development, and 
basic infrastructure, EDA assists local communities in 
developing the skills and infrastructure necessary to compete 
in today's global economy.
    The EDA is the only Federal agency focused exclusively on 
economic development. Its proven track record was verified by 
an independent consultant, who concluded that the Federal 
Government receives a high return for the dollars invested in 
EDA. Specifically, it was confirmed that EDA's construction 
grant program generates 2.2 to 5 jobs per $10,000, resulting in 
a cost per job of $2,001 to $4,611.
    In fiscal year 2010, EDA saw a return on investment of 
$6.90 in private-public investment for every Federal dollar 
invested. Of the $285 million EDA awarded in fiscal year 2010, 
approximately $191.5 million funded construction projects that 
are expected to help create or retain approximately 48,500 jobs 
and generate nearly $6 billion in private investment.
    EDA's effectiveness stems from its use of a bottom-up 
approach, by partnering with communities that can determine 
their own needs to develop long-term sustainable economies.
    Last Congress this subcommittee held hearings on the need 
to reauthorize EDA. And in July 2010, the full committee 
reported by voice vote a bill to reauthorize EDA. It is clear 
that a bill to reauthorize EDA is a bill to create jobs at 
little cost to the Federal Government. And we know that EDA is 
vital to reducing unemployment in areas that would otherwise 
wait much longer than other areas for recovery.
    Last month the national unemployment rate was 9.2 percent, 
while the District of Columbia unemployment rate was 10.4 
percent, while some areas of the District are experiencing an 
unemployment rate of over 20 percent.
    In a time of high unemployment, and with the economy 
struggling to recover from the recession, Congress cannot 
afford to let another opportunity to reauthorize EDA go by. 
Even though EDA is valuable to our Nation's economy--I would 
say invaluable, and singularly so, because there is no agency 
like it--there is, of course, room for improvement.
    The General Accounting Office has identified EDA as an 
agency providing economic development programs similar to those 
of other Federal agencies, and believes that more collaboration 
among agencies is necessary. It is, however, important to note 
that even GAO agrees that its own conclusions are tentative, 
and that more work would need to be done before it could 
conclude that there is actual duplication and related waste or 
inefficiencies when it comes to EDA. Our own work over the 
years has found just the opposite, I must say.
    I look forward to learning more about EDA's collaboration 
with other agencies to develop regional innovation clusters and 
any preliminary outcomes from this initiative, or from the work 
it has been doing and not reported thus far.
    Once again, I would like to thank the witnesses for 
appearing today; the chairman, for calling this hearing. And I 
look forward to today's testimony. Thank you, Mr. Chairman.
    Mr. Denham. Our witnesses here today on our first panel, we 
have the Honorable John R. Fernandez, Assistant Secretary for 
Economic Development, U.S. Department of Commerce, and Mr. 
William Shear, director of financial markets and community 
investment, U.S. Government Accountability Office.
    I ask unanimous consent that our witnesses' full statements 
be included in the record. Without objection, so ordered. Since 
your written testimony has been made part of the record, the 
subcommittee would request that you limit your oral testimony 
to 5 minutes.
    Assistant Secretary Fernandez, you may proceed.

TESTIMONY OF JOHN R. FERNANDEZ, ASSISTANT SECRETARY OF COMMERCE 
  FOR ECONOMIC DEVELOPMENT, U.S. DEPARTMENT OF COMMERCE; AND 
  WILLIAM B. SHEAR, DIRECTOR, FINANCIAL MARKETS AND COMMUNITY 
       INVESTMENT, U.S. GOVERNMENT ACCOUNTABILITY OFFICE

    Mr. Fernandez. Thank you very much, Chairman Denham and 
Ranking Member Norton and members of the subcommittee. I 
certainly want to thank you for the opportunity to testify 
today on behalf of the Economic Development Administration.
    Now, there is no denying that this is a tough economy. The 
country is recovering from the deepest recession since the 
Great Depression. And while there has been progress, economic 
and job growth has not been strong enough nor fast enough. We 
clearly have more work to do.
    And while we acknowledge the work at hand, we must also 
operate in a constrained fiscal environment. One of the most 
important urgent things that we can do for the economy is to 
get our fiscal house in order, and reduce our Nation's deficit. 
In this context, the focus of today's hearing is particularly 
timely and very important.
    When we look closely at thriving economies, we see at their 
core a business climate that supports innovation, industry 
clusters, the development and growth of entrepreneurs and small 
businesses. EDA's investments--public-private partnerships to 
create jobs and encourage business expansion. Importantly, the 
investments that we make support bottom-up strategies developed 
by the local and regional leaders. This orientation, that the 
best ideas bubble out from the regional and small business 
leaders, is a critical element of EDA's success.
    Rather than pursuing a one-size-fits-all approach, EDA's 
funds customize solutions. EDA's unique portfolio of flexible 
programs allows us to respond to the changing regional 
conditions. We are able to do this, because EDA is the only 
Federal agency with economic development as its sole purpose.
    I recently visited Fresno, California, an area particularly 
hard hit during the economic downturn. EDA funds helped 
construct the Claude Laval Water and Energy Technology 
Incubator. At WET, as they call it, start-up companies and 
entrepreneurs are doing cutting-edge research in the use of 
water, supporting the agricultural sector while helping small 
new businesses grow. WET reports that, since opening their 
doors in 2007, it has launched 15 businesses, leveraged $17 
million in private capital, and created 95 jobs.
    This incubator is also a good example of how EDA has been 
successful linking programmatic support across Federal agencies 
in a highly complementary way. At WET, the USDA, Rural 
Development, and the SBA provide programmatic support in a 
facility constructed with EDA funds. There are other examples 
in my written testimony of this kind of collaboration.
    EDA is also using its knowledge of best practices to 
further advance regional economic growth strategies through 
coordinated Federal investments. For example, we recently 
announced the Jobs and Innovation Accelerator Challenge. The 
Jobs Accelerator, through a single competitive process, offers 
$33 million in funding from 3 different Federal agencies, as 
well as technical assistance from another 13, so that we can 
support 20 competitively selected industry clusters with high-
growth potential.
    This initiative represents the Administration's policy 
priority to accelerate bottom-up innovation, while bringing 
together siloed Federal programs and promoting more coordinated 
Federal investment opportunities.
    Now, every region across the country has unique economic 
challenges, opportunities, and assets. The diversity of these 
regional economies also reflects the complexity that often 
makes up an economic development ecosystem. Working with the 
regions to develop local economic development strategies, we 
can leverage these opportunities for the central purpose of 
increasing productivity and job growth.
