1 COMMONWEALTH OF PENNSYLVANIA HOUSE OF REPRESENTATIVES APPROPRIATIONS COMMITTEE LOCAL GOVERNMENT COMMITTEE

***** i Re: Public Hearing

*****

Stenographic report of hearing held at Feast Hall, Old Economy Village 14th & Church Streets, Ambridge, Pennsylvania, Thursday, January 6, 1994 10:00 a.m.

iN. DWIGHT EVANS, APPROPRIATIONS CHAIRMAN IN. FRANCIS PISTELLA, LOCAL GOVERNMENT CHAIRMAN MEMBERS PRESENT Hon. Elaine Farmer Hon. Susan Laughlm Hon. Anthony Melio Hon. Joseph Preston Hon. Theresa Brown Hon. John Wozniak

HOLBERT ASSOCIATES JANET JACKSON, Court Reporter 2611 Doehne Road Harrisburg, Pennsylvania 17110

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CHAIRMAN EVANS: Good morning. My name is Dwight Evans. I'm Chairman of the House Appropriations Committee here this morning with the House Local Government Committee. And the Chairman of that particular committee is Francis Pistella, also joining us later.

What I'd like to do is introduce some of my colleagues. The young lady to my left - we're in her district and I did have the chance of having dinner with her yesterday evening, Representative Susan Laughlin, who is the representative for this particular district. She's hosting us.

MS. LAUGHLIN: Thank you. I enjoyed myself. CHAIRMAN EVANS: To my right is a young lady who is not too far from this area. She told me I must come up and bring my hunting buddies, Representative Teresa Brown. And next is Representative Elaine Farmer and a gentleman who just came in this morning who's a neighbor from Bucks County, Representative Tony Melio.

I'm pleased to be back in Beaver County. During the budget meetings of 1993-94, we included a focus on Act 47, the Distressed Municipality Act. We learned how a number of communitles on the list were successful in implem­ entation of the Act.

Since that discussion, two success stories, Shenandoah in Schuylkill County and Ambridge, where we are 3

today in Beaver County, Pennsylvania, who have been removed from that list. Today we will hear from representatives from Ambridge who will tell us about the transition from being placed on the distressed list to successfully being taken off the list.

We also will hear from representatives from Aliquippa, a community still working hard to recover.

We also will hear how the DCA and Commerce have worked with local community leaders to revitalize distressed communities. Responding to distressed communitles requires a combination of resources from the Department of Community Affairs and the Commerce Department. The DCA presents us with administrative and fiscal remedies and Commerce provides us with direction.

Working with local government, the state can help communities help themselves. We have two representa­ tives, one from the Governor's Response Team and one who is the Regional Director of DCA. I'd like them to introduce themselves.

First, I'd like to ask Representative Laughlin if there's any comments that she'd like to make before we start. MS. LAUGHLIN: Yes; good morning. I just want to say thank you for having the Local Government Committee 4 and the Appropriations Committee coming over to especially Old Economy because this is a place that is dear to our hearts here in Ambridge. And as you can see, we're getting some restoration here. We're going to need a heck of a lot more. And we're looking forward to some help and support from you. And I'm sure you're going to help us out here.

And I also want to say that I've worked with Ellen Kight and Barbara Bateman and Bill Gamble over the last two years and even when my husband was in office. And we have some excellent people here. So that's the main reason why with the cooperation and the support of the local govern­ ment in Ambridge that we came out of the distressed community. And I want to thank them personally for that.

MS. KIGHT: Good morning; my name is Ellen Kight and I am the Regional Director of the Department of Community Affairs for the Southwestern Regional Office. And we cover nine counties in Southwestern Pennsylvania. And certainly Beaver County is one of those counties. We have been working extensively with the distressed municipalities program since 1987.

I want to thank you for asking me to talk with you about Municipal financial distress. My statements this morning are based on the Department of Community Affairs' years of experience dealing with financially troubled munici­ palities, most particularly through our administration of 5

Act 47, the Municipalities Financial Recovery Act or better known as the Distressed Municipalities Act. Incorporated in my comments is information that was previously provided to this committee by Secretary Karen Miller and Deputy Secretary Ray Angeli. I would also like to provide some background on Act 47, information on Recovery Plans with emphasis on those in Western Pennsylvania,,and offer some thoughts on issues to be addressed in the future.

Since the summer 1987, the Department of Community Affairs has been administering Act 47, the Municipalities Financial Recovery Act. The Department has received 21 petitions from municipalities for a distressed declaration. And we've declared 15 of them actually to be distressed .

The cities were Aliquippa, Farrell, Clairton, Duquesne, Scanton, and Johnstown; and the boroughs were Wilkinsburg, Shenandoah, Braddock, Franklin, Rankin, Ambridge, East Pittsburgh, Millbourne, and Homestead. It's important to note that of the 15 that were declared distressed, 12 are in Western Pennsylvania and nine have been in Southwestern Pennsylvania. So there's a heavy concentration in the west­ ern part of the state.

Both Shenandoah and Ambridge were released from the ProgranT on Apr lT~l6", 1993, so DCA now has actively 13 distressed municipalities. We've provided $1,450,018 in 6 grants and $8,119,559 in no-interest loans to these 15 com­ munities. The Department has given thousands of hours of technical assistance and has developed comprehensive recovery plans for all of the communities, as required by law.

Communites involved under the Act generally ex­ perience some degree of both economic decline and tax base erosion and also financial/administrative mismanagement. The more their distress is rooted in economic/tax base decline, the more difficult the job of recovery is.

To initiate an Act 47 recovery, the community files a request for help with DCA. The staff is sent out to validate whether the Act's technical criteria have been met; i.e., budget deficits, failure to withhold taxes, missed pay­ rolls, bankruptcy filings; and if so, whether the community meets the basic policy criteria of the Act set up by the General Assembly:

Can they provide for health, safety, and wel­ fare of the citizens; can they pay principal and interest of debt; pay employees, vendors, suppliers; provide for proper budgeting, accounting, and taxing practices?

And this has been a problem with almost all of our municipalities A staff investigation is done, a staff recom­ mendation is made, a report issued and presented at a public hearing held to gather further information on the financial 7 condition of the community.

A hearing officer's report is issued and Secretary Karen Miller studies the evidence and makes a de­ termination. If distress is declared, emergency no-interest loans have been provided to insure continuation of basic ser­ vices. DCA hires a coordinator to prepare a comprehensive recovery plan for the municipality at the state's expense. The plans are all unique but they must present concrete rec­ ommendations.

The officials, employees, and management of the community are consulted throughout plan development. And that's very important. The community comments on the plan. It may be changed by the coordinator. And then the elected officials vote whether to adopt the plan.

Assuming they adopt the plan, the coordinator then begins implementation immedlately with municipal and DCA assistance. At this stage we provide further loans and grants, comprehensive technical assistance, project help, and other state economic development resources.

The plan covers a period of three years and it is updated as needed. And as the plan covers a period of three years, it's updated as needed and as approved by munic­ ipal officials. At the end of the three years, DCA does a re-evaluation and generally the plan is further revised and approved by municipal officials for a set period of time. 8

Five of the nine recovery plans that we've had in Southwestern Pennsylvania have been updated and/or extended for a period beyond the three years.

Certain general strategies for municipal finan­ cial recovery have emerged: first, get the community out of immediate financial difficulty by loaning some money to keep services going;

Second, begin instituting good management and financial practices. Start the business of getting municipal costs under control as soon as possible; Third, get new revenue sources on line - insti­ tute new taxes and fees, if necessary, improve collections, sell assets, whatever is in the plan;

Fourth, begin economic development, tax base revitalization planning, start working on getting grants and programs in place, and begin creating the public-private partnerships needed for long range tax based solvency - and we'll talk more about that as it relates to Ambridge;

Fifth, work on building public-private partner­ ships, on developing shared municipal services whenever pos­ sible in areas such as police, public works, code enforcement, and even economic development using COGs, contracts, and reg­ ional police agencies.

What has worked? Why are an increasing number of communities willing to pursue Act 47? Certain things seem 9 clear. No interest loans are the best deal in town, especially for municipalities whose banks have stopped pro­ viding them with credit - and that certainly was the case in Aliquippa.

Communities entering the program have generally become bankable in fairly short order after implementing re­ covery plans .

The Act has afforded protection from escalating employees going beyond their statutory property tax millage and earned income tax limits. When read in conjunction with Act 511, it has allowed distressed communities to enact a non-resident earned income tax.

The Act has afforded protection from escalating employee wage and benefit costs. While Act 47 does not change current labor agreements, it sets parameters which future collective bargaining agreements and arbitrations can­ not surpass. The recovery plans impose a discipline on local operations and goverance that many municipal officials would not otherwise be able to sustain. The technical assistance has been effective and services have often improved dramatic­ ally, particularly in the public works area.

Several common elements are present m the re­ covery plans of Act 47 municipalities, most of which have had a positive impact upon the distressed municipalities in 10

Southwestern Pennsylvania. The recovery of Ambridge Borough

demonstrates that the Act can work and also shows the import­

ance of the following keys to success:

One is installation of a professional manager - and we've done that in almost every case - putting in strong financial management and, in most cases, provision of an in­ dependent audit;

Two, the ability to exceed earned income tax limits for residents and to levy the earned income tax on non-residents;

Three, the ability to affect future labor con­ tracts since labor costs make up 70 percent of municipal bud­ gets ;

Codification of local ordinances and updating zoning and subdivision ordinances;

Preservation of housing and infrastructure through strong code enforcement; Initiation of capital improvement planning and budgeting; Grants for purchase of computer systems to im­ prove financial record keeping and reporting;

And grants for community economic development studies.

Ambridge's situation was one where long term economic deterioration, caused primarily due to the decline 11

of the steel industry coupled with ineffective financial management practices, were the root of the Borough's prob­ lems. A new Borough Council took office and recognized that an increasing amount of payables at the end of the year and repeated year-end deficits were becoming overwhelming. The Borough had been withholding payment of bills late in the year because they simply did not have sufficient revenues to pay them.

These bills, although paid early the following year, were not addressed in the budget process and therefore resulted in repetitive deficits. Council requested a dis­ tressed determination from DCA in February of 1990. DCA's initial review showed increasing deficits over the previous three years, a projected deficit of $276,000 for 1990, a 23 percent decline in tax base over the previous seven years, a population decline of 23 percent over the last 20 years, the highest taxes per capita in Beaver County, and considerable uncertainty about future borrowing.

Following a public hearing, the Borough was designated as distressed in April, 19910 and Eckert, Seamans, Cher in and Mellot, a Pittsburgh based law firm, was appointed plan coordinator. A $300,000 emergency loan was provided and recovery began. The adopted recovery plan placed a strong emphasis on good management/financial management practices as well as the development of a comprehensive economic 12 development program. Throug the leadership and commitment of Borough Council - and that should also be included as a very common element in success, is having strong leadership within the Council itself - and the dedication of Borough employees, Ambridge has achieved recovery within a relatively short per­ iod of time.

How did they do it? The Borough recommitted itself to the Council/Manager form of government, adopted an administrative code that established a more business-like approach to Borough government. They negotiated new labor contracts, held the line on spending, and initiated an ag­ gressive economic and community development program.

The Borough has eliminated its deficit, sub­ stantially reduced its debt obligations, and operated for the last three years with a positive operating fund balance. There now exists a commitment to sound financial management and administrative pcactices. And the Borough's economic and community development initiatives are beginning to bear fruit in terms of a stronger tax base, new 30b opportunities, and a more stable housing stock.

Tim Waxenfelter, Ambridge Borough Council President, puts the Borough's Act 47 experience in the fol­ lowing light. "I can remember three years ago when I didn't see light at the end of the tunnel. I was looking at the 13

possibility that we would become an Act 4 7 community and the stigma that is attached to that. "I think we undertook a very ambitious journey that encouraged us to look very critically at a lot of facets of this Borough in the acceptance of that plan. We went through some very extensive and, I think, educational trips in searching for our administration and our police adminis­ tration.

"The most recent comprehensive plan proposal, I think, is exciting and lays out the future for Ambridge quite simply. Now that we are possibly nearing the end of this journey, I don't think it's a very small administrative ac­ complishment, the fact that we have a 21st century adminis­ tration and that we have an administrative team that has worked closely."

Through strong interagency cooperation between DCA, Commerce, and PennDOT, a community such as Ambridge with strong leadership on Council and a solid tax base is able to respond positively to a comprehensive approach to recovery with the implementation of a fiscal and economic recovery plan.

Although we can identify positive keys to suc­ cess as they apply specifically to Western Pennsylvania, Act 47 and municipal financial distress bring several trouble spots for Pennsylvania's local government system into a clear 14 perspective. First, Pennsylvania's local government struc­ ture and current tax system make recovery very difficult for those communitles which have suffered fundamental economic decline. Human and regional economic bounds are not re­ flected by municipal lines, but our tax system is.

When economic activity moves from an aging city or borough to a growing suburban township, taxes leave but service needs do not. In fact, it's an unpleasant fact of life that the needs often multiply as the population of the municipality becomes increasingly unable to pay. If suffi­ cient revenues are not raised to maintain a decent quality of life, further economic disinvestment ensues and the process feeds on itself. Substituting one kind of tax for another within municipal boundaries is of little use when there is no tax base.

Our experience has shown in Western Pennsylvania distressed communities that the tax base has de­ clined by approximately 50 percent in the last decade for both real estate and non-real estate taxes. Second, several of our distressed and at risk communities are just too small to provide services; but no one wants to consolidate with them or even to share services, although they would not pose serious service or tax burdens to wealthier neighbors. There is no provision under state 15 law to force a municipality to be a partner with its neighbor. Where does that leave the distressed municipality and the state?

Repeated efforts to create regional police de­ partments have been unsuccessful, although in this area that is growing. We have some new successes but it's been very difficult especially with our distressed municipalities.

However, a joint Public Works Department has been established for the Boroughs of Braddock, Rankin, and Chalfont with Homestead and East Pittsburgh designated to 30m shortly. It has been demonstrated to us that even with the economies of scale in the case of distressed communlties, because of the limited tax base and appropriations, outside financial assistance or subsidization is necessary even with the benefits of a regional approach. One presumes a regional approach is cost effective but it's not always so with a lim­ ited tax base and appropriations.

Third, distressed school districts and dis­ tressed communities are often coterminous or at least over­ lapping and exacerbate each other's problems. The recovery acts for both have markedly different philosophies and resources. Secretaries Miller and Carroll have begun dis­ cussions on this but options are limited given current law.

Secretary Karen Miller's previous remarks be­ fore this Committee are relevant regarding courses of action L6 dealing with distress. In her remarks she says, "The General Assembly may want to look at counties, councils of government, joint authorities, or new creatures like municipal service districts for the delivery of municipal services when a dis­ tressed place no longer has the tax base to do so.

"The alternative is to do something with Act 47 that I have tried successfully to avoid for six years, to turn this into a welfare municipality program which gives an­ nual grants to support essential municipal services in com­ munities which cannot generate the taxes needed to pay for them."

The recently passed Regional Assets District legislation for Allegheny County presents the propsect of local government participation in the distribution of sales tax on a weighted effort basis. We would hope to reduce the dependence upon the higher earned income tax on residents and non-residents with the income generated from the Regional Asset District.

Other possible remedies could include tax base sharing, targeted state support, consolidation of services and/or municipalities, dismcorporation, and a new boundary change law.

When dealing with management issues, Act 47 is an effective tool providing some degree of success. Leader­ ship and support from the municipal council along with a 17 strong administrative structure and fiscal controls can lead a community to recovery. The more distress is rooted in economic tax base decline, the more difficult recovery is to achieve.

The people and the leadership have shown a re­ siliency and survival instinct through what appears to be in­ surmountable adversities. The town is its people and the people are survivors.

We look forward to continuing to work with you and we continue to examine how the state might best assist our financially distressed municipalities. CHAIRMAN EVANS: What I'd like to do is have Barbara Bateman-McNees present her testimony now

MS. McNEES: Thank you. Good morning, Repre­ sentative Evans, Representative Laughl in and other represent­ atives from the House.

I'm Barbara Bateman-McNees, Director of the Governor's Response Team, the Pittsburgh Area Office. Unlike Ellen and her nine counties, our office covers 12 counties in Southwestern Pennsyvania. The Response Team is the primary economic de­ velopment marketing arm of the Governor and the Department of Commerce. We serve as a single point of contact for busi­ nesses who are interested in expanding or relocating their operations in Pennsylvania. 18

Additionally, we assist businesses in identify­ ing public and private funding sources. I am proud to say that since 1987, the Response Team and the Department of Commerce have helped needy businesses create and/or retrain over 200,000 Pennsylvania jobs. Regionally, the Response Team's Pittsburgh Office has continually been involved in local economic de­ velopment projects and, as such, was active in coordinating various financial resources for Ambridge.

On behalf of the Governor, the Department of Commerce, and the Response Team, I thank you for the oppor­ tunity to testify today regarding the Borough of Ambridge and its exemplary climb toward economic recovery.

As you may be aware and as Ellen has pointed out, Ambridge has suffered deterioration from the economic decline of the steel industry in the 70s and 80s and had also been adversely affected by the Borough's financial management practices. The community was faced with tax base erosion, increased unemployment, and local industry decline.

Dramatic measures were needed to turn Ambridge around. Fortunately, a new Borough Council recognized the community's problems and began to work with local, state and private sector leaders to develop and implement an economic recovery strategy.

