Vermont Governor and Legislature Working to Finalize $400 Million Vermont Economic Recovery and Relief Package
Last week, Vermont Governor Phil Scott announced plans for a $400 million economic recovery and relief package for businesses and nonprofits throughout Vermont impacted by the coronavirus pandemic (the “Relief Package”). The Relief Package, which will be funded with money the State of Vermont received from the CARES Act, is being developed jointly by Governor Scott’s Administration and the Vermont Legislature. The Legislature will need to pass a bill approving the final Relief Package before funds will be available to aid the Vermont economy. The information that follows describes the Relief Package as proposed by the Governor, but remains subject to change based on input from the Legislature.
The Relief Package includes two phases. The majority of funds would be spent in Phase 1, which allocates $310 million across four main areas:
- Financial assistance: $250 million in grants and loans to businesses and nonprofits
- Housing assistance: $50 million in rent stabilization payments and homelessness reduction efforts
- Technical assistance: $5 million in business restart and recovery assistance andmental health counseling and wellbeing resources
- Marketing support: $5 million for promotional marketing assistance and grants to regional Vermont tourism groups.
The remaining $10 million of the Relief Package will be used in Phase 2. Phase 2 is still under development, but programs may include additional financial assistance, broadband expansion, retraining programs for unemployed Vermonters, and permitting modernization.
The financial assistance portion of Phase 1 includes three programs: (1) Emergency Action Grants; (2) Vermont Economic Injury Disaster Loan and Grant Program; and (3) Vermont Restart Loan and Grants. According to representatives from the Agency of Commerce and Community Development (the “ACCD”) and the Vermont Department of Taxes, the three programs are designed to ensure that all Vermont businesses or nonprofits negatively impacted by the pandemic qualify for assistance from at least one program, subject to the availability of funds.
At $150 million, the Emergency Action Grants are the largest portion of the financial assistance program. They will only be open to the food, accommodation, retail, and agriculture sectors. $40 million is reserved for dairy farms grants, and $10 million for secondary dairy production businesses, such as cheese and ice cream makers. Emergency Action Grants are designed to assist with paying fixed costs, such as rent, mortgage, existing loan payments, and inventory costs.
Emergency Action Grants will be open to businesses in the applicable sectors that have average annual revenue of $2.5 million or less, which experienced at least a 40% revenue decrease for any month between March and August 2020 (inclusive) relative to the same month in 2019 or 2018. The published program details do not specify loan amounts, but in industry webinars, the ACCD said that grant amounts would equal 10% of the average quarterly revenue of a qualified business. Under that formula, the largest grant available under the Emergency Action Grant program would be $62,500.
The Vermont Economic Injury Disaster Loan and Grant Program will be open to any Vermont business or nonprofit that saw significant revenue losses due to the pandemic, such as hair salons, theaters, and manufacturers. This $80 million fund will be administered by the Vermont Economic Development Authority (“VEDA”), which will provide priority access to businesses and nonprofits that did not receive Emergency Action Grants. Economic Injury Disaster Grants can be sought to cover three months’ of fixed costs during a partial or full shutdown due to COVID-19. No cap on grant amounts or formula for determining the grants has been issued yet. After grant funds are exhausted, loans of up to $150,000 will be offered. The loans will have a 2% interest rate, with interest deferred for the first year, and repayment terms as long as 20 years.
The final financial assistance program, the Vermont Restart Loan and Grant Program, targets sole proprietors and businesses with less than $1 million in annual revenue and five or fewer employees. It will make $20 million available to assist businesses by providing grants up to the lower of $15,000 or three months’ fixed cost expenses, or 5-year, 0% interest loans of up to $20,000.
All financial assistance funds in the Relief Package may be reduced or offset by Paycheck Protection Program funds or other federal coronavirus aid a business or nonprofit received. Initial statements from the ACCD suggest that federal relief will only offset state relief if state funds are sought for the exact same purpose and federal funds fully satisfied that need (e.g. covered the full mortgage interest payment), but additional details are needed to clarify the offset rules.
The housing assistance fund will be divided into two pools: a $42 million Rental Housing Stabilization Fund and an $8 million Re-Housing Recovery Fund.
The Rental Housing Stabilization Fund will provide residential property owners up to three months’ rent to cover rent and arrearages a tenant is unable to pay. These payments will provide property owners the funds they need to pay their mortgages and maintain properties, as well as preventing the eviction and potential homelessness of tenants who are unable to pay rent. The Rental Housing Stabilization Fund will be open to all residential property owners whose tenants are unable to pay rent or have rental arrearages. Larger property owners do qualify, but only for payment on up to 20 rental units.
The Re-Housing Recovery Fund will provide emergency housing rehabilitation grants and forgivable loans to assist property owners with updating and repairing property. This program will make up to 250 new housing units available to families and individuals currently experiencing homelessness.
The technical assistance component of the Relief Package is designed to offer businesses and employees that were greatly affected by state-mandated closures with technical support on safe, viable operations, and with mental and emotional support in trying times.
Technical assistance will include manuals with information about how to apply for grants off-line for those with limited internet access and how to help with new business issues, such as reconfiguring business layout to minimize close contact between patrons. Professional service providers, such as software consultants and business turnaround experts who are selected by a state request for proposal, may also be available to advise eligible businesses and nonprofits on how to restart operations safely and efficiently.
In recognition of how stressful and uncertain the pandemic and rapid economic downturn is, the State of Vermont will also extend access to the Invest EAP Centers for Wellbeing employee assistance program to all businesses with 50 or fewer employees. For three months, qualified businesses, their employees, and families will all be eligible to receive free mental health counseling (currently available by videoconference), plus resource referrals for a variety of issues, such as substance abuse, elder care, childcare, and family or workplace issues.
The marketing support component of the Relief Package will include two main initiatives. First, the state will make promotional materials available to local businesses, nonprofits, and communities to use for marketing themselves as a part of the statewide “Restart. Respect. Rediscover” marketing campaign. Second, there will be marketing and consumer stimulus grants available to help chambers of commerce, downtown districts, and similar regional tourism groups spur consumer spending. Grant recipients may receive a menu of promotional packages to choose from, such as a gift card match program, to help infuse funds into their local economy.
Additional details on the proposed Relief Package are available here. The Scott Administration hopes to pass a final Relief Package in early June, and to begin disbursing funds as early as July. We will monitor for updates, and provide new information, applications, and guidance as they become available.
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FOR MORE INFORMATION
For more information about the Vermont Economic Recovery and Relief Package, please contact your attorney at Gravel & Shea PC or Heather Hammond (firstname.lastname@example.org) or Catherine Burke (email@example.com).