    EDA's bottom-up approach to economic development is the 
ability to customize our solutions that address what the 
communities want. And the distinct authority and focus we have 
with this mix of flexible tools really allows us to customize 
our activities. Our tools include planning, we have economic 
development technical assistance, we support innovation 
infrastructure. While all of these programs may have a distinct 
focus and authority together, they bring flexible tools that 
address the critical economic needs of distressed communities.
    I want to also make a point that, you know, we are 
constantly looking for opportunities to improve how we operate. 
When I joined EDA it took, on average, 128 business days to get 
a decision on a grant. Today it is less than 20. We recently 
completed a public comment period on our regulations. Later 
this summer, we expect to publish streamlined regulations that 
are even more flexible, responsive, and improve accountability 
for the agency.
    Mr. Chairman and Ranking Member Norton and other members of 
the committee, EDA is proud of our performance, and firmly 
believes that the agency will continue to be a catalyst for job 
growth throughout the country.
    And I certainly look forward to answering any questions you 
may have today.
    Mr. Denham. Thank you, Mr. Fernandez.
    Mr. Shear, you may proceed.
    Mr. Shear. Thank you. Chairman Denham, Ranking Member 
Norton, and members of the subcommittee. I am pleased to be 
here this morning to discuss the potential for overlap, 
duplication, and fragmentation in economic development 
programs. In March, and then more recently in May, we reported 
on this issue. My statement is based on this work.
    Absent a common definition for economic development, we had 
previously developed a list of nine activities most often 
associated with economic development. Our recent work includes 
information on economic development programs at four agencies: 
Agriculture, Commerce, HUD, and SBA. Commerce administers 11 of 
the 80 programs we have included, with EDA representing 8 of 
the 11. According to the agencies, funding provided for these 
80 programs in fiscal year 2010 amounted to $6.2 billion, of 
which about $2.9 billion was for economic development efforts.
    Here I want to stress that our focus to date has been on 
the design of these programs. In other words, we have evaluated 
the permitted uses of funds and have not, as of yet, drilled 
down to see how each program's funds are actually distributed 
among various uses.
    In summary, based on our work to date, we have found that 
the design of each of these economic development programs 
appears to overlap with that of at least one other program, in 
terms of the economic development activities that they are 
authorized to fund.
    Commerce, HUD, SBA, and USDA appear to have taken actions 
to implement some collaborative practices, but have offered 
little evidence to us so far that they have taken steps to 
develop compatible policies or procedures with other Federal 
agencies, or to search for opportunities to leverage physical 
and administrative resources with their Federal partners. And 
the agencies--and here I mean the four agencies across the 
board--appear to collect only limited information on program 
outcomes, information that is necessary to determine whether 
this potential for overlap and fragmentation is resulting in 
ineffective or inefficient programs.
    Building on our past work, we are in the planning phase of 
a more indepth review that will focus on a subset of these 80 
programs. Just last week we met with EDA to discuss the current 
engagement. At this time we think that we may have a focus on 
the programs that fund entrepreneurial efforts.
    Based on the classification scheme we have used to date, 
six of the eight EDA programs can fund entrepreneurial efforts. 
Excluding community trade adjustment assistance, a program that 
did not receive any appropriation in fiscal year 2010, the 
remaining five programs are: grants for public works and 
economic development facilities; economic adjustment 
assistance; global climate change mitigation incentive fund; 
economic development technical assistance; and research and 
evaluation. The two remaining EDA programs, economic 
development support for planning organization and trade 
adjustment assistance, are classified as supporting one 
activity: plans and strategies.
    In our May 2011 report, we compared the 80 programs by 
identifying the primary targeted recipient for each program. 
And in our work going forward we plan to further differentiate 
the programs.
    In this work we plan to: identify the services that each 
program provides; explore alternative definitions for economic 
development and update, if necessary, the economic activities 
that are generally accepted as being directly related to 
economic development; evaluate the efficacy of collaborative 
relationships that have been established by the agencies and 
identify additional opportunities for collaboration; determine 
and apply criteria for program consolidation; and assess how 
program performance is measured.
    Chairman Denham and Ranking Member Norton, this concludes 
my prepared statement. I would be happy to answer any 
questions.
    Mr. Denham. Thank you for your testimony. Mr. Fernandez, 
you highlighted the WET incubator program on the campus of Cal 
State Fresno. Can you elaborate on how the EDA funds were used 
to create this incubator, and what was EDA's investment, and 
what are some of the key outcomes that you have seen already?
    Mr. Fernandez. Thank you, Mr. Chairman. Yes. The WET 
project came--you know, you have to back up. Before there was a 
proposal to fund WET, EDA was engaged with some of our partners 
there to develop strategies. And WET was an investment that was 
built on the strategies that they developed on how to diversify 
the economy and how to build on the assets they had.
    So it was tied to that initial strategy, which is an 
important distinction about how we make our investments. All of 
our competitive applications have to be tied to a clear 
economic development strategy that is sustainable. And that is 
why I think you see the sustained impact of these investments.
    WET itself was in--we invested $1.8 million to help with 
the construction. Those funds were matched by local sources. 
And as I noted in my testimony, since 2007 we have seen the 
results of the 15 new companies, $17 million--there is several 
companies that are already becoming market leaders in their 
industry sector, 95 new jobs.
    But, most importantly, it has been a catalyst to bring 
together private and public support for this industry sector 
that they are trying to grow. So you see companies like Amazon 
and Microsoft providing programmatic support to the tenant 
companies. You see not just USDA's Rural Development and SBA 
providing program support, but also the city of Fresno, other 
cities in the area, and the workforce investment board.
    So, together, you know, we funded to help fund the 
facility, but other agencies, public and private, are bringing 
the programmatic support to support those entrepreneurs and 
help them grow their businesses.
    Mr. Denham. And the GAO has raised concerns about the self-
reported nature of EDA's job creation figures. Can you talk 
about how EDA arrives at some of the job creation numbers, and 
what steps you are taking to ensure that those numbers are 
correct?
    Mr. Fernandez. Yes. I think this is a very important 
question that GAO has reported and brought up. And you know, as 
they note, our applications require that the various applicants 
submit estimates, estimates on projected job growth, as well as 
potential private sector leverage. They are self-reported, and 
that has been one of the areas that folks have brought up from 
time to time, in terms of the accuracy.
    But it is important to note that, you know, in addition to 
the Grant Thornton study that essentially validated the 
methodology that EDA uses to generate the projected impact of 
these investments, that our GPR reports, which include the job 
numbers and the private sector leverage, have been 
consistently, you know, on target. And I think there is only 1 
year in recent reporting where the projected estimates were 
less--or the actual job creation numbers were less than 
projected, and that was from the 6-year count off of 
investments made in 2001.
    But what we do is that, in addition to the self reporting, 
there is a vigorous process at the front end, where people on 
the ground with the agency do due diligence. And they 
understand what is happening in the community and the regions, 
they know who the players are, and there is a little bit of art 
that goes along with the science of evaluating projects.
