Concord Steam kills plans for long-delayed South End plant
Concord Steam will not build a new plant in the South End. Final efforts to secure financing for the long-troubled project were not successful, the company announced yesterday.
A review of construction costs finalized this week showed that the projected return on investment was “not sufficient to secure the necessary investor participation,” developer Steve Duprey said in a written statement, acting as a spokesman for Concord Steam.
Peter Bloomfield and Mark Saltsman, the company’s president and vice president, respectively, began plans for the plant in 2007. This year, Duprey and his associate Jon Chorlian began working to help Concord Steam secure financing. The project would have replaced an aging facility on the New Hampshire Hospital campus. But the company will now pursue a backup plan: rebuilding the plant on its existing site.
“Obviously, we are disappointed because we came very close to succeeding,” Duprey said in his statement. “Peter Bloomfield and Mark Saltsman have put their heart and soul into building a new plant over the past six years.”
The utility purchased a property on Langdon Avenue off South Main Street in 2007, and obtained the necessary permits and city approvals in 2008. But Bloomfield and Saltsman struggled to find both financing and customers to purchase the electrical power the wood-burning plant would produce.
As the project stalled, a Massachusetts utility in 2010 backed out of a deal to buy more than a quarter of its electricity.
Bloomfield asked the state and city for help in 2011. It took several months and two failed rounds of bidding for the Concord City Council and state Executive Council to approve 10-year contracts to purchase power from the new plant. Even with those contracts in place, Concord Steam struggled for more than two years to secure financing. The state and city governments backed out of the contracts in May, once it became clear the new plant would not be online by the contracts’ start date of Jan. 1.
Duprey and Chorlian began helping Bloomfield and Saltsman earlier this year, offering their expertise with tax credits. The federal investment tax credit needed to finance the project expires at the end of the year; the team worked on a tight deadline but voiced optimism this fall.
It was a recent construction cost estimate that ultimately killed the project, Duprey said.
Rehabilitating the existing Concord Steam plant will cost “substantially less” than the more than $100 million estimated for a new plant in the South End, Duprey said.
“A rebuilt Concord Steam plant will lower rates for all customers and will provide sufficient steam to support the Main Street project,” he wrote in his statement, referencing potential plans to build a sidewalk snowmelt system for Main Street. That system would be powered by Concord Steam and be built as part of the city’s Main Street redesign project set for construction next year.
City and state officials said Duprey informed them Thursday that the new plant would not come to fruition.
“It’s taken years now to get to a point where we were all hoping it would come through, but apparently it’s not going to move forward,” said Carlos Baia, Concord’s deputy city manager for development.
While Baia said he understands the company is just beginning to review its backup project, he would like to know about its viability within a month. Contractor bids for the Main Street construction project are due Jan. 24, and the city council will need to make a decision about heating its sidewalks with Concord Steam heat.
“I stressed to Mr. Duprey and Mr. Chorlian (on Thursday) that we really would like to know definitively about the steam project before the Jan. 24 deadline,” he said.
Michael Connor, deputy commissioner for the state Department of Administrative Services, said the state is open to continuing a lease to Concord Steam for its plant on the state hospital grounds.
“We would obviously work with them to see if they can make something that’s viable,” Connor said.
But that discussion cannot begin until Concord Steam develops a clear proposal for its project, Connor said. He also did not rule out the state’s movement away from steam heat for its buildings, and he said he hopes to learn more from Concord Steam before next spring.
“We kind of have to make a decision if we’re going to stay on steam or go to some other type of source,” he said.
Concord Steam provides steam heat and hot water to buildings in downtown Concord though underground pipes that connect to its plant on Pleasant Street.
Duprey acknowledged yesterday that Concord Steam must work quickly to review financing and permitting for its backup project. He and Chorlian plan to remain involved.
“The goal here is to move as quickly as possible,” Duprey said.