U.S. Senate Committee on Environment & Public Works
U.S. Senate Committee on Environment & Public Works
Hearing Statements
Date:   04/29/2004
 
Statement of R. Charles Gatson
Vice President and COO
Swope Community Builders
Reauthorization of the Economic Development Administration

Chairman Inhofe, Senator Jeffords and Members of the Committee, thank you for inviting me to testify in front of your committee on the Economic Development Administration reauthorization bill. I want to particularly recognize Senator Bond who has been a friend and a champion of our efforts to improve the lives of thousands of folks living in Kansas City, Missouri.

I am currently the Vice President / Chief Operating Officer of Swope Community Builders, a position I have held for the past 13 years. Swope Community Builders is one of the nation’s 3,600 community based development organizations represented by the National Congress for Community Economic Development.

We are a nonprofit community development corporation with a $7.5 million annual budget. On December 31, 1991 our total assets were approximately $60,000. On December 31, 2003 our total assets exceeded $61.4 million. We have completed in excess of $120 million in development projects – single and multi-family housing, as well as commercial and institutional – over the past 10 years. Every dollar the federal government invests in our work leverages another $7. We manage more than $100 million dollars of investment. We have over $100 million of new investments in our development pipeline.

In 1991, when I came to work at Swope Community Builders, many in our was troubled with high poverty and unemployment rates, low housing values coupled with many vacant and abandoned buildings. Many in our community did not have adequate health care coverage or access to retail shopping. Community residents were not engaged in planning activities nor were they beneficiaries from higher economic growth.

As I stated earlier, Swope Community Builders has completed in excess of $120 million in redevelopment projects during its fourteen (14) years of existence. One of our most important projects, the H & R Block Technology Center, was completed in December of 1999. This project, a corporate technology center built using cutting edge construction, cabling and computer technology, relocated 150 employees earning an average of $45,000 per year from suburban Kansas to Kansas City’s urban core and created 400 full time equivalent jobs with starting salaries of $15.00 per hour. The total annual payroll at the H & R Block technology center exceeds $20 million. The building generates annual real estate taxes of approximately $225,000 which, coupled with economic activity taxes, generates enough income from a Tax Increment Finance District to debt serve a $2 million tax exempt bond issue that has been used to spur other job creating redevelopment projects. Across the country, the computer needs of over 8,000 of H & R Block’s franchisees are serviced by this Center. This project did more than provide jobs to area residents; it provided hope to the residents, spurred further development and provided proof to other corporations and investors that urban Kansas City locations are safe and can be the sites of sound investments.

The FirstGuard Office Building, a 72,000 square foot technologically advanced office building completed in 2002, is home to the FirstGuard HMO, Mazuma Credit Union, the Dalmark Corporation, the Housing and Economic Development Financial Corporation and Swope Community Builders. This $14 million facility is geared towards companies with a need for fast computer links, advanced telephone systems and video capabilities and a trained labor force. This building is home to over 300 employees.

Swope Community Builders is in the development phase of the New Village at Technology Center, a 480,000 square foot office/warehouse project, accompanied by 50,000 square feet in companion retail/service space and 175 units of work force and market rate housing. The New Village at Technology Center will be designed to attract office/warehouse tenants whose businesses are based upon the uses of new technologies, who have similar needs as the tenants in the H & R Block Technology Center and the FirstGuard Office Building and who need easy access to rail and surface transportation. This center will employ over 1,200 people at average wages of $19.50 per hour which translates into an annual payroll of $48.6 million. It is expected that a large percentage of the jobs created will be filled by residents from Kansas City’s 3rd Council District, statistically its most economically distressed location, located due east of the Central Industrial District. This project will have a lasting effect on at least 1,200 families while providing another example to the investment community that community development corporations are excellent partners who understand how to make deals work in urban core America.

The revitalization of our community and the H & R Block project would not have been possible without substantial federally funded and supported investments. Again I want to recognize Senator Bond’s efforts in securing millions of federal dollars for these initiatives. We regularly make great use of HUD funds through HOME and the Community Development Block Grant, Health and Human Services through the Office of Community Services, the Department of Justice through COPS and the Neighborhood Initiative and Economic Development Initiative programs. We have also utilized local governmental funding techniques such as Tax Increment Financing, Special Taxing Districts, Property Tax Abatement (home ownership projects) and the City of Kansas City’s Capital Improvements programs. All these funding mechanisms, coupled with private capital from conventional loans and equity investments, are crucial to bringing more technology based projects and investments to urban core locations where sites are available and easily trained labor forces are available.

