[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]
THE PITTSBURGH EXPERIENCE: HOW HAS THE COMMUNITY DEVELOPMENT BLOCK
GRANT PROGRAM SHAPED THE STEEL CITY?
=======================================================================
HEARING
before the
SUBCOMMITTEE ON FEDERALISM
AND THE CENSUS
of the
COMMITTEE ON
GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED NINTH CONGRESS
FIRST SESSION
__________
JULY 18, 2005
__________
Serial No. 109-76
__________
Printed for the use of the Committee on Government Reform
Available via the World Wide Web: http://www.gpoaccess.gov/congress/
index.html
http://www.house.gov/reform
______
U.S. GOVERNMENT PRINTING OFFICE
23-851 WASHINGTON : 2005
_____________________________________________________________________________
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COMMITTEE ON GOVERNMENT REFORM
TOM DAVIS, Virginia, Chairman
CHRISTOPHER SHAYS, Connecticut HENRY A. WAXMAN, California
DAN BURTON, Indiana TOM LANTOS, California
ILEANA ROS-LEHTINEN, Florida MAJOR R. OWENS, New York
JOHN M. McHUGH, New York EDOLPHUS TOWNS, New York
JOHN L. MICA, Florida PAUL E. KANJORSKI, Pennsylvania
GIL GUTKNECHT, Minnesota CAROLYN B. MALONEY, New York
MARK E. SOUDER, Indiana ELIJAH E. CUMMINGS, Maryland
STEVEN C. LaTOURETTE, Ohio DENNIS J. KUCINICH, Ohio
TODD RUSSELL PLATTS, Pennsylvania DANNY K. DAVIS, Illinois
CHRIS CANNON, Utah WM. LACY CLAY, Missouri
JOHN J. DUNCAN, Jr., Tennessee DIANE E. WATSON, California
CANDICE S. MILLER, Michigan STEPHEN F. LYNCH, Massachusetts
MICHAEL R. TURNER, Ohio CHRIS VAN HOLLEN, Maryland
DARRELL E. ISSA, California LINDA T. SANCHEZ, California
GINNY BROWN-WAITE, Florida C.A. DUTCH RUPPERSBERGER, Maryland
JON C. PORTER, Nevada BRIAN HIGGINS, New York
KENNY MARCHANT, Texas ELEANOR HOLMES NORTON, District of
LYNN A. WESTMORELAND, Georgia Columbia
PATRICK T. McHENRY, North Carolina ------
CHARLES W. DENT, Pennsylvania BERNARD SANDERS, Vermont
VIRGINIA FOXX, North Carolina (Independent)
------ ------
Melissa Wojciak, Staff Director
David Marin, Deputy Staff Director/Communications Director
Rob Borden, Parliamentarian
Teresa Austin, Chief Clerk
Phil Barnett, Minority Chief of Staff/Chief Counsel
Subcommittee on Federalism and the Census
MICHAEL R. TURNER, Ohio, Chairman
CHARLES W. DENT, Pennsylvania WM. LACY CLAY, Missouri
CHRISTOPHER SHAYS, Connecticut PAUL E. KANJORSKI, Pennsylvania
VIRGINIA FOXX, North Carolina CAROLYN B. MALONEY, New York
------ ------
Ex Officio
TOM DAVIS, Virginia HENRY A. WAXMAN, California
John Cuaderes, Staff Director
Shannon Weinberg, Counsel
Jon Heroux, Counsel
Ursula Wojciechowski, Professional Staff Member
Juliana French, Clerk
C O N T E N T S
----------
Page
Hearing held on July 18, 2005.................................... 1
Statement of:
Gorski, Stanley, executive director, South Hills Area Council
of Governments; William McGowen, executive director,
Redevelopment Authority, county of Washington; William E.
Mitchell II, assistant director, planning and development,
Westmoreland County Industrial Development Corp.; and Diana
Reitz, community development coordinator, city of
Jeannette, PA.............................................. 34
Gorski, Stanley.......................................... 34
McGowen, William......................................... 43
Mitchell, William E., II................................. 74
Reitz, Diana............................................. 81
Patenaude, Pamela Hughes, Assistant Secretary, Office of
Community Planning and Development, U.S. Department of
Housing and Urban Development; Dorothy Kelly,
councilmember, borough of Carnegie; and Diana Irey, county
commissioner, Washington County, PA........................ 11
Irey, Diana.............................................. 22
Kelly, Dorothy........................................... 17
Patenaude, Pamela Hughes................................. 11
Letters, statements, etc., submitted for the record by:
Gorski, Stanley, executive director, South Hills Area Council
of Governments, prepared statement of...................... 37
Irey, Diana, county commissioner, Washington County, PA,
prepared statement of...................................... 24
Kelly, Dorothy, councilmember, borough of Carnegie, prepared
statement of............................................... 20
McGowen, William, executive director, Redevelopment
Authority, county of Washington, prepared statement of..... 46
Mitchell, William E., II, assistant director, planning and
development, Westmoreland County Industrial Development
Corp., prepared statement of............................... 76
Murphy, Hon. Tim, a Representative in Congress from the State
of Pennsylvania, prepared statement of..................... 8
Patenaude, Pamela Hughes, Assistant Secretary, Office of
Community Planning and Development, U.S. Department of
Housing and Urban Development, prepared statement of....... 14
Reitz, Diana, community development coordinator, city of
Jeannette, PA, prepared statement of....................... 83
Turner, Hon. Michael R., a Representative in Congress from
the State of Ohio, prepared statement of................... 4
THE PITTSBURGH EXPERIENCE: HOW HAS THE COMMUNITY DEVELOPMENT BLOCK
GRANT PROGRAM SHAPED THE STEEL CITY?
---------- MO
NDAY, JULY 18, 2005
House of Representatives,
Subcommittee on Federalism and the Census,
Committee on Government Reform,
Carnegie, PA.
The subcommittee met, pursuant to notice, at 10:15 a.m., in
the Carnegie Municipal Building, One Veterans Way, Carnegie,
PA, Hon. Michael Turner (chairman of the subcommittee)
presiding.
Members present: Representatives Turner and Dent.
Also present: Representative Murphy.
Staff present: John Cuaderes, staff director; Jon Heroux,
counsel; and Ursula Wojciechowski, professional staff member.
Mr. Turner. I am going to call to order the subcommittee
hearing, noting that a forum is present for this Subcommittee
on Federalism and Census. And before we begin I want to note
that today with this subcommittee hearing we have, with Mr.
Dent and Mr. Murphy, two members in addition to the
Subcommittee on Federalism and Census, but an initiative that
Speaker Dennis Hastert pulled together called ``Saving
America's Cities.'' The Speaker looked within the Republican
conference for Members that had experience in economic
development and community development. He appointed 24 Members
to this important working group, and the working group's
function is to look both into their communities and to their
experiences that they have had in working on issues of economic
development and advise the Speaker on ways that Federal
programs can be improved or ways that we need to respond to
assist our communities to create jobs.
And Mr. Murphy and Mr. Dent, two Members from Pennsylvania,
were recognized as having expertise in economic development and
were appointed by the Speaker to be part of the advisory
working group for him in addition to their important work on
the Federalism and Census Subcommittee, which Mr. Murphy, I am
certain, will highlight his efforts to make certain that we
preserve community development block grants and the effects
that they have on our community is one of the things we will be
looking at today to help us in that process to making certain
we strengthen and improve the program.
I would like to welcome all of you to the Subcommittee on
Federalism and the Census in this field hearing. This is a
followup to three hearings the subcommittee has held in
Washington, DC, on this topic. As a former mayor, I understand
that in order to comprehend the benefits and shortcomings of
national programs, one should go to where the real action takes
place. Field hearings allow us to do just that, to reach out to
you and hear your views, your concerns, and your suggestions.
CDBG is one of the largest Federal block grant programs in
existence. State and local governments use CDBG grant moneys to
fund various housing, community development, neighborhood
revitalization, economic development, and public service
provision projects. CDBG is one the largest Federal-direct
block grant programs in existence. For over 30 years the CDBG
program has been a critical tool in the arsenal of cities to
help create livable communities for individuals and families.
Without question, the program provides vital funds for
addressing poverty and other community development needs.
However, in recent months the effectiveness of the program
has been called into question. Much of this scrutiny has been
related to the mechanisms used for delivering CDBG funds to
grantees and whether those grantees have ultimately spent those
funds in the most effective way. That is why we are here in
Carnegie, to hear how you at the local level have used these
funds and how your citizens have benefited from the CDBG
program. In general, we are interested in learning from you
what works in the program and what does not.
I am very pleased with the response to this hearing,
especially from the number and quality of witnesses seeking to
testify today and the number of people who are in attendance. I
would like to express my appreciation to the Borough of
Carnegie for hosting us today, and especially for allowing us
to use these Council Chambers today. Moreover, I would like to
give my thanks to Congressman Tim Murphy for inviting us to his
district and for his efforts in facilitating this hearing.
We have two panels of witnesses before us to help us
understand how the CDBG program has benefited the Pittsburgh
metropolitan area, as well as what can be done better in the
future. Our first panel consists of 3 witnesses from the
national and local elected official perspective. They are the
Honorable Pamela Hughes Patenaude, Assistant Secretary for
Community Development and Planning at U.S. Department of
Housing and Urban Development; the Honorable Dorothy Kelly,
councilmember for the Borough of Carnegie; and the Honorable
Diana Irey, county commissioner for Washington County,
Pennsylvania.
The second panel of witnesses consists of four
representatives from the Pittsburgh area community development
practitioner community. They are Stanley Gorski, executive
director of the South Hills Area Council of Governments; Rear
Admiral William McGowen, executive director of Redevelopment
Authority of the county of Washington; William Mitchell,
assistant director of planning and development, Westmoreland
County Industrial Development Corp.; and Diana Reitz, community
development coordinator for the city of Jeannette, PA.
I look forward to hearing our expert testimony of our
distinguished panel of leaders, which will be provided to us
today, and I thank you all for your time and for coming today.
In addition to our witnesses, I am pleased to have two of
my colleagues with me here today. And I now yield to the
gentleman from the 18th District of Pennsylvania, the Honorable
Tim Murphy, for any opening remarks.
[The prepared statement of Hon. Michael R. Turner follows:]
[GRAPHIC] [TIFF OMITTED] T3851.001
[GRAPHIC] [TIFF OMITTED] T3851.002
Mr. Murphy. Thank you, Mr. Chairman, and thank you for
having this congressional hearing here in the fine borough of
Carnegie. I want to make sure everybody knows how to pronounce
it in case any people here are from out of town. Andrew
Carnegie is the way we say it here.
I also want to thank the borough and thank everybody who
are going to be witnesses and talking today on this very
important issue of the Community Development Block Grant
Program, which was established back in 1974 to provide low and
moderate-income communities with supplemental resources for
projects such as infrastructure improvements, rehabilitation of
blighted areas, public services, and other economic development
projects.
Over its more than 30-year lifespan, CDBG, as administered
through the Department of Housing and Urban Development [HUD],
has provided the largest and one of the most reliable sources
of Federal funds for our States, counties, and towns to draw
upon for community-improvement programs. Today, 1,168 State and
local governments considered ``entitlement communities''
receive direct allocations of CDBG moneys based on one of two
formulas. These funds are then redistributed by the governments
for various activities, including commercial and industrial
improvements, acquisition of property, financial assistance for
local businesses, residential property rehabilitation, and
public facilities improvements.
