Good afternoon Mr. Chairman and committee members. My name is Dan Neff and I serve as Executive Director of the Ohio Mid-Eastern Governments Association (OMEGA). OMEGA is an Appalachian Regional Commission (ARC) supported Local Development District (LDD) which serves a 10-county region of Appalachia in eastern Ohio. In that role, I am also representing today two important partners who support and work with ARC: the Development District Association of Appalachia and the National Association of Development Organizations.

Dan Neff, Executive Director of the Ohio Mid-Eastern Governments Association

I appreciate the opportunity to testify before the Committee on Transportation and Infrastructure's Subcommittee on Economic Development, Public Buildings and Emergency Management and offer proponent testimony concerning the reauthorization of ARC. It is my privilege to discuss with you today the important role of ARC in its efforts to improve the quality of life in one of our nation's most economically disadvantaged and socially distressed regions. Indeed, the history of our country's Appalachian region (which includes parts of 12 states and all of West Virginia) is replete with examples of poverty that denotes an area which is isolated and out of the mainstream of America's system of commerce. As a result, many Appalachians live in substandard housing, have inadequate health care, lack access to quality education and training programs, and have minimal opportunities for employment that provide wages to adequately support their families. It is my belief that we, as citizens of this great nation, have a moral obligation to respond to these issues of social and economic distress that afflict many residents of our country (in Appalachia and elsewhere) not because of what they have done but because of where they live. ARC, in my opinion, has proven that it is a sound and effective model of program implementation and, with the necessary resources, is successful in meeting these challenges that exist in the Appalachian region.

I have been involved with ARC in various capacities for almost 17 years and believe that this experience provides me with some unique insight as to the work and functioning of this program. I began my career as an entry-level Planner with OMEGA after having an internship there as a student at Muskingum College. Later, I moved into the Ohio Governor's Office of Appalachia; first as the Program Manager and then as Director of the office and Ohio's Alternate to ARC for then Governor George Voinovich. After serving four years in that capacity, I then had the opportunity to return "home" and accepted the position of Executive Director at OMEGA in 1998.

Having been at the state level, I have seen how the states must work together with each other and the federal government (represented by the Federal Co-Chairman and commission staff) to craft policy and chart a programmatic direction for ARC. While not always pretty, the process provides for an effective manner in which sound decision-making can take place for the betterment of the region. As the Executive Director of a LDD, I have also been actively involved with the vital "grassroots" end of ARC's intergovernmental partnership and the important role that local officials play in project development and the prioritization of activities.

In essence, LDDs serve as local governments' representative to ARC. LDDs are generally governed by a board of local elected officials and other appointed non-elected individuals representing various economic and social concerns. These organizations were established through the Appalachian Development Act of 1965 as the "local partner" in the ARC intergovernmental model. At present, there are 71 LDDs covering 406 counties within the 196,000 square miles that make up the 13-state Appalachian region. With administrative financial support from ARC, each LDD serves as a "convener" of local governments and organizations within their area. Each organization seeks to "assess, plan, and facilitate action within their locality in efforts aimed toward achieving the quality of life enhancement goals of the ARC."

Of course, it is my fervent belief that the ARC program model has been and continues to be an extremely effective structure from which to provide services and support to local governments and residents. The "bottom up" process of ARC funding which emphasizes state and local decision making and project prioritization provides for a balanced process that limits federal control and bureaucracy. This, coupled with the wide array of eligible activities that can receive assistance truly does make it an intergovernmental model that has not only proven to be extremely successful but I believe is worthy of emulation in other geographic areas of distress in the country. (It is particularly gratifying that Congress modeled the new Delta Regional Authority mostly on the ARC structure.)

