TESTIMONY OF DAVID A. SAMPSON
ASSISTANT SECRETARY FOR ECONOMIC DEVELOPMENT
U.S. DEPARTMENT OF COMMERCE
SENATE COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS
Chairman Jeffords, Senator Smith, Members of the Committee:
Thank you for this opportunity to appear before the Environment and Public Works Committee regarding the Economic Development Administration’s role supporting brownfields revitalization and development planning.
The Administration, the Department of Commerce (DOC), and the Economic Development Administration (EDA) recognize the need for brownfield revitalization and strategic land-use planning objectives that are the focus of S. 1079, the Brownfield Site Redevelopment Assistance Act and S. 975, the Community Character Act of 2001. EDA has an established record of working with local stakeholders to redevelop and reuse brownfields and has partnered with the Environmental Protection Agency (EPA) to provide assistance similar to what is outlined in these bills. The President has announced that his FY 2003 budget will double the funds available through EPA in FY 2002 from 98 million dollars to 200 million dollars – to help states and communities around the country clean up and revitalize brownfield sites. However, given the demands on the federal budget to fight the war on terrorism and safeguard our national and homeland security, the Administration cannot support the additional funding beyond the increased funding already in the President’s budget.
In addition, brownfield redevelopment and land-use planning must be addressed through community-driven, market-based approaches instead of a centralized approach. We must focus our efforts on leveraging existing resources and authorities at the federal, state, and local levels to support market-based solutions.
In the economic development arena, free markets, community organizations, private industry, and local governments are the drivers of successful long-term economic opportunity. It is the private sector that has the financial resources necessary to revitalize our communities and create jobs and wealth in America. Therefore, it is the federal government’s role to create an environment that allows local governments to partner with private industry by encouraging market-based solutions that attract private sector investment to revitalize America’s communities.
This strategy lies at the heart of EDA’s mission to help our partners across the nation create wealth and minimize poverty by promoting a favorable business environment to attract private capital investment and create higher-skill, higher-wage jobs. This approach is consistent with the Administration’s vision that government should be active, but limited; engaged, but not overbearing. Government has a role to play in brownfields redevelopment and strategic economic development planning by creating an environment where private sector solutions can be realized.
Successful regions build on their inherited assets such as geography, climate, population, research centers, companies, governmental organizations, to create specialized economies that both differ from other regions and offer comparative advantages to local companies.
The Economic Development Administration (EDA) has a longstanding role in supporting the economic redevelopment of abandoned, idled, and contaminated industrial and commercial sites. Since 1997, EDA has invested over a quarter of a billion dollars in more than 250 brownfield redevelopment projects. Last year alone, EDA invested $55 million in 58 brownfield projects, that is close to the level authorized in S. 1079.
EDA’s flexible economic development program tools have assisted local governments, nonprofit organizations, and regional Economic Development Districts in overcoming their brownfields revitalization challenges. Under existing statutory authority, EDA provides assistance to brownfields-impacted communities designed to achieve long-term economic revitalization. In assisting with brownfields redevelopment activities, EDA has used a variety of different program tools to address various phases of brownfields redevelopment, including:
· Providing targeted planning and technical assistance investments to support market feasibility studies and geographic information system (GIS) inventories of brownfields;
· Assisting communities with infrastructure investments to rehabilitate land and buildings, attract private capital investment that in turn creates jobs; and
· Making investments to capitalize local revolving loan funds used to provide gap financing in support of local business development.
In my brief tenure at the helm of EDA, I have visited several brownfield sites and have viewed first hand the powerful economic transformation that can occur when previously constrained market forces are unleashed. For example, at the former Fitzsimons Army Medical Center in Denver, Colorado, a BRAC closure and brownfield site, EDA has invested $9.4 million to replace the 4,000 jobs and $192 million in annual expenditures lost to the Aurora community.
The site is currently being transformed into a new employment center with 25,000 jobs anchored by a new medical campus for the University of Colorado and a 160-acre bioscience research and development park. The bioscience research and development park is the first of its kind west of the Mississippi. The new work force already exceeds 2,000 people, with a projected full replacement of jobs lost by 2004.
