Tolland Town Council Won't Bond Geothermal Project

Lease-purchase agreement for new heating and cooling system for town hall and library will save taxpayers nearly $500,000.

The town has decided to pursue a money-saving lend-purchase agreement for a geothermal heating and cooling system in the Hicks Memorial Municipal Center and library instead of the initial plan, which was February's voter-approved bond.

The switch is expected to save taxpayers up to $500,000.

Voters authorized the town to issue up to $3.6 million in bonds. The savings will come via federal stimulus cash.

Speaking at Tuesday night's meeting, Town Manager Steven Werbner said the state had approved Tolland for a program through which 70 percent of the interest costs for a lend-purchase agreement for the project are reimbursed from the $19 million in federal stimulus money that Connecticut has received.

Werbner estimated the savings to taxpayers over the 15 years of the agreement to be between $400,000 and $500,000.

The project is eligible for funding with money generated from the sale of qualified energy conservation bonds issued by the Connecticut Development Authority. The town would pay back the money over a 15-year period as part of its debt service budget.

Despite the projected savings, not every member of the council was quick to embrace a lend-purchase agreement for the project.

Councilmember Jack Flynn said he felt “uneasy” about going with a lease-purchase agreement because that was not the fund mechanism that voters had approved for the project. Voters had authorized the town to issue general obligation bonds of the town to pay for the project.

Flynn said he was concerned that town council’s in the future could use the lease-purchase system to sidestep the town’s bonding requirement for large projects.

There is no requirement for a referendum on a lease-purchase agreement, Werbner said, noting that more typically they are used for purchasing expensive equipment like a fire truck. The agreement is with a lender that offers the best deal in terms of the cost of the lease.

In the end, the council voted 6 to 1 in favor of authorizing Werbner to pursue a lease-purchase agreement to cover the project’s costs from design to installation. The $3.6 million will include the cost of removing the existing heating and cooling systems.

Voting in favor of the agreement were Chairman Frederick Daniels, Vice Chairman MaryAnn Tuttle, Dale M. Clayton, Francis Kennedy, Craig Nussbaum and April Teveris. Only Flynn voted against the measure.

Speaking during the time set aside for pubic participation in the meeting, resident Rich Bozzone praised Flynn for drawing attention to the potential conflict between the town’s $1.9 spending threshold that triggers a bond referendum and the lease-purchase which does not require voter approval at referendum.