Today I'm happy to report that Ambridge, 19

officially taken off the state's distressed list in April, 1993, is making a comeback. Its fiscal management has im­ proved and the community is financially healthy. Its unem­ ployment rate has declined and its tax base has grown. Most of Ambridge's success can be attributed to a wide array of financial and technical resources that were provided to the community due in large part to the great de­ gree of teamwork and coordination that existed among the var­ ious parties involved with Ambrige's recovery.

My remarks today will elaborate on the factors that contributed to the community's remarkable climb toward economic recovery - mainly state assistance, effective local leadership, and private sector investment.

Ambridge benefitted from several state assist­ ance programs. However two programs in particular, the Department of Community Affairs' Act 47 Program and the Department of Commerce's Regional Opportunities Initiative Program, provided Ambridge with the majority of its state funding for economic recovery.

As you are probably aware, Ambridge was de­ clared distressed in April, 1990. This official declaration was crucial because it enabled the state to place Ambridge under a broad based program of fiscal management oversight, technical assistance and planning, and financial aid. Fur­ thermore, it enabled the Department of Community Affairs to 20

provide an immediate no-interest $300,000 loan to Ambridge that gave the community some financial breathing room and allowed it to develop an economic recovery plan with an out­ side consultant, the Pittsburgh law firm of Eckert, Seamans.

Early into the recovery strategy, the Department of Community Affairs interacted with the Department of Commerce. This coordination and teamwork en­ abled Commerce, under its Regional Opportunities Initiative Program, to work with Ambridge in building an economic plan for new business opportunities through the redevelopment of local abandoned industrial sites.

Commerce became heavily involved in targeting financial and technical assistance to Ambridge in 1990. First, the Community Economic Recovery Program was used to establish an economic development strategy for Ambridge. After the plan was established, Commerce awarded approximate­ ly $14,000,000 in grants and loans to private real estate de­ velopers and local economic development agencies to construct public infrastructure and to renovate blighted buildings on old industrial sites.

In total, three former industrial sites were rehabilitated. These sites formed the hub of Ambridge's new economic base. Commerce provide an additional $10,000,000 in low interest machinery and equipment loans and land and building loans to companies that located on the redeveloped 21

sites. Other state agencies were also involved in assisting Ambridge with its community and economic recovery. The Department of Education, under the Customized Job Train­ ing Program, provided training to workers from companies that located on Ambridge's new industrial site.

Additionally, the Department of Transportation made significant investments in highway improvements in Ambridge including the construction of a $4,300,000 ramp to provide access to the Port Ambridge Industrial Park from Route 65, legislation, I'd point out, that was initially in­ troduced by Representative Charles Laughlin who led the way for that to go through the Legislature.

Finally, the rebuilding of Logan Lane, jointly funded by the Commerce Department, PennDOT, and Community Affairs, provided direct access from Route 65 to the reha­ bilitated industrial properties. This alleviated truck traf­ fic in the main street business district, thus making it more attractive for commercial and retail development.

In addition to the positive effect of the state's various financial resources, much of Ambridge's quick climb toward economic recovery occurred due to management, determination, and commitment of its local leaders. These leaders actively worked with the Department of Commerce; the Department of Community Affairs; Eckert, Seamans, Cher in and 22

Mellot; and various private sector groups to implement com­ munity and economic strategies, reorganize borough management,

redevelop industrial sites, and collect unpaid taxes.

The Ambridge Borough officials, the Beaver County Commissloners, the local state representatives, and

the Beaver County Corporation for Economic Development along with the Ambridge Revitalization and Development Corporation should be commended for their efforts. And they do deserve a round of applause.

All of the local leaders shared a commitment to sound financial management and administrative practices. They were also committed to strong economic development ini­ tiatives which brought about a stronger tax base and new job opportunities. Additionally, the local leaders were able to work together to free Ambridge from debt. And it's my un­ derstanding that the Borough now has a surplus.

All of the state's financial resource assist­ ance and all of Ambridge's effective local leadership would not have enabled Ambridge to revoer without a critical third link - private sector investment.

Private investors were actively sought by local and state leaders to work together to market Ambridge's three rehabilitated industrial sites. Results were outstanding. Over 40 companies, including World Class Processing and KoppeI Steel, relocated or expanded their businesses in 23

Ambridge. This private sector investment enabled Ambridge to generate job creation, expand its tax base, and position it­ self for future economic growth. The combination of state, local and private sector leadership enabled Ambridge to climb quickly toward economic and community recovery. More economic development still lies ahead for Ambridge and we will continue to play an active role where possible. However, strong groundwork has been laid and the future looks promising.

In closing, I want to thnk you and your Committees for your interest in the economic development story. Ambridge is truly a community which has begun to turn the corner toward economic recovery. Continued state re­ sources and effective state and local leadership and private sector investment will provide us other opportunities to experience the success which Ambridge has incurred. Thank you.

CHAIRMAN EVANS: Representative Joseph Preston is here; good to see you, Joe. REP. PRESTON: Thank you. I spent the last three hours on the road. CHAIRMAN EVANS: What I'd like to do is going back to the testimony on page five. And this is probably a very - certainly a very important point for the members of the Committees. I just want to kind of get some of your 24 thoughts. Last year I was questioning the secretary and was asking about the future. Certainly she doesn't have a crystal ball and certainly you and the Governor's Response Team and all the various departments have done a good job in terms of coordinating. We're talking about the future. And you men­ tion in here about the aspect of cooperation. And it seems to be a rather difficult thing to occur in Pennsylvania gen­ erally. Of course, all we in the General Assembly are cooperative.

I know that we have 2,600 local governments. Certainly the whole question of culture, you raise the ques­ tion about communitles sometimes don't want to take on those kinds of responsibilities.

What are the ways would you think in your opin­ ion or the Department to try to induce people to realize that there's only so many tax dollars available? What are some of your thoughts in terms of things we can do to try to get people to understand we have to redesign how we work and operate?

And I think that's the tone of your paragraph that starts out with Pennsylvania's local government struc­ ture and current tax system. And then you describe about boundaries and things of that nature. What are some of your 25 thoughts?

MS. RIGHT: We've worked very, very hard to­ ward - I think the one thing that we want to do is to encour­ age wherever possible voluntary coopertive efforts. And we have made some strides, not huge strides but certainly have made some strides in the area of contracting for police services. We have put together a successful joint public works program although it still needs a subsidy, which is the problem

But perhaps we can work on revising and updat­ ing the boundary change legislation. Right now, you have to have complete approval by both communities and through refer­ enda for any kind of a merger of municipalities. Perhaps an update and revision of the boundary change law may be possi­ ble; or short of that, just work on providing support and in­ centives for functional consolidations, consolidations of services.

And I think Secretary Miller did mention this in her testimony before, the possibility of developing ser­ vice districts for specific functions like police and fire and public works so that you would have a broader tax base. The problem, of course, that we're seeing is that a lot of communities, no matter how hard they try and how cooperative their councils are, just don't have the tax base within their community to be able to provide even the 25 most minimum of basic services. And if we can broaden that tax base to some extent, then that might help to alleviate that problem Municipalities are very concerned about main­ taining their identities. And perhaps through functional consolidation or consolidation of certain services, a mu­ nicipality can keep its character, its local identity but can have the resources available to it to provide basic services.

CHAIRMAN EVANS: Do you think local governments are to the point of trying to protect their identity even if it leads to physical demise? MS. RIGHT: UnfortunateLy, I must say that in some cases that is still true today.

CHAIRMAN EVANS: You talked about broadening the tax base. What about the aspect of eliminating services from a consolidation standpoint where you may not need to have two certain things, where certain things there may not be a need for?

MS. RIGHT: Well, if you had a service district that incorporated multiple municipalities, certainly then you wouldn't need two or three police forces, three police chiefs, et cetera. You would consolidate those services. And we've had some difficulty bringing that consolidation of services, especially in the police area, in our distressed municipali­ ties . 27

We're having more and more success - and the staff here, I would like to take this opportunity to intro­ duce to you Bill Gamble. Bill has been the coordinator for Aitibridge and Aliquippa and has been working on the police studies and consolidation efforts all throughout Southwestern Pennsylvan la . And Mike Foreman, Mike has been our coordinator for most of our other distressed municipalities in our reg­ ional office. And Keith Robb, who is our chief of financial management and our local government services consultant m the Pittsburgh office - all three of them have worked ex­ tensively in this area and perhaps would like to comment on your question. CHAIRMAN EVANS: Let me ask a question of any­ body. You used the word, voluntary, to try to induce local governments to kind of change their form of behavior. Could there not be a way that strings be attached in some way to encourage local governments to understand that, again, the world is not the way it used to be? You don't have this revenue that you had available here. Is there any kind of way that strings are attached?

MS. KIGHT: I think that many of them are beginning to recognize in the recovery plan process, once they come into the program, they begin to understand that

they're not going to be able to provide the same level of 28

services. Although, frankly, quite a few of them are not providing basic services even now It's not as thought they're moving something. They're not.

We want to be able to bring them to the point where they can provide even the most minimum services. In Braddock and Rankin public works were almost non-existent. And the one positive thing that has happened with the joint public works program is that at least we are now bringing the community up to a basic minimum level of services. But even that is more than what their budgets can attempt to sustain.

And so the problem is we're beginning to make those communitles that are distressed understand that they're not going to be as they were many years ago. What we're hav­ ing difficulty with is making the other communities that sur­ round them that may be more affluent or better able to help to help to provide services to them, to say that they're in­ terested and willing to do so. That's been difficult.

The more affluent communities are not willing on a voluntary basis to take on problems that they don't have already. There's a very high concentration of public housing units in most of these communitles. Other communities don't want to take on those issues of concern. There's a high level of crime in many of these communities. Other communitles fear that the crime is going to move over into their community and they don't want to take 29 on the concern. From an educational standpoint, it's the same problem. Some of the neighboring school districts don't want to take on the problems of a Clairton or Duquesne School District.

So on a voluntary basis it has been hard to en­ courage more affluent communitles to share in this effort.

I don't know, Keith or Mike or Bill, if you have any other thoughts in terms of what incentives we could provide.

CHAIRMAN EVANS- Bill, do you have any comments? MR. GAMBLE: Bill Gamble; I think the identity is certainly an issue, especially in Allegheny County where most of our disrtessed communitles are. We have 128 munici­ palities and 117 police departments. So you can see that that is a problem yet they still have the parochial idea of keeping their own police departments, no matter how low that department goes. And that is a problem.

I think that what is - in order to get more consolidation of police services, I guess one issue is man­ date it. And T don't know if that's feasible to do it at this time.

Number two is to provide some type of incentive to do that.

Number three is the reality of the crime 30 situation that we have in Western Pennsylvania right now, the municipalities that don't want to be involved with the dis­ tressed communities, I think eventually are going to realize that they're going to have to because crime knows no boundary. And if they're not going to work with these municipalities where crime is higher, then certainly they're going to have to do it in a cooperative effort.

So I don't know what the answer is except that eventually I think the municipalities are going to realize that they've got to come together. When that happens, I don't know.

CHAIRMAN EVANS: Well, I want to go to Barbara for a second in terms of the Governor's Response Team and on the part of the state government and all the various depart­ ments that have come together - you're talking about the Department of Education.

Is there on the part of state government a sense of collaboration or understanding after the DCA plan coordinator lays out a plan and the plan comes back to state government - sometimes we in state government operate where I'm from PennDOT, I'm from the Department of Commerce, I'm from whatever department - do people understand the nature of what needs to take place? Have the lines been broken to the degree that people are prepared to have that coordination?

MS. McNEES: I can't speak for the rest of the 31

state but Southwestern Pennsylvania, our directors meet on a

regular basis, Henry Nutbrown, all of the regional directors

of PennDOT, DER, Penn-Vest, my staff.

CHAIRMAN EVANS: Is that something formally organized from district to district? MS. McNEES: No, that's something we've organ­ ized ourselves. Every community we go into, we typically find ourselves all working together to improve the infra­ structure, improve the tax base, locate any 30b expansions. And it takes effort from all of us to be able to do that. We all have done that out here. We just have a good working team among the state agencies. We spent a lot of time coordinating and trying to find who has the best source of funding, who has the best location in terms of technical support and then bringing all those opportunities to bear on the community's problems.

CHAIRMAN EVANS: You have 128 different munici- palities and these municipalities that are less distressed or problematic, do you do some sort of ranking to try to target, being that you've got limited resources, to sort of budget? Do you say, "We do spent an awful lot of money. I think ut just needs to be better used"? Do you approach it that way or do you say to us, "This is what we have"? MS. McNEES: Many times we have comparative ratings form a funding program. We also have special 32 programs that will target funds to distressed municipalities, to enterprise zones with varying interest rates depending on where you are in Beaver County. In the Ambridge enterprise zone our loans are at two percent. In more affluent munici­ palities our interest rate is six pe^cent'

We vary the interest rates to make it more attractive for a business to locate in one of the distressed communitles as we go through the funding because our monies are competitive. We get applications from all sectors. We have a comparative rating system. Distressed communitles are put to the top of the funding.

MS. KIGHT* I feel the same way. We have pri­ orities for the prospective program but again with emphasis on the distressed community. And we try to spend a lot of time within those communitles to bring their technical exper­ tise to the point where they have become competitive m community development projects. We prioritize.

Potential grant money is going into developing a new comprehensive plan for a distressed community. And we share information about - we share the recovery plan informa­ tion with Commerce, PennDOT and others on a regular basis. And not only in the region but we do this in Harrisburg as well.

So there's a formalized team in Harrisburg to look at the distressed municipality not only within DCA but 33 other agencies. And the recovery plan is reviewed and where other agencies can assist in the implementation of the re­ covery plan, they do. CHAIRMAN EVANS: Representative Melio? REP. MELIO: You mentioned about your managers in these municipalities you're dealing with. Do they have professional managers? MS. KIGHT: Most are elected, functioning part time. Sometimes there are ones who do have a manager, pro­ fessional manager, usually full time. And they have a little more expertise.

MS. McNEES: We take that approach in all of our recovery plans. Most of these communities did not have a professional manager or those that did really did not neces­ sarily support the efforts of their professionals. We have spent a lot of time reinforcing the need no matter how small a community is for strong professional management.

In the case of a very small community and they're right next door to another community, neither commun­ ity could afford to pay for a full time manager on their own so that with our district grant funds, we've been able to help to support a professional manager that each community pays for out of their own budget their share of the pro­ fessional manager. We were able to provide some seed money to get that going so that they now share a full time 34 professional manager. And it's made a tremendous difference. CHAIRMAN EVANS: Bill had made mention about it many times. That's a vote you had in the Assembly.

REP. MELIO: We're in the process - we're going to provide a township code. If you have any suggestions, maybe we can mandate that they have a professional manager.

MS. KIGHT: That's an idea. REP. MELIO: So if you have any suggestions at all, that bill is coming up quickly. MS. KIGHT: I will take that back to the secre­ tary and certainly we will absolutely comment on that.

REP. MELIO: Just from the fuss, I think professional managers, I think they're in deep, deep trouble.

MS. KIGHT: Some very, very small, certainly rural communitles would have difficulty supporting a full time manager. However, certainly joint effort in sharing a manager, it's something that we've tried to stimulate and en­ courage through our intergovernmental cooperation program funds.

We do have a pot of money that's just there to encourage shared services so that we've provided seed money for shared managers, shared pol ice chiefs, shared code en­ forcement officers, shared planners. And certainly this would be something that might be looked into.

REP. MELIO: Western Pennsylvania has councils 35 of government. MS. RIGHT: Right. REP. MELIO: We don't have any in Eastern Pennsylvania. MS. KTGHT- Right.

REP. MELIO: I don't know why we don't. Maybe they haven't sold the programs properly. MS. RIGHT: Well, certainly the program needs to be sold heavily and promoted and it is well utilized so that the funds, of course, available are very small. But it is something that needs to be strengthened and encouraged. And the councils of government here do provide tremendous service to their municipalities.

REP. MELIO: Maybe the councils of government could have a joint manager, reimburse for a joint manager. That could help the municipalities that can't affort it full t lme.

MS. RIGHT: Right; in our councils of govern­ ments, in the Twin Rivers Council of Governments - that's in the McReesport area, they have funds for a joint recreation director for their municipalities. And that's been a very successful program.

CHAIRMAN EVANS: Thank you. Representative Laughlin?

REP. LAUGHLIN: I'd like to ask a question. 36

I know you have a large area. Are you able to track the different municipalities' financial situations or do you wait until they come to you to make an application when they're in deep trouble and need some heLp?

MS. RIGHT: Well, we do both. Through Act 47, municipalities are required to file with us each year a re­ port. Well, they file financial statements and file their audits as a matter of course. But they also are required to file a statement with the Department of Community Affairs that answers a variety of questions that are similar to those that are the major indicators of distress.

All municipalities are required to file that information at the end of the year. And then we begin to track the changes and what has happened. So we do have a sense not only from that information but just information working with these communitles on a regular basis and being contacted by them and going out and working with them. We do have a sense of which communities in the region are having difficulty.

We have not initiated or brought any community into Act 47 at this point in time. It has all been so far at their request. Certainly the Department under Act 47 has the authority to do that as do citizens in the community. They can petition the Department as well as creditors and all kinds of other people. But so far, the communities have come 37

to us. But we do keep an eye and we do - from communi­ ties that are not already in the program or may possibly be a candidate for the program, we do try to spend some more time with them. It is difficult because we do have a large number of distressed communitles in our region.

We have over 550 municipalities in our region. So sometimes it's become difficult for us to spend the time that we'd like to spend with communities that are not in Act 47 but with a little bit of technical assistance certainly could avoid it because we are spending so much time with this program.

REP. LAUGHLIN: I'm sure that whenever you see a mill or a factory closed down or move out of the district, you sometimes target on that community to see if there is any assistance that you could give them.

