City and state back out of Concord Steam contracts
Concord Steam missed a deadline this week to notify the city of financing for its proposed plant in the South End. City and state officials are now backing out of contracts to purchase power and steam heat from the long-delayed plant.
“I think the city has tried its very best to make this a reality, but Concord Power and Steam has not been able to meet the time frames that they set for themselves,” said Deputy City Manager for Development Carlos Baia.
When the city and state governments approved the 10-year contracts in 2011, Concord Steam President Peter Bloomfield called them crucial to the project. He said he couldn’t secure financing without those long-term commitments.
But yesterday, Bloomfield said he hasn’t given up on the project. “We continue to work exhaustively,” he told the Monitor in a written statement.
“We hope that as we are able to move forward with this project that the city will decide to continue to support it through the purchase of a portion of its output,” Bloomfield wrote.
Concord Steam purchased property on Langdon Avenue in 2007 to build the new plant. Bloomfield has said the project would lower the cost of steam heat and replace the utility’s aging facility on the New Hampshire Hospital campus.
Construction has been delayed while Concord Steam sought financing for the more-than-$70 million project.
Baia said Concord Steam has missed several deadlines to notify the city of its financing. The company said it had deals in place in October, but city officials later learned that arrangement was not final.
Early last month, Baia said he notified Concord Steam that they must provide “definitive, concrete evidence” of financing by April 30. He did not hear from Concord Steam this week.
“As a result, the city of Concord understands that you will not be moving forward with the proposed plant,” Baia wrote in a letter sent to Bloomfield on Wednesday.
Baia said yesterday that city officials were considering the steps necessary to end contracts with Concord Steam, given their conclusion that the plant will not be built.
“It was a project recognized in the community as being important and worthwhile to pursue,” he said. “But it has been years now, and we’ve been talking about multiple deadlines, and we have been patient.”
The contracts were set to begin in January 2014. Even with financing, construction would not be complete by the end of this year. Bloomfield acknowledged that the delays allowed the city to end its contractual obligation.
Mayor Jim Bouley said officials acted “to protect the city’s interests.” But he’d still like to see Concord Steam build its plant.
“There is still a strong desire on my part . . . that obviously something could happen,” he said. “We’d like to see them succeed. There are businesses and buildings downtown which rely on Concord Steam.”
The city had also planned to heat a portion of downtown sidewalks or streets with heat from the new plant. A network of underground pipes installed during the Main Street redesign project would have channeled waste heat to provide a snowmelt system.
Though Bloomfield has said the city could still provide a snowmelt system from its current location, Baia said the city can’t design the system amid uncertainty about the company’s future. Deadlines are approaching next month for federal approval on the Main Street project.
“There’s a lot of variables that are still out there, and we don’t really have anything concrete from the company
. . . and we need to move forward on the project,” he said.
The state is also seeking to end its contract with Concord Steam, said Michael Connor, deputy commissioner for the Department of Administrative Services.
“We’re in it together,” he said. “The contracts actually state that we’re in it together. In order for this deal to happen, they needed the electric load from both the city and the state.”
Connor and Baia both said they are open to new proposals from Concord Steam. But, Connor noted, any future deal would be considered as a separate project.
“From our perspective, it’s a new deal now if they do have something that comes forward,” he said.
Without the contracts to buy a portion of their electricity from Concord Steam, both the city and state governments would continue purchasing power on the open market.
In March, Bloomfield said the company had developed a backup plan to remain on the New Hampshire Hospital campus and improve its existing infrastructure. Connor said yesterday that the state is “amenable” to that arrangement.
Concord Steam’s current lease with the state for that property expires in August. Connor said a new long-term lease would likely require the company to improve its facility.