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.