While the program's funding levels have never been very large (Ohio's non-highway ARC funding has averaged approximately between $4 to $4.5 million per year during the last decade); it has, nonetheless, been able to leverage significant amounts of other federal, state, local and private sector support. As a point of policy, ARC requires some level of matching funds in virtually all of the projects in which it is involved. (ARC can fund up to 80% of a project in a Distressed County and no more than 50% of a project in a Transitional County. Ohio presently has 9 Distressed Counties and 19 Transitional Counties. Ohio's remaining Appalachian county - Clermont - is defined as a Competitive County and therefore eligible for no more than 30% funding on any given project.) This requirement has enabled a little bit of ARC money to go a long way with the ARC funds often being the stimulus that allows a project to move forward and be completed.

In addition, Ohio has taken funding for Appalachia a step further by providing state dollars to match ARC Area Development funds received for non-highway projects. As a result, through the strong leadership of Governor Bob Taft, Ohio brought an additional $4.3 million to the table for project related activities during state FY '01. The Governor's Office of Appalachia (GOA) in cooperation with the Ohio Department of Development and Ohio's 3 LDDs (Buckeye Hills-Hocking Valley Regional Development District in Marietta, Ohio Valley Regional Development Commission in Waverly and OMEGA) agreed to adhere to ARC guidelines in making project determinations. This was done because we recognized the strength, value and equitable nature of the ARC funding process. It is also worth noting that even in a difficult funding climate the state of Ohio's recently adopted biennial operating budget included this additional Appalachian support for a second year with no cuts in funding per the recommendation of Governor Taft.

One of ARC's strongest features is the flexibility and discretion that its regulations provide each of the 13 Appalachian states and their governor in developing priorities and determining how ARC funding will actually be spent. Ohio, I believe has one of the better systems in place to make those decisions. Through the direction of GOA and its coordination with the LDDs the spending of the vast majority of Ohio's ARC allocation (as well as the state funding) is determined through decision-making at the local level. This is accomplished through each LDD's Board of Directors which (as previously mentioned) is primarily made up of local elected officials. While the process varies with each LDD, the Board of Directors ultimately prioritizes its projects and submits them to GOA. At that point the LDDs meet with GOA to determine the state's project funding priorities for a given federal fiscal year.

This structure helps to "depoliticize" the project selection process and makes it more objective in nature. It further supports the logic that local officials know best as to what their needs and priorities are. With limited funding from ARC and other federal and state sources, the process also takes advantage of LDD staff expertise in helping to coordinate the overall funding structure of any given project. As a result, those projects which have the most funding "pieces" in place and have been identified as priority projects for ARC consideration can be moved ahead in a timely manner.

It is also important to note that each LDD has its own particular role and function within the area that it serves. In Ohio our 3 LDDs are involved in numerous activities that seek to address economic and social concerns that impact the counties and communities that make up their district. These activities include the administration of Revolving Loan Fund (RLF) programs for small to medium sized businesses. In Appalachian Ohio, ARC funds, coupled with those from the Economic Development Administration, have resulted in almost 150 loans totaling over $8.3 million in RLF program investment. These funds have leveraged significant private investment (in OMEGA's case this is a ratio of approximately $5.60 in private funds for every $1.00 in public investment) which has resulted in the creation/retention of almost 5300 jobs in a period of 14 years.

Ohio's LDDs are also involved in international trade activities that seek to encourage business and industry in the region to become more involved with world markets. This not only involves direct counseling but also includes participation in various trade events and activities that help to benefit local companies. Each of the 3 districts have been designated an International Trade Assistance Center by Ohio's Small Business Development Center (SBDC) program. ARC funding has played a pivotal role in the start-up and operation of each program in Ohio and throughout much of Appalachia.

Other activities that involve one or more of Ohio's LDDs include: administration of the Ohio Public Works Commission program, administration of an Area Agency on Aging program, participation in SBDC counseling for those interested in starting their own business, grantsmanship training and counseling for public agencies and non-profit organizations, serving as a census and demographic affiliate for the Ohio Department of Development and providing GIS services to member governments and other interested parties. As can be seen, the LDDs play a varied but important role in each of the areas that they serve in Ohio Appalachia.