    We also do annual reporting from the recipients. They 
report back on the outcomes. We do these what we call----
    Mr. Denham. Does that annual reporting also include a 6-
month, a 1-year, 2-year, 5-year review on----
    Mr. Fernandez. It is the----
    Mr. Denham [continuing]. The sustainablity of those jobs?
    Mr. Fernandez. Yes, it's 3-, 6-, and 9-year increments.
    Mr. Denham. Three, six, nine.
    Mr. Fernandez. Because, I mean, most of economic 
development is really--in our work, it's really about building 
assets that communities can use to leverage production activity 
and growth of businesses. And they tend to have a long-term or 
medium-term impact. So we use a 3-, 6-, 9-year reporting.
    But we do--we call them A123 audits, where we look at the 
reporting, look for anomalies, look if it's consistent with our 
own studies and analysis over the years. We do a sampling of 
site visits. We can only do a limited number, based on 
resources we have. But that's another mechanism that we use to 
go validate the numbers.
    But again, I mean, the Grant Thornton study essentially 
said that, while there are limitations to self-reporting, in 
the main the numbers that we are using to estimate impacts are 
pretty consistent with their findings.
    Mr. Denham. Thank you. My time has expired. Ms. Norton?
    Ms. Norton. Thank you, Mr. Chairman. I wish you would 
discuss the stimulus funds that the EDA got, how they were 
used, and what the results thus far are.
    Mr. Fernandez. Well, the--thank you. The Stimulus Act 
allocated about $150 million to EDA for our programs. $147 
million of that went directly into our projects. We were able 
to obligate 100 percent of those funds within the first year of 
the program. And to date we have dispersed about 63 percent of 
the funds. So all but one of the projects are actually in 
progress.
    You know, it was a limited amount of money, but the vast 
majority of our dollars went into construction projects, 
infrastructure projects. So, you know, we have not been to 
the--we are not to the point where we are getting the 3-year 
reporting on outcomes, but we anticipate that the lift from 
those dollars are going to be significant, and consistent with 
our other programs.
    Ms. Norton. I wonder if both of you could comment on the 
real effects--the effects on the ground--if there is no 
reauthorization this year. Does it matter that there is no 
reauthorization? What is the effect?
    Mr. Fernandez. Well, I mean, you know, there is real 
effects and perceived effects. I think that as long as the 
budget includes funding for EDA, it certainly enables us to 
continue----
    Ms. Norton. Well, what does the budget include now? What--
how much cut in 2011 was proposed? I suppose you don't know yet 
for 2012. How much down or up, or whatever it turns out to be 
in 2012?
    Mr. Fernandez. The continuing resolution for fiscal year 
2011 maintained our program support at the same level as the 
previous fiscal year. We did have a cap on our salary and 
expenses, which has created some challenges for us. We don't 
know what is going to happen in 2012. The proposal the 
President made actually increased funding for EDA in a modest 
way, but that was in the context of a discretionary, non-
defense spending freeze. And I think the statement of the 
prioritization of economic development--you know, we look 
forward to seeing the outcome of the budget process.
    Ms. Norton. Yes, do you have a comment on that?
    Mr. Shear. Our focus tends to be on the programs that are 
in place, the expenditures that are made, and we don't focus on 
reauthorization. But one of the things that we'll be looking 
for with reauthorization, as well as the appropriations process 
in EDA's plans, is what resources EDA has in place to evaluate 
the investments that they are deciding to make, and how they 
evaluate those investments after they are made.
    Ms. Norton. Yes. Indeed I have a question on that. I must 
say that the leveraging effect of EDA argues very strongly for 
funding it. It's not as if this agency gets any money. What 
this agency does is to give the functional equivalent of the 
seal of approval that work that the community wants to do, and 
then they come in. They see the government thinks this is 
worthwhile, and then the private sector--if you will forgive 
me--piles on, and sometimes the State and local governments, as 
well.
    I don't think there is anything else like it, so it would 
be pretty penny unwise and pound foolish to cut this leveraging 
effect.
    Finally, this notion of what the impact is that both Mr. 
Shear and Mr. Fernandez comment on, I noted that there was 
something I find very interesting used, because it's very 
difficult, I understand, to estimate impacts and to discuss 
them intelligently. The--one of your consultants, Grant 
Thornton, apparently installed something called an ``impact 
estimation tool'' on the EDA computer system.
    So, one, I would like to know how this works, whether you 
are using it, and I would like to ask Mr. Shear, in light of 
the GAO report that says that estimate impacts are sometimes 
unreliable, whether you think this kind of a tool will be 
effective.
    So first let's hear from Mr. Fernandez.
    Mr. Fernandez. Yes, I think your question----
    Mr. Denham. Very quick response, please.
    Mr. Fernandez. We use a version of the tool that uses the 
same methodologies. But I can't say with certainty we actually 
use the specific computer program--or at least the algorithms--
that they created. Ours are very conservative, I would note.
    But I would note, if I could, Mr. Chairman, quickly, 
another thing that Grant Thornton noted is that while we have 
focused on job creation and private sector leverage, arguably 
we underestimate and under-report the full economic benefit and 
community benefit of the investments we make, because we are 
not looking at induced impacts, we are not looking at the 
broader community impacts.
    Many agencies at the State and local level use things like 
implant that have input-output models that can really tell much 
more robust economic impact from investments we make.
    We are taking a very narrow sliver here. But for us, the 
jobs and the leverage are really important, but we got to get 
back to what are our investments really designed to do. And 
they are to create assets, economic development assets in 
communities that they can use to help advance their economic 
development strategy. And it is hard to completely evaluate the 
full economic benefit of increasing the asset base in the 
community.
    Mr. Denham. Thank you, Mr. Shear. Anything to add very 
briefly?
    Mr. Shear. Yes. I will start out by saying we think the 
Grant Thornton study is useful. The tool itself I can't speak 
to, and so I defer to Mr. Fernandez.
    But the point you made--which is an excellent one--this is 
difficult to estimate. It is a very difficult exercise. And, to 
some degree, we are going to be looking not just at what Grant 
Thornton addressed, but where and how EDA has implemented Grant 
Thornton recommendations for improvement. We are also going to 
look more generally at the metrics that are used to evaluate 
EDA investments.
    Mr. Denham. Thank you. Mr. Crawford?
    Mr. Crawford. Thank you, Mr. Chairman. I have just a real 
quick question for Mr. Shear. Thank you for your time today.
    Do you believe more jobs will be created with less cost, if 
some programs were consolidated? And if so, talk about some of 
those programs, what they would be.
