REMARKS AS PREPARED FOR DELIVERY - SANDY K. BARUAH, ASSISTANT SECRETARY OF COMMERCE FOR ECONOMIC DEVELOPMENT - NADO REGIONAL ECONOMIC DEVELOPMENT CONFERENCE FOR THE EDA PHILADELPHIA REGION - PROVIDENCE, RHODE ISLAND

TUESDAY, APRIL 24, 2007

AS PREPARED FOR DELIVERY

Introduction by Providence Mayor David Cicilline

SLIDE 1 – Logo
OPENING

Thank you, Mayor Cicilline, for that kind introduction. It is a pleasure for me to be back in Providence – a town I spent a lot of time in during the 1990s – and I’m pleased to see that Providence’s beauty and prosperity have only increased since that time. Mr. Mayor, thank you for your leadership and commitment to public service.

I’d like to thank Matt Chase of NADO for the invitation to be here at this NADO regional conference. NADO is a strong advocate on behalf of EDA’s Planning Program, and I appreciate NADO as an important player in issues we all care about.

I would also like to recognize Phil Saputo, Acting Director of EDA’s Philadelphia Regional Office, whom you will hear from tomorrow. Phil and his team in Philadelphia are doing a great job, and I appreciate their hard work and dedication. And I hope all of you had the opportunity to attend the EDA Philadelphia regional conference in The City of Brotherly Love.

SLIDE 2 – Two Topics to Discuss
This afternoon, I would like to discuss with you two topics:

• First: EDA’s Partnership Planning Program – specifically what EDA is doing to support the planning process.

• And second, I would like to describe an EDA proposal called the Regional Development Account – or simply the RDA – which will result in an innovative improvement in how we do business. The RDA, I believe, will make life better for you – the customers of EDA’s programs.

SLIDE 3 – EDA Is Absolutely Committed to a Robust Planning Program
EDA SUPPORT FOR PARTNERSHIP PLANNING

Let me start our discussion with a clarifying, declarative statement: EDA is absolutely and positively committed to robust planning and I personally acknowledge the critical role planning plays in the economic development puzzle. This is important, because I believe this message has not gotten out.

Smart and effective planning is critical to any successful economic development effort. Economic Development Districts often serve – as they should – as the central conveners in an economic region. The work of Development Districts serves as the glue between governments, other non-profits, the private sector, EDA, and other Federal agencies. Successful economic development cannot occur without these bonds in place.

SLIDE 4 – EDA Support for Planning
Let me highlight the following facts:

• One: Today, EDA’s annual support for the Planning Program is $27 million – the highest level in EDA’s history based on a percentage of EDA’s overall budget. The percentage of EDA’s budget has more than doubled, from 5.5% to 12%, since I started with the President in 2001.

• Two: This annual $27 million commitment allows all recognized EDDs to be funded – and the Agency is currently reviewing applications from new areas that are attempting to form new EDDs. I know this is important to many in this room, and I want to give credit where credit is due; our friends at IEDC, NADO and other economic development interest groups were instrumental in securing this additional funding.

• Three: EDA is also putting its money where its mouth is by devoting scarce research dollars towards bolstering the Planning Program. EDA has awarded a research grant to a consortium of universities to develop a new regional economic development curriculum for the benefit of local and regional economic development officials. This training will better ensure that all development professionals are up-to-speed on the latest thinking in regional strategies, collaboration tactics, and best practices in development, and will supplement the training offered by NADO, IEDC, NARC and others.

• Four: We have heard that many of you miss EDA’s regional conferences. Well, we brought them back for 2007. EDA partnered with the International Economic Development Council and the National Association of Regional Councils to host five such conferences in 2007. Our next three will be in Long Beach, California on May 16 with a focus on “Global Gateways,” Atlanta, Georgia on June 14 on “Disasters and Economic Dislocations: Building a Disaster-Resistant Economy,” and Kansas City in September on “Entrepreneurship.” These follow the one in Philadelphia previously mentioned and our most recent one in San Antonio, Texas.

• Five: While the EDD community has a good relationship with our regional offices, EDA’s Washington office has not done a good job communicating directly with EDDs. So to help remedy this situation, I am committed to engaging in a direct dialog with EDDs across the country. Last summer, I began, along with Deputy Assistant Secretary Ben Erulkar, conducting EDD roundtables across the country. As I travel the country, we invite all the EDDs in the state to sit down with us for an “everything’s-on-the-table” discussion, such as was just held this morning with New England Economic Development District Directors. These statewide meetings – about 15 and counting – have been tremendous opportunities, I think, to learn from each other and foster better understanding.

