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23–851 PDF 2005

THE PITTSBURGH EXPERIENCE: HOW HAS THE

COMMUNITY DEVELOPMENT BLOCK GRANT

PROGRAM SHAPED THE STEEL CITY?

HEARING

BEFORE THE

SUBCOMMITTEE ON FEDERALISM

AND THE CENSUS

OF THE

COMMITTEE ON

GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

FIRST SESSION

JULY 18, 2005

Serial No. 109–76

Printed for the use of the Committee on Government Reform

(

Available via the World Wide Web: http://www.gpoaccess.gov/congress/index.html

http://www.house.gov/reform

(II)

COMMITTEE ON GOVERNMENT REFORM

TOM DAVIS, Virginia, Chairman

CHRISTOPHER SHAYS, Connecticut

DAN BURTON, Indiana

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

JOHN L. MICA, Florida

GIL GUTKNECHT, Minnesota

MARK E. SOUDER, Indiana

STEVEN C. LATOURETTE, Ohio

TODD RUSSELL PLATTS, Pennsylvania

CHRIS CANNON, Utah

JOHN J. DUNCAN, JR., Tennessee

CANDICE S. MILLER, Michigan

MICHAEL R. TURNER, Ohio

DARRELL E. ISSA, California

GINNY BROWN-WAITE, Florida

JON C. PORTER, Nevada

KENNY MARCHANT, Texas

LYNN A. WESTMORELAND, Georgia

PATRICK T. MCHENRY, North Carolina

CHARLES W. DENT, Pennsylvania

VIRGINIA FOXX, North Carolina

——— ———

HENRY A. WAXMAN, California

TOM LANTOS, California

MAJOR R. OWENS, New York

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

CAROLYN B. MALONEY, New York

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

DANNY K. DAVIS, Illinois

WM. LACY CLAY, Missouri

DIANE E. WATSON, California

STEPHEN F. LYNCH, Massachusetts

CHRIS VAN HOLLEN, Maryland

LINDA T. SANCHEZ, California

C.A. DUTCH RUPPERSBERGER, Maryland

BRIAN HIGGINS, New York

ELEANOR HOLMES NORTON, District of

Columbia

———

BERNARD SANDERS, Vermont

(Independent)

MELISSA WOJCIAK, Staff Director

DAVID MARIN, Deputy Staff Director/Communications Director

ROB BORDEN, Parliamentarian

TERESA AUSTIN, Chief Clerk

PHIL BARNETT, Minority Chief of Staff/Chief Counsel

SUBCOMMITTEE ON FEDERALISM AND THE CENSUS

MICHAEL R. TURNER, Ohio, Chairman

CHARLES W. DENT, Pennsylvania

CHRISTOPHER SHAYS, Connecticut

VIRGINIA FOXX, North Carolina

——— ———

WM. LACY CLAY, Missouri

PAUL E. KANJORSKI, Pennsylvania

CAROLYN B. MALONEY, New York

EX OFFICIO

TOM DAVIS, Virginia HENRY A. WAXMAN, California

JOHN CUADERES, Staff Director

SHANNON WEINBERG, Counsel

JON HEROUX, Counsel

URSULA WOJCIECHOWSKI, Professional Staff Member

JULIANA FRENCH, Clerk

(III)

C O N T E N T S

Page

Hearing held on July 18, 2005 ............................................................................... 1

Statement of:

Gorski, Stanley, executive director, South Hills Area Council of Governments; William McGowen, executive director, Redevelopment Authority, county of Washington; William E. Mitchell II, assistant director,

planning and development, Westmoreland County Industrial Development Corp.; and Diana Reitz, community development coordinator, city

of Jeannette, PA ............................................................................................ 34

Gorski, Stanley .......................................................................................... 34

McGowen, William .................................................................................... 43

Mitchell, William E., II ............................................................................. 74

Reitz, Diana ............................................................................................... 81

Patenaude, Pamela Hughes, Assistant Secretary, Office of Community

Planning and Development, U.S. Department of Housing and Urban

Development; Dorothy Kelly, councilmember, borough of Carnegie; and

Diana Irey, county commissioner, Washington County, PA ...................... 11

Irey, Diana ................................................................................................. 22

Kelly, Dorothy ............................................................................................ 17

Patenaude, Pamela Hughes ...................................................................... 11

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

Gorski, Stanley, executive director, South Hills Area Council of Governments, prepared statement of ...................................................................... 37

Irey, Diana, county commissioner, Washington County, PA, prepared

statement of ................................................................................................... 24

Kelly, Dorothy, councilmember, borough of Carnegie, prepared statement

of ..................................................................................................................... 20

McGowen, William, executive director, Redevelopment Authority, county

of Washington, prepared statement of ........................................................ 46

Mitchell, William E., II, assistant director, planning and development,

Westmoreland County Industrial Development Corp., prepared statement of ........................................................................................................... 76

Murphy, Hon. Tim, a Representative in Congress from the State of Pennsylvania, prepared statement of .................................................................. 8

Patenaude, Pamela Hughes, Assistant Secretary, Office of Community

Planning and Development, U.S. Department of Housing and Urban

Development, prepared statement of .......................................................... 14

Reitz, Diana, community development coordinator, city of Jeannette, PA,

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

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

of Ohio, prepared statement of .................................................................... 4

(1)

THE PITTSBURGH EXPERIENCE: HOW HAS

THE COMMUNITY DEVELOPMENT BLOCK

GRANT PROGRAM SHAPED THE STEEL

CITY?

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON FEDERALISM AND THE CENSUS, COMMITTEE ON GOVERNMENT REFORM, Carnegie, PA.

The subcommittee met, pursuant to notice, at 10:15 a.m., in the

Carnegie Municipal Building, One Veterans Way, Carnegie, PA,

Hon. Michael Turner (chairman of the subcommittee) presiding.

Members present: Representatives Turner and Dent.

Also present: Representative Murphy.

Staff present: John Cuaderes, staff director; Jon Heroux, counsel;

and Ursula Wojciechowski, professional staff member.

Mr. TURNER. I am going to call to order the subcommittee hearing, noting that a forum is present for this Subcommittee on Federalism and Census. And before we begin I want to note that today

with this subcommittee hearing we have, with Mr. Dent and Mr.

Murphy, two members in addition to the Subcommittee on Federalism and Census, but an initiative that Speaker Dennis Hastert

pulled together called ‘‘Saving America’s Cities.’’ The Speaker

looked within the Republican conference for Members that had experience in economic development and community development. He

appointed 24 Members to this important working group, and the

working group’s function is to look both into their communities and

to their experiences that they have had in working on issues of economic development and advise the Speaker on ways that Federal

programs can be improved or ways that we need to respond to assist our communities to create jobs.

And Mr. Murphy and Mr. Dent, two Members from Pennsylvania, were recognized as having expertise in economic development and were appointed by the Speaker to be part of the advisory

working group for him in addition to their important work on the

Federalism and Census Subcommittee, which Mr. Murphy, I am

certain, will highlight his efforts to make certain that we preserve

community development block grants and the effects that they

have on our community is one of the things we will be looking at

today to help us in that process to making certain we strengthen

and improve the program.

I would like to welcome all of you to the Subcommittee on Federalism and the Census in this field hearing. This is a followup to

three hearings the subcommittee has held in Washington, DC, on

this topic. As a former mayor, I understand that in order to comVerDate 11-MAY-2000 10:40 Feb 08, 2006 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 D:\DOCS\23851.TXT HGOVREF1 PsN: HGOVREF1
2

prehend the benefits and shortcomings of national programs, one

should go to where the real action takes place. Field hearings allow

us to do just that, to reach out to you and hear your views, your

concerns, and your suggestions.

CDBG is one of the largest Federal block grant programs in existence. State and local governments use CDBG grant moneys to

fund various housing, community development, neighborhood revitalization, economic development, and public service provision

projects. CDBG is one the largest Federal-direct block grant programs in existence. For over 30 years the CDBG program has been

a critical tool in the arsenal of cities to help create livable communities for individuals and families. Without question, the program

provides vital funds for addressing poverty and other community

development needs.

However, in recent months the effectiveness of the program has

been called into question. Much of this scrutiny has been related

to the mechanisms used for delivering CDBG funds to grantees and

whether those grantees have ultimately spent those funds in the

most effective way. That is why we are here in Carnegie, to hear

how you at the local level have used these funds and how your citizens have benefited from the CDBG program. In general, we are

interested in learning from you what works in the program and

what does not.

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

from the number and quality of witnesses seeking to testify today

and the number of people who are in attendance. I would like to

express my appreciation to the Borough of Carnegie for hosting us

today, and especially for allowing us to use these Council Chambers today. Moreover, I would like to give my thanks to Congressman Tim Murphy for inviting us to his district and for his efforts

in facilitating this hearing.

We have two panels of witnesses before us to help us understand

how the CDBG program has benefited the Pittsburgh metropolitan

area, as well as what can be done better in the future. Our first

panel consists of 3 witnesses from the national and local elected official perspective. They are the Honorable Pamela Hughes

Patenaude, Assistant Secretary for Community Development and

Planning at U.S. Department of Housing and Urban Development;

the Honorable Dorothy Kelly, councilmember for the Borough of

Carnegie; and the Honorable Diana Irey, county commissioner for

Washington County, Pennsylvania.

The second panel of witnesses consists of four representatives

from the Pittsburgh area community development practitioner community. They are Stanley Gorski, executive director of the South

Hills Area Council of Governments; Rear Admiral William

McGowen, executive director of Redevelopment Authority of the

county of Washington; William Mitchell, assistant director of planning and development, Westmoreland County Industrial Development Corp.; and Diana Reitz, community development coordinator

for the city of Jeannette, PA.

I look forward to hearing our expert testimony of our distinguished panel of leaders, which will be provided to us today, and

I thank you all for your time and for coming today.

3

In addition to our witnesses, I am pleased to have two of my colleagues with me here today. And I now yield to the gentleman from

the 18th District of Pennsylvania, the Honorable Tim Murphy, for

any opening remarks.

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

4

5

6

Mr. MURPHY. Thank you, Mr. Chairman, and thank you for having this congressional hearing here in the fine borough of Carnegie.

I want to make sure everybody knows how to pronounce it in case

any people here are from out of town. Andrew Carnegie is the way

we say it here.

I also want to thank the borough and thank everybody who are

going to be witnesses and talking today on this very important

issue of the Community Development Block Grant Program, which

was established back in 1974 to provide low and moderate-income

communities with supplemental resources for projects such as infrastructure improvements, rehabilitation of blighted areas, public

services, and other economic development projects.

Over its more than 30-year lifespan, CDBG, as administered

through the Department of Housing and Urban Development

[HUD], has provided the largest and one of the most reliable

sources of Federal funds for our States, counties, and towns to

draw upon for community-improvement programs. Today, 1,168

State and local governments considered ‘‘entitlement communities’’

receive direct allocations of CDBG moneys based on one of two formulas. These funds are then redistributed by the governments for

various activities, including commercial and industrial improvements, acquisition of property, financial assistance for local businesses, residential property rehabilitation, and public facilities improvements.

In the 18th Congressional District, which includes parts of Washington, Allegheny, Westmoreland, and Beaver Counties, much of

the CDBG funds have been used for water and sewer improvements, street improvements, and assistance to local businesses.

Last fall, southwestern Pennsylvania experienced devastating

flood damage as a result of Hurricanes Frances and Ivan, some

that we just saw on our walking tour of town. It resulted in $60

million in losses to communities in the region and damaged 30,000

homes and businesses. Ten months later, as you can see, many of

these towns are still struggling to clean up and rebuild.

