The Olean Common Council signaled a green light Tuesday to allow borrowing on the municipal bond market for a $5.6 million energy performance project.
Members of the Council voted, 6-1, on three bond resolutions that will pay for $764,000 in HVAC upgrades to some of the city's buildings, as well as $3,700,000 for purchase and installation of digital meter replacements for the city's 6,500 water taps and $1,136,000 for improvements in the sewer system.
The project costs will be lowered because of special interest rates afforded by the New York State Energy and Research Development Authority's Smart Loan grant program. Savings are guaranteed, and the project is designed to pay for itself within five years, according to consultants. Upgrading the meters will assure all residents are paying the proper amount for water usage and collecting the readings will take less time. Public Works Director Tom Windus told the Council that the aging meters have a 2 percent variation in accuracy.
"We can't account for 50 percent of the water we produce. I don't have a clue of how much is consumed," added Windus, noting it is difficult to find leaks and compare usage to production.
He said the changeover would save time and water, while plugging water fund losses by identifying homes where meters have either not been read or have not been read consistently.
The resolutions authorized City Auditor Janet Jones to finalize the financing on the city's behalf. Only Alderman Ray Wangelin voted against the bond resolutions to replace working equipment and said after the meeting that he had not realized when he voted to approve an energy audit that $500,000 would be spent on the plan.
But all of the aldermen expressed fears that the current economic problems in the bond markets could drive interest rates up to a level that would make the project too costly. They issued a caveat that Jones should return to them for final approval on the interest rates once bids have been submitted to the city and that should take place in a special meeting if necessary.
"I won't do anything until I bring it back to you," Jones assured the Council, adding that the resolution could always be rescinded or amended and assuring the aldermen that she has always advised them of interest rates prior to completing financial contracts.
After the meeting, Jones said the consultants Wendel Energy used an interest rate of 5.5 percent in drawing up the proposal.
A higher interest rate will cut into the savings that are factored into the project, she added, and under that scenario some items could be removed from the plan to get the costs down.
Officials decided early this month to abandon the more costly municipal lease financing option and instead take the project to the bond market to seek a lower interest rate.
Two residents spoke out against the project, warning the aldermen that the city's low bond rating will drive up the interest rates and asking how they know which taxpayers will have to foot the bill for the upgrades.
The Council also authorized a $4,466,033 contract award to Man O'Trees to complete the Two Mile Sanitary Sewer Replacement Project and an agreement for Flexible Technical Services, in connection with solids-handling alternatives, in the Olean Wastewater Treatment Plant. That agreement will bring $33,830 in state unding toward contractor fees, and the city's share of the cost will be $41,817.