<DOC> [109th Congress House Hearings] [From the U.S. Government Printing Office via GPO Access] [DOCID: f:23258.wais] THE OHIO EXPERIENCE: WHAT CAN BE DONE TO SPUR BROWNFIELD REDEVELOPMENT IN AMERICA'S HEARTLAND? ======================================================================= HEARING before the SUBCOMMITTEE ON FEDERALISM AND THE CENSUS of the COMMITTEE ON GOVERNMENT REFORM HOUSE OF REPRESENTATIVES ONE HUNDRED NINTH CONGRESS FIRST SESSION __________ MAY 16, 2005 __________ Serial No. 109-64 __________ Printed for the use of the Committee on Government Reform Available via the World Wide Web: http://www.gpoaccess.gov/congress/ index.html http://www.house.gov/reform ______ U.S. GOVERNMENT PRINTING OFFICE 23-258 WASHINGTON : 2005 _____________________________________________________________________________ For Sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; (202) 512ÿ091800 Fax: (202) 512ÿ092250 Mail: Stop SSOP, Washington, DC 20402ÿ090001 COMMITTEE ON GOVERNMENT REFORM TOM DAVIS, Virginia, Chairman CHRISTOPHER SHAYS, Connecticut HENRY A. WAXMAN, California DAN BURTON, Indiana TOM LANTOS, California ILEANA ROS-LEHTINEN, Florida MAJOR R. OWENS, New York JOHN M. McHUGH, New York EDOLPHUS TOWNS, New York JOHN L. MICA, Florida PAUL E. KANJORSKI, Pennsylvania GIL GUTKNECHT, Minnesota CAROLYN B. MALONEY, New York MARK E. SOUDER, Indiana ELIJAH E. CUMMINGS, Maryland STEVEN C. LaTOURETTE, Ohio DENNIS J. KUCINICH, Ohio TODD RUSSELL PLATTS, Pennsylvania DANNY K. DAVIS, Illinois CHRIS CANNON, Utah WM. LACY CLAY, Missouri JOHN J. DUNCAN, Jr., Tennessee DIANE E. WATSON, California CANDICE S. MILLER, Michigan STEPHEN F. LYNCH, Massachusetts MICHAEL R. TURNER, Ohio CHRIS VAN HOLLEN, Maryland DARRELL E. ISSA, California LINDA T. SANCHEZ, California GINNY BROWN-WAITE, Florida C.A. DUTCH RUPPERSBERGER, Maryland JON C. PORTER, Nevada BRIAN HIGGINS, New York KENNY MARCHANT, Texas ELEANOR HOLMES NORTON, District of LYNN A. WESTMORELAND, Georgia Columbia PATRICK T. McHENRY, North Carolina ------ CHARLES W. DENT, Pennsylvania BERNARD SANDERS, Vermont VIRGINIA FOXX, North Carolina (Independent) ------ ------ Melissa Wojciak, Staff Director David Marin, Deputy Staff Director/Communications Director Rob Borden, Parliamentarian Teresa Austin, Chief Clerk Phil Barnett, Minority Chief of Staff/Chief Counsel Subcommittee on Federalism and the Census MICHAEL R. TURNER, Ohio, Chairman CHARLES W. DENT, Pennsylvania WM. LACY CLAY, Missouri CHRISTOPHER SHAYS, Connecticut PAUL E. KANJORSKI, Pennsylvania VIRGINIA FOXX, North Carolina CAROLYN B. MALONEY, New York ------ ------ Ex Officio TOM DAVIS, Virginia HENRY A. WAXMAN, California John Cuaderes, Staff Director Ursula Wojciechowski, Professional Staff Member Juliana French, Clerk C O N T E N T S ---------- Page Hearing held on May 16, 2005..................................... 1 Statement of: Dufficy, Joseph, Chief, Brownfields and Early Action Section I, Environmental Protection Agency Region 5 Office; Amy Yersavich, manager, Voluntary Action Program, Ohio EPA; Frank Sarosy, mayor, Village of Fairport Harbor, OH; Daniel Pocek, mayor, city of Bedford, OH; Tracey Nichols, assistant director for economic development, Cuyahoga County Department of Development; and Casey Stephens, manager of public services and brownfield coordinator, city of Toledo Division of Environmental Services............... 7 Dufficy, Joseph.......................................... 7 Nichols, Tracey.......................................... 40 Pocek, Daniel............................................ 28 Sarosy, Frank............................................ 23 Stephens, Casey.......................................... 57 Yersavich, Amy........................................... 18 Machaskee, Alex, president and publisher, the Plain Dealer; Todd Davis, CEO, Hemisphere Development, LLC; Thomas Stone, executive director, Mt. Pleasant Now Development Corp.; Barry Franz, principal engineer, Civil & Environmental Consultants, Inc.; Craig Kasper, CEO, Hull & Associates, Inc.; and Kevin O'Brien, executive director, Great Lakes Environmental Finance Center, Cleveland State University, Maxine Goodman Levin College of Urban Affairs.............. 78 Davis, Todd.............................................. 85 Franz, Barry............................................. 103 Kasper, Craig............................................ 112 Machaskee, Alex.......................................... 78 Stone, Thomas............................................ 99 Letters, statements, etc., submitted for the record by: Davis, Todd, CEO, Hemisphere Development, LLC, prepared statement of............................................... 86 Dufficy, Joseph, Chief, Brownfields and Early Action Section I, Environmental Protection Agency Region 5 Office, prepared statement of...................................... 9 Franz, Barry, principal engineer, Civil & Environmental Consultants, Inc., prepared statement of................... 104 Jones, Hon. Stephanie Tubbs, a Representative in Congress from the State of Ohio, prepared statement of.............. 70 Kasper, Craig, CEO, Hull & Associates, Inc., prepared statement of............................................... 114 Machaskee, Alex, president and publisher, the Plain Dealer, prepared statement of...................................... 81 Nichols, Tracey, assistant director for economic development, Cuyahoga County Department of Development, prepared statement of............................................... 42 Pocek, Daniel, mayor, city of Bedford, OH, prepared statement of......................................................... 29 Sarosy, Frank, mayor, Village of Fairport Harbor, OH, prepared statement of...................................... 25 Stephens, Casey, manager of public services and brownfield coordinator, city of Toledo Division of Environmental Services, prepared statement of............................ 58 Stone, Thomas, executive director, Mt. Pleasant Now Development Corp., prepared statement of................... 101 Turner, Hon. Michael R., a Representative in Congress from the State of Ohio, prepared statement of................... 3 Yersavich, Amy, manager, Voluntary Action Program, Ohio EPA, prepared statement of...................................... 20 THE OHIO EXPERIENCE: WHAT CAN BE DONE TO SPUR BROWNFIELD REDEVELOPMENT IN AMERICA'S HEARTLAND? ---------- MONDAY, MAY 16, 2005 House of Representatives, Subcommittee on Federalism and the Census, Committee on Government Reform, Cleveland, OH. The subcommittee met, pursuant to notice, at 10:30 a.m., in the 1914 Lounge, The Thwing Center at Case Western Reserve University, 11111 Euclid Avenue, Cleveland, OH, the Honorable Michael R. Turner (chairman of the subcommittee) presiding. Present: Representatives Turner, LaTourette, and Jones of Ohio. Staff present: John Cuaderes, staff director; Shannon Weinberg, counsel; and Juliana French, clerk. Mr. Hunter. Good morning. I'm Edward Hunter, president of Case Western Reserve University. I just wanted to offer a brief welcome to all of you. I want to thank Chairman Turner for hosting this hearing here on our campus for his subcommittee. We really are honored to have you all here today. It's a special honor because Congressman Turner is an alumnus of Case Western Reserve University, of our law school. I also want to welcome Congressman LaTourette, who is also a great friend of Case Western Reserve. And I also want to thank all of the people who are testifying here today--for your efforts to help with urban redevelopment and brownfield redevelopment. As you know, Case has made a major commitment to urban redevelopment in this area. And so this is a very, very important issue for us locally, for the State of Ohio, and nationally as well. I hope you have a very good time here. I hope you'll take some time to walk around and see the campus, because we're trying to walk the talk. As you may know, we've tried to do some interventions here in the local area in the way we're building our new residential villages, reaching out to the community, moving some of our back office people downtown to help with downtown revitalization. We started a home buyer program here at Case so any employee, faculty or staff member of Case gets a very generous sum of money from the university to buy a home, if they buy a house in the city of Cleveland. And since we started that program, for the spast year we've had a house a week bought in the city of Cleveland. There are a lot of other innovative programs that we've had in working with minority contractors to do a lot of the work in these areas. So it's been a very, very wonderful collaboration between our university and the city of Cleveland. So thank you, again, for honoring us by hosting this here on campus and enjoy your time here. Thank you. Mr. Turner. With that, we'll call to order the Subcommittee of Federalism and the Census. I appreciate Case Western Reserve University hosting us and I appreciate the attendance by my colleague, Steven LaTourette. We're going to be joined by Stephanie Tubbs Jones, who currently is in an event in downtown Cleveland and encouraged us to go ahead and proceed. So we'll begin with panel one, taking testimony, and then Ms. Tubbs should be joining us later. I have a short statement to read in welcoming everybody to the subcommittee hearing. This is a followup to a hearing that we held on the same topic in Washington, DC, on April 5, 2005. This is the subcommittee's first field hearing and our first opportunity to interact with individual communities on a more personal basis. Hearings in D.C. have been informative and helpful. All too often we only get the inside-the-beltway viewpoint. So the field hearings give us the opportunity to reach out to the public and learn firsthand what is occurring in this important topic of brownfield development. I'm very pleased with the response to the hearing, both from our great number of witnesses and the public in attendance here today. I would also like to express my appreciation to the city of Cleveland for hosting us. We have a great number of witnesses to present and we are here to listen to you. And in the interest of time, the full statements of the written statements that are being entered into the record are out at the press table up front. And we're going to keep our opening comments short so we can get the witnesses and hear what you guys are doing to improve our communities in the area of brownfields. Our first panel includes Joseph Dufficy, Chief of the Brownfields and Early Action Section, Environmental Protection Agency Region 5; Amy Yersavich, manager, Voluntary Action Program, Ohio EPA; the Honorary Frank Sarosy, mayor, Village of Fairport Harbor, OH; the Honorable Daniel Pocek, mayor, city of Bedford, OH; Tracey Nichols, assistant director for economic development, Department of Development, Cuyahoga County, OH; and Casey Stephens, manager of public services, Brownfield Coordination, Division of Environmental Services, city of Toledo. We'll begin with Mr. Dufficy. My colleague, Mr. LaTourette, has opening comments, also. [The prepared statement of Hon. Michael R. Turner follows:] [GRAPHIC] [TIFF OMITTED] T3258.001 [GRAPHIC] [TIFF OMITTED] T3258.002 [GRAPHIC] [TIFF OMITTED] T3258.003 Mr. LaTourette. Well, thank you very much. And I guess you want to move along, so I'll be mercifully brief. I want to thank you, Congressman Turner, for coming to Cleveland, OH. Welcome to Cleveland, OH for this hearing. The Congressman has hid his light under a bushel basket a little bit in that he has previously introduced and I understand again will introduce legislation dealing with brownfield remediation, especially in urban cities. He's a former mayor of Dayton, so he comes to us in the U.S. Congress as someone who is looked to with a great deal of admiration when it comes to dealing with America's cities. He's also been placed in charge by the Speaker of the House, Mr. Hastert, of the task force that looks at the unique problems that face cities across the country. So it's an honor for us to have you here and we appreciate you having this hearing. And just a couple of observations about the panels we put together. And I want to, first of all, indicate to President Hunter, my son will be a freshman here in the fall and I took the opportunity to walk over to the undergraduate admissions office before this hearing began. And President Hunter is right, there is a building that is completely missing from the corner of Adelbert and Euclid Avenue. It's been apparently torn down since my last visit. So he is walking the walk and doing good things for the University Circle area. On the first panel, Mr. Chairman, you have two people, not to single out anybody in particular, but Mayor Sarosy of Fairport Harbor is an outstanding mayor of a good, solid community. And he has had the vision that sometimes is lacking in other parts of the State that treats Lake Erie as an asset and is doing everything to move his village forward, so I'm glad he's here. Next to him is someone I lost to in the district, Mayor Pocek, the mayor of Bedford. And I very much liked representing that area, but I also know Mayor Pocek has done great work in his part of the world. On the second panel you have a fellow by the name of Todd Davis. I know that Mr. Machaskee just joined us, but I'm going to hold up a rival newspaper. In Sunday's Lake County News Herald, anyone who hasn't seen it, there's a very exciting long article about the old Diamond Shamrock property. Those of us in Lake County were devastated back in the sixties, like the news going on here in Cleveland with NASA Glenn and DFAS, the Diamond left, and that's where most of the people in Fairport worked was the Diamond. Most of the people in Painesville worked at the Diamond. And Todd Davis, who is on your second panel, is in charge of an organization called Lakeview Bluffs, and I think we can be very excited to hear what he has to say, as well. So thank you for coming to Cleveland, thanks to all of the witnesses for being here, and thank you, Mr. Chairman. Mr. Turner. I really appreciate Mr. LaTourette's participation in the committee and permitting us to be able to move forward with the witnesses that he's recommended. This committee, it's our policy to swear in witnesses prior to their testimony, so I'm going to ask, if you would, please, stand and raise your right hands. [Witnesses sworn.] Mr. Turner. Please let the record show that the witnesses all responded in the affirmative. Mr. Dufficy, we will