[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]





     BUILDING A 21ST-CENTURY INFRASTRUCTURE FOR AMERICA: ECONOMIC 
                 DEVELOPMENT STAKEHOLDERS' PERSPECTIVES

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

                                (115-24)

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
    ECONOMIC DEVELOPMENT, PUBLIC BUILDINGS, AND EMERGENCY MANAGEMENT

                                 OF THE

             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             FIRST SESSION

                               __________

                           SEPTEMBER 13, 2017

                               __________

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             Committee on Transportation and Infrastructure



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             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                  BILL SHUSTER, Pennsylvania, Chairman
DON YOUNG, Alaska                    PETER A. DeFAZIO, Oregon
JOHN J. DUNCAN, Jr., Tennessee,      ELEANOR HOLMES NORTON, District of 
  Vice Chair                             Columbia
FRANK A. LoBIONDO, New Jersey        JERROLD NADLER, New York
SAM GRAVES, Missouri                 EDDIE BERNICE JOHNSON, Texas
DUNCAN HUNTER, California            ELIJAH E. CUMMINGS, Maryland
ERIC A. ``RICK'' CRAWFORD, Arkansas  RICK LARSEN, Washington
LOU BARLETTA, Pennsylvania           MICHAEL E. CAPUANO, Massachusetts
BLAKE FARENTHOLD, Texas              GRACE F. NAPOLITANO, California
BOB GIBBS, Ohio                      DANIEL LIPINSKI, Illinois
DANIEL WEBSTER, Florida              STEVE COHEN, Tennessee
JEFF DENHAM, California              ALBIO SIRES, New Jersey
THOMAS MASSIE, Kentucky              JOHN GARAMENDI, California
MARK MEADOWS, North Carolina         HENRY C. ``HANK'' JOHNSON, Jr., 
SCOTT PERRY, Pennsylvania                Georgia
RODNEY DAVIS, Illinois               ANDRE CARSON, Indiana
MARK SANFORD, South Carolina         RICHARD M. NOLAN, Minnesota
ROB WOODALL, Georgia                 DINA TITUS, Nevada
TODD ROKITA, Indiana                 SEAN PATRICK MALONEY, New York
JOHN KATKO, New York                 ELIZABETH H. ESTY, Connecticut, 
BRIAN BABIN, Texas                       Vice Ranking Member
GARRET GRAVES, Louisiana             LOIS FRANKEL, Florida
BARBARA COMSTOCK, Virginia           CHERI BUSTOS, Illinois
DAVID ROUZER, North Carolina         JARED HUFFMAN, California
MIKE BOST, Illinois                  JULIA BROWNLEY, California
RANDY K. WEBER, Sr., Texas           FREDERICA S. WILSON, Florida
DOUG LaMALFA, California             DONALD M. PAYNE, Jr., New Jersey
BRUCE WESTERMAN, Arkansas            ALAN S. LOWENTHAL, California
LLOYD SMUCKER, Pennsylvania          BRENDA L. LAWRENCE, Michigan
PAUL MITCHELL, Michigan              MARK DeSAULNIER, California
JOHN J. FASO, New York
A. DREW FERGUSON IV, Georgia
BRIAN J. MAST, Florida
JASON LEWIS, Minnesota
                                ------                                7

 Subcommittee on Economic Development, Public Buildings, and Emergency 
                               Management

                  LOU BARLETTA, Pennsylvania, Chairman
ERIC A. ``RICK'' CRAWFORD, Arkansas  HENRY C. ``HANK'' JOHNSON, Jr., 
BARBARA COMSTOCK, Virginia               Georgia
MIKE BOST, Illinois                  ELEANOR HOLMES NORTON, District of 
LLOYD SMUCKER, Pennsylvania              Columbia
JOHN J. FASO, New York               ALBIO SIRES, New Jersey
A. DREW FERGUSON IV, Georgia,        GRACE F. NAPOLITANO, California
  Vice Chair                         MICHAEL E. CAPUANO, Massachusetts
BRIAN J. MAST, Florida               PETER A. DeFAZIO, Oregon (Ex 
BILL SHUSTER, Pennsylvania (Ex           Officio)
    Officio)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
                                CONTENTS

                                                                   Page

Summary of Subject Matter........................................    iv

                               TESTIMONY

William C. Seigel, Assistant Executive Director, SEDA-Council of 
  Governments....................................................     6
Justin Hembree, Executive Director, Land of Sky Regional Council, 
  on behalf of the National Association of Development 
  Organizations..................................................     6
Brett Doney, CEcD, SCLA, AICP, President and CEO, Great Falls 
  Montana Development Authority, on behalf of the International 
  Economic Development Council...................................     6
Steve Linkous, President and CEO, Harford Mutual Insurance 
  Company, and Chairman, National Association of Mutual Insurance 
  Companies, on behalf of the BuildStrong Coalition..............     6
Jessica Grannis, J.D., LL.M., Adaption Program Director, 
  Georgetown Climate Center......................................     6

               PREPARED STATEMENTS SUBMITTED BY WITNESSES

William C. Seigel................................................    27
Justin Hembree...................................................    30
Brett Doney, CEcD, SCLA, AICP....................................    39
Steve Linkous, President and CEO.................................    49
Jessica Grannis, J.D., LL.M......................................    55

                       SUBMISSIONS FOR THE RECORD

Report submitted by witness Brett Doney, CEcD, SCLA, AICP, 
  ``Critical Condition: Infrastructure for Economic 
  Development,'' February 11, 2016, by Emily J. Brown, et al., 
  published by the International Economic Development Council....    63
  
  
  