More than $500 million in construction is completed or underway, and ten biotechnology companies have already located at Fitzsimons. Major private investments include a $55 million gift for a clinical complex and $18 million in venture capital for the largest biotech company located in the business incubator on the site. Total private investment to date is estimated to be well over $100 million.
EDA has been a longtime supporter of the Environmental Protection Agency’s (EPA) Brownfields Initiative and was the first federal agency to enter into a partnership agreement with EPA – signing a memorandum of understanding (MOU) in 1995.
Pursuant to this partnership, EPA funds a Brownfields Coordinator position in EDA headquarters to enhance communication and coordination among the two agencies, and our prospective applicant beneficiaries. This unprecedented level of cooperation between two federal agencies, with markedly different missions, has established a new model for intergovernmental collaboration and effective delivery of assistance to local communities.
Another part of the Department of Commerce, the National Oceanic and Atmospheric Administration (NOAA), has also been involved in the clean up and redevelopment of brownfield sites. NOAA is the Nation’s primary coastal steward and the Agency has worked to improve our Nation’s coastal areas and resources in a number of areas. NOAA programs are working at coastal brownfield sites to sponsor local workshops focusing on brownfields restoration; revitalizing waterfronts and redeveloping sites through effective coastal zone management; and providing advice to communities on cleaning up and restoring contaminated coastal areas. For example, NOAA is sponsoring a Brownfields Showcase Community coordinator for the city of New Bedford, MA to work on the joint EPA and NOAA issues. This coordinator is assisting the local brownfields task force in cleaning up and restoring brownfields sites in the city. NOAA works with a number of other local communities to deliver tools and services that promote effective local decision-making to revitalize local economies and communities. EDA and NOAA are looking at ways to enhance what our two agencies, as part of DoC, can bring to these communities.
Despite these efforts, we recognize the need for a more comprehensive approach to dealing with brownfields redevelopment across the nation. Toward this end, the Department of Commerce and the Environmental Protection Agency are drafting a memorandum of understanding that empowers all DOC bureaus to partner with EPA to comprehensively address brownfields redevelopment. This partnership would allow DOC and EPA to provide additional assistance to brownfields-impacted communities across the country.
As the President stated upon signing EPA’s landmark brownfields legislation in January, we believe the key to effectively and efficiently addressing the brownfields development challenges facing our nation’s communities is for the federal government to pursue a more cooperative common sense approach. This brownfields legislation was passed with the support from both Republicans and Democrats. Notably, the legislation recognizes and supports state efforts directed at regulatory relief and market-based incentives for redevelopment.
An example of an effective market-based incentive that we strongly support, not included in EPA’s legislation, is the brownfields tax incentive. This incentive allows for environmental clean up costs to be fully deducted in the year they are incurred, rather than being amortized and depreciated over the life of the property. Under current law, favorable tax treatment for the contamination clean up costs will expire at the end of 2003. As proposed in the President’s fiscal year 2003 budget, the Administration believes that the brownfields tax incentive should be made permanent. According to government estimates, the $300 million annual investment in the brownfields tax incentive will leverage approximately $2 billion in private investment and return 4,000 brownfields to productive use.
The Administration believes brownfields redevelopment is about reclaiming land and returning it to productive use by encouraging private sector investments that will create jobs, rejuvenate local tax roles, and support sustainable use of restored natural resources. Public policy in this area should focus on incentives to encourage entrepreneurs and developers to invest in and revitalize brownfields sites. Furthermore, it is essential that we engage in collaborative partnerships and leverage funding through existing programs to provide assistance to brownfields-impacted communities.
Given the scope and complexity of brownfields throughout the United States, one program, agency, or organization is not able to adequately address the multitude of issues involved in brownfields redevelopment. Therefore, the best approach to address this complex problem is through an enhanced coordination between federal agencies and leveraging existing assets at the federal, state, and local levels which create an environment that attracts private sector investment. The collaboration of all parties will result in the redevelopment of brownfields, new jobs and a cleaner environment.
An example of federal agencies coordinating their efforts and assets is the national Brownfields Showcase Communities Initiative that has provided technical assistance and resources from more than 20 federal agencies to selected communities grappling with brownfields issues.
