MONTPELIER — Another round of legal opinions is being sought as the state and city try to work out a disagreement over a projected budget overrun for a proposed heat plant.
The state obtained a legal opinion that suggests the state would not be liable if it cancels the project, causing financial implications for the city, Mayor John Hollar said Wednesday afternoon before he was scheduled to meet with the state again for negotiations.
That’s caused the city to ask its attorney to review the issue as well, Hollar said.
The two governments are working to create a new heating district for Montpelier that relies on wood-chip boilers rather than heating oil to save money in the long term.
Estimates have shown the cost of the heating plant could be as much as $3.3 million more than expected, causing the state to ask the city for 24 percent of the additional expense and look to the Legislature to see where other money could come from. The city’s role is to install a distribution pipeline to downtown buildings.
“It’s kind of puzzling with the insistence for us to pay,” Hollar said.
He said the City Council has expressed frustration with the state’s request to pay for the projected budget overruns when the city wasn’t involved with that portion of the project.
City officials have maintained they’re willing to work with the state, and Buildings and General Services Commissioner Mike Obuchowski has said the state is committed to the project. According to a contract, the parties are required to work out the problem together in good faith.
City Manager William Fraser told the Senate Institutions Committee last week that the city has spent some $2.1 million and has about a $4 million contract for the pipeline.
“The contracts are pretty clear if one defaults the other pays damages,” Hollar said. “It’s a significant concern to us.”
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