  [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
 
     BUILDING A 21ST-CENTURY INFRASTRUCTURE FOR AMERICA: ECONOMIC 
                 DEVELOPMENT STAKEHOLDERS' PERSPECTIVES

                              ----------                              


                     WEDNESDAY, SEPTEMBER 13, 2017

                  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 a.m. in 
room 2167, Rayburn House Office Building, Hon. Lou Barletta 
(Chairman of the subcommittee) presiding.
    Mr. Barletta. The committee will come to order. The purpose 
of this hearing is to examine how we build a 21st-century 
infrastructure for America in the context of economic 
development and disaster resilience.
    First, as the chairman of the subcommittee with oversight 
over FEMA [Federal Emergency Management Agency], we are working 
closely with the Members, States, and communities devastated by 
Hurricanes Harvey and Irma. Our thoughts and prayers go out to 
the families and the communities that are impacted.
    I also want to acknowledge the brave and tireless work of 
the thousands of first responders, volunteers, and members of 
the Federal family that are helping respond to these 
catastrophic storms and pave the way for recovery.
    I have seen firsthand how disasters can upend and devastate 
communities: the loss of homes, jobs, cherished belongings, 
and, most tragically, lives.
    We must work to ensure the States and communities impacted 
by these hurricanes recover, and recover quickly. And, in 
recovering, it becomes even more critical to ensure that we 
rebuild smarter and better. It will not serve anyone well if we 
simply rebuild without incorporating mitigation measures that 
will minimize the impact of future disasters.
    Investment in mitigation ensures the wise investment of 
taxpayer dollars because mitigation strengthens infrastructure, 
saves lives, and reduces future disaster costs and losses.
    Today I hope we can find ways to ensure mitigation is built 
into our building and rebuilding process so that we can save 
lives and property.
    Critical in the recovery following a disaster is ensuring 
businesses and jobs return. Agencies like the Economic 
Development Administration, or EDA, provide critical assistance 
to help with economic recovery following a disaster.
    For example, in the district I represent, many businesses 
were impacted by floodwaters during Tropical Storm Lee, 
threatening businesses and hundreds of jobs. EDA's investment 
of $15 million for flood control systems in Bloomsburg, 
Pennsylvania, leveraged an additional $10 million in private 
investment and saved nearly 900 jobs.
    Today we also want to explore how we can strengthen 
economic development programs to more effectively leverage 
private investment in infrastructure and create jobs. And we 
want to examine how we can build and rebuild better to save 
lives, strengthen our communities, and reduce disaster costs 
and losses.
    But the mission of agencies like EDA and the Appalachian 
Regional Commission, or ARC, extend well beyond natural 
disasters. Federal economic development programs often provide 
the last piece of the puzzle distressed communities need to 
attract private investment, businesses, and jobs.
    For example, ARC's Partnerships for Opportunity and 
Workforce and Economic Revitalization, also known as the POWER 
Initiative, invested $9 million in Pennsylvania that will 
attract $33 million in private investment and create over 600 
jobs in coal-impacted communities.
    The grants from these agencies are usually tied to specific 
outcomes that increase their impact in distressed communities 
and ensure jobs are actually created and other goals achieved.
    I look forward to hearing from our witnesses how these 
programs work and what programs exist to improve upon them.
    In rebuilding our Nation's infrastructure, we cannot do it 
alone. It takes all levels of Government and the private 
sector. How do we maximize these economic development and 
disaster response programs to ensure good outcomes and quick 
recovery, while creating lasting jobs and economic growth? I am 
sure our witnesses today will help us answer these questions. I 
thank you all for being here.
    I now recognize the ranking member of the subcommittee, Mr. 
Johnson, for a brief opening statement.
    Mr. Johnson. Thank you, Mr. Chairman, and good morning. I 
wish to extend my condolences to those who have lost loved ones 
during the recent hurricanes. And my thoughts and prayers are 
with the survivors of both hurricanes. I wish them a successful 
recovery.
    Given the recent back-to-back hurricanes, which also went 
through Atlanta and other parts of Georgia as a storm, today's 
hearing on the importance of resilient infrastructure and 
promoting strong economic development is timely.
    The American Society of Civil Engineers, ASCE, has noted 
that the Nation has an infrastructure deficit. In fact, the 
ASCE has graded the Nation's infrastructure a D-plus. Between 
2016 and 2025, ASCE found that households will lose $3,400 each 
year in disposable income due to infrastructure deficiencies.
    Loss of individual income affects the ability of businesses 
to provide well-paying jobs, which in turn further reduces 
incomes. If this investment gap is not addressed by 2025, ASCE 
determined that the economy is expected to lose almost $4 
trillion in gross domestic product, resulting in a loss of 2.5 
million jobs by 2025.
    While the sorry state of infrastructure has a devastating 
impact on our national economy and its citizens in ordinary 
times, during times of disasters it also increases costs. 
Hurricane Harvey damage estimates range from $100 billion up to 
$180 billion. Swiss RE, a private reinsurance company, 
estimates that Hurricane Irma damage could cost $100 billion to 
$300 billion. The infrastructure damage caused by these 
hurricanes will negatively impact and affect the local 
economies with business disruptions and workers left jobless, 
or at least temporarily unemployed.
    The Nation cannot afford to continue on this path. We must 
rebuild, but it must be stronger, safer, and smarter. While 
devastating, these hurricanes provide the affected areas with 
an opportunity to be more resilient, going forward. For those 
communities that are not affected, this should be a wake-up 
call to invest in resilient infrastructure before disaster 
strikes.
    Studies have shown that investments in mitigation before 
disaster strikes saves $3 to $4 for every dollar spent on 
mitigation. FEMA's Pre-disaster Mitigation Program provides 
grants specifically for this purpose. By all accounts, FEMA's 
PDM program is working, which is why it is so baffling that 
President Trump proposed to reduce PDM funding by over $60 
million in his fiscal year 2018 budget. He wants to build a 
wall, rather than put America's infrastructure and the American 
taxpayers first.
    But President Trump has gone further. Instead of requiring 
communities to build back stronger, last month he revoked the 
Federal Flood Risk Management Standard. This standard would 
have required infrastructure projects built with Federal funds 
such as those the hurricane-impacted communities are about to 
undertake, be built back more resilient.
    This standard would have required projects to be rebuilt to 
one of three standards: the 500-year flood standard, a 
reasonable requirement, given that Texas suffered its third 
500-year flood in 3 years; using climate science-informed data; 
or constructing critical infrastructure 3 feet above the base 
flood elevation, and other infrastructure 2 feet above the base 
flood elevation.
    President Trump would be wise to follow the old adage: If 
something isn't broke, don't fix it. We have an opportunity to 
diminish future losses. Let's not throw it away. Congress needs 
to look out for all taxpayers and require these impacted 
communities to recover smarter and stronger where Federal funds 
are used. This is the only way to end the cycle of build, 
damage, rebuild.
    After a disaster, all sectors need to recover. FEMA 
estimates that up to 40 percent of small businesses do not 
return after a disaster. This means we need to invest in 
economic development activities in those areas and elsewhere. 
The Economic Development Administration, EDA, has a disaster 
assistance recovery program that affords local communities the 
flexibility necessary to recover economically after a disaster.
    As Congress looks at supplemental appropriations for 
disaster-affected areas, this committee must ensure that 
funding is provided for this program. For years, regional 
organizations in other parts of the country have successfully 
assisted local communities in achieving economic development 
through infrastructure investments. While Congress has 
authorized the Southeast Crescent Regional Commission, Congress 
has only appropriated minimal funding, and the President has 
yet to appoint a Federal cochair that would allow the 
Commission to become operational.
    My district, which is within the Commission's boundaries, 
has an unemployment rate of 8.9 percent, and a poverty rate of 
15 percent. We are already behind, and my district cannot 
afford to lose $3,400 per year due to infrastructure 
deficiencies.
    It is time for EDA to be reauthorized and adequately 
funded, and the Southeast Crescent Regional Commission must be 
stood up so that my district can experience desperately needed 
economic development. Investment in resilient infrastructure 
works, and is one of the best tools to address unemployment and 
poverty, and reduce disaster costs and losses.
    President Trump has called for infrastructure investments, 
yet has not provided a plan forward. Not only that, he has 
proposed to eliminate EDA and the only regional organizations 
despite their success. Congress needs to ignore President 
Trump's ill-conceived proposals and support local communities 
by reauthorizing funding for these proven programs.
    Thank you, and I look forward to today's testimony.
    Mr. Barletta. Thank you. At this time, I would like to 
recognize the chairman of the full committee, Mr. Shuster.
    Mr. Shuster. Thank you, Chairman Barletta. And thank you 
and Ranking Member Johnson for holding this important hearing 
today exploring what our Nation needs to build a 21st-century 
infrastructure.
    I want to welcome Mr. Seigel, whose SEDA-COG [Susquehanna 
Economic Development Association-Council of Governments] 
encompasses counties that are near and dear to my heart: 
Mifflin, Juniata, Snyder, Perry County, great places that I 
used to represent, and now I know--I believe Mr. Barletta and 
Mr.--no. Perry has a piece of that, too, but so does Marino. 
Yes. So again, great part of the State of Pennsylvania. And I 
miss them very much because they are strong Republican 
bastions.
    [Laughter.]
    Mr. Shuster. So, anyway, I was happy that Mr. Perry and Mr. 
Barletta and Mr. Marino got that part of the world.
    Again, before we start, also I want to offer my condolences 
to those who have lost loved ones, and to the families that 
were affected by Hurricanes Harvey and Irma, and our thoughts 
and prayers are with them.
    I also want to recognize the professionals at FEMA who are 
working night and day to manage the disaster response to those 
hurricanes, as well as, you know, across the States; the 
responders as well as the folks in the local communities. It 
has been a terrible tragedy. But again, watching America pull 
together, it is always--makes you feel proud and renews your 
strength and belief that America is the greatest nation in the 
history of the world.
    When these tragedies strike, as we have learned with 
Katrina, Rita, and Sandy, we need to be able to effectively 
help the people and those communities impacted. And from a 
policy perspective, we can never stop exploring ways to improve 
and invest in those disasters, in the preparedness, response, 
and recovery, and how these programs and capabilities can be 
improved.
    I know the folks from the BuildStrong Coalition are here 
today, and they are doing great work on--I have been to their 
facility in South Carolina. I think they burned a building the 
day I was there. But, you know, they can blow a building up, 
but it is a great facility, I would encourage everybody to go 
down there and see it--and the work they are doing is really 
great work--so that as we rebuild these communities, we are 
learning the lessons from what those folks are doing and that 
that industry is doing to make sure that we are doing the right 
thing as we rebuild these communities.
    I expect our witnesses today to address the critical 
issues. I know we got a great panel here today.
    But investment in infrastructure goes beyond disasters. On 
the economic development side, we have communities all across 
this Nation: struggling coal communities, small Appalachian 
towns, communities that are suddenly hit by disasters, and 
businesses are closing. And I know where I come from in 
Pennsylvania, it is all small, small and rural communities. So 
this is an incredibly important aspect of what we do.
    For many of these communities, agencies like the EDA and 
ARC provide the technical expertise and the seed money they 
need to spur the economic growth and create and save jobs. So 
it is incredibly important, I know, across the country. But 
certainly, I know in my district and Congressman Barletta's 
district and Mr. Johnson's district and the State, there is a 
great need for it.
    So I look forward to hearing from our witnesses today. And 
again, I want to--everyone affected by the hurricanes that have 
just occurred, we know that, as I said earlier, they are in our 
thoughts and our prayers. And we stand ready to help rebuild 
and recover those areas. So thank you very much.
    Mr. Barletta. Thank you, Mr. Chairman. We now welcome our 
witnesses. On our panel we have Mr. Bill Seigel, assistant 
executive director of SEDA-Council of Governments; Mr. Justin 
Hembree, executive director, Land of Sky Regional Council, 
representing the National Association of Development 
Organizations; Mr. Brett Doney, president and CEO, Great Falls 
Montana Development Authority, representing the International 
Economic Development Council; Mr. Steve Linkous, president and 
CEO of Harford Mutual Insurance Company, and chairman of the 
National Association of Mutual Insurance Companies, 
representing the BuildStrong Coalition; and Ms. Jessica 
Grannis, adaption program director, Georgetown Climate Center.
    I ask unanimous consent that our witnesses' full statements 
be included in the record.
    Without objection, so ordered.
    For our witnesses, since your written testimony has been 
made a part of the record, the subcommittee would request that 
you limit your oral testimony to 5 minutes.
    Mr. Seigel, you may proceed.