Last week, HUD announced the release of $150 million in CDBG

disaster recovery assistance grants for disaster relief, long-term recovery, and mitigation for communities across the country hit by

hurricanes. Pennsylvania will receive $21⁄2 million to help alleviate

still unmet housing, business, and public assistance needs that develop due to this flooding.

This morning, I had the privilege to escort my colleagues, Congressman Turner and Congressman Dent, on a tour of Carnegie,

one of our local communities hit hardest by the floods. And I believe it is crucial that Members of Congress with oversight responsibilities over CDBG see firsthand both the needs of these communities and how the funds will be utilized.

That is why I am grateful this subcommittee has decided to hold

this hearing today in Pittsburgh, away from the Washington beltway bureaucracy, to experience the positive impact CDBG has had

on towns in real America.

As most of us in this room know, earlier this year President

Bush proposed that several Federal community and economic development programs, including the Community Development Block

Grant Program, be consolidated with the Department of Commerce.

7

While the administration has not sent a formal legislative proposal

to the Hill, and the House has continued to fund CDBG and HUD,

Chairman Turner has held several hearings to examine the appropriateness and feasibility of this recommendation.

The administration’s review of CDBG is not completely without

warrant. The relatively broad mission of the program has led to

concern that some dollars have been spent on projects that may not

significantly contribute to the well-being of low and moderate-income urban areas. Criticisms have also been raised regarding the

fairness of the funding formula, which can lead to less needy communities receiving more funding per person than communities with

larger low-income populations. These are both issues Congress

should consider as it evaluates the President’s proposal. However,

shifting of CDBG to a new Federal agency could significantly impact thousands of local governments and businesses and millions of

people across the Nation that have come to rely on the positive contributions this program has had over the last three decades.

I believe it is vitally important Congress go beyond the beltway

and hear a firsthand account of people who know best, our local

elected officials and economic development coordinators—how

CDBG has worked, how it hasn’t worked, and suggestions for how

to make the program better.

These moneys are real dollars which have a very real impact on

real communities. The wholesale consolidation of CDBG with other

programs is not a decision that should be made from 30,000 feet,

but is a decision that should be made only after substantial feedback and consultation with individuals here on the ground.

I can think of no better place to learn about the contributions the

program has made on the average American community than right

here in southwestern Pennsylvania, and I am pleased that the

chairman and the Government Reform Committee has agreed to

hold this hearing.

I want to join you in welcoming all our witnesses and Congressman Turner, the former mayor of Dayton, OH, who has firsthand

encountered a number of the issues involved with these grants, and

also Congressman Dent, a former colleague of mine in the State

Senate as well, from Allentown, PA. And I yield back the balance

of my time. Thank you, Mr. Chairman.

[The prepared statement of Hon. Tim Murphy follows:]

8

9

10

Mr. TURNER. Thank you, Mr. Murphy. I appreciate your leadership in the efforts to retain CDBG funding, not only to make certain that the funding is there, but also that it is retained as a program at HUD and its efforts to be able to make an impact in the

lives of people in their communities. I now turn to Honorable Charlie Dent, the distinguished vice-chair of this committee who is from

the 15th District of Pennsylvania. And I yield to him for his opening remarks.

Mr. DENT. Thank you, Mr. Chairman, and thanks to my friend

and colleague, Tim Murphy, whom I served with in the Pennsylvania Senate, as well as now Congress. I want to point out that I

did serve in the Pennsylvania Senate as the Chair of the Senate

Urban Affairs and Housing Committee, so I got to deal with a

number of the issues that impact all of us.

I am also struck by the similarities of the impacts of Hurricane

Ivan on this community of Carnegie, just as it impacted many of

the many of the communities in my area as well, not just with

Ivan, but the succeeding flood a few months ago. We experienced

similar damage along the streams and also the Delaware River,

and we are still recovering as well.

With respect to the CDBG program, the beauty of this program

is its flexibility, and I suspect that in southwestern Pennsylvania,

we spend the moneys in similar ways that we spend it in eastern

Pennsylvania. You use this money for site improvements, you use

it for demolition, you use it for mediation, in some cases you may

use it to pay for staff, personnel in some cases where I live. You

use it for a variety of purposes to advance the betterment of your

communities.

And I am just excited to be here today to hear the testimony of

all the presenters about just how you utilize those dollars and what

you think we can do to make the program better. As was stated

by Congressman Murphy, a lot of us in Congress have a great deal

of concerns and reservations with respect to the President’s program that would have consolidated CDBG and 17 other programs

into the Department of Commerce. CDBG will not move to Commerce. You know, we would make sure of that. But we want to

hear from you just specifically as to what you think we can do to

make this program better and to better serve the needs of people

in the region. So with that, I yield back the balance of my time.

Thank you, Mr. Chairman.

Mr. MURPHY. Mr. Chairman, can I just interrupt for one moment

if you would yield? I am not sure how well known it is that recently, CDBG disaster assistance grants just came to this area, Allegheny County, receiving $388,000 to rebuild homes damaged by

the storm and purchase and demolish homes no longer available.

Also Washington County received $400,000, and Penn Hills, another part of my district, received $115,000. Penn Hills is one of

those communities which is identified as being eligible for those.

For residents that may be watching this, it is a matter of contacting the proper authorities from the county or my office to find out

how they can obtain some of those funds. So I yield back. I am

sorry.

Mr. TURNER. OK. Thank you all for participating again in the

field hearing today. And we will now start with the witnesses. Each

11

witness has kindly prepared written testimony, which will be included in the record of this hearing. Each witness has also prepared an oral statement summarizing their written testimony. Witnesses will notice that there is a timer with a light at the witness

table. The green light indicates that you should begin your remarks, and the red light indicates that your time has expired. In

order to be sensitive to everyone’s time schedule, we ask that you

adhere to the 5-minute time allowance for your oral presentation.

We will follow that with a question-and-answer period from the

Members. It is the policy of this committee that all witnesses be

sworn in before they testify. So if you would please rise to accept

the oath and raise your right hands. I will now swear in our panel

of witnesses.

[Witnesses sworn.]

Mr. TURNER. Let the record show that all witnesses have responded in the affirmative. And we begin our testimony with Pamela Patenaude.

STATEMENTS OF PAMELA HUGHES PATENAUDE, ASSISTANT

SECRETARY, OFFICE OF COMMUNITY PLANNING AND DEVELOPMENT, U.S. DEPARTMENT OF HOUSING AND URBAN

DEVELOPMENT; DOROTHY KELLY, COUNCILMEMBER, BOROUGH OF CARNEGIE; AND DIANA IREY, COUNTY COMMISSIONER, WASHINGTON COUNTY, PA

STATEMENT OF PAMELA HUGHES PATENAUDE

Ms. PATENAUDE. Good morning. I am Pamela Hughes Patenaude,

Assistant Secretary for the Office of Community Planning and Development at the Department of Housing and Urban Development.

I am pleased to be here today in Carnegie on behalf of Secretary

Alfonso Jackson. Thank you, Mr. Chairman, Congressman Dent,

and Congressman Murphy, for scheduling this field hearing to

gather information on the performance of the Community Development Block Grant Program and its influence on the city of Pittsburgh and the surrounding area.

I am pleased to be here before you today near my hometown of

Upper Saint Clair alongside the Honorable Dorothy Kelly and the

Honorable Diana Irey to discuss the impact of CDBG funding and

hear from local recipients of CDBG assistance.

As Assistant Secretary for Community Planning and Development, I am responsible for the administration of the CDBG program. My predecessor, now Deputy Secretary Roy Bernardi, last

testified before the subcommittee on May 24, 2005. During previous hearings, Mr. Bernardi testified on various CDBG issues, including the Grant Allocation Formula, eligible activities, and performance measures. We now have a unique opportunity to hear

from local grantees and organizations assisted by CDBG.

Let me also use this opportunity to note that the President, via

his 2006 budget, has proposed to consolidate 18 programs within

the Department of Commerce, including the CDBG program. These

programs would be consolidated into one program—the Strengthening America’s Communities Initiative. This initiative would support

communities’ efforts to meet the goals of improving local economic

conditions by simplifying access to Federal funds, increasing flexiVerDate 11-MAY-2000 10:40 Feb 08, 2006 Jkt 000000 PO 00000 Frm 00015 Fmt 6633 Sfmt 6633 D:\DOCS\23851.TXT HGOVREF1 PsN: HGOVREF1
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bility, improving targeting, and establishing strong accountability

measure.

However, let me begin with a brief overview of the CDBG program. The program has been the Federal Government’s primary

vehicle for assisting local governments and undertaking a wide variety of community development activities aimed toward improving

the lives of low and moderate-income persons in the United States.

In the course of its 30-year history, CDBG has provided a ready

source of funding for housing rehabilitation programs, public services, public facilities and infrastructures, and economic development activities.

The city of Pittsburgh has focused its planning and community

efforts on economic development and the revitalization of its neighborhoods, transforming itself into one of America’s leading 21st

century cities.

The city has used CDBG funds to address more traditional challenges found in former manufacturing centers such as aging housing stock and economic development. The city of Pittsburgh has reported that since 1974, CDBG has provided housing rehabilitation

funding for approximately 18,000 units, the majority of which benefit low and moderate-income households. I would like to provide a

couple of examples with respect to Pittsburgh’s economic development. A small CDBG economic development loan in East Liberty

led to the opening of a Whole Foods Market in a commercial district that had been declining for 40 years. Whole Foods has hired

nearly 160 neighborhood residents to work in what was once an

abandoned warehouse. This grocery store is expected to be a catalyst for additional commercial development nearby. Project officials

indicate that the commitment of CDBG funds to this project was

key in securing private investors.

This city is also undertaking a major redevelopment effort to

transform the 123-acre site of a former steel plant. I had the pleasure of touring this South Side Works last night. The redevelopment

plans call for offices, shops, and housing onsite. Total investment

in the project is estimated to be approximately $350 to $400 million

with an expected 5,600 jobs created, many of which will go to low

and moderate-income persons. CDBG-related funding in this

project to this point includes construction financing for two parking

structures and related infrastructure improvements. Upon completion of the projection, real estate taxes will be approximately $8

million annually.

Another major CDBG grantee in the metropolitan area is Allegheny County. Allegheny County’s fiscal year grant is more than

$16 million and the county operates one of the largest urban county programs in the Nation with 126 cooperating jurisdictions.

The county’s CORE housing program combines funds from

HUD’s CDBG and HOME Investment Partnerships programs to

support affordable housing developments throughout the county.

Both non-profit and for-profit developers may access these funds for

new construction or for the conversion of existing single and multifamily properties for the benefit of low and moderate-income home

buyers. The county’s CORE program also provides funding for single-family owner-occupied rehabilitation activities. Over the past 6

1/2 years, Allegheny County has dedicated almost $3.2 million of

13

CDBG funds that have provided 294 housing rehabilitation loans

for low and moderate-income home owners.

CDBG helps communities across the Nation address a variety of

needs and funds an array of activities. However, it is often difficult

to measure results. Therefore, HUD is implementing a comprehensive performance measurement framework for all of our formula

grant programs with a specific focus on CDBG. We anticipate that

will help HUD improve performance and track results.