One agency missing from that list is the Economic Development Administration. Despite our best efforts, Swope Community Builders has never received any funding from the Economic Development Administration. Indeed, none of the 14 Community Development Corporations in Kansas City has received substantial funding from the Economic Development Administration in the past sixteen years.

The experience in Kansas City is not an isolated case. Our membership association, the National Congress for Community Economic Development (NCCED), surveyed some of the leading Community Development Corporations in the nation in 2002 to learn of their experiences. Outside of the Western region, which includes California and Washington, no Community Development Corporation could report access to Economic Development Administration investments.

To his credit, Assistant Secretary David Sampson has taken this lack of access of community based organizations to Economic Development Administration seriously. Dr. Sampson told NCCED members at our Policy Summit in March that, “I have a great appreciation of what you do in local communities every single day.” Dr. Sampson has a personal commitment to community based organizations, including those that are faith-based because he knows Community Development Corporation’s create conditions so our communities have a growing standard of living. Over the past three years, Dr. Sampson has made community based organizations and faith-based organizations a funding priority of the Economic Development Administration. Dr. Sampson clearly stated that the Economic Development Administration should not discriminate against faith based or community groups in funding decisions. Economic Development Administration headquarters is looking at regional offices to see if they are working with new groups, expanding the deal flow, and expanding the group of partner agencies. “We do not want to work with the same groups all the time”, he said. “It is our goal that no geographic sector or community is left behind in the economy geographically or demographically”, he added. The Economic Development Administration has added a community based partnership category to its annual Awards for Excellence.

However, the intention has not translated into reality due to a combination of inadequate appropriations for the Economic Development Administration and an institutional culture that is closed to community-based nonprofits like mine.

In the previous Economic Development Administration reauthorization, Congress expressly made community based organizations an eligible group for Economic Development Administration investments and relaxed the requirements that any project have approval from the development department of the participating jurisdiction.

Making nonprofits eligible for poverty alleviation resources is a typical federal strategy including programs like the Temporary Assistance to Needy Families, Workforce Investment Act, and the Economic Development Administration. However, in most of these programs, eligibility does not translate into partnerships that build on the abilities of nonprofits.

While I support the reauthorization of the Economic Development Administration, I hope that the agency and Congress will more aggressively seek opportunities to enable nonprofit community based organizations to better utilize Economic Development Administration funds. Some opportunities include providing a set-aside investment pool specifically for community development corporations that is available through competitive applications to headquarters.

Swope Community Builders is preparing a pre application as described in the Catalog of Federal Domestic Assistance, Grants for Public Works and Economic Development Facilities, for $2.5 million to assist in the predevelopment stage of the New Village at Technology Center. One of the selection criteria states that the project must “involve innovative partnerships and private investment leveraging”. Swope Community Builders’ projects are always based upon partnerships with local, state and federal partners, local and regional banks, national intermediaries, philanthropic foundations and, most importantly, local residents. While I am sure this criterion is utilized, I would like to see some type of application scoring system that would give higher priority to community development corporations that leveraged relationships as well dollars. Economic Development Administration assistance will, allied with the type of financing tools that we have utilized on our completed projects, be crucial to the speedy and efficient development of this most important project.

It is my personal belief that the future of urban core neighborhoods is closely tied to job creation and economic development that are tied directly to new and emerging technologies from biomedicine to information dissemination and management to light industry and manufacturing. The Economic Development Administration can and must act as a catalyst, providing dollars that can be leveraged seven (7) times by those who have the commitment to urban core communities and the experience to produce job creating development projects.

Thank you for the opportunity to testify on how community development corporations are building strong vibrant communities with the federal government as our investment ally. We look forward to being able to add the Economic Development Administration’s programs to our arsenal as we continue to attack the problems that plague some parts of our nation’s urban cores. I personally look forward to a continued working relationship with Senator Bond, a true champion of urban revitalization.

* * * * * * * * *