In the 18th Congressional District, which includes parts of
Washington, Allegheny, Westmoreland, and Beaver Counties, much
of the CDBG funds have been used for water and sewer
improvements, street improvements, and assistance to local
businesses.
Last fall, southwestern Pennsylvania experienced
devastating flood damage as a result of Hurricanes Frances and
Ivan, some that we just saw on our walking tour of town. It
resulted in $60 million in losses to communities in the region
and damaged 30,000 homes and businesses. Ten months later, as
you can see, many of these towns are still struggling to clean
up and rebuild.
Last week, HUD announced the release of $150 million in
CDBG disaster recovery assistance grants for disaster relief,
long-term recovery, and mitigation for communities across the
country hit by hurricanes. Pennsylvania will receive $2\1/2\
million to help alleviate still unmet housing, business, and
public assistance needs that develop due to this flooding.
This morning, I had the privilege to escort my colleagues,
Congressman Turner and Congressman Dent, on a tour of Carnegie,
one of our local communities hit hardest by the floods. And I
believe it is crucial that Members of Congress with oversight
responsibilities over CDBG see firsthand both the needs of
these communities and how the funds will be utilized.
That is why I am grateful this subcommittee has decided to
hold this hearing today in Pittsburgh, away from the Washington
beltway bureaucracy, to experience the positive impact CDBG has
had on towns in real America.
As most of us in this room know, earlier this year
President Bush proposed that several Federal community and
economic development programs, including the Community
Development Block Grant Program, be consolidated with the
Department of Commerce. While the administration has not sent a
formal legislative proposal to the Hill, and the House has
continued to fund CDBG and HUD, Chairman Turner has held
several hearings to examine the appropriateness and feasibility
of this recommendation.
The administration's review of CDBG is not completely
without warrant. The relatively broad mission of the program
has led to concern that some dollars have been spent on
projects that may not significantly contribute to the well-
being of low and moderate-income urban areas. Criticisms have
also been raised regarding the fairness of the funding formula,
which can lead to less needy communities receiving more funding
per person than communities with larger low-income populations.
These are both issues Congress should consider as it evaluates
the President's proposal. However, shifting of CDBG to a new
Federal agency could significantly impact thousands of local
governments and businesses and millions of people across the
Nation that have come to rely on the positive contributions
this program has had over the last three decades.
I believe it is vitally important Congress go beyond the
beltway and hear a firsthand account of people who know best,
our local elected officials and economic development
coordinators--how CDBG has worked, how it hasn't worked, and
suggestions for how to make the program better.
These moneys are real dollars which have a very real impact
on real communities. The wholesale consolidation of CDBG with
other programs is not a decision that should be made from
30,000 feet, but is a decision that should be made only after
substantial feedback and consultation with individuals here on
the ground.
I can think of no better place to learn about the
contributions the program has made on the average American
community than right here in southwestern Pennsylvania, and I
am pleased that the chairman and the Government Reform
Committee has agreed to hold this hearing.
I want to join you in welcoming all our witnesses and
Congressman Turner, the former mayor of Dayton, OH, who has
firsthand encountered a number of the issues involved with
these grants, and also Congressman Dent, a former colleague of
mine in the State Senate as well, from Allentown, PA. And I
yield back the balance of my time. Thank you, Mr. Chairman.
[The prepared statement of Hon. Tim Murphy follows:]
[GRAPHIC] [TIFF OMITTED] T3851.003
[GRAPHIC] [TIFF OMITTED] T3851.004
Mr. Turner. Thank you, Mr. Murphy. I appreciate your
leadership in the efforts to retain CDBG funding, not only to
make certain that the funding is there, but also that it is
retained as a program at HUD and its efforts to be able to make
an impact in the lives of people in their communities. I now
turn to Honorable Charlie Dent, the distinguished vice-chair of
this committee who is from the 15th District of Pennsylvania.
And I yield to him for his opening remarks.
Mr. Dent. Thank you, Mr. Chairman, and thanks to my friend
and colleague, Tim Murphy, whom I served with in the
Pennsylvania Senate, as well as now Congress. I want to point
out that I did serve in the Pennsylvania Senate as the Chair of
the Senate Urban Affairs and Housing Committee, so I got to
deal with a number of the issues that impact all of us.
I am also struck by the similarities of the impacts of
Hurricane Ivan on this community of Carnegie, just as it
impacted many of the many of the communities in my area as
well, not just with Ivan, but the succeeding flood a few months
ago. We experienced similar damage along the streams and also
the Delaware River, and we are still recovering as well.
With respect to the CDBG program, the beauty of this
program is its flexibility, and I suspect that in southwestern
Pennsylvania, we spend the moneys in similar ways that we spend
it in eastern Pennsylvania. You use this money for site
improvements, you use it for demolition, you use it for
mediation, in some cases you may use it to pay for staff,
personnel in some cases where I live. You use it for a variety
of purposes to advance the betterment of your communities.
And I am just excited to be here today to hear the
testimony of all the presenters about just how you utilize
those dollars and what you think we can do to make the program
better. As was stated by Congressman Murphy, a lot of us in
Congress have a great deal of concerns and reservations with
respect to the President's program that would have consolidated
CDBG and 17 other programs into the Department of Commerce.
CDBG will not move to Commerce. You know, we would make sure of
that. But we want to hear from you just specifically as to what
you think we can do to make this program better and to better
serve the needs of people in the region. So with that, I yield
back the balance of my time. Thank you, Mr. Chairman.
Mr. Murphy. Mr. Chairman, can I just interrupt for one
moment if you would yield? I am not sure how well known it is
that recently, CDBG disaster assistance grants just came to
this area, Allegheny County, receiving $388,000 to rebuild
homes damaged by the storm and purchase and demolish homes no
longer available. Also Washington County received $400,000, and
Penn Hills, another part of my district, received $115,000.
Penn Hills is one of those communities which is identified as
being eligible for those. For residents that may be watching
this, it is a matter of contacting the proper authorities from
the county or my office to find out how they can obtain some of
those funds. So I yield back. I am sorry.
Mr. Turner. OK. Thank you all for participating again in
the field hearing today. And we will now start with the
witnesses. Each witness has kindly prepared written testimony,
which will be included in the record of this hearing. Each
witness has also prepared an oral statement summarizing their
written testimony. Witnesses will notice that there is a timer
with a light at the witness table. The green light indicates
that you should begin your remarks, and the red light indicates
that your time has expired. In order to be sensitive to
everyone's time schedule, we ask that you adhere to the 5-
minute time allowance for your oral presentation. We will
follow that with a question-and-answer period from the Members.
It is the policy of this committee that all witnesses be sworn
in before they testify. So if you would please rise to accept
the oath and raise your right hands. I will now swear in our
panel of witnesses.
[Witnesses sworn.]
Mr. Turner. Let the record show that all witnesses have
responded in the affirmative. And we begin our testimony with
Pamela Patenaude.
STATEMENTS OF PAMELA HUGHES PATENAUDE, ASSISTANT SECRETARY,
OFFICE OF COMMUNITY PLANNING AND DEVELOPMENT, U.S. DEPARTMENT
OF HOUSING AND URBAN DEVELOPMENT; DOROTHY KELLY, COUNCILMEMBER,
BOROUGH OF CARNEGIE; AND DIANA IREY, COUNTY COMMISSIONER,
WASHINGTON COUNTY, PA
STATEMENT OF PAMELA HUGHES PATENAUDE
Ms. Patenaude. Good morning. I am Pamela Hughes Patenaude,
Assistant Secretary for the Office of Community Planning and
Development at the Department of Housing and Urban Development.
I am pleased to be here today in Carnegie on behalf of
Secretary Alfonso Jackson. Thank you, Mr. Chairman, Congressman
Dent, and Congressman Murphy, for scheduling this field hearing
to gather information on the performance of the Community
Development Block Grant Program and its influence on the city
of Pittsburgh and the surrounding area.
I am pleased to be here before you today near my hometown
of Upper Saint Clair alongside the Honorable Dorothy Kelly and
the Honorable Diana Irey to discuss the impact of CDBG funding
and hear from local recipients of CDBG assistance.
As Assistant Secretary for Community Planning and
Development, I am responsible for the administration of the
CDBG program. My predecessor, now Deputy Secretary Roy
Bernardi, last testified before the subcommittee on May 24,
2005. During previous hearings, Mr. Bernardi testified on
various CDBG issues, including the Grant Allocation Formula,
eligible activities, and performance measures. We now have a
unique opportunity to hear from local grantees and
organizations assisted by CDBG.
Let me also use this opportunity to note that the
President, via his 2006 budget, has proposed to consolidate 18
programs within the Department of Commerce, including the CDBG
program. These programs would be consolidated into one
program--the Strengthening America's Communities Initiative.
This initiative would support communities' efforts to meet the
goals of improving local economic conditions by simplifying
access to Federal funds, increasing flexibility, improving
targeting, and establishing strong accountability measure.
However, let me begin with a brief overview of the CDBG
program. The program has been the Federal Government's primary
vehicle for assisting local governments and undertaking a wide
variety of community development activities aimed toward
improving the lives of low and moderate-income persons in the
United States. In the course of its 30-year history, CDBG has
provided a ready source of funding for housing rehabilitation
programs, public services, public facilities and
infrastructures, and economic development activities.
The city of Pittsburgh has focused its planning and
community efforts on economic development and the
revitalization of its neighborhoods, transforming itself into
one of America's leading 21st century cities.
The city has used CDBG funds to address more traditional
challenges found in former manufacturing centers such as aging
housing stock and economic development. The city of Pittsburgh
has reported that since 1974, CDBG has provided housing
rehabilitation funding for approximately 18,000 units, the
majority of which benefit low and moderate-income households. I
would like to provide a couple of examples with respect to
Pittsburgh's economic development. A small CDBG economic
development loan in East Liberty led to the opening of a Whole
Foods Market in a commercial district that had been declining
for 40 years. Whole Foods has hired nearly 160 neighborhood
residents to work in what was once an abandoned warehouse. This
grocery store is expected to be a catalyst for additional
commercial development nearby. Project officials indicate that
the commitment of CDBG funds to this project was key in
securing private investors.
This city is also undertaking a major redevelopment effort
to transform the 123-acre site of a former steel plant. I had
the pleasure of touring this South Side Works last night. The
redevelopment plans call for offices, shops, and housing
onsite. Total investment in the project is estimated to be
approximately $350 to $400 million with an expected 5,600 jobs
created, many of which will go to low and moderate-income
persons. CDBG-related funding in this project to this point
includes construction financing for two parking structures and
related infrastructure improvements. Upon completion of the
projection, real estate taxes will be approximately $8 million
annually.
Another major CDBG grantee in the metropolitan area is
Allegheny County. Allegheny County's fiscal year grant is more
than $16 million and the county operates one of the largest
urban county programs in the Nation with 126 cooperating
jurisdictions.
The county's CORE housing program combines funds from HUD's
CDBG and HOME Investment Partnerships programs to support
affordable housing developments throughout the county. Both
non-profit and for-profit developers may access these funds for
new construction or for the conversion of existing single and
multi-family properties for the benefit of low and moderate-
income home buyers. The county's CORE program also provides
funding for single-family owner-occupied rehabilitation
activities. Over the past 6 1/2 years, Allegheny County has
dedicated almost $3.2 million of CDBG funds that have provided
294 housing rehabilitation loans for low and moderate-income
home owners.
CDBG helps communities across the Nation address a variety
of needs and funds an array of activities. However, it is often
difficult to measure results. Therefore, HUD is implementing a
comprehensive performance measurement framework for all of our
formula grant programs with a specific focus on CDBG. We
anticipate that will help HUD improve performance and track
results.
