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THE NEW YORK CITY EXPERIENCE: HOW HAS

THE COMMUNITY DEVELOPMENT BLOCK

GRANT PROGRAM SHAPED THE BIG APPLE?

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 25, 2005

Serial No. 109–77

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

(II)

COMMITTEE ON GOVERNMENT REFORM

TOM DAVIS, Virginia, Chairman

CHRISTOPHER SHAYS, Connecticut

DAN BURTON, Indiana

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

JOHN L. MICA, Florida

GIL GUTKNECHT, Minnesota

MARK E. SOUDER, Indiana

STEVEN C. LATOURETTE, Ohio

TODD RUSSELL PLATTS, Pennsylvania

CHRIS CANNON, Utah

JOHN J. DUNCAN, JR., Tennessee

CANDICE S. MILLER, Michigan

MICHAEL R. TURNER, Ohio

DARRELL E. ISSA, California

GINNY BROWN-WAITE, Florida

JON C. PORTER, Nevada

KENNY MARCHANT, Texas

LYNN A. WESTMORELAND, Georgia

PATRICK T. MCHENRY, North Carolina

CHARLES W. DENT, Pennsylvania

VIRGINIA FOXX, North Carolina

——— ———

HENRY A. WAXMAN, California

TOM LANTOS, California

MAJOR R. OWENS, New York

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

CAROLYN B. MALONEY, New York

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

DANNY K. DAVIS, Illinois

WM. LACY CLAY, Missouri

DIANE E. WATSON, California

STEPHEN F. LYNCH, Massachusetts

CHRIS VAN HOLLEN, Maryland

LINDA T. SANCHEZ, California

C.A. DUTCH RUPPERSBERGER, Maryland

BRIAN HIGGINS, New York

ELEANOR HOLMES NORTON, District of

Columbia

———

BERNARD SANDERS, Vermont

(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

CHRISTOPHER SHAYS, Connecticut

VIRGINIA FOXX, North Carolina

——— ———

WM. LACY CLAY, Missouri

PAUL E. KANJORSKI, Pennsylvania

CAROLYN B. MALONEY, New York

EX OFFICIO

TOM DAVIS, Virginia HENRY A. WAXMAN, California

JOHN CUADERES, Staff Director

SHANNON WEINBERG, Counsel

JON HEROUX, Counsel

JULIANA FRENCH, Clerk

ADAM BORDES, Minority Professional Staff Member

(III)

C O N T E N T S

Page

Hearing held on July 25, 2005 ............................................................................... 1

Statement of:

Bloomberg, Michael R., mayor, city of New York .......................................... 9

Butts, Rev. Dr. Calvin, pastor of the Abyssinian Baptist Church; Chris

Kui, executive director of Asian Americans for Equality; and Dr. Ingrid

Gould Ellen, associate professor of public policy and urban planning

at the New York University Furman Center for Real Estate ................... 65

Butts, Rev. Dr. Calvin ............................................................................... 65

Ellen, Dr. Ingrid Gould ............................................................................. 89

Kui, Chris ................................................................................................... 80

Towery, F. Carlisle, president of the Greater Jamaica Development Corp.;

Ronay Menschel, chairman of the Board of the Phipps Houses; Mark

Willis, executive vice president of community development programs

at JPMorgan Chase; and Andrew Reicher, executive director of the

Urban Homesteading Assistance Board ...................................................... 30

Menschel, Ronay ........................................................................................ 37

Reicher, Andrew ........................................................................................ 49

Towery, F. Carlisle .................................................................................... 30

Willis, Mark ............................................................................................... 42

Letters, statements, etc., submitted for the record by:

Bloomberg, Michael R., mayor, city of New York, prepared statement

of ..................................................................................................................... 12

Butts, Rev. Dr. Calvin, pastor of the Abyssinian Baptist Church, prepared

statement of ................................................................................................... 71

Ellen, Dr. Ingrid Gould, associate professor of public policy and urban

planning at the New York University Furman Center for Real Estate,

prepared statement of ................................................................................... 91

Kui, Chris, executive director of Asian Americans for Equality, prepared

statement of ................................................................................................... 83

Maloney, Hon. Carolyn B., a Representative in Congress from the State

of New York, prepared statement of ........................................................... 98

Menschel, Ronay, chairman of the Board of the Phipps Houses, prepared

statement of ................................................................................................... 39

Reicher, Andrew, executive director of the Urban Homesteading Assistance Board, prepared statement of ............................................................. 52

Towery, F. Carlisle, president of the Greater Jamaica Development Corp.,

prepared statement of ................................................................................... 33

Turner, Hon. Michael R., a Representative in Congress from the State

of Ohio, prepared statement of .................................................................... 5

Willis, Mark, executive vice president of community development programs at JPMorgan Chase, prepared statement of ................................... 44

(1)

THE NEW YORK CITY EXPERIENCE: HOW HAS

THE COMMUNITY DEVELOPMENT BLOCK

GRANT PROGRAM SHAPED THE BIG APPLE?

MONDAY, JULY 25, 2005

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON FEDERALISM AND THE CENSUS,

COMMITTEE ON GOVERNMENT REFORM,

New York, NY.

The subcommittee met, pursuant to notice, at 10 a.m., in the

Sixth Floor Gymnasium of the Thurgood Marshall Academy, 200–

214 West 135th Street, New York, NY, Hon. Michael R. Turner

(chairman of the subcommittee) presiding.

Present: Representatives Maloney, Rangel, and Turner.

Staff present: John Cuaderes, staff director: Juliana French,

clerk; and Adam Bordes, minority professional staff member.

Mr. TURNER. Good morning. I want to welcome you to the Subcommittee on Federalism and the Census and our hearing today

on, ‘‘The New York City Experience: How has the Community Development Block Grant Program Shaped the Big Apple?’’ A quorum

being present of the subcommittee, this subcommittee will come to

order.

Before I go into my written remarks, I want to thank the mayor

and his staff for an excellent tour today that we had of Harlem and

the wonderful community development activities that are going on

here. Although this hearing is about CDBG and the funding that

the Federal Government provides, we know that this story is really

the fabric of communities and the discussion of community development.

Community development is about changing the places that we

live and changing the lives of the people that live there. We have

seen those examples today of people taking leadership in their communities and with Federal assistance being able to garner resources and to change their communities.

I want to thank Congressman Rangel for having us here in his

district today. We know you must be very proud of the things that

the community here has accomplished I am certain with the aid of

your leadership and we are very excited to see those examples

today.

I also want to thank Congresswoman Maloney for suggesting this

hearing. She suggested this hearing not only because of her commitment to the CDBG Program but because of her intimate knowledge of the excellent accomplishments here and the fact that if we

look at this Federal program and we look for accomplishments that

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we knew we could find them here in New York City. I appreciate

her leadership and having us here.

I would like to welcome you all to the Subcommittee on Federalism and the Census Field Hearing entitled, ‘‘The New York City

Experience: How has the Community Development Block Grant

Program shaped the Big Apple?’’ This is a followup to three hearings the subcommittee has held in Washington, DC, and the second

field hearing held on the topic of CDBG.

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.

As most of you here today are aware, CDBG is one of the largest

Federal direct block grant programs currently in existence for use

by local governments. State and local governments use CDBG moneys to fund various housing, community development, neighborhood

revitalization, economic development, and public service provision

projects.

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. That is why I have worked hard this year along with my

colleagues in Congress to ensure that the CDBG Program continues to receive a funding level similar to previous fiscal years.

Nevertheless, 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.

For this reason this subcommittee has come here to hear how

you here in Harlem and elected officials and community leaders at

the local level have used these funds and how your citizens have

benefited from the CDBG Program. We are interested in learning

from you what works in the program but also what does not.

I am very pleased with the response to this hearing, especially

the number and quality of witnesses seeking to testify today. It is

this kind of response that makes it great to be back in New York

City, especially in Harlem. On two occasions last year I had the opportunity to visit this great community. The first was with Congressman Chris Shays as part of a community development tour organized by living cities to see the successes of their programs.

On my second visit to Harlem I had the opportunity to honor a

number of Youth Action/YouthBuild students from my district, a

program sponsored by the original Youth Action Program and

Homes Program founded and located here in Harlem. It is because

of this past experience and the presence of our distinguished panelists today that I am excited about this hearing. I know that it will

be a tremendous success because of the experiences and successes

that each of the members can bring to this panel.

With that said, I would like to express my appreciation to the

city of New York and to Mayor Bloomberg and to the Thurgood

Marshall Academy for hosting us today. I would also like to thank

3

my friend and colleague Congresswoman Carolyn Maloney and the

Honorable Charles Rangel.

I understand we also need to thank Dr. Calvin Butts who assisted us in arranging for this location today and, of course, the

principal of Thurgood Marshall, Dr. Sandy Johnson.

Our first panel consists of the distinguished mayor of this great

city, Michael Bloomberg. I want to thank him again for his leadership and his efforts. I know, mayor, you must be very proud of your

city and the things that you are accomplishing in the area of community development. Certainly your community is responding and

your leadership is appreciated as we look to the great things that

are happening in your communities and neighborhoods.

Our second panel of witnesses consist of four representatives

from the city of New York Development Community. They are F.

Carlisle Towery, president of the Greater Jamaica Development

Corp.; Ms. Ronay Menschel, chairman of the Board of the Phipps

Houses; Mark Willis, executive vice president of Community Development Programs at JPMorgan Chase; and Andrew Reicher, executive director of the Urban Homesteading Assistance Board.

Finally, our last panel we have three distinguished witnesses

and they are Dr. Calvin Butts, Pastor, who we recognized earlier;

Mr. Chris Kui, executive director of Asian Americans for Equality;

and Dr. Ingrid Gould Ellen, associate professor of public policy and

urban planning at the New York University Furman Center for

Real Estate. I look forward to their expert testimony today.

I now yield to the distinguished gentleman and long-time Member of Congress from the 15th District of New York, the Honorable

Charles Rangel for any opening remarks that he wishes to make.

Mr. RANGEL. Thank you, Mr. Chairman. We are fortunate to

have a former mayor at such an important subcommittee and my

community thanks you for coming here. I want to thank Carolyn

Maloney. Without her strong suggestion as to having our great

community selected we probably would have been lost in the South

Bronx some place.

I think we really want you to take back to Washington, Mr.

Chairman, the exciting enthusiasm of a community that has such

a rich intellectual and cultural history that actually got bombed out

in terms of homelessness, abandoned buildings, empty lots. Yet, we

continue to persevere with people like Calvin Butts and Percy Sutton and entrepreneurs who came together with List and Enterprise

and being able to have the empowerment zones and the restoration

of the Apollo brought back a community that once again all of us

can feel so proud of.

Kids can go to school and know that they are coming home to

decent surroundings, a place for people to live and go to work and

to be able to bring people back home. It is a thriving, exciting community and the Federal Government must step up to the plate to

make certain that this rich community remains affordable to all of

our citizens so that they will be able to enjoy living where they

have seen this rebirth of an exciting community.

I want to thank the mayor and, more specifically, the chairman

of the Housing and Preservation Department. There are so many

ribbon cuttings that we are having in our community with Calvin

Butts, with List, with Mark Willis, with the Addict Rehabilitation

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Center, people who have such exciting ideas as to how they wanted

to see a community, and with local, State, and especially the Federal Government’s help was able to fulfill those dreams.

I hope we can take back to Washington the concept that we have

heard, ‘‘If it ain’t broke, don’t fix it.’’ This is a community that has

come back and we want to continue to make certain that our kids

and generations to follow would be able to enjoy all that they are

able to enjoy today.

Thank you, and thank you, Carolyn, for your constant support,

not only for this program but fighting for the city of New York.

Thank you, Mr. Chairman.

Mr. TURNER. I now turn to my friend and colleague, the Honorable Carolyn Maloney, who sits on this subcommittee and who, as

we acknowledged, first proposed the subcommittee come to New

York City. Mrs. Maloney, I yield to you for your opening comments.

Mrs. MALONEY. Thank you so much. It is so wonderful to be

home here in Harlem and to see the wonderful work of HPD and

of the community to rehabilitate it. Ten years ago I was on the city

council and spent a lot of time in Harlem. We just came from a

tour. Mr. Mayor, it was unbelievable. Broadhurst used to be a drug

infested crime area.

New housing for families, TIL buildings turned into cooperatives, the great Apollo helped by CDBG, St. Morris Park historic district, the parks. The city really is a symbol of how CDBG

can work. Charlie, you must be so proud. What a wonderful legacy

that under your leadership working with others all this affordable

and available housing has come to our neighborhood.