Whenever a community goes through the three- year period being financially distressed, what kind of an ex­ tension do you give them? MS. KIGHT* I think what I'll do is have - Keith, Mike, Bill - answer that because they can address it specifi­ cally.

MR. ROBB: Act 47 provides for a three-year plan, the current fiscal year and two additional years. It also provides that a community will remain distressed as long 38 as the Secretary of Community Affairs indicates that the fac­ tors that led to the distress are still present. So after a three-year period, a revised recovery plan is prepared.

The greatest length of time is an additional three years. But if we see that they're moving toward recov­ ery, we can revise it for periods of less than three years, in some cases, one year.

So, frankly, some communitles are facing the prospect of not having the factors that led to the distress removed and so the end is not in sight. In other cases they may be approaching recovery. Their recovery plans will be for a much shorter period or time.

We could be involved with several revised re­ covery plans over a period of innumerable years in the future. MS. RIGHT. That's a major concern to us and something that we do need to look to. The legislation doesn't say anything about communities that may be in this program, hopefully not forever, but it appears that way.

One of the critical problems has been - and we haven't touched on it yet - has been problems with assessed valuation within the communities. For instance, in Braddock Borough the Borough was moving along financially and even had a fund balance or close to a fund balance becaue they they had a hospital there that was a non-profit corporation. It became a for-profit corporation that generated about $400,000 39 in revenue for the community. And that was enough to begin to bring Braddock to a point where it could be solvent. And that for-profit status lasted only for about two years and they've gone back to a non-profit situation.

That means now that there will be a loss, a substantial loss of revenue. They depend very heavily on the increased earned income tax.

So do a lot of these communitles. Wilkmsburg, Clairton, Braddock, and so on and so forth depend on that. So even if we bring them into a situation where they may be even, they are able to exceed the limits on the earned income tax, not only for residents but they're also able to tax non­ residents .

And once they are no longer distressed, then they lose that ability to levy that additional income. So that's been a bit of a problem. We're just concerned that we'll never be able to get them off of that. Now, the Regional Assets District legislation should help that in Allegheny County. The additional revenue that will be generated by that, we would hope to apply to re­ duce the earned income tax. But in Braddock and Aliquippa there's also been a big loss in assessed valuation of the J and L property. The property was recently purchased at a fairly low price and

therefore Aliquippa once again was getting to a point, where 40 once they had a fund balance, now may see a loss. You'll hear from them a little bit later on. So we're very concerned about the long range, with the municipalities depending solely on their own local tax base to provide services when their assesments keep going down. We can put all the most wonderful financial managers and everybody in place and we still won't have enough money to generate the dollars to meet the basic services unless we broaden the service area.

REP. LAUGHLIN: Whenever you brought up Aliquippa, was it your department that suggested that they become a city so that they can go to a two tier

MS. RIGHT: No. MS. McNEES: That was their own idea. REP. LAUGHLIN: Now, the school district has gone to two tiers.

MS. McNEES: It's our understanding that those taxes are under appeal. REP. LAUGHLIN: That what? MS. McNEES: Those taxes are under appeal so they'll probably be right back where they started.

That's probably one of the factors that really was an asset to Ambridge that we don't have in a lot of communitles. Here there were a number of different proper­ ties. There already were some existing manufacturers who 41

were still in business, still doing well. So there was a broad tax base. When we looked at redeveloping in Braddock or in Aliquippa where you have one large industrial property that belongs to one owner, it's very difficult to get new businesses interested in coming in there because they look at it - are they going to be the sole breadbasket for this whole community. And it makes it much more difficult to get busi­ nesses interested in locating there. They don't want to be the only taxpayer. They don't want to be the only industrial user.

In Ambndge it was spread out nicely because there was a number of different properties. You could reha­ bilitate it and bring people in so the businesses saw the risk being spread, the tax base being predictable. And we can't guarantee that in too many of the other communities.

CHAIRMAN EVANS: If you're distinguishing between the different communitles, then what type of recom­ mended strategies do you usually say to the people in the General Assembly and the Administration about targeting solu­ tions to the problems? Is it that we're just trying to make one solution or do you try to adjust?

I think you're raising a very good point in terms of an economic development strategy. What do you say to these communities? "We cannot convince a developer or an 42

individual to move into a particular area"? What do you say to that community?

MS. RIGHT: I think we have to look at a broad­ er, more regional approach. The problems is communities were designed and built around a single industry for the most part or industries that were related to the steel industry. And when that employer left - and the whole tax base was designed around that - and when those employers, major, huge employers have left, it's left a major hole in that community. And I don't know that we can hope to bring a Homestead back or a Duquesne or a Braddock back to what it was in the 30s and 40s and 50s. And we need to look at

CHAIRMAN EVANS: I don't want to interrupt but do we at least say that to the local elected officals and to the people? There's always a question of expectations. And if you have people

MS. McNEES: Well, we absolutely do do that.

MS. RIGHT: They don't expect it now. The real dilemma is that - for instance, in Homestead the Council is working, everyone is working together finally. The community is so incredibly resilient. And they are working hard at community economic development prospects.

The same with Duquesne; the community is now organized. It's taking on itself leadership roles. Their expectations are not such that they think they're going to be 43 where they were 20 or 30 years ago. However, they can implement all kinds of new management strategies within their community. But the way the tax system, the structure is now, they would have to bring themselves back to the way they were 20 years ago in order to be able to provide the services that they need be­ cause they still have to rely upon real estate taxes and development of those properties to generate income. That's the problem.

CHAIRMAN EVANS: Any other questions? Representative Farmer?

REP. FARMER: Well, Susan, you had a wonderful question there and I'd kind of like to build on it. It's always exciting to hear a success story. It has to be a shot in the arm for you folks because it must be depressing day in and day out to be dealing with people that are scratching at the bottom and trying to get their heads above the water.

Do you have enough information to develop any kind of a generic preventive type of program that could be made available for some of the communities that maybe are not in this distressed area as yet but are kind of bobbing there that might help prevent them from being future applicants?

MS. KIGHT: I think that as indicated in our testimony, there are two causes of distress. And one is easier to remedy than the other. 44

The one has been fiscal - just a lack of man­ agement or mismanagement and a lack of coordination and coop­ eration on the part of the community. And there's a great deal of technical assistance and a comprehensive approach to planning and bringing in other departments.

We have been able to work with communitles, especially if they're really willing to cooperate. And Act 47, quite frankly, has been very successful in that area where you have some kind of tax base to work with and you have a willing community or even a not so willing community. In Act 47 there are some strings and there is some leverage. The community eventually comes around. We can be successful.

We have a system where we can look and see which communitles are on the edge and begin to target and work with them to support their efforts.

What is much more difficult is to work with a community that has just no financial resources available to it or very little limited resources available, where its major industry or tax base has gone. And then there's just nothing. You can put in all the new management controls you want to but you still don't have a way to generate revenue. That has been the biggest challenge. And as long as - we're putting economic development plans in place and working with the Homesteads and Duquesnes to develop those properties. But that may be at least 10 years down the 45

road. And so what do they do other than to find some other way to share the tax base? So that's what we're looking at, possible future remedies; either allowing some communities - allowing the counties perhaps in some cases to provide services, al­ lowing service districts to be established so that you have joint municipal functions created, boundary change legisla­ tion, things of this sort that might be able to - looking at things on a more regional base than just the tax base that's shared by one municipality and only one municipality.

REP. FARMER: And one other question; do you in your financial role run a tab as far as what kind of finan­ cial input, quality input or what have you, a breakdown with respect to the distressed communities? Are you responsible, I guess, is what I'm asking for, to keep tabs as far as what the financial input is costing and any kind of percentage of return, that type of thing? MR. ROBB: We constantly are aware of the fact of the various loans and grants that we provide to the com­ munities. I think the way the Department administers the loan and grant money that it has available to us is, number one, I suppose our primary direction that we take with the communities is that we are prone to give loans and not grants. Grants are the exception rather than the rule.

And when we provide a loan, we recognize that 46 the community has to demonstrate the need for the loan and the ability to repay the loan. It is at no interest, as Ms. Right's remarks indicated. And with regard to grants, we look for some positive cost/benefit ratio. In other words, in line with some earlier comments, if we see the need to bring in a pro­ fessional manager, we may pay for a portion of that manager's salary just to introduce the professional manager into the community to show that community the benefits of a manager system of government.

And then down the road, the expectation is the community will take on that responsibility themselves; so that when we engage in a grant, we're looking for real iden­ tifiable benefits that far exceed the grant to be provided. They tend to be regional approaches to issues or introducing greater professionalism in a variety of areas.

REP. FARMER: Do you keep a breakdown then as far as the costs? Do you keep figures on that type of thing or do you just consider that your internal type of cost factor? MS. RIGHT: We have a report that we put out every month on all the consulting that we do as a department and basically have a cost for how much we ve spent, what the value of that consulting service would be. So we have that completely broken down, how many hours we're spending with 47

each community that we respond to and what that might cost if it was out there in the private sector, if they were getting that same service. And we certainly do a cost/benefit analysis for the distressed communities. I don't know that we do that for all of the rest of the communitles. But we do have extensive computerized reports that show the amount of time we're spending and what kind of services are being provided.

REP. FARMER: That was very helpful. Thank you. CHAIRMAN EVANS: Representative Brown? REP. BROWN: Ellen, there's been some talk about consolidating services and so on. Has there been any attempt made to consolidate fire departments, either volun­ teer or paid? MS. RIGHT: I'm going to defer that question to Bill. MR. GAMBLE: There's more fire departments than police departments, quite a few more, I believe. We're starting to get some feedback about talking about it. But that's probably a lot of steps behind even the police, you know, the issue of police consolidation. It seems that every municipality has a volun­ teer fire department. Some have even more than one. Some vie with each other. But I would say that there's not been a 48 real strong movement to do that. What I see in the fire department area is the first level of working together. It's one municipality buy­ ing a piece of equipment, one volunteer fire department, maybe the neighbor buying a piece of equipment and then shar­ ing that piece of equipment.

But I don't see the volunteer fire departments coming together in a voluntary nature. REP. BROWN: My next question, have you seen a problem in the municipalities, especially the distressed ones, who are having real problems paying Worker's Comp and all the expenses that go along with the fire department? In other words, it's got to be part of the problem that we're dealing with.

MR. GAMBLE: I think Homestead is the prime example. Maybe you could touch on that. MR. ROBB: The municipalities do have a respon­ sibility to pay the Worker's Comp on the volunteer fire company that serves the municipality. And that is a cost that is escalating in certain municipalities. So your point's well taken. It becomes a tremendous expense of a local municipal budget.

But as Bill says, unlike the municipal side, the volunteer fire companies are private, chartered and incorporated so that they really are under the ownership and 49 control of their own membership. They're franchised to work in the municipality but they control their own destiny in that sense.

There's some indications of a few examples where they've joined together in some joint activities. But for the most part they're pretty much independent of each other.

REP. BROWN: Thank you.

CHAIRMAN EVANS: The last questioner, Representative Preston.

REP. PRESTON: I guess I represent one of the distressed communitles, the Borough of Wilkinsburg, and it's probably the only distressed community that we have that got there because of mismanagement. Clearly it does have a prob­ lem as far as some of its tax base but it still has a viable tax base.

My concern - and I started with this last year also along with the public hearings that we had for the bud­ get in dealing with distressed communitles especially with the regional assets. In all honesty I didn't want to vote for it because the return for the City of Pittsburgh was so great

You think that the COGs are great. That may be true but you'll find that if you ask the employees that work for the COGs where they came from, they came off the payrolls 50 of some of these distressed communitles. And that's part of the problem that I've had. And I'm going to ask the secre­ tary because last year I gave her a chance to avoid it.

Are there communitles that we have now that we're continuously pumping money into that down the road in the foreseeable future in the next five to 10 years that are not going to come out of distress? And when is the state going to recognize that and stop bailing them out?

MS. RIGHT: That's a very good question, yes.

REP. PRESTON: Are we going to publicize that? MS. KIGHT: I think that's the question that we raised just a few minutes ago, that there are communitles that right now as we're structured at the moment, as the tax structure is at the moment, may not - we don't see the light at the end of the tunnel for those communities. And so you do have to ask the question, Are we going to continue to sub­ sidize or are there other ways that we can convince others to take on the services of those communities?

So the question right now, if we stopped sup­ porting them, there is no way for them to disincorporate. That's one thing that happens in certain states, is that a community would disincorporate and the county or some other body would take over those functions.

REP. PRESTON: We have to have a charter to operate; right? 51

MS. RIGHT: The state does, yes. REP. PRESTON: That's my concern because you said earlier it's time that something has to be done. I think we can't prolong this much longer. And now, we're starting some quasi levels of government that still aren't going - I think you said there are 117 police departments

MR. ROBB: There were 120 a couple of years ago. MR. GAMBLE: Well, that's progress. REP. PRESTON: How many police departments right now are paying the minimum wage? We have police departments paying minimum wage.

MS. RIGHT: Many of them are. REP. PRESTON: So I'm looking at having a po­ lice department paying them the minimum wage. At the same time, I think Wilkinsburg and there's only one other borough in the state that has a full time fire department; correct?

MS. RIGHT: I don't know about the state. REP. PRESTON: Well, a volunteer in Wilkinsburg does not work. The support's not there. That's the part of the problem that you look at. However, it will be coming out of distress. We're only $100,000 down where we were over a million. So it's reversed.

You know, somewhere you've got to really recom­ mend to us that we have to bite the bullet and do this be­ cause what we're doing is subsidizing. And now we're seeing 52 quasi levels of government. Some of them are good but they're not uniform. They don't have a system. There's no rules for them to really cooperate. And we've got to be responsbile about doing that. We're going to help the county government to do right.

I mean our county government has a police de­ partment. I receive no benefit from it. I live in the City of Pittsburgh. It doesn't do anything for me but I pay for it. I'm not getting any benefit from the police department. The thing that's happening in the Mon Valley from their own frequent successes in the 50s and 60s, they refused to have parkways and interstates built because they wanted to keep it all right there.

Now, they're trying to do everything they can to get expressways where they can create jobs. This is part of the problem. So you're benefitting in a sense from some of the demise because of entry level of the police in your area. And, again - and it's my favorite subject - there's no public transportation here. It's also lacking.

So we have this enormous situation and in all honesty, we're going to have to do something about it. We really need to be clear cut.

MS. McNEES: One of the other things that we haven't touched on yet but Ellen mentioned it, and we have a 53

situation in Beaver County, is the school districts.

REP. PRESTON: That's next, the school dis­ tricts .

MS. McNEES: Yes. When you look at Duquesne and you look at some of the

REP. PRESTON: Duquesne will have a distressed school district. It's very simple. MS. RIGHT: The only reason - it was interest­ ing because I attended a conference just on that subject a couple of weeks ago. And they said one of the concerns there is the only reason Duquesne is not distressed, according to the Department of Education, they've made such huge cutbacks in their budget that financially they're not distressed. They've balanced their budget but they have withdrawn most of their programs. Academically, they're distressed. So ulti­ mately it's the same problem.

CHAIRMAN EVANS: I want to thank both of you. You've both been excellent and your staff in the details that you've given.

REP. PRESTON: One last thing and I think this is important to all of us. I was at a borough council meet­ ing. And I think there was a decision concerning the police along with the distressed community. I think there's a Supreme Court decision upholding a Commonwealth decision that's going to make a difference where the bargaining 54 situation is a very tantamount decision dealing with dis­ tressed communities. And I want to give this to you because I don't think anybody has a copy of that yet?

MS. RIGHT: What is this' There has been a de­ cision? REP. PRESTON: There has been a decision as of December 30. I think this is a major situation.

MR. GAMBLE: What's the outcome7

REP. PRESTON: It's in favor of Wilkmsburg against the police. MR. GAMBLE: Against the police. REP. PRESTON: So I want to give this to you.

CHAIRMAN EVANS: Thank you, sir. I want to thank Ellen and Barb, sincerely thank you and thank your staff for spending the time just to help educate us. Again, I want to thank you.

I'd like to have the borough manager and coun­ cil president if they could move to the table. (Whereupon, a brief recess was taken.) CHAIRMAN EVANS: I'd like to reconvene the hearing. And I'd like to thank the borough manager, Alfred MR. VENNARE: Vennare. CHAIRMAN EVANS: Vennare - I'd like to thank you for being so patient.

MR. VENNARE: No problem. 55

CHAIRMAN EVANS: I'd also like to thank the council president, Timothy MR. WAXENFELTER: Waxenfelter. CHAIRMAN EVANS: Waxenfelter. I'd like to thank you also. I know this is the middle of your work day.

MR. WAXENFELTER: Very much so. I'm going to be in trouble if I don't get back soon. CHAIRMAN EVANS: I want to apologize but I appreciate both of you coming just to help us, educate us a little. This is a joint hearing of the House Appropriations Committee and the Local Government Committee.

In the early part of this year we had a hearing where we had the secretary of DCA come before us and give us an update of how Act 47 was being implemented. What we de­ cided after talking to Representative Sue Laughlm was to come to Ambridge to talk about a success story, exactly how you did it, what did it take to do it?

You may have heard earlier, we heard from the Regional Director and the Governor's Response Team in terms of how the state - we now want to hear from you in terms of your side, your observations, what you had to do, as well as your whole reaction to the state. You heard some of the other comments about the future. We'd be interested in what you have to say. So whoever wants to start-'—

MR. WAXENFELTER: I'm under a little time 56 constraint. I'd like to get back as soon as possible.