Our partners--public interest groups representing cities,
States, and counties across the country--are helping us to
design a better performance measurement system. We will be
conducting five forums around the country in the next few weeks
to obtain input on how best to implement this proposed system.
One of the forums will be held in Philadelphia this Wednesday.
It is our belief that with better performance measurement
tools, grantees such as Pittsburgh and Allegheny County will be
able to design programs that maximize resources and results for
low and moderate-income citizens. Cooperation with local
communities will be essential to our success as we move
forward, which is why this hearing today is so valuable.
Thank you, Mr. Chairman, Congressman Murphy, Congressman
Dent. I look forward to answering your questions.
[The prepared statement of Ms. Patenaude follows:]
[GRAPHIC] [TIFF OMITTED] T3851.005
[GRAPHIC] [TIFF OMITTED] T3851.006
[GRAPHIC] [TIFF OMITTED] T3851.007
Mr. Turner. Thank you. Councilwoman Kelly.
STATEMENT OF DOROTHY KELLY
Ms. Kelly. Thank you. I would like to first state that I
have been councilperson for 1\1/2\ years, and I have been
president of the council for about 11 months. Carnegie has
applied for and been the recipient of CDBG funds over a period
of 30 years. However the Federal records I was able to access
were sketchy prior to 1989. So for that period of time, the
grants that I looked at fell into two main categories--safety
and recreation. Under safety or handicap access included the
ramps, curb cuts, and walkways, and all of those things that we
needed as a result of the American Disability Act.
We had retaining walls, and there is one for which a grant
is pending. These walls were needed to prevent the road from
falling onto business patrons' parking lot below and one to
keep the road from collapsing into homes below. The road now,
the grant is pending, is to prevent the entire road from
collapsing, thereby closing off the only exit/entry to that
road.
There were catch basins that were part of these grants,
concrete steps to replace the wooden deteriorated ones for
residents that live on the hill so they might have access by
foot into the town.
An important one for us is the demolition of structures.
The old municipal building was badly impacted by the flood, and
as I speak, demolition is continuing there. There are 5
abandoned buildings that are in the process of being razed.
Chartiers Creek channel slope was corrected in 1999. The
problem that exists in the creek today, however, are very
complex. The 52-mile creek flows downhill to Carnegie. No laws
prevent upstream communities from degrading land for
residential and commercial development. The channel slope
correction helped until Hurricane Ivan struck.
There have a been a great deal of storm and sanitary work
as a result of the grants, and with road construction, there
was one road for the Busway, and if you note, there is a Busway
to the side of this building, and there is another one down the
road a quarter of a mile.
The second category of projects relate to recreation. There
was park lighting, hockey pads, volleyball court, park restroom
renovation, tennis court and basketball court. Carnegie is
grateful for the grants much needed in an old community.
In the present year, five grants are pending. The total of
all the grants for both granted and pending is about $2
million. The total of all grants received, however, is about
$329,000. If all the grants pending are approved, Carnegie will
have received approximately 17 percent of the grants applied
for. The grant money that we receive comes at a cost to us. We
pay dues to COG, and that went up 20 percent this year. Much
employee time is required in writing for the grants, the
manager, the secretary, public works, and often services of an
engineer.
I would like to give you a holistic approach to better
understand the needs of Carnegie; 9 months after the flood,
flood victims are still in need of help, and it is the Church
Ministerial Association that is helping these people. There was
not enough money given to them through FEMA. After the flood,
Senator Specter, Santorum, Secretary of Commerce, Donald Evans,
all visited Carnegie, but no money was forthcoming. Residents
did not receive enough FEMA money to cover their needs. FEMA
offered a floodplain buyout for those who have water on the
first floor. The buyout was not feasible for the borough. The
Small Business Association did very little for businesses in
this town.
Allegheny County reduced the assessments of properties
affected by the floodplain 25 percent. The reduced assessment
has further eroded the tax base in this town. There is not
adequate revenue to support the reasons for the very existence
of local government, and that is the safety, the roads, and the
sewers.
The consent order mandated by EPA, DEP, and Allegheny
County will cost the borough $1 million over 3 years. Liquid
fuel tax money for road paving is not enough to resurface roads
made worse from the flood. PennDOT maintains the State road
here, and there were moneys to cover the loss, so those roads
are in good condition. But other than that, they are in very
poor condition. Section 8 housing at the 10-story Carnegie
Towers continues to create problems for the fire and police
departments and depressed property values in the area. And
there are abandoned homes that were not cleaned after the
flood. Owners simply closed the door and walked away. You can
do an Internet search for Section 8 and properties, and they
are being bought up in this town by some landlords. They just
jump at the opportunity.
Carnegie is a town worth saving. Its location, close
proximity to the city, to the airport, and to the two
interstates and with a direct Busway to Pittsburgh, which is
where the universities are located. Assets of the town include
the Carnegie Library Music Hall, which is undergoing
renovation. It will cost about $8 million. They have foundation
and other grants, and they did receive one gallery grant. Three
art galleries in town, music, Pittsburgh Music Academy, two
ballet companies, two resident theater groups, a recently
opened upscale nightclub restaurant, historical society, Honus
Wagner Museum, and a very active Carnegie Renaissance group
that takes care of the planters in this town, the banners that
you saw in front of businesses. They also have business mixers.
They do everything they can to promote business in this town.
There is a group seeking to develop a trail to connect to the
Panhandle Trail, and this trail eventually, if it is connected
through Carnegie and the other areas, will go directly to
Washington, DC.
So you can see that even with the creek having been such a
damaging force in town, it could become an asset for boating
for this town because the creek goes all the way to the Ohio
River. Carnegie has all the ingredients for a viable community.
Only the funds are needed to make it grow again to a
destination town.
There were two recent events that make me optimistic that
Carnegie will become a vibrant community. Otherwise, it could
decay into a slum. The Carnegie Mellon University, in working
with them, I was able to have them use Carnegie for their urban
land. Senior students who are in the School of Architecture and
Urban Planning will come to this town and they will draw up
their vision of it. This will cost us nothing, and possibly we
will have some good ideas for this town.
Another event that gives me hope, I submitted a lengthy
proposal to the FHL Bank system, and just in the last week and
a half I received word that we were selected as 1 of 10
communities in western Pennsylvania. This will give us
technical assistance, training, and assistance in locating
other kinds of funding.
I would like to end with a quote of Thomas Friedman, the
journalist and political writer who has said, ``If you don't
visit a bad neighborhood, it will visit you.'' And we are all
losers if Carnegie is not revitalized. Thank you.
[The prepared statement of Ms. Kelly follows:]
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Mr. Turner. Thank you. Ms. Irey.
STATEMENT OF DIANA L. IREY
Ms. Irey. Thank you. Good morning, Chairman Turner,
Congressman Murphy, and Congressman Dent. I appreciate the
opportunity you have provided to all of us today to speak to
you about the importance of the CDBG program.
The Community Development Block Grant provides invaluable
assistance to our municipal governments in Washington County
for a myriad of projects that would otherwise not be completed.
The funds are distributed on a rotational basis, and it allows
our local officials to plan their budgets accordingly.
Municipal governments are charged with numerous
responsibilities, and they serve on extremely limited budgets.
So many of the projects that CDBG has come alongside to help
fund would not be completed. They are used for road and bridge
projects, gap funding, redevelopment/revitalization studies,
plans, and constructions, and comprehensive planning and
implementation of ordinances.
CDBG program truly benefits our senior population. The home
rehabilitation program has provided assistance to low-income
and moderate-income households. Predominantly, our elderly are
affected. This helped to complete repairs on our homes, which
result in a higher quality of housing stock, and more
importantly, has allowed our seniors to stay in their homes.
Approximately 25 percent of the projects that have been
completed in Washington County have directly benefited our
senior citizens.
I want to mention three recent cases that resulted in
allowing our seniors to stay in their homes. Robert and Joan
Golbraith of Canonsburg had the exterior of their house painted
and their back porch fully rebuilt. LouAnn and Eugene Clark of
Washington received new siding, new windows, and a garage roof.
Joyce Carroll and Francis Vennon of Washington now live in a
home with a new roof, a new porch, a repaired bedroom that had
suffered water damage.
On a larger scale in the New Eagle Borough, we had an
abandoned, dilapidated hospital that was acquired, demolished,
and remediated with CDBG funding. In its place was built a 42-
apartment low-income senior high-rise. The nearest facility for
our seniors, only approximately a mile and a half away, had a
waiting list of over 5 years. So this was a very, very needed
housing facility for our seniors.
Many of the fire departments in Washington County could not
purchase the equipment that they need without the CDBG moneys.
Water and sanitary sewer service has been provided and roads
and bridges have been improved, including a major slide and a
repair in Carroll Township resulting from an underground spring
in an abandoned mine shaft. And due to the complexity of the
stabilization process and road reconstruction, that project
alone would have severely impacted Carroll Township's budget.
That is the township in which I live. School buses travel that
road. It was reduced to a one-lane road, and had been so for
quite a while because no one could find the money to repair the
road. Without the CDBG funds, it put our children at risk as
they traveled that on the school bus, and also many people
utilizing the road.
We have a development at the new Head Start facility to
provide better educational opportunities for our low-income
children. And that is a wonderful program. That, again, would
not have been possible without CDBG funding. This program is
all-encompassing, and it is difficult to provide just a
thumbnail sketch in 5 minutes of what this program has done for
Washington County.
This program has benefited our children directly with
educational opportunities, our seniors with housing
opportunities, our citizens with traveling opportunities. It
has provided safe water and sewage. It has helped with our
safety, and with our fire departments. So we are very much
interested in seeing this program continue. In Washington
County in 2002 we received $5.6 million in CDBG funding. It has
reduced now to 2005 to $4.9 million. We would like to see this
program restored. This program is critical in Washington
County.
And we thank you for taking the time to come hear from us,
the local residents and elected officials and economic
development leaders in our communities, to know exactly what we
are using this money for. We are pleased with how the program
is working, and we ask that you please help us to continue.
Thank you very much.
[The prepared statement of Ms. Irey follows:]
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[GRAPHIC] [TIFF OMITTED] T3851.011
Mr. Turner. Commissioner, thank you so much. And again, I
thank each of you for your time and your preparation for this
important hearing. And we will begin our questions and comments
with Mr. Murphy.
Mr. Murphy. Mr. Chairman, how much time do we have, each of
us, for questions?
Mr. Turner. Let me do a round of 5 minutes and then see how
that goes, and if we need additional time, we can do either a
second round or extend that.
Mr. Murphy. Thank you, Mr. Chairman. First of all, I would
like the witnesses to know and also the audience to know that
as far as some of the money, in addition to some of the grants
that we work with CDBG to help out the county, and if people
still have needs in Washington and Allegheny County, they can
certainly contact the county. I don't know if there is a
specific place in Washington County folks can apply for some of
that $400,000 that just came through. Is it a matter of calling
the commissioner's offices or----
Ms. Irey. We are having them go through our human services
director.
Mr. Murphy. OK.
Ms. Irey. They can call the commissioner's office, and we
have a list of unmet needs that we are very appreciative that
you were able to provide that funding for us.
Mr. Murphy. And someone here in Allegheny County, they can
contact our office, and we will give them the right number as
well. And I should also say, we are working on some other
appropriations to help here. We recognize that FEMA and the SBA
programs are made to provide that quick response to residents,
but something still needs to take place in the appropriations
process, and we are working at that, as well as Army Corps of
Engineers funding to help with dealing with the flood problems
over time.
