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[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]

 
          H.R. 2941--BROWNFIELDS REDEVELOPMENT ENHANCEMENT ACT
=======================================================================

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                   HOUSING AND COMMUNITY OPPORTUNITY

                                 OF THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS

                             SECOND SESSION
                               __________

                             MARCH 6, 2002
                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 107-59

                     U.S. GOVERNMENT PRINTING OFFICE
78-502                       WASHINGTON : 2002
________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov  Phone: toll free (866) 512-1800; (202) 512-1800  
Fax: (202) 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001

                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                    MICHAEL G. OXLEY, Ohio, Chairman

JAMES A. LEACH, Iowa                 JOHN J. LaFALCE, New York
MARGE ROUKEMA, New Jersey, Vice      BARNEY FRANK, Massachusetts
    Chair                            PAUL E. KANJORSKI, Pennsylvania
DOUG BEREUTER, Nebraska              MAXINE WATERS, California
RICHARD H. BAKER, Louisiana          CAROLYN B. MALONEY, New York
SPENCER BACHUS, Alabama              LUIS V. GUTIERREZ, Illinois
MICHAEL N. CASTLE, Delaware          NYDIA M. VELAZQUEZ, New York
PETER T. KING, New York              MELVIN L. WATT, North Carolina
EDWARD R. ROYCE, California          GARY L. ACKERMAN, New York
FRANK D. LUCAS, Oklahoma             KEN BENTSEN, Texas
ROBERT W. NEY, Ohio                  JAMES H. MALONEY, Connecticut
BOB BARR, Georgia                    DARLENE HOOLEY, Oregon
SUE W. KELLY, New York               JULIA CARSON, Indiana
RON PAUL, Texas                      BRAD SHERMAN, California
PAUL E. GILLMOR, Ohio                MAX SANDLIN, Texas
CHRISTOPHER COX, California          GREGORY W. MEEKS, New York
DAVE WELDON, Florida                 BARBARA LEE, California
JIM RYUN, Kansas                     FRANK MASCARA, Pennsylvania
BOB RILEY, Alabama                   JAY INSLEE, Washington
STEVEN C. LaTOURETTE, Ohio           JANICE D. SCHAKOWSKY, Illinois
DONALD A. MANZULLO, Illinois         DENNIS MOORE, Kansas
WALTER B. JONES, North Carolina      CHARLES A. GONZALEZ, Texas
DOUG OSE, California                 STEPHANIE TUBBS JONES, Ohio
JUDY BIGGERT, Illinois               MICHAEL E. CAPUANO, Massachusetts
MARK GREEN, Wisconsin                HAROLD E. FORD Jr., Tennessee
PATRICK J. TOOMEY, Pennsylvania      RUBEN HINOJOSA, Texas
CHRISTOPHER SHAYS, Connecticut       KEN LUCAS, Kentucky
JOHN B. SHADEGG, Arizona             RONNIE SHOWS, Mississippi
VITO FOSSELLA, New York              JOSEPH CROWLEY, New York
GARY G. MILLER, California           WILLIAM LACY CLAY, Missouri
ERIC CANTOR, Virginia                STEVE ISRAEL, New York
FELIX J. GRUCCI, Jr., New York       MIKE ROSS, Arizona
MELISSA A. HART, Pennsylvania         
SHELLEY MOORE CAPITO, West Virginia  BERNARD SANDERS, Vermont
MIKE FERGUSON, New Jersey
MIKE ROGERS, Michigan
PATRICK J. TIBERI, Ohio

             Terry Haines, Chief Counsel and Staff Director

           Subcommittee on Housing and Community Opportunity

                    MARGE ROUKEMA, New Jersey, Chair

MARK GREEN, Wisconsin, Vice          BARNEY FRANK, Massachusetts
    Chairman                         NYDIA M. VELAZQUEZ, New York
DOUG BEREUTER, Nebraska              JULIA CARSON, Indiana
SPENCER BACHUS, Alabama              BARBARA LEE, California
PETER T. KING, New York              JANICE D. SCHAKOWSKY, Illinois
ROBERT W. NEY, Ohio                  STEPHANIE TUBBS JONES, Ohio
BOB BARR, Georgia                    MICHAEL E. CAPUANO, Massachusetts
SUE W. KELLY, New York               MAXINE WATERS, California
BOB RILEY, Alabama                   BERNARD SANDERS, Vermont
GARY G. MILLER, California           MELVIN L. WATT, North Carolina
ERIC CANTOR, Virginia                WILLIAM LACY CLAY, Missouri
FELIX J. GRUCCI, Jr, New York        STEVE ISRAEL, New York
MIKE ROGERS, Michigan
PATRICK J. TIBERI, Ohio

                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    March 6, 2002................................................     1
Appendix:
    March 6, 2002................................................    35

                               WITNESSES
                        Wednesday, March 6, 2002

Bartsch, Charles, Director of Brownfield Financing Studies, 
  Northeast-
  Midwest Institute..............................................    23
Bernardi, Hon. Roy A., Assistant Secretary, U.S. Department of 
  Housing and Urban Development..................................     9
Colangelo, Robert, Executive Director, National Brownfield 
  Association....................................................    27
Kalisz, Frederick M., Jr., Mayor, City of New Bedford, 
  Massachusetts..................................................    21
Kasko, Charles, Regional Sales Manager, Avis America, on behalf 
  of the National Association of Home Builders...................    29
Murphy, John C., Executive Director, National Association for 
  County 
  Community and Economic Development, on behalf of the National 
  Community Development Association..............................    26
Reid, Hon. Lydia, Mayor, City of Mansfield, Ohio.................    19

                                APPENDIX

Prepared statements:
    Roukema, Hon. Marge..........................................    36
    Oxley, Hon. Michael G........................................    38
    Barr, Hon. Bob...............................................    40
    Carson, Hon. Julia...........................................    41
    Israel, Hon. Steve...........................................    42
    Kelly, Hon. Sue..............................................    43
    Bartsch, Charles.............................................    44
    Bernardi, Hon. Roy A.........................................    49
    Colangelo, Robert............................................    53
    Kalisz, Frederick M., Jr.....................................    55
    Kasko, Charles...............................................    60
    Murphy, John C...............................................    65
    Reid, Hon. Lydia.............................................    68