I tell you, we could not have a better friend than my colleague

Michael Turner who was a mayor for 8 years in Dayton, OH, so

he knows the challenges that mayors face. He knows the need for

a flexible program that confront the needs as they come forward

whether it is combating arson or urban blight or whatever. He was

very instrumental in beating back the attempt to totally dismantle

the CDBG Program and move it to commerce.

Give him a standing ovation because that is important to our

city. I mean it. They tried to cut it and move it and they tried to

cut out the housing component which is the most important part

of the program and this guy helped us put it back in.

More importantly, he is going to help us save it because those

people who tried to cut it out are going to be coming back after it.

I am very pleased to welcome my constituent and friend Mayor

Bloomberg as one of our witnesses, along with many colleagues

with whom I used to work many years ago. I see you haven’t gone

too far in your life. You are still here battling for affordable, available, quality housing and it is wonderful to see all of you.

Mr. Mayor, I appreciate very much the attention that your staff

has focused on housing. It is critically important. As you know,

even though we put 60 percent of city money in, without that 40

percent of Federal support it is very hard to do the many wonderful

renovations and rebuildings and improvements that literally help

people.

I just want to state very seriously that one of the justifications

the administration advanced for eliminating CDBG as we know it,

and as the mayor knows, both mayors know, this is one of the few

5

block grant programs that are flexible for communities so that you

can use that money in a creative way to confront whatever the

problem is. New York City, I am very proud of this city, historically

has been a leader in coming up with answers on whatever the

problem is.

Regrettably CDBG did not score well on the OMB assessment

rating test. While we supported it and we got it back, we need to

come up with a way to measure the results of CDBG that demonstrates the benefit it has provided and I hope that we can work

together with the witnesses today to find a scientifically solid

measurement to put up against the administration’s test.

Also, because the program remains under-funded while more and

more communities become eligible and apply to it, we face an ever

shrinking pie and that situation will intensify with the questions

of fair share. As representatives of this community, we each need

to make the case for New York City. No one that has spent any

time reviewing the numbers can contest that New York has significant needs and that the city has directed a CDBG funding to those

who need it most but we need to make that case as strong as possible.

I wanted to really note the very professional nature of your staff

in Washington, Mr. Mayor. They are able. They are competent.

They get back with research quickly. They are warriors for New

York and we need them. A lot of formula changes look like they

are not going to have a lot of impact but they mean a great deal

of money, sometimes millions, to New York City and they do an excellent job.

I appreciate your being here very much and the support of your

staff. Charlie, you are the best always. Thank you, Mr. Turner. We

are going to work together to make sure we preserve it in the next

budget, too. Thank you so much.

Mr. TURNER. 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 light on the witness table. The green light

indicates that you should begin your remarks and the red light indicates the time has expired.

In order to be sensitive to everyone’s time schedule, we do ask

that witnesses cooperate in limiting their remarks. After the oral

presentations of each panel, the subcommittee will followup with a

question and answer period. It is the policy of this committee that

all witnesses be sworn in before they testify.

Mr. Mayor, I understand that you have Rob Walsh and Shaun

Donovan with you who will also be answering questions so if the

three of you would please rise for the administration of the oath.

[The prepared statement of Hon. Michael R. Turner follows:]

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[Witnesses sworn.]

Mr. TURNER. Please let the record reflect that the witnesses have

responded in the affirmative. At this time then it is my honor

again to recognize the mayor of New York City, Michael

Bloomberg. We appreciate your time that you have spent in preparing for this hearing and also your attendance here today.

It is important for us to get information from you. We have had

the opportunity to see some of the great successes from your leadership and we want to hear obviously the ways in which CDBG

and the Federal assistance has contributed to that.

Mayor Bloomberg.

STATEMENT OF MICHAEL R. BLOOMBERG, MAYOR, CITY OF

NEW YORK

Mr. BLOOMBERG. Chairman Turner, thank you. I join Congresswoman Maloney and Congressman Rangel in welcoming you and

the members of the subcommittee to New York City, and especially

to Harlem. I think when you go out on the streets you see what

can happen when the public and private sectors work together and

whether it is Sheena Wright and Calvin Butts of Abyssinian Development Corp. or similar groups throughout the city, you see that

when people of good intentions roll up their sleeves and say, ‘‘Let

us not complain.’’

Let us not look back but let us go forward, you really can make

a difference. Harlem also offers just excellent proof of what Federal

community development block grants funding can achieve and continue to accomplish in our city.

Mr. Chairman, as a former mayor yourself, you undoubtedly appreciate the importance of Federal support for our cities that permits a high degree of flexibility in discretion at the local level while

also requiring local accountability. That is federalism at its best. I

think it also perfectly describes the operation of the CDBG Program in New York City. It is why the program has produced outstanding results in housing and community development in our

city.

This morning here in Harlem you have seen exactly what I am

talking about. Twenty years ago this proud neighborhood was

plagued by the widespread abandonment of housing. My predecessors at city hall, Mayors Koch, Dinkins, and Guiliani, used

CDBG funds to reverse that trend here and elsewhere in our city.

The result is that today Harlem, like other New York neighborhoods that were once on the decline, are now experiencing a heartening revival. You only have to look at what has gone on on this

street right by Thurgood Marshall Academy. Just take a look down

125th Street where two new hotels are being built.

That means that we now have a new challenge, preventing the

displacement of long-term community residents and ensuring that

Harlem and other neighborhoods in our city remain places that

people of all income levels can call home. The adaptability and local

autonomy built into the CDBG Program means that we can use

CDBG funds to do exactly that.

With me today is the commissioner of the city’s Department of

Housing, Preservation, and Development, Shaun Donovan. New

10

York City annually spends about $260 million in CDBG funds and

HPD administers the larger share, roughly 60 percent, of that sum.

Here in Harlem in Bushwick, in the South Bronx, and elsewhere

in our city, HPD uses community development block grant funds

to help tenants in what were once abandoned city owned apartment buildings to establish low-income co-ops and, in this fashion,

take part in the great American dream of home ownership.

We draw on CDBG funds to plan the reuse of former industrial

brownfields in our city for affordable housing development. A key

part of our administration’s ambitious plan to develop and preserve

affordable housing for more than 200,000 New Yorkers.

Shaun’s team also uses a substantial percentage of CDBG funds

for what they rather prosaically describe as code enforcement. Let

me tell you what code enforcement means in New York City. When

landlords in Harlem or in other communities are unable to unwilling to make basic emergency repairs in low-income housing, tenants call our 311 citizen service number for help.

We then use CDBG funds to ensure that people who have nowhere else to turn get heat, hot water, and can live in homes that

are safe. We also use CDBG funds for comprehensive improvement

programs for substandard privately owned residential buildings.

Safe, affordable housing is crucial to the revival of communities

like Harlem but so are many other factors. The genius of the

CDBG Program is that it encourages such robust neighborhood development.

Also with me today is Rob Walsh, the Commissioner of the New

York City Department of Small Business Services. A major mission

of Rob’s agency is creating healthy environments for the businesses

that sustain neighborhood life in our revitalized communities.

As detailed in our written testimony, SBS’s neighborhood Small

Business Solution Centers, its storefront renovation programs, and

other initiatives, all of which benefit from CDBG funding, are helping us realize that goal in Flatbush in Brooklyn, Hunts Point in the

Bronx, and in other communities.

CDBG funds also support daycare centers that help New Yorkers

with children move off the welfare rolls and onto the job payrolls.

They fund the renovations of senior centers throughout the city.

CDBG funds also underwrite the city’s outreach to homeless mentally ill men and women in and around the Staten Island Ferry terminals.

The CDBG Program is, in short, critical to the people of New

York. When the proposed Federal budget threatened it with extinction earlier this year, I wrote to congressional leaders expressing

my strong support for preserving this program. I applaud the action taken by the Senate and the House to maintain the CDBG

Program. I urge you all to increase funding to at least last year’s

levels.

Mr. Chairman, like you and other members of this committee,

our administration also believes strongly that CDBG funds must be

spent where they are needed most and that local governments

must be held to stringent standards in their expenditure. We have

promised the people of New York just such efficient, transparent,

and accountable city government and we have delivered in the administration of these funds as in other areas.

11

Let me stress unequivocally that our administration has zero tolerance for waste, fraud, or other misuse of any public dollars. What

is more, CDBG funding has been highly targeted and has produced

results. As you know, Federal law requires that a minimum of 70

percent of CDBG funds benefit low-income people.

In New York City I am happy to say we far exceed that target.

In fact, 93 percent of our CDBG funds benefit low-income people.

Independent research findings and other testimony that will be

presented to you later today will also describe the economic ripple

effect that CDBG funds have in encouraging nonprofit and private

lenders to invest their own funds in housing and community development.

By supporting our initiatives in affordable housing, small business development and other areas, CDBG funds have played a vital

role in the revival of our neighborhoods. Because New York is the

Nation’s largest city, the one most frequently visited by tourist

from overseas, and a symbol to the world of how our Nation has

bounced back since September 11th, every American has a stake in

helping us continue to write such success stories.

We look forward to working with this committee to insure that

happens. Now we will be glad to take your questions.

[The prepared statement of Mr. Bloomberg follows:]

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Mr. TURNER. Mayor, there are two basic criticisms that were levied against CDBG in the process this year when the proposal occurred to zero out the budget. One was that the program lacked

specifics in its goals and objectives. The goal and objective that was

cited was that of community development. The term community development was one that lacked clear definition and, therefore, it

was very difficult to provide any measurement as to whether or not

community development has occurred.

The second was that the belief that CDBG was a duplication of

other programs, that there were other sources readily available to

cities to seek funding to apply to some of the programs, projects,

some of which you have just described. Would you talk for a moment about the issue of community development?

I think someone such as yourself who have worked in the areas

of turning neighborhoods around can certainly speak to the issue

of how can we look at knowing when community development is occurring that it is something that CDBG can cause to happen and

the act that what other sources you might look to as a mayor to

replace CDBG funds if they weren’t available.

Mr. BLOOMBERG. Well, it would be very difficult to replace the

funds obviously. The city is always strained by lots of different objectives and needs. Let me say that I think we are not an expert

on how other cities use CDBG funds so we can really only talk

about ourselves but I think there are ways to measure the effectiveness of this program. You go out in the streets and you look for

vacant lots, deserted buildings.

If those aren’t there, that says people are going and renovating

and moving in, not leaving. They are doing it because the community is better. You look at the crime statistics. Communities that

are growing have lower crime because people want to make sure

that they have safe neighborhoods and they understand they are

part of police work, working with the police and having zero tolerance for neighbors who try to take away their freedoms to go about

their business.

Looking at the schools and seeing whether the schools are getting better, that is another way all of this comes together. If people

have hope and pride in their neighborhoods, if they think that

things are getting better and it is not hopeless, if they come to the

realization that they don’t have to settle for the problems of the

past. In fact, in this country they can make things better. I think

you go back and you say that is the result of a lot of things but

CDBG money is clearly a big part of it.

You want to add something, Shaun? Mark Page is my commissioner for all the moneys that get distributed, Office of Management and Budget. Mark.

Mr. PAGE. I think New York City’s budget obviously in the shortterm, I mean, sometimes a little bit more money and sometimes

there is less but overall it is under extreme stress all of the time

in finding resources. The existence of this program over now decades means that there is an ongoing program and an ongoing research that can be focused on the community development and lowcost housing purposes that it served so well without having to start

by competing with every other city service for the money.

23

It is actually a continuous source and it can focus on how best

to spend this sum with some confidence that it will go on which

is perhaps why it is so important that Federal funding continue in

this program, that it not become the same kind of annual competitive process that city services otherwise face.

Mr. DONOVAN. I think also, just to take a specific example, when

you ask about replacing that funding, if you think about the InRem housing stock that we saw this morning on the tour, nobody

would have predicted when CDBG was begun exactly what the

funding would have been used for.

We were able to respond to that crisis by managing those properties, the day-to-day how are you going to pay the bills, who is

going to be in those buildings making sure the tenants are safe.

Nobody at that point would have predicted that 10 years later we

would have had such success in turning those buildings around

that we would have been able to shift that money to a new use

which was actually beginning to rehabilitate them and beginning

to focus on the privately owned stock.