I first want to say that the Act 47, the Dis­ tressed Coramunit les program, is probably the most well con­ ceived program in the state. I think it's a magnificent program. I think it has great potential beyond what we've already seen.

We are probably an example of someone, a com­ munity which has had great success in the program much be­ cause - I don't believe there was a miracle here as much as a cooperative effort.

There are some communities you're facing right now m Act 47 that I believe would be a raised-from-the-dead situation. I mean you've got commun lties that are virtually dead at present. They're going to be on life support for a long time.

We didn't need as much of that as we needed a shot in the arm, as we needed guidance, as we need a walk­ through procedure, as much as we needed a facilitator. And this is what I believe the program did for us. It was a - and I guess it's my reason to be­ lieve that this is the finest program in the state. It forced us to reassess, to take apart piece by piece every­ thing we did and look at it, to take our taxing policy apart. to take our housing stock and our direction in housing apart, to take our road program apart, to take our staffing apart, 57 to take our financial tracking system and accountability apart.

It forced us to rip to shreds everything that we were doing. In the process we found that many of those sacred cows, those things that we felt were well structured and functioning very well, we saw major flaws.

By having the guidance, by having someone look­ ing over our shoulder, by having experts there to answer questions when we really got bogged down, because we needed immediate access to that, we were able to really make some progress . One of the reasons that I think the program is so important, from a politician's standpoint - I don't like to look at myself in that light, but many times that's what this comes down to, it comes down to politics - it was very nice in this case to be able to tell someone, This is what DCA is recommending, this is a requirement. We were not forced to go out on the street and sell the program and beat it around and talk politics.

You know, we established the credibility of the program and credibility of those people who were sent to help us. And once their credibility was recognized, the import of what we had to do was softened by the fact that there was an expert standing behind us telling us that this was the way to go, this was what had to be done, there were consequences if 58 it wasn't carried out in this manner, that really took a lot of political pressure off our backs. It didn't make really all that happened happen but it really sped the process up and it prevented us - it kept us from having to go out and justify every little thing. There was a major portion of the community that didn't neces­ sarily see the reason for a professional manager. We really didn't need it in the past, council had always been able to run it in the past, when the fact was we weren't able to get things done. There was pulling apart in the political arena that prevented us from really looking at the 90s realistical­ ly that you need a professional manager.

And that was the way to allow that to happen. It forced us to make that decision. Not only that, the pro­ cess was a tremendously educational process for us. It let us see things that we had never looked at, the accounting procedure, how the money came in, how the money went out, the way we kept track of that money. We recognized that the way we accounted for that money made a difference in how we en­ visioned our budget for the following year. And, again, that opened some eyes.

The point is here, especially in a smaller com­ munity, we're not professional administrators. We needed that expertise, we needed that support from the Department. And when we took the necessary steps of cooperation, when we 59

began to see through this educational process that this is what we had to do, that was invaluable. None of us would have been able to give that information to the members of our Board. We would never be able to promulgate that educational process like the Department was able to get across. They mostly kept us abreast of what they were doing, making a lot of changes that would lead to bigger changes. And that really helped to fa­ cilitate things.

I guess above all the reason I see it as so valuable, it was a holistic approach to the problem not a piecemeal approach, not a seminar here or there in finance and that was going to be the panacea; not a seminar in how to run your police department and that was going to be the pana­ cea .

It was a holistic approach, tearing apart our entire operation, looking at our police operations, our fire operations, our facilities, our delivery of services, all within a matter of six or seven months. We couldn't have done it in five or six years. We could not have done it. We probably always had the wherewithal to pull ourselves up by our own bootstraps. But I don't think that without the Department's help, we could have done it. We couldn't have weathered the political storm that it would have caused. We could not have made the tough decisions in 60 personnel. That is a very difficult thing to do from a politician's standpoint, to make personnel decisions because those people are tied to other people who work in the depart­ ments. And they protect jobs. And we were able to very gently ease over that with the Department's help.

In a community that was in worse shape than ours, I think the Department would have to take probably a different posture. And maybe the Act 47 program isn't for those communities. I think there's a point at which the Department really has to look at a situation where it must come in and overtake the town and declare it defunct rather than distressed.

We were truly distressed. And before we ended up in a situation - we were headed downhill. We were really heading downhill. With the $300,000 Loan, no interest loan that we received, it gave us - it brought us to the surface and allowed us to breathe while we made these changes. Without that, we would have been in worse shape to have to go to the bank again and seek more in debt for the next three, four, five years until we could pay that back.

We would have been able to do it but it wouldn't have given us - it was like a shot in the arm, just new energy.

We don't have to worry about this for a year. Now, we can do things. And we can be daring instead of 61 constantly being worried about our financial situation.

I think the program is absolutely magnificent. It's the only comprehensive program that I have seen. RIRA is fine but it only deals with the recreation issue. You have other programs that target certain areas. And that might be a way to go in the future, to be able to consolidate all those programs and to draw them all in at one time and to force them all to focus on distressed communitles and get all of their expertise from the experts. But our benefit has been that you were able - the Department was able to help us weather the storm, to con­ solidate our energy, to stand behind us. This was tremendous. We just absolutely could not have done it without the Department.

CHAIRMAN EVANS: All right, you may have to leave, I understand. I appreciate your coming. If I can ask you one question MR. WAXENFELTER: Sure. CHAIRMAN EVANS: You certainly put an awful lot of weight on the Department. Ambridge is now, based on their definition, moved off the distressed list. You are now much more capable. I also hear you saying something else. You put a lot of weight on that. And you as council president and others, you kept saying what you were able to do with DCA 62 pressure.

MR. WAXENFELTER: Right. CHAIRMAN EVANS: Now, the ball is in your court and the borough manager's court. How are you going to be able to continue that if you don't have DCA, because I hear you talking about what I call the political culture. Is there a change in the political culture at this particular point to realize that you don't have DCA over your shoulder? You now have to run your operation a little differently than you have in the past.

MR. WAXENFELTER: It's a good point. What I think you're referring to - let me go back to the educational process. CHAIRMAN EVANS: That's not unique to what's happening here?

MR. WAXENFELTER: No. CHAIRMAN EVANS: I don't want you to think that it's just unique to Ambridge. We see this all the time.

It's what we do in Harrlsburg right regularly. MS. RIGHT: I call it a majority.

CHAIRMAN EVANS: Let me hear your response to that.

MR. WAXENFELTER: The educational process, as we walked through the beginning of this process, we began to assess the circumstances. The beauty of the whole thing was 63

that while we were being educated, the public was being edu­

cated. There's a much larger number of people in this town

right now who believe that Ambridge Borough government is a business than ever believed it before. I guess that's what I'm trying to say here. We experienced a real educational process. As we went through it, the town went through it, people began to see the bene­ fits of running a business - it's a $3,000,000 business - as a business.

Not to say that there won't be politics but there's a point - you know, if it was 50-50 before, it's 75-25 now. We all were educated together. At some point in the future, it may not - we may end up in the same situation; not while we're here, I'm sure. I think we have been strongly committed. Most of the people who went through this process are still in­ volved in borough government. We are strongly committed to creating the direction that will keep us from ever falling into that trap again.

But even if that doesn't happen; suppose there's a complete turnover m this borough. The educational process, too many people in this town have seen both sides of the com. And too many of them recognize now how viable we have become following this course of action. It's becomre more common place to hear, "That 64 isn't prudent. That's not a good business decision." That wasn't the case before. You didn't hear that spoken in that manner. And maybe this process shouldn't be rushed because of that.

You're really talking about a very holistic educational process here, taking it out of the political realm and putting it in the business realm that certain decisions are very prudent because they're good business decisions, to look from your insurance policy not from, "Well, the guy in town has always handled insurance so we're going to let him continue to do so." When you're forced to look at those things, you begin to look at things in a business-like manner. That's fine if you've got all business people sitting on council that tend to do that. If you don't, if you have average cit­ izens there who have very little business training, which I don't, you need that expertise because it's just not avail­ able to us. We're not going to get it any place else until they change election laws and require a certain number of courses in economics and a certain background. That's what we're faced with. CHAIRMAN EVANS: Do you have a few minutes? MR. WAXENFELTER: Sure.

CHAIRMAN EVANS: Representative Melio?

REP. MELIO: Sorry to hear you have to leave 65

early. I was a township commissioner for 18 years. Our first manager was a secretary appointed by the board. I'm a strong advocate for a professional manager. When we brought in a professional manager, you could see a difference right away. I can't ask you a question because I know your manager is right here but

MR. VENNARE: That's okay. REP. MELIO: Do you belong to the Borough's Association?

MR. WAXENFELTER: Yes, I do. REP. MELIO: When you go to these association meetings, do you tell them how important it is for them to do something like you've done?

MR. WAXENFELTER: I sing the praises of this whole process and the evaluation process that we have entered into. I have said this to to numerous people in borough and township governments that I don't know how you can function without a township manager or borough manager.

It's a difficult situation. First of all, it's a difficult situation to force people who are not experts in the field and who don't have eight hours a day, to look at what's going on, and to force them to take on that responsi­ bility because inevitably what happens is they'll back away from that and take the safe road whenver they can.

It's always going to be a political road. More 66

often than not, it's going to be the safe road. If you're

working on a special problem, they say, "Let's not touch it

because as long as we don't touch it, we're not in violation

of anything." It's a reactive government instead of a proac­ tive government. And I think that's what has to come. You have to have a professional manager. And the Act 47 program is obviously geared very highly towards forcing that kind of manager.

REP. MELIO: A lot of people say they can't afford a professional manager. I question how they can afford not to have one.

MR. WAXENFELTER: Right; I can say since we've made that transition, I can see the benefit every time I look at the situation. When we meet with the manager, he says, "I've just reassessed the insurance situation," or "I've just reassessed the road situation. I think we have to deposit more money."

We're going to be $20,000 this year behind by doing it this way. But had we not done it, that would be twenty thousand dollars that would not be available to us. There are so many things he did. And that's what is very difficult to sell to people. You're paying the manager "X" amount of dollars. But somebody would have had to have done that part time. 67

The danger of losing that benefit to the community is too great if you don't have that being done.

Did you ever go out and take a $3,000,000 busi­ ness and ask an untrained, inexperienced, unqualified person to run that $3,000,000 business? I cannot believe that I never looked at it that way. I really can't believe I ever thought it was possible for four years sitting on the council that it would work with the right people in place. I learned as I went along. We made too many mistakes we couldn't recover from because we didn't have the means to get hands-on control of our own destiny. So I was ready when we made the DCA application. And, again, I can't tell you enough how much - how well spent that money is. It's well spent money. I can remember the grants that we got. One in particular comes to mind. We got a grant to buy a police car, a $10,000 grant to buy a police car. We bought a police car and made not one significant change in our police. I'll be honest with you. We were going nuts. There were times when the DCA was right there to provide hands-on help. I just have to be truthful about that. But when we look at this whole program, it was a great benefit.

But I don't want to leave by singing the praises of the program without telling you why I think - where's there one drawback. I really think they need more 68 money. If that's what the purpose of this is to determine how you're going to appropriate, we desperately need more money.

I don't know what you're going to be able to do to make them more accountable to you. But boroughs and com­ munities are certainly accountable to them. That money is so well spent. It's savings over and over and over again down the road in years to come.

CHAIRMAN EVANS: We probably could measure how many municipalities are off the list.

MR. WAXENFELTER: That's true. Let me just finish with one example. I want to give you one example of why. We had a situation with a swimming pool. And we had a tremendous public undercurrent about that swimming pool de­ manding that that pool be opened, that it be rehabilitated, et cetera.

After they had helped us to look at that par­ ticular situation with recreation, it was so much easier to take their assessment of that situation and strong suggestion that it not be re-opened for the following reasons: it was easier than having me go to the public and saying, "Well, here is the reason why it shouldn't be opened." Now, I had something to fall back on. I said, "Look, here's some good solid evidence why this is the wrong direction and that we need to look at a new recreation rather 69 than throwing good money after bad." I could say that any­ where in this community and it wouldn't mean as much as tak­ ing documentation, taking their report to the public and having that be the foundation upon which we began to rebuild.

And I can't thank them enough for their support. They were always there when we needed them and spent count­ less hours with us, long, long hours. I can remember going through the whole borough manager process and trying to in­ terview borough managers and coming up with criteria upon which - that was a learning experience for us. By sitting through all those interviews, I learned what we really needed. I began to focus on our real problem when I looked at what was out there. We had no idea. We were getting people who were negotiators, we were getting people who were planners, we were getting people who were fi­ nancial administrators. That was the educational process that it took us through. That's why I think you must keep this program. You really need to enhance it somehow. It's a tremendous program. I shudder to think where we would have been three or four years from now I really don't know. It wouldn't have been - it's not a pleasant thought, the political has­ sle that would have been undertaken. If there's no more questions, I'll

CHAIRMAN EVANS: I want to thank you for coming. 70

REP. LAUGHLIN: I just want to say I was happy you had the foresight to see that Ambridge did need a borough manager. And even though you stated you don't like the poli­

tics of it, you were thrown into it. But you have managed to do a tremendous 30b here in Ambridge. I want to commend you for that along with Al Vennare. And I know I did a little bit of help, too, in providing for that police car.

MR. WAXENFELTER: Right; I wasn't trying to slight anyone but that one stuck in my mind.

REP. LAUGHLIN: But, anyway, you are involved in COG, I know, because I've gone to some of their meetings there. And I know they've been a big help to Ambridge, too. This is a wonderful town here. I was born and raised here so I'd like to see it thriving. I want to thank you and the Department of Community Affairs for their help in making this a good place to live, and also the enterprise zone. Being in an enter­ prise zone also helps the community, too.

MR. WAXENFELTER: Right. REP. LAUGHLIN: As Barb Bateman said, you were able to get a lot of things here because of that status. MR. WAXENFELTER: Right. REP. LAUGHLIN: Now, I know you have to get back to school but thank you again for coming down.

MR. WAXENFELTER: Thank you very much. 71

MR. VENNARE: Before I begin, the gentleman you just met is one of the reasons that Ambndge has gotten where it's gotten. It was his commitment and the commitment of his fellow members of council that in my view made the difference between a community that had an opportunity to achieve and a community that seized the opportunity and did achieve.

For all of the things that you've heard about the Department - and I will repeat some of them - all of their work would have been for naught had this council not taken on the tough issues and made the commitment to see it through. And I think therein lies - and I will get to that later - what I believe to be the significant need in the program.

There are some things I think that we need to focus on in terms of improving the program and the potential results. And one of those centers around in my opinion the educational process, the expectations that I heard mentioned earlier, and perhaps the perception of what the program is all about from the local officials' point of view. And I think there we need to look at that very carefully.

And at the risk of repeating some of the things that you've heard; as far as Ambndge is concerned, I believe the that Act 47 process basically gave us the opportunity to do exactly what Tim said, to look at the organization, the municipal organization, and begin to focus on all the 72 components of that organization from a view of perhaps a business point of view; from an objective point of view, rather than subjective, personal or political; and to begin to apply the resources and the input of a variety of profes­ sionals from a variety of areas and fields of expertise.

I can't not emphasize it enough, the importance of the recovery team that was put together here in addition to the players in the department itself, the original office in particular. It was that recovery team and the expertise in the various areas that they brought to bear on our spe­ cific problems that in my view led to the development of a very focused, very directed, very effective recovery plan. And at the bottom of all of this, if a commun­ ity is to succeed through the process of Act 47, it must have a good blueprint or recovery plan because if there are flaws in that document and that is the document on which you rely, certainly the process will not be successful. I think that the development of that recovery plan is critical. And perhaps if there is another area where we need to emphasize a little more attention and perhaps make some changes, it is in the amount of time and some of the ef­ fort - well, not so much effort but the amount of time and focus that is spent in some cases, not particularly ours, on development of that recovery plan. It is the document that I believe makes the difference. 73 I'll give you an example. The education pro­ cess that Tim talked to you about in terms of the public and the political playes in town relative to the various aspects of our recovery was critical. And one of the things that we relied on continuously was the fact that there were very spe­ cific issued addressed in that recovery plan.

Here is a problem. You have a problem in the housing. In the housing stock area there are a number of problems. Here's what we believe them to be. And they are very specific in nature, the code enforcement program, this program, that program. And it's all listed here. There is none, there should be some. All of those things are ad­ dressed specifically. On the other page is a list of recommendations. Those recommendations focused directly on those areas of a problem that I can identify. It's during that process that the real education takes place. It's during that process that the importance of the recovery team and their expertise becomes extremely visible because as the political partici­ pants try and grapple with what are my constitutents going to say, how am I going to get this across to the public, they've got to have - and through this process they do have - and as indicated to you, a piece of paper, a document that says, "Here are our suggestions and recommendations."

They're not the fifth ward's, they're not the 74 second ward's, they're not the first ward's. They are the borough's problems. And these recommendations for solutions to these problems are not the first or fifth's. They are recommendations for the entire organization. The ability of the program to bring to bear all of the resources of the Department of the recovery team, of those people that are brought in to address the issue, once that's done and once that recovery document is prepared, the ability of the local officials to maintain their commitment is critical.

Ambridge was left in a position - not left in a position - put in a position where it had developed a recov­ ery plan, implemented a recovery plan, and began to develop commitments to those programs in the recovery plan. Once that had happened and once we were able to financially get our house in order, the Department said to us, "Look, guys, you pretty much addressed a lot of the problems. You've got a lot of things you need to address but you addressed a lot of the major problems and we think that you can do it on your own."

That came after we knew we could do it on our own because of that process that we had been through, that rebuilding of the organization that had showed us and proved to us, whether we be the elected officials, the department heads, the employees, or the manager, that in fact we had 75 the wherewithal, the ability, and the business plan that would make it work. We had more confidence, I think, than even the Department did that it was not only in our best interests and the Department's best interest, but in the community's best interest that we move forward now.