begin with you. STATEMENTS OF JOSEPH DUFFICY, CHIEF, BROWNFIELDS AND EARLY ACTION SECTION I, ENVIRONMENTAL PROTECTION AGENCY REGION 5 OFFICE; AMY YERSAVICH, MANAGER, VOLUNTARY ACTION PROGRAM, OHIO EPA; FRANK SAROSY, MAYOR, VILLAGE OF FAIRPORT HARBOR, OH; DANIEL POCEK, MAYOR, CITY OF BEDFORD, OH; TRACEY NICHOLS, ASSISTANT DIRECTOR FOR ECONOMIC DEVELOPMENT, CUYAHOGA COUNTY DEPARTMENT OF DEVELOPMENT; AND CASEY STEPHENS, MANAGER OF PUBLIC SERVICES AND BROWNFIELD COORDINATOR, CITY OF TOLEDO DIVISION OF ENVIRONMENTAL SERVICES STATEMENT OF JOSEPH DUFFICY Mr. Dufficy. Thank you, Mr. Chairman. Good morning, Mr. Chairman, members of the subcommittee. My name is Joe Dufficy. I manage the Brownfield and Early Action Section with U.S. EPA's Region 5 Office in Chicago. I'm appearing here today to discuss the EPA'S Brownfields Program and our efforts in the State of Ohio. More than a decade ago, U.S. EPA identified a problem facing local communities in their efforts to development properties that were contaminated or potentially contaminated with hazardous substances. The private sector and public sectors were extremely hesitant to get involved at these sites which became known as brownfields. It was here in Cuyahoga County that U.S. EPA began providing seed money to local governments to inventory sites and assessment for contamination. Congress also ultimately enacted legislation that provides tax incentives to promote private sector cleanup and redevelopment of brownfields. Over the years, U.S. EPA also had grants to capitalize revolving loan funds for cleanup. The agency also provides money for job training opportunities for employment at brownfield communities. Since U.S. EPA's initial efforts, States, tribes and local units of government as well as non-for-profit organizations have began to focus us on brownfield cleanup and redevelopment. The Small Business Liability Relief and Brownfields Revitalization Act broadened the reach of the U.S. EPA grant programs by also providing statutory liability protection to the sector participation in brownfield's cleanup and redevelopment. Under the new brownfields law, U.S. EPA can now award direct cleanup grants to the public section as well as not-for- profit entities that own the property. The new law also broadens the definition of what constitutes a brownfield. The U.S. EPA can now award Brownfield moneys to sites contaminated with petroleum as well as mine-scarred lands and sites contaminated by controlled substances. The grand selection and award process for fiscal year 2005 culminated last week with the announcement of over 300 new grants, 19 of which are here in the State of Ohio. The newest grants include 14 assessment awards, four clean-up projects and one revolving loan fund for a total of $7,750,000 here in the State. As a whole, the State of Ohio constitutes as well as the 40 communities here that have received the U.S. EPA funding one of the largest concentrations of U.S. EPA funding nationwide. The Ohio Department of Development's Revolving Loan Fund is one of the largest U.S. EPA loan funds in the Nation with over $7 million right now. Currently more than $65 million in redevelopment work is ongoing across all of U.S. EPA funded projects. Ohio communities have also inventoried over 10,000 brownfield sites. Ohio EPA and U.S. EPA have combined resources to perform an additional 30 assessments onsites not targeted by communities for part of the competitive grants program. Both agencies have coordinated their activities to minimize duplication of efforts and reached the largest number of communities possible. One thing is clear, that notwithstanding all of the efforts the Federal, State, local units of government, we will never be able in the public sector to clean up the hundreds of thousands of sites that are out there. The only way that will happen is with significant increases in funding and influences from the private sector. Mr. Chairman, that completes my statement and I would be pleased to answer any questions. [The prepared statement of Mr. Dufficy follows:] [GRAPHIC] [TIFF OMITTED] T3258.004 [GRAPHIC] [TIFF OMITTED] T3258.005 [GRAPHIC] [TIFF OMITTED] T3258.006 [GRAPHIC] [TIFF OMITTED] T3258.007 [GRAPHIC] [TIFF OMITTED] T3258.008 [GRAPHIC] [TIFF OMITTED] T3258.009 [GRAPHIC] [TIFF OMITTED] T3258.010 [GRAPHIC] [TIFF OMITTED] T3258.011 [GRAPHIC] [TIFF OMITTED] T3258.012 Mr. Turner. Ms. Yersavich. STATEMENT OF AMY YERSAVICH Ms. Yersavich. Thank you, Mr. Chairman. Thank you, Mr. Chairman and members of the subcommittee. My name is Amy Yersavich. I'm the manager of the Voluntary Action Program at Ohio EPA. And I would like to thank you for the opportunity to speak today on behalf of Joseph Koncelik, director of Ohio EPA, about the brownfield redevelopment needs of Ohio communities. In both large urban areas and small towns, brownfields exist and create not only blights, but environmental and safety hazards. These brownfields are also a reminder of jobs lost and opportunities missed. Ohio has operated a successful brownfield cleanup program, known as the Voluntary Action Program, since 1994 when the legislation for the program was signed by Senator Voinovich. Thank you God for Voinovich. The program allows for licensed environmental professionals to privately clean up Ohio brownfields using state-of-the-art technical requirements adopted by Ohio EPA. Once the properties are cleaned up appropriately, Ohio EPA reviews the documentation and issues a release from State civil liability for the cleanup. To date, over 200 properties have been cleaned up, both private and public, under the Voluntary Action Program and technical assistance for cleanup has been provided to over 300 more brownfield owners and volunteers. In return, approximately 7,000 new Ohio part-time and full-time jobs have been created at these redeveloped sites. Ohio is also operating an extremely successful brownfield cleanup grant program known as the Clean Ohio Fund. The Clean Ohio Fund was established in November 2000 when Ohio voters passed Issue 1. The Clean Ohio Fund provides cleanup assessment grants, up to $3 million per site, to municipalities for brownfields that they own or hold interest in. To date, the Clean Ohio Fund provided over 15 million in assistance funding and over 200 million in revitalization funding to 88 sites across Ohio. In return, the Clean Ohio Fund has seen $930 million in investment in these properties and the creation of 6,700 new jobs. U.S. EPA, through Joe and others, also offers many attractive brownfield cleanup incentives with funding made available through the Small Business Liability Relief and Brownfields Revitalization Act of 2002. As a result of this act, 29 cities and towns in Ohio have received grant funding for investigation and cleanup of brownfield sites that have blighted their communities. This fund has been a tremendous help toward revitalizing these communities, urban cores and has resulted in both job creation and retention. Despite all the innovative financial incentive programs and technical assistance available to make brownfield cleanup easier at former commercial industrial sites, there are still obstacles. Encouraging private developers to take on brownfield redevelopment projects at sites with large amounts of contamination or where complex cleanup is needed are a few of those obstacles. Most government brownfield incentives are made available only to local governments or other governmental entities. Providing a tax credit that would encourage the private sector to increase their brownfields redevelopment work, as you have proposed, Chairman Turner, would provide a tremendous boost to Ohio's urban core and small town revitalization efforts. Chairman Turner and members of the subcommittee, I thank you for allowing me to testify at this hearing today. On behalf of Director Koncelik and the many communities in Ohio that are dealing with challenges of brownfield redevelopment, your interest is greatly appreciated. [The prepared statement of Ms. Yersavich follows:] [GRAPHIC] [TIFF OMITTED] T3258.013 [GRAPHIC] [TIFF OMITTED] T3258.014 [GRAPHIC] [TIFF OMITTED] T3258.015 Mr. Turner. Mr. Sarosy. STATEMENT OF FRANK SAROSY Mr. Sarosy. Mr. Chairman and distinguished members of the subcommittee, I would like to thank you for the opportunity to be a part of this important discussion. I am Frank Sarosy, mayor of the Village of Fairport Harbor, OH. And on behalf of my community, I would like to discuss how one brownfield remediation has had a positive impact on my community. Fairport is an ideal community sitting on the shorelines of Lake Erie. On the eastern edge of the village, however, there had been a large vacant parcel of land that had sat unused for years. This land was formerly the home of Diamond Shamrock Painesville Works. It was more than 1,000 acres of land that straddles Fairport Harbor, the city of Painesville and Painesville Township. This was some of our most desirable lakefront property, and that was hugging the shoreline atop of a scenic stretch of bluffs. We could not capitalize on it, however, because its former use as the home of Diamond Shamrock had left it a major brownfield site. The land had been put to many uses over the years, such as serving as a 500-acre settling pond, as a home to heavy manufacturing and as a landfill. In 1980, the U.S. EPA initiated action to remedy chromium contamination at the site, which resulted in the construction of a 120-acre clay cap over the impacted area. The Ohio EPA began enforcement activities for the rest of the site in 1989. This property was a perfect example of how a brownfield can affect a community. At its height, the Diamond Shamrock property employed more than 3,000 people. And after it closed in 1976, Fairport Harbor lost not only those jobs, but also the use of this land. Until we could find some way to remedy the contamination of the land, it would remain idle and unused. Fortunately, Hemisphere Development stepped into the picture in 2002. Their president, Todd Davis, brought his nationally recognized expertise to bear on this project and put forward a vision that will change Fairport Harbor and the neighboring communities. In a partnership with Fairport Harbor, the Ohio EPA, Lake County, Lake County MetroParks, and local municipalities, Hemisphere has developed a plan for redeveloping the site. The formerly used Diamond Shamrock site is now known as Lakeview Bluffs and, once completed, it will be a national model for brownfield redevelopment. The mixed-use project will feature a variety of housing options, commercial development, public park, not to mention breathtaking views of Lake Erie and some of the best steelhead trout fishing in the world. Hemisphere is creating several recreation destinations linked by aesthetically pleasing trails, permanent public access to the Grand River, a commercial vineyard, a trout club, a winery, and new residential development overlooking both Lake Erie and the Grand River. The land's many rich endowments include more than a linear mile of shoreline, breakwall protection for the development of a commercial marina in the harbor, and a stretch of scenic Grand River that is renowned by fishermen as one of the best spots in the Nation to catch a steelhead trout. Lakeview Bluffs represents an unprecedented opportunity resolve years of contentious litigation and reclaim one of Ohio's most promising brownfield sites. Ultimately, the project will be one of the largest and most comprehensive brownfield developments in the United States, serving as a national model for the effective integration of green space planning, reclamation and redevelopment. Further, the project represents the best example of the amazing community transformation that can occur through the power of the public private/partnerships. And I would like to thank you. [The prepared statement of Mr. Sarosy follows:] [GRAPHIC] [TIFF OMITTED] T3258.016 [GRAPHIC] [TIFF OMITTED] T3258.017 [GRAPHIC] [TIFF OMITTED] T3258.018 Mr. Turner. Mr. Pocek. STATEMENT OF DANIEL POCEK Mr. Pocek. My name is Daniel Pocek. I'm the mayor of the city of Bedford. We are a historical city of 14,000 plus residents, we have a downtown and neighborhoods. We also have Taylor Chair, the oldest manufacturing concern in the State of Ohio in continuous operations since 1816. In essence, we have a history. The city of Bedford has been committed to redevelopment of the former Brush Wellman site located at 200 Egbert Road in Bedford, OH. This formerly vibrant site has been vacant since 1986 and previously employed 400 plus employees and provided the City with beneficial tax revenue. The site needs to be fully developed to meet the needs of the community. With an unemployment rate of 6.4 percent that includes 8 surrounding communities and the city's poverty rate doubling from census year 1990 to 2000 to 8 percent of its 14,212 residents, it's imperative that the site be developed to its full potential. With the balance of land uses, the city's current makeup of industrial land is 3.3 percent and 8.8 percent of the total land mass is commercial. This leaves the site as the only major redevelopment opportunity left in the city of Bedford's 5.4 square mile radius. The city relies on its land uses to be the most practical and economical for its residents and the city. Light industrial commercial land use at this site will best address the city and community needs. With this, the site can prosper, not only for the business sector, but also for the potential of the employment it can create. There's an estimated 50 acres for planned mixed use development, with a potential of 300,000 square feet of developable space, increasing property values from $318,200 in 2004 to $28 million in 2008, and the likelihood of creating and retaining up to 500 plus jobs. The redevelopment site has been vacant almost for 20 years. It has generally little or no tax revenue and has zero employment base for the city. The city of Bedford supported the redevelopment of the site that maximizes the developable acreage and, thus, the number of jobs created. It was through the efforts of Cuyahoga County Commissioners, we were granted a $500,000 grant and a $500,000 loan to the project. The State of Ohio came up with almost $900,000 in funds to redevelop the infrastructure. The final piece of the puzzle was pursued by the Cuyahoga County Development Department. They were the vehicle for the city of Bedford to apply for the BEDI Grant. The city was able to compete for this grant on an even par with much larger