This is true throughout the 13-state Appalachian region where each of the 71 LDDs is involved in a wide array of activities. With guidance and direction from their Board of Directors, each LDD seeks to fill gaps and voids in support and services that many of our communities in Appalachia need but simply do not have the financial or human capacity to accomplish. Attached as EXHIBIT A is a brochure from the Development District Association of Appalachia (DDAA) which highlights the varied functions and roles of the LDDs in their efforts to serve local governments and residents from throughout Appalachia. (The DDAA is a membership organization of LDDs that seeks to strengthen districts and their member governments through training opportunities and technical assistance services. It serves as a facilitator for districts with ARC and state alternates on various initiatives and activities. The DDAA also provides leadership and advocacy for ARC's effective intergovernmental model.)

It is my hope that this information has helped to shed some light on the important role that ARC continues to play in sustaining a unique but most needed local, state and federal partnership that means so much to many areas of this nation's Appalachian region. As you may recall when ARC reauthorization legislation was originally enacted 3 years ago it marked the first time that ARC had such Congressional support since the 1970s. It is my belief that this support has helped to legitimize and strengthen the program and therefore make it more responsive to the needs of the region.

I am pleased to represent NADO and the DDAA and offer our support to this reauthorization legislation for ARC. The present legislation is solid and needs little modification although I would offer the following items as ways that Congress could make ARC more effective:

• Provide an additional $75 million ($15 million a year for 5 years) to ARC for an Information Technology Initiative. This would help Appalachian communities and businesses to better bridge the "digital divide" through appropriate planning and development activities.

• Allow Appalachian states the opportunity to administer ARC funded projects where no federal basic agency is available or involved with the project. (This could be done in a manner similar to HUD's Community Development Block Grant program in which states have administrative oversight of the funds allocated to them in non-entitlement areas.)

• Return LDD administrative support provide by ARC back to a 75-25% ratio as opposed to the 50-50% ratio that was adopted with ARC's present reauthorization legislation. This would not provide LDDs with any additional ARC funds but would enable the districts to use their limited matching funds for other activities.

• Provide fiscal incentives for states to target more of their funds for Appalachian counties. This would increase project dollars for the Appalachian region and encourage state governments to share more of the financial burden for project development.

• Adopt a 5-year period for ARC reauthorization, similar to the current authorization length for the Economic Development Administration.

In closing, I would like to reiterate my strong support for ARC and its model for service delivery. It is clear that the administration of the ARC program by the agency's staff and the Federal Co-Chairman's office is not conducted in a manner that many would consider to be "typical Washington bureaucracy." ARC has shown that it is a program that seeks to simplify rather to complicate. It does not try to operate under a rigid or lengthy review and approval process that in many other agencies tend to frustrate and confuse the applicant. Indeed, perhaps the most important thing that I can add in this regard is that ultimately ARC operates with a programmatic mindset that seeks to work with the states in order to get their priorities funded.

Frankly, I think the question before Congress is not about reauthorization; it is about funding ARC at a level that allows it to complete its work in bringing Appalachia to a standard of living that we, as Americans, can be proud of. ARC has proven that it is an intergovernmental model of service delivery that works and a model that is worth replicating in other parts of the nation where there is severe economic distress. If the necessary resources are provided, I belief that there is a day in the foreseeable future in which we can "lock the doors and turn out the lights" of the ARC program and the citizens of this nation can say a "job well done." I look forward to that day.

Thank you.

Local development districts bring individuals, businesses, and communities together to develop and implement projects that fulfill the Appalachian Regional Commission's five core goals:

1. Developing a knowledgeable and skilled population.
2. Strengthening the region's physical infrastructure.
3. Building local and regional capacity.
4. Creating a dynamic economic base.
5. Fostering healthy people.

The following are examples of outstanding projects developed and implemented by local development districts belonging to both the Development District Association of Appalachia (DDAA) and the National Association of Development Organizations (NADO).