 TESTIMONY OF WILLIAM C. SEIGEL, ASSISTANT EXECUTIVE DIRECTOR, 
    SEDA-COUNCIL OF GOVERNMENTS; JUSTIN HEMBREE, EXECUTIVE 
   DIRECTOR, LAND OF SKY REGIONAL COUNCIL, ON BEHALF OF THE 
NATIONAL ASSOCIATION OF DEVELOPMENT ORGANIZATIONS; BRETT DONEY, 
   CECD, SCLA, AICP, PRESIDENT AND CEO, GREAT FALLS MONTANA 
DEVELOPMENT AUTHORITY, ON BEHALF OF THE INTERNATIONAL ECONOMIC 
DEVELOPMENT COUNCIL; STEVE LINKOUS, PRESIDENT AND CEO, HARFORD 
MUTUAL INSURANCE COMPANY, AND CHAIRMAN, NATIONAL ASSOCIATION OF 
   MUTUAL INSURANCE COMPANIES, ON BEHALF OF THE BUILDSTRONG 
 COALITION; AND JESSICA GRANNIS, J.D., LL.M., ADAPTION PROGRAM 
              DIRECTOR, GEORGETOWN CLIMATE CENTER

    Mr. Seigel. Thank you, and good morning. Good morning, 
Chairman Barletta, subcommittee members, and guests. I am Bill 
Seigel, I am the assistant executive director of SEDA-Council 
of Governments, a regional local development agency serving 11 
counties in central Pennsylvania. On behalf of SEDA-COG and the 
nearly three-quarters of a million residents of our region, we 
thank you for the opportunity to share our perspectives on 
infrastructure needs and the role of the Federal Government in 
our region.
    We are a rural region, historically defined by agriculture, 
anthracite coal, and manufacturing. Today we are challenged to 
redefine ourselves by maintaining and growing our manufacturing 
sector, while building our service industries.
    We look to the Federal Government to partner with us as we 
confront these challenges. Roads, bridges, and rail are 
important, but not to the exclusion of flood resiliency and 
technology in our 18th- and 19th-century communities. The funds 
offered through the Economic Development Administration, the 
Community Development Block Grant program, the Appalachian 
Regional Commission, and the Federal Emergency Management 
Agency, to name a few, are critical catalysts for our 
infrastructure projects.
    How do we build a 21st-century infrastructure in America? 
In central Pennsylvania it is through Federal, State, local, 
and private partnership, partnerships that protect and enhance 
the infrastructure in which we have already invested, and by 
complementing that investment with new infrastructure that 
allows the region and its industries to remain competitive.
    Allow me to share a success story. The town of Bloomsburg, 
as the chairman made reference, is located on the banks of the 
Susquehanna River and, until recently, was the only 
municipality on the Susquehanna without flood protection.
    Autoneum North America, a manufacturer of automotive 
carpet, today employs over 650 workers with an annual payroll 
of over $30 million. If you traveled here today by car, you 
likely placed your feet on their carpet. Autoneum faced a 
serious dilemma. Located in the special flood hazard area, 
their 100-year-old plant flooded every several years.
    If they chose to remain at this location, they placed 
themselves at risk of financial devastation, as is evidenced by 
their $60 million loss in 2011. The entire automotive 
manufacturing system and supply chain was slowed by the 
unavailability of automotive carpet while Autoneum struggled 
through shutdown and recovery. It affected the entire Nation.
    Relocation out of the flood hazard area had similar 
impacts, due to lost production time ripping through Detroit. 
They could not stay, they could not leave. But after Hurricane 
Lee and Tropical Storm Sandy, long-term customers began to 
waffle at contract renewal, and to investigate alternative 
suppliers, including foreign suppliers, to avoid the cost of 
flood-induced shutdowns.
    In 2014, SEDA-COG and the Columbia County commissioners 
were successful in obtaining a $15 million EDA grant to 
construct a flood protection system around Autoneum. With the 
EDA commitment, we leveraged $12 million from the Commonwealth 
of Pennsylvania, along with $2.5 million of private funds to 
construct a $30 million flood control system. SEDA-COG staff 
managed the funding and the project. We broke ground in 2015 
and completed the project last year under budget and ahead of 
schedule.
    I recently learned that several of Autoneum's major 
customers had placed contract renewals on hold until we broke 
ground for that project. Without the partnership of the Federal 
Government through EDA, it is with near certainty that I can 
say we would have lost this manufacturer, leaving the town of 
Bloomsburg without the employment and with a 42-acre vacant 
manufacturing facility falling into blight and generating 
little to no taxes.
    Protecting the existing infrastructure, in this example 
Autoneum North America, is a priority of SEDA-COG. Using the 
Federal tools such as EDA, CDBG, and FEMA pre-disaster 
mitigation, SEDA-COG is able to incentivize public and private 
partners. EDA support of LDDs [local development districts] 
allows us to develop and maintain a caliber of staff that 
otherwise would not exist in rural Pennsylvania, and which is 
critical to leading the economic and community development 
activities.
    In deference to time I would conclude by saying in order to 
build a 21st-century infrastructure, we must continue to 
partner at all levels of Government and business to address all 
three legs of this stool. We need to first maintain what 
exists. We need to protect it from the new threats.
    And we need to expand it to become globally competitive.
    Thank you very much.
    Mr. Barletta. Thank you for your testimony, Mr. Seigel.
    Mr. Hembree, you may proceed.
    Mr. Hembree. Thank you, Chairman Barletta, Ranking Member 
Johnson, members of the subcommittee, for the opportunity to 
testify this morning on infrastructure and the EDA's role in 
aiding rural and distressed communities. My name is Justin 
Hembree. I am the executive director of Land of Sky Regional 
Council. We are a public entity dedicated to economic and 
community development headquartered in Asheville, North 
Carolina.
    I am also a board member of the National Association of 
Development Organizations, known as NADO. NADO is a member-
based association of more than 350 regional development 
organizations throughout the country.
    NADO provides advocacy, education, research, and training 
to members, including 368 EDA funded and designated economic 
development districts, or EDDs. NADO members support local 
governments, communities, and economies through regional 
collaboration, comprehensive planning, and program 
implementation.
    I come before the committee to speak on EDA's role as a key 
facilitator of economic opportunity for distressed and 
underperforming communities. Since its creation under the 
Federal Public Works and Economic Development Act of 1965, EDA 
has provided direct financial and technical assistance, 
resulting in business and job growth, especially for small and 
rural communities.
    From fiscal years 2012 to 2016, EDA steered $2 billion 
towards local and regional initiatives, leveraging nearly $39 
billion in private investment, while helping to create and 
retain 321,000 jobs.
    Infrastructure investments are a major part of EDA's 
assistance to communities. A good example is the agency's 
recent investment of nearly $400,000 into a sewer line 
expansion and wastewater system upgrade for the small town of 
Mars Hill, North Carolina.
    The funding addressed additional capacity needs for the 
town's wastewater treatment plant, due to an expansion of Mars 
Hill University as well as the creation of a new industrial 
site.
    The sewer line also contributed to business expansion along 
the I-26 corridor. Overall, EDA's investment leveraged at least 
$585,000 in local and State funding. The project helped to 
create and retain 95 jobs with a private investment of $35 
million.
    The project also shows how EDA serves as an integrator of 
public and private resources. EDA identifies and invests in 
projects, in part, based upon participation from local and 
State partners. EDA investments also combine with resources 
from other Federal agencies such as HUD, Department of 
Agriculture, and the Appalachian Regional Commission.
    EDA also offers loan servicing for small businesses. EDA's 
revolving loan fund responds to the challenge of cost and 
access to capital involved with small business startup and 
expansion. EDA loan funding is often the last resort for small 
businesses seeking resources to launch and grow operations. 
Loans are managed by economic development districts to provide 
direct local oversight and compliance between lenders and loan 
recipients.
    To improve local processes, NADO has recommended the 
suspension of RLF [revolving loan fund] burdensome reporting 
requirements following loan repayment. A defederalization of 
the loan would cut unnecessary requirements currently endured 
by local administrators.
    As Congress considers a proposal to rebuild our Nation's 
infrastructure, EDA remains a strong resource to assist in 
Federal, State, and local economic development activities. 
Strategic movement of Federal resources will be key to ensuring 
taxpayer dollars are directed to the greatest infrastructure 
needs. EDA offers both a successful record and structure 
responsive to local and regional needs in infrastructure 
development, especially in rural areas.
    Again, thank you for the opportunity to address the 
subcommittee, and I look forward to answering your questions.
    Mr. Barletta. Thank you for your testimony, Mr. Hembree.
    Mr. Doney, you may proceed.
    Mr. Doney. Good morning. On behalf of the International 
Economic Development Council, our board of directors, and over 
5,000 members, thank you, Chairman Barletta and Ranking Member 
Johnson, for inviting me here today to share our perspective on 
this critical issue.
    Before delivering my prepared remarks, I would like to note 
that our full testimony includes a report written by our 
economic development research partnership of IEDC, titled, 
``Critical Condition: Infrastructure for Economic 
Development.''