So, with these five facts, I hope I’m able to convey the seriousness in which EDA takes the Planning Program and the EDD community. While we may not agree on every issue, we are united in our overall goal to ensure that economic development efforts across America are based on sound planning.

THE REGIONAL DEVELOPMENT ACCOUNT

Effective planning is more important than ever today, as the pace of change in the 21st Century continues to accelerate, and economic development efforts across the nation face tightening government budgets.

Given these twin challenges, economic developers need to “practice what they preach” in terms of innovation – they need to find new ways to be effective in an environment of diminishing government resources. EDA is no exception. We need to look at “what’s next” for EDA’s programs and policies to make it easier for our customers to access EDA investments. It is in this spirit that EDA is proposing the Regional Development Account, or RDA.

This afternoon, I’d like to:

1. First, outline what the RDA is, and, since at the end of the day, any change to EDA’s program is worthless unless it is a direct benefit to the people we serve, I’ll outline what it means to you;

2. And, second, discuss what the RDA is not to help address some of the questions that I have received about this proposal.

WHAT THE RDA IS
SLIDE 5 – EDA Today: Multiple Program “Buckets”
What you see here are the “buckets” of EDA program funding:

• Public Works.

• Economic Adjustment.

• Technical Assistance.

• Partnership Planning.

• Trade Adjustment Assistance.

The first 3 – the ones highlighted in blue – are the competitive programs administered by EDA’s regional offices. The other 2, Partnership Planning and TAA for Firms are separate, non-competitive programs that are administered in a completely separate manner.

What has happened for generations now is that folks inside the Beltway tell you – the local economic development professional – and EDA’s regional offices exactly what your Public Works needs are…exactly what your Economic Adjustment needs are…exactly what your Technical Assistance needs are by dictating from Washington how much should go into each of these buckets. You, the EDA customer, are required to separate your inter-related development needs to fit into one of these EDA buckets, and to pursue EDA assistance for each of these needs separately.

The RDA would put an end to this current funding structure that severely limits EDA’s flexibility, and would shift decision-making on how EDA funding should be used to a more local level.

SLIDE 6 – EDA Proposed: Single RDA “Bucket”
Here’s how the RDA would allow EDA to be more flexible. As I mentioned, the RDA would simply consolidate EDA’s three primary competitive investment programs – Public Works, Economic Adjustment, and Technical Assistance – into a unified, holistic, and flexible program account.

Ultimately, this is what is important: Every EDA program dollar would have attached to it Public Works authority, Economic Adjustment authority, and Technical Assistance authority. Our Regional Offices would no longer have to worry about how much money is left in any particular bucket. If EDA has money left, we could use it for what ever the pressing economic development need is – and not make decisions regarding what we fund or don’t fund based on how much money is left in a particular funding bucket.

It’s a simple proposal, but I believe it provides you important benefits.

SLIDE 7 – More flexibility
First: It makes it easier for you to access EDA programs. Under the RDA, you will be able to apply for multiple activities in a single EDA grant.

One investment application. One approval. One set of reporting requirements. Yet you can use your EDA funds for both Public Works and Technical Assistance.

I think this is important, because successful economic development today is holistic in nature. Under the RDA, you as an EDA investment recipient could finally use EDA funds in a holistic manner.

Here’s an example of how this would work: You would apply to EDA as you usually do for, let’s say a Public Works investment to support an inter-modal facility. But in the same grant, you could also ask for some technical assistance funds to help build the relationship infrastructure with the private sector, with neighboring political jurisdictions, with other non-profits such as workforce development boards, with local community colleges, and other economic players in your region, to ensure that once you are done constructing your inter-modal facility, your project will be as successful as it can be.

SLIDE 8 – Administrative Savings for You – and EDA
The beauty of being able to do multiple things with a single EDA grant is that is means less paperwork for you! Instead of applying for two grants, which means two applications, two approvals, two sets of reporting requirements, two sets of EDA staff to keep informed, you’d only have one grant and its associated requirements to keep on top of.

This also means that EDA would have fewer grants to process, approve, and monitor – and that’s a meaningful administrative savings to the agency at time when we are scrambling for resources. No one can argue that this would be more efficient.

