Stevens Wood Boiler On Rocks
Claremont — The School Renovation Committee continues to hit roadblocks on financing for a proposed $5 million contract to install energy saving equipment at the district’s five schools, including a wood pellet/propane boiler at Stevens High School.
Unable to secure a 20-year loan at an interest rate that will make the project financially viable, the committee said Wednesday installation work may not begin until next month, providing a loan can be obtained.
With the start of the heating season just 90 days away, there is concern that the new boiler may not be ready when chilly weather hits. The existing boilers are more than 100 years old and are not expected to last another winter, officials have said.
Requests for financing were sent out to several lending institutions but those are not due back until later this month, SAU 6 Business Manager Tim Ball said at Wednesday’s committee meeting.
“The earliest commitment you could get on financing is Aug. 8,” said Steve Horton, the district’s representative on the $12.6 million Stevens High School renovation project.
A closing date on the financing could take another 60 days.
Horton said with time running out, the district may have only two options: a temporary boiler, which would cost $30,000 a month to rent, or putting the project off until next year.
With interest rates likely to continue to climb, however, waiting a year would eat up the projected savings in the project, he said. A recent jump from 4.4 to 5.5 percent added $600,000 to the cost, Horton said, adding that the “winning strategy” is to get a commitment on a loan. “That is what we are shooting for.”
In March, voters approved a bond for the renovation of the high school and a separate warrant article for a lease purchase of up to $7 million of energy saving upgrades with a guarantee from Johnson Controls that annual savings in energy costs would off set the lease payments.
Yesterday, the committee talked about signing the contract with Johnson once a commitment for financing has been received and approved by the district’s attorney. However the “notice to proceed” would not be signed with Johnson until the closing date of the financing, and only after that document is signed would the district be obligated to pay Johnson.
“That puts the risk on Johnson Controls,” said Johnson’s representative Ned Raynolds.
With a signed contract, Raynolds said they could begin ordering material and lining up subcontractors.
“That is what we will start doing now at our own risk,” Raynolds said, adding that the company is confident financing will be obtained and delaying the contract signing for six to eight weeks will have “significant costs” to the project.
Committee Chairman Dave Putnam wanted a consensus among the committee to proceed with signing the contract. He said if there is a letter or commitment from a financial institution and lawyers agree it will work and sign off on it “then I feel confident we can sign the contract because it minimizes all the risk.
“There is no obligation to pay until we have the money.”
Waiting until September could impact the overall cost of the project, Putnam said. “We are OK with the Johnson Controls contract. It is the financing.”
Horton agreed with Putnam.
“If you get a financial commitment, I would advise signing the Johnson Controls contract at that point,” he said.
But committee member Deborah Lewis was not swayed. She insisted that the financing, including the closing, be in place before anything is signed.
“I don’t like my name on something until it is all set,” Lewis said.
Raynolds pushed the committee to move ahead.
“I think delay is not your friend,” Raynolds said, adding they should grab the first financing offer that comes along.
Horton saw things differently.
“We have to get the lowest rate,” he said. “If we lose two weeks, so be it. I don’t want to lose $600,000.”
The committee expects to hear back from at least one institution next week.
At one point in yesterday’s meeting, Horton threw out the idea of using some of the bond money to buy the boiler and then cover that expense with the loan later on but that discussion did not go far.
In other business, the committee awarded a $519,000 site work contract to St. Pierre of Charlestown. It was the lowest bid of four received and mostly will involve constructing a bus loop and repaving and enlarging the parking lot.
Construction fencing along Broad Street was being put up yesterday and St. Pierre is expected to be on site Monday.
Patrick O’Grady can be reached at email@example.com.