Coosa Valley Regional Development Center, P.O. Box 1793, Rome, Georgia 30162-1793
Jim Layton, Executive Director w (706) 295-6485

Georgia's Coosa Valley RDC contains communities with high rates of poverty, teen pregnancy, school failure, illiteracy and unemployment. With help from ARC, the RDC and five local communities have begun an Early Childhood Initiative. Working with local agencies, the RDC has identified five services that can bring support to young families: birth contact, intensive home visitation, developmental childcare, parenting education, and adult job training and education. Since July 2000, 416 families with newborns have been contacted, 86 parents have enrolled in GED classes, and 91 children have received developmental childcare.

Cumberland Valley Area Development District, P.O. Box 1740, London, Kentucky 40743
John L. Bruner, Executive Director w (606) 864-7391

In eastern Kentucky, ARC along with state and federal agencies and local development districts, is helping promote a regional project, Personal Responsibility in a Clean Environment (PRIDE). Initiated by Congressman Harold Rogers, PRIDE is a comprehensive approach to cleaning up local communities. By participating in PRIDE, the Cumberland Valley Area Development District (CVADD) has become a leader in Kentucky's fight against two long-standing problems - illegal dumping and inadequate residential sewage disposal into fresh water sources through "straight pipes."

With ARC contributions, CVADD has used GIS technology to map straight pipe and illegal dumpsites in its 8-county region. The data collected is also used to assist communities with more efficient long term planning for sewer service extensions. ARC funds are also used to provide no-interest loans to homeowners willing to replace straight pipes with cleaner, safer septic systems. Larger projects, including the installation of a $1 million sewer system in Magoffin County, Kentucky also rely on ARC funds.

East Alabama RP&DC, P.O. Box 2186, Anniston, Alabama 36202
Bill Curtis, Executive Director w (267) 237-6741

East Alabama RP & DC has evaluated Appalachian seniors' needs to lessen the costs associated with drug prescriptions, and in response has conceived the "Prescription DrugAssist Program." The program is a well-administered cooperative effort between the LDD staff, clients, physicians and pharmacists, social service agencies and pharmaceutical companies. DrugAssist addresses both long-term and short-term prescription needs of uninsured and low-income seniors by helping access pharmaceutical companies' assistance programs and synchronizing community inter-agency resources. During its first six months of operation, DrugAssist served approximately 400 clients with 2000 prescriptions

Land-of-Sky Regional 25 Heritage Drive Council Asheville, NC 28806 Robert Shepherd Executive Director (828) 251-6622

Southwestern NC PDC P.O. Drawer 850 Bryson City, NC 28713 Bill Gibson Executive Director (828) 488-9211

In western North Carolina, two local development districts are cooperating with ARC and two community colleges on "Appalachian Access," a 23-county broad-based public/private initiative to formally aggregate bandwidth demand via a large regional cooperative and several smaller sub-regional cooperatives. Currently, companies in this rural region must pay more than their urban counterparts to access the information superhighway.

Appalachian Access intends to present private providers with a provocative business case, thereby inducing them to install POPs (Points of Presence) in the region with access to high-speed bandwidth at competitive prices. Appalachian Access is conducting the necessary research to determine the amount of current and potential future demand for services. Through e-business college classes, Appalachian Access is both creating more demand and introducing high-wage, high-skill jobs to an economy traditionally based on textiles and agriculture.

Mid-Ohio Valley Regional Council, P.O. Box 247, Parkersburg, West Virginia 26102
James Mylott, Executive Director w (304) 422-4993

MOVRC operates one of the most successful revolving loan funds in West Virginia. Serving Calhoun, Roane, Wirt and Ritchie counties, where poverty rates average from 20% to 32% and unemployment rates range from 14% to 22%. The fund provides local entrepreneurs with access to low interest loans and assistance with understanding the financial implications of operating a new business venture. MOVRC was able to equally match an initial ARC grant of $500,000. The $1 million fund was exhausted after nine successful loans in the fund's first 12 months. These nine loans leveraged an additional $500,530 in llocal funds and helped save 62 jobs. A second installment of $500,000 from ARC is currently allowing MOVRC to expand its loan activities and to inform more of the region's citizens and businesses about loan fund opportunities.