    Mr. Shear. Many times, outside of the committee setting, I 
have gotten that question. And I really have to revert back to 
the idea that we have identified areas of potential overlap. We 
will look for areas where consolidation could be helpful and 
where collaboration could be helpful. But it is difficult to 
put our finger on it at this point.
    I will just mention some of the programs. There are some 
programs that address counseling and training for 
entrepreneurs. Some of those programs have been a focus of the 
small business committees. There is also some focus as far as 
some programs, such as community development block grants, 
which are many times used for economic development purposes, is 
a way to provide funding where the locality has more control, 
in contrast to EDA.
    So, there are different approaches for economic 
development, but we really can't yet identify any where 
consolidation or different types of coordination and 
collaboration could really improve. We are trying to get to 
that point.
    Mr. Crawford. I yield back.
    Mr. Denham. Thank you. Ms. Edwards?
    Ms. Edwards. Thank you, Mr. Chairman, and thank you very 
much, gentlemen, for your testimony.
    I have a couple of questions for you, Secretary Fernandez. 
You mentioned in your testimony that the grant cycle had been 
significantly reduced. And it does strike me that that is one 
of those areas where, if you look at the comparable--the 
agencies that were compared in the GAO report, where there have 
been significant issues raised about the length of time that it 
takes to proceed through a grant cycle, and then that distance 
in time creating some differences in terms of what was 
originally planned versus what can be accomplished, and I guess 
I wonder, in a coordination role, whether there are some things 
that you have learned, in terms of tightening up that process, 
that actually could be useful to some of the other agencies 
that are also doing similar economic development activity.
    Mr. Fernandez. Well, thank you. I guess I would put this in 
context. I mean I spent nearly 20 years doing economic 
development, primarily at a local level. I was a mayor for 8 
years, worked in real estate and investment. And, you know, 
that experience kind of colors my perspective.
    And when you're the customer, the bottom line is you need a 
decision. Even if it's a decision that says no, if I can't get 
my deal financed I need to know so I can move on to Plan B. So 
that was kind of the perspective that I bring to EDA. And when 
you look at a process that was taking, on average, over 128 
days, that is very difficult for folks to make informed 
decisions, particularly in these economic times, and where 
money is tight.
    So, I guess what--the lesson learned would be that we did a 
pretty deep dive into every step of the process. We did, like, 
a fishbone analysis and said, ``Here is all the different 
things that happen. Where are their opportunities to 
consolidate activities? Where are their activities that aren't 
really value-added into the decisionmaking process,'' and got 
rid of them.
    But most importantly--and this was a substantial change for 
EDA--we went to a quarterly tranche system with firm deadlines. 
Prior to this new process, we didn't have a firm deadline. So 
we would have rolling applications, which--you know, there is 
an upside to that, as well. But when you're competing for 
limited money, you never know where you're at in the cycle, and 
you never know who you're competing with. And, as an agency, it 
is hard for us to tell the story from an accountability and 
transparency perspective.
    So, we were able to come--you know, do this new process. We 
had a lot of stakeholder input. And we did this in a way that 
hasn't diminished the consultive role that EDA plays.
    So, when you submit an application today, within 15 
business days we will do a quick merit review and tell you 
where there are strengths and weaknesses in your application, 
and give you an opportunity to fine-tune it, make it stronger. 
And then, when we go into the competition, we know that we are 
getting projects that have been really well put together, and 
it is highly competitive.
    And, you know, when we look at how we measure impacts, and 
whether or not it is a good program or not, I mean, one of the 
things we have to bake into our thinking is that there is a lot 
of due diligence that goes in at the front end for EDA 
selecting projects, because we are so oversubscribed that we 
can't justify not selecting highly competitive projects.
    The other thing I would just note, though, is that--really, 
based on my own experience--is that in many instances it is not 
a matter of whether you consolidate programs. But are you 
coordinating them? And so you have different kinds of Federal 
resources that are really more complementary than duplicative. 
But the trick is that if you are trying to do a 
multidisciplinary solution to a problem on the ground, you 
still got to have a streamlined, synchronized decisionmaking 
process.
    The way it is today is that you may have to go to three 
different Federal agencies that have three different 
grantmaking processes, three different timelines, and when you 
add it all up together you really have increased my transaction 
costs, and the decision cycle is unpredictable, and usually way 
too long.
    So, what we have tried to do is take the lead in these 
coordinated efforts, where we bring multiple agencies together 
to complement our investments, do it in a seamless system that 
has a set deadline, where all of the decisions are made. And 
that is something that our customers desperately want, and I 
think that is where there is a tremendous opportunity to 
enhance the performance of all these programs, not necessarily 
by consolidating, but enhancing the collaboration and 
coordination.
    Ms. Edwards. Thank you. And just as my time closes, I 
wonder if Mr. Shear could comment on this. Because I think when 
you look at the other programs that you evaluated, this is a 
huge complaint that we get, both from the local level--about 
the process of getting those grants. And is that something that 
you actually looked at?
    Mr. Shear. In our work over the years--which has taken us 
to EDA a number of times--we are aware of the problem. It has 
been a while since we did audit work to focus in on them. But 
we are certainly aware of the problem. And when there are 
different ways that localities can make use of Federal funds to 
try to affect economic development, different types of 
community development, or to build up its small businesses, it 
does become a problem when it is hard to get decisions from any 
one agency, or when you find yourself having to meet the 
requirements of agencies that don't have compatible policies.
    Ms. Edwards. I strongly suggest a really deep look at the 
grant cycle process, and where that crosses over these 
agencies, because I think that there are some real lessons to 
be learned there.
    Anyway, my time has run out. Thank you.
    Mr. Shear. Thank you.
    Mr. Denham. Thank you. And thank you for your testimony. 
Your comments have been very helpful today. I know that there 
are a number of other questions that we have; we will submit 
those to you in writing.
    I will now call our second panel of witnesses: Mr. Steve 
Etcher, executive director of Boonslick Regional Planning 
Commission; Mr. David Spaur, president, Merced County Economic 
Development Corporation; and Mr. David Baker, senior vice 
president, FutureFuel Corporation.
    I ask unanimous consent that our witnesses' full statements 
be included in the record. Without objection, so ordered.
    Since your written testimony has been made part of the 
record, the subcommittee would request that you limit your oral 
testimony to less than 5 minutes.
    And at this time I would like to recognize first Mr. 
Crawford for a short statement.
    Mr. Crawford. Thank you, Mr. Chairman. I am privileged to 
introduce one of our witnesses today, Mr. David Baker, the 
senior vice president of operations support for FutureFuel 
Chemical Company located near Batesville, Arkansas, in the 
district that I am privileged to represent. FutureFuel has a 
30-year history in developing and manufacturing complex 
specialty chemicals. Today FutureFuel is an active participant 
in the U.S. biodiesel industry.