But I want to ask about a couple other things about the
CDBG funding here. Madam Secretary, I guess part of the
question is how does HUD monitor whether the grantees, for
example, use at least 70 percent of the funds awarded for
activities that really benefit low and moderate-income persons?
What is the process used and do you feel that some improvements
need to be made, or is it working adequately?
Ms. Patenaude. Thank you, Congressman Murphy. First of all,
a consolidated plan, a 3 or a 5-year plan is required by the
grantees to be submitted to HUD. Our CDB representatives in our
field offices review those plans. The second report that is
required of the grantees is an annual action plan. Again, the
CDB field reps review the annual action to plan to see that it
is in concert with the 3 to 5-year strategic plan; 90 days
after the end of the program here, the grantees submit a
CAPERS, a performance evaluation report. Our CDB reps have a
risk analysis that they use to determine which grantees would
be monitoring onsite with the grantee. We are certain with the
process that is in place right now that we are doing a good job
of monitoring CDBG grantees, but, of course, there is always
room for improvement, and we are very hopeful that our
performance measurement system will be that source of
improvement.
Mr. Murphy. Thank you. Also, let me ask about with regard
to when you monitor that performance, because some of the
criticism has come across country that I am concerned has been
unfairly targeted CDBG for some changes here, has been that
some communities and some States have misused that, for
example, using funds just to balance the books at the end of
the year. What do you do when that occurs? What kind of
accountability is put into place?
Ms. Patenaude. If a grantee has misused the funds or not
used the funds for eligible activity, the department does have
the ability to reduce the grantee's allocation. In the case of
a grantee that is not spending--we have a one and a half time
is the goal that we have for grantees drawing down their funds.
In that situation we also have the ability to recapture those
funds from the grantee.
Mr. Murphy. OK. And Commissioner Irey, thank you for being
here today. But a question with regard to if you could use
these funds on a rotational basis through communities----
Ms. Irey. Yes, we do.
Mr. Murphy [continuing]. How do you determine that? That is
a policy that Washington County has alone? Is that how you do
that?
Ms. Irey. I believe it is Washington County's policy, and
we determine it based on the needs in the communities and the
population in the communities. We do have a formula established
for that. It has been working that way for 10 years, since I
have been in office, and I know that it is going very well.
Mr. Murphy. But are there difficulties you encounter when
using the CDBG funds or applying for them? Are there
recommendations that you might want to make to this panel in
terms of how we could make it smoother, easier, quicker, any of
the above?
Ms. Irey. Allowing more money to be used for emergency
projects such as the road slide that we had in Carroll Township
would be helpful to allow a little more room to move.
Mr. Murphy. So some formula changes on that?
Ms. Irey. Yes.
Mr. Murphy. OK. And to Councilwoman Kelly, you had named a
number of projects that were used here----
Ms. Kelly. Right.
Mr. Murphy [continuing]. In Carnegie. I am sure you are
aware other communities are also using some of these, so I
don't expect you to represent other communities out here too. I
don't know if you were aware before about this, this money we
talked about, this CDBG money just coming through for emergency
assistance. Is that something you are going to be able to
notify your local residents here of some of that funding to be
able to help them? Do you have a mechanism to do that?
Ms. Kelly. Well, our borough manager has done this sort of
thing, although I do think that some of us should become more
involved in it. I think that is one of the secrets to obtaining
funding is to have these searched out and taken care of in a
timely fashion. They are publicized some of the things that are
done in our local paper and sometimes in the Pittsburgh
newspaper.
Mr. Murphy. OK. Thank you. And one final question for you.
You had mentioned that there were some recordkeeping changes
since 1989. You don't have the records prior to that? It is not
clear what was done before?
Ms. Kelly. I was not able to locate them. And as I would
point out to you, I called to get the information, and it is
out of my hands in a sense that I can only rely on the people
that are maintaining these records. They moved from the old
building 3 years ago and some records never made it up here.
Mr. Murphy. Does that get in the way of future grants in
terms of them being able to get these records? Is that not
necessarily a problem then for you?
Ms. Kelly. I don't think that would be a problem. I think
we just start with where we are and write for grants as they
are needed.
Mr. Murphy. All right. Thank you. Thank you, Mr. Chairman.
Mr. Turner. Mr. Dent.
Mr. Dent. Thank you, Mr. Chairman. And I guess just an
observation, Commissioner, I just noticed that it seems in
Washington County you use a great deal of your CDBG money for
infrastructure improvements?
Ms. Irey. Yes, we do. It is a very rural county.
Mr. Dent. And it is a little bit of a contrast from where I
am, a more heavily urbanized area where you see a lot of
downtown business redevelopment, remediation, demolition, that
kind of work. I also noticed too you use money for Head Start?
Ms. Irey. Yes.
Mr. Dent. Did you build a Head Start facility?
Ms. Irey. Yes, we did.
Mr. Dent. That was just an interested use. And I was just
curious to ask the secretary, what have you noticed in terms of
best practices or problems that you have identified in various
field offices about how these CDBG dollars are being spent?
Could you give us any suggestion or some thoughts as to what
are the best practices here in this region for example? Do you
have any examples here in the Pittsburgh region?
Ms. Patenaude. An example of the best practice here in
Pittsburgh?
Mr. Dent. Yes. Or problem for that matter.
Ms. Patenaude. The 123-acre site that they are developing,
they use for economic development.
Mr. Dent. That was in Pittsburgh?
Ms. Patenaude. In Pittsburgh.
Mr. Dent. Yes. I have no further questions. I was just
struck by the amount of money being used for infrastructure in
Washington County which is--again, I can understand why you
would do that there, a more rural county. And just contrasts to
my experience. So thank you. Mr. Chairman.
Mr. Turner. One of the exciting things about CDBG is that
you get visible results. Things change in a community and
things happen in a community. The excitement of the hard work
that goes into both the community planning, the grassroots
efforts, many times to identify projects, and then also the
leveraging aspect of CDBG really does, I think, give a
community a sense that these dollars, once placed into a
project, attract other types of investment and commitment.
And Commissioner and Councilwoman Kelly, I am going to ask
you if you guys could talk for a moment about two aspects of
your work with CDBG, and really, your work about economic and
community development. Because CDBG goes beyond just the issue
of what did you spend the moneys on? It goes to the issue of
what are your needs in your community that you are looking at
with economic development and how can CDBG be used to help
assist that.
So if we could talk about two things. One, if you could
talk about the leveraging aspect. The funds that you have spent
generally are not the only funds that go into a project, and
usually there is a tremendous amount of hard work to find those
other funds, to marry them to CDBG programs. So the leveraging
aspect is one. And the second thing I would like to have you
talk about is--and I know, certainly, in your community,
Councilwoman Kelly, and the things that you have talked about,
there is a tremendous amount of grassroots support for your
economic and community development efforts. And if you could
talk about your community's response to your efforts to use
these funds for the projects that you identified and how they
have been received. And why don't we start with Commissioner
Irey.
Ms. Irey. Thank you. From a leveraging aspect, we have had
downtown revitalizations in the major cities and boroughs in
Washington County that if we did not have the CDBG moneys to
leverage, we have no starting point. And we have revitalization
projects in the city of Washington, which is where our county
seat is, and the borough of Canonsburg. We have had them in the
past in the city of Charleroi and the city of Monongahela. Many
of our smaller communities, which are actually larger
communities for our county, have been able to use these for
leveraging funds. So they are a starting point.
And for grassroots support, boy, I couldn't tell you, if
you had this in Washington County, I think you would have a lot
more people attending, only because this is so critical for our
county. People are very excited about the CDBG program because
it does allow them the opportunity to do things they could not
otherwise do. We hear back from constituents all the time. We
get thank you notes, which is a little surprising, but we
actually do because of the program. And I don't know what the
response would be if we didn't have that. I would imagine that
another type of program to be funded in another way would have
to take its place because our local government simply could not
provide the revitalization programs and help to seniors and our
children that the CDBG program provides.
Mr. Turner. Thank you. Councilwoman Kelly.
Ms. Kelly. Yes, as far as leveraging aspect, I know that
Main Street was the important issue here, and there were two
pedestrian laws in this town that had been there for many
years, and actually, they helped destroy the town because there
was such limited parking and people just wouldn't want to walk
through there. But that was all taken care of, and I think on
the walking tour you notice that area had been made attractive
right there. And I don't know what all grants went into that,
and perhaps Congressman Murphy would know better than I as to
which grants went into it. But certainly, there was a great
deal of money that came into it for that.
However, we hardly had time to get started until this flood
hit the town, and we are almost to base one again. And so there
is a great deal that needs to be done with revitalization of
the business district. Without that, this is not a town any
longer. We pointed out that even the drugstore in town had
closed and we do have a group in town, the Carnegie Community
Development Corp., and they were involved in bringing
businesses into town. However, I don't think there was any real
coordination between them and some of us who serve on council.
And that has kind of fallen apart, and now it has been
reorganized, and I have high hopes that the person that is
executive director will get us started in that direction to try
to bring businesses into this town. I think that is one of our
prime concerns at the moment.
And, of course, the other is demolition of these old
structures. I mean they are absolute slums after a while if
they are not demolished and removed. And we do need the money
for that. And we did get I think $38,000 for some, but that is
not adequate to take care of all the other buildings. You did
not see those areas on the streets below, which were in very
bad shape. The road is like a washboard. And there are slum
landlords that come in and they don't even follow the
guidelines of the county. They somehow evade all of that and
they slap a coat of paint on them, and there is mold growing
behind that. So that is indeed a problem.
Mr. Turner. Certainly.
Mr. Dent. Just for either of you, Dottie or Diana. Do
either of you use CDBG dollars to pay for staff? Like in one of
my communities----
Ms. Kelly. No.
Mr. Dent [continuing]. We use some dollars to pay for code
enforcement, for example, which is a good use I think. But do
you use----
Ms. Kelly. To my knowledge none of that money has been used
for staff. That is why I am saying even with the 17 percent, it
is not clear money to us because we then pay employees and an
engineer to go out onsite for some of these grants. And we do
pay COG and we pay dues to COG, and I pointed out that went up
20 percent this year. We did not pay it because we could not
afford to do that.
Mr. Dent. Do you have a Main Street manager down here in
Carnegie, Department of State program? Have you participated in
that?
Ms. Kelly. No, but I am hoping with this one proposal
through the FHL Banks that we will get their assistance. I mean
we need someone that is very knowledgeable. I don't think we
have people here that are quite that knowledgeable on how to
handle that.
Mr. Dent. Thank you.
Ms. Irey. To my knowledge we did use some for the
administration of the program. We use the CDBG program through
our redevelopment authority, so they actually manage the
program. And they also provide support staff because some of
our local governments don't have the staffing capabilities or
expertise to even know how to go about applying for matching
grant funds or other things for the projects, even filling out
the paperwork. So they assist in local governments.
And one thing I forgot to mention earlier was when it came
to leveraging funding, some of our non-profits like Head Start
that are able to receive some CDBG fundings are able to use
that to leverage foundation money as well.
Mr. Dent. Thank you. That was interesting too. In my area I
haven't seen as much use of the money for human service related
program. I am on a Head Start Board where I live, use State
capitol funds and a variety of sources. I am going to suggest
that they look at CDBG to help their program. Thank you.