          H.R. 2941--BROWNFIELDS REDEVELOPMENT ENHANCEMENT ACT

                              ----------                              

                        WEDNESDAY, MARCH 6, 2002

             U.S. House of Representatives,
                       Subcommittee on Housing and 
                             Community Opportunity,
                           Committee on Financial Services,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:05 a.m. in 
room 2128, Rayburn House Office Building, Hon. Marge Roukema, 
[chairwoman of the subcommittee], presiding.
    Present: Chairwoman Roukema; Representatives Kelly, Oxley, 
Miller, Grucci, Tiberi, Frank, Carson, Jones, Capuano, Clay, 
Israel, and C. Maloney of New York.
    Chairwoman Roukema. May I have your attention? I apologize 
for the delay here, but I believe that we should wait a few 
more minutes. I am told that some Members on the Democratic 
side of the panel will be here, but let's be patient and have 
another minute or two or three, hopefully before we get 
started. Thank you, I appreciate your patience.
    The hearing will come to order. I will open the hearing 
with opening statements and then greet the panelists and 
introduce those panelists. I certainly thank all of you for 
coming today and I would hope that other Members will be here. 
I know there is intense interest on this legislation. It's not 
highly controversial, but there is intense interest, not only 
on a regional basis, but across the country, and I want to 
especially state that it's important for the State of New 
Jersey, but that's only one of 50. But I will be working with 
all of you to deal with the problems, the technicalities, not 
the problems, but the technicalities as they may arise.
    This hearing today on H.R. 2941, Brownfields Redevelopment 
Enhancement Act, was introduced by our colleague and panel 
member here, Congressman Gary Miller from California, and we do 
appreciate his leadership here.
    Today, local communities and States are eagerly looking for 
ways to clean up and redevelop their brownfield sites and 
certainly it's an idea whose time has come and perhaps overdue. 
It's incredible to think that there are an estimated 500,000 
brownfields in existence today across the country. That's a 
horrific number, a number that you can hardly comprehend. But 
the brownfield sites are sites where redevelopment is 
complicated by potential environmental contamination, but that 
are less seriously contaminated than those that are covered 
under the Superfund Act. And may I just say parenthetically 
here I am a strong environmentalist and certainly in a State 
like New Jersey I am strong, so I don't want anything here to 
be considered as anti-environmental. We have to be intelligent 
about how we deal with this subject and protect all sides of 
the issue.
    No matter how these areas are classified, there are 
possible health hazards and eyesores in the communities that 
can be cleaned up, but redevelopment of these sites will go a 
long way toward revitalizing the communities around. And as I 
say, they are not mutually exclusive. It's our job here in this 
legislation to accommodate and get the best of both worlds so 
to speak.
    While some States have established programs to encourage 
brownfields cleanup and redevelopment, the liability involving 
the sites remain controlled by the strict standards of the 
Superfund law. Investors and developers have therefore been 
reluctant to purchase brownfield sites out of concern that they 
will become entangled in legal disputes and be forced to pay 
for the unexpected cleanups.
    On January 11th of this year, President Bush signed the 
Small Business Liability Relief and Brownfields Revitalization 
Act, which provides for up to $200 million a year to States, 
local governments and Indian tribes for brownfield cleanups. 
That legislation more than doubles the $92 million spent 
annually for cleanups up to this point.
    The liability measure within the bill--now this is 
important--the liability measure within the bill protects the 
new owners of restored brownfields from having to pay any 
future cleanup costs. The legislation also calls for the 
creation of a public record of brownfield sites and encourages 
community involvement in cleanup and reuse. It authorizes $50 
million a year for grants to local and State governments to 
start and enhance brownfield programs.
    While this bill that was signed by the President has been 
widely hailed as a valuable step forward. H.R. 2449, the 
legislation under review today, is complementary and 
supplementary legislation which addresses another facet of the 
brownfields redevelopment needs. H.R. 2941, introduced again by 
our colleague, Congressman Miller of California, focuses on 
providing access to capital for local entities that 
traditionally have had trouble obtaining financing for 
brownfield redevelopment activities. Most notably, this bill 
authorizes appropriations for BEDI, Brownfields Economic 
Development Initiative. This program, for the first time, 
eliminates the requirement that local governments obtain 
Section 108 loan guarantees as a condition for receiving the 
BEDI grant funding.
    Delinking brownfields economic development initiative 
grants from Section 108 loan guarantees is important because 
some cities, some small cities, that is, have great difficulty 
in securing and are unable to secure those guarantees, the 
Section 108 guarantees. The current requirement that cities 
must leverage their CDBG funds in order to receive brownfields 
grants has discouraged many of our smaller communities from 
applying for the grants.
    H.R. 2941 takes at least two other important steps. First, 
the bill authorizes appropriation for BEDI program for the 
first time, and second the bill establishes what's known as the 
quote: ``Pilot Program for National Redevelopment of 
Brownfields.'' This will enable the HUD Secretary, and I would 
hope that our representative from HUD here, Mr. Bernardi, will 
help me understand this need here, will enable the HUD 
Secretary to fund a common loan pool for brownfields and 
economic development loans to be distributed on a competitive 
basis. By that, I mean I don't fully understand the need for 
its so-called pilot program, but you can tell me how that gets 
integrated.
    Because the newly passed Small Business Liability Relief 
and Brownfields Revitalization Act authorizes only $200 million 
with a $1 million cap on funds to any individual locality, the 
pilot program funds, as I understand it, will fill the gap for 
potential developers of the other hundreds of thousands of 
brownfields across the country. Again, I just don't understand 
that separation, but there must be a temporary need for this 
proposal.
    Significantly, the HUD 2003 proposed budget request 
submitted to the President proposes decoupling the brownfield 
programs from the Section 108 loan guarantee program to attract 
more participants. This reflects, of course, what we are 
proposing here in this legislation. And it's assuming, of 
course, that we're going to be successful in getting this 
through.
    I certainly would like to take time again to commend 
Congressman Miller and the Northeast/Midwest Coalition, of 
which New Jersey is an active participant, for their work on 
this issue. They have worked closely with HUD officials to look 
for ways to make this program more efficient and effective so 
that we can provide State and local governments another source 
of funding for brownfield cleanup and redevelopment.
    I also want to thank Congressman Jack Quinn of New York and 
Marty Meehan of Massachusetts for their work on this important 
issue.
    And with that, I would like to acknowledge Congressman 
Frank, the Ranking Minority Member on the subcommittee, and 
look forward to his comments.
    [The prepared statement of Hon. Marge Roukema can be found 
on page 36 in the appendix.]
    Mr. Frank. Thank you, Madam Chairwoman. I want to express 
my appreciation to Mr. Miller and Mrs. Maloney who worked with 
him in bringing this forward. This is a very important step. We 
will be marking this up actually next week. We had a couple of 
questions, but they do not go to the fundamental heart of the 
bill, and I am confident that we will get a unanimous vote out 
of the Committee I believe on this. Certainly on the basic 
principle, there is no good reason--I can't even think of a bad 
reason--why it should be Section 108 dependent requiring this 
to be part of a loan program as well as a grant.
    I note that the Administration has taken a position with 
which I am in substantial agreement that we should, with regard 
to the International Development Association, which helps very 
poor countries, we want to switch from loans to grants, and if 
we can do that overseas, which I think we should, I think I can 
support doing it for a lot of American cities. So I want to 
work on this.
    I'm particularly pleased that we will be hearing later from 
the Mayor of the City of New Bedford in the district that I'm 
able to represent, because New Bedford is one of those American 
cities which carried the burden of industrialization for this 
country for a very long time, and then found national policy 
somewhat neglectful of the needs of its citizens, including 
leaving behind as the result of some of this industrial 
activity, brownfields. Brownfields, I must say, is the nicest 
word for a pretty nasty group of places that anybody has ever 
coined. And helping the municipalities deal with the brownfield 
situation is a very important one, so I am very supportive of 
this.
    I would note that the one set of questions we have deals in 
part with the implications of ending the linkage with the 
Community Development Block Grant Program. It's the wrong kind 
of linkage to Section 108 and I raise that, Madam Chairwoman, 
because I want to renew my request, which I've made several 
times before, that we have a hearing on the whole question of 
Community Development Block Grants and particularly on the low- 
and moderate-income impact. That's very important to a number 
of our colleagues. Congresswoman Meek from Florida and others, 
and it's an issue that came up when we debated the 
appropriations bill people will remember, and the question was 
making certain firefighting activities eligible. So while I 
want to go ahead with this hearing, I hope that this will be 
the precursor to a hearing in which we consider the broader 
implications of the CDBG program, although there's no reason to 
hold up this bill as we go forward.
    The only other point I would make is this. The purpose of 
this bill is to give more Federal money to municipalities so 
they can do something very good. That's important to note, 
because we have this strange dichotomy in America in which 
almost everybody in this House of Representatives is for, from 
time to time, giving people more Federal money to do good 
things, but in general we think the Federal Government 
shouldn't have any money. People need to understand that there 
is a disconnect. You cannot keep reducing the amount of revenue 
the Federal Government takes in and expand the amount of 
revenue the Federal Government gives out. And this is an 
example of Government. People should understand this. This is 
bureaucracy, this is Government. The people sitting at this 
table are two public employees of great distinction who intend 
to administer a program in which we take tax revenues and give 
it to other public employees so that they can do good things. 
In the abstract, this whole process of taxing the private 
sector so that one group of public employees can give another 
group of public employees money to do something is often 
demonized. In particular, everybody's for it. And there really 
is a limitation intellectually in the extent to which you can 
be opposed to something in general and then be all in favor of 
it in the particular. And I hope that this strong support for 
the particular will ooze out a little bit, maybe leaching would 
be the term in terms of brownfields. Maybe a little of this 
support for this particular Government activity will leach over 
the people's views about whether or not the Federal Government 
is a bad thing, and whether or not having Federal revenue is a 
bad thing.
    The last the thing I have to say is a bit of an apology. 
The House Judiciary Committee will be going into session at 
10:30, fortunately not far away, to mark up a couple of 
important pieces of legislation, and one of the consequences of 
legislative scheduling is it has become fashionable for Members 
to get elected to Congress and spend a great deal of time 
expressing their horror at the very notion of association with 
other Members of Congress. That is it has become a mark of your 
being good at the job that you spend as little time in the 
place where the job is carried on as is humanly possible. So we 
have this situation where Congress now exists from 6:00 p.m. on 
Tuesday to 6:00 p.m. on Thursday, and if it starts getting to 
6:00 p.m. on Thursday, the Members get cranky and want to get 
out early. And the result is that we have two days, two working 
days so that too many things have to be crammed into too few 
days and we do not have enough time to do them adequately. And 
thus I will have to be at both the Judiciary Committee and here 
and that will mean that I will not be here for this full 
hearing. It's not the chair's fault. She was very gracious in 
the scheduling, and I appreciate her accommodating us in that 
regard. It's just that you can only, I guess limitations is the 
theme of today's sermon. The more you limit the Government's 
money, the less you can do with it, and the more you limit the 
number of days Congress is in session, the fewer things people 
can accomplish. And having said that and knowing that, at least 
in the current situation, it will fall almost entirely on deaf 
ears, I conclude my statement.
    Chairwoman Roukema. Well, I do thank you for that 
bipartisan approach to action here in the Congress. My 
colleague, I appreciate your support for brownfields, but we 
will not have a debate on the other subject that you've raised 
as to how we spend our money, whether or not we need taxes, and 
whether or not we need a 5-day week here in Congress.
    Mr. Frank. No, I appreciate that. What are the consequences 
of a 2-day week is you don't have any time for debates.
    Chairwoman Roukema. I'm going to recognize now the Chairman 
of the Full Committee, Mr. Oxley, who has honored us with his 
presence today. It's indication of an intense interest on this 
subject. Chairman Oxley.
    Mr. Oxley. Thank you, Madam Chairman, and thank you for 
your leadership on this issue, and I want to associate myself 
with most of the remarks of the gentleman from Massachusetts. 
I'll be in more detail later in my submission to the 
subcommittee, but we appreciate his leadership on this as well.
    Madam Chairman, it seems that brownfields keep following me 
around. As some of you may know, in a prior congressional life, 
I spent a lot of time trying to reform the Superfund program 
for the clean up of toxic waste sites. As a matter of fact, it 
was just across the hall. Superfund has a broad liability 
system. People are interested in redeveloping a contaminated 
site fear that without legal protection, they could be sued to 
pay for part or all of an expensive cleanup even if they had 
nothing to do with the original pollution.
    And what we saw emerge was the brownfield phenomenon. 
Developers would shy away from even slightly contaminated sites 
like old factories and gas stations and build instead on 
pristine greenfields in the country. Cities lost jobs and their 
tax base. Rural communities complained about urban creep. This 
hit industrial States like Ohio especially hard. There are 
thousands of abandoned brownfields in Ohio that have the 
potential to contribute to the economy. I recall holding a 
field hearing at a brownfield site in Columbus several years 
ago. The true test of how persuasive you are with your 
congressional colleagues is if you can convince them to traipse 
over a frozen waste site in Ohio in 20 degree weather on 
Valentine's Day, which I somehow managed to do. A few Members 
still haven't forgiven me for that exercise.
    The threat of brownfield life became so great that people 
were moved to action. States like Ohio and Pennsylvania 
pioneered voluntary cleanup programs providing more legal 
certainty and flexible cleanup standards. Thanks to the good 
work of our friend, Paul Gillmor, we now have a Federal law 
clarifying liability at brownfield sites.
    Today, we turn our attention to the Department of Housing 
and Urban Development, HUD's brownfields and community 
development programs are going to become more important as more 
brownfields projects get underway. These programs need to be 
user friendly, especially for communities that are new to this 
specialized area. I'm pleased to be a co-sponsor of H.R. 2941 
introduced by the Vice Chairman of this subcommittee, Gary 
Miller, who has shown great leadership and vision on this issue 
and the tenacity that can only be attributed to a weight 
lifter.
    This legislation will authorize HUD's brownfields programs 
for the first time. It will make more communities eligible for 
grants, make it clear that brownfield redevelopment is a 
community development block grant eligible activity and permit 
HUD to set up a pilot revolving loan program to maximize the 
impact of Federal dollars.
    Ultimately, the vast majority of the funding for brownfield 
projects must come from the private sector. This subcommittee 
is working to assure the banks and insurance companies under 
our jurisdiction that brownfields projects are good business 
investments. We want to remove the stigma and turn these into 
normal real estate deals that have a manageable environmental 
component.
    I want to welcome HUD Assistant Secretary Roy Bernardi, who 
was the former mayor of Syracuse and is well versed in the 
community development issues. The Northwest/Midwest Institute 
co-chaired by our good friend Jack Quinn, from Buffalo, has 
been a source of innovative thinking about brownfields and 
helpful in developing H.R. 2941. Charlie Bartsch has always 
been able to see the big picture and of course I'm especially 
honored to greet the Mayor of Mansfield, Ohio, Lydia Reid. 
Mayor Reid and I have worked on a variety of development 
projects over the years for Mansfield. Mansfield has a vigorous 
revitalization program that has won national awards. Mayor Reid 
has a great story to tell on the second panel, and we look 
forward to her testimony, and want to thank her for taking the 
time to come out here and share her vision on this important 
issue.
    Brownfields redevelopment should unite Republicans and 
Democrats, city mayors and farmers. Our subcommittee has a role 
to play by highlighting and fine-tuning HUD's vital programs. 
Having toiled in the vineyards on this, I am very happy to see 
brownfield legislation finally bearing fruit in this Congress.
    Madam Chairwoman, thank you again for your patience, and I 
yield back the balance of my time.
    [The prepared statement of Hon. Michael Oxley can be found 
on page 38 in the appendix.]
    Chairwoman Roukema. I thank the Chairman. May I observe 
that I'm told that we may be shortly having a vote on the 
floor, but in any case, with that in mind, let us move as 
quickly as possible with the opening statements.
    All right, Mrs. Maloney, you're not a Member of this 
subcommittee, so let me go on to Mr. Miller first. Thank you in 
consideration of the time restraints.
    Mr. Miller. Thank you, Chairwoman. I'd like to begin by 
thanking Chairwoman Roukema and Ranking Member Frank also for 
calling this hearing on H.R. 2941, the Brownfields 
Redevelopment Enhancement Act.
    My mike is awful loud, isn't it? Excuse me.
    I would also like to thank the hardworking people of the 
staff of this subcommittee who worked so hard to improve the 
bill, and Chairman Oxley, you've been very supportive on this 
issue and I want to thank you personally for that.
    My personal knowledge of brownfields is rooted in a few 
different experiences. As a developer and builder for over 30 
years in Southern California, I've seen the interest in 
redeveloping brownfields grow and grow each year. This has been 
a response to the rising land value and the shrinking 
undeveloped available property that we have in our communities. 
Moreover, because brownfields tend to be located in developed 
areas, they are close to the infrastructure and potential 
markets private developers are often seeking.
    However, I'm also very familiar with the liability issues 
associated with brownfields. Although many of these concerns 
were addressed with the passage of H.R. 2869, this issue still 
merits attention. Lenders should not be scared away due to 
liability issues.
    As the Mayor and Councilman of the City of Diamond Bar, I 
learned about the critical issues of financing brownfields 
developments as I watched several neighboring cities analyze 
the feasibility of redeveloping local contaminated sites.
    Today's hearing focuses on the critical issue of financing 
and there is where the Department of Housing and Urban 
Development has a constructive role to play. HUD's financing 
comes in after the environmental issues have been addressed and 
communities need some assistance to close the deal. About a 
year ago, I began discussions with HUD to try to remedy some of 
the problems I was familiar with in regards to brownfields, 
specifically the ability of communities to obtain capital 
needed to develop these sites. I was pleased to learn that 
HUD's Section 108 Loan Grant program has been trying to address 
this issue for over 25 years. But I believe that in its current 
form, 108 Loan Guarantee programs for the Brownfield Economic 
Development Initiative--or BEDI--grants, are not flexible 
enough. This finding is echoed by Secretary Martinez' budget 
which proposes delinking these two programs.
    In addition to delinking the BEDI grants from the Section 
108 Loan Guarantee program, H.R. 2941 authorizes, for the first 
time, the BEDI program and creates a pilot program for the 
national redevelopment of brownfields. Moreover, this bill 
clarifies that CDBG funds can be used for brownfields 
redevelopment and it's not an attempt to reduce or to restrict 
CDBG funding in any way.
    By making HUD's programs more flexible and thereby 
accessible to more communities, brownfields redevelopment will 
become a more attractive option for communities of all sizes. 
Again, I'd like to thank Chairwoman Roukema for her support and 
co-sponsorship on this, as well as Congresswoman Maloney. I'm 
looking forward to hearing the views of today's panel and I 
hope we'll basically be able to resolve some of the issues that 
local agencies deal with, and I'm delighted to hear that Mr. 
Frank is not grouchy today. I've never seen him that way 
before. But thank you for calling this hearing, Madam 
Chairwoman.
    Chairwoman Roukema. All right, thank you.
    Mr. Tiberi. No? All right.
    Congresswoman Maloney.
    Mrs. Maloney. Thank you very much, Chairwoman Roukema and 
also Ranking Member Barney Frank. I want to certainly welcome 
from the great State of New York, the Honorable Bernardi, 
Assistant Secretary and compliment him on the fine work that he 
did in Syracuse. I know you're very familiar with this program. 
You've had some successes in Syracuse.
    I also thank my colleague, Gary Miller from California, for 
working so hard on this for a very long time. I want to 
emphasize that this work has been shared by many Members in 
Congress. It has been very much a bipartisan effort. On the 
House side, Jack Quinn, Marty Meehan, James McGovern and John 
McHugh have introduced H.R. 2064, which also addresses the 
decoupling issue, and on the Senate side, Senators Levin and 
Jeffords have introduced S.1078 with a similar objective. And 
the support for this legislation is significant, because it is 
needed and it is bipartisan. As the Chairwoman pointed out, we 
have over 500,000 brownfield sites in our country, it is a drag 
on our economic development, and Congress really needs to 
support and seek creative approaches that match the large 
number of needs with the financing to redevelop contaminated 
sites.
    Obviously, one of the most critical obstacles in cleaning 
up brownfields is funding and the financial resources that are 
needed for a large number of potential jobs. This bill 
allocates $25 million, and also will allow working with the 
$200 million revolving loan.
    The BEDI initiative has been successfully funded since 
1998, and I support the flexibility of funding and the 
streamlining, which is in this legislation, which will make it 
easier to access. At the same time, there are many existing 
BEDI success stories and Assistant Secretary Bernardi can 
certainly tell you about the success in Syracuse where New York 
State received over $800,000 in BEDI funds and a $2.19 million 
Section 108 loan guarantee that are being used, as we speak, at 
the Crossroads project by the City of Syracuse to create 200 
new jobs for low- and moderate-income workers. And as this 
legislation moves forward, I hope we can meet the dual goals of 
streamlining the funding and the approval process and making 
these funds available quickly to the needy communities such as 
the Syracuse project.
    I welcome all efforts to review HUD brownfields activity 
and all efforts to increase the number and effectiveness of 
projects that the Department funds. I want to note that this is 
for State and local entities, it is not for private developers 
and our State and local entities desperately need this help. 
Even the City of New York has a number of brownfields areas 
that are just really fallow and sitting there not serving or 
helping anyone. And with this program, hopefully we can build a 
community center or a park or something that people can use.
    I thank everyone for their efforts on it. I look forward to 
working with the Minority staff and the Majority staff as we 
move forward to a mark-up, and thank you very much, 
particularly Congressman Gary Miller.
    Chairwoman Roukema. I thank the Congresswoman. We are going 
to be having a vote, as you can tell, or maybe you don't know. 
Those lights mean that we're having a vote on the floor, so if 
the panelists will excuse us, we'll go to vote on the floor and 
I understand that more Members are expected to return right 
after the vote, and we will begin immediately following this 
vote.
    Thank you.
    [Recess.]
    Chairwoman Roukema. The hearing will come to order. I 
believe we will have to proceed. Oh, here, I was just going to 
announce that Mr. Frank was in a mark-up of the Judiciary 
Committee, and he's back here now, and I think with that, we 
can proceed and hopefully we will have a period of time without 
voting interruption to hear our panels today.
    I do want to welcome the Honorable Roy Bernardi, Assistant 
Secretary for Community Planning and Development at HUD. We 
appreciate your being here today, and certainly you bring 
extensive experience on this subject sa well as a whole range 
of subjects relating to housing needs in this country. So Mr. 
Bernardi, I welcome you and with that, I will hold it open for 
your statement. I will also inform you that any statement can 
be included in the record. By unanimous consent, your full 
statement will be included in the record and anything 
supplementary that you want to include, if you just mention it, 
it will be included in the record. Thank you and the microphone 
is yours.