    Additionally, FutureFuel is engaged in the evaluation of 
technologies used to manufacture cellulose-derived fuels and 
other bio-based products that have the potential to reduce our 
dependence on foreign oil.
    Shortly after the November election I had the privilege to 
visit with David and the leadership at FutureFuel. I was 
extremely impressed by their team and their facilities, located 
on the banks of the White River. They are a leader in Arkansas, 
as well as the Nation, by investing in research and development 
that is led by well-qualified doctorate-level researchers. 
Their company is a prime example of the manufacturing process 
being driven by high-tech research and development.
    It is my honor and privilege to introduce before the 
committee Mr. David Baker. Thank you for being here.
    Mr. Denham. Thank you. And Mr. Etcher, you may proceed.

   TESTIMONY OF STEVE ETCHER, EXECUTIVE DIRECTOR, BOONSLICK 
 REGIONAL PLANNING COMMISSION, AND EXECUTIVE COMMITTEE MEMBER, 
NATIONAL ASSOCIATION OF DEVELOPMENT ORGANIZATIONS; DAVID SPAUR, 
     PRESIDENT AND CEO, MERCED COUNTY ECONOMIC DEVELOPMENT 
CORPORATION; AND DAVID BAKER, SENIOR VICE PRESIDENT, FUTUREFUEL 
                        CHEMICAL COMPANY

    Mr. Etcher. Thank you, Chairman Denham, Ranking Member 
Norton, and members of the subcommittee, for the opportunity to 
testify today about Federal economic development programs, 
including the U.S. Economic Development Administration, or EDA. 
My name is Steve Etcher. I am the executive director of the 
Boonslick Regional Planning Commission, located in Warrenton, 
Missouri. I also currently serve on the executive committee of 
NADO, which is a national membership organization for the 
Nation's 540 regional planning and development organizations, 
including the EDA's 380-plus economic development districts.
    I would like to respectfully make three core points this 
morning.
    First, Mr. Chairman, I would like to stress that EDA is 
unique among the portfolio of Federal economic development 
programs. The agency's program flexibility, partnership 
structure, and performance results are exceptional within the 
Federal system. As GAO noted earlier, there are currently more 
than 80 Federal programs related to domestic, community, and 
economic development. While many of these line item programs 
are housed within larger departments and agencies, EDA is the 
only Federal agency with the sole mission of creating high-
quality jobs in the United States.
    Our second main point, Mr. Chairman, is that many of the 
programs outlined in the recent GAO reports support broader 
community development activities, rather than focusing strictly 
on job creation and economic growth, like EDA. While both of 
these related activities are necessary, especially for 
distressed communities, it is important to note how EDA 
supports regional and local economic development partners.
    By Federal law, EDA typically requires a 50 percent local 
cost share, and significant private sector investment. This 
helps to ensure local officials are committed to a project's 
success. EDA's investments are focused on high-quality, long-
term jobs. And, by Federal law, EDA's investments must be tied 
into a regional, comprehensive economic development strategy 
developed and vetted by local officials, including the economic 
development districts.
    EDA is uniquely designed to address almost any economic 
development activity, both from areas suffering from chronic 
distress, as well as more sudden and severe dislocation, such 
as plant closures and natural disasters.
    Our third main point, Mr. Chairman, is that there are many 
opportunities for reform within Federal community and economic 
development programs. This includes elevating EDA's role as the 
lead Federal economic development agency. This is important for 
better coordination and consistency. Rather than focus solely 
on opportunities across the four major Departments of Commerce, 
HUD, USDA, and SBA, as outlined in GAO's May 2011 report, we 
see greater opportunities for agencies and programs within each 
of these departments to be streamlined, better coordinated, and 
reformed.
    Another option is to focus on coordinating and prioritizing 
Federal community and economic development investments based 
upon regionally based, locally driven, comprehensive 
development strategies, known as the CEDS. While an area must 
have a CEDS to qualify for EDA funds, these regional strategies 
should be used more aggressively to inform, coordinate, and 
prioritize investments by other related Federal agencies.
    Finally, today's modern economy requires that distressed 
and underserved regions be prepared for the innovation and 
knowledge economy. Therefore, it is essential that EDA, as the 
lead Federal economic development agency, be more closely 
aligned with programs for workforce development, research and 
development, and science and technology, not just the 
traditional infrastructure partners.
    Mr. Chairman, please allow me to close by giving you a 
specific example of how our EDD, which is part of EDA's network 
of economic development districts, has helped prepare our 
region for the future. Our region was drastically impacted by 
major flooding in 1993, 1995, and again in 2008. Entire 
communities were destroyed. Businesses, infrastructure, homes, 
and jobs were completely washed away. EDA provided matching 
resources for our organizations to assist these flood-ravished 
communities.
    Our efforts were not focused on the immediate emergency 
response, like those efforts of our local responders and FEMA. 
Instead, our role is to work with our local communities and 
develop long-term economic recovery strategies, and to take 
strategic actions that will make our region more resilient 
during future natural or economic crisis. With support from 
EDA, we decided to tackle these challenges differently. We 
innovated, we collaborated, and we helped our local communities 
envision a life without the constant threat of flooding.
    In three separate communities during the past 20 years we 
physically relocated these flood-ravaged communities out of the 
flood plain, obtaining local buy-in, planning the logistics, 
and leveraging this change into new economic opportunities.
    We agree that Federal development programs can be better 
integrated, streamlined, and updated. We also feel that EDA and 
its EDD partnership network should serve as the backbone for 
these efforts at the regional level.
    Thank you again, Mr. Chairman, and members of the 
subcommittee for the opportunity to appear before you today. We 
appreciate your interest in this timely and important issue, 
and we look forward to continuing this dialogue.
    Mr. Denham. Thank you, Mr. Etcher.
    Mr. Spaur?
    Mr. Spaur. Thank you, Chairman, members of the committee. 
Congresswoman Edwards, I heard your comments, take those to 
heart, and Mr. Crawford.
    I am Dave Spaur, president, Economic Development 
Corporation, Merced County, located in the Central Valley of 
California. It is an eight-county region, I am one of eight 
counties. I served on that committee several years as its 
chair, been in the Central Valley over 10 years, and I have 
served on the board of directors of the International Economic 
Development Council. I do partner with NADO, and appreciate the 
assistance that these organizations provide to us, particularly 
in rural communities.
    I have about 25 years of economic development experience, 
mostly in California, a little bit in Arizona. I have worked in 
rural communities, I have worked in urban communities. Started 
working with Sierra Economic Development District. Kind of 
straddles Lake Tahoe, so it gives you a little bit of 
perspective of where it's at. They're a planning organization 
and an economic development organization, not an easy task.