Our partners—public interest groups representing cities, States,

and counties across the country—are helping us to design a better

performance measurement system. We will be conducting five forums around the country in the next few weeks to obtain input on

how best to implement this proposed system. One of the forums

will be held in Philadelphia this Wednesday. It is our belief that

with better performance measurement tools, grantees such as

Pittsburgh and Allegheny County will be able to design programs

that maximize resources and results for low and moderate-income

citizens. Cooperation with local communities will be essential to

our success as we move forward, which is why this hearing today

is so valuable.

Thank you, Mr. Chairman, Congressman Murphy, Congressman

Dent. I look forward to answering your questions.

[The prepared statement of Ms. Patenaude follows:]

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Mr. TURNER. Thank you. Councilwoman Kelly.

STATEMENT OF DOROTHY KELLY

Ms. KELLY. Thank you. I would like to first state that I have

been councilperson for 11⁄2 years, and I have been president of the

council for about 11 months. Carnegie has applied for and been the

recipient of CDBG funds over a period of 30 years. However the

Federal records I was able to access were sketchy prior to 1989. So

for that period of time, the grants that I looked at fell into two

main categories—safety and recreation. Under safety or handicap

access included the ramps, curb cuts, and walkways, and all of

those things that we needed as a result of the American Disability

Act.

We had retaining walls, and there is one for which a grant is

pending. These walls were needed to prevent the road from falling

onto business patrons’ parking lot below and one to keep the road

from collapsing into homes below. The road now, the grant is pending, is to prevent the entire road from collapsing, thereby closing

off the only exit/entry to that road.

There were catch basins that were part of these grants, concrete

steps to replace the wooden deteriorated ones for residents that live

on the hill so they might have access by foot into the town.

An important one for us is the demolition of structures. The old

municipal building was badly impacted by the flood, and as I

speak, demolition is continuing there. There are 5 abandoned

buildings that are in the process of being razed.

Chartiers Creek channel slope was corrected in 1999. The problem that exists in the creek today, however, are very complex. The

52-mile creek flows downhill to Carnegie. No laws prevent upstream communities from degrading land for residential and commercial development. The channel slope correction helped until

Hurricane Ivan struck.

There have a been a great deal of storm and sanitary work as

a result of the grants, and with road construction, there was one

road for the Busway, and if you note, there is a Busway to the side

of this building, and there is another one down the road a quarter

of a mile.

The second category of projects relate to recreation. There was

park lighting, hockey pads, volleyball court, park restroom renovation, tennis court and basketball court. Carnegie is grateful for the

grants much needed in an old community.

In the present year, five grants are pending. The total of all the

grants for both granted and pending is about $2 million. The total

of all grants received, however, is about $329,000. If all the grants

pending are approved, Carnegie will have received approximately

17 percent of the grants applied for. The grant money that we receive comes at a cost to us. We pay dues to COG, and that went

up 20 percent this year. Much employee time is required in writing

for the grants, the manager, the secretary, public works, and often

services of an engineer.

I would like to give you a holistic approach to better understand

the needs of Carnegie; 9 months after the flood, flood victims are

still in need of help, and it is the Church Ministerial Association

that is helping these people. There was not enough money given to

18

them through FEMA. After the flood, Senator Specter, Santorum,

Secretary of Commerce, Donald Evans, all visited Carnegie, but no

money was forthcoming. Residents did not receive enough FEMA

money to cover their needs. FEMA offered a floodplain buyout for

those who have water on the first floor. The buyout was not feasible for the borough. The Small Business Association did very little for businesses in this town.

Allegheny County reduced the assessments of properties affected

by the floodplain 25 percent. The reduced assessment has further

eroded the tax base in this town. There is not adequate revenue to

support the reasons for the very existence of local government, and

that is the safety, the roads, and the sewers.

The consent order mandated by EPA, DEP, and Allegheny Coun- ty will cost the borough $1 million over 3 years. Liquid fuel tax

money for road paving is not enough to resurface roads made worse

from the flood. PennDOT maintains the State road here, and there

were moneys to cover the loss, so those roads are in good condition.

But other than that, they are in very poor condition. Section 8

housing at the 10-story Carnegie Towers continues to create problems for the fire and police departments and depressed property

values in the area. And there are abandoned homes that were not

cleaned after the flood. Owners simply closed the door and walked

away. You can do an Internet search for Section 8 and properties,

and they are being bought up in this town by some landlords. They

just jump at the opportunity.

Carnegie is a town worth saving. Its location, close proximity to

the city, to the airport, and to the two interstates and with a direct

Busway to Pittsburgh, which is where the universities are located.

Assets of the town include the Carnegie Library Music Hall, which

is undergoing renovation. It will cost about $8 million. They have

foundation and other grants, and they did receive one gallery

grant. Three art galleries in town, music, Pittsburgh Music Academy, two ballet companies, two resident theater groups, a recently

opened upscale nightclub restaurant, historical society, Honus

Wagner Museum, and a very active Carnegie Renaissance group

that takes care of the planters in this town, the banners that you

saw in front of businesses. They also have business mixers. They

do everything they can to promote business in this town. There is

a group seeking to develop a trail to connect to the Panhandle

Trail, and this trail eventually, if it is connected through Carnegie

and the other areas, will go directly to Washington, DC.

So you can see that even with the creek having been such a damaging force in town, it could become an asset for boating for this

town because the creek goes all the way to the Ohio River. Carnegie has all the ingredients for a viable community. Only the funds

are needed to make it grow again to a destination town.

There were two recent events that make me optimistic that Carnegie will become a vibrant community. Otherwise, it could decay

into a slum. The Carnegie Mellon University, in working with

them, I was able to have them use Carnegie for their urban land.

Senior students who are in the School of Architecture and Urban

Planning will come to this town and they will draw up their vision

of it. This will cost us nothing, and possibly we will have some good

ideas for this town.

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Another event that gives me hope, I submitted a lengthy proposal to the FHL Bank system, and just in the last week and a half

I received word that we were selected as 1 of 10 communities in

western Pennsylvania. This will give us technical assistance, training, and assistance in locating other kinds of funding.

I would like to end with a quote of Thomas Friedman, the journalist and political writer who has said, ‘‘If you don’t visit a bad

neighborhood, it will visit you.’’ And we are all losers if Carnegie

is not revitalized. Thank you.

[The prepared statement of Ms. Kelly follows:]

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Mr. TURNER. Thank you. Ms. Irey.

STATEMENT OF DIANA L. IREY

Ms. IREY. Thank you. Good morning, Chairman Turner, Congressman Murphy, and Congressman Dent. I appreciate the opportunity you have provided to all of us today to speak to you about

the importance of the CDBG program.

The Community Development Block Grant provides invaluable

assistance to our municipal governments in Washington County for

a myriad of projects that would otherwise not be completed. The

funds are distributed on a rotational basis, and it allows our local

officials to plan their budgets accordingly. Municipal governments

are charged with numerous responsibilities, and they serve on extremely limited budgets. So many of the projects that CDBG has

come alongside to help fund would not be completed. They are used

for road and bridge projects, gap funding, redevelopment/revitalization studies, plans, and constructions, and comprehensive planning

and implementation of ordinances.

CDBG program truly benefits our senior population. The home

rehabilitation program has provided assistance to low-income and

moderate-income households. Predominantly, our elderly are affected. This helped to complete repairs on our homes, which result

in a higher quality of housing stock, and more importantly, has allowed our seniors to stay in their homes. Approximately 25 percent

of the projects that have been completed in Washington County

have directly benefited our senior citizens.

I want to mention three recent cases that resulted in allowing

our seniors to stay in their homes. Robert and Joan Golbraith of

Canonsburg had the exterior of their house painted and their back

porch fully rebuilt. LouAnn and Eugene Clark of Washington received new siding, new windows, and a garage roof. Joyce Carroll

and Francis Vennon of Washington now live in a home with a new

roof, a new porch, a repaired bedroom that had suffered water

damage.

On a larger scale in the New Eagle Borough, we had an abandoned, dilapidated hospital that was acquired, demolished, and remediated with CDBG funding. In its place was built a 42-apartment low-income senior high-rise. The nearest facility for our seniors, only approximately a mile and a half away, had a waiting list

of over 5 years. So this was a very, very needed housing facility for

our seniors.

Many of the fire departments in Washington County could not

purchase the equipment that they need without the CDBG moneys.

Water and sanitary sewer service has been provided and roads and

bridges have been improved, including a major slide and a repair

in Carroll Township resulting from an underground spring in an

abandoned mine shaft. And due to the complexity of the stabilization process and road reconstruction, that project alone would have

severely impacted Carroll Township’s budget. That is the township

in which I live. School buses travel that road. It was reduced to a

one-lane road, and had been so for quite a while because no one

could find the money to repair the road. Without the CDBG funds,

it put our children at risk as they traveled that on the school bus,

and also many people utilizing the road.

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We have a development at the new Head Start facility to provide

better educational opportunities for our low-income children. And

that is a wonderful program. That, again, would not have been possible without CDBG funding. This program is all-encompassing,

and it is difficult to provide just a thumbnail sketch in 5 minutes

of what this program has done for Washington County.

This program has benefited our children directly with educational opportunities, our seniors with housing opportunities, our

citizens with traveling opportunities. It has provided safe water

and sewage. It has helped with our safety, and with our fire departments. So we are very much interested in seeing this program

continue. In Washington County in 2002 we received $5.6 million

in CDBG funding. It has reduced now to 2005 to $4.9 million. We

would like to see this program restored. This program is critical in

Washington County.

And we thank you for taking the time to come hear from us, the

local residents and elected officials and economic development leaders in our communities, to know exactly what we are using this

money for. We are pleased with how the program is working, and

we ask that you please help us to continue. Thank you very much.

[The prepared statement of Ms. Irey follows:]

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25

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Mr. TURNER. Commissioner, thank you so much. And again, I

thank each of you for your time and your preparation for this important hearing. And we will begin our questions and comments

with Mr. Murphy.

Mr. MURPHY. Mr. Chairman, how much time do we have, each

of us, for questions?

Mr. TURNER. Let me do a round of 5 minutes and then see how

that goes, and if we need additional time, we can do either a second round or extend that.

Mr. MURPHY. Thank you, Mr. Chairman. First of all, I would like

the witnesses to know and also the audience to know that as far

as some of the money, in addition to some of the grants that we

work with CDBG to help out the county, and if people still have

needs in Washington and Allegheny County, they can certainly contact the county. I don’t know if there is a specific place in Washington County folks can apply for some of that $400,000 that just

came through. Is it a matter of calling the commissioner’s offices

or——

Ms. IREY. We are having them go through our human services director.

Mr. MURPHY. OK.

Ms. IREY. They can call the commissioner’s office, and we have

a list of unmet needs that we are very appreciative that you were

able to provide that funding for us.

Mr. MURPHY. And someone here in Allegheny County, they can

contact our office, and we will give them the right number as well.

And I should also say, we are working on some other appropriations to help here. We recognize that FEMA and the SBA programs

are made to provide that quick response to residents, but something still needs to take place in the appropriations process, and

we are working at that, as well as Army Corps of Engineers funding to help with dealing with the flood problems over time.

But I want to ask about a couple other things about the CDBG

funding here. Madam Secretary, I guess part of the question is how

does HUD monitor whether the grantees, for example, use at least

70 percent of the funds awarded for activities that really benefit

low and moderate-income persons? What is the process used and

do you feel that some improvements need to be made, or is it working adequately?