None of the other Federal housing programs have that flexibility

that allows us to shift those to those needs whether it is Section

8 vouchers, tax credits, home funding, all of those we use to build

projects. CDBG is really the only funding stream that we have that

we can use flexibly to be able to shift with the changing needs that

we have in our community and that is what is so critical about the

flexibility.

Mr. TURNER. Flexibility is an important point because just as

your needs shift, the needs of every community throughout the

country shift and differ so allowing a program where the Federal

Government doesn’t dictate how they are to be used really does

allow the local community to determine what needs they are responding to or have as a priority.

That leads me to my next question. You were talking about the

things that you accomplished and the shifting needs and flexibility.

I am very impressed with the leveraging aspects of CDBG. When

those funds are used by a community as seed moneys how they attract other capital. Mayor, perhaps you could talk about the issue

of how those funds have been able to attract other investments as

you have identified areas through development.

Mr. BLOOMBERG. Mr. Chairman, I don’t think any government

even combining Federal, State, and city tax revenue sources would

have enough money to make the big dent that this country needs

in improving its housing stock and solving lots of other problems.

You have to have the private sector come in.

The private sector is driven by capitalism. You have to make it

attractive for them. They have to think that they can earn a good

return and they will look to the trends, how safe their investment

is going to be, and whether it is likely to get other investment

whether they are going to be the only investor, which they don’t

want to be, or whether they will join a whole group of people.

I have always thought that Congress should hold cities accountable for how they spend the money. But when a city does it intelligently and shows results, don’t penalize that city by taking money

away from it. Quite the contrary. You are really getting something

for your money and you should give them even a greater share.

24

You have to have an incentive for cities to use money intelligently or they will waste it. New York City has not wasted Federal moneys. I think you can demonstrate with clear hard numbers

that this city whether it is in job creation or making a better quality of life for people or finding housing, those people who were here

during the tough times and now are getting squeezed out by a rising real estate market, you can show that New York City has done

with the Federal Government what Congress intended those moneys to accomplish.

Rob, you want to talk about job creation just as a good example.

Mr. WALSH. Well, job creation is one example. Our agency uses

a very small portion of the money but it goes a long way. Over the

last 3 years we funded over 150 different groups who are out there

working to improve store fronts along commercial districts, some of

the things you saw today whether it was on 125th Street, 116th

Street.

I quickly think of an example on Myrtle Avenue and Brooklyn

where we worked with the local development corporation grassroots

effort. Over the last 2 years over 40 small businesses moved into

the area opening up coffee shops that didn’t exist and restaurants

and bookstores and other businesses that happened.

When you start thinking about leverage, you look at some of the

other development, the private sector development that is taking

place. In the case of Myrtle Avenue a local university also moved

onto a block which they would have never thought about before.

We could not have done that without the money because where else

would the grassroots organization get the money.

They could go to the banks. They could go to a number of other

groups but it is limited funds. New York City has the most comprehensive local development corporation system in the city. Many

of these groups are one, two, three, four blocks of merchants associations that have come together.

What the mayor has done in the last 2 years, as I mentioned to

you on the bus, he has taken the Workforce Investment Act money

to the Department of Employment and he has linked it with small

business services. We are now making links between economic development as you would see in the local stores.

We have set up small business centers throughout the five boroughs. We went by one today on 125th Street. We go after the merchants and we ask about jobs. ‘‘What jobs do you have and what

jobs are available?’’ We are now linking that money. We are

leveraging other Federal money, other State money, other local

money to get people jobs in their communities.

Mr. DONOVAN. I would add on the housing side that you will

hear from two folks today in testimony, Mark Willis from

JPMorgan Chase who will talk very directly to this issue of

leveraging. Every single project that we do we link up with the private sector with a very sophisticated network of banks like

JPMorgan Chase and others that bring funding to these projects to

leverage the Federal funds.

At the same time you will also hear from Professor Ellen from

NYU who will talk about the leveraging effect that these funds,

particularly CDBG funds, have had on neighboring property owners.

25

Very sophisticated statistical analysis that shows that where

these investments are made people surrounding those investments

improve their properties more than in other areas and the values

of those properties rise more than other areas. That shows very directly that there is private investment leveraged by these investments if they are done right as they are done in New York City.

Mr. TURNER. I now recognize Mr. Rangel for his questions.

Mr. RANGEL. Thank you. Mr. Mayor, would you share with the

chairman in addition to improving the quality of education and creating jobs how important it is that low and middle-income people

be able to gain access to the apartments that are being built in the

community?

Mr. BLOOMBERG. The Congressman is part of an effort. He was

really the instigator in getting our administration to form a commission of government leaders, of union leaders, of developers, of

financiers to try to make sure that one of the biggest growing industries in this city, construction, is open to everybody who lives

in this city. We want to make sure that all of our industries and

all parts of city government roughly reflect the population of this

city. In the past there are reasons to believe that was not the case.

It turns out that by working with the unions and with the developers you are starting to see more and more agreements on big

projects that the developers agree to make sure that minority and

women-owned businesses, for example, get an opportunity to bid on

contract, they have knowledge of them, they know how to bid, and

they get the opportunity to partner with bigger companies.

You are starting to see the unions open up and understand that

it is in their interest if they want to have the best work force and

grow with the city, that they make their programs available to everybody. It is also incumbent on the city to make sure that our

education system going forward produces children or young adults

that have the skills necessary to compete in the modern world.

Today you go into the construction industry and you have to

have a level of academic skills that would have been unheard of

just 10 or 20 years ago. Today construction is a job that requires

the ability to work together and to use complex technology to build

the great buildings. The Congressman has kept our feet to the fire

and we have a long ways to go but I am committed to making sure

that everybody in this city who wants a good job has the opportunity. All they have to do is to work hard.

This is a city where we don’t ask where you come from. We only

ask what you can do. While that is probably not true 100 percent

it is getting more and more every day. We have an educational system that for a big city is actually pretty good but for a system that

produces children with the skill sets required for tomorrow’s jobs

we have failed too many of our children and we are committed to

not doing that anymore.

One of the things I am most proud of is that we started to close

the gaps between different ethnic groups, for example, in this city,

or different economic groups in terms of the children’s ability to

read and write at grade level. We still have a long ways to go but

the latest results were very encouraging. I want to make sure that

whether you want a job with city government or you want a job in

26

the private sector, if you work hard, that opportunity is available

to you.

Mr. RANGEL. Well, the major thrust of my question is how we

formulate the rent structure in these buildings so that there will

always be set aside a sufficient number of apartments for low and

moderate-income people because whenever a community is being

improved as fast as we are, it is always the fear that the people

who struggle to make it this way will not be able to afford to stay

here.

Mr. DONOVAN. What we have done in the properties that we

have renovated here in Harlem and the new construction that you

see going on all over Harlem under this mayor’s administration, we

have focused first of all on making sure that existing residents can

stay in place and we do that in a couple of different ways.

One is we use a combination of CDBG funds and other Federal

funding with Section 8 vouchers which are another incredibly important resource to make sure that rents get set at 30 percent of

that individual or family’s income and make sure that they are

able to stay.

Even more importantly we have an expansive effort. We have

now helped close to 20,000 households become homeowners in

those city-owned buildings. Not only are they able to stay affordable but they can actually participate in the revitalization of the

community through building equity in home ownership.

We actually visited a couple of those, they are called TIL buildings, this morning on our tour of Harlem and they are a very, very

important part of our overall strategy to help people stay in the

community. In fact, the training that we do in other parts of that

TIL Program are funded directly by CDBG so it is a very, very important piece of our overall strategy in terms of helping folks stay

in the community and keep that housing affordable.

Mr. RANGEL. Thank you, Mr. Chairman.

Mr. TURNER. Congresswoman Maloney.

Mrs. MALONEY. Thank you for your testimony. You outlined all

the wonderful things the city is doing with these grants and we

saw it today. One of the justifications the administration uses for

eliminating CDBG as we know it was that the program did not

score well on the OMB assessment rating test.

Maybe from your perspective you could help the Federal Government define what progress is. How can the Federal Government define what progress is? Do you have a rating system within HPD or

within the administrative Executive Office that rates these programs and defines whether or not they are successful?

In other words, the Federal Government wants more accountability and they want a definition of what is success that they can rate.

Second, should a city lose grant dollars if they cannot meet the

Federal benchmark for success? More importantly, what should be

that banner for success that they can objectively look at it so we

can answer their concerns?

Mr. BLOOMBERG. Shaun can give you some specifics but I would

argue that, in fact, the Federal Government should insist on

deliverables, should insist that their money is used intelligently,

should measure whether or not there is progress, and penalize

27

those who don’t make progress and reward those that do. Otherwise, it is just verbiage.

If you want some macro numbers as to whether or not Federal

programs—it is always difficult to single out the affect of any one

of them but I will give you some numbers that say that, in fact,

New York City is using Federal moneys intelligently. Our population is at an all-time high. Life expectancy in this city is greater

than it is in the country as a whole.

Our bond rating has been raised to the highest it has ever been

in history. Our crime rate has declined to where it was back at the

beginning of the 1960’s. Deaths by fire, deaths by traffic, all of

those kinds of public health things the numbers are down to low

numbers that nobody ever would have expected.

You can go right down whether it is improving schools or improving quality of life, whether it is measured by people that vote with

their feet or measured by independent agencies. You can make the

case that we are doing it intelligently—whether it is Federal moneys, State moneys, or city moneys.

Shaun, you want to add specifics?

Mr. DONOVAN. Yes. First, I would just say I think no administration in any city around the country is more focused than the mayor

is around this issue of accountability. From what we have done in

putting things up on our Web sites to measuring the performance

of every single agency throughout the city it has been enormous

focus. We would love to be helpful on this issue as you go forward

with the specifics of it.

Mrs. MALONEY. Commissioner, have you developed any type of

evaluation mechanism specifically for the CDBG grants that show

they have been successful that we might be able to use on the Federal level that shows that maybe it is generated more people living

in an area, more tax revenue, more community activity?

Mr. DONOVAN. I would say a couple things. First of all, we do

have testimony from Professor Ellen that will speak directly to that

issue. Very clearly the research that we have done around the city’s

housing investments has demonstrated substantial increases in

neighboring property values, improvements in many, many neighborhood indicators such as crime and others and has actually

showed a dramatic return to the city itself in terms of increased

tax revenues. On all of those we have very good evidence that

shows that these results have been achieved.

What I would also say, however, is that we have to recognize

that this program by its very nature and flexibility is a difficult one

to measure. We have to retain some flexibility in the measurement

systems themselves because of the flexibility of the program. We

think that the joint consensus document that has been developed

in Washington among a number of groups is a good start in terms

of doing that.

Develop some broad categories for performance and rate them

within those broad categories. I think beyond that trying to get to

a single or a very limited set of indicators on these programs because of its very nature is going to be difficult and really would be

a mistake we believe.

Mr. PAGE. I think this question of an objective rating scale, we

think that we spend the money very effectively for community deVerDate 11-MAY-2000 13:10 Feb 09, 2006 Jkt 000000 PO 00000 Frm 00031 Fmt 6633 Sfmt 6633 D:\DOCS\23852.TXT HGOVREF1 PsN: HGOVREF1
28

velopment but what does that mean? I think it might be helpful

to just briefly go down the list. We obviously spend a lot of attention on housing but we spend CDBG money on home repair services for elderly homeowners to prevent abandonment of buildings.

There is a certain amount of money for information provided to

the elderly and senior citizen centers on housing. There is daycare

in some communities, assistance to crime vehicle victims, improvement of schools, graffiti, vacant lot cleanup and greening of vacant

lots. There is a whole broad list of very specific purposes where this

money is spent which we think the purposes are successful and effective in building communities and making the city a good place

to live.

But a quality rating you need to look at the very specific uses

and see how that is working in that community. It is hard to figure

how you bridge from this very concrete detail to some sort of cosmic

level that is going to be meaningful to Federal OMB. It is going to

be a lot of work to do that.

Mrs. MALONEY. OMB also proposed to move CDBG out of HUD

to really terminate its housing function and to move it to the Department of Commerce for mainly economic development. From my

years on the city council CDBG was housing. It was used to leverage TIL, to leverage investment, to leverage the preservation of

historic buildings.

We saw all of that today. I would like the mayor to elaborate and

give us some more examples of how CDBG has been used to leverage the money for housing, the newest initiative, the new market

place plan, how will CDBG support that, and how has it worked.

Another very important part of it is the flexibility which you pointed out in your testimony.