    I wanted to state to this committee some of the important 
things, and focus my comments on some of the projects that we 
have been working on in the Central Valley.
    As you have heard from the chairman's opening comments, our 
unemployment rate is 17 to 22 percent. Some of our cities are 
23, 24, and 25 percent. And they have been that way for the 
past decade, or for the last 30 years. I am sure some of your 
communities are the same way. Chronic unemployment is an 
issues.
    Strategies is what reduces that. Infrastructure investment 
is what reduces that. We were on the Forbes list as the worst 
community for foreclosures in the entire United States. We were 
rated number one. I am proud to announce today we are rated 
number four. We haven't moved up the list much, but programs 
like EDA help us do that, and they are extremely important. 
There is just not enough funds to go around, so you have 
competing communities and competing counties. And I think, 
Congresswoman Edwards, some of the complaints you hear about 
EDA is, because there is not enough money to go around, we tend 
to compete with one another.
    EDA is a very stringent and conservative program under the 
Department of Commerce. And I think when they were first formed 
there might have been scrutiny. Are we really going to create 
jobs? And as a result, they have deed restrictions on 
properties when you enter into an agreement to build an 
incubator, or bricks and mortar for a building to help a 
company. On water and sewer--I have done airports, I have done 
water and sewer. And very stringent numbers on you have to 
create jobs. Because they are all about creating jobs.
    But the job reporting really doesn't get reported right. 
Because of their conservative approach, even the Grant Thornton 
report is counting direct jobs related to that project. There 
is hundreds of other jobs created after that project happens.
    EDA, what it is not, it is not an earmark. We all know 
earmarks have funded many infrastructure projects. Earmarks are 
very important in our district, as well as your district.
    Our experience is the bid process has been streamlined, but 
that is where a lot of complaints do come from. It is not a 
complaint to get rid of EDA, it is a complaint that we wish it 
were faster, we wish we got the money sooner.
    EDA is extremely cost effective. It forces private sector 
to come to the table. It forces me to provide a dollar-for-
dollar match, which--really, no other program does that out 
there. And it does bring the private sector and the public 
sectors together.
    The EDA leverage you have heard is really seven-to-one. For 
every dollar they put in, it leverages another $7. I think that 
that is extremely important.
    It's got a heck of a portfolio of projects. But accessing 
those portfolio of projects would be best practices. And I was 
fortunate to learn about one in Pomona, Cal Poly Pomona, on 
leveraging dollars for a hospital, for a blood bank, and for a 
biotech life science center. That came from Will Marshall, who 
handles southern California and the Central Valley. And I was 
trying to do the same thing in Sacramento, and he shared with 
me how that could be done. If we had more access to EDA and 
their other programs, we could look at best practices and we 
could look at better strategies on solving solutions across the 
United States. It's just not enough funds and not enough staff 
to go around.
    You have a list of the projects here. In Merced we have an 
Air Force base that closed, Castle. It has been difficult to 
get jobs there. But UC Merced came along, and UC Merced 
partnered, and we got a $4 million grant to bring in 
infrastructure, critical infrastructure. That has created the 
Solar Institute. And the Solar Institute is the world's 
foremost authority on energy efficiency, not just solar, but 
energy efficiency. And that center is now spurring off new 
company startups, and we assist those company startups. We 
don't get to count those jobs after those initial dollars went 
in; we wish we could.
    Also, Fresno, the $1.8 million that went into the WET lab, 
the WET lab started as a Central Valley business incubator. 
They design nozzles, drip irrigation to meter water, 
fertilizer, and the spray of pesticides. This technology is 
used in Israel. They have over 400 members. Most of their 
members are international. We don't get to count those jobs, 
the innovations that come out of that lab, not just for 
California, but across the world. We don't get to count those 
hundreds of jobs and hundreds of businesses that are created 
from that one important lab and partnership.
    Kings County, another county next to us, has benefitted, as 
well as the city of Stockton. And I wanted to point out the 
city of Stockton did an intermodal facility with the dollars 
that they received from EDA. A competitor to me in Fresno. And 
it relocated our intermodal facility when I worked in Fresno up 
to Stockton. It has created 27 companies as a result. It has 
become a logistics hub for the Central Valley. And each one of 
those eight counties in the Central Valley has benefitted from 
the jobs. Now, I am mad, I am angry I lost that intermodal 
facility to Stockton. But I am relieved, for the Central 
Valley, that it is creating jobs up and down the valley, and 
overall, it is helping the goods movement in California and 
reducing poor air quality.
    Mr. Denham. Mr. Spaur, if you could, wrap it up.
    Mr. Spaur. Certainly. The rest of the projects I think you 
can see in my testimony that is written and provided to you. I 
think what is most important is you need to realize EDA, as a 
program for economic developers, really needs to be thoroughly 
vetted, so you understand the benefits, so you understand there 
is not overlap there. There may be overlap in other programs.
    And if you wanted a strategy that could cut across the 
various programs, I think the Economic Development 
Administration, along with its partners, could deliver that for 
you. Thank you very much.
    Mr. Denham. Thank you, Mr. Spaur.
    Mr. Baker?
    Mr. Baker. Thank you, Chairman Denham, Congressman 
Crawford, and Congresswoman Edwards, and other members of the 
subcommittee, for this opportunity to testify today about our 
experience with the U.S. Economic Development Administration, 
our region's economic development district, and the impact that 
it has had on our company.
    My professional background includes four decades of 
chemical industry, both domestic and international, with 
Eastman Chemical Company. I worked in Asia and Europe, and 
while domiciled there, worked with economic development 
agencies in those countries.
    FutureFuel Chemical Company is a subsidiary of FutureFuel 
Corporation. We are traded on the New York Stock Exchange now 
with symbol FF. We currently own 2,200 acres of land southeast 
of Batesville in north central Arkansas. We occupy about 500 
acres of that site with continuous manufacturing facilities, 
laboratories, and other infrastructure. In perspective, 
Batesville's population is 10,000; the county's population is 
37,000.
    Before we acquired the site, Eastman Kodak and Eastman 
Chemical constructed the site for production of photographic 
and imaging chemicals. Over the years they added other 
specialty chemicals. The site did quite well in some years. 
Unfortunately, it became non-core to Eastman Chemical Company. 
Employment declined from 750 in 1998 to approximately 400 when 
we bought the site.
    After the acquisition in 2006, we had an objective to 
become a world leader in the U.S. biofuels industry, which we 
had just begun at the site, while maintaining a facility status 
as a world-class specialty chemical manufacturer. The new 
ownership quickly realized that in order to facilitate growth, 
we needed infrastructure changes, additions in rail, truck, and 
storage. So we knew we could generate projects that could 
achieve those goals, but not without the infrastructure.