communities. In October 2004, they were awarded--the HUD awarded 17 grants out of over 100 applications, and we were one of them. We were the only one in the State of Ohio. With that grant, we feel we have guaranteed the economic survivability of the city and the community, as well as the region, for the next generation. I want to thank the chairman and the members of the committee for the opportunity to appear here today. I would be happy to answer any questions you may have. Thank you. [The prepared statement of Mr. Pocek follows:] [GRAPHIC] [TIFF OMITTED] T3258.019 [GRAPHIC] [TIFF OMITTED] T3258.020 [GRAPHIC] [TIFF OMITTED] T3258.021 [GRAPHIC] [TIFF OMITTED] T3258.022 [GRAPHIC] [TIFF OMITTED] T3258.023 [GRAPHIC] [TIFF OMITTED] T3258.024 [GRAPHIC] [TIFF OMITTED] T3258.025 [GRAPHIC] [TIFF OMITTED] T3258.026 [GRAPHIC] [TIFF OMITTED] T3258.027 [GRAPHIC] [TIFF OMITTED] T3258.028 [GRAPHIC] [TIFF OMITTED] T3258.029 STATEMENT OF TRACEY NICHOLS Ms. Nichols. Mr. Chairman, members of the subcommittee. In my 21 years in community and economic development in the region, I have seen no other program that benefits the community to the extent that brownfields remediation does. Besides the obvious benefits to health and safety of our citizens, the economic benefits we have seen in Cuyahoga County exceed any other economic development program. In 1998, the Board of County Commissions issued a bond to fund brownfield redevelopment. Since 1998, 21 projects have been funded, 6 projects are cleaned up with a new end user open onsite, over 1,400 jobs have been created or retained, and $562,000 in new annual property taxes have been generated, even with two projects partially tax abated. We have leveraged over $14 for every $1 the county has invested. An important aspect of the county program is that we provide up to $1 million per project, and up to 45 percent of that amount is either a subsidy or a forgivable loan. This subsidy is critical for developers and businesses to invest in these properties. We also have a brownfield prevention program called our site expansion program that provides up to $500,000 as a forgivable loan to companies expanding on an adjacent brownfield site rather than moving to a greenfield site in another location. In many cases, companies leave behind additional brownfield sites when they relocate. While the program has been quite successful, some of our larger and more complicated sites could not be done without the assistance of Federal and State brownfield programs. Last year, as Mayor Pocek said, the county received a $2 million BEDI Grant and $4 million in HUD 108 funds to redevelop a 50-acre brownfield site in Bedford. We have also received U.S. EPA funding for site assessments and revolving loan funds. While these programs have been very helpful, there needs to be more funding available. The county currently has 16 project applications for a total of $13.9 million in funding. These are for projects that are ready to go with end users. With our current funding sources we will be $3.5 million short. Without some type of subsidy, many of these projects will not go forward. To that end, we encourage the Federal Government to go forward with tax credits as a way to attract equity investments to these projects. We appreciate that the current house bill is taking out the provision limiting funds to only communities where the census track poverty rate is 20 percent or more. That provision would have limited these funds to only 8 of our 59 communities in Cuyahoga County. We also support increases to the U.S. EPA revolving loan fund and the HUD BEDI Grants. Both provide needed grants to help with large or more contaminated sites and help us in tougher real estate markets, such as the Greater Cleveland area. We also strongly urge the Congress to consider providing administrative funds for these grants, such as those provided with Block Grant and Home Funds. We think this will help move funds out to the community more quickly. I thank the committee for inviting me here today to speak on behalf of the Cuyahoga County Board of Commissioners on this important issue. [The prepared statement of Ms. Nichols follows:] [GRAPHIC] [TIFF OMITTED] T3258.030 [GRAPHIC] [TIFF OMITTED] T3258.031 [GRAPHIC] [TIFF OMITTED] T3258.032 [GRAPHIC] [TIFF OMITTED] T3258.033 [GRAPHIC] [TIFF OMITTED] T3258.034 [GRAPHIC] [TIFF OMITTED] T3258.035 [GRAPHIC] [TIFF OMITTED] T3258.036 [GRAPHIC] [TIFF OMITTED] T3258.037 [GRAPHIC] [TIFF OMITTED] T3258.038 [GRAPHIC] [TIFF OMITTED] T3258.039 [GRAPHIC] [TIFF OMITTED] T3258.040 [GRAPHIC] [TIFF OMITTED] T3258.041 [GRAPHIC] [TIFF OMITTED] T3258.042 [GRAPHIC] [TIFF OMITTED] T3258.043 [GRAPHIC] [TIFF OMITTED] T3258.044 STATEMENT OF CASEY STEPHENS Mr. Stephens. Mr. Chairman and members of the subcommittee, my name is Casey Stephens. I am with the city of Toledo, the Brownfields Coordinator. I would like to take this opportunity to thank the subcommittee and also to commend the U.S. EPA for all of their efforts over the past several years in brownfield redevelopment. As you know, the city of Toledo has a long history of industrial development. And as you would expect, we have a significant number of brownfields. And while we've been very successful in cleaning up contaminated and industrial sites and getting them back into reuse, with examples such as the Owens Corning world headquarters and the DaimlerChrysler North Toledo assembly plant, we found that there are certain areas of the city that have been left behind. And those areas of the city are the central city area that are most impacted by brownfield locations located there. Mayor Ford's goal of having clean, safe and beautiful neighbors goes hand and hand with the economic development and the brownfield cleanup in these central city areas. And as such, the city of Toledo has identified a given area of the city that we refer to as the brownfield impact area. That area was identified by using census data and by combining that with our brownfield inventory; it was also identified as an area of the city that was most impacted by the presence of brownfields. Levels of poverty and unemployment in the brownfield impact area are greater than in any other parts of the city. Since 1970, Toledo has lost nearly 70,000 people from our population. And of that, over 65,000 people have migrated from the brownfield impact area. So as you can see, the impacted brownfield sites on the central city area is quite devastating. Toledo's current strategy for redeveloping brownfields is two-prong. We are focusing on our riverfront properties, creating commercial and residential areas that offer sites that cannot be found in our neighboring suburbs. Our second part of our strategy is to focus on the brownfield impact area. And we're doing that in conjunction with the Toledo Public Schools' reconstruction program. They are spending nearly $800 million in redeveloping the schools throughout the city of Toledo. And we are focusing on their construction as a way to enhance brownfield development in residential areas of our brownfield impact area. We feel this is a very sound strategy. However, our problem is not finding cleanup money. Our problem is attracting investments to invest into the central city area. So the city of Toledo supports anything that the Federal Government can do to help attract private investment into the central city areas. Thank you for the opportunity to speak. And if you have any questions, I would be happy to answer them now. [The prepared statement of Mr. Stephens follows:] [GRAPHIC] [TIFF OMITTED] T3258.045 [GRAPHIC] [TIFF OMITTED] T3258.046 [GRAPHIC] [TIFF OMITTED] T3258.047 [GRAPHIC] [TIFF OMITTED] T3258.048 [GRAPHIC] [TIFF OMITTED] T3258.049 [GRAPHIC] [TIFF OMITTED] T3258.050 [GRAPHIC] [TIFF OMITTED] T3258.051 [GRAPHIC] [TIFF OMITTED] T3258.052 Mr. Turner. I want to thank all of you for taking your time to put together the testimony and for your statements here today. The Federalism and Census Subcommittee has been looking at the issue of brownfield redevelopment. Obviously, an area that I have a particular interest, having served as mayor for the city of Dayton, a city that has a significant number of brownfields and has been negatively impacted by its ability to redevelop those sites. The focus this committee has taken is the relationship between the Federal Government and the local governments, and certainly brownfields being a federally created problem, it's a natural outlook that we would look at. What are some of the Federal responses, what are the Federal programs, grant moneys that's available, what's missing, what else do we need to be doing. As part of our initial hearing on this topic, we had the GAO issue a report in looking at the available grant programs that are out there, revolving loan funds, EPA's Federal financial assistance. And they had some criticisms of the program and gave some advice and examples of how communities are accessing them. But they did go on to say that there was a greater need than the programs that are currently available can fill. And it talked about the need for looking to how we can get additional resources to communities to address brownfield issues. And I know in the great examples that we've heard from our two mayors and the great work that is being done throughout Ohio, we have some great successes, but we also have high need. We have properties that we know that the environmental contamination, building demolition costs exceed the value of the property. Without a financial incentive, these sites are going to be unattractive for people to locate their businesses and we're going to continue to eat up our greenfields and have broader and broader metro areas. My question is that I would ask each of you to speak for a moment about the issue of the need and the resources that are available. Mr. Stephens, you were saying that you haven't had a problem finding cleanup money. But I know that for most communities, when they look at trying to redevelop land addressed to brownfields and make it business ready in a timely fashion so that when a business is interested in going into a spot so they'll have the land redeveloped and ready, that they have struggled in finding the available resources to address the brownfield cleanup. So let's start with Mayor Sarosy, if you would talk about the issues of what you see as the need versus the available resources that are out there. Mr. Sarosy. The need for Fairport and the surrounding communities in all of Lake County is the fact that property has been sitting there, 1,100 and some acres, with nothing happening on it and contaminated soil and so forth. It's going to mean a lot to our schools. It's going to mean a lot to the surrounding communities. It's going to be a regional project for all of the surrounding areas. Again, not seeing anything happen for many years, it's going to have an impact on everybody. Mr. Turner. OK. Mr. Pocek. Very similar situation in city of Bedford to the Village of Fairport Harbor, you have all those much smaller sites, 50-acre sites, happens to be the most populated areas of northeast Ohio. This site is 1\1/2\ minutes from 271 and the population growth is going southeast, and it's just an excellent place to redevelop. But it has sat there for 20 years. And now it's going to produce at least 500 jobs, be a regional development, and bring more money to the schools. Like I said, we got approximately a couple hundred thousand dollars in income tax from Brush Wellman on real estate tax on this from Brush Wellman in 2004. We're going to get $28 million projected in 2008. So that's a tremendous boom not only to the city, but to the school district and the region as a whole, because it is a regional development, too. Mr. Turner. Ms. Nichols. Ms. Nichols. In 1996 it was estimated that there were 4,623 acres of brownfields in Cuyahoga County. And what we've done with our program is since 1998, we've made many changes, as we've seen the market change. And I think one of the most important things that we learned, early on, we were giving money only to municipalities and non-profits who would buy sites to redevelop them. As our economy worsened and cities were hard hit and did not have funds available to go out and buy brownfields to redevelop them, we changed our program to give funding directly to developers and to offer them a forgivable loan. Once that happened, we saw a huge increase. We did 21 projects. We did six from May 2004 to December 31, 2004, after starting the program in 1998. And now we have 16 projects that we're currently looking at. All are private developers who are stepping up to the plate. And what's most important is that we have a subsidy available to them. Without that subsidy, these projects would not go forward. So we see a huge demand and a huge need in our community. And the commissioners have stepped up to the plate and are provided funding. And we're looking for partners to go forward with us. Mr. Turner. Mr. Stephens. Mr. Stephens. As I said, I don't want to lessen the impact of cleanup funds, but we have had the opportunity or we have been fortunate enough to have been able to access cleanup funds for a number of projects. Our biggest issue, and I have to reiterate it, is the fact that we have 1,200 vacant residential lots in our brownfield impact area. Our largest problem in the city of Toledo is attracting private investment to the central city area. Developers have been more than willing to grab for the lower hanging food, as it were. And we've had much success in working with our industrial partners within the city of Toledo to clean up sites and to redevelop those sites. But our biggest focus now is out in those central city areas. And quite frankly, we'd like to see the line in the bill about the areas of poverty levels greater than 20 percent, because we think that will focus in on areas in the central city. And it's the city of Toledo's point or the city of Toledo's stance that you can't have a strong suburban area without a strong core area. And we feel that anything we can do to attract investment, private investment, into the central city, into the core area will go a long way in strengthening our whole regional economy. Mr. Turner. Ms. Yersavich. Ms. Yersavich. Thank you, Mr. Chairman, and the rest of the representatives. Yes, I would say, I would have to agree with Mr. Stephens. I think a lot of what we're seeing where the need is now is some of the higher hanging fruit, some of the more complicated sites that maybe need a little push. I think helping out