Mr. Turner. Very good. One of the criticisms of CDBG when
the administration brought forth the Strengthening America's
Communities program, which would have consolidated 18 grant
programs and moved them into Commerce, in effect eliminating
CDBG, was an allegation that the program duplicated other
efforts on the Federal level. When I hear the types of
activities that you have undertaken, I am not aware of other
Federal sources that duplicate the types of seed money and
economic development assistance that CDBG would provide or has
provided to your projects. So I want to ask you, is CDBG your
second source that you go to or is it the primary source? Are
there other sources that you are aware of or is this the only
source that you would find in order to be able to fill that gap
and make a difference in these projects?
Ms. Irey. To my knowledge, in 10 years this is the only
source. This is such a huge program in Washington County, I
can't even begin to tell you. Everybody looks forward to every
year when we get a list of the projects that CDBG is going to
fund. So I don't know of any duplication there could possibly
be or any overlap from any other government with this program.
Ms. Kelly. The same is true here. It is our main source,
and it is not a great deal when you consider the 10 years,
roughly $330,000--or, no, what was the figure I gave you? About
$330,000. We really don't have any foundation money for this.
And I know they did for the library, which is quite an asset.
It is the gem, the beacon up on the hill. And there was some
government funding for that. I don't know all the details in
that, but most of that money was from foundations and from
outright donations of people. People have been very generous to
this town actually. It is just like after the flooding with
their donations.
Ms. Irey. Mr. Chairman, I would also like you to know that
we don't seek projects for CDBG. Elected officials seek us with
projects to find funding for. And CDBG happens to be one that
allows a lot of funding for their projects. So there is never a
shortfall of needs or programs that we need helping with.
Mr. Turner. Excellent. Thank you. Ms. Patenaude, I
apologize if I have mispronounced your name. There are two
things that I am interested in if you could speak about. One,
obviously, is the benefits of the CDBG program and its
leveraging. To what extent does HUD monitor or track leveraging
so that they can be viewed as an item that supports the CDBG
program? We certainly hear about it from every community that
we go to, and that ability to attract other dollars to
important economic development projects for communities, I
think, is one of the greatest things of CDBG. So leveraging is
something that is very important, and I am very interested in
learning from you about, and how HUD might track that.
Another item that I think is interesting is that, in
hearing from the different communities, just even the two we
have today, the differences in the need and the differences in
the uses are very wide. And that is true across the country.
But many times the types of projects that a community might be
undertaking may be somewhat similar to something another
community has done. And the opportunity to share information
about best practices with a little bit just of technical
assistance and advice of what has worked or what has not
worked, I think CDBG projects can be made more successful. And
I know there is a lot of national associations that people
participate in that share best practices information. But I am
not quite certain at the HUD level that the best practices
information is being collected and distributed. I would like
your thoughts on that.
Ms. Patenaude. Thank you, Mr. Chairman. My understanding of
best practices is that they are available to the public on our
Web site. The 30th anniversary of CDBG in last September there
was an effort underway at HUD to highlight some of the very
successful programs. But I do agree that we could do a much
better job with technical assistance by sharing best practices
with other communities.
To answer your question on leveraging, I don't know the
answer to that. The IDIS system is the information and funding
system that we use. And I am not sure that we track leveraging
dollars. So I would have to defer to my staff and get back to
you.
Mr. Turner. OK. I know that HUD has such a tremendous
amount of expertise in the projects that are being undertaken
as you review the strategic plans, the comprehensive plans that
communities put together and then looking at the issue of how
the funds are spent and their compliance to those plans. And it
just would be great if we could look at how to harness that
great expertise in HUD to make certain it is available to these
communities. Thank you. Are any other questions from the
Members?
Mr. Murphy. Mr. Chairman, I have one for the secretary. And
I was asked by a reporter and haven't been able to find an
answer yet, but is there any data kept on overall the number of
jobs that have been assisted--not necessarily directly created
because I don't think government creates jobs--but certainly
have come out of some of these CDBG grants? Any job count?
Ms. Patenaude. I believe that the IBIS system does track
jobs created to benefit low and moderate income.
Mr. Murphy. Do we have any idea what that overall number
is?
Ms. Patenaude. I don't know the number but we can get back
to you.
Mr. Murphy. I appreciate that. How about you had mentioned
something about economic return in terms of one of the projects
in Pittsburg would yield $8 million in tax revenue coming
through, but does that system also track overall dollars
generated and overall economic impact? For example, business,
the amount of sales, and other developments that come through
then?
Ms. Patenaude. No, I don't believe we have the ability to
track that, and that is one of the efforts underway is to
create a performance measurement system that will actually
capture the outcomes. My staff just sent a note to me here,
sir, on the number of jobs created in fiscal year 2004, 75,000
jobs were created.
Mr. Murphy. Nationwide?
Ms. Patenaude. Yes.
Mr. Murphy. Is there any requirement of parts of
communities to report back after they have used some of the
money to give any information of what this has led to, local
job development, economic impact?
Ms. Patenaude. I believe in the annual--the CAPERS, that is
the performance evaluation report that information is
requested. We don't have the ability to track it, though----
Mr. Murphy. So we don't audit that afterwards?
Ms. Patenaude. We do. We do audit by doing the monitoring.
And the grantees also input data into the IDIS system as well.
We don't have the ability at this time, though, to compare the
CAPERS and the IDIS system.
Mr. Murphy. OK. Thank you. And thank you, Mr. Chairman.
Mr. Turner. Good. Thank you. Just one last question for the
commissioner and Councilwoman Kelly. Is there anything you can
tell us that would be helpful for the program to be changed now
that you have had the additional thoughts and the testimony
that you have given today that you would like to leave us with
in how we might be able to more assist your economic
development efforts?
Ms. Irey. More flexibility in the program.
Mr. Turner. Thank you.
Ms. Kelly. I would reiterate that is the case. I think when
we need the emergency funds, it is an awfully long time to wait
by the time you submit these and by the time we receive the
moneys and put it out for bid. It is very time-consuming, and
the residents begin to question their government when they have
to wait so long. But we just follow whatever track we have to
follow.
Mr. Turner. Well, I want to recognize that from what I
understand this is Ms. Patenaude's first House congressional
hearing, is that correct?
Ms. Patenaude. Yes.
Mr. Turner. So we appreciate you coming here and
participating in this as your first. I do want to thank all of
you for the time that you have given us, the time in
preparation, the time for your staff, and I want to give you
just one last opportunity if there is anything that any one of
you would like to add to this record for a closing statement
with us, I give you the opportunity now.
Ms. Patenaude. Mr. Chairman, I want to thank you for
holding this field hearing today in Carnegie. Am I pronouncing
it correctly?
Ms. Kelly. Carnegie.
Ms. Patenaude. Carnegie. OK, I will go home with the
correct pronunciation. And Congressman Murphy, it is nice to
meet somebody from Upper Saint Clair.
Mr. Murphy. Me too. I didn't know you were from my town.
Nice to see you.
Ms. Patenaude. Thank you, Congressman Dent.
Ms. Kelly. Yes, I would just like to thank you for the
opportunity of having this. It is an eye-opener to me. I am a
novice at this sort of thing, and there will be other thoughts
that will accompany. Perhaps I can be in contact with the
offices after this.
Mr. Turner. Absolutely.
Ms. Irey. I would also like to thank you for allowing us to
testify, to make our needs known in our counties and
municipalities, and also that you have allowed our economic
staff. You will be hearing later from our director of
Redevelopment Authority, and he will be giving you some more
details about the program. So I thank you for taking your time
out of your busy schedules to travel so far and to hear what
our needs are in our district. Thank you.
Mr. Turner. Thank you for your comments, and we certainly
wish you great success. If there are additional comments that
you would like to make, please submit them to the committee and
we will help make certain that we have them. We are going to
take a short 2-minute recess while the second panel is seated.
Thank you.
[Recess.]
Mr. Turner. Call to order the second portion of the hearing
of the Subcommittee on Federalism and the Census. On our second
panel I would like to welcome Mr. Stanley ``Lou'' Gorski,
executive director of the South Hills Area Council of
Governments; Mr. William McGowen, executive director of
Redevelopment Authority of the county of Washington; Mr.
William E. Mitchell II, assistant director of planning and
development, Westmoreland County Industrial Development Corp.;
and Ms. Diana Reitz, Community Development Coordinator, city of
Jeannette, PA. We appreciate all of your efforts to provide us
written testimony. We also appreciate your appearing today and
the work that you are doing in providing us additional
information on the CDBG program. As you would have heard with
panel one, on the table there are lights that will appear. The
green light indicates for you to commence your testimony. The
red light means that your time has expired. As is the custom of
this committee, we do swear in all of our witnesses. So if you
would please stand and raise your right hands.
[Witnesses sworn].
Mr. Turner. Let the record show that all the witnesses have
responded in the affirmative, and we begin this second panel
with Mr. Gorski, if you would begin your testimony.
STATEMENTS OF STANLEY GORSKI, EXECUTIVE DIRECTOR, SOUTH HILLS
AREA COUNCIL OF GOVERNMENTS; WILLIAM MCGOWEN, EXECUTIVE
DIRECTOR, REDEVELOPMENT AUTHORITY, COUNTY OF WASHINGTON;
WILLIAM E. MITCHELL II, ASSISTANT DIRECTOR, PLANNING AND
DEVELOPMENT, WESTMORELAND COUNTY INDUSTRIAL DEVELOPMENT CORP.;
AND DIANA REITZ, COMMUNITY DEVELOPMENT COORDINATOR, CITY OF
JEANNETTE, PA
STATEMENT OF STANLEY GORSKI
Mr. Gorski. Good morning. I would like to thank the
subcommittee for the opportunity to speak with you today about
the impact of the CDBG program and its funding on helping
municipalities in this area. Notwithstanding the President's
proposal, I would encourage retention of the program in its
current form, and I would like to address current uses of CDBG
funding at the local level, the supplemental benefits accrued
to the participants in the program, as well as the consequences
of the President's proposal in consolidating the programs, as
he has suggested.
With respect to current uses, I would like to offer the
perspective of 14 years of municipal service as a municipal
manager in a municipality that was aggressively pursuing and
successful in received CDBG funds for more than 14 years, and
as a current administrator of the program in my current
capacity.
Although constrained by the statutory requirements that the
money be committed to low to moderate-income people,
municipalities in this area have developed a wide array of
strategies to both participate in the statutory objective.
Common uses include infrastructure improvements, recreation
enhancements, demolition activities, development and
enhancement of senior citizen facilities, planning studies,
commercial and economic revitalization, and public safety
support.
By way of one brief example, I am going to call your
attention to how the program can directly impact a community,
and it is one in which I was involved several years ago,
wherein an infusion of $800,000 in CDBG funds over a 6-year
period prompted an additional commitment from the Commonwealth
of Pennsylvania in the amount of $100,000, $500,000 from the
local government, as well as $600,000 from the participants in
the program. This was a commercial revitalization area that saw
the business district eliminate blighted conditions, see
infrastructure improvements, and most importantly, preserve
jobs.
Notwithstanding the impact of that type of program, the
supplemental benefits of the program cannot be ignored. As a
matter of fact, if you do not appreciate the supplemental
benefits, you will probably lose an appreciation for the
program as a whole. First and foremost is what you mentioned
earlier, Congressman, and that was leveraging ability of the
dollars. We have the situation in most of the programs I
administer now where the local governments are bringing in a
local match, which means that the dollar value of the program
is more than just the dollar value of the CDBG grant. You are
looking at a situation where communities most often would not
even be able to undertake the program or project without the
CDBG money, which means you are helping to stabilize the
financial base of the community as a whole, in addition to
achieving the target objective.