It's very hard in a few minutes to really talk about the intricacies of the program. But I think the suc­ cess here in large part may not have been due to some of the dramatic things that some of the other communities have to deal with but, rather, that we were the right community at the right time with the right leadership and involved in the right program, that we do not have some of the dramatic econ­ omic problems that other regions, other communities have al­ though we did have our share. But I think we were given an opportunity, given the circumstances that we had here, to go and move forward and we did so. There are a couple of things that I think we might want to consider. Money certainly is one of them. One of the problems that we did have in the program was that many of the opportunities that we believed we had for a viable grant program, viable for a specific program, were often bogged down in that competitive battle with everybody else out there, distressed or not distressed. And the Department in many cases in my opinion 76 was hard pressed to try and find a way to work us into a spe­ cific grant program that was out there. There may be some need to look at flexibility in developing grant programs based on specific criteria for Act 47 communitles, not just general or broad based.

As you have heard, we did get a gcant for a portion of the manager's salary early on. We did get a grant for development of a comprehensive plan to go along with our recovery plan, which was a very, very important document, a very important step for us because in a very technical sense, it made us look at what the Borough of Ambridge consisted of and what did we want to see it look like five years from now. We did get a grant for a computer system which has been in­ valuable and allowed us to develop other programs.

Yet there were programs that we thought we should put in place but we weren't able to get what we be­ lieved to be the necessary funding because we just couldn't find the place to put that. That's one of the areas.

The other thing is I think that - early on I heard some comments about some of the things that might be needed to mandate for communitles in the 47 program. I could probably talk about two hours on that but I won't. I think the Legislature in all honesty needs to look at what it's going to take to get some people to do what they have to do.

I think there's areas where the statute needs 77

to say, "If you want this, you must do that," because the political pressures that come to bear on local officials in many instances prevent them from making the decisions that are necessary.

You've heard talk about regionalizing and con­ solidating the police forces and fire departments and public works departments. And quite frankly, folks, none of that is going to happen unless the incentive along with the mandate to do certain things to receive that incentive is put in place.

Act 47 is no different. There are communities out there, as you all know, that will never survive the pro­ cess, not because they don't want to, but because, from a business perspective, from all other aspects, it is impossi­ ble for them to do so.

So in order for them to shorten that wasted time, what will end up in wasted time and money not well spent, perhaps what we need to do is provide an alternative wherein halfway through after an evaluation process that says, "Hey, guys, we can't get here from there. Here's what you have as an option," allows you, as part of the program, to direct those people into a different situation, perhaps a regional or consolidated program in a larger scope, not just police, not just fire, and not just public works; maybe one of those or more of those or a combination of those things as 78 options. I think that is important. And in addition to that, the Department itself - there's no way that I can express to you. I spent 15 years on the road, a lot of those years as a consultant for public agencies in four different states, in Ohio and West Virginia and in Michigan as well as Pennsylvania. And I have never seen a program that offers as much opportunity as Act 47 does. By the same token, I have never seen a Depart­ ment under so much pressure and with such limited resources applied to the very things that makes it the top department, the most important department, at least in my view.

Staff-wise and funding-wise, the annual battle in Harrisburg is to decide what dollars go where. It's a very difficult one, I know. And the trading and negotiations are constant. But somehow I think we need to focus on what's been indicated earlier. And that is that the dollars that you spend in this program today pale in comparison to the money that will be wasted over the years if we don't address those problems now.

Somehow, some way we've got to find a way to look at the funding mechanisms for various aspects of Act 47 that will allow - perhaps a revolving fund that is estab­ lished through a seed program initially and then is able to be maintained at a specific level on its own on a repayment 79 process or a participant process. I don't have the answers for that. But certainly I believe that's something that we need ter look at.

I've jumped around a little bit here because my boss took away all my notes and didn't let me do what I wanted to do. But I appreciate the opportunity to speak my piece. REP. LAUGHLIN: You mentioned that you had some help with the comprehensive program. How much money was that? MR. VENNARE: We received, I believe, a total grant of $39,500. Twelve thousand of that was for the man­ ager's supplementary salary and the balance was for the Comp plan.

REP. LAUGHLIN: Did you come to the Borough since the program started?

MR. VENNARE: I came in as a consultant in early '90 during the labor negotiations, became interim man­ ager in '91 and then manager. REP. LAUGHLIN: Well, we can see the results. You've done a very good job and I want to thank you.

MR. VENNARE* I appreciate that. CHAIRMAN EVANS: Representative Melio?

REP. MELIO: Those two hours you want to talk about, you can put it in writing and send it to us. 80

MR. VENNARE: I would like to.

CHAIRMAN EVANS: I would like to take you up seriously on that. Representative Melio is on the Local Government Committee. You should share your comments with us. It would be very helpful to receive your point of view. It's important to hear from people out there in the field every single day telling us what they think, looking at Act 47, how to retool, what do we look at in the future. Representative John Wozniak from Johnstown.

REP. WOZNIAK: I'll tell you, it was easier to get here from Philadelphia. It's nice to be in the Ambridge Borough Building.

Since I came in late, I don't have any ques­ tions but Johnstown is going through the distressed status right now. And many of the things, just the pieces that I picked up are pretty pertinent to our situation. You have to give DCA some powers that will force the local government decision making process because a lot of them are politically improper. And by strengthening their hand a little bit, the things that have to be done can be done because then they can blame the state and that nebu­ lous General Assembly stuff instead of taking some of the heat right there locally. The regionalization of programs that forces it, I think, is important. And a lot of this stuff is going to 81 have to be done from the top down because local politics does not allow it. Even if the facts and figures and all the dy­ namics prove that it's cost savings for the whole entire area, people just aren't willing to give up their local po­ lice and fire departments or other programs even if econom­ ics dictates that it makes sense. CHAIRMAN EVANS: Representative Brown? REP. BROWN: I have one question. Did Ambirdge have a problem with water and sewage? Did you have problems in that area? MR. VENNARE: Not actually. Our water author­ ity is a separate municipal authority, a regional water authority, Ambirdge Area Water Authority. So that organiza­ tion has been taking care of its own. And basically we have an excellent program, an excellent authority. The Municipal Sewage Authority was a lease-back at one time but during this process, became an operating authority of itself. So even though we have some problems in that area, they were not of such magnitude that they really impacted, although I think they will in the near future in terms of the municipal authority. They really did not impact the process, though. REP. BROWN: Thank you. CHAIRMAN EVANS: I'd like to thank you for spending the time with us. 82

REP. PRESTON: One other thing, it would be nice if you would maybe in the next month take the time to jot down some of your suggestions which you may have and submit them to both committees because I think it would really make a difference.

MR. VENNARE: I'd be happy to. CHAIRMAN EVANS: I'd like to thank you again. We will take a lunch break and we'll reconvene at 1:00 to hear from Aliquippa, the city administration and council persons of Aliquippa to look at exactly what is taking place in Aliquippa.

Then at 2:00 we have Economic Development efforts, people from the Beaver County Corporation for Economic Development, Ambridge Redevelopment Corporation, and Brent Glass coming in from the Pennsylvania Historical and Museum Commission. And we'll end up at 3:00. I'd like to thank everyone again.

MR. SHEPHARD: I'm Ray Shepard . I'm Director of the site for the Commission. I'd jult like to welcome you all. I'm glad you're here. We'd like to have you all come down to a lunch, if you'd like to come down. We have put

together a stew on a nice cold day. Maybe that'll give you time to get back on schedule, if you'd like to. So just fol­ low me and we'll go right down there.

(Whereupon, at 12:15 p.m., the hearing 83

recessed, to reconvene at 1:30 p.m., the same day.) CHAIRMAN EVANS: What I'd like to do is reconvene the House Appropriations Committee and Local Government Committee.

The next person we have before us is the city administrator, Rebecca Bradley, who is from Aliquippa. This morning, to give you some background of what we're talking about, we spent two hours talking about Ambridge and its ability to move off the distressed list. We talked about some of the things that Ambridge did to move off that list. We talked about what it took to make that happen

And now, we're interested in the Aliquippa ex­ perience, exactly what's taking place, what's going on. Can you offer us some assessment as to where you are? I'11 have you introduce yourself for the purposes of the record

MS. BRADLEY: My name is Rebecca Bradley. I am the acting city administrator for Aliquippa. I have been with Aliquippa since April. I came on as finance officer and when the adminstrator resigned in September, I was appointed acting administrator I'm hoping to be able to answer all of your questions to the best of my knowledge. And I'm sure that Bill Gamble will be able to help me.

I have prepared a few pages that I'11 kind of fill you in and if you have any questions, I'd be happy to 84 try to answer them for you. Aliquippa is a mill town on the Ohio River approximately 28 miles northwest of Pittsburgh. We are facing severe social and economic problems characteristic of many cities in Western Pennsylvania. Our basic comparison of the population of Aliquippa over the last 20 years brings us into a better perspective.

In 1978 Aliquippa had a population of approxi­ mately 20,000. Right now according to the 1990 census, we have decreased to about 13,000. Aliquippa has been faced with a continually decreasing financial and economic picture for several years.

The drop in the LTV mill employment, the major employer of the region for numerous years, from a peak near fourteen thousand employees to fewer than 1,500 coupled with the increasing out-migration and general economic decline has complicated the existing problems of housing deterioration and retail district decline.

This problem is characterized by an eroding economic base which in recent years has resulted in unemploy­ ment, reduction in municipal services, and an exodus of the younger population and loss of local business.

A significant decline in revenues of the City of Aliquippa has emanated in real estate tax collections a string of successful assessment appeals by LTV on its 85 approximately 1,300 acres of industrial land and buildings and caused a very serious fiscal condition for the City of Aliquippa.

In a petition notarized October 21 of 1987, the then Borough of Aliquippa requested the Department of Community Affairs to determine its eligibility as a dis­ tressed municipality under Act 47 of 1987.

The Borough failed to remit withheld payroll taxes at the end of 1984 on the required due date. These funds represented employee withholdings for Social Security, federal income tax, state and local income tax, along with pensions and Fraternal Order of Police dues and were not re­ mitted to the appropriate taxing agencies until April and May of 1985.

Based on an analysis of interim financial statements through September of 1987, it was projected that Aliquippa would finish in 1987 with a deficit of approximate­ ly $350,000. Continued erosion of the tax base resulting in further deficits was likely unless further action was taken.

Aliquippa encountered over a period of two years an eroding tax base to a substantial degree affecting its ability to render basic public services. Following a public hearing, Aliquippa was formally declared a distressed community on December 22, 19 87.

Aliquippa requested an emergency loan under the 86 provisions of Act 47 in the amount of $460,000 in order to pay unpaid bills and to meet operating expenses for the bal­ ance of 1987. The loan was received in early 1988. The Borough of Aliquippa officially became a city in 1988, allowing the municipality to levy a two-tier taxing system in an attempt to alleviate the ongoing assess­ ment appeals by LTV. Subsequently, LTV has been torn down with the exception of one section. The land has been sub­ divided and sold to various corporations for development.^

With the assistance of the DCA, the City of Aliquippa has done extremely well. The technical assistance provided has been a vital link in the recovery of the city. Most of the major recommendations made by DCA have been or are in the process of being completed by the city officials.

Aliquippa has been able to maintain a substan­ tial fund balance for the past three years and was in the process of completing the distressed program. The basis for the city continuing in the Act 47 program for the past few years was that it would allow sufficient time for the planned administrative improvements to be implemented.

Some of the more significant impacts of dis­ continuing the distressed status are as follows: Earned income tax would return to statutory limits. With the imple­ mentation of Act 47, Aliquippa was authorized by the Court to increase earned income tax .2 percent, which is beyond the 87 statutory limits for cities of the third class that are not distressed.

The bargaining group's wage rate ceiling would be broken. All contract negotiations are currently held in rate of increase no higher than the standard cost of living increase. Inter-agency assistance would no longer be avail­ able to the city.

The loss of this integral tool would be a po­ tential pitfall for the city in its continuing progress. The city would lose the availability of no interest loans and grant preference. The impact of this situation also could cause the city to backpedal.

The extension of the distressed status also provides additional time to discern any challenges to the two-tier tax real estate system. J and L Structural Steel Company, a greatly downsized but nonetheless the successor and major industrial employer in Aliquippa, has had its assessment decreased drastically several years in a row.

The conclusion of DCA at this point in time is that although there has been substantial and definite pro­ gress towards alleviating the conditions that led to the original determination of distress, to make a declaration of complete alleviation is premature.

Currently, the city is undertaking a process with the aid of DCA to implement the Rudac program. This 88 program, which would be available to the city via grants, should play a major role in the continuing struggle to re- build the erodng business district of Aliquippa.

Economic development has to play a key role in the continuing recovery of the City of Aliquippa. With the rebuilding of the city, only then will the financial picture begin to take shape. The Act 47 Distressed Municipalities Act has allowed the city every opportunity to improve and is vital to its recovery.

It is my opinion that the most important ele­ ment of Act 47 has been the intervention and/or recommenda­ tions made by the Department of Community Affairs. The continual instruction has led the city to finally possess a long range plan of action. The officials have begun to en­ vision and perform with the knowledge of a certain future picture.

The Department of Community Affairs can be en­ visioned as a parent leading a child and giving that child medicine which the child may not like but which actually cures its ailment. It is not my belief that the Act itself or the Department of Community Affairs has been restrictive in any function but has greatly increased the professionalism and the stability with which the city operates.

Currently, the city has been again challenged by a real estate reassessment of more than 300 acres of 89

former LTV property, which was sub-divided and sold to two corporations in 1993. According to the current assessment appeal handed down on December 30 of this year, the city will lose approximately $270,000 in revenue during 1994.

The city had the foresight because of the im­ plementation of the Act to budget accordingly. And although this is a significant loss of revenue for the city, we are prepared for it.

The importance of this Act cannot be downplayed. With the intervention of DCA, the city was able to see the future and to plan for it. Although we do not anticipate that this will be the end of the continuous assessment ap­ peals, the city has been able to keep its head above the water and start swimming for the shore.

The Department of Community Affairs in conjunc­ tion with Act 47 has been the saving grace for the City of Aliquippa and for many other communitles. Although the city still has a struggle ahead, we are comfortable with the know­ ledge that the crunch supplied by Act 47 will enable the city and its residents and officials to stand tall and walk proud­ ly again in the very near future.

CHAIRMAN EVANS: Thank you, Rebecca, With Ambridge and Aliquippa virtually being neighbors, what do you see as the difference between one being able to move off the list and the other, DCA has yet to give an official release? 90

MS. BRADLEY: I think that the major difference between Ambridge and Aliquippa is that Ambridge had a viable downtown district and they were able to rebuild based on the tax base that they had. Aliquippa's downtown distirct is basically a lot of empty store fronts. And so therefore we've lost a lot of the tax revenue that we once had.

CHAIRMAN EVANS: What exactly do you do about that strategy? I heard kind of a discussion by someone earlier. I think it came from the Governor's - Barbara's re­ sponse team in terms of reversing the economy to more diver­ sity from kind of a one-horse town. Is Aliquippa in that category?

MS. BRADLEY: Aliquippa has always been a one- horse town. They've always put their eggs m one basket. And what has happened with that basket is it has broken.

The LTV site has been - it always has been the major tax base. And with the demise of that, we have lost quite a bit. And in order to come back as Ambridge has been able to, we need to start sprading out looking in other areas for revenue, start building a tax base in other places, re­ build our downtown or generate more revenue from other parts of Aliquippa, which could become a new downtown.

But we need to start focusing on those areas and stop focusing on that one horse, the eggs in that basket 91

that have broken. CHAIRMAN EVANS: And I think this was said by Ellen earlier and I also see you saying that, that Aliquippa's problem is as much a management problem as a structural problem. Can Aliquippa do that by itself? Do we need to redesign the boundaries or regions? What do we exactly need to do in Hamsburg to assist Aliquippa, which seems to be much more different than Ambridge MS. BRADLEY: I think that the major thing that Aliquippa needs is to be able to do it itself. I don't know that Hamsburg or DCA or Act 47 can basically come into Aliquippa and rebuild it. Aliquippa needs to rebuild itself. And they need to have those guidelines. They need to have those boundaries set.

As far as help from Hamsburg, we need to know that you're there, we need to know that there are programs available to us that will help us bring ourselves back. CHAIRMAN EVANS: Tell me how does Aliquippa do what you're describing. If I heard you say, the economic look in downtown Aliquippa versus Ambirdge, there's a real difference in terms of not having a downtown. How do we get an individual to make an investment in Aliquippa? Now do we do that?

MS. BRADLEY: Aliquippa has a number of small groups that have been very vital in bringing new business to 92

the town. One of the links that we need is to be able to work more closely with these organizations.

It's a tough problem. Aliquippa definitely has

one. They need an administrator that has a lot of economic

knowledge, a lot of redevelopment knowledge, someone that can

come in that has the connections to start putting the pieces

back together, someone that is familiar with the grant appli­

cations and the redevelopment processes that are necessary.

And with the proper management, it can be done.

CHAIRMAN EVANS: Representative Laughlm? REP. LAUGHLIN: Well, when you say that Aliquippa has to pull up its bootstraps by itself, I really don't agree with that because you're going to some other groups for help. And those groups are coming to us for money. So it looks to me like you still need the help of the state. I know the AAUD has done a fantastic job of revitali- zation. But they've also gotten money from private industry,

grants from private industry. And they've been able to at least help to bring back some revitalization. But as far as us trying to help Aliquippa, other than through what Barbate Bates's group is doing and the enterprise zone in bringing companies to locate in that area - you know, there's talk about when riverboat gambling, the bill is passed, there's talk about bringing that kind of development there. And now, with J and L Structural 93

expanding - and that was through the help of the state. They got money from the state. So, you know, I think that what we really need is to bring in those companies to Aliquippa. As far as the boarded up store fronts, you would have to see it to believe it because it's really bad.