    By 2008, FutureFuel had developed a portfolio of time-
sensitive business opportunities. We shared those with White 
River Planning and Development, a district designated an 
economic development district by EDA. We also had shared our 
vision of the future with county leadership and Arkansas 
Economic Development Commission.
    White River Planning arranged a meeting for us with EDA in 
Austin, to share our vision, goals, and needs. And we were able 
to work with them and secure a grant that was granted in late 
2009 to Independence County. The grant was $3.4 million. The 
State of Arkansas gave us a grant of $2.4 million. Independence 
County provided some early site work for the project. We 
provided capital. And that total project was $7 million.
    The rail project should be complete late this year. Parts 
of it are usable. The results thus far, we have moved from an 
annual capacity for biodiesel from about 12 million gallons 
when we bought the site to more than 30 million gallons. We are 
completing projects that will give us 59 million annual rate 
using feed stocks that are not in the food chain. So we're a 
chemical company with technology, as Congressman Crawford 
indicated, that move into those areas.
    We also have increased or doubled our truck traffic in that 
time period. We doubled our rail traffic. We are adding many 
new products, including an anode material that goes into 
electric drive vehicles.
    Our region had experienced a lot of job losses, GDX almost 
600 jobs lost, White-Rodgers 125. We believe we are a success. 
We believe that all agencies believe that we have created what 
we said, the grants were funded. We have reacted to those. We 
continue to grow. We believe those resources will continue to 
grow our region. So we will add to the 100 jobs that we have 
already created at the job site.
    So, in closing, FCC is proud of our accomplishments as a 
new company. With the help and guidance of our economic 
development district on how to identify and leverage resources 
through a small investment from EDA, combined with local and 
State assistance, we have been able to experience tremendous 
growth at our site in rural Arkansas during an extremely 
turbulent and challenging business climate.
    Thank you, Mr. Chairman and members of the committee, for 
the opportunity to share with you today. Pleased to answer any 
questions.
    Mr. Denham. Thank you, Mr. Baker. Thank you to all of our 
panel for your testimony. I will now recognize each Member for 
5 minutes, starting with Mr. Crawford.
    Mr. Crawford. Thank you, Mr. Chairman. I just want to ask 
my constituent a couple of questions here.
    You highlighted in your testimony that your county in 
Arkansas in predominantly rural and agriculture in nature. How 
important are infrastructure projects such as the one you 
highlighted to spurring economic growth in rural areas?
    Mr. Baker. Yes, I think it is very important for a county 
and a State that has experienced, like the rest of the country, 
unemployment problems. We add jobs to the region. It attracts 
other industries to support the industries already there, and 
it grows the infrastructure for the county, in order to have 
goods and services that aren't available in the area come in 
and locate there.
    Mr. Crawford. Excellent. As you may know, the GAO has 
identified 80 programs in 4 different departments that fund 
economic development programs. Did your company explore any 
other Federal programs? And, if so, was there any particular 
reason--or, if not, were there any particular reasons they were 
not pursued?
    Mr. Baker. We have looked at those programs that are a fit 
for our company. So we were a recipient of a U.S. rural grant 
for biodiesel. That has helped us expand. We are constantly 
looking to see how we can leverage our dollars, which have been 
significant at the site, with Federal to grow and provide jobs.
    Mr. Crawford. OK. And finally, given your experience with 
EDA on this project, are there areas of improvement you would 
recommend?
    Mr. Baker. We have had a very good experience. I am sure 
there are things that could be helped. The time cycles, 
obviously, are slow. But they are to make sure that the 
projects are worthy of funding. So, in order to get the good 
projects, obviously that part of the program needs to be intact 
and working well.
    Mr. Crawford. Thank you, Mr. Baker. I yield back, Mr. 
Chairman.
    Mr. Denham. Thank you. Ms. Edwards?
    Ms. Edwards. Thank you, Mr. Chairman. And again, thank you 
to the witnesses.
    Mr. Etcher, I am really intrigued by your testimony, and by 
the experience of your members. And I wonder. In the GAO report 
one of the things that was pointed out was this idea of 
multiple programs, potentially some duplication of activities. 
But it does seem to me that duplication, in and of itself, is 
not a reason not to fund in these areas.
    I mean I was a grantmaker at one point, and one of the ways 
that we use duplicative funding was to try to experiment with 
some things, to see, in some places where, you know, something 
could work, and maybe something else would work someplace else.
    And so, I wonder if you could comment about that, because I 
worry about going down a track of saying, ``Well, this is 
duplicate, and so therefore, stop doing one thing,'' as opposed 
to looking at this more holistically, and looking at the idea 
of collaboration.
    Mr. Etcher. Thank you. That is an excellent question. I 
guess my initial response is when I hear the word 
``duplicate,'' I am thinking of something that is exactly 
identical. And I think within that Federal program, or 80 
Federal programs, you are not going to find exact replication 
of each and every one of those programs. They may have a broad 
mission of economic development or community development, but 
they are each individually uniquely designed to address a 
specific need or clientele or eligibility. So, you are not 
having two programs offering the exact same service, the exact 
same benefits. They are all unique.
    The beauty of that, from a practitioner's standpoint, 
though, is you can take your local and regional needs and apply 
them to those specific programs that respond specifically to 
those needs that are local and regional.
    So, while we can streamline it, and I think we can do more 
integration, more coordination, to just blanketly call them 
duplicative--they are not exact.
    Ms. Edwards. Thank you. And I wonder if you could speak to 
this idea of what it takes to coordinate and collaborate.
    One of the things that I have learned is that coordination 
and collaboration require funding. You cannot just expect 
agencies to do it on their own. Or local governments to do that 
on their own in a region, because people are strapped for 
resources, they have their own mission and activity.
    And I wonder if you could speak to the role that the EDA 
can play in encouraging and underwriting the kind of 
collaboration and coordination that is actually necessary to 
achieve success.
    Mr. Etcher. Excellent question. And EDA already plays a 
role in that. They fund, through their planning partnership 
program, the economic development districts. What that does is 
it provides expertise, at the practitioner level, to help 
encourage coordination among local, State, and the various 
Federal programs. Obviously, that investment is critical to our 
organization. That is what gives us the staff resources to 
bring the various funding agencies together, whether it be SBA 
and EDA, or whether it be CDBG and the EDA.
    Without that local expertise--and some of that expertise is 
not cheap. I mean it takes more and more and more to sustain 
these organizations. But without that, I think what you would 
have is a very siloed approach to every specific problem, 
versus looking at what is good for the community and the 
region, the State, and the Nation, as a whole. So, EDA's 
investment allows that holistic address.
    Ms. Edwards. And then, of course, the worry is that once 
you get those silos, you actually end up spending way more 
money than you needed to on a given project or strategy, or 
community.