In addition, you have the leveraging ability to take that
dollar into the community that has other dollars available, be
it the non-profit corporation arena or other funding agencies
through government. I am working on an application right now,
for example, where the ratio is 5 to 1 CDBG with everything
else coming in from other sources.
An additional benefit is the general stabilization of the
community because you are enhancing the tax base, you are
improving the general conditions, and thereby bringing benefit
not only to the target community, but also to the municipality
as a whole.
Not to be forgotten is the contractor community as well. We
are in a situation where most of this activity is competitively
bid, so you are looking at a whole host of small contractors
being able to effectively compete for jobs that would otherwise
not be available to them. Keep in mind that they, in turn, are
providing employment at prevailing wages, they are buying goods
and services, as well as hiring subcontractors. We are not able
to quantify this at our level, but we are looking at a
situation or a discussion with these individuals really brings
concern to their mind with the threat of this program
disappearing, because the ability for them to participate means
jobs; it means their very survival.
And last would be a focus on the President's proposal.
Notwithstanding what he is attempting to do, whether it is
either good or bad from our perspective, it means the
termination of the program. And that would be absolutely
devastating. Nobody in this room, I would suspect, would
encourage the idea of a reduction in funding, but as difficult
as a reduction would be, it would be preferable to have the
dollars reduced and retain the program in its current form
within HUD, as opposed to consolidating and moving it or
whatever vestige is left into the Department of Commerce.
In short, the program is an important mainstay to the
viability of fiscality and for the future of municipal
governments, as well as the contractor community. If there is a
problem with the program, fix it. Don't eliminate it. Thank you
for the opportunity, and I welcome any questions.
[The prepared statement of Mr. Gorski follows:]
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Mr. Turner. Thank you, Mr. Gorski. Mr. McGowen.
STATEMENT OF WILLIAM MCGOWEN
Mr. McGowen. OK. I am going to do a PowerPoint
presentation. Thank you for the opportunity to address you. It
is going to be 20 minutes in 5 minutes, so hold on.
We feel that this is the most successful program in
existence from the Federal standpoint. It keeps urban
communities viable. It really is key in helping low-income
people. Go ahead to the next slide.
And you can follow along or you can follow the slides,
either one. If you follow the slides, you can followup with the
other later.
It does revitalize and redevelop blighted areas--and, of
course, we have plenty of those in Washington County from the
past--maintains housing stock. Again, you don't want sprawl;
you want to fix up what we have, especially in the downtowns.
And from an economic standpoint, the small towns, this program
is run at a county level, but the municipalities get all the
benefit. Next slide.
There are some of the major areas where we feel that CDBG
is key. Again, those top two, the sewer and the parks and the
citizens' facilities, low-income census tracks, the low-income
neighborhoods, that is direct help to those that are in need.
It keeps and puts people in homes instead of having them go
someplace that they shouldn't be.
Let me give you a bunch of examples here real quick and we
will run through these. Let us take a look at downtown business
districts. This program more than any other that I know of
helps downtowns. It leverages many different kinds of moneys.
In the case of Washington, we leveraged over $10 million.
PennDOT, T-21 moneys, private moneys of businesses contributing
to keep the downtown where it is supposed to be, very close
coordination with Main Street Program. Charleroi is the same
way down in the Mon Valley, you can see the facts there. The
city of Monongahela the same way. It keeps and puts small towns
back in business. Next slide.
The Head Start program has already been mentioned. It is a
superb example. It took empty public housing, empty public
housing, and put it where it needed to be in a very nice
partnership with Community Action Southwest and the Housing
Authority. We have done two of these and we are going to do one
more of them. Next slide.
That shows you the before and after that you can see in
doing that Head Start building in Washington. Next slide.
Another fine example, a neighborhood example, Highland
Ridge neighborhood revitalization. We have acquired 42
properties and we are building 25 new single-family homes for
very low-income people. Again, partnership and leverage. Now,
Highland Ridge CDC was formed, banks giving money, PHFA
contributing, and we, the Redevelopment Authority, provide the
leadership and the staff to make it all happen. Next slide.
You can see the Highland Ridge example. The top one is a
new home, and you can see the bottom one is what they were. We
built energy-efficient homes for low-income, and we actually
trained the homeowner to be a good homeowner in terms of making
payments. Next slide.
Another great example. For individuals without this
program, the house becomes unlivable and the owners cannot
afford to buy or live elsewhere. 1,800 homes so far over the
years, code deficiencies, lead-based paint now has increased
the cost of the program, but it is an excellent program. You
can see 640 on the waiting list, so we need a lot more
assistance in this area. Next slide.
These are some examples of before and after, before the
rehab program. Next slide.
Elderly housing, this is a demand which will increase
substantially in the future, obviously, with the baby-boomers,
and we take between 7 and 8 facilities, 503 units, put people
in there, low-income, and it has taken vacant, hazardous
structures, taken then either to go away or remodel, and it
puts these things on the tax roles. We paid full taxes on those
elderly facilities. We, ourselves, own six facilities, 461
units. It is a very, very successful program. Again, there is
some examples there. You can see the before and after of what
it was and what it became. Next slide.
Demolition and clearance. This has been mentioned several
times. It helps towns tremendously, and the cleared lots are
used for all kinds of things, parks, new homes. Charleroi is
now doing an open market with two buildings that we are tearing
down. Elderly facilities, commercial, it removes blighted
structures. And let me point out very strongly, without this
kind of money, it doesn't happen. Those structures stay there.
They don't go away. Again, a very successful business that you
saw down in--this used to be Braydenville, and tear down a
bunch of houses there. OK, go on to the next slide.
OK. Special help for special facilities. These are just two
examples of many to help these kind of facilities so that they
can put a new roof on or whatever and stay in business so that
they can provide for the low-income people. Another one is we
help the Housing Authority itself in a lot of ways, building
new elevators, etc. Next one.
Recreation, this speaks for itself. And, again,
partnerships with communities. Next one.
Again, these are other examples that we have and, again,
they are older communities. They have older sewer systems, etc.
The bottom one there, accessibility, that is key for the
buildings. Next slide.
And to wrap up here a little bit, I could give you hundreds
and hundreds of examples. We could write books of testimony. We
could get books of testimony from the people that have gotten
help through these programs. But let me point out that just
since 2002 we have gone down 12 percent already in the CDBG
funding. That doesn't take into account inflation or the rise
in building costs, etc. So we should not go down anymore. It
will hurt, and it will hurt the wrong people. It will also slow
the economic growth. Next slide.
We feel that it is an excellent Federal program that is run
correctly on the local level. We run it for the whole county.
We have nobody that has opted out in any of the time we have
been with it. If there is less CDBG money, then you are going
to see more rundown, vacant homes and building and more people
homeless and living off the State, living off the Federal
moneys. So the small downtowns would, and if the funding goes
down, do exactly what you don't want them to, and that is to
deteriorate. This program helps the downtowns tremendously.
There is no substitute. If this goes down, then the examples
that I have given you just won't happen. Thank you.
[The prepared statement of Mr. McGowen follows:]
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Mr. Turner. OK, Mr. Mitchell.
STATEMENT OF WILLIAM MITCHELL
Mr. Mitchell. Mr. Chairman, from the text of the letter
that we received from you, your subcommittee is seeking input
from practitioners involved in the day-to-day operations of the
Community Development Block Grant programs in the Pittsburgh
region. I am delighted you invited Westmoreland County to
participate in this endeavor because I believe that the county
is truly representative of the region as a whole.
And I am especially pleased to be here because I firmly
believe that the regional rise or fall on economic vitality of
the central city and how that central city interacts with the
surrounding region, whether the outlying areas of the region
are in agreement with this presumption is sometimes
questionable, but the fact remains that the city of Pittsburgh
and the outlying areas are one in the same economically. Since
1974, CDBG has been a valuable tool in assisting local
governments of all sizes to remain viable, but more could be
done to further enhance the region's vitality.
CDBG has proven to be an asset to the region and
Westmoreland County in particular because this program has
served this county for over 30 years as a resource to help
cities, boroughs, townships, etc., meet their community
development, affordable housing, and economic development
needs. It is not just a tool for concentrated urban areas. It
is a valued resource for our outlying areas as well. In
Congressman Murphy's district alone in Westmoreland County over
3,600 people benefit from the activities, programs of fiscal
year 2005 moneys.
Another often-overlooked benefit of the CDBG program is the
professional staffs that are developed under its auspices. If
the program should be eliminated, a number of the staff would
be laid off, and this would negatively impact the region.
Because of the nature of many other Federal programs and State
programs, the loss of these experienced employees will mean
that many of the regions local governments will no longer be
capable of administrating complex programs.
The region is also blessed with partners in the U.S.
Department of Housing and Urban Development at the Pittsburgh
Area Office that possess many years of experience in
administration of the CDBG program. But just as importantly,
the local HUD staff is a source of technical assistance in
other related areas. Our office consults with the local HUD
staff extensively, and these consultations are not always
related to CDBG, but include other Federal, State, and even
private foundation resources. Disseminating ideas that assist
constituents may not be quantifiable, but that service is just
as important as passing out checks, and that is one of the
services provided to all the local practitioners by the
Pittsburgh HUD staff. It is not just the money; it is the
people. And that tends to be overlooked.
That is not to say that Westmoreland County has always
enjoyed harmonious relations with HUD in general. In the past
there have been difficult times because over the life of many
programs, the process of the program becomes paramount in some
minds, while the delivery of the services to the constituencies
intended to be benefited becomes secondary. There is one
instance in particular in our program history that reflects
that attitude, and most of the problem generated was the
creation of the central office in Washington. I won't further
pursue that unless you all want to.
All in all, HUD has been a positive force for the bettering
of CDBG's intended constituencies. Last year CDBG celebrated
its 30th anniversary since being signed into law by President
Ford in 1974. The program still has widespread bipartisan
support within the Nation and in Congress. Just look at the
number of House and Senate Members signed the letters to the
Budget Appropriations Committees urging those committees to
preserve their program, keep it at HUD, and fund it at $4.7
billion.
There is a lot that is right about the CDBG program. It is
a tool that allows grantees to leverage other public and
private resources. This year the county will provide $1.7
million in CDBG Section 108 assistance toward the city of
Greensburg's downtown revitalization efforts. The inclusion of
the CDBG funds will be leveraging approximately $19.8 million
other funds. This project is also in Congressman Murphy's
district.
CDBG has been achieving results nationwide similar to those
obtained in the Pennsylvania 18th Congressional District
throughout its history. An analysis performed by an economist
at the George Mason University showed that for the first 25
years of the program, CDBG funded projects, created 2 million
jobs--you knew that before, right--and contributed over $129
billion to the gross domestic product. The program does not
lack focus as intimated by the program assessment rating tool
utilized by the Office of Management and Budget. Congress
stated in its purpose in a 1974 act, ``The primary objective of
this title is the development of viable urban communities by
providing decent housing in a suitable living environment and
expanding economic opportunities principally for persons below
moderate income.'' Moderate income is moderate income, not
extremely low income. This broad statement of congressional
intent provides grantees flexibility in their implementation of
the program so that their sometimes unique development goals
are addressed, not a goal created by a bureaucrat in Washington
with no local knowledge. This program creates and nurtures
local initiative. This region needs more, not less, of that.
The Pittsburgh region, in my opinion, is a depressed area.