Al loomer April 13, 2011 at 03:04 PM
A multimillion dollar system for an outdated building. We will never recoup the cost before we will be bonding a new town hall complex. Watch, in 10 years we will be debating the bonding of a new buiding and everyone will have forgotten about the expensive system we put in place. Patch up the current system and save the money for a new town hall. Al Loomer
Max Headroom April 13, 2011 at 04:07 PM
I think it's worth the expense - and I approve of the council finding a way to save half a million in funding costs. I don't expect the system to save any money in operating costs, though. I think ten years down the road we'll find, as we often have found with alternative energy systems, that the savings are largely theoretical and vanish in the gritty, uncertain real world. Geothermal systems, wind systems, solar systems... all promise big, all are disproportionately expensive to install, and most fail to meet their promised performance and cost savings due to overestimated efficiencies and underestimated maintenance and operation costs. As PC as a shiny green HVAC system is, perhaps a very high efficiency gas or oil system is a better choice at this time.
Ralph Mazzarella April 13, 2011 at 04:40 PM
A better approach would have been to subsidize a natural gas trunk line from Vernon into Tolland. Natural gas is cheap and will remain so with the development of shale gas extraction. The first usage of the line could have been the Town Hall with future extensions to our schools.
Josh Freeman April 13, 2011 at 05:05 PM
Hi Max, The cost savings are real. Oil purchases go away (to the tune of $18k/year and more as oil prices increase). Electricity use will actually decline (hard to believe, I know). Geothermal cools more efficiently then the current system, so this is the majority of the electric savings. All this is documented at http://www.tolland.org/hickshvac/faq/#Q9 if interested and the chart there shows year 1 savings based on engineering extrapolations where fuel costs and electric rates will be. As for a real world example of how "shiny green HVAC system" technology actually works...consider my home. Two years ago we installed a cold air heat pump. This replaced our traditional oil boiler system for heat (and gave us central air conditioning as well). The system is so efficient, that our increase electric usage is only 4,100 kWh. I have years worth of usage data that shows we've not changed behavior or trended significantly on way or another. This one change is it so the numbers are reliable. The 4,100 kWh to heat and cool our house translates to $57/month. Compare that to the 1200 gallons of heating oil we used to use (also consistent) and it's hard to argue that the shiny green HVAC system doesn't work. Simply put, it does. Taking a risk is not some people's cup of tea, but the technology works. Just have to make sure it's well designed and it's well investigated to see if it meets your needs.
Josh Freeman April 13, 2011 at 05:09 PM
See http://www.tolland.org/hickshvac/natural-gas/ for details of this idea which was investigated. Yankee Gas told us it's not practical.
Josh Freeman April 13, 2011 at 05:14 PM
I forgot to mention one other thing with regards to Oil vs Geo (or natural gas vs geo): - The CDA funds which are paying for 70% of the interest costs would not be available for Oil/Natural Gas systems because they do not create the 20% energy savings that CDA requires. - When factoring in the fund allocation the cost of oil replacement vs geothermal is essentially the same.
Max Headroom April 13, 2011 at 05:28 PM
Josh, I'm anything but anti-green and in favor of all reasonable steps that reduce fossil-fuel use and costs - even at higher initial costs or other downsides. The record of most alternative energy systems, in the field, in the real world, has not been heartening. Whether the possibilities are overstated or mistaken assumptions are used, a majority of the systems do not prove to have lower costs, sufficient reliability or any benefit sans the lower carbon emissions. Given that the building is approaching the end of its usefulness, a high-efficiency gas-fueled system might prove to be a better choice, assuming that an all-new plant will be built in 15-20 years. But we're on track for this system and I always hope for the best... but will be utterly unsurprised if it turns out to be less efficient in operation (requiring supplementary gas or electric heating), more costly to maintain and operate, and less reliable than expected. That is, unfortunately, the track record of these systems so far, and all the boosterism of the alternative community (including my oldest son) tends to gloss over the fact that this stuff isn't *quite* ready for prime time.
Max Headroom April 13, 2011 at 05:30 PM
"Yankee Gas told us it's not practical." Meaning it's not cost-effective for them. I'm not sure that's a valid reason for this decision.
Max Headroom April 13, 2011 at 05:34 PM
Josh, heat pumps are *old* tech - we had one in a house in the 1970s. Geothermal still has many problems and only works efficiently under a narrow range of conditions. Like wind and solar, it's promising... but still on a development path towards true out-of-the-box operation. Install it in universities and tech companies willing to tinker, modify and put up with ongoing revisions, not a business or government building already fully busy with other things.
Josh Freeman April 13, 2011 at 06:07 PM
"heat pumps are *old* tech - we had one in a house in the 1970s" You do realize that geothermal is a "ground source heat pump", right? It's hard to argue it's unreliable and not proven if it's also "old tech" at the same time. Geo has been in use since the 1940s. I expect improvements since then have significantly improved it's performance over the years, but it is hardly "new tech". It is, after all, a heat pump attached to the ground. US DOE: http://www.energysavers.gov/your_home/space_heating_cooling/index.cfm/mytopic=12640
Max Headroom April 13, 2011 at 06:15 PM
I'm *deeply* familiar with energy technology, Josh. :) The heat pump in 1970 was a cantankerous bugger that was slow to heat, slower to cool and in the end was no more cost-efficient than a gas/AC system. One I had in the late 1990s was vastly improved, completely acceptable for black-box residential use. The difference was 25 years of intensive development on the *details* - not the general notion of heat pumping, which has been around since the mid-1800s. Geothermal does not have a good enough track record for general, black-box installation and use yet. Every part of it may be based on old tech, but the devil is very much in the details. Nothing will change the plans now. Let's check back in five-six years and see if we have a cantankerous system that has worked half the time and needed much updating, maintenance and extra cost, or a miracle of greenergy that has saved us money and kept tons of carbon out of the system. I bet one wooden nickel (not to mention my tax dollars) on something a lot closer to the former... because that's where geo energy is right now. Twenty years on... no bet.
Dan Smith April 13, 2011 at 07:23 PM
Hey Al - in 10 years we will be building a smaller High School - the one we have now will be too big and no longer cost effective! Regarding the Town Hall project - after the first cold snap the consultants will advise us that to keep the building warm we have to 1) reduce the amount of healthy (but cold) make-up air, 2) replace all the windows and re-insulate the building to reduce heating load, and last but not least 3) dramatically increase the capacity of the supplemental electric heat. I hope the project includes a new electrical service capable of handling the load.


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