Ms. PATENAUDE. Thank you, Congressman Murphy. First of all,

a consolidated plan, a 3 or a 5-year plan is required by the grantees to be submitted to HUD. Our CDB representatives in our field

offices review those plans. The second report that is required of the

grantees is an annual action plan. Again, the CDB field reps review the annual action to plan to see that it is in concert with the

3 to 5-year strategic plan; 90 days after the end of the program

here, the grantees submit a CAPERS, a performance evaluation report. Our CDB reps have a risk analysis that they use to determine

which grantees would be monitoring onsite with the grantee. We

are certain with the process that is in place right now that we are

doing a good job of monitoring CDBG grantees, but, of course, there

is always room for improvement, and we are very hopeful that our

performance measurement system will be that source of improvement.

27

Mr. MURPHY. Thank you. Also, let me ask about with regard to

when you monitor that performance, because some of the criticism

has come across country that I am concerned has been unfairly targeted CDBG for some changes here, has been that some communities and some States have misused that, for example, using funds

just to balance the books at the end of the year. What do you do

when that occurs? What kind of accountability is put into place?

Ms. PATENAUDE. If a grantee has misused the funds or not used

the funds for eligible activity, the department does have the ability

to reduce the grantee’s allocation. In the case of a grantee that is

not spending—we have a one and a half time is the goal that we

have for grantees drawing down their funds. In that situation we

also have the ability to recapture those funds from the grantee.

Mr. MURPHY. OK. And Commissioner Irey, thank you for being

here today. But a question with regard to if you could use these

funds on a rotational basis through communities——

Ms. IREY. Yes, we do.

Mr. MURPHY [continuing]. How do you determine that? That is

a policy that Washington County has alone? Is that how you do

that?

Ms. IREY. I believe it is Washington County’s policy, and we determine it based on the needs in the communities and the population in the communities. We do have a formula established for

that. It has been working that way for 10 years, since I have been

in office, and I know that it is going very well.

Mr. MURPHY. But are there difficulties you encounter when using

the CDBG funds or applying for them? Are there recommendations

that you might want to make to this panel in terms of how we

could make it smoother, easier, quicker, any of the above?

Ms. IREY. Allowing more money to be used for emergency projects

such as the road slide that we had in Carroll Township would be

helpful to allow a little more room to move.

Mr. MURPHY. So some formula changes on that?

Ms. IREY. Yes.

Mr. MURPHY. OK. And to Councilwoman Kelly, you had named

a number of projects that were used here——

Ms. KELLY. Right.

Mr. MURPHY [continuing]. In Carnegie. I am sure you are aware

other communities are also using some of these, so I don’t expect

you to represent other communities out here too. I don’t know if

you were aware before about this, this money we talked about, this

CDBG money just coming through for emergency assistance. Is

that something you are going to be able to notify your local residents here of some of that funding to be able to help them? Do you

have a mechanism to do that?

Ms. KELLY. Well, our borough manager has done this sort of

thing, although I do think that some of us should become more involved in it. I think that is one of the secrets to obtaining funding

is to have these searched out and taken care of in a timely fashion.

They are publicized some of the things that are done in our local

paper and sometimes in the Pittsburgh newspaper.

Mr. MURPHY. OK. Thank you. And one final question for you.

You had mentioned that there were some recordkeeping changes

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since 1989. You don’t have the records prior to that? It is not clear

what was done before?

Ms. KELLY. I was not able to locate them. And as I would point

out to you, I called to get the information, and it is out of my hands

in a sense that I can only rely on the people that are maintaining

these records. They moved from the old building 3 years ago and

some records never made it up here.

Mr. MURPHY. Does that get in the way of future grants in terms

of them being able to get these records? Is that not necessarily a

problem then for you?

Ms. KELLY. I don’t think that would be a problem. I think we just

start with where we are and write for grants as they are needed.

Mr. MURPHY. All right. Thank you. Thank you, Mr. Chairman.

Mr. TURNER. Mr. Dent.

Mr. DENT. Thank you, Mr. Chairman. And I guess just an observation, Commissioner, I just noticed that it seems in Washington

County you use a great deal of your CDBG money for infrastructure improvements?

Ms. IREY. Yes, we do. It is a very rural county.

Mr. DENT. And it is a little bit of a contrast from where I am,

a more heavily urbanized area where you see a lot of downtown

business redevelopment, remediation, demolition, that kind of

work. I also noticed too you use money for Head Start?

Ms. IREY. Yes.

Mr. DENT. Did you build a Head Start facility?

Ms. IREY. Yes, we did.

Mr. DENT. That was just an interested use. And I was just curious to ask the secretary, what have you noticed in terms of best

practices or problems that you have identified in various field offices about how these CDBG dollars are being spent? Could you

give us any suggestion or some thoughts as to what are the best

practices here in this region for example? Do you have any examples here in the Pittsburgh region?

Ms. PATENAUDE. An example of the best practice here in Pittsburgh?

Mr. DENT. Yes. Or problem for that matter.

Ms. PATENAUDE. The 123-acre site that they are developing, they

use for economic development.

Mr. DENT. That was in Pittsburgh?

Ms. PATENAUDE. In Pittsburgh.

Mr. DENT. Yes. I have no further questions. I was just struck by

the amount of money being used for infrastructure in Washington

County which is—again, I can understand why you would do that

there, a more rural county. And just contrasts to my experience. So

thank you. Mr. Chairman.

Mr. TURNER. One of the exciting things about CDBG is that you

get visible results. Things change in a community and things happen in a community. The excitement of the hard work that goes

into both the community planning, the grassroots efforts, many

times to identify projects, and then also the leveraging aspect of

CDBG really does, I think, give a community a sense that these

dollars, once placed into a project, attract other types of investment

and commitment.

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And Commissioner and Councilwoman Kelly, I am going to ask

you if you guys could talk for a moment about two aspects of your

work with CDBG, and really, your work about economic and community development. Because CDBG goes beyond just the issue of

what did you spend the moneys on? It goes to the issue of what

are your needs in your community that you are looking at with economic development and how can CDBG be used to help assist that.

So if we could talk about two things. One, if you could talk about

the leveraging aspect. The funds that you have spent generally are

not the only funds that go into a project, and usually there is a tremendous amount of hard work to find those other funds, to marry

them to CDBG programs. So the leveraging aspect is one. And the

second thing I would like to have you talk about is—and I know,

certainly, in your community, Councilwoman Kelly, and the things

that you have talked about, there is a tremendous amount of grassroots support for your economic and community development efforts. And if you could talk about your community’s response to

your efforts to use these funds for the projects that you identified

and how they have been received. And why don’t we start with

Commissioner Irey.

Ms. IREY. Thank you. From a leveraging aspect, we have had

downtown revitalizations in the major cities and boroughs in Washington County that if we did not have the CDBG moneys to leverage, we have no starting point. And we have revitalization projects

in the city of Washington, which is where our county seat is, and

the borough of Canonsburg. We have had them in the past in the

city of Charleroi and the city of Monongahela. Many of our smaller

communities, which are actually larger communities for our county,

have been able to use these for leveraging funds. So they are a

starting point.

And for grassroots support, boy, I couldn’t tell you, if you had

this in Washington County, I think you would have a lot more people attending, only because this is so critical for our county. People

are very excited about the CDBG program because it does allow

them the opportunity to do things they could not otherwise do. We

hear back from constituents all the time. We get thank you notes,

which is a little surprising, but we actually do because of the program. And I don’t know what the response would be if we didn’t

have that. I would imagine that another type of program to be

funded in another way would have to take its place because our

local government simply could not provide the revitalization programs and help to seniors and our children that the CDBG program provides.

Mr. TURNER. Thank you. Councilwoman Kelly.

Ms. KELLY. Yes, as far as leveraging aspect, I know that Main

Street was the important issue here, and there were two pedestrian

laws in this town that had been there for many years, and actually,

they helped destroy the town because there was such limited parking and people just wouldn’t want to walk through there. But that

was all taken care of, and I think on the walking tour you notice

that area had been made attractive right there. And I don’t know

what all grants went into that, and perhaps Congressman Murphy

would know better than I as to which grants went into it. But certainly, there was a great deal of money that came into it for that.

30

However, we hardly had time to get started until this flood hit

the town, and we are almost to base one again. And so there is a

great deal that needs to be done with revitalization of the business

district. Without that, this is not a town any longer. We pointed

out that even the drugstore in town had closed and we do have a

group in town, the Carnegie Community Development Corp., and

they were involved in bringing businesses into town. However, I

don’t think there was any real coordination between them and

some of us who serve on council. And that has kind of fallen apart,

and now it has been reorganized, and I have high hopes that the

person that is executive director will get us started in that direction to try to bring businesses into this town. I think that is one

of our prime concerns at the moment.

And, of course, the other is demolition of these old structures. I

mean they are absolute slums after a while if they are not demolished and removed. And we do need the money for that. And we

did get I think $38,000 for some, but that is not adequate to take

care of all the other buildings. You did not see those areas on the

streets below, which were in very bad shape. The road is like a

washboard. And there are slum landlords that come in and they

don’t even follow the guidelines of the county. They somehow evade

all of that and they slap a coat of paint on them, and there is mold

growing behind that. So that is indeed a problem.

Mr. TURNER. Certainly.

Mr. DENT. Just for either of you, Dottie or Diana. Do either of

you use CDBG dollars to pay for staff? Like in one of my

communities——

Ms. KELLY. No.

Mr. DENT [continuing]. We use some dollars to pay for code enforcement, for example, which is a good use I think. But do you

use——

Ms. KELLY. To my knowledge none of that money has been used

for staff. That is why I am saying even with the 17 percent, it is

not clear money to us because we then pay employees and an engineer to go out onsite for some of these grants. And we do pay COG

and we pay dues to COG, and I pointed out that went up 20 percent this year. We did not pay it because we could not afford to do

that.

Mr. DENT. Do you have a Main Street manager down here in

Carnegie, Department of State program? Have you participated in

that?

Ms. KELLY. No, but I am hoping with this one proposal through

the FHL Banks that we will get their assistance. I mean we need

someone that is very knowledgeable. I don’t think we have people

here that are quite that knowledgeable on how to handle that.

Mr. DENT. Thank you.

Ms. IREY. To my knowledge we did use some for the administration of the program. We use the CDBG program through our redevelopment authority, so they actually manage the program. And

they also provide support staff because some of our local governments don’t have the staffing capabilities or expertise to even know

how to go about applying for matching grant funds or other things

for the projects, even filling out the paperwork. So they assist in

local governments.

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And one thing I forgot to mention earlier was when it came to

leveraging funding, some of our non-profits like Head Start that

are able to receive some CDBG fundings are able to use that to leverage foundation money as well.

Mr. DENT. Thank you. That was interesting too. In my area I

haven’t seen as much use of the money for human service related

program. I am on a Head Start Board where I live, use State capitol funds and a variety of sources. I am going to suggest that they

look at CDBG to help their program. Thank you.

Mr. TURNER. Very good. One of the criticisms of CDBG when the

administration brought forth the Strengthening America’s Communities program, which would have consolidated 18 grant programs

and moved them into Commerce, in effect eliminating CDBG, was

an allegation that the program duplicated other efforts on the Federal level. When I hear the types of activities that you have undertaken, I am not aware of other Federal sources that duplicate the

types of seed money and economic development assistance that

CDBG would provide or has provided to your projects. So I want

to ask you, is CDBG your second source that you go to or is it the

primary source? Are there other sources that you are aware of or

is this the only source that you would find in order to be able to

fill that gap and make a difference in these projects?

Ms. IREY. To my knowledge, in 10 years this is the only source.