S. 1079 recognizes EDA’s historic role in supporting national brownfields revitalization efforts through planning, technical assistance, infrastructure construction, and revolving loan fund development tools. With EPA focused on the front-end assessment and clean up of brownfields, and EDA focused on the back-end redevelopment and revitalization of sites, we believe this model partnership is the proper vehicle to address the nation’s brownfields challenges. Recognizing the success of this partnership, EDA and NOAA will work to strengthen collaboration with EPA and other partners on the revitalization of brownfields-impacted areas.
While there are many parallels between this legislation and EDA’s current efforts to support brownfields revitalization activities, portions of this bill represent a broad departure from EDA’s mission. For example, the legislation calls for EDA to “create parks, playgrounds, and recreational facilities.” This type of development falls outside of EDA’s principle mission as authorized by Congress.
Finally, we are concerned that S. 1079 calls for resources that are not included in the President’s budget. We believe that the objectives of this legislation can be best attained within current budgetary resources through improved coordination of existing programs, a market-based tax incentive approach, and a locally-driven development process where community and business leaders come together to address economic and environmental needs.
The Community Character Act of 2001 (S. 975)
The Committee has also asked me to comment on the Community Character Act. In recent years, concerns have been raised regarding the kinds of development occurring in America’s suburban communities. Concern exists that development is occurring in a way that detracts from quality of life as characterized by traffic congestion, air and water pollution, and unfocused and unattractive development.
This problem is addressed through local community planning with a focus on investments that look beyond the immediate economic horizon and anticipate economic changes in the local regional economy and embrace market-based rigorous development standards.
Comprehensive market-based local and regional planning is an essential component of successful economic development. Effective planning creates a road map for communities to grow and develop with a focused approach towards creating higher-skill, higher-wage jobs.
For almost 40 years, economic development planning has been a cornerstone of EDA’s development programs. During this time EDA has found that effective economic development planning is accomplished at the local level. Other than special circumstances such as coastal zone management planning, as a general rule, states are too far removed from local history, background, and circumstances involving land use planning to reasonably find solutions to what are frequently unique local circumstances. Local stakeholders are best able to effectively identify and analyze local problems and opportunities, and implement the vision of the community.
EDA is currently involved in and committed to local planning through its Partnership Planning program, which supports 325 multi-county Economic Development Districts and 59 American Indian tribes and Alaska Native villages. Since 1997, EDA has provided planning activities matching the level of funding that would be provided through the Community Character Act. Last year alone, EDA provided over $18 million to Economic Development Districts and more than $2.5 million to American Indian tribes through the Partnership Planning program. This program provided approximately $100 million in assistance to support regional development. Last year, EDA made 49 short term planning investments totaling almost $3 million; 26 of these investments were to regional planning districts, 14 to urban areas, and 9 directly to states.
This process supports local planning by encouraging development of a regional comprehensive economic development strategy (CEDS). The CEDS process is designed to guide the economic growth of an area through an inclusive and dynamic process that coordinates the efforts of community organizations, local governments, and private industry concerned with economic development.
While our CEDS process is a prerequisite for EDA infrastructure construction assistance, its greater value to communities is the development of a strategic vision as well as a capacity-building program. While not prescriptive, local communities developing CEDS are encouraged to address economic issues and opportunities in a manner that promotes economic development, fosters effective transportation access, enhances and protects the environment, and balances resources through sound management.
Fundamental to the success of the CEDS process is that regional strategies are market-based and recognize that each community or region must craft an economic development plan that focuses on its unique strengths. These local strategies then translate into a holistic approach to local land use planning by considering multiple issues of concern by community stakeholders, including job creation, environmental protection, transportation options, and public works investments, among others.
In addition, NOAA, under its Coastal Zone Management Act responsibilities, has a 30-year history of working with coastal states to support effective local planning. Coastal zone management plans provide a framework for successful economic development and the maintenance of environmental quality at the state and local level. Thirty-three coastal states and territories, covering 99% of our Nation’s ocean and Great Lakes coasts, have approved coastal zone management plans.