New River Valley PDC, 6580 Valley Center Drive, Radford, Virginia 24141
David W. Rundgren, Executive Director w (540) 639-9313

The New River Valley PDC has supported the efforts of the New River Valley Economic Development Alliance in obtaining "User Fee Airport/Port of Entry" and "Foreign Trade Zone" designations for the New River Valley Airport in Dublin, Virginia. These designations will bring area manufacturers greater access to international markets, increased convenience in processing imported merchandise and reduced costs for importing manufacturing components. PDC staff served on the Alliance's Foreign Trade Zone Alliance Committee and provided technical assistance in the development of the Foreign Trade Zone goals, action items and budget. Since March 2000, the Port of Entry has logged over 900 entries representing more than $85 million in imported merchandise.

North Georgia RDC, 503 West Waugh Street, Dalton, Georgia 30720
Barry Tarter, Executive Director w (706) 272-2300

North Georgia RDC in Dalton, Georgia has cooperated with ARC to provide basic water and sewer infrastructure so that the area's existing industries, including a poultry operation and a bath textiles manufacturer, could expand. ARC's contribution of $300,000 enabled the Ellijay-Gilmer County Water and Sewage Authority to increase the gallons treated per day from 4.0 million to 5.5 million, while improving the facility's water treatment capabilities. Encouraged by the RDC, the two companies also contributed a combined $2 million to the effort. As a direct result of the system improvements, 600 jobs were retained and an estimated 120 new jobs have been created.

Ohio Mid-Eastern Governments Association, P.O. Box 130, Cambridge, Ohio 43725
Daniel Neff, Executive Director w (740) 439-4471

Thousands of low-income working families in southern Ohio lack dental insurance coverage or access to affordable dental care. With support from ARC and OEMGA, local health and human services agencies have joined forces to expand dental services for low-income residents in a five-county area of Appalachian Ohio, including three economically distressed counties. Based in Marietta, the clinic handled well over 4,000 visits from low-income patients last year.

Region VII PDC, 4 West Main Street, Buckhannon, West Virginia 26201
Rosemary Wagner, Executive Director w (304) 472-6564

Region VII PDC has worked with the Randolph County Development Authority and ARC to enhance the resources provided by the West Virginia Wood Technology Center in Elkins, West Virginia. The Center provides workforce development and technical support necessary to expand and update the regional wood products industry. Training programs in computer graphics, CAD-CAM software, modern sawmill and lumber drying operations are available to citizens of seven counties.

The Center's students have diverse backgrounds and goals. Some are employees of local companies, looking to improve their ability to perform a specific job. Others are entrepreneurs, struggling to learn the skills required to operate computerized woodworking equipment. Some are unemployed, and realize that their future marketability directly correlates to their understanding of current technology in an increasingly global marketplace. All the students are seeking to enhance their skills in order to find a better job, and all come away with the ability to operate, maintain, troubleshoot and repair modern production woodworking machinery.

SEDA-COG, RR1, Box 372, Lewisburg, Pennsylvania 17837
Dennis Robinson, Executive Director w (570) 524-4491

Some ARC grants allow development districts to evaluate projects before implementing lengthy and complex business plans. SEDA-COG, located in central Pennsylvania, received a $25,000 ARC grant in 1984 to conduct a feasibility study of its Rail Acquisition Project. Area businesses realized that economic viability largely relied on control of access to adequate transportation for industrial products. The initial ARC investment helped establish one of the most successful and nationally recognized economic development projects, the creation of SEDA-COG's Joint Rail Authority. Since 1984, the Authority has purchased 192 miles of track line and has become the second largest short line railroad in the Commonwealth of Pennsylvania. It covers nine counties, serves 64 shippers, and has helped area businesses retain over 3,000 jobs, while creating an estimated 2,500 new jobs at expanded and new facilities along the rail lines. Currently, the Authority is constructing a new rail line, which will serve the region's important limestone industry.

