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- Kevin McCallum
- Treasurer Mike Pieciak
Vermont communities struggling to rebuild after the devastating July flood can now get low-interest loans under an expanded program announced on Tuesday by Gov. Phil Scott and Treasurer Mike Pieciak.
The $15 million Municipal Climate Recovery Fund will make short-term loans with interest rates as low as 1 percent to cities and towns. The lower-than-market rates are expected to save communities about $3.5 million in interest.
The loans are meant to bridge the gap between the towns’ immediate needs, such as emergency wastewater system repairs, and the arrival of federal disaster relief funds, which could take months or even years.
Many communities went to commercial lenders to address flooding issues and now are paying up to 9 percent interest, Pieciak said. “That’s going to cost taxpayers money, and that’s going to delay their rebuilding efforts,” he added.
The funds are being made available through an expansion of a program that allows the Treasurer’s Office to invest up to 10 percent of the state’s cash on hand in economic development and job creation projects.
Federal pandemic aid has swollen the state’s coffers to more than $2 billion, giving Pieciak significant ability to offer low-interest loans. After the flood, his office announced it would focus more than $55 million in such loans on housing projects.
The additional $15 million will allow the Vermont Bond Bank to make five-year loans at 1 percent interest and seven-year loans at 1.5 percent. The Vermont League of Cities & Towns, which insures many municipalities, announced it will subsidize the interest paid by cities and towns on the loans, increasing the total savings to $4.5 million.
In addition to the huge expenses communities are shouldering, many are also facing a shortfall in sales tax revenue from the flood’s economic disruption, as well as drops in property tax revenue related to damage, said Ted Brady, the league’s executive director.
“This is going to reduce the cost of debt so they can put more of that money in other places,” Brady said.
The $15 million won't go very far. Julie Moore, secretary of the Agency of Natural Resources, said the damage to wastewater treatment plants and the sewer systems that feed into them is estimated at $75 million.
Pieciak said his office will take another look at expanding the program further in January.