    [The IEDC report entitled ``Critical Condition: Infrastructure for 
Economic Development'' is available on pages 63-150.]

    I would also like to take a moment to thank you for your 
kind remarks and appreciation of disaster recovery and response 
workers and volunteers. Across Montana and the West, we are 
fighting thousands of fires right now, and there are a lot of 
people this morning working out there, protecting lives and 
community.
    As economic developers, every day we work with businesses 
of all sizes to help them start up, expand, address adversity, 
and take advantage of new opportunities. Infrastructure is 
often a deal-breaking challenge to overcome. Iconic projects, 
such as the Erie Canal, the Hoover Dam, and the Interstate 
Highway System reflect investments that revolutionized the 
economic futures of the people and regions they touched.
    In economic development, more often we are challenged with 
smaller but no less critical infrastructure needs. Gaps in our 
local infrastructure that prevent businesses from creating the 
higher wage jobs desperately needed in too many of our 
communities and regions.
    EDA has been a critical partner in overcoming these deal-
killing infrastructure gaps. Our challenges today are greater 
than ever before. We need your help to ensure that EDA remains 
an instrumental resource and partner in helping those of us on 
the ground at the local level get things done.
    In my submitted testimony, in addition to the detailed 
report on how economic developers work with infrastructure, I 
provide a few examples of successful projects that have taken 
place in my community. I am happy to discuss these and answer 
questions about them, as well as our statewide Montana 
Infrastructure Coalition, but I will use my time to discuss 
suggestions for how economic developers might like to see this 
committee proceed as it addresses our infrastructure crisis.
    There are two opportunities we would like to highlight for 
EDA to advance infrastructure for the purpose of economic 
development.
    First, as has been discussed by this committee in the past, 
and by Mr. Hembree, the defederalization of revolving loan 
funds will allow communities to leverage existing funding with 
State and private-sector funding to potentially great impact.
    Second, the advancement of the division of economic 
development integration at EDA would result in streamlined 
processes and leveraged Federal investments, with the outcome 
of a better, more coordinated Federal engagement in local 
economic development efforts.
    I would also like to point out one other opportunity for 
your consideration. Economic recovery following disaster is a 
critical component to restoring communities. The national 
disaster recovery framework identifies the Department of 
Commerce, via EDA, as the lead Federal agency on economic 
recovery. Yet the Department was left out of Sandy's 
supplementals. We encourage the members of this committee to 
ensure the Department is included in future supplemental 
related to Hurricanes Harvey and Irma, hopefully also the 
western fires, as well as any future legislation regarding the 
role of the Federal agencies in disaster response and recovery.
    It has been suggested an explanation for calling for the 
elimination of the Economic Development Administration that the 
Department of Transportation could fulfill EDA's role in 
infrastructure. This demonstrates a lack of understanding of 
the type of infrastructure that EDA supports. The most 
straightforward description would be to consider it as ``last 
100 yards'' infrastructure.
    These are the sewer lines and rail spurs running into 
industrial parks and manufacturing plants that DOT money does 
not cover. These are the renovations of existing buildings that 
take the idea of a business incubator in a small town to 
reality. These are the expansion of broadband capacity that 
allows a Rust Belt city to move into the 21st century. These, 
to put it a different way, are the targeted, locally driven, 
strategically planned investments in infrastructure that EDA 
makes that no other Federal agency does on a national scale.
    We encourage this committee to look to the strengths of EDA 
and the regional development agencies, their institutional 
knowledge of local economic needs and abilities, and invest in 
them. Thank you.
    Mr. Barletta. Thank you for your testimony, Mr. Doney.
    Mr. Linkous, you may proceed.
    Mr. Linkous. Good morning. Thank you, Chairman Barletta, 
Ranking Member Johnson, and members of the subcommittee. Thank 
you for inviting me today to testify. My name is Steve Linkous, 
and I am the president and chief executive officer of the 
Harford Mutual Insurance Company. I also serve as chairman of 
the board of directors of the National Association of Mutual 
Insurance Companies. NAMIC is a founding and executive 
committee member of the BuildStrong Coalition, on whose behalf 
I am testifying today.
    Founded in 1842, Harford Mutual Insurance Company has grown 
from a small, local insurer serving homeowners and farmers in 
rural Bel Air, Maryland, to a regional company protecting 
policyholders in seven States and the District of Columbia.
    One of the reasons we have been providing property and 
casualty insurance products to our policyholders for over 175 
years is the mutual insurance model, where policyholders are 
put first.
    Harford Mutual is a member of NAMIC, the largest property 
and casualty insurance trade association in the country, with 
more than 1,400 member companies. As we have seen in recent 
days, now is more important than ever to consider the 
devastating and growing impact of severe disasters. And during 
this critical time for everyone in the path of these 
hurricanes, we commend the leadership of Chairman Barletta, who 
has never wavered in his mission to reduce disaster losses and 
better protect communities ahead of the next storm.
    As victims recover from the massive destruction left behind 
in the wake of Hurricanes Harvey and Irma, we should remember 
that the storms have not only destroyed lives and homes, but 
will have a devastating effect on the local economies for years 
to come. According to FEMA, 40 to 60 percent of small 
businesses never reopen their doors after a disaster. And 90 
percent of smaller companies fail within a year if they cannot 
resume operation within 5 days.
    But it is not just small businesses that suffer the long-
term effects of extreme weather. Rather, catastrophes have 
lasting ramifications on entire communities. A recent study by 
the National Bureau of Economic Research shows that counties 
hit by severe disasters experience greater out-migration, lower 
home prices, and higher poverty rates.
    As they wreak havoc on our economies and communities, 
natural catastrophes are also drastically increasing in 
frequency and severity, and creating an enormous burden on the 
Nation's taxpayers. Between 1976 and 1995, there were an 
average number of only 39 annual Federal disaster declarations.
    This number has skyrocketed to 121 between 1996 and 2015, 
during which we experienced Hurricane Katrina and Superstorm 
Sandy, storms that resulted in almost $180 billion in combined 
Federal aid. And many expect the combined aid sent to victims 
of Harvey and Irma could reach $200 billion.
    While victims of catastrophes like Harvey and Irma should 
always be the first priority, we owe it to America to 
drastically change our approach. We will always help victims 
get back on their feet. But I believe we should be doing more 
to keep them from becoming victims in the first place.
    Research has shown repeatedly that pre-disaster mitigation 
and more resilient construction is our best line of defense in 
the face of disasters. But the Federal Government has taken a 
reactive posture, spending 14 times more on rebuilding 
communities after, instead of preparing before the catastrophes 
strike. We have the science and the ability to do better, and 
we must implement a national strategy for investing in disaster 
mitigation in order to protect lives, communities, and taxpayer 
dollars.
    First, we must incentivize States to adopt and enforce safe 
construction standards. As part of this critical reform, 
essential assistance made available to communities after 
disasters could be used to develop and enforce such standards.
    Next, we must shift reactive post-disaster mitigation 
dollars to a new national Hazard Mitigation Grant Program, 
where funds could be used by communities to protect homes and 
mitigate risk before a disaster strikes.
    Additionally, Congress should adjust the Federal minimum 
cost share following a major disaster, based upon a State's 
resiliency. We should not treat States that put responsible 
mitigation measures in place the same as those that needlessly 
leave lives and homes vulnerable.
    Finally, the Federal Government should respond more 
efficiently to victims of disasters like Harvey and Irma by 
consolidating all Federal disaster assistance programs under 
FEMA.
    As Congress and the President work together to help the 
victims of disasters and improve the Nation's infrastructure, 
the time has never been more urgent to adopt a national 
strategy for investing in disaster mitigation, which will save 
lives, property, and billions of taxpayer dollars.
    Chairman Barletta, Ranking Member Johnson, and members of 
the subcommittee, thank you again for holding today's critical 
hearing. I look forward to answering any of your questions.
    Mr. Barletta. Thank you for your testimony, Mr. Linkous.
    Ms. Grannis, you may proceed.
    Ms. Grannis. Thank you to the distinguished members of the 
House Transportation and Infrastructure Committee for inviting 
me to testify on this important topic. My name is Jessica 
Grannis, I manage the adaptation program for the Georgetown 
Climate Center, an institute based at Georgetown University Law 
Center that supports State and local efforts to reduce carbon 
pollution and prepare for the impacts of climate change. Part 
of my work focuses on how Federal programs can better support 
State and local efforts to prepare for future climate impacts.
    This year of record-breaking weather and devastating 
impacts provides a sobering preview of what we can expect with 
greater frequency and intensity as the climate changes. Sea-
level rise, more intense heavy downpour events, and more 
extreme heat will increasingly affect people, property, and 
infrastructure.
    These events have also had significant economic and fiscal 
impacts. According to NOAA [National Oceanic and Atmospheric 
Administration] data adjusted for inflation, we saw an average 
of two billion-dollar disaster events per year in the 1980s. 
That number has risen to 10 per year since 2010. And 2017 is 
likely to break yet another record as the most costly year for 
natural disasters that this Nation has ever experienced.
    It is essential to talk about resilience now, as Congress 