This is such a huge program in Washington County, I can’t even

begin to tell you. Everybody looks forward to every year when we

get a list of the projects that CDBG is going to fund. So I don’t

know of any duplication there could possibly be or any overlap from

any other government with this program.

Ms. KELLY. The same is true here. It is our main source, and it

is not a great deal when you consider the 10 years, roughly

$330,000—or, no, what was the figure I gave you? About $330,000.

We really don’t have any foundation money for this. And I know

they did for the library, which is quite an asset. It is the gem, the

beacon up on the hill. And there was some government funding for

that. I don’t know all the details in that, but most of that money

was from foundations and from outright donations of people. People

have been very generous to this town actually. It is just like after

the flooding with their donations.

Ms. IREY. Mr. Chairman, I would also like you to know that we

don’t seek projects for CDBG. Elected officials seek us with projects

to find funding for. And CDBG happens to be one that allows a lot

of funding for their projects. So there is never a shortfall of needs

or programs that we need helping with.

Mr. TURNER. Excellent. Thank you. Ms. Patenaude, I apologize if

I have mispronounced your name. There are two things that I am

interested in if you could speak about. One, obviously, is the benefits of the CDBG program and its leveraging. To what extent does

HUD monitor or track leveraging so that they can be viewed as an

item that supports the CDBG program? We certainly hear about it

from every community that we go to, and that ability to attract

other dollars to important economic development projects for communities, I think, is one of the greatest things of CDBG. So

leveraging is something that is very important, and I am very inVerDate 11-MAY-2000 10:40 Feb 08, 2006 Jkt 000000 PO 00000 Frm 00035 Fmt 6633 Sfmt 6633 D:\DOCS\23851.TXT HGOVREF1 PsN: HGOVREF1
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terested in learning from you about, and how HUD might track

that.

Another item that I think is interesting is that, in hearing from

the different communities, just even the two we have today, the differences in the need and the differences in the uses are very wide.

And that is true across the country. But many times the types of

projects that a community might be undertaking may be somewhat

similar to something another community has done. And the opportunity to share information about best practices with a little bit

just of technical assistance and advice of what has worked or what

has not worked, I think CDBG projects can be made more successful. And I know there is a lot of national associations that people

participate in that share best practices information. But I am not

quite certain at the HUD level that the best practices information

is being collected and distributed. I would like your thoughts on

that.

Ms. PATENAUDE. Thank you, Mr. Chairman. My understanding of

best practices is that they are available to the public on our Web

site. The 30th anniversary of CDBG in last September there was

an effort underway at HUD to highlight some of the very successful

programs. But I do agree that we could do a much better job with

technical assistance by sharing best practices with other communities.

To answer your question on leveraging, I don’t know the answer

to that. The IDIS system is the information and funding system

that we use. And I am not sure that we track leveraging dollars.

So I would have to defer to my staff and get back to you.

Mr. TURNER. OK. I know that HUD has such a tremendous

amount of expertise in the projects that are being undertaken as

you review the strategic plans, the comprehensive plans that communities put together and then looking at the issue of how the

funds are spent and their compliance to those plans. And it just

would be great if we could look at how to harness that great expertise in HUD to make certain it is available to these communities.

Thank you. Are any other questions from the Members?

Mr. MURPHY. Mr. Chairman, I have one for the secretary. And

I was asked by a reporter and haven’t been able to find an answer

yet, but is there any data kept on overall the number of jobs that

have been assisted—not necessarily directly created because I don’t

think government creates jobs—but certainly have come out of

some of these CDBG grants? Any job count?

Ms. PATENAUDE. I believe that the IBIS system does track jobs

created to benefit low and moderate income.

Mr. MURPHY. Do we have any idea what that overall number is?

Ms. PATENAUDE. I don’t know the number but we can get back

to you.

Mr. MURPHY. I appreciate that. How about you had mentioned

something about economic return in terms of one of the projects in

Pittsburg would yield $8 million in tax revenue coming through,

but does that system also track overall dollars generated and overall economic impact? For example, business, the amount of sales,

and other developments that come through then?

Ms. PATENAUDE. No, I don’t believe we have the ability to track

that, and that is one of the efforts underway is to create a performVerDate 11-MAY-2000 10:40 Feb 08, 2006 Jkt 000000 PO 00000 Frm 00036 Fmt 6633 Sfmt 6633 D:\DOCS\23851.TXT HGOVREF1 PsN: HGOVREF1
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ance measurement system that will actually capture the outcomes.

My staff just sent a note to me here, sir, on the number of jobs created in fiscal year 2004, 75,000 jobs were created.

Mr. MURPHY. Nationwide?

Ms. PATENAUDE. Yes.

Mr. MURPHY. Is there any requirement of parts of communities

to report back after they have used some of the money to give any

information of what this has led to, local job development, economic

impact?

Ms. PATENAUDE. I believe in the annual—the CAPERS, that is

the performance evaluation report that information is requested.

We don’t have the ability to track it, though——

Mr. MURPHY. So we don’t audit that afterwards?

Ms. PATENAUDE. We do. We do audit by doing the monitoring.

And the grantees also input data into the IDIS system as well. We

don’t have the ability at this time, though, to compare the CAPERS

and the IDIS system.

Mr. MURPHY. OK. Thank you. And thank you, Mr. Chairman.

Mr. TURNER. Good. Thank you. Just one last question for the

commissioner and Councilwoman Kelly. Is there anything you can

tell us that would be helpful for the program to be changed now

that you have had the additional thoughts and the testimony that

you have given today that you would like to leave us with in how

we might be able to more assist your economic development efforts?

Ms. IREY. More flexibility in the program.

Mr. TURNER. Thank you.

Ms. KELLY. I would reiterate that is the case. I think when we

need the emergency funds, it is an awfully long time to wait by the

time you submit these and by the time we receive the moneys and

put it out for bid. It is very time-consuming, and the residents

begin to question their government when they have to wait so long.

But we just follow whatever track we have to follow.

Mr. TURNER. Well, I want to recognize that from what I understand this is Ms. Patenaude’s first House congressional hearing, is

that correct?

Ms. PATENAUDE. Yes.

Mr. TURNER. So we appreciate you coming here and participating

in this as your first. I do want to thank all of you for the time that

you have given us, the time in preparation, the time for your staff,

and I want to give you just one last opportunity if there is anything

that any one of you would like to add to this record for a closing

statement with us, I give you the opportunity now.

Ms. PATENAUDE. Mr. Chairman, I want to thank you for holding

this field hearing today in Carnegie. Am I pronouncing it correctly?

Ms. KELLY. Carnegie.

Ms. PATENAUDE. Carnegie. OK, I will go home with the correct

pronunciation. And Congressman Murphy, it is nice to meet somebody from Upper Saint Clair.

Mr. MURPHY. Me too. I didn’t know you were from my town. Nice

to see you.

Ms. PATENAUDE. Thank you, Congressman Dent.

Ms. KELLY. Yes, I would just like to thank you for the opportunity of having this. It is an eye-opener to me. I am a novice at

34

this sort of thing, and there will be other thoughts that will accompany. Perhaps I can be in contact with the offices after this.

Mr. TURNER. Absolutely.

Ms. IREY. I would also like to thank you for allowing us to testify,

to make our needs known in our counties and municipalities, and

also that you have allowed our economic staff. You will be hearing

later from our director of Redevelopment Authority, and he will be

giving you some more details about the program. So I thank you

for taking your time out of your busy schedules to travel so far and

to hear what our needs are in our district. Thank you.

Mr. TURNER. Thank you for your comments, and we certainly

wish you great success. If there are additional comments that you

would like to make, please submit them to the committee and we

will help make certain that we have them. We are going to take

a short 2-minute recess while the second panel is seated. Thank

you.

[Recess.]

Mr. TURNER. Call to order the second portion of the hearing of

the Subcommittee on Federalism and the Census. On our second

panel I would like to welcome Mr. Stanley ‘‘Lou’’ Gorski, executive

director of the South Hills Area Council of Governments; Mr. William McGowen, executive director of Redevelopment Authority of

the county of Washington; Mr. William E. Mitchell II, assistant director of planning and development, Westmoreland County Industrial Development Corp.; and Ms. Diana Reitz, Community Development Coordinator, city of Jeannette, PA. We appreciate all of

your efforts to provide us written testimony. We also appreciate

your appearing today and the work that you are doing in providing

us additional information on the CDBG program. As you would

have heard with panel one, on the table there are lights that will

appear. The green light indicates for you to commence your testimony. The red light means that your time has expired. As is the

custom of this committee, we do swear in all of our witnesses. So

if you would please stand and raise your right hands.

[Witnesses sworn].

Mr. TURNER. Let the record show that all the witnesses have responded in the affirmative, and we begin this second panel with

Mr. Gorski, if you would begin your testimony.

STATEMENTS OF STANLEY GORSKI, EXECUTIVE DIRECTOR,

SOUTH HILLS AREA COUNCIL OF GOVERNMENTS; WILLIAM

MCGOWEN, EXECUTIVE DIRECTOR, REDEVELOPMENT AUTHORITY, COUNTY OF WASHINGTON; WILLIAM E. MITCHELL

II, ASSISTANT DIRECTOR, PLANNING AND DEVELOPMENT,

WESTMORELAND COUNTY INDUSTRIAL DEVELOPMENT

CORP.; AND DIANA REITZ, COMMUNITY DEVELOPMENT COORDINATOR, CITY OF JEANNETTE, PA

STATEMENT OF STANLEY GORSKI

Mr. GORSKI. Good morning. I would like to thank the subcommittee for the opportunity to speak with you today about the impact

of the CDBG program and its funding on helping municipalities in

this area. Notwithstanding the President’s proposal, I would encourage retention of the program in its current form, and I would

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like to address current uses of CDBG funding at the local level, the

supplemental benefits accrued to the participants in the program,

as well as the consequences of the President’s proposal in consolidating the programs, as he has suggested.

With respect to current uses, I would like to offer the perspective

of 14 years of municipal service as a municipal manager in a municipality that was aggressively pursuing and successful in received

CDBG funds for more than 14 years, and as a current administrator of the program in my current capacity.

Although constrained by the statutory requirements that the

money be committed to low to moderate-income people, municipalities in this area have developed a wide array of strategies to both

participate in the statutory objective. Common uses include infrastructure improvements, recreation enhancements, demolition activities, development and enhancement of senior citizen facilities,

planning studies, commercial and economic revitalization, and public safety support.

By way of one brief example, I am going to call your attention

to how the program can directly impact a community, and it is one

in which I was involved several years ago, wherein an infusion of

$800,000 in CDBG funds over a 6-year period prompted an additional commitment from the Commonwealth of Pennsylvania in the

amount of $100,000, $500,000 from the local government, as well

as $600,000 from the participants in the program. This was a commercial revitalization area that saw the business district eliminate

blighted conditions, see infrastructure improvements, and most importantly, preserve jobs.

Notwithstanding the impact of that type of program, the supplemental benefits of the program cannot be ignored. As a matter of

fact, if you do not appreciate the supplemental benefits, you will

probably lose an appreciation for the program as a whole. First and

foremost is what you mentioned earlier, Congressman, and that

was leveraging ability of the dollars. We have the situation in most

of the programs I administer now where the local governments are

bringing in a local match, which means that the dollar value of the

program is more than just the dollar value of the CDBG grant. You

are looking at a situation where communities most often would not

even be able to undertake the program or project without the

CDBG money, which means you are helping to stabilize the financial base of the community as a whole, in addition to achieving the

target objective.