  STATEMENT OF HON. ROY A. BERNARDI, ASSISTANT SECRETARY FOR 
COMMUNITY PLANNING AND DEVELOPMENT, U.S. DEPARTMENT OF HOUSING 
                     AND URBAN DEVELOPMENT

    Mr. Bernardi. Good morning, Chairwoman Roukema. I really 
appreciate the opportunity be here with Ranking Member Frank 
and the distinguished Members of the subcommittee.
    My name is Roy Bernardi. I am the Assistant Secretary for 
Community Planning and Development for the Department of 
Housing and Urban Development, and I have the responsibility 
for the management, the operation, and oversight of 
approximately $8 billion in Federal funds, most of which are 
distributed by formula to our communities for economic 
development and housing activities.
    As the former Mayor of Syracuse, New York, as Congresswoman 
Maloney mentioned, I was a recipient at one time of HUD funding 
and I can tell you all first hand that the programs are very, 
very important to the communities around the Nation.
    I'm pleased to appear before you to discuss a common 
interest, brownfields remediation and revitalization. 
Brownfields is a subject that has received a good deal of 
attention these last few years. And President Bush indicated 
clearly that brownfields revitalization is high on his domestic 
agenda. Given the shared goals of the Congress and the 
Administration, I think we have the makings of a good, solid 
partnership. That potential was demonstrated only a few weeks 
ago when President Bush signed the legislation that the 
Congress crafted and that being the Small Business Liability 
Relief and Brownfields Revitalization Act.
    The redevelopment of brownfields may be framed in two ways. 
One as an environmental cleanup issue and two as a community 
redevelopment issue. Framed as an environmental issue, the 
central concerns are an assessment, the cleanup, and potential 
liability and the principal players are environmental 
specialists and engineers. Framed as a community development 
issue, the central concern is the issue of creating a community 
asset and the principal players are economic development 
specialists and financiers.
    Experience has taught us that both approaches are relevant, 
especially when they are harnessed together. For a variety of 
reasons, coordinating remediation and redevelopment into an 
integrated approach does not always happen seamlessly. At the 
Federal level, HUD, the Environmental Protection Agency, the 
EPA, and the Economic Development Administration, the EDA, are 
the primary agencies that assist communities with addressing 
brownfields issues. Given the different funding mechanisms that 
exist within these agencies, their various regulatory 
responsibilities, their own internal priorities, their unique 
field structures, and certainly the well-established operating 
cultures within each agency, the coordination of HUD with EPA 
and with EDA is not always an easy task.
    As we move from the Federal to the State and local levels, 
the complexity of this obviously sometimes only increases. All 
over America today, big cities, small cities and medium cities 
are engaged in building cities on old industrial and 
manufacturing sites that were left soiled by our heavy 
industries of the early and mid-20th century. The General 
Accounting Office has estimated that 450,000 brownfields sites 
exist, the vast majority of which are located in urban areas.
    We at HUD, along with our colleagues from EPA and EDA and 
the other 20-plus Federal agencies involved in the interagency 
brownfields efforts, strive daily to achieve the maximum result 
at the minimum cost and in the shortest time.
    Secretary Martinez and I are committed that HUD will 
fulfill its mission as the principal vehicle for the 
redevelopment of these brownfields.
    Let me turn to H.R. 4921, the Brownfields Redevelopment 
Act. As we understand it, the purposes of this Act are to: 
first, provide more flexibility to communities; second, 
increase accessibility to funds; third, increase capacity to 
coordinate and collaborate. It does this by providing 
additional incentives for remediation and redevelopment and by 
delinking the Brownfield Economic Development Initiative grants 
from the Community Development Loan Guarantee program. Further, 
this bill clarifies that activities associated with brownfields 
redevelopment are eligible activities under the Community 
Development Block Grant program. Finally, it permits the 
Secretary to establish a pilot program, a common loan pool 
which may be securitized.
    We are interested in working with you on this, and other 
approaches to brownfield revitalization, that will enhance the 
well being of affected communities.
    A survey of over 200 cities by the U.S. Conference of 
Mayors estimated that brownfield redevelopment could add up to 
$2.7 billion in additional tax revenues and create 675,000 new 
jobs if these sites were returned to productive use. We, as an 
Administration, are committed to what I am calling the Three R 
approach; remediation plus redevelopment equals revitalization.
    Just as Governor Whitman has brought a new level of 
commitment to EPA, to address and resolve brownfield 
remediation, Secretary Martinez and I bring a renewed 
commitment to HUD's focus on redevelopment. Brownfields include 
real property with real or perceived contamination. Therefore 
significant remediation is not always necessary or required. As 
always, HUD's role as the catalyst and contributor is to 
leverage adequate private financial resources along with other 
public funds to enable redevelopment to take place. We are 
confident that our brownfields effort will, over the long term, 
provide for neighborhoods to attract better housing, and will 
lead to better quality living environments for moderate and low 
income residents.
    I'd like to tell you just a little bit about my experience 
as Mayor of the City of Syracuse. Back in 1989, we had a scrap 
yard on the northern section of our city. And that scrap yard 
was 75 acres. That was remediated and now what sits there is a 
1.5 million square foot shopping mall called the Carrousel 
Center accomplished by the Pyramid Company.
    Presently, just before I left in July to assume this 
position as Assistant Secretary for CPD at HUD, we were able to 
negotiate with this developer to reclaim the 60 acres that are 
adjacent to that site. And on those 60 acres were approximately 
75 oil tanks. It was known as ``oil city.'' If you fly around 
this country, as I know most of you do, as you go into an 
airport, usually you'll see the oil tanks right in the 
periphery of the city. Well, through eminent domain and through 
negotiation, these oil tanks were moved. That site was 
remediated and right now the plan is to construct another 3.5 
million square feet and call it Destiny USA, not just a 
shopping mall. And I bring this up because the first phase of 
that created thousands and thousands of jobs, permanent jobs, 
temporary construction jobs, tremendous sales tax income, and 
it really revitalized that area.
    And the tens of thousands of jobs, the property taxes that 
eventually are going to accrue from that project is going to 
enhance the City of Syracuse and the County of Onondaga. But it 
was a partnership. It was a partnership of the Federal 
Government, the State government. Syracuse is now an 
empowerment zone using tax incentives. That developer, you 
provide a business person with the opportunities to make money 
and make sure that that bottom line is going to obviously do 
what it needs to do for a business person to be successful, you 
can create the kind of atmosphere, the kind of remediation off 
those brownfield sites, the redevelopment of those brownfield 
sites so that everyone benefits, and the purpose here is to 
preserve the environment, take care of the environment, create 
economic activity, create jobs. And we at HUD play a small part 
in that, and the Bush Administration understands that there are 
opportunities to improve the revitalization process, to speed 
redevelopment while still achieving remediation of risks to 
human health and the environment. We can improve the 
administration of our brownfield efforts without sacrificing 
either redevelopment or remediation. We really, really believe 
that and the cooperation between EPA and HUD in the short 6 or 
7 months that I've been there is improving, and I feel very 
good about that. So Madam Chairwoman and Members of the 
subcommittee, we thank you for your leadership and as we look 
at this bill, and Congressman Miller, thank you for all of your 
efforts in putting this together. Congressman Frank, you talked 
about limitations. Well, we want to take those limitations 
away. We want more people to have access to the limited amount 
of funding that we have for brownfields. Thank you.
    [The prepared statement of Hon. Roy A. Bernardi can be 
found on page 49 in the appendix.]
    Chairwoman Roukema. I thank you, Secretary Bernardi. Let 
me, and I do commend you for outlining very nicely the positive 
and the comprehensive approach that is being take here. It's 
not only the environment, it's jobs and housing, and I think 
you made an excellent case.
    But I do have to go back to the question I introduced in my 
opening statement, and you referenced the Pilot Program for 
National Redevelopment of Brownfields. Why does that have to be 
supplementary? Cannot that be integrated? I don't really 
understand the reason for the separation and why it's not the 
common pool, or is it a common pool?
    Mr. Bernardi. Well, the pilot program for the 
redevelopment, as I understand it, it's a common loan pool for 
economic development and it's going to be geared toward a 
common underwriting approach. It's going to serve as a credit 
enhancement for private loans.
    Chairwoman Roukema. Why should that be separated, however, 
from the overall BEDI program, the Relief from Brownfields 
Revitalization Act? I don't quite understand the reason for the 
separation.
    Mr. Bernardi. Well, we're planning to separate the 108 from 
the BEDI obviously to have communities that can't participate 
in the process, non-entitlement communities, for example, that 
receive their CDBG dollars from the State. We want more 
participation, but at the same time this is a pilot program 
that I believe our staff is working in conjunction with your 
staffs to try to put it together so that we an create another 
avenue for communities to be able to participate in brownfield 
remediation.
    Chairwoman Roukema. Well, I'm going to have to submit a 
question in writing to you for more explicit explanation of 
this, and I don't believe it's going to be contradictory to the 
total--it won't be contradictory to the total bill and we will 
be able to deal with it, but I just don't understand the 
technicality.
    Mr. Miller. Madam Chairwoman.
    Chairwoman Roukema. I yield to the Congressman.
    Mr. Miller. The difference is currently in order to get a 
BEDI grant, you have to apply for the loan and it's guaranteed 
through CDBG fund repayment, which virtually blocks the use of 
CDBG funds locally. This takes and sets up a new pool and says 
you can apply for a BEDI grant without even getting a loan, and 
it doesn't impact your CDBG funds, or if you want to get the 
loan through the guarantee program and the CDBG fund, there's 
no locking in the CDBG funds for the guarantee so you can 
virtually go get a loan for the redevelopment of a brownfield 
site plus a grant, and yet have your CDBG funds be used for 
purposes in the community that they're currently used for.
    Chairwoman Roukema. I guess what confuses me is the 
terminology ``pilot program.''
    Mr. Miller. Because it's a limited program. And the $25 
million can be used----
    Chairwoman Roukema. By time? By time?
    Mr. Miller. Well, no. It can be increased next year by 
appropriations if they want to. The bill allows each year they 
can increase the program if they want to, but this year it 
starts up with the $25 million and that's leveraged funds which 
could equate $100 million worth of loans or $200 million worth 
of loans.
    Chairwoman Roukema. We won't take up more time on this, but 
I guess my definition of pilot program is different from what 
is being defined in this bill. But it's not going to be 
contradictory to our mutual goals here.
    Mr. Bernardi. As Congressman Miller indicated, there are 
communities that were just averse to pledging their CDBG 
dollars to be involved in the BEDI program, so we wanted to 
take that away by delinking it with 108. Now the pilot program 
for the common loan pool is not a substitute for that, but I 
think it gives additional impetus, it gives additional 
opportunities for communities, but I'll be more than happy to 
have our people look at it and get back to you in detail.
    Chairwoman Roukema. I would appreciate that. Thank you very 
much.
    Mrs. Jones. Thank you. First of all, good morning. Glad to 
have you here before the subcommittee. I hail from the City of 
Cleveland where there are a lot of issues with regard to 
brownfields. We have, in fact, right now a juvenile justice 
center being built on an old facility that was like a Carling's 
Brewery facility and the possibility of a job corps facility 
being built on an old facility that used to be a Ford Motor 
Company place. So the issue of brownfields is prevalent, 
particularly in cities like the City of Cleveland and other 
industrial areas where we still have a number of former urban 
filling stations, as they used to call them. They now call them 
gas stations. I'm laughing, because the other day I was walking 
with my dad, who's 80 years old, and he said ``filling 
station.'' I said to myself, ``Boy, I haven't heard that term 
in a long time.''
    So there are a lot of places and I am very much supportive 
of options or opportunities for communities to use dollars for 
brownfields in innovative ways, particularly as we begin to 
talk about housing. My question would be directed to assuring, 
and this is the issue that continues to come up in my 
community, why are we building juvenile detention facilities? 
Why are we building job corps facilities on locations that were 
brownfields? What do you believe that we can do to assure the 
communities across the board that the locations that we clean 
up are going to be redeveloped for other purposes and are going 
to be cleaned up for other purposes. Surely clean to the extent 
that children would not be put in jeopardy, people moving into 
housing would not be put in jeopardy. How do we get that 
message out to them?
    Mr. Bernardi. In the BEDI application, the Brownfield 
Economic Development Initiative Application, there is a grading 
system to make sure that the environmental work is done so that 
we don't have a property, once the money has been expended, 
that will cause harm to children. It can be residential, it can 
be a playground, it can be obviously the community puts forth 
in the application what they want to use the property for once 
the remediation takes place. But in the application process, 
there's a scoring system. That scoring system indicates that we 
need to be assured that the remediation will take place so it 
won't have a harmful effect on its reuse.
    Mrs. Jones. What else do I want to ask? I'm usually not 
speechless. The question just came to me so quickly, I think it 
was going to ride on top of some other questions. One of the 
suggestions--I also serve on the Small Business Committee, 
Subcommittee On Empowerment--a suggestion that the Small 
Business administrator and HUD administrator begin to have a 
discussion about what can we do collectively to continue to 
build communities by encouraging small business and encouraging 
housing to happen in the same development. Do you have any 
ideas in your capacity that you serve whether we might be able 
to do that? Because in my opinion, a community is more than a 
house or housing. A community is having the ability to have 