with private developers as well as public is very, very helpful and is a direct need. And the Voluntary Action Program, what a volunteer receives, they receive a tax abatement on real property taxes for 10 years for the increase in the value of the property as a result of the cleanup, but also any improvements that are on it, and that's been very popular. And that is provided to both the private and the public alike. I would also say we see along with big cities is some of our smaller towns, particularly those that need a little more education in brownfields, because they all do have issues of, as the mayor said, you know, one area in a particular community that may have lost a lot of jobs, causing blight, causing problems, and working on helping them do grants, and helping them get the funding and the incentives that they need to get things started in their communities. Thank you. Mr. Turner. We've been joined by Stephanie Tubbs Jones, who is the Congresswoman for this area, also a fellow alumni of Case Western Reserve. Ms. Jones of Ohio. Double alumni. Mr. Turner. I had the honor to follow in Stephanie Tubbs Jones' tracks and give a commencement speech for our law school, of which we're both an alumni from. Stephanie is a co-author with me of the Brownfield Tax Credit Act, and she's been incredibly supportive of the issue of trying to make certain we have a Federal response and resources to assist communities in redevelopment and addressing issues of brownfields. I appreciate her joining us so that we can have this hearing in Cleveland and get the additional information that you bring to us, because we look to this committee trying to get data and information on ways to address the brownfield issue. We, of course, have the various Members of the committee and their local experience, but being able to come here and to get your experience and your testimony really helps us fashion some solutions. With that, I would like to recognize Ms. Stephanie Tubbs Jones. Mrs. Jones of Ohio. Thank you, Mr. Chairman. I am so pleased that you would choose the 11th Congressional District of Ohio to host this wonderful hearing in and to give the people in my congressional district an opportunity to speak out on the issue. I must apologize for being late. When you're in your congressional district with a hearing, there's 7,000 other things that draw people to you. And then you know that the recent announcement with the closing of DFAS, there was a meeting this morning of all the staff of DFAS to talk about that issue. And myself and my colleague, Congressman Dennis Kucinich, were at that hearing. I'm expecting that he may hold down the fort there while I'm holding down the fort here, so that is the reason that I'm late. But the issue of brownfields is so very, very important for the redevelopment of our area. I have an opening statement that I would ask to be put into the record, with regard to a number of brownfields and the things that Cuyahoga County and others like Mayor Pocek have been able to do in their community. I can think of a couple other sites where we've taken brownfields and had an opportunity. For example, I'm hoping this is going to happen soon that we're going to have a ground breaking for the Job Corps, which is that old White Motors site, and that we're going to have a ground breaking that we can get some issues for the Juvenile Court Detention Center on brownfields. But it is just a great opportunity for us to get into this issue as it impacts--I would like to welcome the city of Toledo, Fairport Harbor, OH EPA. I used to work at the sewer district, so it's just good. Tracey, as well. Let me ask Tracey. Based on your testimony, Ms. Nichols, excuse me, let me be more formal for the record, a huge collection of dollars is a result of the brownfield work that Cuyahoga County does. Do you take those funds and reinvest them in brownfield redevelopment? What happens? [The prepared statement of Hon. Stephanie Tubbs Jones follows:] [GRAPHIC] [TIFF OMITTED] T3258.053 [GRAPHIC] [TIFF OMITTED] T3258.054 [GRAPHIC] [TIFF OMITTED] T3258.055 Ms. Nichols. Well, Congresswoman, our funding for the brownfields program is from a bond, so part of the money that we do receive back is to pay the bond. That was our only option at the time; to be able to fund this program is to float a bond through the county commissioners. However, we have seen large amounts of tax increases that do go back into the community. As I said, right now on six completed projects, there is $562,000 in new annual taxes which benefit the local communities, the schools and the county. So we're very happy to see those types of amounts. We do have a small amount of revolving loan funds. We are very proud of the fact that Cuyahoga County is the first entity in the Nation to revolve the initial pilot money and convert the new brownfield revolving loan fund under the U.S. EPA. So we're very happy about that and we now have those moneys available with some additional supplemental funding. Those will revolve. We have set up a revolving loan fund. And just like our economic development program where we have a long view in our office to cater revolving loan funds for future benefits, we will do that with the U.S. EPA money. Mrs. Jones of Ohio. Mayor Pocek, good morning. Mr. Pocek. Good morning. Mrs. Jones of Ohio. I heard the end of your testimony with regard to Brush Wellman. Are there other projects in your city that you have been using or working on brownfields redevelopment? Mr. Pocek. No, that's the first one. That's the only real brownfield we have. Mrs. Jones of Ohio. What about you, Mayor of Fairport Harbor. Mr. Sarosy. This is the first time for us, also. We have 1,100 acres sitting east of us where nothing is happening and the impact it's going to have, again, I mentioned earlier not just to the region, but to everybody, schools really close to me, and safety forces were all hurting in our surrounding areas or communities for getting some moneys coming in. What Todd Davis has meant to us, the vision is just unreal. I mean, everybody, I mean the money will flow in after we go. Mrs. Jones of Ohio. Yersavich. Ms. Yersavich. Yes. Mrs. Jones of Ohio. Ms. Yersavich, have you found any impact of brownfields on water redevelopment projects in any communities. Ms. Yersavich. We are seeing a lot more of those. I think first, when the program first started our voluntary cleanup program, we didn't see as much because it is a difficult type of cleanup to deal with because you're usually looking at not only the lands, but the waters and who caused what and that sort of thing. But I think as the program has matured and with the advent of the Clean Ohio Fund, putting more money into it along with the Federal grant, we're seeing a lot more waterway cleanup, and things like Diamond Shamrock. Mrs. Jones of Ohio. In case I didn't do this, welcome, Congressman LaTourette, to the 11th Congressional District. Mr. LaTourette. They checked my credentials when I crossed the border. Mrs. Jones of Ohio. I'm going to cutoff so we can go on to the next thing. In a yes or no answer, you all are real exited about this legislation. Mr. Dufficy. Mr. Dufficy. I've been doing this for about as long as anybody in Federal Government and what brownfields need is as many tools in the toolbox as you can possibly get. The issue at hand is largely real estate transactions. That's really what a brownfield is. And anything that can impact whether a real estate transaction can go forward is what we really need. The issue is whether you want to market. I think what Tracey and what Stacy have said, if you have the market to take the public sector resources that are out there, a project is going to go forward. We don't have to market--the public sector money really has to work an awful lot harder and often isn't substantial enough to make a project happen on it's own. Mrs. Jones of Ohio. Mr. Stephens, anything you want to add before I cutoff my questioning. Mr. Stephens. Well, I just want to say that, yes, the city of Toledo is in support of the legislation. And as I said earlier, anything that the Federal Government can do to encourage investment in our brownfield impact areas would be most welcomed. Thank you. Mrs. Jones of Ohio. I'm sorry, Mayor. Yes. Mr. Sarosy. I just had something, when you mentioned the lakefront---- Mrs. Jones of Ohio. I thought about you, but then---- Mr. Sarosy. In touching on that, we have a costal renovation plan going on right now in Lake County and it's headed up by Harry Ellen which is like 23 acres. And, again, this Lakeview Bluff property is going to have a major impact on all of Lake County. We have a lot of erosion, it's going to help us stop the erosion that we're having. So for that 23 miles that we have going along our shoreline, for our whole county, it's going to have a major, major impact. Mrs. Jones of Ohio. I used to go to Fairport Harbor Beach when I was a little girl two or three times in the summertime. I haven't been in a while. I'll have to call you when I'm coming. Mr. Pocek. I just want to add that the very fact is that Bedford is totally landlocked, totally developed, and this is the last piece that we had. With increasing burdens on the city, we have to come up with other revenue sources, and this was a Godsend to us. And the fact that BEDI Grant, the way it was structured and the way we applied, we applied with 100 plus some communities across the Nation. We were awarded, you know, we were in competition with the city of Akron, we also won with the city of Sacramento, CA. So the way it was structured was really fair. And it gave us an opportunity to compete. And if it's not broke, don't fix it. Mrs. Jones of Ohio. All I can say, if Brush Wellman had won that, we would have probably fallen down. We worked very hard. Mr. Pocek. We have some champions that we have in this room who I want to thank publicly. Mr. LaTourette. Thank you very much, Mr. Chairman and Congresswoman Tubbs Jones. It's a pleasure to be in the public and I hope to welcome you out to Fairport Harbor sometime. The mayor has done a great job in cooperation with the MetroParks. That really is the key to this Lakeview Bluffs projects is partnerships and everybody pulling in the same direction. That's why I asked, Mayor Sarosy, in the article I referred to in yesterday's News Harold, the soup pond that they covered with the clay cap, I thought I heard in the article they actually planted grapes on that site. Mr. Sarosy. Yes. As a matter of fact, the soil is one of the top of the State. We had Ohio State come in and work on the vineyards there for us. And the soil there is just excellent for the vineyards. Mr. LaTourette. And the project, and I know Mr. Davis will talk about it, but it really is going to be an exciting mixed use. You're going to have residential properties, you're going to have a golf course, you're going to have some businesses, you're going to have some retail. And I think that gets to, and I want to talk to Mr. Stephens in just a second about where the 70,000 people went, because that is a Browns game, and maybe we can talk about that, but one of the issues that's going on in Lakeview Bluffs that doesn't have so much to do with the financing and the talking about today, is the level that we reach in cleanup. And I hear from some of my friends on the Fairport project, I hear some of my friends on the Ashtabula Harbor project that has been wildly successful. Hopefully we'll finally be able to dig some dirt out of the harbor after many, many years. And can you just, Mr. Dufficy, start with you, I would just tell you that I think you're in the right office being in Region 5, because I think the last guy that had it is the President of Lithuania. So I think it's a good path you're on here. Can you talk to us just a little bit as well about this. People complain that three things hold us back. Money is one that we're talking about today. Two is the liability that's attached if you make a loan on the property or develop the property, if you own a brownfield. And then three is the level of cleanup that's required before we can move forward with additional uses. Can you just talk to us about how you feel about that debate, where we are today. Are we better off today? Are we incentivizing people, beside giving them money? Mr. Dufficy. First off, I'm just a brownfield guy. We're in a much better situation today than we were. From a cleanup standpoint, I think that the secret in a lot of the Federal programs, especially the U.S. EPA, has been pulling out of the direct oversight and allowing programs like Amy's corrective action programs to go forward and really define within the communities at hand how clean is clean. I say just about every cleanup you see in a brownfield scenario right now is happening because we know what the next use is going to be. Taking a cleanup out of context is cleanup for cleanup, and no one can afford to do that. So if the cleanup is focused on exactly what the next use can be, it allows the government to do what it can do best, ensure public health, among other things. And also, when you have put in perspective, you know, what kind of Constitutional controls can be put in place, be able to track things that are left behind. But we're in a much, much better situation now. Mr. LaTourette. Can I ask you this about the revolving loan fund, because I think those are small loans, are they not, like a million dollars, not millions of dollars. Mr. Dufficy. Right. Mr. LaTourette. Go on to the Ashtabula situation. I don't know what Lakeview Bluffs is going to cost. Just the Federal kick-in on Ashtabula Harbor is $40 million. So if we had to do a million at a time, we would all be dead and our grandchildren would be dealing with the problem. Would it help you if the size of those revolving loan fund grants, if we said, you know what, this year we're going to take care of Cleveland, so put all our money in Cleveland, then go to Toledo, rather than sort of dribble it out at a million dollars a plan. Would that be more helpful? Mr. Dufficy. More money is always going to be helpful. Again, right now all the public sector programs that are out there are really focused on trying to find as much public sector resource really as possible. Either going to be a finance situation, a transaction that can take that extra debt on, you know, loan scenario. If you're talking about a loan in a scenario such as a community that's landlocked, this is the only thing we've got and they've got to do up with the wherewithal to do