The Community of Character Act proposes new funding to establish a grant program to promote comprehensive land use planning at the state, tribal, and local levels. The bill would authorize 25 million dollars each year, for five years at the state level for planning activities. The Administration cannot support S. 975 because it calls for resources that are not included in the President’s budget to support activities that can be accomplished through existing authorities and appropriations, and a centralized approach to land use planning is not the most effective solution to address issues of sprawl and unfocused economic development.
Rigorous development standards in land use planning, which are market-based, locally defined, and focused beyond the immediate economic horizon, are good business. While quality of life issues surrounding poor land use planning in America’s suburbs are a growing concern, the most effective approach to land use planning is to create a locally devised plan that is market-based in its focus.
EDA’s experience has proven local planning efforts work. As I stated earlier in my testimony, EDA’s planning grants require the participation of local economic development stakeholders including community organizations, local governments, and private industry. Ultimately, this process must involve leveraging public, private and community resources, to achieve a commonly held vision for the community. This approach will allow for different local planning views to be considered, resulting in market-based planning that is flexible enough to accommodate innovation.
This market-based approach is currently addressing the concerns about sprawl throughout the country. Developers are using cutting-edge designs that mitigate the unpleasant aspects of sprawl, while satisfying citizens’ demands for clean and convenient communities. Markets are naturally driving developers towards high-end development standards demanded by consumer interest in development designs that reflect their desire for pleasing aesthetic environments, convenience, safety, and affordability. In the end, a market is more than a place; it is a process.
EDA, for example, has been actively involved in supporting eco-industrial development as a preferred redevelopment technique for brownfields impacted areas and has supported many of the nation’s early efforts in this regard. Eco-industrial development emphasizes synergistic corporate relationships and closed loop industrial systems, where the waste product of one industry is used as input for another. Eco-industrial development takes many forms, but the overarching goal is to catalyze local economic growth through cost saving, performance based long-term development approaches. Fundamental to this concept is the use of high-end development standards.
There are several innovative approaches in the marketplace addressing eco-industrial development. For example, The Londonderry, New Hampshire Ecological Industrial Park is a successful example of the eco-industrial concept. The anchor tenant for this industrial park is a 720 mega-watt combined cycle natural gas power plant that will use treated wastewater from the neighboring City of Manchester for cooling as part of a closed-loop industrial system. The industrial park is located adjacent to several residential areas and was developed through a market-based local planning process that included government, private-sector, and community participants. As such, the park includes 100 acres of permanently protected open space and other aesthetic amenities providing value added benefits to tenants and the surrounding community.
Another innovation in the marketplace is the emergence of environmentally sensitive development. This emerging market niche marries real estate development with natural and rural amenities. Typically, some portion of these “eco-developments,” as they are known, is set aside as community space while the remainder is divided up for commercial and residential uses. An example of this kind of development is Prairie Crossing in Grayslake, Illinois located between Chicago and Milwaukee. This development incorporates agricultural production and open space preservation in a model that allows developers to realize returns in the top quartile of the area real estate market. Development in Prairie Crossing is holistically integrated with the natural environment including 150 acres of agricultural land and community gardens; 228 acres of lakes, wetlands, meadows, and prairies; and 15 miles of hiking trails.
This Administration will continue to work for the American people to protect the quality of our air, land, and water, while building on the premise that environmental protection and economic prosperity go hand in hand. It is important to provide flexibility to states and local communities to craft solutions that address their unique situations. Further, legal obstacles to clean up brownfields should be removed, brownfield tax incentives made permanent, and federal financial assistance made more effective by cutting red tape. Brownfields clean up, restoration, and redevelopment are important because they revitalize communities by improving public health and environmental conditions, boosting local property tax rolls, and creating jobs.
In all aspects of its development and implementation, economic development must be addressed at the local level if it is to be successful in its objectives of creating wealth and minimizing poverty by promoting a favorable business environment to attract private capital investment and job opportunities.
By working together with state and local communities, leveraging the federal government’s current resources, and coordinating the efforts among agencies, we can work effectively to create a market-based approach to develop and revitalize communities across the nation.