businesses operating right there with that housing.
    Mr. Bernardi. As I indicated earlier, I was Mayor of 
Syracuse, New York and like most northeastern cities and other 
cities around the country in the 1960s and 1970s and 1980s, 
everyone pushed out into the suburbs and left the city behind 
with a significant number of brownfields sites and 
neighborhoods that were in blight. My belief and Secretary 
Martinez I know feels very strongly about this, is we need to 
have more people owning their own homes. Right now, there's 
67.7 percentage of homeowners overall in this country. When we 
look at minorities, we look at African Americans, I believe 
it's about 49 percent. We look at Hispanics, it's about 48 
percent. And home ownership in the center cities is only 52 
percent. Initiatives such as this, the Brownfield Economic 
Development Initiative, our HOME program, our CDBG program, 
what we strive to do is not only to build housing, to refurbish 
housing to provide rental assistance, but at the same time the 
UD, Urban Development, has to take place.
    To me, it's a very simple process. You need economic 
development--you need jobs so that people can buy homes, people 
can live in a neighborhood, people can have a good quality of 
life and send their children to school, so it's a combined 
effort.
    What I think we're doing with EPA right now, the 
opportunity to work together where they will do the 
remediation, we will do the redevelopment. I'm very pleased, as 
I know all of you are, that the budget at EPA has been doubled 
to $200 million, up to a maximum of $250 million. This is the 
first time I believe that EPA is actually doing direct grants 
for remediation. There's an awful lot of unused property in a 
lot of our neighborhoods in our central cities that programs, 
such as this, are going to help. Not just for businesses, 
that's the primary part of it, obviously. We want to redevelop 
and we want to create jobs, but at the same time on the 
periphery of those businesses, we need to continue parallel 
roads to build our neighborhoods so people who are in those 
neighborhoods can work in those businesses.
    Mrs. Jones. My time is up. I can't ask any more questions, 
but I look forward to having the opportunity to work with you 
and your administration on this issue, particularly in the City 
of Cleveland. Thank you, Madam Chairwoman.
    Mr. Bernardi. My pleasure.
    Chairwoman Roukema. I thank you.
    And now, Congressman Miller.
    Mr. Miller. Thank you, Madam Chairwoman.
    It's good to have you here today. When I started meeting 
with the Secretary the first part of last year, right after he 
was sworn in, we had an agreement on the issue of redevelopment 
and housing issues and specifically brownfields and looking for 
opportunities to be able to provide local assistance. I know a 
lot of local cities have a lot of political pressure placed on 
them, especially when it comes to CDBG funds, because there are 
so many groups pulling at them for those dollars.
    So under the current program, for them to go out and really 
use funds for redevelopment purposes, many cities were unable 
to do that because of the obligation of historically giving 
those funds to certain groups within the community. That's 
where I became interested in this legislation. We looked for 
areas and we thought how can we take and provide opportunities 
to revitalize communities, eliminate brownfields and put them 
to purposes, whether they be parks or community centers or 
commercial use or residential use, and yet free up the 
opportunity for cities that still have CDBG funds to use with 
those local groups that they've historically dealt with. I 
think this bill does a good job at that.
    The Chairwoman had a concern because of the term ``pilot 
program'' and I understand that. But the way the bill is 
drafted, it says $25 million this year, but the appropriators 
can, if it's a successful program, can increase that to $50 
million or $100 million or $200 million if they want to as the 
years progress. So it's a program that I believe will justify 
itself, and if it does justify that it's benefited the 
communities, which I believe it will, then the appropriators 
have the opportunity to increase the program and help HUD in 
working with that. And the site of a loan guarantee being able 
to receive a BEDI grant, if you can do that now before these 
projects based on this bill, without having to borrow money, 
which you couldn't do before, plus if you want to go out and 
get a loan, and then get a BEDI grant. At the same time, these 
funds can be used to leverage, if the Secretary chooses, $12.5 
million. That might leverage $100 million worth of loans or 
$200 million, depending on the amount they're able to leverage.
    This is a program that, although it's considered a pilot 
program, I think can be a very beneficial program nationally 
and can really produce great benefit, and I applaud you for 
being here today. I have no questions. I've worked with the 
Secretary and your staff. You have just been excellent trying 
to resolve the issues and resolve the concerns. I've worked 
with the Democrat staff also to try to deal with some of the 
issues. A big concern that the staff on the Democrat side has 
with the way CDBG funds are being locked up. That's why we made 
sure, through the bill, that it said no, this is really going 
to enhance current programs. If you want to go get a loan under 
the current program, you still can using 108 funds, and then a 
loan under BEDI, a grant under BEDI, or you can take and go 
this direction, or you can get a loan guarantee, you can get a 
BEDI grant and yet not involve your CDBG funds in any way. So I 
want to thank you for working with us, working with my staff 
and the Ranking Member's staff here and the Chairwoman's staff. 
They've been just excellent. I applaud you for your efforts in 
this area.
    Mr. Bernardi. Thank you, Congressman. I know of what you 
speak when you talk about the CDBG grants. In many communities, 
before they get there, they're already spent. And the groups 
that vie for that money it becomes very difficult, but there's 
also the old adage that success breeds more success. If we go 
with this program, and we've enjoyed working with your staff 
putting it together, CDBG dollars can be used for brownfield 
redevelopment. Some communities do it obviously more so than 
others. As I mentioned earlier, we do this redevelopment. We 
give businesses the opportunity to expand or to locate into an 
area where all the infrastructure is already there and has been 
there for years. We create jobs, then they're creating jobs for 
the people that need them the most.
    Mr. Miller. Your goal has tried to create accessibility and 
create an environment where there can be more funds in the 
market to solve this problem and I believe this bill goes a 
long way to doing that. Thank you for your help.
    Chairwoman Roukema. Thank you.
    Now I want to recognize Congresswoman Maloney and 
acknowledge the fact that she is an original co-sponsor of this 
bill. I thank her for her leadership.
    Mrs. Maloney. Thank you, Madam Chairperson.
    Do you have a listing now at HUD of brownfields sites. In 
the past, there's always been a reluctance in New York to 
designate anything brownfields, because of the problems or 
challenges that come out of that. Do you have a listing now?
    Mr. Bernardi. EPA would have a listing. I'm sure we have an 
identification of them, but they have a listing that I think 
would be more exact.
    Mrs. Maloney. What is the criteria for brownfields?
    Mr. Bernardi. Real or perceived contamination. That's a 
good phrase, real or perceived. Perceived sometimes is you look 
at a property and perhaps it's unkempt and it just looks bad 
and you feel there's contamination there, but I think as you go 
through the phases, Phase I tells you whether there's 
contamination, and then that requires a Phase II.
    Mrs. Maloney. Today we will hear testimony on the second 
panel about how the delinking of the Section 108 guarantee and 
the BEDI funds will allow more access. It certainly is my 
desire to get as much money as quickly as possible to the 
communities that need it. The bill also states that the 
Secretary shall establish criteria for awarding grants. Could 
you share with us what those criteria will be?
    Mr. Bernardi. Well, I think we have it here chapter and 
verse.
    Mrs. Maloney. Will this be done by a panel or just by the 
Secretary? I would assume you're going to have many more 
requests for the $25 million in the pilot program than the 
funding will be available.
    Mr. Bernardi. As I mentioned earlier, the application 
process is competitive, and there's points for different 
categories and it's quite detailed. There's a program overview, 
eligible activities, national objectives.
    Mrs. Roukema. Will the gentlelady yield? That's an 
excellent question, and I'd just like to refer back to the fact 
that the record is open and I think this is the kind of 
information that HUD, that you, Mr. Secretary, should be 
submitting in writing for the record, because it's an excellent 
question.
    Mrs. Maloney. I just know that the prior criteria was need 
soundness of approach leverage capacity of the administering 
organization and cooperation of the proposed project with 
community development objectives.
    I wonder if the criteria is going to change or will it be 
the same criteria.
    Mr. Bernardi. Not appreciably. The Secretary will make the 
final decision, but I'll get everything back to you in this 
booklet that tells you what the procedure is now and any 
perceived changes.
    Mrs. Maloney. In addition to the legislation we're 
considering today, what other proposals is the Bush 
Administration considering that would increase available 
funding, actual money, to clean up brownfields through HUD?
    Mr. Bernardi. Our budget for 2003 is $25 million for the 
Brownfield Economic Development Initiative.
    Mrs. Maloney. But it will also be able to tap into the 
Gilmore initiative of the $250 million in loans, is that 
correct?
    Mr. Bernardi. That's EPA, as I understand it.
    Mrs. Maloney. But this could work with that program and 
leverage more money for this initiative?
    Mr. Bernardi. Absolutely.
    Mrs. Maloney. That's very good. Do you see any problem in 
the de-linking?
    Mr. Bernardi. Not at all. It would still allow a community 
the opportunity to use a 108 if they so choose, but by 
delinking it, it's going to give other communities, smaller 
communities if you will, the opportunity to participate in the 
competition.
    Mrs. Maloney. Syracuse is a small community and you got 
through the de-linking. Why is it such a problem to be linked 
with a Section 108?
    Mr. Bernardi. There are smaller communities in New York 
State, for example, Congresswoman, that the State basically 
they're not entitlement communities so they have to depend on 
the State to pledge their CDBG dollars, and in some instances, 
many instances, the State doesn't want to do that for the 
community, so it gives the community a little more independence 
and flexibility, smaller communities. In Syracuse, we use the 
108s.
    Mrs. Maloney. Then it will release the CDBG, because then 
you don't have to use the CDBG?
    Mr. Bernardi. That's right.
    Mrs. Maloney. That also is a benefit. Well, I find it 
exciting. I think it's an important program and I'm glad you're 
in the position you are bringing the experience that you bring 
from Syracuse successfully implementing prior programs in this 
area. Thank you very much.
    Mr. Bernardi. Thank you.
    Chairwoman Roukema. Thank you.
    Congresswoman Kelly.
    Mrs. Kelly. Thank you, Madam Chairwoman.
    We welcome you, and we're delighted to have you here. Mr. 
Bernardi, I am just very excited about what you did in 
Syracuse. I've seen it. It works. And the beautiful thing is it 
puts back onto the tax rolls and thereby relieves the taxes, a 
certain tax burden from the local citizens. When you do the 
kind of thing that you do in Syracuse with brownfields, you've 
moved them from useless areas of the community into something 
that's very useful. People enjoy going there.
    A similar thing actually happened in my home town of 
Katonah, New York. We had oil tanks in the middle of the town. 
It became a brownfield and we moved the oil tank. I was very 
interested in your saying you moved oil tanks and redeveloped 
the area into a shopping mall. In this little village of 
Katonah, New York, we had oil tanks and we now have a three 
story attractive group of small businesses in there that range 
everywhere from a toy store to a podiatrist. All of those 
people are bringing individuals into our community. It's really 
an excellent idea. I'm a co-sponsor of the bill, and I really 
do feel very strongly that we need to make progress. I'm 
delighted that we have, if we can get a piece of it out for a 
demonstration project, I think it's really important.
    I do think though you've pointed something very important 
out. That is that you've got to have State and local as well as 
the Federal Government working together to make anything 
happen. I'm very excited about the possibility also that we're 
actually going to put money into the communities instead of 
into one more study of something. It's wonderful to think that 
there will actually be money put into an applied process that 
will actually bring communities back in the same way that 
happened in the community that you represented and my home 
town.
    So I welcome you here. I thank you for your testimony. 
Thank you, Madam Chairman. I turn back the balance of my time.
    Mr. Bernardi. Thank you.
    Chairwoman Roukema. Thank you.
    Mr. Bernardi, is there anything you would like to say in 
summary? I believe we've concluded the questioning and are 
ready for the second panel, but I don't want to cut you off if 
there's some follow-up that you would like?
    Mr. Bernardi. Just to say that it's a pleasure to be here 
representing the Bush Administration and Secretary Martinez. Be 
assured that we at HUD, all of us, working together with all of 
your staffs, whatever builds up that we forge, we'll do it 
together we'll do it in a combined way, and I welcome the 
opportunity and I know the other speakers are going to provide 
information and thoughts and ideas that we'll perhaps 
incorporate into the process, so the process, as I understand 
it, is to come out with the best possible bill that will enable 
us to do what we need to do to help the poor people in our 
country. I thank you.
    Chairwoman Roukema. And I might repeat the inference or the 
reference that I had in my opening statement that the Members, 
yourself as well as Members, will have 30 days in which to 
submit written questions. You will have that time period in 
which to submit further information that we've requested and/or 
anything additionally that you think is appropriate for the 
record, and it will be an open record for the next 30 days. 
Thank you again. Will the next panel take their positions at 
the table.
    I welcome all of you panelists here today. I will 
acknowledge you by name as you testify, but I would like to 
make the observation that all of you have extensive experience 
in the field. You're not speaking hypothetically, you're 
speaking from ground zero, so to speak. We do appreciate having 
the benefit of your experience and long history of experience 
at many different levels, both the local, State and regional, 
as well as the national level.
    That having been said, I recognize first the Honorable 
Lydia Reid, Mayor of Mansfield, Ohio. And as we've all heard 
that region has extensive experience in this area. We thank you 
for your leadership and your presence here today. Mayor Reid. I 
would simply ask you in the interest of time that you try to 
limit your statements to 5 minutes. I'll use some discretion 
here, but be aware of the time limitations. Thank you.