I think that is a very important part of CDBG that it is flexible

and that your creative team can work on coming up with new ideas

of how to use that and giving concrete examples of how it has been

used creatively will help us save the program. There is also a

movement in Congress to move it away from a block grant that

gives the discretion to a city to more of a formula-driven program

and your feelings on whether or not it should remain a block grant

flexible program and why.

Mr. BLOOMBERG. Well, for a start, Congresswoman, I think each

city has its own unique problems but even more importantly what

is a city where the boundaries create the city and create the suburbs vary so dramatically that if the Federal Government has one

size fits all kinds of requirements, you will wind up really doing

nothing for anybody.

In terms of the economic development, in the end I have always

been a believer that companies go where their labor force and their

customers want to live. The best thing that you can do to create

economic activity is to make a place where everybody says, ‘‘That

is where I want to raise my family, send my kids to school, have

the entertainment of family things together, quality time.’’

That has been our strategy in this city, reduce crime, make the

schools better, improve the parks, keep the street clean, make sure

there are cultural institutions. When you do that, companies say,

‘‘I don’t have any choice. That is where I want to be because that

is where the work force I need and my customers are going to be.’’

29

Those quality of life decisions are the first decisions generally that

people make. Then they go looking for a job.

Mr. WALSH. You will hear later today from Carlisle Towery and

I think that is one of the great examples of what Carlisle has done

over the decades in Greater Jamaica Development Corp. Obviously

there is a lot more work to be done. Rebuilding the retail corridor,

improving the transportation, working with the local university,

creating jobs.

You will hear about the industrial initiatives going on, saving the

manufacturing jobs. The manufacturing and industrial jobs pay

more so we should be spending a good amount of money to ensure

that there are skilled workers. Congressman Rangel, this is something that you have talked about on the new commission on jobs

of training people in those areas. Not only construction but other

skilled areas in addition to retail where there is a greater possibility for promotion and opportunity. That is exactly what you are

going to be hearing from Carlisle later on.

Mr. TURNER. Thank you, Mayor Bloomberg. I appreciate both

your hospitality today and then the tour, your comments here

today, and the preparation that you have had for this hearing.

Also, it has been great to look at your leadership in community and

neighborhood development.

The second and third panel that we are going to have are some

of the partners that you have used in formulating some of this redevelopment from the private sector, the nonprofit sector, and also

your faith-based partnerships. We are going to be very excited to

hear from them.

Before we end this panel, I wanted to give you an opportunity,

or any of your staff opportunities, to add to the record anything

that we have not asked today that you did want to speak on or

anything that you have heard in questions that you would like to

embellish before we end panel one.

Mr. BLOOMBERG. I would just like to urge you to listen to Congresswoman Maloney and Congressman Rangel when they argue

for more funds for this program and particularly where those funds

should be spent. I think they are both highly intelligent, have the

interest of the country at heart. You couldn’t do better than follow

both of them. Incidentally, while you are here, we would love to

have you spend more time and spend more money. We need the

sales tax revenues.

Mr. TURNER. Thank you. Then we have just some closing remarks from Mr. Rangel.

Mr. RANGEL. I can hardly resist the opportunity to have a candidate running for reelection under oath but I will pass. Thank you

for coming, Mr. Mayor. I want to thank the chairman for honoring

our community and the work that we have done, and certainly our

friend Carolyn Maloney for pointing it out. We are so proud of

what we have done and we know we have a lot more to do.

We couldn’t have done it without the people in the audience,

Mark Willis and certainly Rev. Dr. Calvin Butts. The Harlem community of churches have done such a fantastic job. Before this

hearing I made an appointment to visit some people at the Calvary

Hospital. As you know, it is a hospital for the terminally ill.

30

I won’t be able to hear the rest of the testimony but in addition

to the rebuilding of Harlem, I cannot be more proud of the people

that are in this audience that have taken time out to show our appreciation for the Federal Government, local and State officials, for

making our community. My mom was born here. I was born here.

It is a great deal of pride to be able to see this happen before I

leave. Thank you so much.

Mr. TURNER. With that we will take a 2-minute recess as we

turn to panel two. The witnesses consist of Carlisle Towery, president of the Greater Jamaica Development Corp.; Ms. Menschel,

chairman of the Board of the Phipps Houses; Mark Willis, executive vice president of Community Development Programs at

JPMorgan Chase; and Andrew Reicher, executive director of the

Urban Homesteading Assistance Board. Thank you.

[Recess.]

Mr. TURNER. If everyone can take their seats, we are going to

start with the second panel.

Our second panel of witnesses consist of four representatives

from the New York City Development Community. They are F.

Carlisle Towery, president of the Greater Jamaica Development

Corp.; Ms. Ronay Menschel, chairman of the Board of the Phipps

Houses; Mark Willis, executive vice president of community development programs at JPMorgan Chase; and Andrew Reicher, executive director of the Urban Homesteading Assistance Board.

I know that you are all aware that on the table there are lights

that will tell you when the 5-minute period has concluded. You also

get a yellow warning before it actually concludes. At that point if

you could summarize and conclude your comments. If I have mispronounced any of your names, please reintroduce yourselves.

Thank you for being here, both for preparing your written testimony and the time that you are taking in sharing your stories with

us today.

We will begin with Mr. Towery.

STATEMENTS OF F. CARLISLE TOWERY, PRESIDENT OF THE

GREATER JAMAICA DEVELOPMENT CORP.; RONAY

MENSCHEL, CHAIRMAN OF THE BOARD OF THE PHIPPS

HOUSES; MARK WILLIS, EXECUTIVE VICE PRESIDENT OF

COMMUNITY DEVELOPMENT PROGRAMS AT JPMORGAN

CHASE; AND ANDREW REICHER, EXECUTIVE DIRECTOR OF

THE URBAN HOMESTEADING ASSISTANCE BOARD

STATEMENT OF F. CARLISLE TOWERY

Mr. TOWERY. Thank you, Mr. Chairman, distinguished Members

of Congress. We very much appreciate your leadership on this issue

and the attention you are giving to New York City.

I am Carlisle Towery from Greater Jamaica Development Corp.

This is a wonderful opportunity for us to point out the productive

partnership with the city and my organization through CDBG

funded contracts with the Department of Small Business Services

and the Economic Development Corp.

The staffs we work with in these two dedicated agencies are especially able, innovative and effective. We have had no experience

31

over my 34 years there of any waste, and I mean that, or any misuse but just talent and dedication and results.

The flexibility of the CD funds have been essential in the undertakings we have had with them, an older downtown in the center

of Queens County serving some 600,000 people. A large minority of

lower and middle-income populations have been the beneficiary.

In a 10-year period early in our efforts, Jamaica took some huge

hits. Economic distress, disinvestment, loss of public confidence all

characterized Jamaica between 1975 and 1985. These were the effects from outlying regional malls beginning in the 1960’s. By 1972

four large malls encircled downtown Jamaica.

Jamaica has come back since 1985 due largely to a thoughtful,

ambitious overall plan backed by consensus and executed with actions and projects enabled by CD funds, leveraged several times

over in particular projects providing us with a base of operating

support.

Another Federal program, the Community Reinvestment Act

[CRA], I want to emphasize, has played with CDBG a fundamental

role in Jamaica’s recovery and growth. Region-serving public investments were made in Jamaica pursuant to its plan and major

private investments have followed.

Our mission is jobs really, economic development, enabling job

growth, assisting in retaining and attracting and creating a setting

hospitable to jobs and private investment. We undertake a range

of activities. I have appended our corporate resume, as we call it,

which elaborates and indicates the level of CDBG support for our

involvement in each effort.

Note that CD funds have been used in various ways by us and

by the city to accomplish a range of projects leveraging substantial

public and private dollars. And CD funds for our operations have

built our capacity to attract private participation in our work and

to generate earned income. Our base operating budget in 1980 was

$1.7 million of which 20 percent came from CDBG funds. This past

year CD’s share of the $8.7 million we spent was 4 percent.

I will reference a few of the 37 projects in that resume in which

we were instrumental and which CDBG funds assisted, 34 of the

37 key projects through Small Business Services and EDC and the

city of New York. One of the Mid-Block Project with capital costs

of $64 million over a 20-year period. It is hard for us to calculate

precise CD participation, which we can do, but assuming that 10

percent of our funds were spent over that time, CD participation

was $500,000 roughly.

The U.S. Food and Drug Administrationsited an $85 million regional headquarters and lab in Jamaica. The project cost us over

the years $800,000 in predevelopment work and $125,000 of that

came from CD.

Intermodal Infrastructure Improvements with Congressman

Meeks who is another very able Congressman in community development, and Senator Schumer using U.S. DOT CMAC funds. We

did vision, planning, and implementation project in which we have

raised $21 million from State and Federal funds toward a $50 million project.

We had an interesting Clearance and Improvement plan, a city

urban renewal plan. We did some high visibility improvements for

32

flat parking and a farmer’s market. We spent $200,000 of CD

funds. We ended up acquiring from the city their municipal parking facilities and just recently built a garage $11 million of which

the architectural design fee for that garage, $220,000, came from

CD funds. They also underwrote demand and feasibility analyses

of $75,000.

CD funds capitalized $375,000 to startup in 1980 a small business revolving loan fund, U.S. EDA funds and private funds. We

have loaned $5.6 million in small deals leveraging $24.4 million

from private sources creating 540 jobs and retaining 780. I am

happy to report scarce business for our fund in recent years which

I attribute to the exceptionally good work of several commercial

banks cooperating with, and often exceeding, Community Reinvestment Act objectives.

We created four Special Assessment Districts that cost about $250,000 over several years to launch, create, and hand off four

business improvement districts. The annual budgets of those four

are now about $1.2 million. I hope that indicates some of the leverage factors that we have in specific projects.

CD funds have been an essential element that allowed us to

work with government for Jamaica’s economic recovery. I want to

highlight, please, the remarkable multiplier effects of CD funds

skillfully administered by this city for local and economic development. Thank you very much.

[The prepared statement of Mr. Towery follows:]

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34

35

36

37

Mr. TURNER. Thank you.

Ms. Menschel.

STATEMENT OF RONAY MENSCHEL

Ms. MENSCHEL. Thank you, Mr. Chairman. Thank you Congresswoman Maloney and Congressman Rangel for having this hearing.

It is very important to New York City.

I want to focus my remarks on two communities that we are

deeply involved with in the South Bronx because I think it best illustrates the impact of the CDBG funding in New York City.

The first is one in Morrisania where Phipps Houses, which I

might add is not-for-profit, 100 years old. We own 4,100 units of

housing. We have been involved in community development for 100

years. The properties that we rehabilitated through the city’s vacant cluster program were the vacant In-Rem properties that sort

of symbolized the decay of the South Bronx in the 1970’s.

The city at that point in the late 1980’s provided funding so that

these buildings could be rehabilitated. Subsequently we, through

another city program that has been assisted by CDBG, and that is

the Neighborhood Redevelopment Program, has taken over partially occupied buildings. Most important we were able to integrate

the tenants of these buildings into the programs that we had established, the human services, educational, social services programs

that were established in the community through both our vacant

cluster program and the community redevelopment.

A second community where we have invested for approximately

30 years we run a Beacon School and that, too, is a program that

has been assisted by CDBG. The importance of this Beacon School

investment is that it has encouraged us to leverage from the base

of the Beacon School further investment in the community. We

raised through charitable support money for educational programs,

Head Start, After School, a whole host of programs to help our residents move forward on the base of sound housing which we provide

in the community.

CDBG has helped and assisted the Bronx River Alliance. It has

provided assistance to a local community arts group. It has provided assistance through Green Thumb. As you see in my written

statement, a lot has been done with the community in building up

the fabric of the community through a whole host of programs. I

think that really points to the importance of CDBG and that is the

flexibility of funding a variety of programs, the sum of which is

much greater than just adding up each individual part.

The administration asked Mayor Bloomberg about the effectiveness, I think, of the administration’s management of the programs.

They have been very effective. The mayor has put communities and

affordable housing four square in his agenda. I have remarked to

myself right now whenever we have rezoning, and that is a major

portion of his agenda, it is no longer a question of whether there

is to be affordable housing. The argument is over what the percentage of affordable housing there is to be.

The mayor is looking for affordable housing in all of these communities. This, of course, is the result of providing funds directly

but also providing incentives for private development for that affordable housing.

38

Let me go back to West Farms, the question of where the money

is going and the needs of the communities to which it is going.

West Farms, that is our South Bronx community where we have

this Beacon School, is one of the poorest communities in the area.

