The state and the city of Montpelier have agreed to cover cost overruns for an expanded heating district that they share.
Last month, the state surprised local officials and taxpayers when it announced that the project is already more than 10 percent over budget.
But, Mayor John Hollar says a deal has been reached. He says the city will pay up to $408,000 to help offset the cost overruns for a project that would heat city and state buildings.
"Our payments would come in the form of increased capacity payments," he said. "So if we buy additional power from the state beyond what we’ve currently contracted to purchase we’ll pay an additional amount – $408,000 – over the duration of the contract."
The city and the state plan to run pipes under State Street to carry heat and water to public and private buildings. The state’s existing wood-fired heating plant will be expanded.
Hollar says taxpayers won’t have to take on any additional debt to cover the costs.
"We’re only going to buy this additional capacity if we have additional customers, so we would have a broader base where this cost would be spread out," Hollar said.
The state has also asked the city for an expedited review of the local zoning permit that they need to move forward with the plan.
Hollar says the city has agreed to issue one, but it has not received an application yet.