In addition, you have the leveraging ability to take that dollar

into the community that has other dollars available, be it the nonprofit corporation arena or other funding agencies through government. I am working on an application right now, for example,

where the ratio is 5 to 1 CDBG with everything else coming in

from other sources.

An additional benefit is the general stabilization of the community because you are enhancing the tax base, you are improving the

general conditions, and thereby bringing benefit not only to the target community, but also to the municipality as a whole.

Not to be forgotten is the contractor community as well. We are

in a situation where most of this activity is competitively bid, so

you are looking at a whole host of small contractors being able to

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effectively compete for jobs that would otherwise not be available

to them. Keep in mind that they, in turn, are providing employment at prevailing wages, they are buying goods and services, as

well as hiring subcontractors. We are not able to quantify this at

our level, but we are looking at a situation or a discussion with

these individuals really brings concern to their mind with the

threat of this program disappearing, because the ability for them

to participate means jobs; it means their very survival.

And last would be a focus on the President’s proposal. Notwithstanding what he is attempting to do, whether it is either good or

bad from our perspective, it means the termination of the program.

And that would be absolutely devastating. Nobody in this room, I

would suspect, would encourage the idea of a reduction in funding,

but as difficult as a reduction would be, it would be preferable to

have the dollars reduced and retain the program in its current

form within HUD, as opposed to consolidating and moving it or

whatever vestige is left into the Department of Commerce.

In short, the program is an important mainstay to the viability

of fiscality and for the future of municipal governments, as well as

the contractor community. If there is a problem with the program,

fix it. Don’t eliminate it. Thank you for the opportunity, and I welcome any questions.

[The prepared statement of Mr. Gorski follows:]

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Mr. TURNER. Thank you, Mr. Gorski. Mr. McGowen.

STATEMENT OF WILLIAM MCGOWEN

Mr. MCGOWEN. OK. I am going to do a PowerPoint presentation.

Thank you for the opportunity to address you. It is going to be 20

minutes in 5 minutes, so hold on.

We feel that this is the most successful program in existence

from the Federal standpoint. It keeps urban communities viable. It

really is key in helping low-income people. Go ahead to the next

slide.

And you can follow along or you can follow the slides, either one.

If you follow the slides, you can followup with the other later.

It does revitalize and redevelop blighted areas—and, of course,

we have plenty of those in Washington County from the past—

maintains housing stock. Again, you don’t want sprawl; you want

to fix up what we have, especially in the downtowns. And from an

economic standpoint, the small towns, this program is run at a

county level, but the municipalities get all the benefit. Next slide.

There are some of the major areas where we feel that CDBG is

key. Again, those top two, the sewer and the parks and the citizens’

facilities, low-income census tracks, the low-income neighborhoods,

that is direct help to those that are in need. It keeps and puts people in homes instead of having them go someplace that they

shouldn’t be.

Let me give you a bunch of examples here real quick and we will

run through these. Let us take a look at downtown business districts. This program more than any other that I know of helps

downtowns. It leverages many different kinds of moneys. In the

case of Washington, we leveraged over $10 million. PennDOT, T–

21 moneys, private moneys of businesses contributing to keep the

downtown where it is supposed to be, very close coordination with

Main Street Program. Charleroi is the same way down in the Mon

Valley, you can see the facts there. The city of Monongahela the

same way. It keeps and puts small towns back in business. Next

slide.

The Head Start program has already been mentioned. It is a superb example. It took empty public housing, empty public housing,

and put it where it needed to be in a very nice partnership with

Community Action Southwest and the Housing Authority. We have

done two of these and we are going to do one more of them. Next

slide.

That shows you the before and after that you can see in doing

that Head Start building in Washington. Next slide.

Another fine example, a neighborhood example, Highland Ridge

neighborhood revitalization. We have acquired 42 properties and

we are building 25 new single-family homes for very low-income

people. Again, partnership and leverage. Now, Highland Ridge

CDC was formed, banks giving money, PHFA contributing, and we,

the Redevelopment Authority, provide the leadership and the staff

to make it all happen. Next slide.

You can see the Highland Ridge example. The top one is a new

home, and you can see the bottom one is what they were. We built

energy-efficient homes for low-income, and we actually trained the

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homeowner to be a good homeowner in terms of making payments.

Next slide.

Another great example. For individuals without this program,

the house becomes unlivable and the owners cannot afford to buy

or live elsewhere. 1,800 homes so far over the years, code deficiencies, lead-based paint now has increased the cost of the program, but it is an excellent program. You can see 640 on the waiting list, so we need a lot more assistance in this area. Next slide.

These are some examples of before and after, before the rehab

program. Next slide.

Elderly housing, this is a demand which will increase substantially in the future, obviously, with the baby-boomers, and we take

between 7 and 8 facilities, 503 units, put people in there, low-income, and it has taken vacant, hazardous structures, taken then either to go away or remodel, and it puts these things on the tax

roles. We paid full taxes on those elderly facilities. We, ourselves,

own six facilities, 461 units. It is a very, very successful program.

Again, there is some examples there. You can see the before and

after of what it was and what it became. Next slide.

Demolition and clearance. This has been mentioned several

times. It helps towns tremendously, and the cleared lots are used

for all kinds of things, parks, new homes. Charleroi is now doing

an open market with two buildings that we are tearing down. Elderly facilities, commercial, it removes blighted structures. And let

me point out very strongly, without this kind of money, it doesn’t

happen. Those structures stay there. They don’t go away. Again, a

very successful business that you saw down in—this used to be

Braydenville, and tear down a bunch of houses there. OK, go on to

the next slide.

OK. Special help for special facilities. These are just two examples of many to help these kind of facilities so that they can put

a new roof on or whatever and stay in business so that they can

provide for the low-income people. Another one is we help the

Housing Authority itself in a lot of ways, building new elevators,

etc. Next one.

Recreation, this speaks for itself. And, again, partnerships with

communities. Next one.

Again, these are other examples that we have and, again, they

are older communities. They have older sewer systems, etc. The

bottom one there, accessibility, that is key for the buildings. Next

slide.

And to wrap up here a little bit, I could give you hundreds and

hundreds of examples. We could write books of testimony. We could

get books of testimony from the people that have gotten help

through these programs. But let me point out that just since 2002

we have gone down 12 percent already in the CDBG funding. That

doesn’t take into account inflation or the rise in building costs, etc.

So we should not go down anymore. It will hurt, and it will hurt

the wrong people. It will also slow the economic growth. Next slide.

We feel that it is an excellent Federal program that is run correctly on the local level. We run it for the whole county. We have

nobody that has opted out in any of the time we have been with

it. If there is less CDBG money, then you are going to see more

rundown, vacant homes and building and more people homeless

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and living off the State, living off the Federal moneys. So the small

downtowns would, and if the funding goes down, do exactly what

you don’t want them to, and that is to deteriorate. This program

helps the downtowns tremendously. There is no substitute. If this

goes down, then the examples that I have given you just won’t happen. Thank you.

[The prepared statement of Mr. McGowen follows:]

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Mr. TURNER. OK, Mr. Mitchell.

STATEMENT OF WILLIAM MITCHELL

Mr. MITCHELL. Mr. Chairman, from the text of the letter that we

received from you, your subcommittee is seeking input from practitioners involved in the day-to-day operations of the Community Development Block Grant programs in the Pittsburgh region. I am delighted you invited Westmoreland County to participate in this endeavor because I believe that the county is truly representative of

the region as a whole.

And I am especially pleased to be here because I firmly believe

that the regional rise or fall on economic vitality of the central city

and how that central city interacts with the surrounding region,

whether the outlying areas of the region are in agreement with this

presumption is sometimes questionable, but the fact remains that

the city of Pittsburgh and the outlying areas are one in the same

economically. Since 1974, CDBG has been a valuable tool in assisting local governments of all sizes to remain viable, but more could

be done to further enhance the region’s vitality.

CDBG has proven to be an asset to the region and Westmoreland

County in particular because this program has served this county

for over 30 years as a resource to help cities, boroughs, townships,

etc., meet their community development, affordable housing, and

economic development needs. It is not just a tool for concentrated

urban areas. It is a valued resource for our outlying areas as well.

In Congressman Murphy’s district alone in Westmoreland County

over 3,600 people benefit from the activities, programs of fiscal

year 2005 moneys.

Another often-overlooked benefit of the CDBG program is the

professional staffs that are developed under its auspices. If the program should be eliminated, a number of the staff would be laid off,

and this would negatively impact the region. Because of the nature

of many other Federal programs and State programs, the loss of

these experienced employees will mean that many of the regions

local governments will no longer be capable of administrating complex programs.

The region is also blessed with partners in the U.S. Department

of Housing and Urban Development at the Pittsburgh Area Office

that possess many years of experience in administration of the

CDBG program. But just as importantly, the local HUD staff is a

source of technical assistance in other related areas. Our office

consults with the local HUD staff extensively, and these consultations are not always related to CDBG, but include other Federal,

State, and even private foundation resources. Disseminating ideas

that assist constituents may not be quantifiable, but that service

is just as important as passing out checks, and that is one of the

services provided to all the local practitioners by the Pittsburgh

HUD staff. It is not just the money; it is the people. And that tends

to be overlooked.

That is not to say that Westmoreland County has always enjoyed

harmonious relations with HUD in general. In the past there have

been difficult times because over the life of many programs, the

process of the program becomes paramount in some minds, while

the delivery of the services to the constituencies intended to be

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benefited becomes secondary. There is one instance in particular in

our program history that reflects that attitude, and most of the

problem generated was the creation of the central office in Washington. I won’t further pursue that unless you all want to.

All in all, HUD has been a positive force for the bettering of

CDBG’s intended constituencies. Last year CDBG celebrated its

30th anniversary since being signed into law by President Ford in

1974. The program still has widespread bipartisan support within

the Nation and in Congress. Just look at the number of House and

Senate Members signed the letters to the Budget Appropriations

Committees urging those committees to preserve their program,

keep it at HUD, and fund it at $4.7 billion.

There is a lot that is right about the CDBG program. It is a tool

that allows grantees to leverage other public and private resources.

This year the county will provide $1.7 million in CDBG Section 108

assistance toward the city of Greensburg’s downtown revitalization

efforts. The inclusion of the CDBG funds will be leveraging approximately $19.8 million other funds. This project is also in Congressman Murphy’s district.

CDBG has been achieving results nationwide similar to those obtained in the Pennsylvania 18th Congressional District throughout

its history. An analysis performed by an economist at the George

Mason University showed that for the first 25 years of the program, CDBG funded projects, created 2 million jobs—you knew

that before, right—and contributed over $129 billion to the gross

domestic product. The program does not lack focus as intimated by

the program assessment rating tool utilized by the Office of Management and Budget. Congress stated in its purpose in a 1974 act,

‘‘The primary objective of this title is the development of viable

urban communities by providing decent housing in a suitable living

environment and expanding economic opportunities principally for

persons below moderate income.’’ Moderate income is moderate income, not extremely low income. This broad statement of congressional intent provides grantees flexibility in their implementation

of the program so that their sometimes unique development goals

are addressed, not a goal created by a bureaucrat in Washington

with no local knowledge. This program creates and nurtures local

initiative. This region needs more, not less, of that.

The Pittsburgh region, in my opinion, is a depressed area. Additional assistance is needed. In the last decade this region lost

212,500 in population. This is a 11⁄2 percent loss compared to a 1.4

percent gain for the Commonwealth as a whole. Just think of the

gain for the rest of the State that did not include this area.