SLIDE 9 – Local Control
The RDA puts regional people, not Washington officials, in a better position to respond to regional economic development needs. Under our current system, we are effectively telling each of the six EDA regions, this is your level of resource need for public works and infrastructure…this is your level of resource need for technical assistance. Why make these decisions in Washington when we have economic development professionals across the country who are in a better position to evaluate local conditions?

This makes sense for investment recipients as well as for the EDA team. Our budget has shrunk so much that the allocation for Technical Assistance for our Regional Offices is only about $1 million a year. That doesn’t go far. With the RDA, our regional offices will have greater discretion to allocate their precious EDA dollars in the manner that best suits the needs of their region.

So, if you like decisions made in Washington, the current model is for you. If you think funding decisions should be made at the regional level, you’ll like the RDA.

SLIDE 10 – RDA Based on a Proven Approach
If you are thinking that the RDA does not sound like a new concept – you’re right. The RDA is built upon EDA’s proven and most popular program account: the Economic Adjustment Account. EDA’s Economic Adjustment Account has the flexibility to do Public Works, strategic planning, and Technical Assistance, but the Economic Adjustment Account is only able to be accessed in response to a “sudden and severe” economic dislocation.

The bottom line here is the RDA turns all the competitive program funds administered by EDA’s regional offices into a large Economic Adjustment Account, without the requirement of sudden and severe economic distress.

THE TOP 7 OF WHAT THE RDA IS NOT
SLIDE 11 – The Top 7 of What the RDA is Not
So that’s an overview of what the RDA is. Let’s spend a moment talking about what the RDA is not. With apologies to David Letterman, let me present to you the top 7 things the RDA is not:

#7: The RDA – in no uncertain terms – would not affect regional office budgets. The funding allocation to EDA’s regional offices is a carefully crafted formula approved by Congress several years ago, and that formula and methodology would be untouched by the RDA.

#6: The RDA will not alter EDA’s investment selection criteria, investment processes, or focus on economic distress. The RDA would in no way impact how EDA makes a grant, where EDA makes a grant, or the processes used to determine who gets an EDA grant. All of EDA’s eligibility requirements would remain as is and our process, funding priorities, and investment policy guidelines all would remain as they are today.

#5: The RDA has absolutely no impact on the agency’s commitment to Public Works projects. Public Works infrastructure is where EDA gets our “bang for our buck” – job creation and private sector investment. We need these infrastructure projects in order to keep our performance results high, because that’s how we are judged by OMB and many folks on Capitol Hill.

#4: The RDA does not touch the Partnership Planning Program, which will remain as a separate, stand-alone program focused on supporting the Economic Development Districts.

SLIDE 12 – The Top 7 of What the RDA is Not (continued)
#3: The RDA will not put some states at an advantage over others. There will be no change in EDA’s longstanding commitment to safeguard to ensure that no state can receive more than 10% of EDA’s total funding per year.

#2: The RDA is not going to reduce EDA’s investments in small or rural communities. EDA never had a set-aside for rural communities, yet we make over half of our investments in rural areas – and that will continue under the RDA.

And the #1 thing that the RDA is Not: The RDA is not a mechanism to cut EDA funding. EDA’s funding will not change based on the implementation of the RDA. In fact, the RDA was first introduced last year when President Bush proposed a $47 million increase for EDA. And for the record, let me remind you, that in 4 of the last 5 years, President Bush has proposed more funds for EDA than the Congress has appropriated. The RDA works equally well if EDA is appropriated a lot of funds, or fewer funds.

CLOSING
SLIDE 13 – Logo
So that’s a brief overview of what the Regional Development Account is, and what it’s not. It’s an innovative strategy for helping to utilize our resources in a more efficient manner, but most importantly, it helps EDA’s investment partners and acknowledges that economic development today is holistic. It’s more than just building something, it’s about answering the “what’s next” question.

We, as economic development professionals need to be innovative and we need to do everything in our power to encourage the competitiveness of the economic regions we serve. We need to advance the art and science of economic development by promoting holistic approaches.

I’d like to hear from you, if you think this is a good idea, then let’s work together to get these changes made…if you disagree with me, I would like to understand why. If you have questions, please do not hesitate to contact me or others on the EDA team.

I thank you for your kind attention this afternoon, and I thank NADO again for the invitation to be here.

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