this entire development on their own, you're not really looking at a loan which is really going to benefit anybody. Because the loan has to find other money to really work well with. And in that scenario, a grant or some mechanism would be a lot better. The loan mechanism works when you have a transaction that can take on extra debt. Mrs. Jones of Ohio. Ms. Yersavich, my friend in the park communities thinks the Clean Ohio is the greatest thing since sliced bread, so I really want to thank you and the administrators and Senator Voinovich for putting it together, because you're really doing good work. Mr. Stephens, they tell me I've got to get a second round. The 70,000 people, where did they go? Mr. Stephens. Well, as people with the economic ability to flee the city left for our suburbs, those left in the brownfield impact area, again, migrated out to the neighbors with higher economic values, better schools, that type of area. So we've seen a series of migrations, basically the, quote unquote, white flight out of the city into our suburbs. And then the movement of those in the central city, you know, migrating out toward the fringes of the city. Mr. LaTourette. I think that's not an uncommon experience. What was the name of that project on the river, what was that development called, the River Walk or the Riverside? Mr. Stephens. The marina district? Mr. LaTourette. You had hotels and floating boats. Mr. Stephens. Portside. Mr. LaTourette. Portside. My sense is, and I know there's a press conference going on in Cleveland about the renovation of the Flats and Stephanie talked about the DFAS problems and NASA Glenn. One of the things that impressed me was when President Hunter was talking about this program they have here; if you buy a house in the city of Cleveland, good things happen to you as an employee of Case Western University. I think not only do you have to redevelop brownfields, people have to have stuff to do. And I'm sure you know as a city planner, and I know Ms. Nichols does, that you just can't have factories anymore, you have to have, like Mayor Sarosy said, golf courses and shops and places for people to go. So I really hope, Mr. Chairman, as we move forward, you move forward in your leadership and so forth on this brownfield issue, that our city planning take a look at stuff to do in Cleveland. And not only to get people to come back downtown and work, but they should live here and play here, and not come down every other Sunday for a Browns game or 73 times a year for an Indians game. So thank you for your courtesy. Mrs. Jones of Ohio. If I could just add something, Mr. Chairman. I've had a meeting, a small business committee hearing the other day and then I was at a banking committee hearing on HUD, all outside of my jurisdiction. But it just seemed to me what would make a lot of sense would be for HUD and SBA to have a relationship where they're developing housing and business, you know, that would be part and parcel of the development of communities, where they would be able to do that more such that we could get to the very issue that you're talking about of having jobs, having housing and something to do. Mr. Turner. Mr. Pocek. Mr. Pocek. Mr. Chairman, just what both Congressman LaTourette and Congresswoman Jones said, if you look at the current trend in architecture and in development, you look at Crocker Park, you look at the Brunswick Town Center. They are taking and doing multiple uses. And they're going to build residential, commercial. And this is where ideally what they're trying to do in the flats area is the same thing. And this is, I think, the trend. And if you could plug in, like Congresswoman Jones said, both HUD and add small banking industry together, this would make a redevelopment of the entire city. Because you have what is the mixed use. The city itself is basically a mixed use. And it makes most sense. The best kind of communities have a diversified mixed-use community. Mr. Turner. Thank you. I want to thank you for your testimony and for your time that you're providing to us. As the committee looks to the issue of the Federal response in relationship, your testimony of your success and what your communities are doing will be very helpful. With respect to the bill that provides the tax credits that all three members who are here are cosponsors of, your testimony is also very helpful as we look at how that program would be structured. The bill, House bill 4480 is a billion dollar annual tax credit program for environmental remediation and building demolition on brownfield sites. As we move forward to try to get support for this bill, hearing the ways in which brownfields have been addressed in communities, the programs that are currently out there and their success, helps provide some of the justification for the bill itself, because we can see that when funding is available, that when communities are able to address brownfield sites, that they do have successful developments in their community. The bill has been endorsed by every major mayor of every major city in Ohio. I certainly would encourage both of the two mayors here to lend their support for the legislation also. And it has been endorsed by the U.S. Conference of Mayors, the Industrial Parks Association, the Shopping Centers Association. And your information and testimony will help us as we move forward. So I want to thank you and I want to give you one opportunity, if there's anything that you would like to put on the record, if there's something that you heard someone else say that you want to add a comment to. Anybody? Ms. Nichols. I just want to also mention that the county has reached out to our partners in the city of Cleveland and the First Suburbs Coalition and we have created the Northcoast Brownfield Coalition. And one of the things that was in the GAO report was the creation of coalitions to kind of consolidate resources in regards to staffing and legal services, etc. And we believe in this area that is another important area that we need to investigate and to have tied more to U.S. EPA funding and local availability, as we believe those areas can truly get the money out and spend it in a timely basis. Thank you. Mr. Turner. Any other comments? If not, we'll take a 5- minute recess as we go to our second panel. [Recess.] Mr. Turner. Calling the meeting back to order. I want to thank all of our panelists on the second panel for coming and taking time out of their busy schedules to share with us their testimony on the important issues of brownfield redevelopment. On panel two we have Alex Machaskee, president and publisher of the Plain Dealer. We have Todd Davis, chief executive officer of Hemisphere Development LLC. We have Thomas Stone, executive director of Mt. Pleasant NOW Development Corp. We have Barry Franz, principal engineer, Civil & Environmental Consultants. Craig Kasper, chief executive officer, Hull & Associates. And each of you, I know, will be telling us your experience and backgrounds and efforts in looking at the brownfield issues. And we'll start with Mr. Machaskee. STATEMENTS OF ALEX MACHASKEE, PRESIDENT AND PUBLISHER, THE PLAIN DEALER; TODD DAVIS, CEO, HEMISPHERE DEVELOPMENT, LLC; THOMAS STONE, EXECUTIVE DIRECTOR, MT. PLEASANT NOW DEVELOPMENT CORP.; BARRY FRANZ, PRINCIPAL ENGINEER, CIVIL & ENVIRONMENTAL CONSULTANTS, INC.; CRAIG KASPER, CEO, HULL & ASSOCIATES, INC.; AND KEVIN O'BRIEN, EXECUTIVE DIRECTOR, GREAT LAKES ENVIRONMENTAL FINANCE CENTER, CLEVELAND STATE UNIVERSITY, MAXINE GOODMAN LEVIN COLLEGE OF URBAN AFFAIRS STATEMENT OF ALEX MACHASKEE Mr. Machaskee. Good morning, Mr. Chairman. Good morning, Mr. Chairman and members of the subcommittee. My name is Alex Machaskee and I'm president and publisher of the Plain Dealer Publishing Co. I represent Ohio's largest newspaper with readership of over 1.1 million people daily. The Plain Dealer owns and operates a 245,000-square-foot office building in Downtown Cleveland, OH and a 600,000-square-foot printing and distribution facility in Brooklyn, OH. I am here today not as an expert on brownfield, but as a concerned stakeholder in the city of Cleveland who has a vested interest in the redevelopment activity of brownfield sites within the city. I will also discuss the reasons why the Plain Dealer was unable to build our $200 million printing and distribution facility in the city of Cleveland, OH. Back in the late 1980's we at the Plain Dealer made the decision to build a state-of-the-art production and distribution facility that would enable us to enhance our printing capabilities and more efficiently and cost effectively distribute our product. We had been on the Cleveland landscape for almost 150 years, so we naturally wanted to invest in Cleveland's growth by building our new facility within the city limits. At that time, we had identified many sites in northeast Ohio that were large enough to accommodate our needs and met other specific criteria, such as proximity to our production base and access to freeways. Several of these sites were located in the city of Cleveland. As it was our preference to build within the city, we further investigated the available sites in Cleveland. We were not able to locate one parcel of greenfield property within the city of Cleveland that would accommodate our needs. The existing brownfield sites within the city at that time caused us concern because of the uncertainty involved in the purchase of this type of property. For example, if the Phase I environmental impact studies shows that remediation would cost us between $6 to $7 million, one might figure that into the total cost of the new building. However, the uncertainty comes in once you start the excavation and site preparation and discover additional problems in the soil. It can create exorbitant challenges as to how and where to move the contaminated materials. Timing and, of course, the budget for the project are key factors, and we were apprehensive about potential legal entanglements that could elongate the development and certainly add to the total monetary expenditure. Although, our objective was to invest in the economic development of the city of Cleveland, in 1994 we completed our $200 million production and distribution facility on 84 acres in Brooklyn, OH, approximately 10 miles from our downtown location. Approximately 450 jobs and the associated tax dollars were moved out of the city of Cleveland and into Brooklyn, where they remain today. Not only were we unable to contribute to the city of Cleveland's economic revitalization, we increased the complexity of our own operation by operating out of two facilities in different cities. Although, we have fine- tuned our processes since then, the situation has presented its challenges. Since we felt strongly about having a presence in the heart of Cleveland, when we made the decision to build our new office building, we tore down our existing structure and built on the same site. And even though we had additional land on which to build in Brooklyn, we felt a commitment to the city of Cleveland. Our new building represents a $38 million investment in the city of Cleveland. Our business is dependent upon the strength of our core city, Cleveland, which I point out to you ranks No. 1 nationally in poverty. Not a very good thing to have in our area. We cannot move north, south, east or west. We are here to stay and the economic revitalization of our city is crucial to us. Incentives for brownfield redevelopment projects provide an excellent means for encouraging investment in the city of Cleveland and for cities across the country. I want to thank you, Mr. Chairman and members of the committee, for allowing me the opportunity to appear before you today. [The prepared statement of Mr. Machaskee follows:] [GRAPHIC] [TIFF OMITTED] T3258.056 [GRAPHIC] [TIFF OMITTED] T3258.057 [GRAPHIC] [TIFF OMITTED] T3258.058 [GRAPHIC] [TIFF OMITTED] T3258.059 Mr. Turner. Mr. Davis. STATEMENT OF TODD S. DAVIS Mr. Davis. Good morning, Mr. Chairman and distinguished members of the committee. My name is Todd Davis. I'm CEO of Hemisphere Development, a nationally recognized brownfield redevelopment firm based in Cleveland, OH. As a matter of background, I wrote the American Bar Association's book on brownfield redevelopment. And I also sat on a number of national committees on brownfield redevelopment, including the Board of Directors for the National Brownfield Association. Hemisphere is actively developing almost 1,300 acres of brownfield properties in Ohio ranging in size from 1.25 acres, which is very close to the Case Western Reserve Campus that we see here this morning, to 1,100 acres, as we heard this morning also, in Lake County, OH. Our Lakeview Bluffs project in Lake County has over 1.2 miles of continuous shoreline and 2.2 miles of scenic Grand River. These projects undoubtedly represent the most challenging and complex brownfield redevelopment projects, not only in Ohio, but throughout the country. And just to put what we do into a little bit of context and perspective, brownfield developers are sometimes perceived like modern day gun fires, riding into town, wearing a white hat, providing the intellectual muscle, creativity and capital to tackle a community's brownfield needs. So in trying to keep with that western motif, I'll quickly summarize the State of Ohio's brownfield challenges into three categories; the good, the bad and the ugly. First the good. Fortunately for Ohio, we have two of the Nation's leading programs to address brownfields; the Ohio Voluntary Action Program on the regulatory side and the Clean Ohio Revitalization Fund on the funding side. And these programs undoubtedly represent the catalyst of brownfield redevelopment in the State of Ohio. Next, the bad. In part, due to the way the regulatory process is implemented, at least from a developer's perspective, the deals are still very difficult and it takes way too long to get them done. In many cases, Ohio brownfield deals are simply economically unviable without significant subsidy. Unfortunately, there's currently no raw market-based incentive to facilitate brownfield transactions. Finally, the ugly, which from my perspective as a brownfield developer is the thought of brownfield redevelopment in Ohio without significant subsidy. So therefore, Congressman Turner, I applaud your effort in coming up with a creative brownfield tax credit strategy, which from my perspective is the only way to get a meaningful shift of capital from a private perspective into brownfield redevelopment, not