Council Tables Plan for New Boilers at Rogers

Citing concerns with what the city's responsibility would be, the Newport City Council on Wednesday tabled a resolution that would've allowed the school district to enter into a 10-year lease to replace two 55-year-old oil boilers at Rogers High School with new, energy efficient, natural gas ones.

"I don't have an issue with replacing them," Councilman Steven Coyne said during the meeting. "But reading this, it looks like the city is on the hook for a million dollars even if your budget accounts for the 10 annual payments."

Newport Schools Superintendent John Ambrogi explained to the council that the new boilers would be paid for using funds allocated in the district's operational budget. As it stands, he said, the district is spending about $235,000 a year for heating oil for the existing boilers. With the new ones, heating costs would be cut in half, with approximately $125,000 going to the natural gas company, and a remaining $125,000 going each year toward paying off the lease agreement. The payments, he said, will come from the approximately 40 percent in savings the district anticipates it will realize from switching from oil to natural gas. If the savings were not realized for some reason, the vendor, ConEdison, would have to make up the difference. The lease payments include all construction costs.

The school district didn't anticipate needing the City Council's approval, Ambrogi said, but TD Bank recently stipulated that in order for the district to receive a lower lease interest rate of 3 percent, additional requirements were necessary. Upon review by the city's bond counsel, it was determined that RI law required the City Council to approve the lease. The bond counsel then outlined a resolution intended to comply with state and federal regulations.

Council members questioned not whether the new boilers were needed, but rather why the resolution's language didn't clearly outline what the city's ultimate obligation would be as the lessee.

"The language in that resolution ... I have to say it's real gobbledy gook," said Councilwoman Kathryn Leonard.

In the city manager's memorandum to Council regarding the resolution, Edward Lavallee wrote that in order for the school district to incur the debt to acquire the system, "it requires the City to underwrite the obligation."

"Are we within our right if we end up on the hook, to say the money has to come out of the normal appropriation we make to the schools?" Councilman Steven Waluk asked at one point during Wednesday's meeting.

"I think that's the condition we're holding to," Lavallee replied.

"I'm ready to support this completely," Waluk said, "but it needs to be cleaned up before going forward. ...  I'm concerned on our end that we need affirmation that the city is not going to be harmed financially."

The City Council asked the city's finance department to return to them at the Sept. 15 meeting with an explanation of how the resolution was written.

If the resolution had been approved Wednesday, representatives from ConEdison, the natural gas company overseeing the project, said construction could have begun within the next two or three months and been completed by January or February. Superintendent Ambrogi urged the council on Wednesday to consider the need to get the project going so the new boilers could be ready in time for the worst of winter. He also asked them to consider the state of the lease market, noting that the school district had the guarantee of that 3.07 percent interest rate from TD Bank through Thursday.

"I understand everybody's uncomfortable with this language; I'm uncomfortable with it," Ambrogi said. "But when we started vetting with the lawyers, this is the way it turned out. I will tell you I hope this is well understood that this is an obligation of the school committee. It will be paid for during our regular budget cycle."

Earlier in the meeting, council members questioned whether it was even the right time to pursue such a hefty project, with the bond referendum for the new elementary school on the table for November, and with talks of regionalization ongoing.

"You're talking about doing something that will take 10 years to pay off," Councilman Justin Mclaughlin said. "I'm curious, you're making an investment of roughly $1 million in the building. What happens if the decision is made five years from now that Rogers would be closed because of regionalization? What happens to that million dollar investment?"

The superintendent responded to both concerns by stating that the energy program at Rogers in no way relates to any plans for a new elementary school, or upgrading the existing ones, and that even if regionalization did occur, it's unlikely the process would be complete in the next 10 years, and even more unlikely that Rogers' facilities would no longer be used.

"Is it the time to do it? I really think it is," added Paul Fagan, the district's director of public services. Fagan noted that the two existing boilers are original to the school and could go at anytime. The district has already invested around $1.3 million in improvements at Rogers in recent years, revamping the academic wing, the science wing, the lockers, and the space behind the auditorium.

"When people come in there, it's very positive," he said. "I've looked all over the island at the other high schools, and we compare very good. It wouldn't be Rogers (to go)."