I don't even know if bringing economic develop­ ment into Aliquippa is going to put companies into that area on Franklin Avenue because they've tried that. And it seems like every time somebody opens up a business, it closes down.

But, you know, I think we all have to pull to­ gether to help Aliquippa. At one time it was a booming area. And I remember shopping there myself. And it was just like Ambridge. You couldn't even park your car for the crowds there.

There's a lot of talk about what can be done in Aliquippa. And I'm sure that Jim Palmer will bring out some of those points. But I still think that Aliquippa needs help from the state. I don't think Aliquippa can do it. I know they just raised taxes; right? MS. BRADLEY: Yes, we did.

REP. LAUGHLIN: And the two-tiered taxing helps somewhat but there's still more that should be done.

MS. BRADLEY: Weil', I agree whole heartedly with what you've said. But I feel, also, in conjunction with 94

the help that is available and the things that the state can do for us, the first thing that Aliquippa has to do is want to be. We have a general attitude of, "We're not going anywhere so why should we try?"

CHAIRMAN EVANS: When you say that, are you referring to the elected officials or the people themselves?

MS. BRADLEY: I think I'm talking more about the population than the elected officials. The elected offi­ cials want to be there and they want to see us succeed. But the general population has the idea that we can never be again. And I think that we need to start with those people and bring them back up to snuff and make them realize that there is - we can be again.

It may not be the same as it used to be but why not something different? If we can't redevelop Franklin Avenue, why not up closer to Brodhead? There's a lot that needs to be done. And when I say that that help can't come from the state, I don't mean it in the sense that we're not willing to accept from the state but that Aliquippa needs to redefine its position with itself first.

CHAIRMAN EVANS: Representative Tony Melio.

REP. MELIO: Is there a reason why the Governor's Response Team hasn't come into Aliquippa to help?

MS. BRADLEY: I can't comment on that. MS. McNEES: The Governor's Response Team has 95 been very involved in Aliquippa. They've provided - I can't speak to all the details but there is a joint enterprise zone. The DCA operates the enterprise zone program in Aliquippa and Ambridge and Harmony, the three municipalities together. And the Response Team has put quite a bit of money into the en­ vironmental clean up of the LTV site. DCA has put quite a bit of money into that process. We both have. Commerce has been actively working on that site.

That site has significantly more difficult - it's a significantly more difficult site to develop than the Ambridge site was because of the environmental issues and problems. And you'll hear more about that when Jim Palmer speaks later this afternoon. But there has been significant involvement by the Governor's Response Team.

CHAIRMAN EVANS: Do you want to comment? MR. GAMBLE: Yes; the major problem that Aliquippa is facing - in fact, we've touched on this - is that they have gone through a three-year recovery plan, a two-year recovery plan updated and then last year a one year. Last year when we looked at the fiscal condition of Aliquippa under the criteria of Act 47, basically they were in real decent shape, over a $400,000 fund balance. What happened between last year and this year is that LTV Steel sold 300 acres of property that - $30,000 was the market value. And they sold each acre for $385. 96

What has happened is that the buyer of that, which is C. J. Betters, has filed an appeal with the county. And the first appeal decision came back this past week, which basically means that the city will lose somewhere in the neighborhood of $276,000 in revenues. And that's just the tip of the ice­ berg .

So while Aliquippa was sort of coming back, this sort of just knocked a hole in the wall, so to speak. And there's going to be more appeals, as far as the LTV property. So the other issue which was mentioned is en­ vironmental; again, buying property at $385 an acre that has a market value of $30,000. They buy that because the envir­ onmental issues are there. And those are going to have to be cleaned up. At this point, nobody knows what direction that's going. And that's going to take a lot of time.

So sometimes when you think you're coming out of something, something like this hits you, the municipali­ ties that rely on industrial property. And that's the prime case in Aliquippa's case. I think that if things would have kept sort of at equal, they may be out of the program within a year or they might have been out this year. But now we have to re­ evaluate again their situation, the situation in Aliquippa as to whether they should stay in the program. At this point it 97

looks like they're going to be in there maybe for a little while longer. CHAIRMAN EVANS: I talked to Representative Wozniak before on the issue of crime. Obviously when you have economic decay or decline, it certainly has an effect. In terms of Aliquippa, what kind of an effect, the fact of not having job opportunities, what has that meant from a crime standpoint?

MS. BRADLEY: Aliquippa has a major crime and drug problem based primarily on the fact that we have a lot of lower income homes. We have areas that are worse than others. We have a very small police force because of the economic crunch that we've been under.

One positive note that I can add to that is that we did apply for the grant that was made available by the President. And we're hoping to be able to add on to our police force because of that to try and counter some of the different crime element, i.e., the drug problem that has permeated the area.

The worse section in town is the Plan 11 area, which is the Hill. And we have some police officers that have been able to work very closely with that area to try to alleviate their problems.

You know, when you have an area that's as de­ pressed as Aliquippa is, it follows that you will have the 98

crime that we do. But then, again, you know, we're working on it.

CHAIRMAN EVANS: Representative Wozmak?

REP. WOZNIAK: What percentage of your property

is tax exempt? MS. BRADLEY: I do not have that figure. REP. WOZNIAK: Forty percen,t, about that?

MR. GAMBLE: I'm not sure. REP. WOZNIAK: How long have you been under the distressed status?

MS. BRADLEY: Since 1987. REP. WOZNIAK: That's a pretty long time. I had Franklin Borough that was pretty much - not dissimilar to the one-horse town, Bethlehem Steel. Everybody had jobs. There was all kinds of stuff. And now, it's all senior citi­ zens. And they listened to everything the DCA requested of them and did it. And the council, some lost office over it. Now, they're reducing taxes and they're moving out of the distressed status.

The police department, you brought up that you have a small police department. I'm not familiar enough with Ambndge or Aliquippa and the area around here. But has the Department made any studies or anything or the Pennsylvania Economy League come in?

MR. GAMBLE: About three years ago we did a 99 study of the whole situation in Aliquippa, did a study on consolidating the police force. And Aliquippa was ready to consolidate. The problem they had, they could not get a willing partner even with the effectiveness of all involved. You do have an example here where Hopewell Township evaluated itself. And they worked together as far as the police department but as far as consolidation, it's a problem. I think on a distressed community, nobody seems to want to take on that problem. CHATRMAN EVANS: Representative Brown? REP. BROWN: Rebecca, is there any type of community pride program? You mentioned you're getting vibes from the people and they don't have the compulsion to go ahead to push a development zone. It reminds me of Titusville. We had a special­ ty steel that went from over 600 employees and now there are less than 100. And that was the main employer in that area. And they have now a community pride program and won in 1982 the Pennsylvania Chamber of Commerce's outstanding community of the year award. And I think that kind of got everybody together. Have you looked into any program like that? MS. BRADLEY: I think that's fantastic. We have various groups within the city that kind of go out on their own but no comingling. They basically set their own thing. They don't have involvement with the city or any of 100

the other groups. But to get them together would be a fan­ tastic idea. REP. BROWN: I think that's the real key to success because when Titusville makes up its mind to do a project, they may not like each other and there may be personal conflicts but it really does work out. That might be a good first step.

MR. GAMBLE: If I might add, different organi­ zations in Aliquippa I've been coordinating for two and a half years. But they do have viable organization problems that I see in Aliquippa. We're trying to address that with the RUDAC process. We're trying to bring them together to talk about their concerns. This takes in all of those organizations working together and determining some movement for the city, which direction they want to go. But more important, they are working together on it.

CHAIRMAN EVANS: Representative Preston, any questions?

REP. PRESTON: No sir. CHAIRMAN EVANS: Representative Farmer?

REP. FARMER: No questions.

CHAIRMAN EVANS: I'd like to thank you for your comments and the others. It's certainly helped the Committee to just, again, understand a little more about what's taking place. We hope the people of Aliquippa don't think they're 101

here by themselves. Representative Laughlin and the Secretary of Commerce have worked very closely with myself as Chairman to get this together.

Again, I want to thank you for coming before our Comittee.

MS. BRADLEY: Thank you very much for having me. CHAIRMAN EVANS: The next speaker we have is Jim Palmer, who is a member of the Beaver County Corporation for Economic Development.

MR. PALMER: Thank you for visiting us in Ambridge. As was stated, I'm with the Beavery County Corporation for Economic Development. We're a certified non­ profit industrial development corporation whose purpose is to promote and facilitate private investment and 30b creation in Beaver County.

CED, which is the acronym we use for ourselves, has a staff of three employees and is governed by a 15-member Board of Directors which includes representatives of business, labor, finance, education, and the Board of the Beaver County 1 Commissloners. Since its certification as an industrial devel­ opment corporation in 1987, CED has participated in over 100 projects that have added several thousand jobs to the Beaver County economy. We could not have had this success without the support of both the Casey Administration and the General 102

Assembly through their commitment to what is considered the most significant economic development effort in the United States.

CED has two major areas of activity. The first area is financing. Through funding from Beaver County's Com­ munity Block Grant program and Commonwealth support from the Beaver County Revital1zation Project Special Appropriation, the Business Infrastructure Development Program, the Indus­ trial Communitles Action Program, and Economic Development Partnership Funds, CED has loaned over $15,000,000 for about forty projects since 1987.

As these funds are repaid, they will be used by CED to continue to support local private investment and job creation. These loan funds in conjunction with PIDA loans approved through our organization and other Commonwealth in­ frastructure programs have leveraged over $300,000,000 in private investment in Beaver County since that 1987 date.

CED' s second major activity is land development. We have elected to carve out a very well defined role for ourselves in this area. We undertake land development pro­ jects only where there is a perceived or actual gap in the private marketplace. We attempt to do real estate projects only where there is a potential for significant economic ben­ efit to the community and the project economics preclude its completion by private developers. To date, CED has 103

undertaken two major real estate projects and is embarking on

its third, which I'll speak about in a little bit. The Ambrldge/Aliquippa area has historically served as a major employment center not only for Beaver County but also Southwestern Pennsylvania. And, notwith­ standing the economic events of the past decade, it still possesses the assets that can allow it to regain this dis­ tinction .

Our organization views its efforts in the Ambrldge/Aliquippa area in that context; that is, certain development opportunities available here will not only have obvious impact on the host community, such as increasing the tax base on jobs for local residents, but also will play a significant part in how development occurs within Beaver County and also this part of our region.

There are several projects that you may have heard about today already which evidence this. Port Ambridge Industrial Park, for example, which is owned by USX Realty, is one. This former steel fabricating plant was improved with investments by both the Commonwealth and USX.

As a result of that investment and the proximi­ ty to Conrail's switching yard in Conway, this site is one of the premier locations in this region for industries that ben­ efit from their ability to move goods through various modes of transportation or, as the jargon goes today, mtermodally. 104 i A private real estate group, Value Ambridge Associates, has purchased and renovated the former Armco plant m Harmony Township, which is adjacent to Ambridge and part of the Ambrldge/Harmony/Allqu lppa enterprise zone. This site, which was a former seamless tubing plant, has been renovated to become a multi-tenant facility that now contains over 40 employers. Again, through a com­ bination of private investment and through investment from the Commonwealth, this formerly closed steel facility is now often held out by the Pennsylvania Department of Commerce as a model for the re-use of vacant industrial plants. There have been several keys to these projects. First has been the private investors committed to the devel­ opment of the properties. But equally important has been Commonwealth initiatives that supported and induced that in­ vestment . Enterprise zone status, the Industrial Commun­ ities Program, and other loan programs that have directly assisted the businesses who located at the sites have been a major reason for the success of those projects as well. The issues involved in Aliquippa are a little bit different. No private developer has immediately stepped forward when LTV Steel substantially closed its Aliquippa works in the mid 1980's. And my testimony indicates the facts and figures you probably heard about the LTV property. 105

So as not to be redundant, I won't -I'll break from the written testimony here a little bit. But needless to say, the closing of that facility had a devastating impact on not only Aliquippa but all of Beaver County. LTV made the decision to close their works with the exception of the tin mill and began demolition of all the properties and completed that demolition in 1991 and searched to sell their vacant property.

They made several sales to companies for oper­ ating facilities. Representative Laughlin, I believe, referred a few minutes earlier to J and L Structural, which was a project that the Response Team was involved in in 1987 that allowed for the restart of a structural beam producing facility. That plant currently employs about 130 people. It's a very successful operation.

LTV sold off the machine shop to a group called Mechanical Services, Inc. They employ about 50 people. And Mechanical Services Inc. has purchased a vacant building that LTV left over there outside of the vacant property that they are leasing and have leased half of it at this point to a company called Shasta Holdings who employ about 50. And Shasta Holdings reconditions steel bars and billets.

The fact that this site remained fallow for a number of years as LTV was demolishing it and there appeared to be no private interest in developing it piqued our 106

organization's interest in the property. And we began nego­

tiations with LTV in 1992, I believe. And in May of 1993 we

purchased a 120-acre portion of the site across the river.

We feel that this site - I don't want to create the impression that our organization ventured into this pro­ ject solely because we felt it was sitting there and we were obligated to do it. We feel there's a very distinct niche that this property can serve in our strategic approcah, I guess, to economic development.

And let me just elaborate on that a little bit. This is referred to in testimony but not dealt with m any great degree. What we're trying to create here in Beaver County is a variety of assets to offer people; that is, if somebody has a particular need, that we have an asset in place that we can try to accommodate that need. If we don't have that asset in place, then we're not in any competition for any industrial growth or expansion that may occur. In terms of the strategic approach towards de­ velopment of sites, you have a privately owned facility here and P0rt Air,bndge Industrial Park where USX kept all its buildings in place; that is, there are buildings for sale there. There's no vacant land there. If they can attract an industry that can fit in that particular building, then it's a match and it works and they sell the buildings and the in­ dustry comes in. 107

You've got the Ambridge Regional Center that I spoke to, which is strictly a development facility. Those folks up there are solely interested in leasing space. They take a huge industrial building, they subdivide it into pieces and they lease space to people. And that's the nature of their business. And that also is a different asset that works in our behalf.

But what we don't have in this array of assets at this point is a clean piece of property that somebody needs a build-to-su it situation. If somebody comes to our organization and says, "We want to build a building. We can't fit in any of the buildings of USX and we don't want to lease space. We want to own our own space. Where do we go?", we have to say, "Well, we can't send you anywhere except we've got property over here in Aliquippa."

So there's a very strategic niche to be able to do a project over there in Aliquippa. It just goes beyond the fact that LTV left and somebody needs to do something. As I say, we purchased the property in 1993. We've done extensive environmental assessment of the proper­ ty. In fact, we were doing that under the terms under our agreement of sale, which began in 1992. So we've been poking holes in this thing for about 18 months.

Part of our decision to proceed with the pur­ chase was based on the fact that we felt the environmental 108

conditions that we found on the piece of property that we

were buying were all manageable. There's things that need to

be done there but they are of such a nature that we felt that

given the support that's been evidenced by the Commonwealth

to date, that we would be able to manage the environmental

remediation that needs to take place. Our plans for remediation are currently under review by DER. We expect to begin to do that work in 1994. As soon as that work is done, put in site improvements, roads, water lines, and sewer lines, and begin to sell prop­ erty. This situation that I've described in Al lqu ippa is a little bit different than the Ambridge situation in that - and it goes back to the private development aspect . There was no ready private developer in place to do what was done in Ambridge, as USX did at the Port Ambridge Industrial Park, as Value Ambridge Associates did when they purchased Armco. LTV decided that they weren't going to be in the real estate business any more and they didn't want to dispose of the property.

I think that, to a large degree, is the reason why development over there on that side of the river has lan­ guished where development over here hasn't because there hasn't been the private development entity ready to step for­ ward . 109

But the other aspect of that is, though, that thcough the variety of programs that the Commonwealth has available where an entity like our organization needs to step in and hopefully fill that gap in the marketplace, we may be able to induce private investment there. And I think that there's some preliminary evidence that we'll be able to do that.

Shortly after we purchased the property in May, we began discussions with the J and L Structural people, who purchased one of the LTV assets that I talked about awhile back for a structural beam plant. They've long been inter­ ested in building a melt shop and a caster on the site to serve their steel needs for their billets. And we've been able through our discussions with them to enter into an agreement of sale for their purchase of approximately 48 acres from us to build a melt shop and caster on the site. Their ability to have a facility next to them where their raw materials are available reduce their trans­ portation costs for the raw materials to almost zero on the steel end, which is of substantial benefit to their beam op­ erations. Certainly it may allow them, if this project is able to be completed, to add a third shift in addition to the caster project - to add a second shift, I'm sorry, to their existing beam operation. And I think it also provides this county with a 110

huge opportunity for development of that site. I mean the

issues relating to future development of that property will

be the same for other folks as they were for J and L Struct­

ural; that is, if you are in the steel business and you have

a ready supply of steel available to you where you don't have

to pay the transportation costs in moving it up the river

from Kentucky or Alabama or whatever, it certainly reduces

your costs and certainly makes the site more attractive to

you.

So we're very excited about the potential that this property holds for us, particularly if we can accommo­ date this existing project that we're working on. And as I hope that I have pointed out here and I hope that you are able to see, the Commonwealth's commitment to this particular area has been vital.