makes billion-dollar decisions about how to fund long-term 
recovery. A fiscally responsible approach does not put 
communities back to the status quo and in harm's way. Congress 
should require that Federal investments account for anticipated 
future conditions and provide incentives to encourage 
communities to take proactive steps to reduce their own risks.
    Many cities and States are already taking action. Miami 
Beach, Florida, is investing $500 million to elevate roads and 
install new pumping systems, which the mayor reported helped 
the city avoid some flood losses during this week's Irma storm 
surge. After impacts from Hurricane Sandy, Fort Lauderdale 
rebuilt Highway A1A to provide additional flood protection. And 
cities in the Midwest like Chicago are upgrading their sewer 
systems and deploying green infrastructure to better manage the 
increasing rainfall that is already overwhelming their 
antiquated systems.
    Federal agencies have also been developing commonsense 
measures that ensure that taxpayer dollars are not being 
wasted. After Hurricane Sandy, disaster-affected communities 
were required to build back stronger. FEMA is also requiring 
States to consider climate change and hazard mitigation plans. 
Congress should support and encourage these types of proactive 
Federal agency actions.
    Although promising resilience practices are being developed 
at all levels of Government, much more needs to be done to help 
our communities respond to the increasing threats, and Congress 
should lead these efforts.
    First, Congress can reform and modernize Federal disaster 
recovery programs under the Stafford Act. Rebuilding to replace 
exactly what was damaged or destroyed to the pre-storm 
standards is not the responsible nor the fiscally prudent thing 
to do in an era of climate change. Congress can require 
recipients of disaster recovery funds to consider climate 
projections when reconstructing infrastructure with disaster 
recovery funds. Reinstating the Federal Flood Risk Management 
Standards that required projects using Federal funds to build 
to higher standards would be a good start.
    Congress should fund the programs that provide science and 
technical assistance that help State and local governments 
understand their risks and design assets to be more resilient 
to future changes, including supporting FEMA's flood plain 
mapping program.
    Congress can also simplify and harmonize administrative 
requirements for deploying disaster recovery funds to enable 
State and local grantees to more easily combine funding streams 
and reduce redtape for both grantees and administering 
agencies.
    Second, Congress should fund and encourage communities to 
proactively implement measures to reduce risks by funding 
FEMA's Pre-disaster Mitigation Program. More help is needed for 
communities preparing for other impacts, like extreme heat, 
droughts, and wildfires.
    Congress could also consider FEMA's proposal to create a 
disaster deductible, which would allow communities to be 
rewarded for the mitigation measures that they are already 
implementing on the ground.
    Finally, much more investment is needed in sound 
infrastructure, even without disasters. Congress could create 
and fund and consider infrastructure banks that are being 
deployed at the State level, or even look at a national 
infrastructure bank to enable private-sector investment in 
upgrading and enhancing the resilience of U.S. infrastructure 
systems.
    Thank you for the opportunity to discuss some commonsense 
actions that Congress can take to build the resilience of our 
communities and our Nation. More information about these 
examples is available in my written testimony and on our 
website. And I welcome your questions. Thank you.
    Mr. Barletta. Thank you for your testimony, Ms. Grannis. I 
will now begin the first round of questions, limited to 5 
minutes for each Member. If there are any additional questions 
following the first round, we will have additional rounds of 
questions as needed.
    I ask unanimous consent that Members not on this 
subcommittee be permitted to sit with the subcommittee at 
today's hearing and ask questions.
    With that, I will begin the first round. Mr. Seigel, as you 
point out in your testimony, economic development funding was 
critical in saving hundreds of jobs in Bloomsburg, 
Pennsylvania. Can you talk about the challenges small and 
distressed communities have in attracting private investment? 
And how do economic development programs help address those 
challenges?
    Mr. Seigel. Certainly, Mr. Chairman. The challenges we have 
in the small and rural communities of the SEDA-COG region 
begins with the fact that many of our communities have very 
limited staff.
    One of the important things that the Economic Development 
Administration as well as the Appalachian Regional Commission 
provides is support to organizations such as SEDA-Council of 
Governments to actually step in and serve as virtual staff to 
these communities in pursuing and in administering the Federal 
funds that are available.
    That is the same service that we provide to small 
businesses as they try to develop. We not only support 
communities, but we support the individual businesses and 
provide financing and assistance in pursuing and obtaining the 
funding that is necessary to move their projects forward.
    Mr. Barletta. Mr. Seigel, as you know, there are many coal-
impacted communities in Pennsylvania. How have EDA and ARC 
helped in getting these communities back on their feet?
    Mr. Seigel. Thank you. Currently, the Northumberland County 
and SEDA-COG are working jointly on a project that was actually 
funded through the POWER Initiative that you referenced 
earlier. That program is to assist coal-impacted communities. 
And while the program is aimed principally at current coal-
impacted communities, the reality is that within the SEDA-COG 
region, the anthracite coal was key to the development of this 
country many years ago. They are still impacted communities, 
with the loss of the anthracite coal industry that has 
declined.
    The POWER Initiative has provided us an opportunity to 
utilize over 6,000 acres of coal-damaged land located in Lower 
Northumberland County in the anthracite fields. And that 
acreage was virtually vacant. It was destroyed through many of 
the mining operations and disposal operations. And today we 
have converted that, and are in the process of converting that 
into the Anthracite Outdoor Adventure Area. We are sponsoring 
Jeep jamborees, four-wheel drive off-road jamborees, and it has 
turned into an outstanding economic development engine for that 
otherwise distressed community.
    Currently, the projects include the construction of 
communications towers, so that we have connectivity. An earlier 
comment was made about broadband and the importance of that in 
our region, and I have many examples of that critical need: 
roadways, camping, and spin-off businesses associated with the 
Anthracite Outdoor Adventure Area, which was funded through the 
POWER Initiative. So I offer that as an example of the tools we 
use.
    Mr. Barletta. Mr. Linkous, I know it is too early to tell 
the full extent of the devastation caused by Hurricane Irma, 
but we have heard about the many changes Florida made following 
Hurricane Andrew to reduce the damages, losses, and costs from 
future disasters. Are we able to gain any lessons learned from 
Florida as to how we, as a Nation, can strengthen our 
infrastructure to withstand the next disaster?
    Mr. Linkous. Thank you. Absolutely. As we have seen from 
some of the terrible images coming out of Florida, there has 
been a dramatic shift, due to the building codes and seeing the 
resiliency to the storm that hit, compared to Hurricane Andrew 
some 25 years ago.
    Senator Nelson recently, as he flew over the State, 
commented to CNN that he was able to clearly distinguish 
between buildings that were build pre-Andrew and post-Andrew. 
So it went to prove very dramatically that sensible and strong 
building codes can have a dramatic impact on protecting lives 
and the building properties that are all around them.
    Unfortunately, events like Andrew come along every now and 
then, and we are devastated by their impact. But we certainly 
learn from them. And Florida certainly shines as an example in 
this country, where they took the opportunity to increase their 
building codes, enforce their building codes in order to make 
their State far more resilient.
    In many ways Florida was lucky with Irma in the way she 
took her path; a direct strike on Miami that is at a very low 
flood level already could have been devastating. And I think 
that, as the State continues to see more disasters head their 
way, enforcing these building codes across the State--and as we 
migrate these across the country--will be extremely important 
to saving lives and property.
    Mr. Barletta. Thank you. The Chair now recognizes Ranking 
Member Johnson for 5 minutes.
    Mr. Johnson. Thank you.
    Ms. Grannis, what is the long-term funding impact of 
rescinding the Federal Flood Risk Management Standard? And has 
your organization studied the long-term fiscal impact of 
implementing the standard versus not implementing the standard?
    Ms. Grannis. We have not studied the long-term fiscal 
impact of implementing the standard or not implementing the 
standard. I think what we do know is, from the figures that you 
pointed out earlier, $1 in mitigation saves us $4 in cost 
avoided.
    And the Federal Flood Risk Management Standard was to 
implement a commonsense mitigation approach to make sure that 
when we were building infrastructure with Federal dollars it 
would be either elevated to account for the future flood risk 
that we are seeing in our communities now and that we expect to 
see with greater intensity and frequency in the future, and to 
encourage people to think about relocating infrastructure out 
of flood plains and out of high hazard areas so that they are 
not as exposed to those flood risks in the first place. So that 
would be a good metric to look for when you are funding 
disaster recovery dollars this time around.
    Mr. Johnson. Thank you. What is the order of magnitude of 
funding necessary to fund resilience in a manner that bends the 
cost curve on disaster funding?
    Ms. Grannis. Another great question. As a lawyer, I don't 
have as good a sense of the economic case for some of these 
investments that we need to make, in terms of pre-disaster 
mitigation. But I would say again the numbers that have come 
out of studies in the past that $1 saves $4 are a good metric. 
And we have other studies that look at other mitigation 
approaches, like restoring and enhancing natural flood plains. 
And the amount that that can help communities reduce their 
flood impacts are a good benchmark to look to when looking at 
Federal investments.
    Mr. Johnson. Thank you, Ms. Grannis.
    Mr. Linkous, do you think that there will be a difference 
