April 26, 2023

Mr. Robbie Coates

Director, Grant Management & Recovery Division

Department of Emergency Management

9711 Farrar Ct.

Richmond, VA 23236

(804) 267-7730

Robert.coates@vdem.virginia.gov

Dear Mr. Coates:

Thank you for your efforts to continue to find opportunities to reduce climate risks faced by our communities.  Although we are not advocating for any particular project, we would like to provide input into the development of the Resilient Virginia Revolving Loan Fund. Environmental Defense Fund (EDF) is a leading international, non-partisan, nonprofit organization dedicated to protecting human health and the environment by effectively applying science, economics, law and innovative-sector partnerships.

We are encouraged to learn that Virginia intends to apply for the FEMA STORM program.  Virginia continues to be a national leader in flood resilience, as shown by investments in communities in the Community Fund Preparedness Fund (CFPF), the seed funding and establishment of the Resilient Virginia Revolving Loan Fund, coastal and statewide resilience planning, as well as other positive changes to the Code of Virginia.  While the revolving loan fund (RLF) model is proven and successful, we would like to reiterate that loans are only one element of Virginia’s resilience toolbox. Grants available to communities, as well as comprehensive resilience planning, also serve an essential role, particularly for communities that are unable or unwilling to service these types of loans due to capacity or existing debt burdens.

The effort that Virginia continues to invest in pre-disaster mitigation and resilience is one that will help prepare its residents for future natural disasters and the impacts of climate change. We commend this forward-looking approach to pre-disaster versus the traditional post-disaster investments, which can cost up to 6 times more.

At EDF, we have been working nationally to help support states and to serve as a resource as they begin the development of these programs and ensure FEMA is enabling the needs of states. To that end, we have a few suggestions that we would like to offer Virginia as it considers the program set up, eligibilities, and design. These priorities include:

• Prioritize natural infrastructure over “grey” infrastructure with maximum flexibility for funding. The term “natural infrastructure” refers to naturally occurring landscape features and/or nature-based solutions that promote, use, restore or emulate natural ecological processes. Utilizing this funding for both traditional infrastructure improvements as well as nature-based solutions, which provide multiple co-benefits and can be more cost effective than traditional grey infrastructure. State agencies such as the Department of Conservation and Recreation (DCR) have recognized the value of natural infrastructure in plans and programs such as the Coastal Resilience Master Plan and the CFPF. VDEM and state partners should explicitly acknowledge that funds can be utilized for natural infrastructure in addition to “buyouts that restore or enhance the natural flood mitigation capacity of functioning floodplains.” Additionally, there is a repeated, consistent sentiment among state SRF administrators and applicants that these programs work best when they allow maximum flexibility. To the degree that STORM can encourage state flexibility to better drive the ‘right solutions at the right time for the right place’ and minimize one size fits all solutions, the better.

• Emphasize investments in under-resourced communities. Through the Biden Administration’s Justice40 initiative, enormous portions of the Inflation Reduction Act, Infrastructure Investments and Jobs Act (which includes the STORM Act funding), and American Rescue Plan are focused on bringing critical resources to communities that have been overburdened by legacy pollution and environmental hazards. The IUP notes that “VDEM and DCR will prioritize projects submitted under BRIC and FMA based on low-income and underserved communities. Specifically, the 41 localities identified in the BRIC Health-Equity Study…” By focusing RLF investments in under-resourced communities, states will be able to address historic injustices as well as make themselves more competitive for federal co-funding opportunities. We would encourage VDEM and DCR to continue to prioritize low-income and underserved communities, but to expand that reach beyond the 41 identified communities. 

• Ensure coordination across relevant agencies. The STORM Act language states that the funds shall “be administered by the agency responsible for emergency management.”  However, Virginia in its IUP and relevant legislation has acknowledged the unique role of other key positions, such as the Chief Resilience Officer and DCR, which is responsible for the state’s natural resource protection. Utilizing the expertise and networks of other state agencies who are already doing direct outreach to communities, such as the Department of Environmental Quality and Department of Housing and Community Development, could help reduce duplication of effort, spread awareness and enrollment in the program, and facilitate projects that address multiple risks and/or provide multiple benefits.

• Ensure that RLF funds can be used for project development and technical assistance. Project development and technical assistance is the work required to identify a potential project, bring groups together for collaboration, assist with identifying and developing reliable repayment streams, and secure funding. Most SRF programs are designed to receive and evaluate fully baked applications, which can lead to SRF programs emphasizing “grey” infrastructure. Making project development funds available would be a small investment that could bring a strong return on investment by bringing more strategic, fully baked projects to the revolving fund. In Virginia, this particularly critical service is also offered by the CFPF that helps build capacity for lower-resourced localities over time. As this is a new program, we appreciate acknowledgement that “[t]technical assistance will include outreach and application and project support” and encourage VDEM to allocate the maximum allowable 5% of the total capitalization grant received toward this purpose, if awarded and continue this beyond the first year of the RLF’s operation.   

• Offer a full range of flexible financing options. A successful RLF program should leverage the widest possible range of financial tools to provide flexibility and meet a variety of needs. This could include traditional debt financing, buy-protect-sell, linked deposits, loan-loss reserve or loan guarantees, pay-for-success, and more. A broad toolkit of financing options will help ensure that the RLF program can meet the unique needs of any project it seeks to prioritize. Additionally, as described in Section 2.3.3., allowing a wide range of applicants to the extent permissible by FEMA to serve as loan program managers, including Planning District Commissions, would help enable a broader range of localities to apply.

Finally, we would also like to extend our support to the Commonwealth of Virginia over the upcoming years as this fund is set up, seeded, and begins offering funding and financing. EDF has technical, legal and policy expertise that may be helpful. Please do not hesitate to reach out to Emily Steinhilber, Virginia Director, Climate Resilient Coasts & Watersheds at esteinhilber@edf.org if you would like to discuss further.  

Sincerely,

Emily E. Steinhilber

Virginia Director, Climate Resilient Coasts & Watersheds

Environmental Defense Fund