And as we move forward, a continuing commitment is required. The value of the variety and flexibility of economic development programs you people have approved and put in place cannot be over estimated. The importance of maintaining that variety and flexibility is evidenced by these example projects that I've discussed.

Just as a closing note, in addition to the fi­ nancing programs that have been put in place and encouraged these efforts, re-examining environmental remediation poli­ cies on industrial properties is also crucial; I think not Ill only to this particular area but - I'm not familiar with all the distressed communitles. But I would think that that might be an issue in all of them because they were all former industrial areas.

This issue is just as important if not more so than the financing programs. And the interest and the efforts of the General Assembly and the administration today are to be commended and shows the recognition of this state government in addcessing that other very significant aspect of encouraging development of our communities.

That's the end of my testimony. I want to thank you for the opportunity. CHAIRMAN EVANS: Thank you. What I'd like to do is ask Robert Nelson of the Ambridge Revitalization and Development Commission to give us some background. We've been talking about the distressed nature of Aliquippa and Ambridge strategy and coordination of the state government, what local government can do. I'd be interested in hearing some comments from the Redevelopment Commission.

MR. NELSON: Yes; my name is Robert Nelson and I'm President of the Ambridge Revitalization and Development Corporation, a non-profit organization in Ambridge here locally. And our purpose in town locally is to renovate a certain part of our downtown, which happens to be Merchant Street, which is our main downtwon business district. 112

That currently is opened up from our 300 blocks to our 1200 blocks. It stops right at the Old Economy His­ torical District site here. The reason why we are trying to focus on this is with the limited amount of funds that are available to our organization, we can more or less take the amount of funds that we currently have and sort of concentrate in a smaller area of town. And, hopefully, we would have a domino effect which - I'll give you some statistic in a moment on some of the domino effect that we've been having right here in our downtown area.

Our board currently has 13 people that repre­ sent it. And we're all - as everyone knows who participates in these types of organizations, it's very difficult when it's a non-profit organization. We all have other jobs and we all try to apply ourselves in every way we can.

Our primary function is our facades only. And some of the other towns here in Beaver County and throughout Pennsylvania concentrate on other areas of downtown renova­ tion. And we focus on facade only. And the reason is we get an average of $40,000 a year grant money. It's very diffi­ cult when we have 240 store fronts in our downtown section, one of the longest in Western Pennsylvania - it's very hard for us to try to delegate such a small amount of money to try to make an impact in this town. 113

So what we've come up with, as far as the grant program, is separate it into two programs. We have sort of what we call a mini grant program, which we have. A business owner might spend $2,000 and we give that business owner fourteen hundred dollars back.

And then we have a major grant program which is if the owner spends $7,500 or more, we give $5,000. And we found that we can do about 15 to 20 buildings a year with this method. And, hopefully, for any of those of you who have seen our downtown three years ago, we have over 70 pro­ jects that were completed. And we feel we're pretty proud of that number because that is over a third of our town in our targeted are that we've got to renovate.

So far since 1991, we have allocated over one hundred thousand dollars in facade money itself. And we also have a very successful sidewalk program which currently is continuing. We have installed brand new street signs, which was really a very good community effort between our organiza­ tion, the Chamber of Comerce, and also the local borough of­ ficials. And in our - once again in this target area we're concentrating all these funds.

We also have other renovations in town that sort of link into our goals and objectives. We've had on Route 65 turning lanes from Fourth Street and Eighth Street. And that directs traffic into our downtown area. L14

One of the most impressive numbers that I can give you is out of the 50 projects that we've completed, we've had 30 businesses take initiative without our funding and renovate their store fronts as a result. So I think what's happening here is people are at least under the impression that Ambridge is we LI on its way to becoming a successful community again. We have a very impressive number, over 90 percent, occupancy in our downtown. So we're very proud of those numbers. And so we're working together very closely with all of the other organizations in our community.

Once again, it's very difficult when you're a non-profit and trying to take time out. I know just from me being a small business person in town here, I can only dele­ gate so many hours per months.

But I'd be happy to answer any questions or concerns for you. I do have a handout that I'll drop off, some of the positives we've been in the local press many times. I'll give you some of our key articles that we have. We're kind of proud to be noticed, at least, in the Beaver County area.

CHAIRMAN EVANS: Before we ask questions, I'd like to ask Mr. Brent Glass if he has any comments.

MR. GLASS: Thank you for the opportunity to speak to your committees today. It's most appropriate for 115

you to hold this hearing in Ambridge and in Old Ecomony Village not only because of the recent experience Ambndge has had as a distressed community and not only because Old Economy Village is a state owned facility; more directly, we are gathered at the site of one of America's most successful economic development ventures. And I'm obligated to give you a little history since I'm the state historian and you're in an historical site.

Many people think of the Harmony Society that settled this community where we're meeting today as an ec­ centric communal sect living in quaint brick and frame build­ ings on the fringes of civilization. And it is true that Father George Rapp and his followers were devoted to a be­ lief in the second coming of Christ.

While it is true that they were devoted to that belief, they were not content to sit around and wait for the millenia to occur They believed that they needed to be pre­ pared to assist the Messiah in achieving peace and prosperity m the world. Therefore, they adopted a simple hard working lifestyle.

To sustain this community of 500 people, they adopted and developed new technologies for their daily needs and lives, made quality industrial products, and contributed meaningfully to the economic development of Western Pennsylvania. 116

By the mid 1820's they had constructed most of the buildings that you see here at this site. And in addi­ tion to cotton and woolen factories, powered and heated by steam engines, they had developed centralized steam laundries and a dairy. They had built shops for blacksmiths, tanners, hatters, wagonmakers, cabinetmakers and turners, linen weavers, potters, and tinners.

Later, they developed technology for high qual­

ity silk, for which they received gold medals in national competitions in Philadelphia, Boston, and New York. In the second half of the 19th century, despite the death of Father Rapp and declining membership, the Society achieved further success through investments in rail­ roads, well production, and the industrial complex that be­ came known as Beaver Falls. When you tour this village this afternoon - and I hope you'll have some time to see some of the village - please remember that the Harmonists were known and admired throughout the world. They lived in a time when market econ­ omies and capitalism were still in the formative stages. It was not inevitable that America's economic systems would de­ velop the way they did at that time. So even under communal ownership - and this was a commune but not a commune m the eccentric sense. They were a commune with a real purpose and a real success story. 117

Even when communal ownership became outmoded, the Harmonists maintained their community and prosperity well into the early twentieth century. Not many corporate ventures of those days can make the same claim.

The Pennsylvania Historical and Museum Commission has administered Old Economy Village since 1919. We are responsible for 17 buildings and a little more than six acres of historic landscapes and gardens. There are also over 16,000 Harmonist objects in our collection; art work, furnishings, tools, and machinery.

This collection forms one of the true treasure troves of the Commonwealth. The entire site is listed as a national historical landmark. More than 30,000 people visited the Village last year for tours, festivals, and school visits. They are attracted by the authenticity and integrity of the site. Those are two words that are very important when you talk about tourism as a part of economic development, authenticity and integrity. Not every place has it.

The authenticity and integrity of the site and its collections, these are original, generally well preserved buildings and a priceless collection. People are intrigued by the story of the Harmonists who built this village and who lived here for nearly a century.

The Commission is responsible not only for 113

preserving and maintaining the site but also for the research and interpretation needed to make this unique place come alive, to make for a quality visit.

To accomplish this, we have a small but dedi­ cated staff and a wonderful support organization called the Harmony Associates. This 400-member group raises money for special projects, provides trained volunteers for tours and events, and operates our gift shop. They have also pur­ chased and restored two Harmonist buildings on Church Street. And how many state agencies do you know where you have people devoting thousands of hours of volunteer time to assist the state in carrying out its mission?

Our current strategy for preserving and promot­ ing Old Economy Village includes the following steps: con­ tinue the restoration and rehabilitation of the historic buildings and grounds. Over 1.1 million dollars in capital projects have been completed or are under contract including this building that we're having this meeting in today.

Smaller projects, electrical cepairs, re- pomting of masonry, repair to fences, gates, and arbors will be accomplished through the use of funds made possible through the Key 93 initiative passed by the General Assembly and also approved in the November bond referendum by the voters of Pennsylvania.

The second step: encourage private 119

preservation in the historic district adjacent to Old Economy Village. An Architectural Review Board exists in Ambridge and an historic district zoning exists - has been enacted by the Borough of Ambridge.

We believe that a preservation strategy will enhance property values and expand visitation to Old Economy Village Many of you saw the movie, "Field of Dreams." And I think the phrase that everybody remembers from that movie that said, "If you build it, people will come."

Well, we've changed that a little bit and say, "If you preserve it, people will come." And it's very im­ portant to think about preservation as an economic develop­ ment strategy. And what we heard here from Mr. Nelson and the Revitalization Corporation, I think reinforces that approach.

Step number three is to cooperate with the Beaver County Tourist Promotion Agency and the state tourism office in the Department of Commerce. We're convinced that we can develop packages with the tourism industry to expand marketing for Old Economy Village. If any of you doubt that history can be an at­ traction, I think the people in the Disney Corporation have already done the research for us that says history can be an attraction. And the investment they're making in Virginia for Disney's America, I think suggests that history can be a 120

major reason for people to travel. Step number four: to construct an off-site visitors' orientation center. This is very important. In cooperation with the Borough of Ambndge, we will develop a facility to provide an introduction to Old Economy Village and to Ambndge and to at least begin to address the parking needs for buses and cars.

There is a 2.6 million dollar authorization in the capital budget for this project. And we have a preferred site identified in the borough. This orientation center will allow us to target increased visitation to Old Economy and to Ambndge. We believe the implementation of this strategy will result in a twofold increase in visitation in the immed­ iate future and many positive spinoff impacts for the entire community.

The Historical Museum Commission is not prin­ cipally an economic development agency. However, we clearly envision Old Ecomony Village playing a critical role in the new economy of Ambndge. We are not claiming that tourism or museum development will replace manufacturing. That's an important point to make. Tourism will not replace manufac­ turing . However, we are part of the diversification of the local economy. And that is the way Pennsylvania is going throughout the Commonwealth. What we are doing here is being 121

replicated in communit les throughout the Commonwealth. Investment in Old Economy is a good strategy for several reasons. First of all, we are a local small bus­ iness with 12 full time and 12 part time employees plus doz­ ens of volunteers. Into this venture we channel approximately $600,000 a year in Commonwealth funds for operations and rou­ tine maintenance.

In addition, the Harmony Associates have a bud­ get of approximately $175,000 in the past two years. Fur­ thermore, public spending on infrastructure at Old Economy is a sound investment because we will never relocate. We will never take Old Economy somewhere else. It will always be here. So every dollar that's invested here will stay here in Ambrldge.

Second, we are assuming a greater role as an educational resource especially with the growing emphasis of hands-on experiential learning. This, too, contributes to the economic potential of the region. Good educational op­ portunity is a part of economic development.

Finally, the presence of Old Economy Village in a community like Ambridge that is in the process of rebuild­ ing is a source of community pride, an intangible that gives the borough an identity. This is the home of a nationally important cultural asset.

I just would close by saying many people

I 12 2

compare Old Economy, that it could be another Williamsburg. Well, I think that may be overly ambitious. But many of you remember Bob Wilburn, who was formerly director of the Carnegie Institute and had been Secretary of Education and Secretary of the Budget. He now is the Director of Colonial Will lamsburg.

Well, before he became Director of Colonial Williamsburg, I had invited him out to see Old Economy Village. And we took a walk around the grounds and I said to him, "You know, Old Economy, Bob, has a lot more integrity than Colonial Williamsburg."

Well, I didn't know he was going to be ap­ pointed the Director of Colonial Williamsburg. I said, "We have more authenticity, we have more integrity. Colonial Williamsburg is a recreation." And he sat there and he nodded and he said, "Yes, you're right." And two weeks later his appointment was announced that he was going to be Di­ rector of Colonial Williamsburg.

I called him and I said, "Why didn't you tell me that you were " He said, "Well, I didn't want to burst your bubble." And he said, "And you're also right. Old Economy is - you have all the furnishings, you have all the objects. It is an intact three-dimensional site that really is quite unique." So we may not become another Colnial 12 3

Williamsburg. But we think we have tremendous potential. And we are happy to be a part of the overall revitalization of the community. Thank you CHATRMAN EVANS: Representative Melio?

REP. MELIO: Jim, how many acres was this LTV property? MR. PALMER: All told, it was, I would say probably - it's about seven and half miles of riverfront - maybe 2,000 acres, something like that. REP. MELIO: How many did you acquire? MR. PALMER: We've purchased 120. There's probably three or 400 that are in use with some of these other operations that I talked about. And then another party purchased the balance of the site when we purchased it. It was about 1,200. REP. MELIO: C J, Betters, how many acres? MR. PALMER: Twelve hundred acres. REP. MELIO: They're not a subsidiary of LTV, are they?

MR. PALMER: Not to my knowledge.

REP. MELIO: If they got that, it just really hurts the whole economy, I just wondered why they got it.

REP. WOZNIAK: The environmental impact, nobody will touch the land. REP. MELIO: The property that you own there, 124 what are you going to do with it? MR. PALMER: We intend to develop it as an industrial park site.

REP. MELIO: But you couldn't purchase any more than you did?

MR. PALMER: No, we just did not feel that we had the financial wherewithal to take on any more at that particular time. When we started these negotiations with LTV, I think our thought process was 100 acres is about a nice round number to get started with. We think we can financial­ ly manage that. If we are successful in doing what we do and additional property is available, then let's look at expand­ ing what we're doing. But we had to take on something ini­ tially that was manageable in scope financially.

REP. MELIO: And was the Governor's Response Team helpful to you in any way?

MR. PALMER: Very much so. This site has been a significant priority through the entire Department of Commerce in terms of financing anticipated through the com­ munities program, financing that's been provided through the program for the environmental assessments. This is a high priority for the program.

Frankly, that's one of the main reasons why we felt comfortable in doing it. We as a local organization clearly don't have the financial wherewithal to put the money 125

in to do everything that needs to be done over there. We have some money. We're probably going to spend about a mil­ lion dollars of our own resources in it. And we're certainly willing to borrow money, which we have a $1,000,000 loan by PIDA, which will need to be paid back through the sales.

But the finances of it require that the costs , be substantially underwritten through grant funds. Had the Commonwealth not made the commitment to that effort, we would not have been able to take it on. We would have just said, "We can't make any financial sense out of this. We can't do

it."

REP. MELIO: This other question I have maybe should have gone to Rebecca. Was it advantageous for Aliquippa to become a city rather than a borough? Is Rebecca here?

MR. PALMER- She would have to answer that or the borough manager. MS. BRADLEY: I think the answer to that would be, yes, from the standpoint that Aliquippa was given an opportunity by going to a city to use a two-tier tax struc­ ture to enable them to tax land at a different rate than buildings.

With the LTV site being vacant land, it was to our advantage to raise the millage rate on that land and lower the millage rate on the buildings. 12 6

CHAIRMAN EVANS: Representative Wozniak? REP. WOZNIAK: One thing, the Pennsylvania Historical Museum is taKing on more and more of a role now with the interest in our history. It's pretty challenging. Do you guys have a dollar bill factor of somebody coming from Johnstown, Pennsylvania and wants to spend the day with his family of four up here at Old Economy Village? Do you have a number in the 30,000 people that come through, how much does that equate to in local expenditures?

MR. GLASS: The industry -I've heard numbers that the average visitor spends - not in overnight visits - fifty or $60 in the community. For overnight visits that would include lodging, that would go up to $120, maybe $150, depending on room rates in the community. It really varies region to region.

We have not done a direct economic impact study on Old Economy. But I think that those are the numbers that I hear. Of the 30,000 visitors, a lot of those are school visits where the students might spend some money here at the gift shop, Maybe they'll spend some money in the community but not 50 or $60, although some kids, the way I see them spend money at museums, they'll run through the exhibits and stop at the gift shop and spend all their time in the gift shop .

But there is - I think that one of the more 127 i slippery figures that - I think the impact of visitors, how much visitors spend, I've seen wide ranging numbers on it.

And I think 50 or 60 is very realistic per day.

REP. WOZNIAK: The economic development people,

Pittsburgh is probably four or five miles down the road;

right? MR. PALMER: Fifteen. REP. WOZNIAK: You're a sleepy suburb of it. How much competition do you have because of Pittsburgh? Obviously, the city itself has its economic development efforts out there. They have a lot of economic revenue to

play ball with. You're competing directly with these people.

Can it be done or do we have ourselves caught in a little regional competition becaue you've got large quantities of riverfront that could be very viable in the future for any myriad of reasons? But you're still competing against the economic ability of the city that can use the efforts - I don't see Aliquippa or Ambridge having the abil­ ity to utilize. I ;]ust wonder how do you compete with your friends across the river?

MR. PALMER: Good question. Part of that is driven by where people choose to invest their money. It's not solely driven by where the Commonwealth is able to step in and do something. In certain instances like, I think, in the case we have in Aliquippa, that clearly needs to be a 128

publicly driven effort to get that effort off the ground. But the caes here in Ambridge were driven ini­ tially through private investment. I can remember back in the early 80s when USX, then USSteel, closed the American Bridge works and they were approached by public sector types that said, "Would you consider selling this so that it can be a publicly developed industrial park?" And they said, "No, we're going to develop it ourselves as an industrial park."

So I think that private investment decisions to some degree drive that. And I think that's what happened

here with the ability to move goods at the Ambridge site through river and water and rail and up here at the former Armco site with a good real estate developer in a good build­ ing who knew the real estate business and was able to get it at a good price. So I think that's part of what drives competi­ tion. Clearly if we were in a situation where it had to be totally public-sector driven and we had to compete not only with the city but with Allegheny County, which is probably a bigger competitor for this region than the city is just by the availability of land, I don't know that we could win that battle. But what we have to try to do is do things here that try to induce private investors.

