My name is James J. Saudade, and I am the Deputy Commissioner for the Vermont Department of Housing and Community Affairs, Agency of Commerce and Community Development.

This morning I would like to tell you how important the assistance available through EDA is to a small, rural state like Vermont. I will share with you some of our experience with the EDA in Vermont, and offer some suggestions for making EDA even more effective in rural parts of our country.

As I am sure my Senator, Jim Jeffords, reminds folks around here once in awhile, Vermont is a small state that is facing substantial economic challenges. The median income for a family of four in Vermont grew only about $500 from 1989 to 1998, our poverty level during that period actually increased from 8.1% to 9.6%, and our share of poverty level jobs increased in the 1990’s to fully 25.5% of all jobs. While unemployment for much of the state remains below the national average, Vermont hosts regions of high unemployment such as our Northeast Kingdom and substantial underemployment is pervasive throughout Vermont. These are serious conditions that impair our economic health.

To address these disturbing trends, we have undertaken economic development planning and projects to stimulate new business, train workers, and grow the businesses we have. In this effort we have enlisted the assistance of EDA as our partners to help underwrite the cost of new infrastructure, capitalize revolving loan funds, and build small business facilities. In fact Mr. Chairman, as we are meeting here this morning, the ribbon is being cut on a new business center in St. Johnsbury, Vermont. A business center that offers new hope for quality jobs in our most economically distressed region. This center, which is largely underwritten with EDA funds, resides in an industrial park that was originally established and expanded with EDA assistance.

Although my personal experience with the EDA has been over many years, most recently I was very involved with a new, EDA assisted, business incubator in Randolph, Vermont. This incubator will open in a few months and is in partnership with Vermont Technical College. It will offer businesses a supportive environment to become established and grow. These businesses will derive research and expertise from the resources of the college and, in turn, provide students and faculty with a laboratory for fostering technological achievements. And most importantly, this new incubator will provide jobs in a community that had been devastated by a series of fires and has suffered several recent plant closures. Already, several businesses are lined up to occupy the incubator, including a very promising business working with new, light emitting diode technology and a software developer.

Both the Randolph and St. Johnsbury projects were planned and executed in accordance with regional Comprehensive Economic Development Strategies (CEDS). These CEDS are a requirement for participation in EDA activities and are a planning feature which I, and the Agency I represent today, strongly endorse. The process to complete these plans is arduous, time consuming, and not without cost, but their value for smart development is indispensable. These plans provide a sobering view of the current regional economy, a retrospective evaluation of previous development, an inventory of available resources, and most importantly, a solid plan for action. The process draws in the interests of planners, businesses, community interest groups, and government and ensures that broad representation is a feature of the planning process. While EDA has always provided helpful materials to regions in support of these plans, I would like to commend EDA on its much-improved web site that now provides a wealth of information, resources, and contacts.

As previously stated, the Vermont Agency of Commerce and Community Development endorses the development planning required by EDA. In fact, we now look to those plans, where they exist in Vermont, to make investment decisions regarding the deployment of state resources. When a project comes to the state for assistance from a region where a comprehensive plan was completed, we ask where that project is in the regional plan, how does it help fulfill the goals of the plan, and what strategic opportunities identified in the plan are captured by this project? In order to make this policy effective statewide, we have recently issued 2005 work plans to regional agencies making the completion of regional economic development plans a top priority where they currently do not exist.

The array of assistance products provided by EDA has helped to address many of Vermont’s economic development requirements and, without them, there would be no alternative. The public works assistance has been vital in underwriting infrastructure improvements. The Economic Development District program has helped the Northeast Kingdom to plan projects in this very rural and distressed region of Vermont. And the Revolving Loan Program has provided credit enhancement and gap financing to hundreds of Vermont’s small businesses. But as effective as these products have been to our work to regain economic vitality, we look forward to implementing the elements of our regional economic plans not yet accomplished and to fulfilling the promise of the regional plans not yet completed.

This week, perhaps as I speak, adjustments to our state’s limited liability program for brownfields reclamation are being considered in our state legislature. I believe the improvements under consideration will result in a watershed of new interest in our existing brownfields sites. With over 2,000 known brownfields in Vermont, we will need the help of the EPA and EDA to help us remediate and reuse these areas. Returning these sites to productivity is crucial to our need for jobs, critical to the stability of our town and village centers, and protective of our yet unspoiled landscapes.

Vermont is a rural state and its character is very different than urbanized areas of the country. As such, we sometimes find ourselves working within constructs of the federal government that do not work as well as they might in more populated states. This is true with EDA. We would recommend that EDA allow some discretion in the design and implementation of its programs to absorb inherent differences that exist across the country, and particularly in small states. For example, EDA and other agencies look to counties as important representations of regional boundaries. In many states where county governments conduct a wide range of governmental functions this makes sense. However, in Vermont, although counties exist as representations on maps and for judicial and law enforcement purposes, there are no “county governments.” EDA would be better served by a more flexible, working definition of regional boundaries.

Similarly, small states cannot begin to garner the resources that larger states are able to assemble in support of economic development activities. Again, flexibility in the goals of EDA programs would allow for more realistic and scaled expectations for smaller states. For instance, EDA would like to achieve leveraging ratios of 22:1 of “other funds” to EDA dollars. This level of leveraging, though laudable, is simply unattainable in Vermont and threatens to make EDA an anachronism in our state.

Rural states also have a more difficult time fielding committees such as those required in developing economic plans. It is difficult to find enough people who are able to commit the time and energy to serve on required boards and, in Vermont, it is impossible to supply the diversity that might be attainable in other states. EDA has with great difficulty, accepted some variation on its model for public participation but, while we understand the need to be accountable to all of our constituents, additional flexibility is warranted.

Also characteristic of very rural states is the lack of professional staff for small communities and the logistical obstacles to attending meetings, accessing program representatives, and maintaining good contacts. The EDA relies heavily on regional representatives. These EDR’s as they are known are responsible for large geographic areas that prohibit frequent visits and limit accessibility. This dependence on very few individuals to provide both technical expertise and firewall review of new proposals for a huge area does not do justice to the otherwise well thought out EDA system of resource deployment.

We would also appreciate an improved EDA application process that did not place project viability in the hands of one person initially, and also allowed for the capture of time sensitive and unusual, but creative projects. The existing application process is multi-tiered, and cumbersome. The process tends to delay if not defeat projects that either require quick action, or offer new and innovative approaches to traditional problems. We recommend a “special review” process for applicants that can demonstrate a need for an extraordinary procedure. We might also suggest a closer partnership with EDA field representatives to state, community development departments. In Vermont, as is the case in most states, development department staff have become proficient in the review and administration of CDBG small cities projects and may offer EDA some assistance in extending field capacity and offering support to EDA field staff.

In conclusion, we enthusiastically recommend reauthorization of EDA. While we would recommend flexibility and discretion in applying program standards to small states, EDA’s major program features are sound, its products are invaluable, and Vermont’s economic distress would become further exacerbated without EDA support. EDA has and is providing resources that we could not otherwise replace, and we look to a re-authorized and invigorated EDA to help shape Vermont’s economic future.