MONTPELIER — After negotiations that representatives of both the city and state acknowledged were challenging, the city has agreed to contribute $408,000 toward the $3.3 million projected cost overrun for the $20 million wood chip heating plant that will serve both the state office complex and downtown Montpelier.
“The good news is that there is no immediate budget impact to the city moving forwards,” said City Manager William Fraser. “It was somewhat frustrating, but in the end we reached a fair way of dealing with the problem. Anything can happen with a construction project.”
The state had sought more than $600,000 toward the cost overrun. The city refused to pay, arguing that it was the state’s responsibility to budget, design, construct and operate the plant, with the city being responsible solely for the distribution system.
The $408,000 the city finally agreed to contribute represents the cost of the thermal conversion unit, known as the “city room.”
The money to pay the bill will be generated in two ways. Should there be leftover money in the budget at the end of the project, the city will pay at least 50 percent of the surplus toward the bill. Any remaining unpaid balance will come out of revenues generated by future profits from the plant.
The project ran into problems after initial estimates for its cost shot up after the state budget process. It has been lauded as an example of how federal, state and local governments can work together to both promote clean energy and reduce heating costs.
“One of the things that I am learning is that each project that we undertake has never been done before,” said state Buildings and General Services Commissioner Michael Obuchowski. “You can bake a batch of chocolate chip cookies, but each one has its own shape and form. These construction projects each have their own shape and form.”
At issue, said Obuchowski, is how and when the Legislature is given figures for a project’s cost. “These projects go through several stages, and we want to be able to give the Legislature figures that they can rely on but not necessarily take to the bank.”
To lessen the kind of sticker shock engendered by the kind of overruns being seen in the wood chip plant project, Obuchowski suggested that perhaps investing earlier in cost analysis up front might help develop better numbers during the planning stage. “As a project develops we need to identify a place along the continuum where we give the Legislature a number, and maybe that’s later in the process.”
Among the items that contributed to the wood chip plant overruns were the $408,000 for the heat conversion room, $550,000 for using the present heating building instead of replacing it, and $316,000 for anchors to prevent the heating facility from floating in the event of a flood.
The city will begin construction of the distribution system April 17, and Obuchowski said the state intends to begin in early June. Plans for the plant to be up and running by Oct. 1 have already been set aside, with acknowledgment that it will be later in the fall before the plant comes fully on line.
“We’re ready to go, and we’re hoping the state is going to be standing right next to us,” said Fraser. “This is an important partnership between the city and state.”
“We’ve got our fingers and toes crossed that things are going to go fine from here on out,” Obuchowski said.MORE IN Central Vermont
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