in property damage between Florida and Texas, due to the 
different emphasis on the use of building codes?
    Mr. Linkous. Thank you. Most certainly. We saw that in 
Houston, especially with the flood impact, that it is estimated 
that only 20 percent of the flood victims actually have flood 
insurance, whereas flood insurance is owned by nearly 80 
percent of those affected in Florida. I think this speaks to 
the State's preparation of not only their own infrastructure, 
but also communicating to the citizens of their States the 
importance of having those protections at their disposal.
    Mr. Johnson. What about the use of building codes in 
Florida, versus lack thereof in Texas?
    Mr. Linkous. Well, certainly, as I mentioned earlier, we 
have seen that, in Florida, it is very clear, the distinction 
between those homes and buildings that are built to the newer 
standards.
    In various parts of the country, the building codes are 
mandated either at the State level or even at a county level, 
and they can vary widely.
    On top of the building codes, an important factor is the 
enforcement of those codes, especially in rapidly developing 
communities. The resources at the county and State level are so 
limited that it makes it difficult to even enforce the higher 
standards that are there. Florida has put forth money to make 
sure that the enforcement is in place. And certainly, what we 
have proposed to Congress in our BuildStrong Coalition is that 
there are funds available to those communities to make sure 
that they are trained, licensed, and enforced when dealing with 
these building codes.
    Mr. Johnson. Thank you.
    Mr. Hembree, in 2009 the American Recovery and Reinvestment 
Act provided funding for the Economic Development 
Administration. Are there any lessons learned from 
implementation of that act that could be incorporated into an 
infrastructure bill so that members of your organization could 
use funds more efficiently?
    Mr. Hembree. Absolutely. I think if you look at the lessons 
learned from our implementation of those funds through that 
program, we found that a lot of times construction ready 
doesn't really mean construction ready. I think what we found 
through that process was that there needs to be more 
flexibility at the Federal level, working with EDA's regional 
offices, to move those funds through quicker to help us 
implement the projects that we know are in place.
    I think the other thing that is important with that is an 
understanding that sometimes, from the Federal level with these 
programs, one size doesn't fit all when it comes to the types 
of projects that funds are dedicated to or being directed to. 
Mainly, when you are talking about rural and distressed 
communities, there are various different needs and different 
capacity at the local level for the ability for organizations 
to effectively administer that type of program. There was such 
a large amount of funds trying to be moved out in such a short 
period of time.
    Mr. Johnson. Thank you, and I yield back.
    Mr. Barletta. Thank you. The Chair now recognizes Mr. 
Ferguson for 5 minutes.
    Mr. Ferguson. Thank you, Mr. Chairman, and thank you all 
for your testimony today.
    One of the things I want to comment on is my experience as 
a mayor in using EDA funding. In two examples that I have, we 
had a revolving loan fund that we used to stabilize buildings 
in our downtown. And it was pretty effective in closing the 
economic viability gap in some of those instances, going in and 
providing funding that a traditional lender simply would not 
touch. And what we found, we had a high level of success with 
that.
    And then we also had success using EDA grants for that last 
mile of infrastructure on water and sewer projects. The net 
result is that we were able to create about 16,000 
manufacturing jobs in our community, and revitalize the 
downtown. And these were two important tools that we used.
    One of the things I would like to get you all's thoughts 
on, it was--we touched on rural broadband. One of the things 
that I have seen going into rural areas--and my part of Georgia 
certainly has a very rural component to it--have you all ever 
thought about rural broadband development, and how a revolving 
loan fund or a grant program might be used for that?
    And, Mr. Hembree, I will start with you on that.
    Mr. Hembree. Thank you. I have actually not given any 
specific thought to the revolving loan fund program as part of 
a broadband initiative. But just in terms of my knowledge of 
the way that that program works, and some opportunities that 
are there, I think it could certainly work.
    Particularly, at least in North Carolina, we have to take 
the approach, based on some State statutes, all broadband 
projects have to be public-private partnerships. Localities 
can't control or operate broadband systems as a utility. So, an 
RLF program or a grant program can certainly provide funds that 
would facilitate those types of partnerships to make it work.
    The challenge that we face--and I think all of us face 
across the country when we are talking about rural broadband--
is that, in terms of our economic competitiveness, in terms of 
us being able to have the ability to compete on the national 
and global market, we have got to have that connection. But the 
flip side of that is the density is not high enough in rural 
areas for the market to drive deployment of those resources and 
those infrastructures to the area--so that is sort of the 
catch-22--and where EDA and other programs could step in to 
fill that gap.
    Mr. Ferguson. And that is my point in that, is that, you 
know, a lot of times we will use either the grant program or 
the revolving loan fund program to close the economic viability 
gap in these other types of economic development projects. And 
I think that we all recognize that the rural broadband 
infrastructure is really critical to really making sure that we 
stay competitive on a global stage.
    But, quite candidly, it is really the best way forward for 
rural America. It is the way that we connect young people in 
those communities to economic opportunities in the metropolitan 
areas. And I would say that using--now beginning to change our 
model for economic development may be moving away from 
traditional infrastructure projects to putting a heavy emphasis 
for the next few years into broadband development and tie that 
directly to our education system to develop students that can 
use this to earn a living. I think it is pretty important to 
do.
    So, whether it is a revolving loan fund, or a grant 
program, or whatever it is, I think we need to look at this 
maybe the same way that we have traditionally, putting in water 
and sewer lines for an economic development project.
    So, with that, Mr. Chairman, I will yield back.
    Mr. Barletta. Thank you. The Chair now recognizes Ms. 
Norton for 5 minutes.
    Ms. Norton. Thank you very much, Mr. Chairman. And I thank 
you for this hearing, which I am going to say, unfortunately, 
is very timely, in light of recent events.
    I think this question is really for Mr. Linkous--am I 
pronouncing your name correctly--because of a suggestion in 
your testimony.
    And in my own district, the Nation's Capital, the threat of 
not hurricanes--although that does happen here--but certainly 
of floods on the Mall are imminent. And we just finished 
working through this committee, constructing a levee there. And 
I have two bills where construction is underway now, literally 
on the water, the Southeast Waterfront, the Southwest 
Waterfront. This is fairly typical of building in the United 
States. So the notion of protections not only against disasters 
like hurricanes, but of surges, of floods is nationwide.
    Now, in your testimony, Mr. Linkous, you proposed something 
very interesting. First of all, you say in your testimony that 
only 15 percent of those affected by Harvey were covered by 
insurance. That ought to shake us up. I can't imagine how we 
are going to rebuild, when you pile on Irma and the rest.
    And you are making a suggestion that I would like to have 
you justify. It is perfectly understandable that you would 
focus--as the Congress has not sufficiently--on pre-disaster 
funding. And so you proposed that 10 percent--and here I am 
reading from your testimony--of all funds appropriated for the 
existing post-disaster Hazard Mitigation Grant Program be 
allocated to a new program, a new mitigation program, where 
funds would be available with regards to whether a disaster 
occurred and could be used for strengthening homes and 
businesses.
    So essentially, you want to take funds from disaster funds. 
It is kind of tough love to make perhaps the Congress and maybe 
even the States do what they haven't done in the past. Is it--
have you concluded that the only way to get sufficient 
attention on pre-disaster funds is this kind of tough taking 
from Peter to pay Paul, as some would say? If you say to Sandy, 
for example, which is still going on, the rebuilding there, 
that part of those funds, which I must tell you they had a 
harder time getting than it looks like we are having getting 
for the Texas and Florida disasters, if you were to, say, take 
away 10 percent of the funds that are being used to rebuild New 
York and New Jersey and set them aside for whoever needs funds, 
we are likely to get members from those delegations saying, 
``Really?''
    So, would you explain why you come to that conclusion, and 
if you think it would be successful here in the Congress.
    Mr. Linkous. Thank you. You know, a wise person once said 
that an ounce of prevention is worth a pound of cure. And, as 
we know, that was Benjamin Franklin, who also happens to be a 
Founding Father of our mutual insurance industry, and his 
company continues 265 years later in Philadelphia. I think we 
need to take that sage wisdom when we go into addressing our 
Nation's disaster recovery.
    As we have heard, $1 equals $4 on the back end. And if we 
continue to----
    Ms. Norton. But everybody in the Congress will give 
lipservice to what you have just said. But you have cited in 
your own testimony that sometimes 80 percent--I think one of 
your figures, the amount--go in to post-disaster than Congress 
has been willing to put in to pre-disaster.
    So they--everybody believes it, but it is in our DNA to 
help people when disasters occur. But cannot be found anywhere, 
apparently among Democrats or Republicans to take a big chunk 
of money and use it for pre-disaster, even though you won't 
find any Member who disagrees with what you just said.
    So I am really looking for the remedy. Do you think this 
notion of saying, OK, you are willing to generate funds after 
disaster, because you have no--you really have no alternative. 
So if there is a provision that says some of that money has to 
go into pre-disaster, then maybe we will build up a pre-
disaster mitigation fund. That is what you seem to be 