    STATEMENT OF HON. LYDIA J. REID, MAYOR, MANSFIELD, OHIO

    Ms. Reid. Thank you, Congresswoman. Again I appreciate the 
opportunity to talk about House Bill 2941. I also appreciate 
Congressman Miller's initiating the bill. It is long awaited 
and we very much appreciate it. I'd also like to say hello to 
my friend, Stephanie Tubbs Jones from Cleveland. Nice to see 
you.
    Mansfield, Ohio is the 19th largest city in the State of 
Ohio. We're the county seat. We have a population of 50,793 
people. We've gone through struggling times. We have a labor 
surplus area with a poverty rate of 17.8. Our unemployment rate 
is 9 percent. Our median household income is $22,591; 48.2 
percent of our population is low-to-moderate income.
    Over the years, as any typical Rust Belt city, we have lost 
a lot of industry. As they closed up, a third generation did 
not continue on in the process that their parents had 
initiated. Our downtown was deteriorating. In 1989, we all 
pulled together. Our downtown was absolutely gutted. We took 
everybody, and this was Government, it was community, and 
private developers, and as a result, we have a showcase 
downtown called the Carousel District. We have the first hand-
carved carousel in the United States since the 1930s. We now 
have over a million visitors a year, and we won the National 
Mainstreet Award last year. That's just a little history of how 
we have been able to do some things with our downtown area to 
further emphasize the brownfields, which is what we're here 
about today.
    The City of Mansfield recently was awarded a grant for a 
pilot project for a brownfield redevelopment master plan called 
the PR Project Path Revitalization, and the key components of 
that are identification of potential brownfield sites, 
assessment of brownfield sites, remediation of brownfield 
sites, redevelopment and prevention.
    The City's PR project is a mixed redevelopment linear zone 
with new commercial and industrial properties. The city also 
includes large, under-utilized vacant parcels of land where 
economic development is low or absent.
    In this corridor, there's numerous abandoned and obsolete 
buildings of all sizes and shapes that are just sitting there 
waiting for the City to come and try to do something with them. 
They no longer meet the operating efficiencies demanded by 
modern manufacturing processes. The numerous brownfield sites 
have depressed our inner city core. The property values are 
going down. Community values in those adjoining neighborhoods 
are down. Depressed real estate values, people don't want to 
invest where everything does not look like it will ever rise 
again.
    What we did, we initiated a multifaceted undertaking. We 
said, OK, we've got this site. We communicated with local and 
State regulatory agencies that were our public partners. We 
continued dialogue with them to establish a foundation for the 
Brownfield Initiative. Then we went to the industrial 
facilities. We said we would secure the services of the 
contractor, which we have been using McCabe Engineering as our 
consultant who has been excellent that had worked the 
industrial arena, because you need consultants that know what 
they're doing when you go into these projects.
    The private partner offered first hand knowledge of the 
working complications, then the current and past owners were 
contacted and we said to them, you have to be a part of this, 
this was your doing, it was on your watch that this occurred. 
You will have to come very apprehensively into the process to 
contribute dollars to help us put this plan together. Obviously 
we were faced with how are we going to fund the entire issue 
once we had an estimate of what the cost was. And subsequently 
we secured required funds. We did not go to 108 dollars for a 
very good reason. We didn't want to tie up our precious CDBG 
dollars into 108 commitments, because as all of you well know, 
when you borrow 108 dollars, you've got to take that chunk out 
of your CDBG money and say we pledge this and then if we 
develop the site and we don't get our money back in the 
timeframe that we have to pay the 108 back, we are then stuck 
with taking that out, the precious dollars that we used to 
revitalize homes, to provide housing for the elderly, for 
demolition, for all the other things you do with CDBG money.
    So what we did, the first big project we did, we got a 
pilot grant of $200,000, we got a revolving cleanup, revolving 
loan fund of $1 million, which is a grant from the U.S. EPA. We 
went to the Ohio Department of Development Urban and Rural 
Initiatives, and we got another grant, $750,000, and then we 
went to the potential responsible parties and got another 
$570,000. So that project was $2,820,000. We were able to do 
this without getting into our 108 dollars because we found 
other ways, with the help of the State, and our consultant and 
the EPA in order to do those things.
    Now the challenges are obvious and I'd like to bring up a 
little bit about----
    Chairwoman Roukema. Mayor Reid, can you summarize. I'm 
going to extend your time period, but your time is up.
    Ms. Reid. Let me just conclude, Congresswoman. The city is 
fortunate to have had success with our brownfields program. In 
an effort to spur development, the city has taken ownership of 
the brownfield sites, became the banker, secured the funds, 
secured the loans to assess and remediate the sites. Our 
brownfields cost $50,000 to $100,000 an acre, but greenfields 
are $10,000 to $20,000, so in summary, we need to be able to 
have more accessibility to funds that are like Section 108 
dollars that we don't have to worry about whether or not we're 
going to pay back, because the city doesn't have enough money 
to do it all.
    In summary, we totally support the bill and look forward to 
its passage. Thank you, Congresswoman.
    [The prepared statement of Hon. Lydia J. Reid can be found 
on page 68 in the appendix.]
    Chairwoman Roukema. Mayor, may I just ask one tiny 
question? It may not be so tiny. But when you made those 
decisions, were you and the counsel free to make those 
decisions at your own pace? You weren't limited either by State 
or Federal legislation? You had that latitude?
    Ms. Reid. We did have the latitude. We took the initiative. 
We looked at our Ohio Brass site, for example, which was really 
the critical one, coming right into town, terrible looking 
sight, and we took the initiative to go out to the people that 
owned the buildings before. We took the initiative. It was our 
decision. EPA was not hammering us over the head, if you will.
    Chairwoman Roukema. And your local zoning ordinances or 
State were not restrictive?
    Ms. Reid. They were not. We worked very closely with all of 
them.
    Chairwoman Roukema. Thank you.
    The second panelist is the Honorable Mayor of New Bedford, 
Massachusetts, Frederick M. Kalisz. Mayor Kalisz from New 
Bedford, Massachusetts.

