Montpelier says district energy cost overrun not it’s problem
MONTPELIER — The city told the state Friday that it won’t pay part of a cost overrun on the district heat project but is open to helping in other ways.
The state asked the city to cover 24 percent of the $2.3 million increase for the heat plant the state is installing behind the Motor Vehicles Department building.
The city is ready to build a distribution pipeline to municipal and private buildings.
“These cost overruns really have nothing to do with the city,” Mayor John Hollar said Friday. “We have not been involved in the state’s budgeting for the plant, its design work, its specific cost elements. We have just been asked to pay for it.”
Hollar indicated the city doesn’t have any money to give the state.
Washington County Sen. Ann Cummings, vice chairwoman of the Senate Institutions Committee, said Friday the Legislature will have to look at all the options, which could include walking away from the project, finding the money elsewhere or downsizing the project.
State officials said the increase was discovered last week and attributed it to an expedited work schedule and unforeseen construction costs. The increase brings the state’s side of the project to $18.1 million.
So far, the state has allocated around $14 million, of which $3 million has already been spent, said a manager for the project, Joe Aja, after his presentation to the council Thursday. Certain allocations have provisions for opting out of scheduled work, he said.
The city’s side of the project is around $4 million. So far, around $2.1 million has been spent, and canceling the project would cost an additional $2.6 million, city officials said.
“It really is not reasonable to expect the city to pay,” Hollar said. “If we had surplus funds, maybe it would be reasonable. But we relied on the state’s prior budget estimates to enter into binding agreements with private users.”
Buildings and General Services Commissioner Michael Obuchowski said during the Thursday meeting that estimates by their nature are subject to change.
The city already has made arrangements for customers to hook up to the pipeline. As part of addressing the projected deficit, Montpelier offered to renegotiate a contract it has with the state, to allow the state higher rates for additional future customers.
The city also offered to share any surpluses it may derive from the operation of the pipeline, Hollar said. Another possibility is to wait and decide how the costs will be borne after the state and city finish their projects.
The state also is interested in parking spaces in front of the Statehouse, possibly switching them to diagonal spots and issuing permits, Hollar said. That option appeared tangential to the conversation Friday, he said, because the city has sought to make the district heat project self-sufficient.
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