<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
______
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COMMITTEE ON GOVERNMENT REFORM
TOM DAVIS, Virginia, Chairman
CHRISTOPHER SHAYS, Connecticut HENRY A. WAXMAN, California
DAN BURTON, Indiana TOM LANTOS, California
ILEANA ROS-LEHTINEN, Florida MAJOR R. OWENS, New York
JOHN M. McHUGH, New York EDOLPHUS TOWNS, New York
JOHN L. MICA, Florida PAUL E. KANJORSKI, Pennsylvania
GIL GUTKNECHT, Minnesota CAROLYN B. MALONEY, New York
MARK E. SOUDER, Indiana ELIJAH E. CUMMINGS, Maryland
STEVEN C. LaTOURETTE, Ohio DENNIS J. KUCINICH, Ohio
TODD RUSSELL PLATTS, Pennsylvania DANNY K. DAVIS, Illinois
CHRIS CANNON, Utah WM. LACY CLAY, Missouri
JOHN J. DUNCAN, Jr., Tennessee DIANE E. WATSON, California
CANDICE S. MILLER, Michigan STEPHEN F. LYNCH, Massachusetts
MICHAEL R. TURNER, Ohio CHRIS VAN HOLLEN, Maryland
DARRELL E. ISSA, California LINDA T. SANCHEZ, California
GINNY BROWN-WAITE, Florida C.A. DUTCH RUPPERSBERGER, Maryland
JON C. PORTER, Nevada BRIAN HIGGINS, New York
KENNY MARCHANT, Texas ELEANOR HOLMES NORTON, District of
LYNN A. WESTMORELAND, Georgia Columbia
PATRICK T. McHENRY, North Carolina ------
CHARLES W. DENT, Pennsylvania BERNARD SANDERS, Vermont
VIRGINIA FOXX, North Carolina (Independent)
------ ------
Melissa Wojciak, Staff Director
David Marin, Deputy Staff Director/Communications Director
Rob Borden, Parliamentarian
Teresa Austin, Chief Clerk
Phil Barnett, Minority Chief of Staff/Chief Counsel
Subcommittee on Federalism and the Census
MICHAEL R. TURNER, Ohio, Chairman
CHARLES W. DENT, Pennsylvania WM. LACY CLAY, Missouri
CHRISTOPHER SHAYS, Connecticut PAUL E. KANJORSKI, Pennsylvania
VIRGINIA FOXX, North Carolina CAROLYN B. MALONEY, New York
------ ------
Ex Officio
TOM DAVIS, Virginia HENRY A. WAXMAN, California
John Cuaderes, Staff Director
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:]
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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:]
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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:]
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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:]
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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:]
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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:]
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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:]
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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:]
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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:]
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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:]
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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:]
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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:]
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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:]
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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
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