Additional assistance is needed. In the last decade this region
lost 212,500 in population. This is a 1\1/2\ percent loss
compared to a 1.4 percent gain for the Commonwealth as a whole.
Just think of the gain for the rest of the State that did not
include this area.
Mr. Turner. Mr. Mitchell, we have your written testimony,
and I think the Members have reviewed it.
Mr. Mitchell. OK.
Mr. Turner. Since we are going to be short on time, if you
might summarize the rest of your testimony if there are any
additional oral comments that you would like to make in
conclusion.
Mr. Mitchell. Thank you. I will just stand there. You all
got it in written form.
[The prepared statement of Mr. Mitchell follows:]
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Mr. Turner. OK, and we will look forward to your
participation in the question/answer portion.
Mr. Mitchell. Thank you.
Mr. Turner. Ms. Reitz.
STATEMENT OF DIANA REITZ
Ms. Reitz. Thank you, Mr. Chairman, for inviting me here
today to testify before the subcommittee. Mr. Chairman,
Jeannette is a small city in an urban county. The city is
located in southwestern Pennsylvania approximately 25 miles
east of Pittsburgh, and our population is roughly 10,500
without 22 percent of the population over the age of 62. Our
median family income is $37,000 and our city is one of the few
remaining that still supports their own fire and police
departments. Up until the mid to late 1970's, Jeannette's
economy was centered around four glass manufacturing plants and
was originally dubbed the ``Glass City.''
Initially, the city of Jeannette received its Community
Development Block Grant funds through Westmoreland County's
Urban County program. However, it soon became apparent that the
city would be able to undertake additional projects if the city
applied for CDBG funding directly from the State. So in the
early 1980's the city fathers decided to opt out of the Urban
County program in Westmoreland County and apply to the State
for CDBG funds.
Mr. Chairman, this action by the City Council was very
successful. Over the past 10 years or so, the city of Jeannette
has received over $4 million in Community Development Block
Grant funds. However, there are some problems that small cities
like Jeannette are facing, and the following is a list of
those: there is a loss of population; there is an aging
population; there is a loss of tax revenue and financial
resources; an aging housing stock; deteriorated infrastructure;
deteriorated buildings, commercial and industrial; and a
declining business district.
The following are some ways cities like Jeannette are able
to battle these problems. Below is a list of activities and
projects the Community Development Block Grant funds support,
especially in our community. They supported recreation
improvements, street and road improvements, clearance and
removal and slums and blights, emergency radios, code
enforcement, removal of architectural barriers under ADA,
homeownership program--which is a rehab for vacant dwellings
for resale to low and moderate-income families that the city
has partnered with the local non-profit to administer a facade
improvement program, a first-time homebuyer program for
individuals and families that have never been homeowners
before, that they have been renters, purchase of a fire truck,
a Commercial Property Improvement program to support and assist
commercial business owners to upgrade their buildings, a
Revitalization Activity program that is currently supporting a
major redevelopment project in our city, and, of course,
Housing Rehabilitation program, which is benefiting low and
moderate-income homeowners.
Mr. Chairman, here are some of the problems that we see
that are affecting cities like Jeannette and that Congress
should address regarding Community Development Block Grants.
Our Housing Rehabilitation program, our program has been very
successful. Over the past years, the city could rehabilitate
approximately 20 to 25 homes in 1 year. Unfortunately, now,
with the implementation of the lead-based paint regulations,
the city doesn't have the list of contractors to bid on the
job. The cost of the jobs has skyrocketed, and it is just too
time-consuming. The city has dropped down to completing around
3 homes a year under our Housing Rehab program because of these
problems. We have difficulty getting contractors, qualified
contractors to bid, and when they do, the cost has doubled from
years past. Many communities are dropping the Housing Rehab
from their list of activities due to these hardships of the
lead-based paint requirements.
Another issue that we find that we are battling is the
implementation of the Davis-Bacon wage rates. With the
implementation of the Davis-Bacon wage rates with any contract
over $2,000, several problems have been encountered by our
city. Small communities like ours do not have large contracting
firms, and the smaller firms do not pay Davis-Bacon prevailing
wage. Generally, our contractors are employing two, maybe three
employees. They are just small companies. They cannot bid on
our jobs or it raises the cost of the job too much. And it
certainly doesn't help the local economies of cities like
Jeannette where we have to go outside of the area for our
contractors.
Another concern is an overall State historic preservation
clearance that I find in particular with respect to the State,
it makes it difficult to improve aging communities like the
city of Jeannette whenever we must adhere to historic
preservation requirements, especially in areas that have no
value left.
The following, Mr. Chairman, is a list of some of our
future projects. We have a construction of a new access road in
the city of Jeannette. We have removal, hopefully, of a
deteriorated glass factory, improvement to our central business
district, and improvement to our housing stock overall.
So in conclusion, Mr. Chairman, without Community
Development Block Grant funds, small cities like Jeannette
would not be able to financially address their problems and
their needs. Thank you.
[The prepared statement of Ms. Reitz follows:]
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Mr. Turner. Thank you. Now, we will go for comments and
questions and begin with Mr. Murphy.
Mr. Murphy. Thank you, Mr. Chairman. I just have a couple
brief ones because I know we are short on time here. But I
wanted to ask in general the panel a couple things. Mr.
Mitchell, you had in your written testimony--you didn't get to
talk about this--was the anti-pirating component.
Mr. Mitchell. Yes.
Mr. Murphy. Talk about pretty fascinating. Could you just
elaborate on that? Is that a problem now in the communities
that you see occurring that one community may leverage money
that ends up simply moving the job from one county to another?
Mr. Mitchell. I think it happens more in Western
Pennsylvania than it does in most of the other regions. The
anti-pirating rule was part of the old Urban Development Action
Grant program. It essentially says you will not use--in this
case it would be CDBG funds--to entice or use as a method of
enticement to take one company from one area and move it to
another. It is something I think Congress ought to look at. I
mean you did have it in the UDAG program. Maybe it is time to
revisit this.
Mr. Murphy. For any of the rest of you, Mr. Gorski or
Admiral McGowen or Diana Reitz, any of you see this as an issue
too, that some of this money is sometimes used to move a
business from one town to another?
Mr. McGowen. We don't see it as an issue in Washington
County. We do see a lot of growth in Washington County coming
south from Pittsburgh downtown or the Pittsburgh area.
Mr. Murphy. That is probably more a property tax issue.
Mr. McGowen. Well, that is part of it. And the part is that
we are growing. The whole Pittsburgh area and the region is
growing, and people want to move out where it is cheaper.
Mr. Murphy. All right. That is all I am going to ask for
now.
Mr. Turner. Mr. Dent.
Mr. Dent. Thank you, Mr. Chairman. Admiral McGowen, I
enjoyed your presentation. You talked a little bit about
homeowner assistance. I guess you are trying to help people in
Washington County, move from a rental situation to an ownership
of owner-occupied situation. Have you had any experience with
de-converting rental units back to owner-occupied settings?
There were always row homes and they were owner-occupied. In
the 1970's many of them became rental units. So it was once a
one-family unit now has--owner-occupied, it now has three
rental units. And do you use any of your CDBG funds for that
kind of de-conversion to take those rental units back to owner-
occupied situations?
Mr. McGowen. Not that I am aware of. Brenda--yes--we have
not done that, no. We have enough people, as you can see in the
waiting list, of both the homebuyer program, and especially the
home rehab to keep the owner there, that, I mean, those two are
very, very viable programs.
Mr. Dent. You talk about your homeownership program. Do you
provide counseling services support with down payments for that
money?
Mr. McGowen. Yes.
Mr. Dent. What do you do in terms of----
Mr. McGowen. Yes, help with the down payment, help with
closing costs----
Mr. Dent. Kind of like helping them with the process, hand-
holding to a certain extent----
Mr. McGowen. Yes.
Mr. Dent [continuing]. To get them through the----
Mr. McGowen. Absolutely. Highland Ridge is a wonderful
example of that. We actually have set up with a non-profit to
help these people make sure that they understand house payments
and proper budgeting and they actually--we are very key about
making sure that they are qualified and go through that before
we----
Mr. Dent. Yes, and I concur with what you said--you don't
have to comment on this--on what you said earlier too about the
need for these CDBG dollars for demolition purposes. I found
the same thing in my community. If you don't have----
Mr. McGowen. Yes.
Mr. Dent [continuing]. Public funds, whether it be CDBG or
some other public fund, the project is not going to move until
you get that site cleared and remediated and really you are
swimming upstream so to speak. And it is interesting that is in
your observation as well.
Mr. McGowen. Yes, and there is so many small towns in this
southwestern Pennsylvania to let it become that way, and you
have to revitalize the whole downtown.
Mr. Dent. And it is ready to go.
Mr. McGowen. Yes.
Mr. Dent. And the private sector doesn't want to throw
their money to knocking down buildings.
Mr. McGowen. No, that is right.
Mr. Dent. Right.
Mr. McGowen. But the private sector will step in if they
see it is being done.
Mr. Dent. Absolutely. That is my experience. And Ms.
Reitz--in Allentown they would say Reitz--but the question--you
talked a little bit about Davis-Bacon and that you are having a
hard time basically getting contractors to bid for that type of
work because the terms are too small. And do you have the same
problem with the State minimum wage law too? The threshold for
hiring is $25,000 or something that extensive?
Ms. Reitz. Yes, we do. Part of the problem is we have
smaller jobs going out. We have a facade program that is a
matching program up to $5,000 to be able to do facade work to
commercial buildings. And if I have a gentleman or a contractor
that wants to bid on that job, and his job, say it is only
signage or maybe some awnings and there is three employees
under his wing, unfortunately, unless he pays that higher wage,
he cannot bid on that job. So he decides not to bid entirely
and walk away from the job.
Mr. Dent. Is it fair to say that less work is being done
because of that law?
Ms. Reitz. Well, what happens is that I end up bumping out
into the larger contracting firms, which the costs actually go
up higher.
Mr. Dent. So would you recommend raising those thresholds--
--
Ms. Reitz. Raising the thresholds----
Mr. Dent [continuing]. For both the Federal and State
acts----
Ms. Reitz. Yes, sir.
Mr. Dent [continuing]. So that you can get more work done--
--
Ms. Reitz. Yes, sir.
Mr. Dent [continuing]. For less money?
Ms. Reitz. And it would provide an opportunity to the
smaller contracting firms to bid on these jobs. We are putting
them out of business.
Mr. Dent. And those are your local firms----
Ms. Reitz. Yes.
Mr. Dent [continuing]. In many cases and you have to go
outside the community to get the larger firms----
Ms. Reitz. Right.
Mr. Dent [continuing]. To come in and----
Ms. Reitz. That is correct.
Mr. Dent. Thank you.
Mr. Turner. Ms. Reitz, you mentioned in your written
testimony and your oral testimony the State historic
preservation offices and the requirements for historic review
that have been, in your opinion, some impediment. Could you
speak a little bit more about that in detail? Is it a State
processing issue, a time issue, or are actually the
requirements that are placed upon you difficult to comply with?
Ms. Reitz. Well, Mr. Chairman, I think that it probably is
first a State issue of another layer of regulations that are
put on top of what we already have. When we are going out--for
example, the city of Jeannette is in the process of doing two
major projects within our downtown area. One is a downtown
revitalization project, which we have set aside Community
Development Block Grant moneys; we have gotten an EDI grant
through the Federal Government and an RCAP through the State
government to help support this project. And what I have seen
is the problem is we couldn't come in and do the demolition
because we had to jump through the hoops to clear the site of
historic value.
