State seeks FEMA agreement on Capitol complex repair budget; July 14 deadline set

Doug Farnham, the state’s chief recovery officer, told the Corrections & Institutions committee Friday that negotiations with the Federal Emergency Management Agency over repairs to the Capitol complex from the July 2023 floods are ongoing and that the administration has until July 14 to agree a project budget with FEMA.

Farnham said FEMA will base its contribution on “the cost to repair and mitigate in place” for each building and that the state must lock a single project budget with FEMA to move to a next-phase plan that could include elevating utilities, replacing lost square footage and other mitigation. “We have until July 14th to set the project budget for the capital complex repair,” Farnham said.

Why it matters: the budget figure FEMA agrees to will determine how much federal reimbursement the state can expect and how much the state will need to pay. Farnham told the committee the administration estimates the capital complex project will be “somewhere in that $200,000,000 range,” and that the state’s cost share would be roughly 10 percent of that estimate (about $20 million) under the reimbursement formula FEMA applies.

Most important facts

- Damage and scope: July 2023 rainfall events flooded much of the Capitol complex; Farnham estimated about 17 of roughly 20 sites were affected, with some first-floor inundation up to four or five feet in buildings along State Street. Several buildings remain unusable or only temporarily repaired.

- FEMA process and deadline: FEMA must first agree on the cost to repair-and-mitigate each building in place. Once FEMA and the state agree on those line-item budgets, the state can use a FEMA alternate (428) project to pursue broader options — including moving utilities out of basements, replacing lost usable square footage, or buyouts for some buildings — but FEMA will only move forward after step one is agreed. The state secured a six-month extension from FEMA: the project-budget deadline is July 14.

- Temporary repairs and operations: Farnham said he directed the Department of Buildings and General Services (BGS) to perform temporary repairs so state operations could continue and so expensive equipment (for example, tax-scanning machines) could remain available. FEMA reimburses after work is done, and Farnham emphasized that “FEMA is a reimbursement” program — permanent work requires prior agreement.

- Money available now: the administration has set aside $30 million to meet FEMA cost-share obligations and cited roughly $48 million in insurance proceeds that must be spent on repair or content replacement. Farnham said those sums, combined with expected FEMA reimbursement, provide initial cash to proceed without endangering the state’s finances while negotiations continue.

Discussion, options and constraints

Farnham described technical and policy disputes with FEMA: whether submerged electrical equipment must be replaced to meet fire and building codes, how much FEMA will credit for mitigation, and how to account for Vermont’s river corridor / flood-hazard rules administered by the Agency of Natural Resources (ANR). He said FEMA has challenged some replacement claims, and turnover among FEMA inspectors and staff has slowed the review process.

If utilities are raised above base flood elevation — a likely requirement for HVAC, electrical and elevator systems — buildings will lose usable square footage and FEMA must cover the cost to replace that space. Farnham said his team will present multiple options to the legislature once FEMA settles on a base budget for repairs: a minimum-code repair plan, one or two middle options that preserve the complex’s character while shifting utilities, and a more aggressive option that would increase green space while retaining equivalent office capacity.

Farnham confirmed the administration submitted an application to FEMA for a possible buyout of the newer Green Mountain Care Board building; he said any buyout or building clearance would require legislative approval before proceeding.

Historic preservation and community input

Committee members pressed for broader public engagement and legislative involvement. Farnham said the state will work with the Montpelier Flood Commission, the State Historic Preservation Officer (SHPO) and other stakeholders when alternatives are ready. He noted a special committee established in last year’s capital bill gives the chairs of the Corrections & Institutions committees a role in joint-fiscal decisions on capital-complex recovery and that the administration expects to present at least three alternatives when FEMA’s budget number is agreed.

Regional and related flood-mitigation work

The session also covered statewide hazard mitigation, ARPA funds used for a Flood Resilient Communities Fund, and earlier examples such as the Waterbury recovery. Farnham said Vermont has roughly $100 million currently booked for hazard mitigation statewide and that the Flood Resilient Communities Fund was created from American Rescue Plan Act (ARPA) state fiscal recovery funds to pay for projects FEMA will not fund. He described ARPA deadlines (obligation by 12/31/2024; expenditure by 12/31/2026) and cautioned that federal grant agreements can contain termination clauses.

Other local risks discussed

Members raised local mitigation needs — for example, retaining ponds and dam infrastructure in Ludlow and nearby towns — where estimated costs can be large and funding uncertain. Farnham said such dam and retaining‑pond projects can be eligible for multiple funding sources (ANR dam-safety programs, EPA, USDA rural development, FEMA hazard mitigation) but are often difficult to finance.

What was decided

There were no final, binding decisions recorded at the meeting. Directions recorded in committee: BGS was directed to continue temporary repairs to keep state functions operating and to compile the documentation FEMA requires. The administration will continue negotiation with FEMA to lock the project budget; once an approved FEMA budget is in hand, the administration plans to develop multiple alternatives for legislative review.

Ending

Committee members said they want more public and legislative involvement as options are developed; Farnham said the administration will engage the Montpelier community, SHPO and the joint-fiscal committee as plans are refined and that officials aim to present alternatives once FEMA agrees on the base project budget.