Mr. TURNER. Mr. Mitchell, we have your written testimony, and

I think the Members have reviewed it.

Mr. MITCHELL. OK.

Mr. TURNER. Since we are going to be short on time, if you might

summarize the rest of your testimony if there are any additional

oral comments that you would like to make in conclusion.

Mr. MITCHELL. Thank you. I will just stand there. You all got it

in written form.

[The prepared statement of Mr. Mitchell follows:]

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Mr. TURNER. OK, and we will look forward to your participation

in the question/answer portion.

Mr. MITCHELL. Thank you.

Mr. TURNER. Ms. Reitz.

STATEMENT OF DIANA REITZ

Ms. REITZ. Thank you, Mr. Chairman, for inviting me here today

to testify before the subcommittee. Mr. Chairman, Jeannette is a

small city in an urban county. The city is located in southwestern

Pennsylvania approximately 25 miles east of Pittsburgh, and our

population is roughly 10,500 without 22 percent of the population

over the age of 62. Our median family income is $37,000 and our

city is one of the few remaining that still supports their own fire

and police departments. Up until the mid to late 1970’s,

Jeannette’s economy was centered around four glass manufacturing

plants and was originally dubbed the ‘‘Glass City.’’

Initially, the city of Jeannette received its Community Development Block Grant funds through Westmoreland County’s Urban

County program. However, it soon became apparent that the city

would be able to undertake additional projects if the city applied

for CDBG funding directly from the State. So in the early 1980’s

the city fathers decided to opt out of the Urban County program

in Westmoreland County and apply to the State for CDBG funds.

Mr. Chairman, this action by the City Council was very successful. Over the past 10 years or so, the city of Jeannette has received

over $4 million in Community Development Block Grant funds.

However, there are some problems that small cities like Jeannette

are facing, and the following is a list of those: there is a loss of population; there is an aging population; there is a loss of tax revenue

and financial resources; an aging housing stock; deteriorated infrastructure; deteriorated buildings, commercial and industrial; and a

declining business district.

The following are some ways cities like Jeannette are able to battle these problems. Below is a list of activities and projects the

Community Development Block Grant funds support, especially in

our community. They supported recreation improvements, street

and road improvements, clearance and removal and slums and

blights, emergency radios, code enforcement, removal of architectural barriers under ADA, homeownership program—which is a

rehab for vacant dwellings for resale to low and moderate-income

families that the city has partnered with the local non-profit to administer a facade improvement program, a first-time homebuyer

program for individuals and families that have never been homeowners before, that they have been renters, purchase of a fire

truck, a Commercial Property Improvement program to support

and assist commercial business owners to upgrade their buildings,

a Revitalization Activity program that is currently supporting a

major redevelopment project in our city, and, of course, Housing

Rehabilitation program, which is benefiting low and moderate-income homeowners.

Mr. Chairman, here are some of the problems that we see that

are affecting cities like Jeannette and that Congress should address regarding Community Development Block Grants. Our Housing Rehabilitation program, our program has been very successful.

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Over the past years, the city could rehabilitate approximately 20

to 25 homes in 1 year. Unfortunately, now, with the implementation of the lead-based paint regulations, the city doesn’t have the

list of contractors to bid on the job. The cost of the jobs has skyrocketed, and it is just too time-consuming. The city has dropped

down to completing around 3 homes a year under our Housing

Rehab program because of these problems. We have difficulty getting contractors, qualified contractors to bid, and when they do, the

cost has doubled from years past. Many communities are dropping

the Housing Rehab from their list of activities due to these hardships of the lead-based paint requirements.

Another issue that we find that we are battling is the implementation of the Davis-Bacon wage rates. With the implementation of

the Davis-Bacon wage rates with any contract over $2,000, several

problems have been encountered by our city. Small communities

like ours do not have large contracting firms, and the smaller firms

do not pay Davis-Bacon prevailing wage. Generally, our contractors

are employing two, maybe three employees. They are just small

companies. They cannot bid on our jobs or it raises the cost of the

job too much. And it certainly doesn’t help the local economies of

cities like Jeannette where we have to go outside of the area for

our contractors.

Another concern is an overall State historic preservation clearance that I find in particular with respect to the State, it makes

it difficult to improve aging communities like the city of Jeannette

whenever we must adhere to historic preservation requirements,

especially in areas that have no value left.

The following, Mr. Chairman, is a list of some of our future

projects. We have a construction of a new access road in the city

of Jeannette. We have removal, hopefully, of a deteriorated glass

factory, improvement to our central business district, and improvement to our housing stock overall.

So in conclusion, Mr. Chairman, without Community Development Block Grant funds, small cities like Jeannette would not be

able to financially address their problems and their needs. Thank

you.

[The prepared statement of Ms. Reitz follows:]

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Mr. TURNER. Thank you. Now, we will go for comments and

questions and begin with Mr. Murphy.

Mr. MURPHY. Thank you, Mr. Chairman. I just have a couple

brief ones because I know we are short on time here. But I wanted

to ask in general the panel a couple things. Mr. Mitchell, you had

in your written testimony—you didn’t get to talk about this—was

the anti-pirating component.

Mr. MITCHELL. Yes.

Mr. MURPHY. Talk about pretty fascinating. Could you just elaborate on that? Is that a problem now in the communities that you

see occurring that one community may leverage money that ends

up simply moving the job from one county to another?

Mr. MITCHELL. I think it happens more in Western Pennsylvania

than it does in most of the other regions. The anti-pirating rule

was part of the old Urban Development Action Grant program. It

essentially says you will not use—in this case it would be CDBG

funds—to entice or use as a method of enticement to take one company from one area and move it to another. It is something I think

Congress ought to look at. I mean you did have it in the UDAG

program. Maybe it is time to revisit this.

Mr. MURPHY. For any of the rest of you, Mr. Gorski or Admiral

McGowen or Diana Reitz, any of you see this as an issue too, that

some of this money is sometimes used to move a business from one

town to another?

Mr. MCGOWEN. We don’t see it as an issue in Washington County. We do see a lot of growth in Washington County coming south

from Pittsburgh downtown or the Pittsburgh area.

Mr. MURPHY. That is probably more a property tax issue.

Mr. MCGOWEN. Well, that is part of it. And the part is that we

are growing. The whole Pittsburgh area and the region is growing,

and people want to move out where it is cheaper.

Mr. MURPHY. All right. That is all I am going to ask for now.

Mr. TURNER. Mr. Dent.

Mr. DENT. Thank you, Mr. Chairman. Admiral McGowen, I enjoyed your presentation. You talked a little bit about homeowner

assistance. I guess you are trying to help people in Washington

County, move from a rental situation to an ownership of owner-occupied situation. Have you had any experience with de-converting

rental units back to owner-occupied settings? There were always

row homes and they were owner-occupied. In the 1970’s many of

them became rental units. So it was once a one-family unit now

has—owner-occupied, it now has three rental units. And do you use

any of your CDBG funds for that kind of de-conversion to take

those rental units back to owner-occupied situations?

Mr. MCGOWEN. Not that I am aware of. Brenda—yes—we have

not done that, no. We have enough people, as you can see in the

waiting list, of both the homebuyer program, and especially the

home rehab to keep the owner there, that, I mean, those two are

very, very viable programs.

Mr. DENT. You talk about your homeownership program. Do you

provide counseling services support with down payments for that

money?

Mr. MCGOWEN. Yes.

Mr. DENT. What do you do in terms of——

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Mr. MCGOWEN. Yes, help with the down payment, help with closing costs——

Mr. DENT. Kind of like helping them with the process, hand-holding to a certain extent——

Mr. MCGOWEN. Yes.

Mr. DENT [continuing]. To get them through the——

Mr. MCGOWEN. Absolutely. Highland Ridge is a wonderful example of that. We actually have set up with a non-profit to help these

people make sure that they understand house payments and proper

budgeting and they actually—we are very key about making sure

that they are qualified and go through that before we——

Mr. DENT. Yes, and I concur with what you said—you don’t have

to comment on this—on what you said earlier too about the need

for these CDBG dollars for demolition purposes. I found the same

thing in my community. If you don’t have——

Mr. MCGOWEN. Yes.

Mr. DENT [continuing]. Public funds, whether it be CDBG or

some other public fund, the project is not going to move until you

get that site cleared and remediated and really you are swimming

upstream so to speak. And it is interesting that is in your observation as well.

Mr. MCGOWEN. Yes, and there is so many small towns in this

southwestern Pennsylvania to let it become that way, and you have

to revitalize the whole downtown.

Mr. DENT. And it is ready to go.

Mr. MCGOWEN. Yes.

Mr. DENT. And the private sector doesn’t want to throw their

money to knocking down buildings.

Mr. MCGOWEN. No, that is right.

Mr. DENT. Right.

Mr. MCGOWEN. But the private sector will step in if they see it

is being done.

Mr. DENT. Absolutely. That is my experience. And Ms. Reitz—in

Allentown they would say Reitz—but the question—you talked a

little bit about Davis-Bacon and that you are having a hard time

basically getting contractors to bid for that type of work because

the terms are too small. And do you have the same problem with

the State minimum wage law too? The threshold for hiring is

$25,000 or something that extensive?

Ms. REITZ. Yes, we do. Part of the problem is we have smaller

jobs going out. We have a facade program that is a matching program up to $5,000 to be able to do facade work to commercial

buildings. And if I have a gentleman or a contractor that wants to

bid on that job, and his job, say it is only signage or maybe some

awnings and there is three employees under his wing, unfortunately, unless he pays that higher wage, he cannot bid on that job.

So he decides not to bid entirely and walk away from the job.

Mr. DENT. Is it fair to say that less work is being done because

of that law?

Ms. REITZ. Well, what happens is that I end up bumping out into

the larger contracting firms, which the costs actually go up higher.

Mr. DENT. So would you recommend raising those thresholds——

Ms. REITZ. Raising the thresholds——

Mr. DENT [continuing]. For both the Federal and State acts——

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Ms. REITZ. Yes, sir.

Mr. DENT [continuing]. So that you can get more work done——

Ms. REITZ. Yes, sir.

Mr. DENT [continuing]. For less money?

Ms. REITZ. And it would provide an opportunity to the smaller

contracting firms to bid on these jobs. We are putting them out of

business.

Mr. DENT. And those are your local firms——

Ms. REITZ. Yes.

Mr. DENT [continuing]. In many cases and you have to go outside

the community to get the larger firms——

Ms. REITZ. Right.

Mr. DENT [continuing]. To come in and——

Ms. REITZ. That is correct.

Mr. DENT. Thank you.

Mr. TURNER. Ms. Reitz, you mentioned in your written testimony

and your oral testimony the State historic preservation offices and

the requirements for historic review that have been, in your opinion, some impediment. Could you speak a little bit more about that

in detail? Is it a State processing issue, a time issue, or are actually the requirements that are placed upon you difficult to comply

with?

Ms. REITZ. Well, Mr. Chairman, I think that it probably is first

a State issue of another layer of regulations that are put on top of

what we already have. When we are going out—for example, the

city of Jeannette is in the process of doing two major projects within our downtown area. One is a downtown revitalization project,

which we have set aside Community Development Block Grant

moneys; we have gotten an EDI grant through the Federal Government and an RCAP through the State government to help support

this project. And what I have seen is the problem is we couldn’t

come in and do the demolition because we had to jump through the

hoops to clear the site of historic value.

