This is Mayor John Hollar’s report to the voters of Montpelier on the current status of the district heating plan. It’s being reposted with his permission.
Anyone who is concerned for the future of sustainable energy in the capital city is encourage to call the city councilors who voted against the project to ask them to support the project.
At its meeting on August 22, the Montpelier City Council voted 2-4 to withdraw from participation with the state in the district heat project. I was deeply disappointed in that vote. I want to share my thoughts on the project, including where things stand and where we go from here.
I have strongly supported the district heat project since its inception, although I have approached it from a practical perspective since becoming mayor in March. The project provides numerous environmental and societal benefits, but I believe it must stand on sound financial footing. I made clear to city staff in March that I would only support the project if we could demonstrate a solid economic case for continuing.
Since March, City Manager Bill Fraser and many other city staff have worked diligently to close a $1 million funding gap by expanding the customer base. As of last week, the city has received commitments from Vermont Mutual Insurance Company, the General Services Administration (Post Office building), the County government and several large private property owners. The school district has committed to including Union Elementary School. Each of these users have independently evaluated the economics of the project and have concluded that it would provide value. Many other users have expressed interest in the project and are likely to sign up if the city commits to moving forward.
As presented to the City Council, the project has a funding safety net $1,127,986, or 34.30%. Moreover, the city could segment the project to reduce costs if needed. These contingencies provide a substantial cushion in the event that project bids exceed current estimates. While all projects have risks, the likelihood that costs will exceed revenues appears to be extraordinarily small.
The benefits of the project are well-known and obvious:
It would allow our community to minimize its dependence on fossil fuels for heating;
It would provide an economical and stable source of heat for decades to come;
It would rely on a local fuel source, further minimizing environmental impacts and providing broader economic benefits.
The Council members who voted against the project have expressed three primary objections:
The economic risks to the city are too great, since we will not know our actual costs until we receive bids in November;
the city has not demonstrated an ability to maintain its existing infrastructure; and
the state has not been a good partner in the project.
I am working with these councilors and the state to address these concerns. I am hopeful that we will reach a solution that allows the project to go forward as planned.
For those wanting to learn more about this project, please visit the City’s web site, and read the City Manager’s excellent report to the council on August 22, 2012.