proposing.
    And I am asking--this is taking away from a disaster to pay 
for the next disaster, whoever gets it--it might not even be 
the particular jurisdiction--I am asking you do you think that 
that is really all that is left to do now to get Congress 
focused on the importance of pre-disaster funding.
    Mr. Linkous. I agree with you, that we must focus on 
recovering those that are impacted by Harvey and Irma, or 
whatever the major disaster that may be striking in the Nation. 
Our priority must be, first and foremost, there.
    That being said, what we have laid out is simply 
incentivizing States to take measures to prevent the damage 
that would come from the next hurricane. Whether we like it or 
not, the frequency and severity of weather events are 
increasing on a dramatic pace. Our funding of these events from 
a disaster situation on a post-disaster basis is unsustainable. 
We will not have the funds to----
    Ms. Norton. Well, people who lose funds--let's say people 
in New York and New Jersey----
    Mr. Linkous. One----
    Ms. Norton [continuing]. By having these funds taken from 
their post-disaster funds, would they be available to them for 
pre-disaster mitigation?
    Mr. Linkous. Yes. What we are recommending is taking a set 
percentage of the annual funds that are coming out of disaster 
relief, and setting them aside for pre-disaster mitigation. As 
you mentioned, 10 percent. So, if $200 billion was in the 
package for 1 year, we would be setting aside $20 billion for 
the States to recover. One key element of what we are proposing 
is also having FEMA oversee all dollars that are being spent on 
a disaster basis.
    Billions of dollars were set aside for Sandy. Most of that 
should have gone to New Jersey and New York, where the disaster 
actually happened. But as we know, slush funds were created 
across the board that impacted 25 States that got Sandy relief 
funds. So we believe that there is sufficient dollars within 
the disaster recovery funds that can be utilized toward pre-
disaster mitigation.
    Ms. Norton. I think it should be considered. As tough as it 
is, I think that the gentleman's proposal should be considered. 
Thank you very much.
    Mr. Barletta. Thank you. The Chair now recognizes Mr. Faso 
for 5 minutes.
    Mr. Faso. Thank you, Mr. Chairman.
    Mr. Linkous, I recently met with a mutual insurance company 
located in my district. And, as you know, we had significant 
damage due to Irene and Lee back in 2011, as did the State of 
Vermont. And all through the Catskills we had serious flooding 
and property damage. And one of the things that the folks from 
the mutual company told me was that, ironically, the people who 
did not have flood insurance, they received compensation 
quicker than the people who had flood insurance. And I am 
wondering if you could comment on that, and what your 
experience and the opinion of your association and your 
coalition is on that topic.
    Mr. Linkous. Thank you. Well, certainly, when we are 
proposing recommendations to Congress, one of them is not to 
have insurance programs run by the Federal Government. We know 
that the large bureaucracy that is created around FEMA creates 
problems when it ultimately takes place in delivering a check 
to an affected business owner or homeowner.
    We, as mutual insurance companies, are based in the 
community. We were formed because of the community. And we are 
there to closely monitor their impact, and can have a far 
quicker and more responsive mitigation of their disasters 
because we are there.
    When you take it to a Federal level, you are inherently 
going to build in some lag of time as the Government is dealing 
not only with the flooding, but also the impacts of the 
hurricane and infrastructure, gas shortages, and everything 
else that inherently get in the way.
    We would call for more privatization of the National Flood 
Insurance Program. We have put forth key elements to 
revitalizing the National Flood Insurance Program, one of them 
being allowing data to be supplied by the National Flood 
Insurance Program to the private market, so companies like us 
could assess that information. Right now that information is 
only in the hands of FEMA. In order for us to adjust the rates 
according to the exposure, so that it does not jeopardize our 
companies, we need that information at our level in order to do 
that.
    Mr. Faso. So streamlining the information, making it 
accessible, in your view, would allow for quicker compensation 
for those that are adversely affected by these events.
    Mr. Linkous. Absolutely.
    Mr. Faso. And I don't know if Ms. Grannis or another member 
of the panel would like to comment. One of the things I hear 
consistently from people in my district is the dissatisfaction 
with the FEMA mapping process, and that this process is often 
convoluted, filled with mistakes, et cetera. Could the 
panelists, Ms. Grannis or any of the other panelists, care to 
comment on that issue?
    Ms. Grannis. Sure, I would be happy to. I think that is a 
common critique in many communities, that the flood plain maps 
are underpredicting what actually floods during these events, 
that FEMA is underfunded to update the maps. Many communities 
have maps that are, you know, many decades old.
    We have looked at solutions to try to have Federal agencies 
work better together. You have a multitude of different Federal 
agencies that are collecting data relevant to flood risk: USGS 
[United States Geological Survey], FEMA, NOAA. So, creating a 
facility that allows those different data sets to be combined 
and used to more easily update flood plain maps and give 
communities better flood risk information.
    So I think, when looking at the National Flood Insurance 
Program, looking at options for improving FEMA's flood plain 
mapping program is going to be really key, and also giving FEMA 
the funds they need to make sure that those maps are up to date 
and accurate, and including future conditions information for 
communities.
    Mr. Faso. Any of the other panelists have a thought on this 
issue?
    Mr. Linkous. If I could just add, as well, myself, as a 
company, we are looking at multiple exposures: hurricanes, 
severe convective storms, tornadoes, severe weather events. We 
utilize modeling companies in the industry--RMS, AIR--to 
provide us data. They change their models, if not once a year, 
multiple times a year, based on the information they are 
receiving from the disasters. The more disasters we have, 
unfortunately, provide more data to us to be able to deal with 
those.
    When flood plains are changed on a multiyear basis, we know 
immediately that they are out of date. And so they cannot be 
used as a basis to adequately charge a rate to the consumer or 
a business that is in a flood plain, or even for them to 
determine are they truly in a flood plain to begin with. And 
so, we need to update the data, as Ms. Grannis said, and that 
would certainly go a long way to supporting the Federal 
insurance flood program.
    Last thing I would say on flood is that we all have to 
understand that the rates being charged by the NFIP [National 
Flood Insurance Program] are pre-subsidized. So the dollars 
that are determined internally to charge for a risk is already 
subsidized when it reaches the consumer. We are giving them a 
false sense of security by them thinking, oh, it only costs me 
$500 for my flood policy, it must not be a big risk, when 
really it has been subsidized by 90 percent by the Federal 
Government.
    More importantly, we know that there are some living in 
those flood-affected areas that can't afford the higher flood 
rates, but there are many that can afford the higher flood 
rates, but we are pre-subsidizing across the board, and not 
looking at this in the proper way. NAMIC has called for many 
changes in the NFIP that we would look for Congress to passing.
    Mr. Faso. Thank you, Mr. Chairman. I yield back.
    Mr. Barletta. Thank you. The Chair now recognizes Mr. 
Smucker for 5 minutes.
    Mr. Smucker. Thank you, Mr. Chairman. I thank you for 
holding this hearing, which, of course, is timely in regards to 
disaster relief and mitigation, and also I think it is timely 
in terms of the Federal role in infrastructure, as we talk 
about an infrastructure package that we hope to see come 
forward in the next few months or so.
    And I want to target at least my first two questions in 
that regard, and this is specifically to Mr. Doney. And just to 
provide just a little context, or background, a community that 
I represent is the city of Lancaster, about 60,000 people, in 
Pennsylvania. And if you visit Lancaster now--again, this is 
happening in many areas, but specifically in my district--it is 
a vibrant, downtown area that is important to the entire 
county.
    And that didn't just happen by accident. It was really the 
result of, you know, a lot of community leaders who focused on 
that for several decades. And we now see the outcome of that. 
And people recognize, you know, that that is a very important 
development to the region, as well as to the downtown.
    And it didn't come about entirely by private investment. It 
really was targeted--in this case it was mostly State dollars 
that--if you look back specifically, a baseball stadium and a 
convention center, which would not have happened without 
targeted investment. It was a public-private partnership.
    And that is why I am excited about what we are talking 
about, in terms of our infrastructure package. We are talking 
about spurring private investment dollars, which--neither of 
those projects that I mentioned would have happened without a 
public-private partnership, but neither would have a lot of 
other ancillary businesses and development occur that didn't 
require any State dollars, but was all private investment 
driven by the initial investment into the community.
    I am not--you know, I am new here, I am not as familiar 
with the Federal role. And so I guess I am interested in 
hearing from you about the role of the Economic Development 
Administration. What specifically can the Economic Development 
Administration provide that other agencies cannot? If you 
would, speak to that.
    Mr. Doney. Well, I think in two respects. And it approaches 
the need for economic opportunity and healthy, vibrant 
communities and regions, as well as emergency preparedness.
    One is capacity on the ground. EDA invests in building that 
capacity. One thing about economic development is we cross just 
about every area. So we develop the relationships with our 
healthcare, with housing, with transportation, certainly with 
the business community, with education. Those relationships 
help us address things and creatively package things together. 
So capacity is one.
    Two is that last bit of money to make something happen. EDA 
tends to focus on those catalytic projects that you get one 
thing going and it gets the ball rolling. We have a revolving 