REP. WOZNIAK: That leads to my last question. How far away are we from the green fields, the suburbs that 129 have pristine lands that you want to put the shopping malls on and all that type of thing?

MR. PALMER: How far?

REP. WOZNIAK: Yes. MR. PALMER: Five minutes. REP. WOZNIAK: Five minutes? MR. PALMER: Seven minutes.

REP. WOZNIAK: That's where your industrial parks are going. Your malls are going there, the develop­ ments are all going into the green fields at the expense of, I guess, Aliquippa, third class city designation. MR. PALMER: Again, going back to some of the comments I made on trying to develop a variety of assets; the first real estate project I mentioned that we did - we did two before we took on this Aliquippa project. And the first one that we did was on the Beaver Valley Expressway on Route 60 at the Hopewell exit, which is the first exit in Beaver County after you get past the air­ port. And back in the early 80's there was a lot of growth occurring in the airport area along the Parkway West. Beaver County wasn't able to capitalize on any of that. We purchased a farm property at the interchange area, developed it as an industrial park site to try to capi­ talize on some of the manufacturing that was being driven out of the Parkway West corridor because of the prices. It was 130

such a hot real estate area. It was turning to office build­

ings as opposed to manufacturers. And we did a nice little project over there. And it's very close. I guess the point that I want to make, though, is that I don't know that we can look at these things as mutually exclusive. I think that there needs to be some balance to how we do it. We want to develop the industrial properties. But certain types of industries clearly don't want to be in heavy industrial areas nor do they need to be. So there needs to be a balance to that. I don't want to be interpreted that these are mutually exclu­ sive things.

REP. WOZNIAK: Okay, that leads me to one more. Should it be private business decision making or should the state step in and create necessary incentives? Not necessar­ ily disincentives, stay away from green fields; you can't do that, but incentives to come into abandoned industrial sites and say, "Here is what we're going to do to eliminate some of the environmental problems," that somebody can come in?

MR. PALMER: I think that clearly has to be the case. You're exactly right. One of the issues in developing industrial sites you've just pointed out is if I am in a bus­ iness where I have a choice, certain businesses - like I say, what if you have limited access four-lane highways? But certain others could be on a farm, they could be across the 131

river in Aliquippa.

If they have a choice, as you know through this green field stuff, what's going around now, what's happening is they're going to the green field site because they don't have to deal - sometimes it's not even a dollar and cents issue, today dollar and cents issue. It's an unknown liabil­ ity issue that somewhere down the road that says, "Why should I take that on? I'll go buy this piece of farm land and do it here where I feel much safer."

So, yes, that kind of incentive clearly needs to be put in place to induce people to spend money in the industrial area.

REP. WOZNIAK: Thank you, Mr. Palmer. CHAIRMAN EVANS: Representative Brown?

REP. BROWN: This is for Jim. When you were talking about the environmental clean up, do you have any idea of the estimated cost?

MR. PALMER: For our 120 acres, we're hoping to come in somewhere around $2,000,000. REP. BROWN: We have a clean up program in Crawford County which started out at approximately three million and it's up to 13 now. There's several proposals and there's no decision on it.

MR. PALMER: Well, that estimate, our environ­ mental assessments told us that it's probably about a million 132

or a million.two. And we used a 100 percent contingency fac­ tor because it's an unknown. REP. BROWN: How long has the enterprise been in existence?

MR. PALMER: 1987, '86. REP. LAUGHLIN: I think it was 1986. REP. BROWN: Have you been able to attract in­ dustry from the city of Pittsburgh? Or like if they're expanding, can you get them to look at this area? MR. PALMER: I don't particularly like to at­ tract industries from any other piece of geography. We're not here to poach. What I want to put in place through the programs that the Commonwealth offers, as I talked about before, is a variety of these assets. You know, we have buildings, we have leased space, we have vacant space. And if you are interested in relocating, then I'd like to have these assets in place to accommodate you. I'm not necessarily interested, though, in going to somebody and saying, "Hey, you're here, why don't you come down and see us?" That has to happen as part of their - you know, hopefully in theory how it works is that they're growing and they're expanding and they need more room or something to expand. Therefore, if they do it in this piece of geography as opposed to this, the region gains 133 because there's growth there. I danced around that one, didn't I? REP. BROWN: Do you notice much competition between Ambridge and Aliquippa? MR. PALMER: Outside of the football field, probably not. You know, I think really that they offer different - they're different and they just offer different opportunities.

REP. BROWN: Bob, a couple of questions for you; we have a program in Meadville and Titusville, downtown revitalization. Have you tried or do you have a signage program? Do you know what I'm talking about?

MR. NELSON: The signs, the building signs? REP. BROWN: Yes, specific signs or- MR. NELSON: Yes; what we've tried to accom­ plish with our downtown signage is make it flush against the building, remove the overhangs, and create the effect of the old days. We do have a format that we try to follow as far as downtown signage goes. And anyone that applies for our program must adhere to that.

And some business owners want their sign to overhang and they do the project anyway and we don't give them any money. So it sort of forces them to adhere to what we're trying to accomplish, although everyone isn't adhering to it. 134

REP. BROWN: Other than the signs, what are some of the other strings and criteria in order to get the grants?

MR. NELSON: Certain colors, earth tone colors. We're trying to keep it - when you're driving down our main downtown section, we try to keep the continuity with certain colors. We're very particular on the color issue just be­ cause you don't want to see this building that was funded by the Commonwealth in a way and all of a sudden it looks like it just doesn't fit in. So we do ^ry to press that issue. The signs, also overhangs; we try to eliminate the overhangs of the sidewalk. We do allow awnings but we're trying - any attached overhang, we're trying to have removed from the building itself and maybe going with an awning and also try to position the door in such a way that it fits right in. REP. BROWN: Now, Bob, you mentioned colors. Do you have particular colors that you MR. NELSON: Greens, browns, tans; we're trying to stay in that color, more of earth colors. We try to stay away from anything like orange or anything that might be too noticeable. REP. BROWN: Do you have a downtown theme? MR. NELSON: Well, I guess we should have a downtown theme. And the reason why - I guess we really 135 don't1 have like a mission statement like we should. And the reason for that is because when I took over being president in 1991, it just seemed like the downtown was so large and I was worried how are we even going to achieve any type of goals with just limited funds. So our theme is, if you will, is a clean up of our buildings. When you just paint the win- dowsills, that's fitting into the scheme of things. Right now, we're just trying to get everyone to participate. And it's fantastic to see so many businesses take action; "Let's fix our buildings up. Now that we know it's going to stand, let's invest." We're seeing a lot of that. They're trying to fit in our scheme of things. REP. BROWN: Have you tried something downtown as far as catering to a particular group or anything like that, that you try to attract people downtown?

MR. NELSON: What we're trying to do is work hand in hand with our local Chamber of Commerce to do that. I also sit on the Board and the Chamber of Commerce. And what we're trying to do, the Chamber has an entity known as the retail division. They try to attract business like sidewalk sales. We're doing that sort of thing.

As far as a revitalization program, it's just to try to keep the town as clean as possible, although we're trying right now to develop some type of information kiosk. We're very much eager for suggestions on that. We're looking 13 6

into that. REP. BROWN: Do you have a farmers' market or flea market?

MR. NELSON: Yes, we have a farmers' market, not in our downtown. But it's directly behind the downtown, actually along Route 65. So we're advertising some with that to try to market the farmers' market in association with the Chamber of Commerce.

We do have Nationality Days in our downtown which attracts 300,000 people in a three or four-day period. It's probably one of the most comprehensive activities we have in Ambridge.

REP. BROWN: Brent, do you have any idea how much funding you're going to get through Key-93? MR. GLASS: Yes; through the bond issue, it will be $8,000,000 over three years. And through the real estate transfer tax, which starts in July of '95 there will be - it's estimated around three and a half million to four million a year for the Historical and Museum Commission.

REP. BROWN: We have the Oil Creek Regional Plan we're working on because of the role the oil industry played in the region. Is there any plan, any regional type 'plan here?

MR. GLASS: There's a Heritage Park, Steel Heritage Park based on the Mon Valley and I think that it 137

includes - Ellen might be able to help me, but I know it

includes

MS. RIGHT: It includes a six-county area; Beaver County, Allegheny, Washington, Westmoreland, Fayette, and Armstrong Counties.

REP. BROWN: What type of activities MS. RIGHT: We're on the Governor's action planning phase right now. A couple of consultants have been hired. They've completed the early feasibility studies and certainly Beaver County is one of the areas that has been looked at as an entryway or portal area.

There's also one up in, I think, Allegheny County, up in Tarentum or New Rensmgton. However, the main focal pom1- will be in the Homestead area and then going on down to Braddock. Those are kind of the entry points coming into the program. But just in the last couple of weeks the con­ sultant team has been put together to actually develop and manage the action plan. And that will be ongoing for the next year or year and a half.

REP. BROWN: And one other quick question; do you have many overnight visits for this area because you're so close to Pittsburgh or does that

MR. GLASS: I don't think that we would - Ray Shepherd, our site administrator might be able to answer that 138

better. MR. SHEPHERD: We would have a lot more if we had a motel or something closer by than what we do have. I would think that one person in 10 who comes in would in one way or another have a place to stay overnight. That's one of the things I think we can tell even Pittsburgh, "We are a resource for you, the hotels and restaurants or whatever. We can have an extra day here in Beaver County." That's another way of getting things. But we need to have a^

REP. BROWN: Do you have many bed and break­ fasts?

MR. SHEPHERD: Not in this town, no. MR. GLASS: One of the undeveloped, I think, strategies for the tourism industry is packaging of letting people know because people tend to be traveling in smaller chunks of time, now. They tend to be traveling in three or four-day periods of time rather than one week or two week vacations. And they're looking for a package where you will know where to stay, where to shop, where to visit that's of cultural interest. And the business sector and the cultural sector, I don't think have done as much as we could in put­ ting those packages together.

Some of our facilities - we have hotels or motels that actually sell discount tickets to our sites. At the registration desk we'll give them away free as premiums 139 for someone who's staying at a motel. And we'd like to do more of that with the industry, the travel industry. We could do that with shops and with other people in the busi­ ness sector .

REP. BROWN: Thank you. CHAIRMAN EVANS: Representative Farmer7

REP. FARMER: I just have kind of a follow up to Teresa's question. The 100 or 120 acres you say MR. PALMER: One hundred twenty. REP. FARMER: Were you able to kind of be selective and take the least offensive nook and ctranny as far as the site was concerned with respect to clean up costs? MR. PALMER: I think that REP. FARMER: And I won't tell if you did. MR. PALMER: I'm trying to figure out how to phrase this question. It was indicated to us by LTV that the acreage - they in essence proposed that we buy this particu­ lar acreage based on their feeling that we were less likely to find serious problems there. So it wasn't so much that we said, "Here's where we want to be." It was a combination of factors; one, this was where they wanted to sell because at that point, as they were selling, they wanted to move down river and these peices fit in with that scheme; and, two, they seemed to feel that we would potentially find fewer problems than if we went 14 0

somewhere else on the balance of the acres.

CHAIRMAN EVANS: Representative Laughlin? REP. LAUGHLIN: Yes; they've answered most of my questions. I don't have too much to say except that I do want to say that Jim Palmer has done an outstanding 30b. He's Director of the Beaver County Corporation for Economic Development.

MR. PALMER: Thank you. REP. LAUGHLIN: But I guess it started - when

did you say it started? MR. PALMER: 1987. REP. LAUGHLIN: Okay, '87; from '87 until, I

think it was '91, you were getting $1,000,000 a year from the

state? MR. PALMER: Our special appropriations went

for five years, I believe, at $1,000,000. REP. LAUGHLIN: Right. MR. PALMER: And I think it's subsequently been reduced to about $250,000 a year since then. REP. LAUGHLIN: And we had to fight for that to get that. Remember that?

MR. PALMER: Well, we're very appreciative of I that effort you've made. When this program first started

back in 1986, it was initially billed as a three-year program. And we were supposed to break on our own from there. And the 141

additional money, certainly I know you folks have fought hard for it. And it's very much appreciated. REP. LAUGHLIN: Well, that's because you've done an outstanding job. We recognize that. MR. PALMER: Thank you.

REP. LAUGHLIN: And I do want to say that we do have that prime piece of property at LTV. We have the river and the rails and the highway. So I think that it's obvious that Allegheny County seems to have it over us. In fact, it was just mentioned here that they have the hotels and restau­ rants which we don't have here.

But monies, hopefully, that are going to be released, we know that Old Economy is a gold mine here. We could have people coming in here, the tours coming in here. And with that kind of economic development, we can have hotels and restaurants in our area. And that's what I'm looking forward to. And I hope that we're going to reach our goals, hopefully, in this next budget. So we're going to be talking to you about that, too.

But we desperately need a visitors' center. As you can see when you come in here, there's no place to park, only on the streets. And the kind of activities and festi­ vals that are going on here throughout the year, thousands of people come here. And there's no place to park. They come from all over the United States. We desperately need some 14 2 money released for that.

And, hopefully, with the revitalization of

Ambridge, we're going to see that. And I hope that if there's anything we can do to help Allqulppa - and I'm sure that sooner or later there is going to be business coming into that property.

C J. Betters, you mentioned had bought some property there. He's a life long resident of Aliquippa. He was born and raised there. A big family was raised there.

And he wants to help the area and he wants to help Aliquippa.

And that's the main reason why he bought the property. And he's looking forward to putting something in that area. He spoke of several things that he wants. And, hopefully, he's going to reach his goal.

Just the Strategy 21 in Allegheny County, we have the big program, the Beaver initiative. And with that program, we're hoping that we're going to bring economic de­ velopment to all of Beaver County.

And I wanted to ask Bob something. The grant that you received for revitalization of the store fronts, was that federal funding?

MR. NELSON: No, I believe that's state funding.

REP. LAUGHLIN: State funding?

MR. NELSON: Yes, 40,000 yearly, we get.

MR. PALMER: Community Economic Development. 14 3

It's federal funding. MR. NELSON: CED; we get about 40,000 for facades. And in the past we've been getting 50,000 for streetscaping. REP. LAUGHLIN: And that's all federal funding? MR. NELSON: Federal funding; so we utilize it

REP. LAUGHLIN: Do you apply every year for that? MR. NELSON: Yes, we do. It's coming up here in the next couple of months. We'll be applying for next year's. We try to utilize it the best we can. We're still concentrating on our sidewalk program. Hopefully, eventually we'll obtain our goal and open it up, really, town-wide and just show people that Ambridge is still a place to do busi­ ness, really, that's our goal.

REP. LAUGHLIN: Well, I wish everyone could be here to see our business district in Ambridge. They have done a fantastic job rehabilitating the store fronts. And I hope everyone is going to take the time in May to come to our Nationality Days. It's a fantastic affair, all kinds of food there. And we have people from everywhere coming in. It must be good if they're coming in.

Thank you.

CHAIRMAN EVANS: I'd like to thank all of you 144 for presenting your testimony today. You certainly have helped both committees have a greater understanding of what we need to do in the area of economic development. Thank you very much.

I'd like to thank all of the members who didn't allow this little bit of snow to stop you. I said to Representative Laughlin, "It's not always like this, is it?" And she tells me in the springtime, it's a lot different.

But I'd like to thank all of you for coming in. And I'd also like to thank Representative Susan Laughlin. I've been chairman for three years. And I can tell you back in 1991 when the Governor had originally recommended that we not fund economic development - Representative Laughlin sits one seat away from me. And each day when I came on the floor she would say to me how important it was for getting that funding to this particular community.

Also, there's something else that we've tried to do or, at least I've tried to do as chairman, is to take the committee outside of Harrisburg. And the reason we come out is just to see exactly how state money is being expended and what recommendations you can make to us regarding how this process works and what we can do to help you.

We know we need to make changes in Harrisburg. All our members are prepared to try to make the changes. And we've had the opportunity to hear any ideas or suggestions 14 5 that you may have to present to us that could be helpful. It's not going to be easy. These problems didn't happen overnight. What's taking place in Ambridge or Aliquippa or even in Pennsylvania in general did not happen overnight.

There's a gentleman who's superintendent of the Farrell School District from Mercer County. He said that un­ fortunately there's going to have to be some darkness before there's some sunlight. Unfortunately, there's an awful lot of darkness particularly in this part of Pennsylvania.

That's sometimes very difficult to try to ex­ plain to people. They don't know exactly what is happening to their commun1ty. Worldwide, the economy is changing. We are six years away from the year 2000 and we have to - Brent, you did say something earlier. You're right, you couldn't pick up and move to Mississippi.

MR. GLASS: That's right. CHAIRMAN EVANS: Nor could you move to Japan. Old Economy buildings are here. We should preserve them. MR. GLASS: Right. CHAIRMAN EVANS: You just can't move them.

Again, I want to thank all of you and I want to thank DCA. You've been very cooperative, and Rebecca Bradley, for your time.

Again, this meeting is concluded. Thank you 14 5 very much. (Whereupon, at 3:20 p.m., the hearing recessed.)

I hereby certify that the evidence and proceedings are contained fully and accurately in the notes taken by me during the hearing of the within cause, and that this is a true and correct transcript of the same.

Qfrnjitjyl ifLt*M*™J JANET A. JACKSON, Court Reporter

The foregoing certification of this transcript does not apply to any reproduction of the same by any means unless under the direct control and/or supervision of the certifying reporter.

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