This story, by Report for America corps member Carly Berlin, was produced through a partnership between VTDigger and Vermont Public.
Communities impacted by the devastating floods that swept through Vermont in July 2023 can now apply for a cut of long-term federal disaster aid.
State officials have opened the application process for nearly $68 million in federal recovery money allocated to the state late last year. Officials hope to funnel the majority of the funding toward housing development outside of flood-prone areas.
“We recognize that housing is a crisis across the whole state, and especially in these flood areas,” said Nate Formalarie, deputy commissioner of the Department of Housing and Community Development, which is administering the federal block grants. “If future storms are to come, we need to have places to put people.”
A state analysis found that Vermont has over $350 million in unmet flood recovery needs tied to the 2023 storm alone, with the bulk of that need stemming from costly damage to public infrastructure like power, wastewater and transportation systems.
But state officials plan to direct more than 60% of the federal disaster aid — over $41 million — toward housing development. Smaller portions of the block grant will be set aside for infrastructure projects, flood-mitigation efforts, future planning and program administration, according to a state action plan approved by the U.S. Department of Housing and Urban Development.
Asked why officials opted to channel much of this funding toward housing specifically, Formalarie emphasized the state of Vermont’s extraordinarily tight housing market — and the loss of homes to flood damage and property buyouts. The pot of money available to the state pales in the face of the overall need, he said.
“There is a need to replenish some of these housing options in these communities that are getting flooded year after year,” he said. Applications for infrastructure that supports new housing development will get considered as part of the housing category for funding decisions, he added.
The feds’ rules dictate that the majority of the disaster funding must flow to Lamoille and Washington counties, which were both particularly hard hit by the flooding two years ago. State officials have earmarked the remaining funds for unmet flood recovery needs in Caledonia, Orleans, Rutland, Windham and Windsor counties. The funding must primarily benefit low- and moderate-income residents.
This type of federal funding isn’t a given after a disaster strikes. Unlike immediate relief funds from the Federal Emergency Management Agency, which can start flowing right after the president declares a disaster, Congress has to take action to appropriate these more flexible, long-range funds. The money allocated to Vermont came out of a disaster aid package that federal lawmakers passed in December.
This form of disaster aid also offers a rare opportunity to build new housing outside of the floodplain. While FEMA’s aid programs generally tie a homeowner to rebuilding on the site of their damaged home, for instance, or buy them out with no guarantee of an available home to move into, these more flexible funds can allow a community to create homes where they didn’t exist before.
Barre City, which has been hit repeatedly by major floods in recent years, has a long list of housing projects it’s considering as it puts together an application for the disaster funding, said City Manager Nicolas Storellicastro. One major priority is financing the infrastructure for new homes at the proposed Prospect Heights development, an undeveloped site near the city’s downtown.
The city also wants to jumpstart the revitalization of the flood-prone North End neighborhood, using some of the funding to build affordable homes at a park outside the floodplain, Storellicastro said. Redeveloping a long-vacant downtown building and funding more home elevations are also on the list, he added.
Between all of those projects, the city plans to apply for around $30 million from the federal funding pot. As Barre loses dozens of homes — and property tax revenue — to buyout-takers and lingering flood damage, the funding could make a meaningful difference, Storellicastro said.
“That would be a big step forward, not just to address the housing crunch, but to help the city’s tax base,” he said.
State officials are asking municipalities and local organizations interested in a shot at the funding to submit pre-applications by Aug. 5, with full applications due in late September. A citizen board will review them according to a rubric and make recommendations to Lindsay Kurrle, secretary of the Agency of Commerce and Community Development, and Gov. Phil Scott, who will have a final say on application decisions.
The state hopes to begin awarding funding before the end of 2025.