We lost something like half of the housing in the 1970’s through

abandonment and through drug problems. The community now is

home to immigrants. Sixty-three percent of our families speak a

language other than English and 20 percent are linguistically isolated households.

These communities are homes to immigrants and my pitch to you

is that the needs of these families are a national concern and, thus,

justify Federal resources being devoted to community building in

communities of immigrants as well as communities of families who

need further assistance to advance economically and socially in this

country. Thank you.

[The prepared statement of Ms. Menschel follows:]

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40

41

42

Mr. TURNER. Mark Willis.

STATEMENT OF MARK WILLIS

Mr. WILLIS. Thank you. Members of the committee, good morning. Thank your for the opportunity to speak to you today.

My name is Mark Willis and I head the Community Development

Group at JPMorgan Chase. The Community Development Block

Grant Program has played a critical part in allowing us to provide

over $3 billion in financing for affordable housing and community

economic development in New York City over the last 10 years.

In addition to our community development loans and invest- ments, JPMorgan Chase has also provided over $5 billion in home

mortgages and small business loans in New York City’s low and

moderate income neighborhoods in just the last 5 years. Without

the city’s commitment to rebuilding these communities and without

the flexible dollars that come from the Community Development

Block Grant Program we would not have been able to infuse these

types of dollars in these communities.

I want to just take a second. You were nice enough before, Mr.

Chairman, to mention the previous tour by Living Cities. I do wear

a couple of the hats here, one of which is co-chair of Living Cities

which is a consortium of national foundations, financial institutions, and Federal Government agencies working together to increase the vitality of America’s cities and quality of life in urban

neighborhoods.

Over 15 years it has invested more than $370 million in cities

across the country helping to leverage over $11 billion. All of that,

again, would not have been possible without the kinds of support

that come to cities through the Community Development Block

Grant Program. Wherever I look and talk about what is important

in communities, you see the incredible importance that Community

Development Block Grant money makes.

I also serve as co-chair of Housing First! coalition in New York

city of over 300 nonprofit and for-profit developers, communitybased organizations, religious institutions, civic groups, businesses,

banks and labor unions that support a 10-year, $10 billion housing

plan. You can see what tremendous gains and support we have gotten from the mayor here.

Again, when you look at what the sources of money are and the

ability of the Federal Government to help in the city’s housing program you see the importance of the Community Development Block

Grant Program.

From a bank’s point of view, and I guess I am the one that is

going to speak from the perspective of the financial services industry, it is important where we invest to have communities that are

stable and where people, projects, businesses can afford to borrow

money and be able to pay that money back.

The role of Community Development Block Grant Programs here,

you have heard many other examples in stabilizing communities

here. It has been incredibly important for us to be able to invest,

to lend that $3 billion that I mentioned before, to invest over a

quarter of a billion dollars in the New York Equity fund which

works under the Low-Income Housing Tax Credit Program to create affordable housing in all five boroughs.

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If you want to make a difference in communities, you want to be

able to attract large amounts of private capital. The building blocks

of that start with programs like the Community Development

Block Grant Program.

I am very fortunate at JPMorgan Chase to head a unit that specializes in working in low and moderate-income communities that

brings a very specialized and knowledgeable set of experts to be

able to be, what I sometimes call using the shorthand, investment

bankers to low and moderate-income communities. There is no way

we could do that in isolation, again, without the kind of investment

that this city has made and so much of that goes back to what is

available as a result of the Community Development Block Grant

Program.

There are lots of examples you are hearing from other people

about the way these flexible dollars have been able to help to stabilize communities, help them then rebuild themselves and grow

and prosper. I think the message that I would like to leave here

is obviously healthy neighborhoods benefit all of us and government plays a key role in turning around our intercity neighborhoods.

This flexible program that you have, the Community Development Block Grant Program, has been key to this work. Without

these types of investments by the public sector, the private sector

institutions like JPMorgan Chase would not be able to do what

they do best, invest in the future of our communities, the people,

the housing, and the businesses. Thank you very much.

[The prepared statement of Mr. Willis follows:]

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Mr. TURNER. Mr. Reicher.

STATEMENT OF ANDREW REICHER

Mr. REICHER. Good morning. Thank you for your interest and

concern for the Community Development Block Grant Program and

I am pleased to have the opportunity to appear before you this

morning. I want to talk a little about UHAB and I want to talk

about CDBG-funded program, the TIL Program which you have

heard some about already.

This program has been central to my work and my organization

for the past 27 years. I am Andrew Reicher and I serve as executive director of UHAB, the Urban Homesteading Assistance Board.

UHAB was founded in 1973 in response to New York City’s housing abandonment crisis.

Sponsored by the Cathedral Church of Saint John the Divine,

UHAB was founded on the simple notion that these abandoned

buildings were opportunities and not problems and that given the

right resources and technical assistance, neighborhood residents

could help meet their own housing needs through the rehabilitation

and ownership of these buildings.

UHAB’s early work was Urban Homesteading providing technical

assistance and training to groups of low-income residents, homesteaders, undertaking the self-help rehab of vacant city-owned

buildings and purchasing them as limited equity co-operatives with

their own sweat equity.

As you no doubt heard this morning, in the early 1970’s disinvestment and non-payment of taxes and landlord abandonment

continued to grow throughout the 1970’s affecting up to 20 percent

of the city’s housing stock and over 40 percent of the housing in

some low-income neighborhoods.

In 1977 Local Law No. 45 was enacted. This allowed the city to

begin foreclosure after just 1 year of non-payment of taxes instead

of 3. This new In-Rem law intended to stop landlord abandonment

resulted in the city taking ownership of buildings before they were

vacant and abandoned.

Between 1978 and 1979 the city vested title to 14,000 buildings

with nearly 40 percent still occupied. What had been a crisis of vacant, abandoned and often burned and devastated property was

now a management and fiscal burden. The newly created Department of Housing Preservation and Development accepted a proposed solution from the Task Force on City Owned Property, a coalition of elected officials and housing advocates and city-owned

building residents, to create a series of alternative management

programs that became the Division of Alternative Management

Programs [DAMP].

These programs were designed to repair and dispose of the properties often as tenant-owned co-operatives. Chief among these programs is the Tenant Interim Lease Program. The TIL Program was

designed to give tenants an opportunity to learn how to own and

operate their own building during an interim period lasting 3 to 5

years. The buildings remained in city ownership and were leased

and managed by the Tenant Association.

TIL is a people program, not bricks and mortar. The Community

Development Block Grant money is invested in staff, both city and

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UHAB, to help build strong co-op organizations. The HDFCs you

saw this morning are a good example. UHAB under a Community

Development Block-funded project provided training, series of

manuals and class materials, and technical assistance.

Tenant Associations opened a bank account and began collecting

rents, paying bills, making needed repairs, employing staff, and undertaking all the functions of the day-to-day management of a New

York City apartment building.

HPD monitors progress and oversees buildings; receives monthly

financial and management reports. Rehab plans are developed by

HPD. Then the residents are temporarily relocated while the building undergoes extensive rehabilitation utilizing city Capital and

HOME Funds. Once rehab is completed UHAB converts the building to co-operative ownership selling the apartments for $250 per

apartment.

The sale and co-op conversation trigger a new set of issues, skills

and knowledge for the tenants and leaders. The co-op corporation

takes on all the responsibilities of home ownership, management

and co-perative governance.

Through our CDBG-funded contracts UHAB provides an array of

training courses, seminars focused on these co-ops that build on the

TIL experience. Follow-on technical assistance remains available as

help the Tenant Associations to make the transition to co-operative

and to help with whatever issues they may face in the future.

Community Development Block Grant-funded training, technical

assistance, and ongoing support both from UHAB and HPD staff

has been essential for the success of the TIL Program for nearly

27 years. The manuals, training materials, and technical assistance

methods developed for the TIL Program have been used by organizations undertaking similar development in cities throughout the

country from Alaska to Texas, Vermont to California including

Iowa, Nebraska, New Jersey, Washington, DC, Chicago, Boston,

Minneapolis. Groups in Russia and South Africa have built upon

the method, materials and capacity that this CDBG-funded program has developed.

As for the success of this Community Development Block Grant

Program, research has shown that over 1,000 co-ops resulting from

TIL and other alternative management programs are the best managed and best maintained when compared to similar housing. The

co-operatives over time are more affordable and have lower levels

of drug and crime activity than buildings in their neighborhoods.

Given a choice residents prefer the TIL Program than other programs that lead to co-operative home ownership over rental development and disposition programs. Residents involved with the TIL

Program are reported to learn skills and confidence that results in

improved employment, increased education attainment, higher levels of civic participation, and a high likelihood of voting.

The TIL Program and the resulting co-ops have been effective

tools overcoming the impact on neighborhoods of abandonment, disinvestment, and preventing displacement of low-income residents

in hard economic times and will in the future prevent displacement

due to gentrification in the current housing market. CDBG and the

TIL Program provide much more.

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The knowledge, experience, materials and processes developed

through this effort serve as the basis for local residents, community

organizations, banks, housing developers and others to undertake

co-operative home ownership as part of new housing programs like

the Third-Party Transfer Program to meet the city’s current housing situation.

Co-op home ownership based on the success of the TIL Program

has become an important tool in the efforts to preserve nearly

200,000 units of existing affordable housing that is at risk today in

New York City.

Thank you.

[The prepared statement of Mr. Reicher follows:]

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Mr. TURNER. Well, I want to thank each of the members of our

second panel again. You are practitioners, if you will, in the area

of community development. You bring to the table a great amount

of expertise and knowledge of community development. But I want

to commend you also because we know that because of your hard

work you are making a difference in communities and in people’s

lives. You are changing the opportunities for communities and,

therefore, the people that live there by the partnerships and the efforts that you put together.

We have heard some great stories from you today in your testimony on partnerships on capacity building, on leveraging, on the

need for flexibility. I am going to talk for a minute about the criticisms that we have heard of the CDBG Program, areas where it

has had vulnerabilities and attempts to try to close the program.

And a little bit about some of the issues where HUD could improve

its administration that might help us in advocating the program.

One of the criticisms against the CDBG Program was that it was

ineffective. In the argument of its ineffectiveness the Office of Management and Budget looked to how success is measured. HUD’s response is that every community is required to do a comprehensive

plan. In the comprehensive plan they must detail eligible uses for

the funds. If the community spends those funds consistent with the

consolidated plan, then it is deemed effective.

OMB sought a little bit greater analysis of even if you spend it

consistent with how you say you are going to spend it, what are

you achieving? How is the community changing? What can we see

that has occurred in the community that would not have occurred

without these funds?

My question to you is going to go to the consolidated plan process

because HUD’s initial response was in the community the practitioners, if you will, and the community leadership have an opportunity to participate in the consolidated plan and thereby formulated an impact of the description of what the uses are for.

Many people consider that to be insufficient, that we need a

greater justification, greater measurement to be able to show all of

your results. I wonder if you might speak for a moment if any of

you in your organizations have participated in New York City’s

process of formulating its consolidated plan or, as HUD has said,

in looking at whether or not the funds in the local community are

being spent consistent with the consolidated plan.

Mr. TOWERY. Mr. Chairman, I have been there quite a while in

this business of practitioner of economic development. I can’t remember the number of times I have participated with the city in

planning and discussing numerous times. I do not recall a precise

focus on the consolidated plan but we are planners in Jamaica and

we participate all the time with the planners from the city on both

the economic side and the city planning side.

We are not short on planning and we are not short on result

measurement. We are held accountable by DSBS in our reports for

what we have done with their funds on an annual basis. I think

it would be quite easy for me just with my little turf to report on

the effectiveness of the funds. There is no question in my mind that

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pened or would have taken much longer. I would love to have a

crack at justifying all of our projects that we have worked on.

Ms. MENSCHEL. My experience has been really HPD has had ongoing consultation with our organization and other organizations

on what is happening, what the needs are in our communities. Furthermore, we have headed up local planning initiatives working

with the residents of our communities to determine what is needed

and that, too, is fed through the network of community boards that

the city has and the reports of those community boards I know is

very important in developing the CDBG plan.

If I may just make one additional comment, I think that sort of

the proof is in the pudding. Prior investments by the Federal Government and housing restoration and just building up housing does

not prove nearly as successful as what you have seen in the last

25, 30 years. For me it marks back to the Koch housing plan in

1986 in which Mayor Koch launched a 10-year investment by the

city. Those were city dollars but what CDBG did was to provide resources that complimented that capital investment.