And please don’t get me wrong; I certainly want to preserve the

history of our community, but in some cases there is no history left.

There is nothing of those buildings left. So it puts a timeframe on

getting the jobs completed within a timeliness manner or, you

know, delaying the project to jump through the hoops, and then

there is the recordation process and, you know, what follows in

putting the MLA together and putting the stipulations in the MLA

and how you would preserve the history of that area. With respect

to our project, we are definitely having some problems not only on

the downtown area, but on the housing end where we have a large

two-block area that we want to acquire, demolish with a non-profit.

These are dilapidated buildings. There really is no value left. But

we are delayed in doing that because of the regulations that have

been attached into preserving the history of that general area and

what the housing stock was back in the 1930’s.

Mr. TURNER. Well, in addition to my responsibilities in this committee, I am also co-chair of the Historic Preservation Caucus. And

having served as a past mayor, I share your concerns, both of the

need to preserve our heritage, and at the same time, to provide a

streamlined process so that economic development can occur. So I

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am always interested in hearing both the experience that people

have and ideas that they have for improvement.

We are currently looking on the Federal level of the reauthorization of the statutes under which these plans operate. And most of

the information that I have experience with or that I have received

relate not necessarily to the text itself and to the goals of the program, but to its administration and the timeliness——

Ms. REITZ. Yes.

Mr. TURNER [continuing]. Of getting responses. So even after this

hearing, if you have additional thoughts on the ways that on the

Federal level this might be able to be addressed, please provide

them to us because we are currently taking that up now.

Ms. REITZ. Thank you.

Mr. TURNER. Mr. Gorski, Ms. Reitz had raised the issue of prevailing wage and you also had that in a statement in your testimony of the positiveness to the value of the wages that were being

provided for these projects, these projects being an economic development initiative. Do you see an issue or a problem also with the

cap level? Is the amount difficult for you or most of the projects you

have undertaken not at a level where you have had difficulty with

it?

Mr. GORSKI. Quite the contrary. There is a difficulty. The threshold is so low that what we are finding is when the estimates for

the projects are placed on the application and then we see the real

numbers as a result of the bid, there is often quite a discrepancy.

In discussing the matter with contractors, we have discovered that

several choose not to bid; others, especially some who gave the

original guidance to the municipality in terms of pricing, are almost embarrassed to the number that they have to submit because

the prevailing wage has afforded the premise under which they

made the original submission. The threshold, if it was higher, probably would make an awful lot of sense. The statement that I made

was the fact that the program is in fact compelling people to work

at decent wages.

We hear an awful lot, especially in the last few days, about what

is happening at the State level about prompting an increase in

minimum wage, which I understand is different. But nonetheless,

we have contractors who understand what is involved, and we are

looking at real, honest, good dollars, irrespective of prevailing

wages being imposed. Once a prevailing wage comes along it does

in fact drive up the cost of the job.

Mr. TURNER. Mr. Dent.

Mr. DENT. This is a Federal hearing. I feel like I am wearing my

State Senator hat at the moment, you talking about RCAP assistance. It is not something you would deal with in Ohio probably.

But to your point—I have just forgotten my point now, but it was

an important one. The issue of tax increment finance and in this

State you have a problem with, you know, prevailing wage now

being applied to private developments where tax increment financing is used. And many of you in the economic development business

know what I am talking about. Has that presented problems for

you in this end of the State? It has been a problem in eastern

Pennsylvania that the prevailing wage, which previously had never

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been applied to those private developments when using tax increment financing, it was quite a problem. Is that a problem out here?

Mr. GORSKI. We haven’t had any interplay between CDBG and

the TIP project, so I can’t comment.

Mr. DENT. OK. Anything in the Westmoreland——

Ms. REITZ. Any larger projects that we have done—and I am

speaking on the larger end—it is never really a problem for us,

Congressman. It is the smaller jobs that we find difficulties with.

Mr. DENT. OK. Thank you.

Mr. TURNER. Mr. Mitchell, you made reference to a difficulty that

you had with HUD and asked whether or not the committee would

want you to elaborate. I would ask that if you would elaborate on

the issues and the difficulties that you have had and also give you

the opportunity to, if you would like to in more specific and greater

detail, provide to the committee in writing a description of that.

But I would like you to just speak for a moment on those issues.

Mr. MITCHELL. Well, this was sometime ago, and it involved

handicap-accessibility issues and the rules and regulations that we

operate under or did operate under at that time. It required you

to provide accessibility to handicapped individuals to various public

facilities, municipal buildings, public parks. And the idea was that

you would use CDBG dollars, and I don’t want to get too technical

because it is involved in technicalities where handicapped people

were generally at that time considered to be of low income by virtue of their handicap. So we did some accessibility improvements

in several public parks. And the HUD folks at Washington took exception to that because other people could utilize those improvements, not just handicapped people.

So being somewhat aggressive at some points, we pursued it and

got them to end up actually changing the rules because of Westmoreland County. And now you will find the rules say that you can

do handicapped accessibility improvements, as long as those improvements are for and considered to be low and moderate-income

benefits as long as those improvements are for frail elderly as defined by the census or handicapped adults. However, it left out children, didn’t it? So one of the things—in the settlement we had with

HUD we had to have a sign that indicated that any project we did

for these handicapped accessible improvements were for those particular protected classes. So what I did is I created an 8 x 10 sign

and we are doing a ramp improvement at a public park for an amphitheater, and so I invited the HUD officials in Washington to attend a ribbon-cutting. And on that sign said this ramp is for the

exclusive use of frail elderly and handicapped adults. Handicapped

children are not permitted to utilize this improvement by order of

the U.S. Department of Housing and Urban Development. And, of

course, I invited those folks to come to the ribbon-cutting, and for

some reason they turned me down.

Mr. TURNER. Mr. Mitchell, you clearly have an ability to make

a point.

Mr. MITCHELL. We were just following the rules, sir. That was

all. And those rules still exist today. For the life of me I can’t understand why children, because they are considered wards of their

parents, and if their parents are not low-income, therefore, they are

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not. Well, there is no difference in my mind between a handicapped

person my age or your age and a handicapped child.

Mr. TURNER. Well, I tell you what, what is important is that

what you are describing is an attempt by your community to do

something that is good and where you have tripped into Federal

rules and regulations that can thwart that, those are the types of

things that we want to learn, so we appreciate you bringing that

to our attention today.

Mr. MITCHELL. Thank you.

Mr. TURNER. Mr. McGowen, the Admiral, I would appreciate

your discussion of the issue of duplication. We had a great presentation by you of the effectiveness of this program in your community. We saw some great results in the photos that you presented.

One of the criticisms that CDBG had to overcome this year was the

allegation that it is a duplicative program, that there are other

sources of funds for your community to seek to accomplish the

tasks that you laid out for us. Could you talk about that for a moment?

Mr. MCGOWEN. I see there is absolutely no duplication at all. As

Ms. Irey said, it is a jumpstart in my cases, especially in downtown

revitalizations. I showed you the city of Washington, which is an

example, that CDBG funds because of the low-income census track

for the whole city, we were able to use that and it jumpstarts millions of dollars. Developers are now coming in with $100 million

project in downtown Washington and 1,000 jobs, and that is because CDBG, no duplication; it wouldn’t have happened if CDBG

hadn’t done it to start with.

The same way with the home rehab program. There is no duplication there. You can’t get that money anyplace else. And it provides keeping homes on the tax roles. The Head Start that I gave

you an example of, the partnership. You wouldn’t have had the

people stepping up to the plate in terms of the CDC and the BHFA,

etc. The Highland Ridge, we had a local bank give $125,000 to the

program once it was established with CDBG. So there is absolutely

no duplication. It is just a multiplier effect that is good.

Mr. TURNER. Thank you. Any questions?

Mr. MURPHY. No, I recognize we are out of time. I just want to

ask this. I know we are out of time, but if you are willing to keep

the record open because many of the communities in my district

and around this region would still like to submit some written testimony. Without objection I would like to ask you to do that, sir.

Mr. TURNER. Excellent. We will leave the record open for a period to the end of this month, and if there are communities that

want to provide it, then that would be very helpful to us.

Mr. DENT. Mr. Chairman, I just want to thank you for holding

the hearing here and appreciate this very good testimony. I feel

very good about how you are using CDBG out here in southwestern

Pennsylvania and realizing that your experiences in many respects

are similar to mine. And I have really learned something now. We

used our money for Head Start in my district with CDBG, so I have

taken something back to my community.

Mr. MCGOWEN. That was partnership.

Mr. DENT. Very clever. Thank you.

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Mr. TURNER. Well, for those members of our second panel, I am

going to give you the opportunity if there are any closing remarks

that you would like to make or additional information that you

would like to provide for us, go right ahead.

Mr. MCGOWEN. I would just like to reemphasize that it is an outstanding Federal program that is executed on the local level by a

county to all the municipalities. And the municipalities do not have

that expertise. They need it at a county level. The other thing is

inner city, CDBG does help inner city revitalization. We don’t want

sprawl. We all know that. But you have to revitalize the inner cities in terms of low incomes, in terms of jobs. This program does

that. If you do away with the CDBG, there is no raising of taxes

at the local level or at the county level. That doesn’t help. It is not

going to happen. If you do away with CDBG, what has happened

with that program stops. And, again, partnership and leverage is

very obvious. We emphasize that very heavily in my organization,

and it does work.

Ms. REITZ. I would just like to say, chairman, thank you so much

for inviting the city of Jeannette a community to speak today. Community Development Block Grant funding is very much needed in

our community. And with the lack of that, we would continue to

lose our housing stock, our population, our youth. I have major concerns that our community cannot financially support this—obviously, we went in through a pre-opt 47 just a couple months ago,

so we have a very, very much needed need to continue the Community Development Block Grant funding for the city of Jeannette. So

thank you.

Mr. TURNER. All right. Excellent. Well, with that I want to thank

Mr. Murphy for asking us to come here and for his leadership on

the national level, for preserving CDBG. The Community Development Block Grant program is one, of course, that he is intimately

familiar with and has been a strong advocate of. And the efforts

to save CDBG, certainly a coordinated effort between the House

and the Senate, and Mr. Murphy was the leader on the House side

to make certain that not only that the funding would be there, but

that the program would be highlighted and preserved. Part of his

efforts to do that, obviously, is to invite us into your community

today to receive this testimony so as part of the written record of

this subcommittee. We will have the testimony of your support and

your effectiveness of the use of CDBG. Mr. Murphy, I want to

thank you for your leadership in that and for having us today.

Mr. MURPHY. Thank you, Mr. Chairman. You are always welcome in Pennsylvania.

Mr. TURNER. Thank you. Before we adjourn I would like to thank

our distinguished panels of witnesses for their participation today.

I appreciate your willingness to share your knowledge, your experiences, and thoughts on the CDBG program. I would also like to

thank both of my colleagues, Mr. Murphy and Mr. Dent, for allowing us to come into Pennsylvania to get this important additional

information and to take it back to Washington, DC, in our efforts

to continue to advocate for CDBG.

Finally, I would like to express my appreciation to the borough

of Carnegie for being our host. We owe a special thanks to Mr.

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Murphy for inviting us and for his arrangements today to make

sure that we had a smooth and productive hearing.

In the event that there may be additional questions that we did

not have time today, we will also give Members the opportunity to

submit written questions to you if you would be so kind as to answer them if one is posed to you.

Thank you all. We stand adjourned.

[Whereupon, at 12:15 p.m., the subcommittee was adjourned.]

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