Southeast Tennessee Development District, P.O. Box 4757, Chattanooga, Tennessee 37405
Joe Guthrie, Executive Director w (423) 266-5781

Appalachian McMinn County faced a myriad of financial and planning problems in the early 1980s, including an overcrowded jail, an overflowing landfill, and deficient public schools. Mounting short-term and long-term public debt compounded the county's problems. Through a series of annual planning sessions involving all ten county commissioners and facilitated by the Southeast Tennessee DD, the county has constantly assessed its financial situation. Because it is now accessing federal and state grant programs such as ARC and planning for future growth and economic shifts, the county will be debt free by 2002 and will operate on a pay-as-you-go basis. Problems with facilities and services have been greatly reduced, and the county has kept its tax rates level.

Southern Alleghanies PDC, 541 8th Street, Altoona, Pennsylvania 16602
Edward M. Silvetti, Executive Director w (814) 949-6520

SAPDC, headquartered in Altoona, Pennsylvania and ARC cooperated on the Bedford County Business Park. This rural area needed facilities with adequate utilities and space to attract and retain light manufacturing, including companies such as Cannondale and Defiance Metals. ARC provided an initial $15,000 grant for a marketing and site feasibility study. By 1998, the project was under construction, and ARC provided $300,000 in project funds. In 1999, the $5.7 million, 143-acre park opened and currently has created 325 jobs. The SAPDC estimates that 1000 jobs will be created by 2004.

South Carolina Appalachian COG, P.O. Drawer 6668, Greenville, South Carolina 29606
Robert Strother, Executive Director w (864) 242-9733

The SC Appalachian COG is stimulating the market for entrepreneurial ventures in five counties in a diverse area consisting of transitional and distressed counties. With an ARC initial investment of $425,000 and a local match of $637,500, the COG was able to recapitalize its revolving loan fund. Since July 2000, the COG has made 13 loans in its four poorest counties, and ten loans in a transitional county. The COG is also committed to educating the area's economic development and financial services professionals about the flexibility and availability of revolving loan fund opportunities.

Southern Tier Central RP&DB, 145 Village Square, Painted Post, New York 14870
William Hess, Executive Director w (607) 962-5092

The Southern Tier Central Regional Planning and Development Board has recently developed three water infrastructure projects that are recommended for funding by the New York State Department of State and will be partially funded by grants from the Appalachian Regional Commission (ARC).

In the Hamlet of Troupsburg, a community with a median household income of $17,813, many households are still without functioning on-site septic systems. An ARC grant of $150,000, combined with state revolving loan funds, a USDA rural development grant and a local contribution will result in a wastewater collection and treatment facility. Without ARC funds this poor community would not be able to afford the project.

The Village of Montour Falls in Schuyler County has a sanitary sewer system in need of improvements in order to serve two major employers, a hospital and a manufacturing facility. Even with these two employers, which account for 690 local jobs, the county ranks 60th out of the state's 62 counties for personal per capita income. With ARC's contribution of $150,000, the village will be able to raise $1.3 million in bonds to upgrade the sewer system and retain two pillars of its economy.

Three Rivers Planning and Development District, P.O. Box 690, Pontotoc, Mississippi 38863
Vernon R. Kelley III, Executive Director w (662) 489-2415

Three Rivers PDD is helping provide e-government capabilities across the district's wide area network to each of its eight counties' governmental offices and employees. By providing hardware, software, and technical assistance, the PDD is ensuring that offices and employees are connected to the network and can access the internet and e-mail services. As well, each county office now has the capability of establishing a home page and developing individual e-government applications for providing specialized local services.

Tri-County Council for Western Maryland, 111 S. George Street, Cumberland, Maryland 21502
Leanne Mazer, Executive Director w (301) 777-2158

The Tri-County Council has worked closely with the Regional Education Service Agency of Appalachian Maryland for several years. ARC provides funds that with a local match, allow the Council to continue offering technical assistance and support to personnel at colleges in the University System of Maryland and local public boards of education. RESA and the Council are presently working to improve the level of career programs in science and engineering.