Furthermore enabled the city to maintain and gradually graduate into the NRP programs and other programs, all this housing

stock the city had taken ownership in. Then from our point of view

having invested significantly both our private equity and our city

capital dollars, the inspections and the maintenance of properties

has been terribly important.

Finally, the compliment of social services has been important in

maintaining those neighborhoods so the fact of the matter is that

you see neighborhoods that investments have been made over the

last 25 years and you don’t see them going into a period of deterioration. The fact is they are getting better and better. You saw it

out here today. That in a sense is the most telling indicator, if you

will, of success.

One other indicator. When welfare reform was approved, our

communities were supportive of people who needed to get off of

welfare and find employment. Even as the time periods expired,

even as the economy became more difficult, people did not go back

onto welfare. Our welfare rolls, I think, are probably the lowest

they have been in years. There, too, is another success of the construct that is providing flexible multi-program support for our communities.

Mr. WILLIS. I would like to make a couple comments here thinking about the program and evaluating it, one of which is here, as

Ronay and others have said, Mayor Koch started this plan in 1986.

We are here almost 20 years later. It is a great time to be talking

about all of the successes that we can see really in almost every,

if not in every, neighborhood across the city.

The point of that is this is longer term. It isn’t like you can come

up with something that is going to change in 6 months. I was at

one point Deputy Commissioner for Development and we went

through the first year and a half of the Koch plan and nothing happened that people could see at all. Yet, a whole infrastructure was

being put in place. A pipeline was being developed. The conversations and consulting with the community was going on.

One of the things that I would caution here in coming up with

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stand that. If you are looking for long-term change you can’t ask

for short-term results and make the dollars depend on that. I am

sure I don’t need to mention to the chairman here. He has seen

many other cities as I have including his own where he was previously the mayor.

They may not be having all the prosperity that New York City

is and may not be seeing what we are seeing in the turnaround in

almost all, if not all, of our neighborhoods. I think this is very, very

hard to be able to come up with criteria. We keep talking about the

flexibility and the flexibility across cities and across this 20 years

as to what the money has been used for and to measure the

progress.

One thing that I would mention, I know in New York City it did

leverage the 10-year Koch plan. $5.1 billion here in Community Development Block Grant Program and the activities. As talked about

before, we would not have been able to have the impact we have

today.

Mr. REICHER. I would echo it. I mean, in terms of participating

in the city planning, I mean, our contracts that we had for 27 years

now we report meticulously to the city. In that reporting we also

find a lot of things that we learn so that over time we changed our

approach. We have adjusted this and changed that. We measure

both the success and things that didn’t work so well are able to

change.

The city for its part is receiving incredible amounts of information each month and each year from us that goes into their specific

planning as well as sort of comprehensive looks that we take periodically of all the buildings that we have worked with to see where

they are going, trying to understand what are the indicators of success and so forth.

One of the great things about Community Development Block

Grants is that while there are lots of sort of bricks and mortars,

you know, financial kinds of numbers that you can look at, the

other things that are much harder to quantify are the successes

over time of building the people who live in these buildings, the

skills that they learn and the tasks that they undertake and the

accomplishments that they make.

The success of the TIL buildings to become co-ops has little to do

because in the early years very little rehab was done. It has to do

with the efforts and the desire of residents to sort of remain in

their buildings and then the skills that the Block Grant-funded

contracts and literally the city Block Grant-supported staff are able

to support them and provide so that they can do this work. It is

not something that we do. It is not something really that the city

does. It is a way of facilitating others.

That is going to be very hard to measure, I believe. It is something that while being accountable measuring, doing all those

kinds of things are going to be important, the program and its

flexibility and the success, at least, from what we have done could

easily be lost if we had to be accountable for a dollar in and a dollar out kind of thing because there is a lot of unmeasurables that

we need to, I guess, either learn how to measure or articulate in

other ways.

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Mrs. MALONEY. I want to thank all of you for your life-long dedication to affordable housing. I had the honor of working with all

of you when I was on the city council and it is truly great to see

you again.

Andy, one of my personal favorites was the Homesteading Program and we worked very hard in East Harlem with you and others in HPD to save housing. I know you said it is very hard to get

an accurate measurement tool but we have to do it because if we

don’t do it and help come back with a measurement tool, they are

going to keep coming at us.

I just would join the chairman in really asking the same question

that later in writing if you could come back with a perspective of

how to pursue an accurate measurement tool. Obviously in the TIL

Program it could be the number going into ownership. Just living

in the apartment is saving the building. It is very, very important.

Mark, you raised the point, which I thought was a very good one,

that you have to look at it long-range. Housing is not something

that you do, and you know more than any of us on the whole panel,

over night. It takes long-term planning and thinking to get the financing together. I believe deeply and strongly in CDBG. What we

saw today shows it works. It has literally revitalized entire neighborhoods not only with commerce but housing. It is incredibly important. We have to come up with it.

Ronay, congratulations on your 100th anniversary of Phipps

Houses which happens to be located in the district that I represent

and we have been honored to represent you. And, of course, Mr.

Towery, you probably hit every single program out there that you

got involved.

One of the things, and my question is to ask you to think about

how we document and work with HPD so that we can come back

with a document before they cut us again next year so that we can

come in and ask for more money and not just try to maintain our

position.

I love cities. I think cities are so important for ideas, for the

strength of the country. Yet, I see many of our funding formulas

hurting cities. I think a major question of the 21st century is going

to be who pays for the cities of the aging infrastructure, the many,

many challenges that are unique to cities. Yet, the support federally has been dwindling for cities.

Instead of sitting there and waiting for what happens, which is

another cut back in CDBG or cut back in Section 8 or in public

housing support, what ideas are created anew that you think we

should take back and try to implement and come forward with aggressive new ideas as opposed to just sitting there and trying to defend the housing programs that have been in place that are now

literally being chipped away every single year.

How can we confront who pays for the cities? What are the great

ideas to save our cities? You can get back to us in writing or anyway that you think we could respond. You are wonderful examples.

You have all done incredible work and we’ll take that back to Congress with our report.

Mr. WILLIS. I’ll just do something that the mayor if he were here

would probably say. One thing is it would be nice if we weren’t

sending so much more to Washington than comes back here. It is

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not just ignoring but really I think that there is a great deal of economic engine here that needs to be allowed to do its own work

without having a net drain.

Mrs. MALONEY. Any other ideas? Are you having any problems

with interacting with HUD or regulations that you feel need to be

modernized?

Ms. MENSCHEL. Maybe I will just say that I think HUD, some

of its regulations and dealing with community groups could be

streamlined. I think that is one of the virtues of CDBG is that

there is this block grant and there is the flexibility of local decisionmaking and there is a lot of value to that as opposed to a bureaucracy often driven from Washington that is making things very

complicated and it is taking a lot of time and that cost money.

Mrs. MALONEY. Well, we will take that back.

Mr. WILLIS. I would just say from, again, the financial services

sector in order to be able to put the investments we have in the

community, we need a reliable partner and I think a lot of this discussion about this program and many others are making it more

questionable about whether that public/private partnership can actually work so that we can bring the kinds of dollars that we have

into the neighborhoods that you have seen today.

Mrs. MALONEY. Are you accessing the Treasury Department’s financial services programs that they have for communities? Are you

working with them, too?

Mr. WILLIS. We would like to think we have one of the best CDFI

programs in the country for everybody, Community Development

Financial Institutions. We just got a low-income housing tax credit

allocation so we would be working with that program as well. And

BEA, another acronym for people, Bank Enterprise Act, is also

something else we have been able to take advantage of. There are

many problems.

I guess the most important one really in Treasury is the LowIncome Housing Tax Credit Program which we are one of the largest investors in the country in that program. Not just here in New

York City but obviously a lot of other places as well so those are

programs. The nice thing about low-income housing tax credit,

‘‘Here are the rules and you follow those and here is what you get.’’

I think there are other programs that because they are subject to

annual appropriation and the kind of debate we are having here

make it hard for us to do long-term—get involved in long-term

projects that require public/private leverage.

Mrs. MALONEY. I must say that after HPD cut the Section 8 program I literally had one community group that was afraid they cut

their 202 even though they had it and did not want to go forward

with it. What you are saying is that the disruption and reliability

of the program is causing huge problems in the partnership. I

think that is an extremely valid point you made.

Mr. REICHER. One of the things that I would mention is that I

see a striking parallel in sort of the early days when the city was

facing sort of abandonment In-Rem housing crisis and sort of recently identified crisis that we are facing in HUD funding projects

which are the buildings that are failing out of their inspections, the

distressed HUD subsidized buildings.

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We have identified 70 to 90 buildings with 17,000 units in New

York City alone and this is a nationwide phenomenon of buildings

that are severely distressed under HUD financing. There are a lot

of lessons to be learned of the TIL Program and the other CDBGfunded programs that the city used to redevelop these programs.

We have actually been able to turn nine of these buildings over to

residents and to local community groups, Abyssinian being one of

them, and some of them right in this neighborhood.

But there is another 70, 80, 90 buildings in the city alone and

HUD’s response and the ability for them to move properties in the

proper direction and provide the support and so forth has a lot to

learn from what we learned over these last almost three decades

with the In-Rem properties in New York City. I think it is a place

where we are going to preserve housing. This is some of the kind

of housing we already know how preserve. We just need a willing

partner in Washington.

Mrs. MALONEY. Thank you. My time is up. I congratulate all of

you for your extraordinary achievements in affordable housing.

Mr. TURNER. I want to thank you also. Your stories are inspiring

and your critical expertise is obviously necessary for the success

that is here and other communities certainly can benefit from what

you are accomplishing and using the best practices and the models

that you have here and the efforts they are taking in their communities.

Before we go to our next panel, I just want to give you one opportunity if you have any closing comments on anything that we have

not asked you that you did want to say to give you an opportunity

to put that on the record now.

Mr. TOWERY. Mr. Chairman, I realize that I didn’t mention that

I am not sure that anything we are doing or have done is

replicable. They are sort of unique. There is no handbook for how

you do it in a place like this except that my experience was when

I went there, this place had deteriorated or was in a level of problem where it was too bad for the private sector to invest and stay

and stick with it and not quite bad enough compared to other parts

of New York City for government to really have programs. It was

never a model city under Lyndon Johnson. It wasn’t bad enough to

be a model city.

There is something to be said about nonprofit brokers and advocates who work with both sectors and speak out of both sides of

their mouths and say to government, ‘‘Look how bad it is,’’ and to

Mark Willis, ‘‘Look how good it is,’’ so that you can put together

the public and private sectors around specific objectives.

I don’t know if that is replicable or not but when you are devoted

to a particular place and you have a plan and you have consensus

behind it, you really do need the flexibility of either sector agent

or broker who can put it all together and stick with it and persist

and glue it together.

I think that is a lesson that—I don’t know how you would do it

otherwise without CDBG funds. We probably wouldn’t be here if

when we got our first CD money our board had left essentially from

the private sector, was disinvesting and moving out to the suburbs.

We probably could not have managed to operate and continue

that role without the CDBG contract. It matched what we already

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had and challenged us to raise more. As I told you, now it is a very

small portion of our income that we do raise. This is tooting my

own horn but in a generic way, please. Thank you.

Ms. MENSCHEL. Maybe just further on your question about looking at the cities in the future. I think that what we have seen in

recent years is far more integration, as we have all started to say,

of both private investment and public investment. Shaping programs that are going to encourage private investment and facilitate

it as opposed to undermining it is important. A lot of that is timeliness and predictability of the government side of things.

The second is the role of not-for-profit in communities. Not-forprofits often are the organizations that are there for the long haul.

That is very important for community stability and protection of

the investments that are made.

Mr. TURNER. Any closing comments?

Mr. WILLIS. I am fine. Thank you.

Mr. REICHER. I know that one of the areas that is also at issue

is the funding of city staff. I should say that our ability to accomplish what we have accomplished in our program comes in a partnership with HPD. Our ability as a nonprofit and our relationship

with residents in buildings and the co-ops is of one nature and

HPD staff has their role to play.

Without both of them it is a much more difficult one. I think that

the overall impact of the program needs to be looked at. I know

this comes up, and came up, and will continue to come up. I think

that it would diminish the success of the program to sort of say absolutely you can’t have it one way.

Mr. TURNER. Thank you. Well, we thank you very much and we

will take a short recess as we seat the third panel.

[Recess.]