    I want to turn to Mr. Spaur for a minute, because I just 
have a bit of time left. And it is to ask about this--I mean I 
think EDA does a great job in terms of what they do for smaller 
and rural communities. I come from this large, metropolitan 
region. But buried within that large county are 20-some-odd 
municipalities that struggle with their own economic activity.
    And I wonder if you could speak to the role that EDA can or 
should play in those kind of areas, where you see pockets of 
disinvestment, but they get buried en masse beneath, you know, 
a larger urban area.
    Mr. Spaur. Absolutely, Congresswoman. I think Mr. Etcher 
hit the nail on the head, that comprehensive economic 
development strategy, the planning process that the EDA funds 
in their districts, really requires or forces collaboration. It 
is asking each community--so we have 6 communities in Merced 
County, I had 15 communities in Fresno County. Each one of 
those communities has to outline its priority projects. When 
they do that, you look at where there is leverage and where 
there is not. Are any of these compatible? If we fund one, 
could it help the other in the other city? And many times it 
can. Cal Poly Pomona was a good example. For UC San Francisco 
in San Francisco and Sacramento with UC Davis and Shriners 
Hospital.
    But these strategies force the collaborations. So we are 
trying to combine an eight-county economic development 
district. The first 2 years were competition among counties. 
They didn't want one district to control the submittal of 
grants. What it did do is it looked at all the projects in each 
of those counties and said, ``Hey, we have clusters. We've got 
logistics, we've got agriculture, we have biofuels, we have 
different--these life sciences that are going on,'' and of 
course the WET lab that binds them all together.
    Once we put all those together, the competition started 
dropping. Once EDA streamlined its submittal process--it's 
still not really fast, but it's quicker--once that happened, 
now we are able to pull the district and say, ``We don't 
control the submittals, you can submit them electronically. But 
if you want technical assistance, if you want alignment or help 
on your strategy, we will help you do that.'' So now, those 
small cities or rural cities get big-city help.
    Ms. Edwards. And I am way out of time. Thank you, Mr. 
Chairman.
    Mr. Denham. Thank you. And thank you, Mr. Spaur. Actually, 
my final question is on that exact example that you gave on 
this California Central Valley coalition that you are putting 
together, forming. How far along are you in that process of 
forming the coalition between all the eight counties?
    Mr. Spaur. We are at the completion stage. The last step is 
for each board of supervisors to pass a resolution and make an 
appointment to the board. We have the governor's letter. We 
probably have to refresh it, because we have a new governor. 
But we have the last step.
    Our comprehensive economic development strategy is out of 
date, so it is time to update it. So now is a good time to do 
it, when we submit the resolution to each of the counties. The 
only thing that is left is to seat the board. Now that we have 
eliminated the competition among the counties, and they are 
actually coming together to collaborate--these are very 
difficult times, so it is much easier to get people to 
collaborate.
    We just wish there were more funds for these economic 
development districts. We just wish there were more funds for 
the individual projects. They are oversubscribed. And the 
forming of the district will help us prioritize or lower the 
competition, so we can fund the most needed projects first.
    Mr. Denham. We also want to work with the State governments 
in leveraging dollars that may be available there. I know that 
the California partnership has been defunded. Is there anything 
that can be done with the California partnership and working 
with the formation of EDD, or are they just two completely 
separate issues?
    Mr. Spaur. Yes, sir, there is. The California Partnership 
for the San Joaquin Valley was an Executive order by the 
governor, and it formed these eight counties. We already had an 
eight-county group called the Central Valley Economic 
Development Corporation. Each economic development corporation, 
or EDC, pulls $11,000 together. And in that we do the business 
retention and business recruitment.
    We have been coming to Washington and talking to USDA and 
HUD and all the agencies. And all the agencies have said, 
``Partner regionally, work on innovation, and produce jobs, or 
no funding. Earmarks are gone. You need to collaborate.'' So 
this California partnership is the collaboration. This new 
economic development district is part of that collaboration. If 
we are going to get any more funds, it will be because we are 
regional, we are innovative, and we create jobs, and we work 
together.
    Mr. Denham. Thank you. And finally, I would just ask a 
quick response from each of you before we close.
    The common theme I heard from each of you is that it is too 
slow, we need to create more efficiencies. Can you give me 
specific examples of how we could better facilitate getting 
money moved quickly and into the hands of locals to be able to 
create jobs? Mr. Etcher?
    Mr. Etcher. Thank you, Mr. Chairman. I think EDA has taken 
some very progressive steps to streamline their process. I 
think other agencies can look at that process and say, ``We 
need to be more responsive, we need to be timely in the 
marketplace.''
    We are in a very competitive environment. And if the 
agencies continue to take lengthy processes, not only just in 
the evaluation and approval of the grants, businesses are going 
to go elsewhere, where they can be accommodated in a timely 
fashion.
    But moreover than that is there is a lot of process, once 
an application is funded, until construction can begin. And we 
need to continue to look at how can we reform and streamline 
that process so we are not an obstacle to business expansion 
and job creation in our regions.
    Mr. Spaur. Congressman, I think that EDA has done a great 
job in streamlining the process, and it has helped us greatly. 
They just--they don't have enough reps. If they had more reps 
to help you, coach you through the process, then you would get 
the projects done a lot faster and get them submitted faster, 
and eliminate some of the duplication. If there were more 
funding there, they wouldn't be oversubscribed, and they 
wouldn't overscrutinize. They are very stringent, and very 
conservative. It is because they just don't have the dollars to 
go around.
    Mr. Denham. Thank you. Mr. Baker?
    Mr. Baker. Yes. In our experience, our economic development 
district has been very helpful. They had a lot of experience in 
dealing with these programs before, have guided us through 
that. They were very efficient and effective. EDA was 
responsive. But again, there is a time lag there.
    So, I think experience with people in the program itself 
with the economic development district working with EPA helps. 
But also it continues to be an immense amount of paperwork that 
needs to be completed in certain sequences, in order to bring 
those projects to fruition. And if companies like ours have 
very time-sensitive business opportunities, they could lose 
those before they really developed.
    Mr. Denham. Thank you. I would like to thank each of you 
for your testimony today. It has been helpful in today's 
discussion.
    If there are no further questions I would ask unanimous 
consent that the record of today's hearing remain open until 
such time as our witnesses have provided answers to any 
questions that may be submitted to them in writing, and 
unanimous consent that the record remain open for 15 days for 
any additional comments and information submitted by Members or 
witnesses to be included in the record of today's hearing.
    [No response.]
    Mr. Denham. Without objection, so ordered.
    I would like to thank our witnesses again for their 
testimony today. And if no Members have anything to add, the 
subcommittee stands adjourned. Thank you.
    [Whereupon, at 11:55 a.m., the subcommittee was adjourned.]
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