STATEMENT OF HON. FREDERICK M. KALISZ, JR., MAYOR, NEW BEDFORD, 
                         MASSACHUSETTS

    Mr. Kalisz. Thank you very much, Madam Chairperson. We 
certainly appreciate the opportunity to address you and the 
Members of the subcommittee today.
    New Bedford is a city of 95,000 people. We are also this 
year recognized as a brownfields showcase community among the 
Federal agencies of the United States Government. The 
brownfields program has spearheaded an economic development 
program that it has proved that it can provide jobs and 
business opportunities. Today I hope to provide in this brief 
period a perspective of local government to you in your 
deliberations process.
    My purpose is twofold to describe some of the extensive 
experiences and successes as well as second to comment 
specifically on H.R. 2941 and how we might benefit in the 
future municipalities, such as mine.
    As mayor, I took over just a little over 4 years ago. We 
had realized a job loss in our community of some 11,000 jobs, 
mostly from the industrial and manufacturing complex that 
Congressman Frank had made reference to a little bit earlier. 
Unemployment was high, real estate values were dropping, and 
tax revenues were in a free fall. We reversed that trend to a 
degree. Our unemployment rate went from 15.6 percent down to a 
low of 5.3. Assessed valuations have begun to rise in the 
community, and the fishing industry, which has been a mainstay 
of our economy is once again beginning to thrive.
    The Port of New Bedford is the largest-value port of 
fishing anywhere in the United States. Last year, 3,600 jobs 
were maintained and over $700 million in seafood-related sales 
were earned. We've created a tourism industry at the same time, 
and this year some 30 cruise ships will arrive in the port that 
Melville once referred to in Moby Dick as the ``most fairest 
place of all of New England.''
    We have a national whaling museum, a national park and 
we're developing a marine science center that will truly 
enhance and recognize the God-given resources that we have.
    Our many environmental challenges over the decades have 
spawned new environmental management opportunities and 
management industries. The brownfields program has been a major 
help in reversing our economic decline and beginning our 
economic and cultural revitalization. Our job training program, 
funded by one of the early brownfields programs, has allowed 
individuals not only to learn new job trades in hazardous waste 
management, but has provided them with meaningful compensation 
opportunities, enhanced benefits, and in many cases the 
opportunity to continue their formal education past the post-
secondary level.
    The brownfields pilot program funded a comprehensive 
evaluation program of all of our brownfields sites, permitting 
us to evaluate and formulate a plan for the future. Our 
targeted site assessment allowed us to take funds and put them 
into a waterfront development over land that had earlier been 
made reference to by the Secretary, was unappealing and deemed 
to be a brownfield just because of the lack of understanding of 
what could possibly happen.
    As I made reference to earlier, we've been named recently a 
Brownfield Showcase Community. That allows for Federal 
representation in our community to manage potentially dozens of 
projects within the City of New Bedford and allow for the 
coordinations of agencies' efforts to ensure that a fast 
tracking takes place, and the re-utilization and use of 
properties to become economically viable. We need the 
brownfields program. We are identifying and remediating 
hazardous situations, removing the cloud of concern and 
liability which has been inhibiting new development for 
decades.
    I enthusiastically support H.R. 2941. We believe that the 
BEDI grants at the same time should be decoupled from the 
Section 108s. I'd like to explain a little bit about that with 
regard to the funding situation. New Bedford's experience has 
demonstrated that small public investment in cleaning up and 
redeveloping abandoned and under used properties yield large 
returns of tax revenues and employment. The brownfields 
programs spell hope to communities such as ours. I respectfully 
suggest to you that you not diminish the BEDI program by 
deducting the BEDI funds from the Community Development Block 
Grant program. And I'd specifically like to talk about the 
flexibility of what is so important and I understand my time is 
drawing to an end.
    We have been able to take a program, such as an oceanarium 
in the City of New Bedford, a $100 million investment, and the 
city has taken the lead. We've been able to get a $2 million 
BEDI on top of a $3 million section 108 which has then 
stimulated State, local and private investment to the tune of 
some $80 million. The shovel will be going in the ground this 
year, this July, to what will be an extensive project. That's 
where it works when it's coupled together. But where there are 
non-revenue generating projects, such as the reenhancement of 
parks in urban mill settings where housing has been the 
predominant mainstay of what has been left, the mills have been 
taken away. You don't have the revenue generating capacity. 
Park development that could benefit from a BEDI grant will then 
stimulate the private sector to look at an environment that has 
been enhanced, and allow for them economic development at that 
point.
    My final comment has to do, just very simply, with the fact 
that there are other programs in ports such as ours with 
homeland security issues and other issues that cannot generate 
revenue of and by themselves. But the value of the BEDI a 
brownfield economic initiative program can help to stimulate 
that type of economy. The loan programs that were spoken of by 
HUD I believe as well are a good move into the future. HUD has 
demonstrated themselves in a good loan management program with 
municipalities. EPA has done a wonderful job with grant 
administration. HUD has been the expert with the loan programs. 
And it rightfully belongs with an agency that has a track 
record of these types of successes.
    I thank you for the opportunity to have been able to 
address you and look to you for support for the future sa this 
legislation advances.
    [The prepared statement of Hon. Frederick M. Kalisz Jr. can 
be found on page 55 in the appendix.]
    Chairwoman Roukema. Thank you very much. You brought your 
practical experience to the fore here.
    Mr. Bartsch, Director of Brownfield Financing Studies, the 
Northeast-Midwest Institute. You're speaking for a large 
component of those of us intensely interested in this subject.

STATEMENT OF CHARLES BARTSCH, DIRECTOR OF BROWNFIELD FINANCING 
              STUDIES, NORTHEAST-MIDWEST INSTITUTE

    Madam Chairwoman and Members of the Housing and Community 
Opportunity Subcommittee, I appreciate the opportunity to 
testify today on this proposal. It reflects the next wave of 
congressional interest and activity in the brownfields arena. 
Since 1991, the Institute has analyzed activities in nearly 100 
jurisdictions of all sizes across the country, and as you 
pointed out, we work very closely with the bipartisan 
Northeast-Midwest Congressional Coalition to examine the 
relationship between environmental contamination and economic 
development. A key part of that effort has been identifying 
ways in which existing Federal financing programs could be more 
creatively and usefully linked with the resource needs of 
brownfield sites.
    There's a clear and critical role for agencies such as HUD 
to play to take the next step to help fill the brownfields 
capital gap and improve the market conditions for these 
properties. The BEDI program was put in place to respond to 
this redevelopment challenge, and H.R. 2941 would make 
important changes to enhance this effort. For those communities 
that are able to tap the existing program, BEDI is one of the 
most flexible Federal resources available for brownfield 
purposes.
    Unlike EPA's grant programs, BEDI funds can be used for the 
full range of redevelopment activities, everything from cleanup 
to construction. BEDI funds can address petroleum and other 
types of contaminants that are still problematic for EPA, even 
with the new brownfields law. And my prepared statement gives 
examples of how BEDI has brought significant benefits to cities 
like Camden and Syracuse and Lorraine, Ohio. There's no 
question that BEDI has been a vital component of brownfield 
revitalization strategies in those cities that have been able 
to access the program and its resources.
    Those successes notwithstanding, HUD has not seen the level 
of grant application activity that one would expect, given the 
tremendous need. And as is clear from today's hearing, the most 
critical issue, and the one that H.R. 2941 addresses, is the 
required linkage of BEDI to the HUD Section 108 loan guarantee 
programs.
    By decoupling these programs, H.R. 2941 would make a 
significant change to this program, with good potential 
benefits. Clearly, this decoupling is needed. As you know, BEDI 
grants can't be awarded unless communities also apply for and 
receive a companion Section 108 loan guarantee. In practice, 
this adds complexity and time demands to projects. These are 
key disincentives for small and mid-sized cities that just 
don't have the staff capacity to prepare and push dual 
applications, and it also discourages small projects, because 
the effort and cost of structuring and securing a Section 108 
loan guarantee reduces its usefulness. This linkage requirement 
has proven difficult for many entitlement cities and counties 
to meet, as we've heard from other witnesses. Even if they 
haven't reached their legal limit on 108, economic and 
political constraints effectively prohibit their use of this 
program, and this makes needed BEDI resources inaccessible.
    There are several reasons for this, and I just want to 
briefly touch on them. From a fiscal standpoint, bond rating 
agencies have viewed Section 108 loans as municipal debt, and 
this is a sensitive issue in many places. Some cities have debt 
caps, which are defined by statute or financial rules, and this 
helps to discourage the use of 108. And in other communities, 
as Mayor Reid has pointed out, using the 108 proceeds for local 
loan funds or infrastructure development forces cities to rely 
on CDBG as backstop to pay down their Section 108 debt, and a 
lot of cities just don't have the capacity to take on this kind 
of debt without jeopardizing their basic block grant 
activities.
    As we have heard, from a practical political standpoint in 
many cases, mayors and city councils find it impossible to 
pledge future CDBG grants as collateral for these projects, 
even though we know that HUD has an outstanding record of 
application review and underwriting.
    I want to focus on the issue of small cities, because they 
face insurmountable obstacles to accessing BEDI resources, 
again first and foremost, because of this required connection 
to Section 108. By law, they don't get their own entitlement 
grants. They can't offer anything to meet the 108 collateral 
pledge. And while in theory they can work through their States 
or urban counties, in practice, those entities are resistant or 
even hostile to these kinds of efforts.
    To date, only a handful of small cities have been able to 
make the Section 108 brownfield connection. This is even as the 
need for brownfield financing resources in smaller and mid-
sized cities grows. A couple of States, notably Connecticut and 
Washington, are trying to make an effort to work with their 
small cities, but I want to give you an example from one State, 
Massachusetts, which is really very typical of the national 
situation. Massachusetts has 370 incorporated non-entitlement 
towns. Many of these have brownfield sites, but none of them 
have ever gotten a Section 108 or a BEDI, so decoupling is 
really the critical issue that H.R. 2941 would address. It 
would open up the program to thousands of communities with 
significant brownfield reuse opportunities. I would urge the 
subcommittee, as this goes forward, and this comes into place, 
to really keep an eye on the changing demand for BEDI 
resources, because I really believe that a more flexible, more 
widely accessible BEDI program will intensify interest in this 
program.
    I have pointed out other benefits in my prepared statement. 
I know my time is running out. I just want to focus on one last 
point. H.R. 2941 specifically authorizes appropriations for 
BEDI. This is critical, because it will reiterate Congress's 
support for this key initiative. I would like to emphasize, as 
several Members have suggested, that the resources dedicated 
for BEDI should not be taken from the larger CDBG program. 
Since BEDI was first funded, it has been defined as a separate 
item in the budget and carried out in accordance with HUD's 
mission, and I think this approach is the right one to take. So 
to close I just want to again reiterate what Congresswoman 
Maloney said, the ideas put forward in H.R. 2941 are shared by 
many other Members of Congress. Representatives Quinn, Meehan, 
Mcovern, and McHugh have introduced H.R. 2064, which would also 
address the decoupling issue. On the Senate side, Senators 
Levin and Jeffords have introduced S. 1078 with a similar 
objective. This all shows that support for this kind of change 
to BEDI is bipartisan, it's significant, and I thank you for 
the time.
    [The prepared statement of Charles Bartsch can be found on 
page 44 in the appendix.]
    Chairwoman Roukema. Thank you.
    Now we have Mr. John Murphy, Executive Director of the 
National Association for County Community and Economic 
Development.