Mr. TURNER. Thank you. We will reconvene to hear our third

panel. We have Rev. Dr. Calvin Butts, pastor of the Abyssinian

Baptist Church; Mr. Chris Kui, executive director of Asian Americans for Equality; and Dr. Ingrid Gould Ellen, associate professor

of public policy and urban planning at the New York University

Furman Center for Real Estate.

Dr. Butts, we will start with you.

STATEMENTS OF REV. DR. CALVIN BUTTS, PASTOR OF THE ABYSSINIAN BAPTIST CHURCH; CHRIS KUI, EXECUTIVE DIRECTOR OF ASIAN AMERICANS FOR EQUALITY; AND DR. INGRID

GOULD ELLEN, ASSOCIATE PROFESSOR OF PUBLIC POLICY

AND URBAN PLANNING AT THE NEW YORK UNIVERSITY

FURMAN CENTER FOR REAL ESTATE

STATEMENT OF REV. DR. CALVIN BUTTS

Dr. BUTTS. Good morning. Thank you. I want to commend the

House Government Reform Subcommittee on Federalism and the

Census on conducting this hearing. I want to again greet and welcome to Harlem and Thurgood Marshall Academy the Honorable

Michael Turner from the Third District of Ohio, the great city of

Dayton. Thank you very much for being here.

And, of course, to say hello to our dear friend Representative

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man Rangel, our Congressman. And I am pleased to have an opportunity to testify on such an important matter.

The successful and sustainable revitalization of our urban centers has been and is a driving principle of my personal efforts for

well over 30 years. In addition, I now lead a nearly 200-year-old

institution, the Abyssinian Baptist Church. By the way, Mr. Chairman, I want to say that the chairman of our deacon board and

many of our members who reside in this community and elsewhere

have been a part of this hearing throughout its entirety. I want to

thank them for being here because they know the importance of

this very important hearing.

The Abyssinian Baptist Church has been at the forefront of social

justice issues since its inception. Abyssinian has also been a leader

in the development of Harlem from its birth as the African American business, social, and cultural capital of the world over 80 years

ago through its development and revitalization today.

You have and will hear a lot of statistics about the importance

of the Community Development Block Grant Program. My task

today is to breathe life into these numbers and to give you a sense

of the flesh and blood impact the Community Development Block

Grant Program has had on the heart and soul of one of the most

important communities in the United States of America, the community of Harlem.

I believe Harlem is a fitting community to examine and evaluate

the past success and the future of such an important national program. The story of Harlem’s decline and its revitalization of a community world renown for its rich cultural legacy has been constantly elevated as the story that most exemplifies the story of our

Nation’s urban centers for its triumphs and its tragedies. Federal

policy has always played a critical role in the development as well

as the destruction of our communities.

Adam Clayton Powell, Jr., one of the great leaders of the Abyssinian Baptist Church, one of the great leaders of the Harlem community, and one of the great leaders of our nation, understood the

impact of Federal legislation on our communities and, as such,

sponsored and co-sponsored more than 50 measures of responsible

Federal legislation. We here in Harlem have also felt the impact

of Federal policy designed sometimes intentionally and sometimes

not to dismantle, disempower, and destroy our communities.

We well remember the Housing Act of 1934 which established

the Federal Housing Authority with the intention to improve housing conditions and standards which in actually promoted segregation and through the Federal Homeowners Loan Corp. defined

black integrated and racially changing neighborhoods as not credit

worthy. Actually drew maps coloring these neighborhoods red. Federal policy red-lined our communities early on and choked out economic development and home ownership and other wealth-building

opportunities for its inhabitants.

Another appalling example is the Housing Act of 1949 which was

founded on slum clearance. And the Interstate Act of 1956 which

allowed local municipalities to use imminent domain to pay

through communities of color. I mention these Federal policies

today to underscore the critical importance of your deliberation

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about the future of the Community Development Block Grant Program.

Much of Adam Clayton Powell’s sponsored legislation was directed to correct those destructive policies of this investment. Those

policies led directly to the blight and decay in Harlem that was

present when I came to Harlem in 1972.

After nearly five decades from 1910 to 1950 of immigration and

an extraordinary growth of the African American population, central Harlem’s population peaked at 226,000 persons in 1950.

Beginning in 1960 to 1990 the trend of the previous five decades

was reversed to population decline and central Harlem lost 54 percent of its population during this same period. With the abandonment of residential and commercial properties and red-lining by financial institutions between 1970 and 1980 central Harlem had its

largest single population loss of 34 percent within one decade.

By 1990 the area’s population had declined to its lowest count of

98,747. The first increase in population since 1950 did not occur

again until the recent census of 2000 reporting a population of

107,178, a modest gain of 8,431 residents over the previous 1990

census count.

Mr. Chairman, I want to continue with this because those who

have gathered, and I know you already have the testimony, this is

so important when considering this Federal program that is in

jeopardy. When I came to Harlem in 1972, 2 years before the Community Development Block Grant Program was initiated, it became

apparent that the Federal Government had to step in and try to

deter the widespread abandonment.

It is difficult to describe the socioeconomic climate of Harlem at

the inception of the Community Development Block Grant in 1974.

Plainly, a Federal aid package with its housing initiatives and commitment to creating viable communities could not have come at a

better time.

Harlem was badly damaged during the civil unrest of the 1960’s,

a situation that was exacerbated by the city’s financial crisis in the

1970’s. There was blight and devastation perpetuated by decades

of disinvestments marked by an exodus of residents suffering from

unbearable economic and societal factors, a pandemic of poverty

which included soaring crime and increased substance abuse.

Not only were the residents who remained in despair isolated

and discouraged but a neighborhood that was once renowned for its

residential housing was ravaged by decades of arson and abandonment thereby creating a housing stock that was deplorable and

without dignity and a homeless population that was escalating

daily.

Over 60 percent of the housing stock in Central Harlem was

owned by the city of New York. Owners of buildings simply walked

away and did not pay property taxes, water and sewer taxes, no

maintenance, utilities, electricity in common areas, no heat and hot

water, living conditions that were dangerous to life, health, and

safety. Community residents were suffering.

The city of New York was able to use Community Development

Block Grant funds to maintain these buildings. Although no municipality ever has the intention of becoming a principal landlord

because of the loss of income through tax roles, the city could have

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condemned the buildings, displaced hundreds of thousands of people.

Yet, the city of New York to its credit took a bold move and decided not to displace people. With Community Development Block

Grant funding the city of New York maintained these buildings

and the character and fabric of this community which directly impacted future successful sustainable development and laid the

foundation for the comprehensive community development initiatives that are implemented today.

Preserving housing is a beachhead against neighborhood decline.

When you are fighting a war, which is what we are in, against

neighborhood decline, you need beachheads, a position or foothold

on an enemy shoreline captured by troops in advance to further an

invading force and comprehensive community development was

that invading force and without Community Development Block

Grant Funding to preserve those buildings for future development,

Harlem would be a footnote in history books.

In fact, a symbol of Harlem’s rebirth, one that could not have

been possible without the preface of Community Development

Block Grant funding is the construction of the building in which we

sit right now, the Thurgood Marshall Academy for Learning and

Social Change. This very building, 90,000 square feet, state-of-theart facility is the first new high school to be built in Harlem in

more than a half century.

In addition, Abyssinian Development Corp. built over 1,000 units

of affordable housing for low and moderate-income families and

some were completely vacant buildings that the city was able to

maintain, architectural jewels of the pre-war housing stock. Some

were occupied by families that held on as the beachhead was becoming secure. Every one of these buildings was preserved and

maintained using Community Development Block Grant funds.

ADC pushed forward and began to reach out to more residents

in need of supportive housing, educational opportunities, small

business development, large commercial enterprises, job development, social services, home ownership opportunities, and the building of community capacity through civic engagement.

We could not have created successful sustainable community development without addressing community decline and poverty

through a holistic approach matching every aspect of societal ills

with appropriate solutions all of which need an inputting of resources. Community Development Block Grant funding is integral

in this process as it is flexible enough to allow local communities

to decide what their needs are and how they should be met.

The primary objective of the program was to establish a broad

network for urban revitalization efforts while providing maximum

flexibility on a local level, essentially the original framework for

the successes we can account for today.

Since so much has been accomplished, why do we need Community Development Block Grant and Community Services Block

Grant Programs today? Quite simply for the same reason we needed community development block grants in 1974. The broad objectives of the Community Development Block Grant Program to establish and maintain viable urban communities with decent housVerDate 11-MAY-2000 13:10 Feb 09, 2006 Jkt 000000 PO 00000 Frm 00072 Fmt 6633 Sfmt 6633 D:\DOCS\23852.TXT HGOVREF1 PsN: HGOVREF1
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ing and suitable living environment and economic opportunities for

persons of low and moderate income are still critical today.

Harlem is at a pivotal crossroads today. Much attention has been

given to the incredible increase in housing production, housing

prices, and commercial development. Rent increased by 46 percent

from 1990 to 2000 compared to 11 percent in New York City overall

and 21 percent in Manhattan over the same period and property

values have tripled in Harlem.

A common price for a brownstone is well over a million dollars.

Commercial rents along 125th Street, the main commercial corridor, is approximately $125 per square foot. In Harlem the dismal

ownership rate is 9 percent as compared to New York City where

about one in three households own their own homes.

The vacancy rate is 3 percent and apartments with an asking rent of less than $500 have a vacancy rate of just 11⁄2. The median

household income in Central Harlem is only $19,920, approximately 52 percent of the citywide median income and only 42 percent of the median income of Manhattan taking into account that

there are households with incomes of less than $15,000 computed

in that average.

The poverty rate is 36.4 percent and 24 percent of the population

pays more than 50 percent of their income toward rent putting

shelter in competition with food and other necessities. The rate of

unemployment in Central Harlem is extremely high at 12.4 percent

while the New York City overall rate is 61⁄2 and the community

services side, as studies suggest, that over 50 percent of AfricanAmerican males are not in the labor force.

Why not just let the market work? That is what some argue. It

is the very nature of economic market forces to push out low and

moderate income families unless systems are in place to prevent

misplacement. Harlem residents that persevere through the unbearable conditions to fight for their children, their community,

and respectable living conditions will be pushed out just as the

market bulldozed them in 1974 when the Community Development

Block Grant funds were first used to maintain and build that

beachhead.

The market forces at work are encouraging landlords to deny

residents decent places to live hoping that they will become frustrated and they will move out so that when they do, property owners can cash in by leasing at market or above-market rates for

units that were originally allocated for low and moderate-income

families.

Much of the Community Development Block Grant funding today

is used for inspectors to make sure that buildings are operating at

code and for litigators to hold landlords accountable. An epic example of how property owners are being driven by market forces is

demonstrated in the Ennis Francis houses, a 231-unit complex that

due to extreme neglect by the landlord was in serious disrepair and

needed both immediate and long-term work.

Among the 250 housing code violations cited investigated with

Community Development Block Grant funding were lack of heating, leaking ceilings, dangerous peeling lead paint. The Tenant Association which formed in 2003 after a week without hot water and

the collapse of an underground sewage pipe leaving a 20-foot by 8-

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foot festering pit of human waste in the community room. On November 1st ADC was assigned as the legal administrator for Ennis

Francis Houses and managed the building and ensured that basic

services were restored.

ADC was able to purchase the Ennis Francis Houses and now

provides a full array of comprehensive programs for the tenants

who no longer have to live in fear that their homes will be sold to

the highest bidder. Ennis Francis Houses is one example of far too

many landlords that are trying to encourage their low to moderateincome residents to live elsewhere as affordable rental restrictions

are expiring including expiring Section 8 contracts, low-income

housing tax credit restrictions, and municipal restrictions on affordability.

Community Development Block Grant funds are as important as

they were in 1974 in preserving and protecting communities. This

deliberation is critically important. Thousands of individuals will

be impacted and this committee has the ability to alter the characteristics of entire communities across the country.

Community Development Block Grant funding will be integral in

ensuring that the most vulnerable are not displaced. That those

who remain in Harlem and communities like it can continue to afford living here in decent and dignified living standards.

Thus, Mr. Chairman, I implore you to think carefully and seriously about the impact that your decisions will have not only on

the Harlem community but communities like Harlem across the

country. The loss of Community Development Block Grant funding

will have detrimental affects on entire neighborhoods and will destabilize the progress that we have managed to achieve since 1974.

No one is as happy as I am, Mr. Chairman, to see you here

today. You can’t imagine how important it is to have you from the

great State of Ohio that has produced tremendous leaders for our

Nation to come and hear from us about how important this is. I

know you will be successful because God is on your side. Thank you

very much.

