The Federal Emergency Management Agency determined on Tuesday that the Vermont State Hospital and other state property damaged by Tropical Storm Irene was not destroyed. The decision runs counter to the Shumlin administration’s claims for the past 15 months that the hospital and parts of the Waterbury State Office Complex were destroyed by flooding.
The determination — which comes roughly one month after the agency rejected the state’s appeal for culvert reimbursements — means the state will not receive the 90 percent public assistance match it sought to rebuild the new state psychiatric hospital in Berlin and other facilities on the Waterbury site.
The Shumlin administration has not decided whether it will appeal the determination in the next 60 days. State and federal officials also did not indicate how the decision would affect the overall level of funding, as they say that both parties are exploring other funding avenues.
Gov. Peter Shumlin said earlier this fall that his administration will go ahead with $170 million worth of projects, $125 million for a new state office building and $45 million for mental health facilities, including a psychiatric hospital in Berlin. At the time, he was hoping FEMA would give the state $80 million to $90 million for the Waterbury complex and $15 million to $20 million for a new Vermont State Hospital in Berlin and smaller mental health expansion projects at four community facilities around the state. The state set aside $29 million in the capital bill for the projects last year. In addition, officials are still wrangling with the insurance company over a reimbursement figure. At last count, Lexington Insurance, a subsidiary of American International Group, had given the state $31.5 million.
In July, the Shumlin administration announced that FEMA had reversed direction, when it indicated that Vermont could not count on the agency to fund up to 90 percent of a new Waterbury State Office Complex and state hospital.
A week later, Jeb Spaulding, the secretary of the Agency of Administration said FEMA’s rejection of the state’s funding plan boiled down to one word: “destroyed.” Spaulding said a state contractor used the term “damaged” instead of “destroyed” in a state filing to FEMA.
Correspondence between FEMA officials and the Shumlin administration from January through May of this year showed that FEMA had never promised 90 percent funding for the hospital.
Now, FEMA is saying the state hospital, the state’s agricultural laboratory, a boiler house and a sewer pump station are not irreparable and thus do not qualify for federal funding to permanently relocate a facility.
“What the determination delivered today stated was that in FEMA’s opinion the state hospital does not qualify as destroyed nor has there been a sufficient showing that it will be subject to repetitive heavy damage,” said FEMA spokesman David Mace.
“What the state had hoped for was that permanent relocation would cover the large portion of the new facility in Berlin under this particular funding avenue,” he added. “FEMA’s determination is that this particular funding mechanism does not apply for the construction of the new facility in Berlin.”
Spaulding told the legislative Mental Health Oversight Committee on Oct. 19 that the state was working with a team of experts and lawyers to develop a case for FEMA that the Vermont State Hospital was rendered irreparable by Irene.
In an interview on Tuesday night, Spaulding said the state had since put that plan on the back burner.
“We have set it aside, and now we have 60 days to figure out whether we want to push it or not,” he said. “But we have not been pushing it lately.”
The other main source of funding for the hospital that Spaulding told the committee about last month was a pool of reimbursements for flood-proofing and building repairs that with FEMA approval could be used for a new facility. The drawback is that FEMA would deduct 10 percent of those funds if they are reallocated.
Mace said that this second option is still viable for the state.
“There are a number of other funding routes available to the state — alternate projects, improved projects, mitigation funding,” said Mace. “This is simply one of a number of funding routes that had been explored at some length, and this is one of those options that FEMA thinks needs to be taken off the table.”
Spaulding said while the state is exploring the reallocation option, it is also working with a FEMA consultant to maximize reimbursements in other areas.
“I don’t think this will interfere with the course that we’re hoping is going to take place,” he said.
Editor’s note: This story was updated at 6:52 a.m. Nov. 28.