   STATEMENT OF JOHN C. MURPHY, EXECUTIVE DIRECTOR, NATIONAL 
   ASSOCIATION FOR COUNTY COMMUNITY AND ECONOMIC DEVELOPMENT

    Mr. Murphy. Thank you, Madam Chairwoman, for inviting my 
testimony here this morning. I am the Executive Director for 
the National Association for County Community and Economic 
Development, or as the acronym has it, NACCED. We are an 
association of practitioners that administer at the urban 
county level the community development block grant, HOME and 
other related programs. I'm also appearing today on behalf of 
the National Community Development Association, which is an 
affiliate of the U.S. Conference of Mayors. It includes city 
governments that administer those same programs. The mission of 
each of the organizations is to improve the technical 
capacities of cities and counties, to administer a whole range 
of affordable housing and neighborhood revitalization programs.
    So you have combined in our two membership really the bulk 
of the entitlement CDBG communities. I'd like, at the outset, 
to offer the enthusiastic support for this bill, in particular 
the decoupling of the Brownfield Economic Development 
Initiative Grants from the requirement that a community also 
apply for a Section 108 loan guarantee.
    I recently surveyed our NACCED members as to whether this 
created an impediment in their moving forward on brownfield 
activity, and, in fact, discouraged them from applying for a 
brownfield EDI Grant, because of the coupling with 108. I found 
at least nine counties across the country, ranging from 
Cuyahoga County and Hamilton County in Ohio to Westchester 
County, New York, to Clark County, Nevada. these counties had 
said that, because of the required coupling of the two 
programs, they had not applied for that assistance.
    I think the reasons are threefold. First, they didn't want 
to pledge future block grant dollars to pay for the 108. 
Second, they wanted to use perhaps other funding and it was 
non-HUD funding or non-CDBG or 108 guaranteed funding. Third, I 
think many communities have been discouraged from applying for 
108, quite frankly, because of the lengthy processing time that 
HUD takes in approving 108 loan guarantees. As you know, in 
financing many development projects, timing is everything.
    We also support the bill's language that would clarify that 
brownfield redevelopment and cleanup is an eligible CDBG 
activity.
    I must say, Madam Chairwoman, I'm as confused as you are 
about the provision that calls for the creation of a loan pool. 
I'm not sure whether that's a separate guarantee of private 
sector loans or whether it's an opportunity for HUD to buy 
these private sector loans and create, in effect, a secondary 
market. I think that provision, as you rightly point out, needs 
some clarification. I would urge the subcommittee to act 
expeditiously on this. We look forward to its enactment by the 
Congress.
    Thank you.
    [The prepared statement of John C. Murphy can be found on 
page 65 in the appendix.]
    Chairwoman Roukema. Thank you. I don't think we can get 
both in before we go for our vote on the floor, but we will 
hear Mr. Robert Colangelo. He is the Executive Director of the 
National Brownfields Association. You've see, I've learned 
something today. I didn't know there was such an association. 
We welcome you here.

  STATEMENT OF ROBERT COLANGELO, EXECUTIVE DIRECTOR, NATIONAL 
                     BROWNFIELD ASSOCIATION

    Mr. Colangelo. Thank you, Madam Chairwoman and 
distinguished Members of the subcommittee for inviting me to 
present my views on H.R. 2941. In my capacity of Executive 
Director of the National Brownfield Association, I work with a 
wide range of property owners, investors, developers, service 
professionals and representatives of the public sector, and I 
hear their concerns daily about the issues regarding the 
redevelopment of brownfields. I also founded Brownfield News 
Magazine and I also manage Brownfield Development which holds 
title to a 26-acre industrial park, so I have firsthand 
knowledge and experience about the difficulties and 
complexities of financing and redeveloping brownfield 
properties.
    Simply put, I define a brownfield as a real estate 
transaction with environmental personality. And the structuring 
and the finance to acquire and clean up environmentally-
impaired properties remains the primary obstacle in 
redeveloping brownfields. The lending community considers 
brownfields high risk transactions; therefore, they are not 
leveraged. And securing traditional sources of debt financing 
remains difficult at best. Banks will not lend on a brownfield 
until the risk is mitigated. That leaves equity and gray market 
sources of capital as the primary mechanism for financing these 
transactions. Both sources of capital are very expensive, 
typically requiring yields in excess of 30 percent.
    As the brownfield market matures, considerable experience 
has been gained by both the public and private sector about the 
redevelopment process. The maturing market has left few 
positive value properties available that can generate returns 
that warrant the use of high-priced capital. The current market 
condition has also left hundreds of thousands of sites within 
the confines of our cities undeveloped, due to the high cost of 
private capital, poor market conditions and difficulty in 
utilizing Government incentives.
    As the market evolves, Government incentives will continue 
to serve as a key mechanism to lower the cost of private 
capital by structuring the acquisition of a brownfield using a 
combination of equity, debt, and Government incentives, a 
blended lower cost of capital can be achieved. The lower cost 
of capital will allow more brownfield sites to be economically 
redeveloped.
    The government's, and particularly HUD's role in the 
brownfield redevelopment process will also increase as the 
market transitions from environmentally driven to real estate 
driven transactions.
    I've had the opportunity to work with a number of the 
cities and just recently I worked with the Brownfield Office of 
the City of Chattanooga, Tennessee. I think they're a great 
example of the real world difficulties in using the HUD's 
Section 108 Loan Guarantee and the companion EDI and BEDI 
grants to promote industrial and business recruitment and 
retention.
    The City of Chattanooga's Brownfield Office identified the 
redevelopment of abandoned industrial sites, brownfields, as an 
important economic objective of the city. Actions to facilitate 
this objective included the identification of projects to 
stimulate economic development using HUD's Section 108 Loan 
Guarantee and the companion EDI and BEDI grants to promote 
industrial and business recruitment and retention. However, 
implementation was stymied by four factors:
    Linking the Section 108 loan to EDI/BEDI funding;
    Unwillingness by the mayor's office to risk CDBG proceeds 
as collateral;
    Lack of local financial expertise to administer the Section 
108 loan; and
    Failure to produce a specific project that fits the HUD 
definition of economic development.
    This legislation appears to promote the responsible 
redevelopment and productive reuse of brownfield properties by 
removing unwarranted obstacles, specifically de-linking grants 
and loan guarantees for brownfield development from the pledge 
of the community development block grant funds. This proposed 
change will allow more communities to have access to funding 
which in turn should allow them to promote the cleanup, 
transfer, and economical use of more brownfields.
    Chairwoman Roukema. Mr. Colangelo, I'm sorry. You have 
about a minute left, or a little less than a minute, but we are 
going to have to go over for a vote now. We will return and 
hopefully we'll all be here to hear your one minute or 50 
seconds. Certainly the Home Builders, which we would be very 
interesting in hearing their perspective on this. We'll be 
returning very shortly. We have one or two votes. It's a 
question as to whether there are one or two votes, but we 
should be back within 15 minutes or less.
    [Recess.]
    Chairwoman Roukema. I believe we'll get started here, again 
resume our hearing. I feel compelled to make a comment to you, 
however. For the whole panel, the fact that there are so few of 
us here today is no indication that people are not interested 
in the subject or what you're saying; it's a competition with 
other committees. However, if it were highly controversial, 
they would all be here ready to question to you. It's a 
reflection of the fact that this has been so well-received by 
all Members of the subcommittee, but again I am confident and 
I'm assured that the Members and their staffs will be going 
over your testimony here today, but I didn't want you to feel 
as though the panel here was not important today. It's very 
important. But it's also a reflection that the Members are 
wholeheartedly for this legislation and supportive of what 
we're doing here today.
    With that having been said, Mr. Colangelo, I believe you 
have at least another minute to summarize your statement.
    Mr. Colangelo. Thank you. I guess in summary, this 
legislation is another step in the right direction toward 
fostering the participation of a wide range of stakeholders, 
the owners, the developers, the investors, service 
professionals and the public sector and community 
representatives in brownfield redevelopment.
    Moreover, the bill would allocate resources to promote 
partnerships between the public and private sector and 
encourage reuse of brownfield redevelopment. I think this bill 
puts HUD back into the brownfield business and whether you'd 
know it or not, part of the other positive benefit is we've 
really created a new market here, a domestic emerging market 
and that's the brownfield industry.
    Thank you very much for inviting me and listening to my 
comments.
    [The prepared statement of Robert Colangelo can be found on 
page 53 in the appendix.]
    Chairwoman Roukema. Thank you very much.
    Mr. Kasko, I believe is regional sales manager and has a 
lot of experience in real estate, and in home building, Avis 
America. But you're here today testifying on behalf of the 
National Association of Home Builders and I know we're all most 
anxious to hear your observations.

   STATEMENT OF CHARLES KASKO, REGIONAL SALES MANAGER, AVIS 
AMERICA, ON BEHALF OF THE NATIONAL ASSOCIATION OF HOME BUILDERS