[The prepared statement of Dr. Butts follows:]

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Mr. TURNER. Thank you very much for that very impassioned

presentation.

Mr. Kui.

STATEMENT OF CHRISTOPHER KUI

Mr. KUI. Good afternoon, Chairman Turner, Congresswoman

Maloney, and guests. Thank you for traveling to New York to hear

our testimonies and see our communities firsthand.

My name is Christopher Kui and I am the executive director of

Asian Americans for equality [AAFE]. When AAFE opened its door

in 1974 Chinatown was an insular ethnic enclave. Founded more

than 100 years before by immigrants from China, it became the

hub of social, cultural, and economic life in New York’s Asian community.

Most of the immigrants did not speak English. They had to adjust to an entirely different culture than that which they had left

behind. Naturally, they lived in Chinatown where they felt more at

ease. At first the community consisted of working men employed in

restaurants and service industries. The liberalization of immigration laws in the 1960’s caused immigration to swell which resulted

in enormous social pressures for the community such as lack of

housing and decent employment.

Increasingly, more and more people came to AAFE for help with

affordable housing and adequate living conditions which had

reached a crisis point. Many local residents lived in rundown tenement buildings dating from the 19th century. Others were crowded

into non-residential spaces that were illegally subdivided into tiny

rooms.

The high demand for living space caused many landlords to ignore housing codes and occupancy standards, and to demand illegal

key money from renters. As downtown neighborhoods became fashionable, unscrupulous landlords tried to evict their low-income tenants, sometimes resorting to extreme tactics like harassment and

intimidation.

In partnership with HPD our eviction prevention programs have

helped our clients in very immediate ways. We have actually many

clients from Chinatown in the back that traveled all the way from

Chinatown to Harlem today to really show their support for the

CDBG Program. I would like to point them out in the back.

In December 2004, a few days before the Christmas holidays, an

anxious Chinatown resident whose building had no heat or hot

water for more than 2 months came to AAFE for help. The tenant,

a senior citizen who spoke practically no English, complained that

he and his neighbors live in misery because temperatures dropped

below freezing. The tenants were afraid to notify housing authorities for fear of retaliation.

AAFE was able to step in immediately advising the tenants of

possible action and provide legal assistance. Meanwhile, our staff

convened a meeting with HPD and other State agencies, the tenants, local elected officials, and the building owner onsite. We arrived at an agreement and the tenants had heat and hot water in

time for the holidays.

To increase housing opportunities AAFE has developed more

than 500 units of affordable and senior housing. Working with the

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Enterprise Foundation and HPD AAFE first began developing

housing in 1986 with the construction of New York City’s first Federal low-income housing tax credit project called Equality House.

All of us at AAFE felt particular pride and strong emotional attachment to this historic project. Equality House enabled the Lee

family among many such families to provide their three children

with the stability and opportunity that they needed to make a better life. Fifteen years later today one son is a police officer, the

other son is a nurse, and the daughter is an urban fellow pursuing

her masters degree at the local college.

Our most recent project, Norfolk Apartment II, was the first lowincome housing project to be developed after September 11th in

lower Manhattan in partnership with the city and State of New

York. Norfolk Apartment II has a total of 52 units. When the

project was announced in 2003 more than 10,000 families around

the city submitted applications.

CDBG funding has also enabled AAFE to provide core immigrant

services that continue to include the capacity of the Asian-American community to address its own needs. AAFE helps new immigrants overcome language and cultural barriers and participate

more fully in American society.

Our affiliate, AAFE Community Development Fund, has counseled more than 5,000 perspective homeowners and have helped secure over $155 million in mortgage financing from private banks

for 1,200 families to purchase their first home. Thousands of other

residents come to AAFE every year for English-as-a-second-language instruction, naturalization information, and citizenship education.

The flexibility of CDBG funds has allowed AAFE to respond to

emergencies as well. Immediately after September 11th AAFE was

able to address the request for assistance to help guide affected clients to government agencies such as FEMA. More than 500 clients

were assisted with Medicaid applications and 300 emergency applications were filed for assistance and temporary housing in the first

month alone after September 11th.

Meanwhile, as partners in the Lower Manhattan Development

Corp.’s $300 million Residential Grant Program, our staff helped

over 20,000 residents receive housing assistance all across Lower

Manhattan neighborhoods. Having latitude in the type of projects

and activities in which we can engage has allowed AAFE to serve

the role of ‘‘social firehouse,’’ responding to a crisis quickly and effectively in our community.

In conclusion, a very large part of AAFE’s work has been possible

thanks to funding from the CDBG program. CDBG funds have allowed us to respond creatively and with flexibility to meet the

changing needs of our immigrant community. We have been able

to provide affordable housing and prevent blight, generate new economic investment and create a more significant role for our community in the city’s decisionmaking process.

With more than 30 years of experience, AAFE has redoubled its

commitment to help new immigrants achieve the American Dream.

Not only has CDBG allowed us to preserve and rebuild the physical

environment, it has furnished the tools to educate and inform our

community.

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Chairman Turner, Congresswoman Maloney, help Chinatown,

help Harlem, and thousands of other communities across the

United States to maintain and expand the CDBG programs so we

can preserve our neighborhoods and serve our constituents. Thank

you.

[The prepared statement of Mr. Kui follows:]

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Mr. TURNER. Dr. Ellen.

STATEMENT OF DR. INGRID GOULD ELLEN

Dr. ELLEN. Chairman Turner and Congresswoman Maloney,

thank you for the invitation to speak to you today about the community benefits of New York City’s housing and community development efforts. During the 1970’s as a result of large population

loses, rising landlord cost, and stagnant tenant incomes, entire

neighborhoods in New York City were devastated by arson and

abandonment.

By 1979 the city had taken ownership through tax foreclosure of

over 60,000 housing units and vacant buildings and another 40,000

units in occupied buildings. Over the past two decades or so,

through the course of the city’s housing efforts, virtually all of

these properties have been stabilized, rehabilitated, and turned

over to responsible private owners.

Together with colleagues at New York University, I have written

a number of research papers that document these efforts, and more

importantly, they examine the extent to which these investments

generated spill-over benefits and contributed to neighborhood revitalization.

We have consistently found significant neighborhood benefits. Actually identifying the neighborhood benefits generated by housing

investment is quite difficult. One challenge is what metric to use

to capture these neighborhood impacts. In the series of papers we

have written so far, we have relied on changes in property values

as a summary measure of neighborhood improvements. Simply if a

neighborhood becomes a better place to live, people will be willing

to pay more to live there.

Another fundamental challenge is that we can never know for

sure what would have happened to property values in the absence

of the housing investment and different statistical models make

different assumptions about this counter-factual situation. Intuitively what our basic approach has been is to assume that housing

prices would have grown at the same rate of prices of comparable

properties that are in the very same neighborhood but just a little

bit further away from the housing investment.

I would like to highlight two of our results briefly today. The first

focuses on the neighborhood effects of abandoned buildings. We

find that the vacant abandoned properties that the city had taken

over for tax foreclosures significantly depressed the value of surrounding properties.

Specifically, we find that prior to rehabilitation properties located

right next to these abandoned vacant properties sold for significantly less, on the order of about 28 percent, than comparable properties that were located further away but still in the very same

neighborhood.

Property abandonment, in other words, can seriously hamper

neighborhood development and may be costly for local governments

which may lose tax revenues as a result.

The second result I would like to highlight, and maybe a somewhat more important result, is that New York City’s investment in

these abandoned, tax-foreclosed properties appears to have yielded

significant, positive benefits. We find that the gap between prices

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of properties near to assisted housing sites and those in the surrounding neighborhoods narrows dramatically after the housing investment is completed. Moreover, we find that these impacts grow

over time perhaps as families move in and the population grows.

As for the magnitude of these neighborhood benefits, we find

they are substantial. Indeed, a simple analysis of approximate cost

and benefits suggest that New York City’s housing investments delivered a tax benefit to New York City that exceeded the cost of the

city’s subsidies provided and amounted to some 75 percent of the

total public investment which includes both State and Federal dollars. This, of course, does not include the benefits enjoyed by the

individual households who actually get to live in the housing. What

was captured here is simply the community spill-over benefits.

In summary, I think our results offer strong evidence that the investments that New York City has made over the past 20 years or

so to stabilize vacant and abandoned properties and to rebuild

them as affordable housing for members of the community have

generated significant improvements in the surrounding neighborhoods.

More generally, I think our results suggest that publicly funded

housing investments targeted strategically at distressed urban

properties cannot only create new affordable housing units for

qualified recipients but also help to revitalize urban neighborhoods.

Thanks.

[The prepared statement of Dr. Ellen follows:]

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Mrs. MALONEY. I want to thank the audience. I mean, you are

really cheering for the right thing, more affordable available housing. You have been the best audience I have ever had the opportunity to be before.

Rev. Calvin Butts, your emotional and intelligent history and

focus and passion. Your remarks were right there and pointed out

really the importance that your church has really played in the revitalization of Harlem.

Chris Kui, of course, and your organization, we worked so closely

after September 11th and you are doing so many other things. I

would like to put all of your testimony into the Congressional

Record. Next time CDBG is attacked, I want all of you up there

in Congress talking to our colleagues, setting the record straight.

You have the stories and the histories.

Dr. Ingrid Gould Ellen, you have really started to document how

this investment pays off in improving the quality of life, people’s

lives, and really the livelihood of a community. I certainly would

like the HPD and really our staffs in Washington to work with you

if we could come up with an alternative way to counter OMB’s

measurement because obviously the program is working incredibly

well.

I can’t thank you enough. The chairman tells me we have to get

back to Washington. If we miss our planes, we will miss our votes

tonight. I can’t tell you how much it was a great honor to be home.

The worse part about my job is that I have to be in Washington

all the time and it is greater to be here to see the people’s faces

and what the programs mean to them. It has been a great honor

for me to be here. Congratulations on this new school and everything you are doing to work together. Thank you so much, Chairman Turner.

Mr. TURNER. Before we close, I want to thank Congresswoman

Maloney for her leadership and her interest in holding this hearing

and inviting me to come to the community and giving everyone the

opportunity to see firsthand what has been accomplished here, but

also to get into the Congressional Record the important experiences

that you all have that are direct ties to what the CDBG Program

is important. I would like to thank Carolyn Maloney one more time

for her efforts in bringing us here today.

Mrs. MALONEY. Thank you very much. Thank you.

Mr. TURNER. I want to thank all the members of this panel. Rev.

Butts, thank you for your leadership in your community. Clearly

your efforts go well beyond just bricks and mortar as you look to

lead the community. I appreciate the faith-based aspect of your

participation. We know that is both important for the fabric of the

community and for the success of many of the social services that

you are providing. We certainly see a tremendous impact that you

are having.

Mr. Kui, I thank you for your participation and your efforts. You

can hear in your testimony and in your voice that this is not just

about a community but it is also about people. When you talk

about the experiences of the people that you have been able to intervene on behalf of, you can tell that this is obviously a labor of

love and not just an issue of a neighborhood’s boundaries but the

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people who reside in the homes and the lives that you are impacting. I thank you for your dedication to that.

Dr. Ellen, I really appreciate your bringing an academic and scientific view to what we all see as community development. It was

so funny in reading Office of Management and Budget’s criticisms

and critique of CDBG, the first thing that they said was, ‘‘Community development is an undefined term.’’

Well, community development is something we feel in addition to

something that we have to measure. Your efforts to measure it I

do know is difficult. You and I were talking just briefly about housing development that we had undertaken in the city of Dayton

when I served as mayor. I hope to get you out to the city of Dayton

to see those programs.

There in trying to justify housing redevelopment investment, we

even had to argue against individuals that looked at measurement

of housing property values where they averaged the property values sales where a property that was sold in its unrehabilitated condition was averaged against its final sale price as the incremental

impact whether than just looking at the overall net impact of the

end results.

I appreciate your looking at this in a manner where other people

can review the work and who don’t necessarily see the feeling of

community development but can see its numbers.

I want to thank obviously the audience for participating. You

have been incredible for giving your time for this. And for all of the

panel members including the mayor who have shown tremendous

effort and commitment to this. You are changing your community

and you are being leaders for people throughout the country who

look to your city and your neighborhoods for examples. Thank you.

[Whereupon, 1:32 p.m. the subcommittee adjourned.]

[The prepared statement of Hon. Carolyn B. Maloney and additional information submitted for the hearing record follow:]

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