loan fund that is 20 years old. We have recycled that money 
many times. We average 17 percent into a deal, so that we push 
the conventional lenders to do as much as possible, we push the 
business to raise as much equity as possible, and then we fill 
that gap.
    It is frustrating at times, when we come here to 
Washington, that we don't think the role of that is as greatly 
appreciated. We are the dealmakers there, and we are trying to 
close that last gap.
    Mr. Smucker. I wonder if you--do you have--as we look at 
spurring additional public-private partnerships, do you have 
suggestions for improvements, based on your experience, to that 
agency or other Federal agencies?
    Mr. Doney. Well, two things. One, streamlining things at 
EDA. They have much lower staff than they used to have. The 
regulatory burdens certainly don't go away, environmental 
review and things like that. That is one of the reasons we have 
suggested the defederalization of the revolving loan funds. 
Again, our loan fund is 20 years old, and we still have to file 
regular reports, and then EDA staff have to review those.
    The proposal that was before the House last year would have 
removed that for revolving loan funds that had proven 
themselves over a number of years to be performing well. So 
that would give them the flexibility there.
    The other is let EDA play its congressionally mandated role 
of being the lead agency in economic development, and 
developing those relationships to eliminate stovepipes between 
other agencies. Usually, when we are working on something, 
whether it be broadband, disaster recovery, or just trying to 
put a deal together, as you know from being mayor, we are 
cobbling together a whole variety of public and private 
resources.
    EDA is the one agency that has the flexibility to fill 
whatever gap that we have. It is really the only resource that 
we have that has that flexibility to fill that last gap.
    Mr. Smucker. Thank you. I see I am out of time.
    Mr. Barletta. Thank you. I am now going to begin a second 
round of questions, if any other Members want to participate.
    Mr. Hembree, are there ways in which we can ensure agencies 
like EDA and ARC encourage mitigation when funding disaster-
related projects?
    Mr. Hembree. Absolutely, I think there are. I think there 
are probably both some requirements--maybe regulatory-type 
requirements--that could be put in place tied to funding 
levels. Well, I guess you would call that probably the stick 
approach.
    Probably what your local communities and we would like to 
see more is sort of the carrot approach. And from that, what I 
mean, and traditionally what has been successful with some 
programs in the past when we have dealt with similar issues, is 
identifying what those communities' needs are, in terms of 
potential mitigation, what happens, what if, and encourage that 
planning process beforehand.
    I think we, as a nation and as regional development 
organizations, and even as local governments, have become much 
better at doing that. I think there is still a lot of work to 
go. So, I guess what the bottom line could be, one of the 
things that could be done is that could be tied to funds, sort 
of getting back to the same thing we are talking about, you 
know, in terms of the actual recovery funds to put in place, if 
that makes sense.
    Mr. Barletta. Yes, thank you. That is--thank you very much.
    Mr. Doney, in recent years, as you point out, EDA has 
served as an integrator of Federal economic development 
programs working with other agencies and streamlining the 
application process for distressed communities. Can you talk 
about why this role is important, and how it can be 
strengthened?
    Mr. Doney. Certainly. EDA plays the--again, that last-gap 
role. When it comes to infrastructure, it has the flexibility 
that if our need on a project is a sewer line or a water line--
maybe it is a building renovation, maybe it is broadband, a 
whole variety of different things usually at the scale that 
won't reach the level of other Federal programs, EDA can fill 
that gap.
    The programs of economic adjustment have been particularly 
critical in my region. The U.S. economy, the global economy, is 
so dynamic that the economic adjustment program allows us to 
develop plans and implement plans at the local level to react 
and take advantage of new market opportunities and address 
market challenges that come up.
    So, the public works program is that last gap of 
infrastructure. I don't know where else to turn to, if it is 
not EDA. It is not like we have choices. We turn to EDA because 
there is nothing else that we can do, we have exhausted 
everything at the local, regional, and State level. We are very 
creative at getting everything we can to put something 
together. We turn to EDA when there is no other resource left.
    Mr. Barletta. Thank you.
    Mr. Seigel, you highlight the significance of disaster 
mitigation in your testimony. Mitigation not only saves lives 
and reduces property damage, but it can also save jobs. Can you 
talk more about how mitigation is critical in economic 
development?
    Mr. Seigel. We have just completed a very intense community 
education and outreach program in the SEDA-COG region, and we 
are actually going to be taking that across the local 
development districts through 52 counties and Pennsylvania. And 
the purpose of that was to hear from the businesses and the 
citizens about how we can plan for resiliency.
    It is a critical element of job retention and job creation. 
In terms of the retention, we have actually proposed and rolled 
out some concept ideas, suggesting offering tax credits, 
targeting revolving loan funds, revenues to businesses in order 
to build resiliency into their facilities.
    The types of things we are looking at are relocation, flood 
proofing, those types of things, all of those things that would 
allow a business to come back into operation quickly after an 
event occurs. And we are utilizing the EDA revolving loan funds 
for that, as well as advocating for certain interests and tax 
credit benefits for those purposes.
    Mr. Barletta. Thank you. The Chair now recognizes Ranking 
Member Johnson.
    Mr. Johnson. Thank you.
    Mr. Linkous, what aspects of the National Flood Insurance 
Program, if privatized, or--let me ask the question like this.
    You recommend that the National Flood Insurance Program be 
privatized, but what would the current market for flood 
insurance--or would that current market for flood insurance be 
served under a privatization model?
    Mr. Linkous. Thank you. We are calling for increased 
privatization of the National Flood Insurance Program, not 
necessarily the complete elimination of the flood. Flood is a 
very difficult loss to model. That being said, I think the 
appetite of carriers and reinsurers would be quite healthy.
    We know that there is a significant capital surplus in both 
the reinsurance and carrier markets. Carriers are looking for 
areas to deploy that capital in order to serve markets, grow 
their market share. So I think it would be quite extensive.
    That being said, insurance companies are not going to take 
that first step to entering that risk until they understand 
fully the risk. And so that information coming to us being 
allowed to set actuarially sound rates for the risk that is 
there needs to be part of the reforms that--to the overall 
protection of flood in the Nation.
    Mr. Johnson. Would the private market be amenable to 
assuming the FEMA mapping process, along with this 
privatization proposal?
    Mr. Linkous. Well, certainly, because we know that the 
better data we have, the better we can manage the overall risk. 
If we don't manage properly the risk of our company, small or 
large, we ultimately will go out of business. That is why we 
have been around for 175 years, because we look at the risk 
appropriately.
    Our owners are our policyholders. So I am not the owner of 
the company, I am the steward of the company. So the 
policyholders expect me to make sure that I am mitigating the 
risks that ultimately protects their surplus, the 
policyholders' surplus.
    So I would see that the industry would enjoy engaging with 
the NFIP to make sure that the maps are correct, that they are 
updated on a frequent basis, and adapt to the changing climate 
that we see all around us that are driving more and more floods 
into these programs.
    I think there is an opportunity with the insurance industry 
coming in with its massive infrastructure of data, that it can 
supplement and help not only policyholders at the home and 
business level, but also communities that are looking for ways 
to improve their infrastructures.
    Mr. Johnson. Ms. Grannis--thank you, Mr. Linkous--Ms. 
Grannis, what would privatization look like if it were to 
become the policy of the country?
    Ms. Grannis. I think there would be a couple things that I 
would look to in thinking about how the private insurance 
market would play a role within and to complement the NFIP.
    The first is the flood plain mapping program. You know, we 
want that information to be public, we want that information to 
be updated and accurate, because it drives so many decisions 
about how we set insurance prices, where we build, how we 
build, who has to purchase insurance. So, you know, we want 
that information to be maintained as a public good.
    There has been proposals to include, like, a surcharge on 
policies to make sure that the flood plain mapping program 
continues to have the resources it needs. The second component 
that I would want to preserve is the role of the NFIP in 
encouraging communities to mitigate risk, and to do things like 
have better land-use practices in flood plains, have better 
codes and standards on the books. So we want to make sure that 
that public good is still preserved with a private role, as 
well.
    And then I think the third prong of the National Flood 
Insurance Program that really has to be managed carefully is 
the affordability of flood insurance. This is the last line of 
defense for people if they are affected by flood insurance. 
This is the only money they have to rebuild. And so, if those 
insurance prices go through the roof and lower income 
homeowners are not able to continue to maintain coverage, or 
are priced out of their home, that will have significant 
resilience effects on communities and the ability of households 
to recover in the event of these extreme storms.
    Mr. Johnson. Thank you. I yield back.
    Mr. Barletta. Thank you, Mr. Johnson. And I thank you all 
for your testimony today.
    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.
    Without objection, so ordered.
    I would like to thank our witnesses again for their 
testimony today.
    If no other Members have anything to add, this subcommittee 
stands adjourned.
    [Whereupon, at 11:30 a.m., the subcommittee was adjourned.]
    
    
    
    
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