only in Ohio, but throughout the country. Thank you. [The prepared statement of Mr. Davis follows:] [GRAPHIC] [TIFF OMITTED] T3258.060 [GRAPHIC] [TIFF OMITTED] T3258.061 [GRAPHIC] [TIFF OMITTED] T3258.062 [GRAPHIC] [TIFF OMITTED] T3258.063 [GRAPHIC] [TIFF OMITTED] T3258.064 [GRAPHIC] [TIFF OMITTED] T3258.065 [GRAPHIC] [TIFF OMITTED] T3258.066 [GRAPHIC] [TIFF OMITTED] T3258.067 [GRAPHIC] [TIFF OMITTED] T3258.068 [GRAPHIC] [TIFF OMITTED] T3258.069 [GRAPHIC] [TIFF OMITTED] T3258.070 [GRAPHIC] [TIFF OMITTED] T3258.071 [GRAPHIC] [TIFF OMITTED] T3258.072 Mr. Turner. Mr. Stone. STATEMENT OF THOMAS STONE Mr. Stone. Good morning, Mr. Chairman and members of the subcommittee. My name is Thomas Stone. I'm the executive director from Mt. Pleasant NOW Development Corp., a CDC focussed on housing and economic development. The agency's service area is the Mt. Pleasant neighborhood, or ward 3, one of the southeast communities of Cleveland. I'm here today to talk briefly about the impact of brownfields in Cleveland and about one specific brownfield in my service area. A study conducted by the Cleveland Neighborhood Development Coalition Industrial Committee indicated that Cleveland has eight industrial parks. The combined total acres of the eight industrial parks was 569. Of the total number of acres, in 2003 only 88 acres were available for development of new industrial facilities. The study in 2003 indicated that 94 acres were slated for development. There appears to be and will continue to be demand for additional space into the future. Therefore, more acreage for industrial and commercial uses must be established. From the 94 acres to be developed, 1,416 jobs will be retained or created. This equates to 15 jobs per acre. The study further identified the next industrial areas within the city of Cleveland. Seventy-three sites were identified. The sites had to be three acres or larger. The sites were categorized as vacant/non-productive or underutilized. The 73 sites represented 1,641 acres. Allow me now to make some rough calculations to establish the economic value of these new sites. While we observed 15 jobs per acre created from the 94 acres previously mentioned, let's be conservative and say only 7 jobs per acre would be created on the new sites. That translates into 11,487 new or retained jobs. Using an average manufacturing annual wage of $47,000, new payrolls to be taxed by the city would equal, let's call it $539 million. A tax, 2 percent tax would generate $10,797,000 in city tax revenue. If only 10 percent of the jobs are created annually, approximately $1 million in tax revenue would be created. The other benefits that will be derived by cleaning sites and making them available for development as are follows: Increase employment in the city, so desperately needed, reduction of those needing public assistance, and removal of blighted areas. Now, while the study focused onsites that were three acres and larger, there are many brownfield sites located within neighborhoods that are smaller but could become community and/ or economic assets. One example is a junkyard site located at East 114th and Kinsman Avenue in Cleveland. The total size is 2.15 acres. Another interesting fact concerning this site is that it is immediately adjacent to Luke Easter Park. Luke Easter Park is the largest urban park in State of Ohio at approximately 110 acres. The junkyard site's former uses were an exterminating warehouse storing pesticides, an auto wrecking yard, a dry cleaning plant, a gas station and an embalmer's facility. The main determined contaminant on the site is Benzo Pyrene. My CDC, Mt. Pleasant NOW Development Corp., for 2 years has been pursuing a project to acquire and remediate the site to convert it to usable land. After the land is remediated, the plan is to develop it for commercial/retail space. The project costs are as follows: Costs to acquire land, $137,000; costs to remediate, $416,000; cost to determine scope of contamination, $50,000. A total project cost of $603,000. To date, Cuyahoga County and the city of Cleveland have provided grant funds to cover the cost of the analysis to determine the scope of contamination. Mt. Pleasant NOW Development Corp. is currently requesting from the city of Cleveland a $142,000 loan to purchase the site and demolish an old abandoned structure. The remaining challenge to making the former junkyard a viable site is obtaining funding for remediation. In 2004, Mt. Pleasant NOW Development Corp. submitted an application to the Ohio Department of Development Assistance Fund for $553,000 to acquire and clean the site. The application was rejected, largely because at the time of application there was no end user for the site identified. If the sources of cleanup of brownfield sites will continue to be limited to those sites that have identified end users, these sites will continue to remain hazardous, unproductive eyesores in our communities. Also, if funding is not made available so that municipalities and non-profit organizations can acquire the sites, development of sites will continue to be hindered. Not to mention that this is an example of a blighted, contaminated site immediately adjacent to an important community asset, Luke Easter Park. This is just one example of many small brownfield sites scattered throughout neighborhoods and communities in the State and country. Securing significant funding to return brownfields to productive use should be a major part of this country's initiative to strengthen America's cities. You very much for your time this morning. [The prepared statement of Mr. Stone follows:] [GRAPHIC] [TIFF OMITTED] T3258.073 [GRAPHIC] [TIFF OMITTED] T3258.074 STATEMENT OF BARRY FRANZ Mr. Franz. Good morning, Mr. Chairman and members of the subcommittee. My name is Barry Franz. I'm a principle with the consulting firm of Civil & Environmental Consultants located in Cincinnati. I'm a registered professional engineer in the State of Ohio and I am also a certified professional under Ohio's Voluntary Action Program. In Ohio, both local and State governments have had to be the lead entity in brownfields redevelopments. They both have a vested interest in maintaining the economic and environmental security of their citizens. The majority of Federal and Ohio programs available to date to assist in brownfields redevelopment require local government agencies to be the lead entity. These public-private partnerships are creating successful brownfield redevelopments, but these successes are slow in coming as compared to the total brownfields properties found in Ohio. With their tax base at stake, many local governments in Ohio are eager to work with private developers to redevelop their local brownfield properties. This eagerness does not change the fact that brownfields redevelopment is complex and costly as compared to the greenfield property. Economic incentives are necessary to spur this redevelopment in Ohio, particularly among small to medium-size brownfields properties. As an example to spur brownfield's redevelopment, the tax bill proposed by Congressman Turner could generate for Ohio many millions of dollars annually for brownfields redevelopment. In addition, brownfields tax credits could be allocated for up to 50 percent of the cost of demolition and remedial actions pursuant to the property being enrolled in the State brownfields programs, such as Ohio's Voluntary Action Program. It is important to private developers to see a return on their cost of the assessments and remedial actions required at the property. While numerous programs are successfully assisting in the identification, cleanup and redeveloping of Brownfields properties, much support is still needed. Legislation such as that proposed by Congressman Turner and others will have a significant impact on all of our efforts, both public and private. I appreciate the opportunity to share with you my perspective as a private consultant regarding the status of brownfields development in Ohio. Thank you. [The prepared statement of Mr. Franz follows:] [GRAPHIC] [TIFF OMITTED] T3258.075 [GRAPHIC] [TIFF OMITTED] T3258.076 [GRAPHIC] [TIFF OMITTED] T3258.077 [GRAPHIC] [TIFF OMITTED] T3258.078 [GRAPHIC] [TIFF OMITTED] T3258.079 [GRAPHIC] [TIFF OMITTED] T3258.080 [GRAPHIC] [TIFF OMITTED] T3258.081 [GRAPHIC] [TIFF OMITTED] T3258.082 STATEMENT OF CRAIG KASPER Mr. Kasper. Good morning, Mr. Chairman, members of the subcommittee. Thank you for the opportunity to testify about the issues affecting brownfield development in Ohio. I'm Craig Kasper, chief executive officer of Hull & Associates, and the firm's Urban Revitalization and Conservation Practice Leader. Our firm specializes in helping communities in the private sector transform neglected or abandoned property into productive uses. As Mr. Davis said, in Ohio we have two tools to help redevelopment. One is our Voluntary Action Program. The second one is our financial incentive, the $400 million Clean Ohio Fund. The funds from these programs are used to preserve green space and farmland, establish recreational trails, and conduct brownfield assessment and cleanup. In Ohio we have also been relatively successful at attracting Federal assessment and cleanup funds. While the Clean Ohio Fund and Federal funds are outstanding examples of incentives that motivate public and private investment in brownfields, other opportunities, such as Federal tax credits, are not only viable funding opportunities, but are necessary to help the enormous population of abandoned and underused real estate in urban cores and rural industrial communities. Today you have heard testimony of many different issues affecting brownfield redevelopment from a variety of skilled stakeholders. I would like to focus my testimony briefly in the following three areas: Inconsistencies in cleanup regulations that can be disincentives to using public funds; the lack of assessment funding necessary to accurately understand the cost of cleanup and demolition; and finally, funding necessary for critical items beyond assessment of cleanup, such as demolition and infrastructure improvement and environmental insurance, all necessary to make brownfields transactions successful. While many States have cleanup programs to cost effectively remedy brownfields, there's still a great deal of conflict between the State and Federal cleanup programs. In Ohio, we struggle sometimes with the acceptance of the State's Voluntary Action Program versus the Federal Memorandum of Agreement [MOA]. For example, a volunteer in Ohio who chooses to remediate a brownfield must go through an arduous administrative process to gain Federal acceptance on a cleanup the State would have accepted with fewer administrative hurdles. Requiring brownfield redevelopments to go through inconsistent or arduous cleanup programs to acquire new funding, such as Federal tax credits, may impede encouraging more brownfield redevelopment because of issues associated with cost and time. Many brownfields continue to sit vacant and idle because communities cannot afford upfront assessment activities and potential developers do not understand cleanup costs and the properties' associated liability risks. In order to accurately understand these, adequate assessment of the properties must be completed. Unless the real estate value of the brownfield property outweighs the cost of assessments, remediation and infrastructure, most of these properties carry upside down pro formas and become speculative developments. This can make developers hesitant to invest sometimes significant funds early on to understand the environmental issues. While U.S. EPA brownfield assessment grants and our own Clean Ohio assistance fund are valuable sources for funding assessments, the competition for these funds is fierce and the needs significantly outweigh those sources. Consideration should be given to allow entities who ultimately clean up a property in, of course, an improved State program offset not just the remedial dollars, but the assessment dollars with financial incentives, including proposed tax credits. Finally, while cleanup and assessments carry a big price tag of brownfields, other issues that exist that can be just as critical to a successful development. Demolition, upgrading infrastructure, and environmental are just a few examples. Consideration to all critical activities necessary for redevelopment should be considered as eligible cost onsites that are ultimately cleaned up and, of course, with an approved State program. In conclusion, I believe Ohio is a frontrunner in implementing programs that motivate brownfield redevelopment. But as successful as Ohio is, the resources do not scratch the surface of the legacies created from our industrial heritage. Through greater Federal investment, whether through financial incentives or working toward streamlined brownfield cleanup programs, the potential exists for increased brownfield redevelopment opportunities. The additional Federal attention to brownfields issued could sustain the work already underway at the local and State level, and could provide the expansion of some existing quality cleanup and economic development programs. I thank you for the time today. [The prepared statement of Mr. Kasper follows:] [GRAPHIC] [TIFF OMITTED] T3258.083 [GRAPHIC] [TIFF OMITTED] T3258.084 [GRAPHIC] [TIFF OMITTED] T3258.085 [GRAPHIC] [TIFF OMITTED] T3258.086 Mr. Turner. Again, I would like to thank each of you for taking the time for being here and the expertise that you bring to the table. You will note that in the first panel we had, we had representatives of government and government agencies. In this panel we have the private sector efforts on brownfield redevelopment. What's exciting here is we have two consultants that are working in brownfields, we have two developers. And then, Mr. Machaskee, I appreciate your participation here and the story that you were telling, because typically when we do this type of hearing and we focus on brownfield redevelopment, we want to hear from those who undertake brownfield redevelopment, who will focus on a site in trying to get it cleaned up and ultimately used with jobs returning, those who act as consultants in providing the expertise to accomplish that and the Federal agencies and State agencies that provide either oversight functions or funding functions. What's exciting about your story, being an end user, is that you can give us insight into how these programs and processes don't necessarily serve the timeline that