Vermont still borrowing to pay for Tropical Storm Irene
Vermont’s worst flooding in 75 years and the lowest borrowing costs in more than four decades are pushing the state and its municipalities to borrow at the fastest pace in the U.S.
Facing a $733 million repair bill from Tropical Storm Irene almost one year ago, Vermont and its local issuers have sold $492 million of municipal bonds this year, according to data compiled by Bloomberg. That’s up from $99 million in the same period of 2011.
“The muni market has been pretty friendly toward debt associated with making repairs and replacements and improvements after weather-related events,” said John Hallacy, head of municipal research at Bank of America Merrill Lynch in New York. “Part of the issuance was just driven by the need to make repairs quickly.”
Irene struck the state on Aug. 28, killing six people and dumping as much as 18 inches of rain. It destroyed 531 miles of roads and 34 bridges, and damaged more than 600 historic buildings and 3,500 homes. Irene roared up the East Coast, causing about $15.8 billion in damages, including $4.3 billion in privately insured costs, according to the National Hurricane Center.
“People think Irene was a year ago, and we should be done rebuilding,” said Sue Minter, a former state lawmaker who was named Vermont’s Irene recovery officer in January. “The story, though, when you look below the surface, is that there’s an ongoing recovery.”
In a June report, Minter put the state’s estimated cost of road, bridge, rail and infrastructure repairs at $486.2 million. She said the Federal Highway Administration will pick up about 90 percent of the $163.5 million for fixing roads and bridges. The Federal Emergency Management Administration should cover about 90 percent of the $118.6 million cost of hazard mitigation to minimize damage from future storms, according to the report.
Traditionally, FEMA has covered about 75 percent of such projects. Vermont Governor Peter Shumlin, a Democrat, persuaded President Barack Obama in May to increase the federal share to 90 percent, freeing up another $30 million in FEMA funds.
The storm damage won’t have a long-lasting impact on the state’s economy or its abilities to repay debt, Flahive said.
“It’s been a challenge for them to put it behind them completely,” Flahive said. “You still see a lot of scars up there when you drive. It’s still pretty amazing the devastation and what it did, but much like any state, they will get through this.”