And please don't get me wrong; I certainly want to preserve
the history of our community, but in some cases there is no
history left. There is nothing of those buildings left. So it
puts a timeframe on getting the jobs completed within a
timeliness manner or, you know, delaying the project to jump
through the hoops, and then there is the recordation process
and, you know, what follows in putting the MLA together and
putting the stipulations in the MLA and how you would preserve
the history of that area. With respect to our project, we are
definitely having some problems not only on the downtown area,
but on the housing end where we have a large two-block area
that we want to acquire, demolish with a non-profit. These are
dilapidated buildings. There really is no value left. But we
are delayed in doing that because of the regulations that have
been attached into preserving the history of that general area
and what the housing stock was back in the 1930's.
Mr. Turner. Well, in addition to my responsibilities in
this committee, I am also co-chair of the Historic Preservation
Caucus. And having served as a past mayor, I share your
concerns, both of the need to preserve our heritage, and at the
same time, to provide a streamlined process so that economic
development can occur. So I am always interested in hearing
both the experience that people have and ideas that they have
for improvement.
We are currently looking on the Federal level of the
reauthorization of the statutes under which these plans
operate. And most of the information that I have experience
with or that I have received relate not necessarily to the text
itself and to the goals of the program, but to its
administration and the timeliness----
Ms. Reitz. Yes.
Mr. Turner [continuing]. Of getting responses. So even
after this hearing, if you have additional thoughts on the ways
that on the Federal level this might be able to be addressed,
please provide them to us because we are currently taking that
up now.
Ms. Reitz. Thank you.
Mr. Turner. Mr. Gorski, Ms. Reitz had raised the issue of
prevailing wage and you also had that in a statement in your
testimony of the positiveness to the value of the wages that
were being provided for these projects, these projects being an
economic development initiative. Do you see an issue or a
problem also with the cap level? Is the amount difficult for
you or most of the projects you have undertaken not at a level
where you have had difficulty with it?
Mr. Gorski. Quite the contrary. There is a difficulty. The
threshold is so low that what we are finding is when the
estimates for the projects are placed on the application and
then we see the real numbers as a result of the bid, there is
often quite a discrepancy. In discussing the matter with
contractors, we have discovered that several choose not to bid;
others, especially some who gave the original guidance to the
municipality in terms of pricing, are almost embarrassed to the
number that they have to submit because the prevailing wage has
afforded the premise under which they made the original
submission. The threshold, if it was higher, probably would
make an awful lot of sense. The statement that I made was the
fact that the program is in fact compelling people to work at
decent wages.
We hear an awful lot, especially in the last few days,
about what is happening at the State level about prompting an
increase in minimum wage, which I understand is different. But
nonetheless, we have contractors who understand what is
involved, and we are looking at real, honest, good dollars,
irrespective of prevailing wages being imposed. Once a
prevailing wage comes along it does in fact drive up the cost
of the job.
Mr. Turner. Mr. Dent.
Mr. Dent. This is a Federal hearing. I feel like I am
wearing my State Senator hat at the moment, you talking about
RCAP assistance. It is not something you would deal with in
Ohio probably. But to your point--I have just forgotten my
point now, but it was an important one. The issue of tax
increment finance and in this State you have a problem with,
you know, prevailing wage now being applied to private
developments where tax increment financing is used. And many of
you in the economic development business know what I am talking
about. Has that presented problems for you in this end of the
State? It has been a problem in eastern Pennsylvania that the
prevailing wage, which previously had never been applied to
those private developments when using tax increment financing,
it was quite a problem. Is that a problem out here?
Mr. Gorski. We haven't had any interplay between CDBG and
the TIP project, so I can't comment.
Mr. Dent. OK. Anything in the Westmoreland----
Ms. Reitz. Any larger projects that we have done--and I am
speaking on the larger end--it is never really a problem for
us, Congressman. It is the smaller jobs that we find
difficulties with.
Mr. Dent. OK. Thank you.
Mr. Turner. Mr. Mitchell, you made reference to a
difficulty that you had with HUD and asked whether or not the
committee would want you to elaborate. I would ask that if you
would elaborate on the issues and the difficulties that you
have had and also give you the opportunity to, if you would
like to in more specific and greater detail, provide to the
committee in writing a description of that. But I would like
you to just speak for a moment on those issues.
Mr. Mitchell. Well, this was sometime ago, and it involved
handicap-accessibility issues and the rules and regulations
that we operate under or did operate under at that time. It
required you to provide accessibility to handicapped
individuals to various public facilities, municipal buildings,
public parks. And the idea was that you would use CDBG dollars,
and I don't want to get too technical because it is involved in
technicalities where handicapped people were generally at that
time considered to be of low income by virtue of their
handicap. So we did some accessibility improvements in several
public parks. And the HUD folks at Washington took exception to
that because other people could utilize those improvements, not
just handicapped people.
So being somewhat aggressive at some points, we pursued it
and got them to end up actually changing the rules because of
Westmoreland County. And now you will find the rules say that
you can do handicapped accessibility improvements, as long as
those improvements are for and considered to be low and
moderate-income benefits as long as those improvements are for
frail elderly as defined by the census or handicapped adults.
However, it left out children, didn't it? So one of the
things--in the settlement we had with HUD we had to have a sign
that indicated that any project we did for these handicapped
accessible improvements were for those particular protected
classes. So what I did is I created an 8 x 10 sign and we are
doing a ramp improvement at a public park for an amphitheater,
and so I invited the HUD officials in Washington to attend a
ribbon-cutting. And on that sign said this ramp is for the
exclusive use of frail elderly and handicapped adults.
Handicapped children are not permitted to utilize this
improvement by order of the U.S. Department of Housing and
Urban Development. And, of course, I invited those folks to
come to the ribbon-cutting, and for some reason they turned me
down.
Mr. Turner. Mr. Mitchell, you clearly have an ability to
make a point.
Mr. Mitchell. We were just following the rules, sir. That
was all. And those rules still exist today. For the life of me
I can't understand why children, because they are considered
wards of their parents, and if their parents are not low-
income, therefore, they are not. Well, there is no difference
in my mind between a handicapped person my age or your age and
a handicapped child.
Mr. Turner. Well, I tell you what, what is important is
that what you are describing is an attempt by your community to
do something that is good and where you have tripped into
Federal rules and regulations that can thwart that, those are
the types of things that we want to learn, so we appreciate you
bringing that to our attention today.
Mr. Mitchell. Thank you.
Mr. Turner. Mr. McGowen, the Admiral, I would appreciate
your discussion of the issue of duplication. We had a great
presentation by you of the effectiveness of this program in
your community. We saw some great results in the photos that
you presented. One of the criticisms that CDBG had to overcome
this year was the allegation that it is a duplicative program,
that there are other sources of funds for your community to
seek to accomplish the tasks that you laid out for us. Could
you talk about that for a moment?
Mr. McGowen. I see there is absolutely no duplication at
all. As Ms. Irey said, it is a jumpstart in my cases,
especially in downtown revitalizations. I showed you the city
of Washington, which is an example, that CDBG funds because of
the low-income census track for the whole city, we were able to
use that and it jumpstarts millions of dollars. Developers are
now coming in with $100 million project in downtown Washington
and 1,000 jobs, and that is because CDBG, no duplication; it
wouldn't have happened if CDBG hadn't done it to start with.
The same way with the home rehab program. There is no
duplication there. You can't get that money anyplace else. And
it provides keeping homes on the tax roles. The Head Start that
I gave you an example of, the partnership. You wouldn't have
had the people stepping up to the plate in terms of the CDC and
the BHFA, etc. The Highland Ridge, we had a local bank give
$125,000 to the program once it was established with CDBG. So
there is absolutely no duplication. It is just a multiplier
effect that is good.
Mr. Turner. Thank you. Any questions?
Mr. Murphy. No, I recognize we are out of time. I just want
to ask this. I know we are out of time, but if you are willing
to keep the record open because many of the communities in my
district and around this region would still like to submit some
written testimony. Without objection I would like to ask you to
do that, sir.
Mr. Turner. Excellent. We will leave the record open for a
period to the end of this month, and if there are communities
that want to provide it, then that would be very helpful to us.
Mr. Dent. Mr. Chairman, I just want to thank you for
holding the hearing here and appreciate this very good
testimony. I feel very good about how you are using CDBG out
here in southwestern Pennsylvania and realizing that your
experiences in many respects are similar to mine. And I have
really learned something now. We used our money for Head Start
in my district with CDBG, so I have taken something back to my
community.
Mr. McGowen. That was partnership.
Mr. Dent. Very clever. Thank you.
Mr. Turner. Well, for those members of our second panel, I
am going to give you the opportunity if there are any closing
remarks that you would like to make or additional information
that you would like to provide for us, go right ahead.
Mr. McGowen. I would just like to reemphasize that it is an
outstanding Federal program that is executed on the local level
by a county to all the municipalities. And the municipalities
do not have that expertise. They need it at a county level. The
other thing is inner city, CDBG does help inner city
revitalization. We don't want sprawl. We all know that. But you
have to revitalize the inner cities in terms of low incomes, in
terms of jobs. This program does that. If you do away with the
CDBG, there is no raising of taxes at the local level or at the
county level. That doesn't help. It is not going to happen. If
you do away with CDBG, what has happened with that program
stops. And, again, partnership and leverage is very obvious. We
emphasize that very heavily in my organization, and it does
work.
Ms. Reitz. I would just like to say, chairman, thank you so
much for inviting the city of Jeannette a community to speak
today. Community Development Block Grant funding is very much
needed in our community. And with the lack of that, we would
continue to lose our housing stock, our population, our youth.
I have major concerns that our community cannot financially
support this--obviously, we went in through a pre-opt 47 just a
couple months ago, so we have a very, very much needed need to
continue the Community Development Block Grant funding for the
city of Jeannette. So thank you.
Mr. Turner. All right. Excellent. Well, with that I want to
thank Mr. Murphy for asking us to come here and for his
leadership on the national level, for preserving CDBG. The
Community Development Block Grant program is one, of course,
that he is intimately familiar with and has been a strong
advocate of. And the efforts to save CDBG, certainly a
coordinated effort between the House and the Senate, and Mr.
Murphy was the leader on the House side to make certain that
not only that the funding would be there, but that the program
would be highlighted and preserved. Part of his efforts to do
that, obviously, is to invite us into your community today to
receive this testimony so as part of the written record of this
subcommittee. We will have the testimony of your support and
your effectiveness of the use of CDBG. Mr. Murphy, I want to
thank you for your leadership in that and for having us today.
Mr. Murphy. Thank you, Mr. Chairman. You are always welcome
in Pennsylvania.
Mr. Turner. Thank you. Before we adjourn I would like to
thank our distinguished panels of witnesses for their
participation today. I appreciate your willingness to share
your knowledge, your experiences, and thoughts on the CDBG
program. I would also like to thank both of my colleagues, Mr.
Murphy and Mr. Dent, for allowing us to come into Pennsylvania
to get this important additional information and to take it
back to Washington, DC, in our efforts to continue to advocate
for CDBG.
Finally, I would like to express my appreciation to the
borough of Carnegie for being our host. We owe a special thanks
to Mr. Murphy for inviting us and for his arrangements today to
make sure that we had a smooth and productive hearing.
In the event that there may be additional questions that we
did not have time today, we will also give Members the
opportunity to submit written questions to you if you would be
so kind as to answer them if one is posed to you.
Thank you all. We stand adjourned.
[Whereupon, at 12:15 p.m., the subcommittee was adjourned.]