business has. When you're going to undertake as a possible end user of a site, looking at locating a new facility, you're not necessarily going to have the same luxury of time that we will invest in sites that we as a community have determined to be important and seek to for the redevelopment. You spoke about two issues that I would like you to give your additional thoughts on. And the one being the timeline of the business decisionmaking and what we need to do to make certain that these sites are business ready when an opportunity comes along. And the second is you spoke about the Phase I process that you went through, and how in looking at a brownfield, the issue of uncertainty that you were faced when--even if you do have the luxury of time, the financial analysis of a project is limited by the information that you have on a Phrase I and you proceed with caution. If you would speak on those two topics. Mr. Machaskee. Sure. First of all, I think that it was somewhat surprising to us that looking at our criteria for what we needed, and we needed at that time at least 35 to 40 acres, and we needed rail access so that we could ship in newsprint, we needed access to major freeways, and it also had to have some utility considerations as well as be central to our distribution system. When you put those factors together, the city of Cleveland at that time was only able to offer up two locations, and one right off the bat we rejected because it was 21 acres. And in order to get an additional at least 10 acres, we would have had to be on someone else's timeline, relocate another company that had 200 employees, and plus there were utility and environmental considerations there. So the focus became then on a site that had 47 acres, close to a freeway, and had rail, so it had some of the major components. The Phase I environmental shows $6 to $7 million of remediation work. At the time of that Phase I environmental and with the owners of that property, we had to sign a confidentiality agreement as to what the Phase I environmental problems uncovered. So I won't talk about that. I can only tell you that ultimately we bought 88 acres in Brooklyn, more than we needed, because, first of all, the price was half as much per acre as what was being purported to us on the 47-acre site. With the greenfield site I didn't have to be concerned with underground storage tanks, defunct sewer lines with toxic waste in them, or PCBs. Now, once again, as I said in my opening remarks, if it was a matter of $6 or $7 million and everything else fell into place, you might consider that into the overall cost. However, in building the new plant, we were purchasing four printing presses at a cost of $66 million. Ultimately, an installation cost of $7 million. Plus, we were purchasing packaging equipment in the amount of $44 million. Now, when you're buying that kind of equipment, first of all, you're going to want to get it installed as soon as you can and operational to benefit from the cost efficiencies of producing in the modern plant. Second, the people that want to sell you this stuff aren't going to hold it up because you discover some additional problems in the soil. And then that raises that big question, what do you find once you start the excavation and what do you do with what you find? And those were very murky areas for us. And ultimately, we had to make the decision that we made to go to Brooklyn on the greenfield site and then, because we feel strongly about the city of Cleveland, come back a few years later and invest in a downtown office building where we made a $38 million investment and we still have 1,000 employees in Downtown Cleveland. Mr. Turner. Thanks. Mr. Davis, one of the elements of the legislation that we've put forward encourages participation from the past pollutant, encourages them to come to the table because, a, they have information that maybe you need about the site that you wouldn't know otherwise unless they were there. And, b, there's an awful lot of these properties that past polluters still control or influence their outcome. And we think that by encouraging them to come to the table that they'll bring properties that communities want to develop or have currently been locked up in abandoned sites. Could you tell me about some of your experience in working with past polluters and their views and interests, and what type of current incentives do you see to get a past polluter to come to the table and assist in the redevelopment. Mr. Davis. I think it's a great question. I've had a lot of experience, as you can imagine, working with PRPs, people who are perceived to have created or actually did create those issues historically. Perhaps, you know, in Diamond Shamrock's case, it was created in the twenties, thirties, forties, which preceded most of the environmental laws. They didn't perceive at the time that they were doing anything that was out of the ordinary in terms of ordinary business. But, after the advent of Super Fund, obviously, the cost associated with redeveloping those issues fell onto their laps, and appropriately so. I think that what you find as we negotiate now with people trying to unlock brownfield opportunities is that, especially in big companies, they're still very, very hesitant, because they're afraid to kind of open up the information publicly. We're currently negotiating in your hometown of Dayton with a company that, you know, I can tell you is somewhat hesitant with respect to entering into the public domain and the public process. Although, I know their intentions are pure and they want to do what's right for the community and they want to see the site remediated. I think that there are a number of corporations that fit into that model, but because there's a lack of predictability, there's a significant lack of people who understand how to go through this mine field of different funding and the legal and demolition and environmental issues all at the same time, that their experiences are mixed. So, you know, from my perspective, it's not about leveling the playing field, it's about helping the playing field. It's tilting the playing field so that it's such a good deal for companies and communities to do brownfield redevelopment, that it's not an issue. People want to be doing this. And I also believe that, while we've got great people in the public sector, whether they're the city, county, State working on these issues, and we have some of the most talented people in the country working in Ohio, fortunately, the private sector has to be the leader in getting these deals done. There's only so much, there's a limited amount of grant dollars that will ever be available for brownfield redevelopment. We're in an era where funding is being cut for regulatory programs, at Federal EPA, at Ohio EPA. You name the government sector, funding is being cut. So in order to encourage the private sector, whether it's companies, private developers, anybody, to work cooperatively to getting these deals done, at the end of the day we've got a clean piece of property that can be reused. That's what we want and that's what we should encourage. Mr. Turner. Mr. Stone, you mentioned the topic in your testimony that I would like you to speak more on, and that is the issue of the blighting influence of brownfields. When we miss the opportunity of redeveloping a brownfield site, of course we miss the jobs that could be on that site and we miss the potential capital investment on that site. But, another important aspect that you mentioned was the impact of brownfield on the surrounding property and its decline to attract capital. Can you speak about that. Mr. Stone. I think that's a major issue that we look at. A number of these smaller brownfields sites are located in neighbors and communities, certainly throughout this city, around the country. The site that I have mentioned specifically is located just adjacent to a beautiful urban park, Luke Easter Park, which we have right to the north of it. We have tennis courts, we have baseball diamonds, we have a track. And actually, the individuals and children have the ability to, you know, wander off into the site. So these are challenges for us when we have blighted conditions. And certainly my job in my organization is to redevelop or to change the physical appearance of some of these, some of our more challenged neighborhoods. And so when you've got a site of this size that's unproductive, that's blighted, it really takes away our ability to certainly market either a housing redevelopment situation or, in this case, economic development of jobs. So that blight cannot be underestimated. If we're going to be able to market or bring companies back to the area, the first thing actually is what's the condition, what do they see. And in a lot of cases that turns them off right there, not even getting to the cost. So in just getting also to the point of, you know, we just miss something when in my case it's a matter of trying to market a site when it's not ready. We've had in this case three entities that were looking for a site in the area, bringing new jobs. But when we tell them basically there's a time horizon of basically 18 months to 2 years before we could even potentially clean the site, they're saying, thanks but no thanks. Businesses are looking at when they want to put in a new store, where they want to create a facility. They're just looking for the available site. So if we can only present them with the opportunity of, well, in 2 years we might have something available for you, then we continually miss these opportunities. So blight is a major issue with communities, but also this missed opportunity. Mr. Turner. Ms. Tubbs Jones. Mrs. Jones of Ohio. Thank you, Mr. Chairman. In your written statement, Mr. Stone, you said that the problem with brownfield redevelopment is having to have an identifiable user in order to do the redevelopment. Are you suggesting that you as a non-profit are going to be able to do the remediation and then sell it or develop it with someone else. Mr. Stone. Certainly we would like to do that. In the current site we are now working and we have been initially approved for a loan with the city of Cleveland to acquire the site. What that will allow us to do and we're working on now is a development project with an actual end user. As I mentioned in my comments some 2 years ago, a year and a half ago, when we made an initial application to the assistance funds with the State of Ohio, we did not have an end user identified. We've been working through that process. As I said, it's marketing, trying to find cleanup funds. Mrs. Jones of Ohio. Basically my question is: Would you want to be the identified person until you got ready to develop for someone else? Is that what you're asking that you ought to be able to do? Mr. LaTourette. I think we would be willing to do that as a community development corporation. Mrs. Jones of Ohio. That's what I mean, as the community. Mr. Stone. Right. We play that role. We look at our service as the table setters and we're going to acquire the prep settings. In this case there's a lot of liability and the need for funding to clean the site. But we have to be in a position that we have available sites. So we would hold those sites. We can develop it ourselves or be in partnership with an entity to develop. Mrs. Jones of Ohio. Mr. Davis, based on the experiences that you've had with representing and litigation on those kinds of issues, what would be the downside to a non-profit being able to hold a piece of property as an identifiable owner for cleanup? And what would be the upside. Mr. Davis. I think the only downside from my perspective is that it's a non-profit instead of a for-profit. I mean, I think most certainly it's a great idea. And just following on some of the earlier comments about the Plain Dealer, and particularly with respect to that issue, to the extent that we had the ability to go in, and I think you're referring to the Collinwood yard site initially, which is a site that we actually worked on, I think, subsequent to the Plain Dealer's involvement in that site. Had we had the ability---- Mrs. Jones of Ohio. That's where Sodexho is now. Mr. Davis. Yes. The Food Bank. Mrs. Jones of Ohio. Right. Mr. Davis. But had we had the tools back then that we have now, had we had the foresight, the wherewithal and somebody who is willing to go in and address those issues, perhaps the Plain Dealer would have been there; while we wouldn't have had an end user necessarily in mind, we would have, as you've said, we would have set the plate. We would have set the tabletop. We went in. End users want a clear, clean, fully remediated piece of property that they can build on in the inner city or wherever as quickly as they can. They don't want to deal with environmental issues. They don't want to know about environmental issues. They want to make sure that their site is competitive with a greenfield site. And I don't blame them, because it's not worth it to a business person, even a great community-minded business person, who has the best interest of the toughest areas in mind. They have to make a business decision and it's got to be in their best interest to do that. Mrs. Jones of Ohio. Thanks, Mr. Davis. Really quickly to Mr. Franz. Do you want to add something? Mr. Machaskee. Could I just add something to that. Mrs. Jones of Ohio. Yes, please. Mr. Machaskee. It's a hypothetical, but I think it will make the point. We all know that the Cleveland Clinic, University Hospitals use an awful lot of Johnson & Johnson products. Supposing that a team is put together to go after Johnson & Johnson and say, look, why don't you come closer to your customers and put something in the inner city of Cleveland, create jobs and supply all those gauzes and everything else that you manufacture to these medical institutions. What would the city of Cleveland offer them? We don't have it. That's the point. Mrs. Jones of Ohio. We have to come up with something. To Mr. Franz and Mr. Kasper, my time has kind of run out, can you identify one project that you've worked on and tell me what community was in, what was there before you worked on the project, what kind of jobs and income came as a result of your redevelopment. One each. Mr. Franz. One of the more recent ones that we worked on actually was unique, what we call vertical brownfields. It was not a demolition of a facility. It was basically the cleanup and remodeling of what is called the Fort Piqua Hotel. Mrs. Jones of