    Mr. Kasko. Thank you, Madam Chairwoman. I'd like to thank 
you and Members of the subcommittee and Congressman Miller for 
having us here today to address you on behalf of the more than 
205,000 members of the National Association of Home Builders to 
express our support for H.R. 2941, the Brownfields 
Redevelopment Enhancement Act.
    My name is Charlie Kasko. I'm a member of the association, 
and I'm also the Chairman of the Federal Government Affairs 
Committee for the National Association of Home Builders. I'm 
from Shaverton, Pennsylvania. I'm a regional sales manager for 
Avis American. We are a division of Excel Homes. We operate in 
20 States in the Northeast and build approximately 1,400 homes 
a year through a network of independent builders.
    Brownfields redevelopment, if it's done correctly, presents 
a unique opportunity to marry economic development with the 
principles of smart growth and environmental protection. 
Additionally, brownfields redevelopment is consistent with the 
notion of reestablishing our communities. Many brownfield sites 
are located in urban areas or close-in suburbs within walking 
distance or in close proximity to existing amenities such as 
restaurants, shops, and the arts. This proximity both fosters 
the sense of community and satisfies the increasing needs of 
our population while helping to satisfy the need for safe, 
affordable housing.
    For example, in my home State of Pennsylvania, the city of 
Pittsburgh has partnered with local builders and developers to 
redevelop a 42-acre site on the banks of the Allegheny River. 
Once a heavy industrial site, Washington's Landing will now be 
a stand-out in full community complete with townhomes, an 
office park, a rowing club, tennis courts, a marina, a public 
park and a bike path.
    NAHB has always held that the first priority when 
addressing brownfields redevelopment must be relief from 
Federal liability and enforcement for innocent parties under 
environmental statutes. The recently enacted Brownfields law 
was a good first step in meeting this priority. Unfortunately 
the new law fails to grant liability relief to innocent parties 
for sites contaminated with petroleum, because approximately 
half of the brownfield sites in this country are contaminated 
with petroleum. The absence of petroleum liability protection 
potentially leaves thousands of desirable sites undeveloped.
    While we remain hopeful that Congress will address this 
short-coming in the new law, we continue to be supportive of 
the efforts to provide Federal aid for the redevelopment of 
brownfield sites. NAHB is confident that H.R. 2941 will 
complement the new brownfields law by removing the barriers to 
valuable Department of Housing and Urban Development funding 
for brownfields projects.
    Grants under HUD's Brownfields Economic Development 
Initiative are designed to provide governments with a flexible 
source of funding to pursue the redevelopment of brownfields 
through acquisition of land, site preparation, economic 
development, and other activities. However, access to these 
funds under current law requires a local government to pledge 
future allocations of Community Development Block Grants as 
collateral. Many of the communities with the greatest potential 
for reclaiming brownfields are unable or unwilling to pledge 
their CDBG funds in this manner, as we've heard so many times 
here this morning.
    H.R. 2941 would remove these leveraging requirements and 
open the door to BEDI to spur much needed economic development 
and affordable housing production. In addition, 2941 would help 
clear up confusion and uncertainty regarding the eligibility of 
brownfield initiatives for CDBG funding. The bill would ensure 
that the redevelopment of brownfield sites is a permissible 
CDBG activity.
    This clarification is important. CDBG funds are the chief 
means used by State and local governments in harnessing public 
and private investment to address community development needs 
by explicitly listing brownfields redevelopment activities as a 
permissible activity for the CDBG funding. 2941 will ensure 
that they have the ability to integrate such efforts as part of 
a broader community development initiatives.
    Finally, H.R. 2941 gives the HUD Secretary the ability to 
establish a pilot program for the development of a loan pool 
that would provide economic development financing for eligible 
public entities. Cities will now be able to expand their 
redevelopment options by leveraging funding from private and 
public sources with the funds from the loan pool.
    Madam Chairwoman, on behalf of the homebuilding industry, 
I'm pleased to support H.R. 2941 and look forward to answering 
any questions that you may have.
    [The prepared statement of Charles Kasko can be found on 
page 60 in the appendix.]
    Chairwoman Roukema. Thank you very much. I do want to just 
restate the fact that I think that the way we have come 
together here is quite remarkable, but perhaps maybe we're long 
overdue. I want to again congratulate Mr. Miller, my colleague, 
for taking this initiative. Certainly all three of these 
issues, whether it's jobs, housing, and environmental concerns 
are a top priority of mine and I believe a top priority of the 
vast majority of people on this subcommittee, both the 
subcommittee and the Full Committee, and the fact that Mr. 
Oxley, our Chairman, has paid such close attention to testimony 
here today, is an indication I believe that we all want to move 
with Mr. Miller, with Mrs. Maloney, to move ahead and expedite 
consideration of this legislation in a form that can be taken 
to the floor.
    With that, I'll yield to my colleague, the prime sponsor of 
this legislation, Mr. Miller.
    Mr. Miller. Thank you, Madam Chairwoman.
    Mayors Reid and Kalisz, you both touched on something that 
I think is very important. That's the competition for CDBG 
funds within the community. I think, Mayor Reid, that you said 
that your median income is $22,000, so you have a lot of low- 
to moderate-income individuals and the need for those funds is 
tremendous within organizations and the linkage between CDBG 
funds, BEDI, the guarantees, have really impacted your ability 
to deal with brownfields.
    Do you see an opportunity, if this bill becomes law, for 
your implementation in dealing with brownfields locally?
    Ms. Reid. We absolutely do, Congressman Miller, because 
right now, we get $1,190,000 a year. Out of that you take admin 
of 20 percent. The balance of it right now, we do have a 108 
loan that we took out to buy 100 acres of land to develop out 
around our airport. The problem is it takes another $250,000 of 
our 108 dollars of our CDBG dollars to pay that back. Until we 
can continue to develop that land out there and get this paid 
back, we are stuck with that. That leaves us about $600,000 to 
do all of the rest of the city. We've almost got it paid off, 
but we would never do it again for that very reason, because 
we've got nine council people all vying for money for their 
wards where there's a lot of low, substandard housing, elderly 
housing projects, all of the things that we need to do in our 
city. We have a decaying inner core. We're an old Rust Belt 
city and taking that money and going back to my council again 
and asking them to do another 108 loan, Congressman, is not 
going to work. We can't afford to take that away from our 
citizens.
    Mr. Miller. So this program, if enacted, would benefit your 
city and would be something you would take advantage of?
    Ms. Reid. Absolutely. Just get it passed, sir.
    Mr. Miller. Mr. Murphy, you talked about the State of 
Massachusetts has never been able to use HUD grant funds for 
this program because of the complexity of the process of the 
loan application process in 108. Is that correct, with the 
National Association of Counties?
    Mr. Murphy. Actually I believe it was my colleague to my 
right here.
    Mr. Bartsch. It was actually me, but that is correct, 
Congressman. Again, it gets into decoupling issues. Again, in 
theory, small cities can take advantage of this because there 
is a process in the law that allows that, but again in practice 
at the State level, the same kind of constraints that Mayor 
Reid points out happen at the State level. States are concerned 
about the impact on their future allocations. They're concerned 
about how existing resources may be distributed to the many 
small cities within a State and many of those States, and again 
I use the example from Massachusetts, because I was able to get 
some numbers yesterday on that, many States just have decided 
that they can't do this, they can't do a 108 for brownfields 
for the very reasons that Mayor Reid pointed out.
    Mr. Miller. So eliminating that requirement and simplifying 
the process, as we're doing here, you see a major benefit?
    Mr. Bartsch. I see a major benefit. One of the things that 
I do is brownfields outreach for a variety of cities. In the 
last year, I probably have been to 20 cities mostly in New York 
and New Jersey, small cities, and when you talk about this 
issue, the inaccessibility of this program comes up almost 
every single time. I think there's tremendous demand for this 
once this gets through.
    Mr. Miller. So linking this between the agencies for home 
builders, once the contamination issue is resolved and the 
funds are there where a developer can come in then and purchase 
the site, which frees the local agencies up from the debt 
they're dealing with, there could be a benefit tremendously for 
jobs in this country too. Is that not true?
    Mr. Kasko. That's absolutely correct, Congressman. We're 
always looking for new sites and for development sites. This is 
great potential, especially in the affordable housing arena for 
us to look at the sites. But the funding as well as the 
liability are two major issues. We've addressed a portion of 
one. We need to continue on the same path.
    Mr. Miller. And moving in this direction in the areas that 
these would be used, most home builders have difficulty dealing 
with the process because they want to development mainly in 
green areas, let's say, that are undeveloped. Lacking 
infrastructure, the costs are tremendous. Many people in areas 
like that don't want growth to occur, but these are inner 
cities, blighted areas where growth is needed because you're 
basically cleaning the environment and putting it to a better 
use, and basically revitalizing the local government through 
taxation. Is that not correct?
    Mr. Kasko. That is absolutely correct. This is a large 
component of our smart growth plan. While it's not exclusive to 
it, but revitalizing and redevelopment of the urban centers it 
has been long understood that to encourage development within 
the Urban areas, there's a number of issues that have to be 
addressed on what I like to call livability, and brownfields is 
a major part of that livability aspect, not just the schools 
and the infrastructure, but also the environment in which the 
people are living, and if you start cleaning up these sites, 
you're going to change, if you will, the image of the urban 
centers and hopefully be able to revitalize them like so many 
of us are trying to do.
    Mr. Miller. I want to thank all of you for your testimony. 
It's been really helpful. As the Chairwoman said, the reason we 
don't have a lot of people here is because obviously they 
support the bill or they'd be here complaining, griping and 
bellyaching, so I want to applaud you for taking your time and 
coming here to Washington to give us this expert testimony. 
Thank you very much.
    Chairwoman Roukema. Thank you.
    Welcome back, Mr. Chairman. I acknowledged your intense 
interest in this in the context of hopefully being able to 
expedite this through the Committee, and caring for it. We'll 
leave that up to you to make your own statement and 
observations here.
    Mr. Oxley. Thank you, Madam Chairwoman.
    Again, welcome to all our panelists, particularly Mayor 
Reid. Mayor Reid, you are to be congratulated on receiving the 
Great American Mainstreet Award. That's quite an achievement. 
It clearly puts Mansfield in a position to be one of the 
leaders and continue to be one of the leaders in the whole 
development area.
    It was interesting that in your prepared testimony, you say 
under the heading of ``Challenges'' complex is synonymous with 
brownfield redevelopment, and indeed I suspect that everybody 
can share that same frustration as we try to work our way 
through some of these difficult issues with the various leaders 
of government and involvement of the private sector, and the 
like.
    I'm wondering, part of this bill deals with revolving loan 
funds. Has Mansfield had experience overall with revolving loan 
funds? If so, are they useful in putting financing projects 
together?
    Ms. Reid. We use revolving loan funds on two levels. We 
have revolving loan funds for our downtown redevelopment. As 
you know, we have been able to put together a pool with the 
local banks and with some city dollars. That is a loan to small 
business people trying to get started and do something 
downtown.
    Then we also, as you know, were awarded a million-dollar 
grant which will be a revolving loan fund for brownfield 
remediation. That one is just getting started. And Congressman, 
as you know, the paperwork to get through this is about this 
high. We are trying to wade our way through it. We had a very 
nice young man from EPA in Chicago come in and tell us this was 
going to be really easy, and we believe him. So we're going to 
hope for the best. But again that will be a revolving loan 
fund. We also use our CDBG dollars into a revolving loan fund 
for the purpose of loaning money to landlords to do rental 
rehab which then is paid back to us, which we use to loan to 
another landlord to rehab another house. So in the ways that we 
use our CDBG money, you can see how important it is that we 
don't tie it up with a commitment to 108 dollars.
    Mr. Oxley. That's a good point. Clearly, the impetus behind 
this legislation CDBG has been appropriate in many indications. 
For example, Holiday Inn at Mansfield was begun with CDBG money 
and obviously turned out to be quite successful and anchor that 
area downtown with a renaissance theater next door, it became a 
perfect opportunity for the city to really put its best foot 
forward. Yours and past administrations were involved in that 
area. It was most appreciated. It was also most helpful to look 
at the profile of the former Ohio Brass, just to use one 
example. And the income sources that you have laid out, would 
we expect, let's say that we were to start all over again with 
Ohio Brass, would the passage of this legislation and the 
legislation that passed earlier last year, Representative 
Gilmore's bill that I mentioned, what would change in that 
overall structure of financing and putting this package 
together.
    Ms. Reid. First of all, that project has been a long time 
coming. We've been working on it, as you know, almost ever 
since I've been Mayor. It's been a project that we've really 
had to struggle to get the dollars for. We are very proud of 
the fact that we were able to get the former owners to 
contribute dollars. The project would probably have been 
speeded up by a minimum of 2 years, and maybe a maximum of four 
if we could have had access to other funding that we wouldn't 
have had to pledge our precious dollars to.
    We did have to scratch for money out of our general fund to 
cover part of it. When we take money out of our general fund, 
as you know, Congressman, it means that we have to look 
somewhere else to find money to pay our police and fire and to 
run our city. So in reality, the Ohio Brass project, if we 
would have had in place what we are now talking about and what 
Congressman Gilmore's bill did a year ago, we would not have 
had to take our precious general fund dollars in order to make 
this. But we were so committed to getting this done that 
there's other things we could have done with that money. A new 
fire station would be nice. But, you know, we put those things 
off because we had to make a commitment to do what we did at 
Ohio Brass.
    Mr. Oxley. That's a great case example of what can be done, 
and obviously with passage of this legislation, and the Gilmore 
bill working together facilitates a lot of these things even 
better.
    Madam Chairwoman, I thank you for your time. And let me 
just say to you that this bill appears to have broad bipartisan 
support and we would plan to put it on a fast track. And it's 
important I think that we send a strong signal and get a bill 
over to the other body soon enough that they can act on it and 
we can get it to the President. Coupled with what has already 
been accomplished on the liability side, this is a natural, and 
we're planning to move with as much speed as we possibly can on 
that.
    And I yield back.
    Chairwoman Roukema. I thank the Chairman and I thank him 
for his exceptional leadership on the Committee of the whole as 
well as for the subcommittee. I do thank the panelists. You've 
made an excellent case and again I assure you that your 
testimony will be made readily available to every Member of the 
subcommittee and the Full Committee.
    If you have further comments or additions, you have a 30-
day time period to put it in the official record. Thank you 
again. We look forward to this being a major piece of 
legislation in this Congress. Thank you.
    [Whereupon, at 12:40 p.m., the hearing was adjourned.]
                            A P P E N D I X

                             March 6, 2002

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