Ohio. That is---- Mr. Franz. In the city of Piqua. That's what it was, it was an old hotel. In that particular instance, the site had been used for everything from a hotel back in the 1840's, all the way through apartments, as well as currently had a sports bar in the basement at the moment. The city of Piqua as part of their brownfields redevelopment wanted to take the hotel and convert it into a space that could be used for their library and also for a number of senior citizen services. So basically that's what we did. We went in and did the assessment, submitted the findings and as well as our application for a Clean Ohio Fund. Mrs. Jones of Ohio. What did it cost. Mr. Franz. For the assessment work? Mrs. Jones of Ohio. For the cleanup. Mr. Franz. For the cleanup, total cost including the assessment, was probably about a half a million dollars. Mrs. Jones of Ohio. I'm cutting you off because I'm running out of time. Mr. Kasper. Mr. Kasper. I would normally talk about the $1.2 billion investment, the DaimlerChrysler facility in Toledo, OH. But besides everyone being sick of hearing about it if you spend $1.2 billion on brownfield, issues go away pretty quick. I would like to concentrate or make a few remarks about a project in Springfield, OH, about 45 minutes west of Ohio. And industrial city of a little under 70,000 people. And several years ago we took a very small brownfield, about 4 or 5 acres on the edge of Buck Creek, beautiful area right in the middle of the industrial corridor, and did some demolition and cleanup. We used both State and Federal money. Ohio EPA and U.S. EPA were great partners in that project, as well as the leadership from the city of Springfield. And about 6 months ago they opened up a regional cancer treatment facility there. It's a great story. Hopefully it will be a winner in the Phoenix award when they make the application this year. But that's brought leverage for that city. That community pulled together two hospitals that are recently merged and that were looking at taking both the campuses outside of the city and working very hard to bring them near their regional cancer center, using that leverage and bring them back to the urban core. So we're excited to see that happen and worked very hard for that success. Mrs. Jones of Ohio. Thank you very much. Mr. Chairman, I'm going to excuse myself and try and make this other event where it's the new redevelopment in the 11th Congressional District. I thank you for bringing the hearing here. Mr. LaTourette. Thank you, Mr. Chairman. Just a couple of housekeeping matters. I think, Mr. Chairman, you mentioned earlier that Congressman Kucinich is involved in the DFAS matter that Ms. Tubbs Jones was involved in as well. And then in addition, at the beginning of the hearing I talked about the article that appeared in yesterday's News Harold relative to the exciting project that Mr. Davis is involved in out in Lake County. And he corrected me during our break and indicated that in the Plain Dealer Sunday Magazine there was also a very nice article that had to do with the grapes that we were talking about a little earlier, that they're growing on the old soup pond. And I don't know if that article is written by their outstanding environmental reporter, John Keener, but I do know that Mr. Keener writes about the environment and does like grapes. The second thing that I wanted to talk about a little off the subject, but I feel constrained to do it, because one of my other hats is to serve as the Railroad Subcommittee Chairman on Transportation and Infrastructure. Mr. Machaskee was talking about the importance of being near rail lines in relocating a business site and the challenges being faced by brownfield redevelopment. And I have to tell you that I became aware last week that some people in the City Council in Cleveland are attempting to pass not in my backyard legislation, which would cause rerouting of all Norfolk and CXS trains so they don't travel through the city of Cleveland if they had materials that these councilmen would feel objectionable. And I would just say, if you're upset about what happened with the service office, if you don't like what happened with DSAF, if you're nervous about the 700 jobs still out on the line at NASA Glenn, one way to shut down the city of Cleveland is to engage in this silly knee jerk not in my backyard legislation. Having said that, Mr. Davis, you, I think, talked about the good, bad and ugly. And I think Mr. Machaskee's story on the Plain Dealer is important because I represent a lot of greenfields east of the city. You're to be commended for what you're doing on the brownfield site in Fairport Harbor. There is this notion that it's the greedy corporate giants that have no loyalty and so they're fleeing the city. And I think with the Plain Dealer, where they tried and didn't succeed, it's illustrative of the fact that isn't the case. And what I wrote down is, you know, you talked about the good, but when we got down to bad and ugly, and I have to tell you, I haven't finished your book yet, but I still have it. But you still say, you say that it takes way too long to get these deals done. What are the impediments that you continue to see to make these deals take too long and what is your opinion of Mr. Turner's legislation in terms of resolving some of those? Mr. Davis. Some of the reasons it takes too long is, just to give you an example with respect to our project, the first letters that we sent to the company seeking our involvement in trying to get in and volunteer to be the redeveloper there were sent in 1997. It took us, to your point, Chairman Turner, about 4 years to convince Diamond Shamrock and the successor to Diamond Shamrock that there was a credible team that could go in and actually make a deal like this happen. That was before there was any public involvement whatsoever. So behind the scenes it typically takes a number of years to just convince companies that it's worth their while to take a chance on doing these projects. Then when you get into the formal process, it's about making sure that we're lining up all of the regulatory issues at the same time we're lining up our financing issues. And if you're relying solely and exclusively on grant funding cycles, it's very hard to make those schedules work. And typically, the limit on grant funding itself, you know, Clean Ohio, which is clearly the leading grant program in the country, has a per project limit of $3 million per project. So when you put that in the context of the Lakeview Bluffs redevelopment, where the numbers, the cleanup numbers are far more than $6 to $10 to $12 to $20 million ultimately, while certainly important money, just one level of the financing. I think in terms of what Congressman Turner's bill would do, again, if you shift the incentive to private marketplace and you come up with a self-implementing private tax program, and you're doing it as a percentage of cleanup costs, cleanup costs defined by, you know, however the final definition comes down, then you can actually raise those limits of private investment and shift the pace dramatically. So I think that's another hidden advantage that people might not recognize that's just really an advantage to the bill. Mr. LaTourette. With respect to the letters that you sent out in 1997, not only to the brownfields Super Fund site, I mean, legislative solutions prior to Mr. Turner's, didn't they sort of encourage companies to hunker down and lawyer up rather than coming forward, coming to the table? Mr. Davis. There's absolutely no question about it. I mean, being an environmental lawyer, having made my limit in living for years before this as part of that litigation trough, I can tell you that nobody wants that scenario. The companies don't like it. I think that the only people who like it probably are the lawyers. I know we're not a sympathetic bunch. So from that perspective, the policies made no sense. And I think if you look at these sites pragmatically and not worry about blaming different people about what happened historically and focus on what we want to accomplish, it's end use versus process. And that's the way to get a meaningful shift in redevelopment projects. Mr. LaTourette. Probably the reason why the only people that have more jokes about lawyers are politicians. Mr. Franz and Mr. Kasper, both of you talked about getting a return of cost of investment. I would just ask you, based on your experience, and Mr. Davis, too, if you want to jump in, is there a rule of thumb that companies look at, and the Plain Dealer, Mr. Machaskee talked about maybe $6 or $7 million, if that's where it all ended, is there a rule of thumb that you're aware of that businesses take a look at when they're looking at a brownfield in terms of what's going to be the return on my investment. And, again, if you've had a chance to look at Mr. Turner's bill, does that help ease minds of those that would make those investments? Mr. Kasper. As far as actual, what type of return, I think I can pass that over to Mr. Davis. But definitely, you know, when I see private sector properties, they're coming in with their basis in the property. And they know they're in a brownfield, they're going to spend more money and try to figure out, how do they take the upside down project and right it. So you have that issue right there. So just a net zero to start off is the first hurdle. The other issue we heard of is the uncertainty that's been spoke of. So if they go into this thinking the basis is a million dollars on a 10-acre property. So if they have $100,000 an acre, in addition to anything else, and it's $3 million, that doesn't end up good for anyone. So it's not just a matter of understanding what type of return they're getting, it's really trying to understand how do they take care of the uncertainty and the risks and maybe how to transfer those risks. As far as what Chairman Turner is proposing, I think, as I said in my written testimony, any Federal incentives that can help, again, right those upside down projects would certainly be very valuable for redevelopment. Mr. LaTourette. Mr. Franz, do you want the jump in? Mr. Franz. Basically economics drive the project no matter what. So if the economics are negative, the project is not going to go forward. It's relatively--it's simple from where I stand. Mr. LaTourette. Do you think that, as Mr. Kasper suggested, that a zero return is enough for people, or do they need to do better? I would hope that Mr. Machaskee's property out in Brooklyn is going to appreciate a little over the next couple years and is not going to be worth the same as he paid for it. Don't people have the opportunity to expect that as well? Mr. Franz. Yes. Mr. LaTourette. OK. Mr. Chairman, thank you very much. Mr. Turner. I want to thank all of you for participating and, again, giving your perspective in working on these issues. This will become part of our larger testimony that we've been taking on what is the Federal response, how are our programs working, what other tools do we need in the toolbox, and then specifics of reactions to the tax credit bill and ways in which we might be able to assist communities. Before we conclude, I want to give each of you an opportunity, if you have any concluding remarks or anything else that you would like to add for the record. Mr. Machaskee. Thank you, Mr. Chairman. As an observer in Cleveland and being with the Plain Dealer for some 25 years, certainly I have observed the Greater Cleveland as a shrinking market for many years. It's been well-documented that our out migration is greater than our in migration. And we've had a significant loss of jobs, particularly in the last 4 or 5 years. And along with that comes the reduction in spending power, discretionary spending power, and that hurts all businesses and all providers of goods and services. So we need people, we need people to come here. But what are they going to come to? They need to come here because we have jobs. And the only way we're going to get more jobs here is to be able to attract business investment, either a new business investment or business extension. And, therefore, this brownfields remediation legislation that you're proposing, I think, is very key to that, to attract business. And so I want to applaud you, Mr. Chairman, and your subcommittee for all the work that you're putting into it. Mr. Turner. Any other comments? Mr. Stone. Thank you, Mr. Chairman. I just wanted to emphasize, and I said earlier to you that I'm here sort of representing the little people in, as you mentioned, blighted conditions in neighborhoods. And in a lot of cases these are projects or sites that are much smaller in size, somewhat fall below the radar screen, but clearly you have them sitting in the middle of neighborhoods. The one that I mentioned is in one of the most densely populated areas in the city of Cleveland. So you have existing homeowners and residents of that, you know, to some extent in the low income situation, really don't have many other options, so they're there. And so we continue to see situations that they don't really have the remedies to get rid of something that's very detrimental to their own health and well-being. And, again, it's a missed opportunity as it relates to job creation. So as I think about your legislation, and I don't have full knowledge of it, when we think about tax credit, compare that to what's been done through the deposit tax credit program, which I think is the best program that's been established for the creation of affordable housing that's been responsible for the government, and now we have the new markets tax credit. We see these projects, we see this type of legislation very effective in creating incentives. So I would applaud you that this is another way in which private investment can be attracted to these challenged sites and these challenged areas, so thank you. Mr. Turner. Gentlemen, any other comments? If not, I want to thank Case Western Reserve University for obviously being our host. They've been very helpful in our being able to pull this together and to be here today. I want to thank all of the people who have come to hear the testimony. And also Mr. LaTourette, I greatly appreciate his assistance in being able to pull this hearing together, and the attendance of Ms. Stephanie Tubbs Jones. Thank you. We're adjourned. [Whereupon, the subcommittee was adjourned.] [Additional information submitted for the hearing record follows:] [GRAPHIC] [TIFF OMITTED] T3258.087 <all>