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Akron City Council puts issue on ballot to donate steam plant to Children’s Hospital after long, heated debate

By Stephanie Warsmith
Beacon Journal staff writer

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Akron has been trying to shed its steam heating and cooling system for years.

Voters rejected a charter change in 2010 that would have allowed the city to sell or lease the aging system.

Now, Akron has come up with a new plan: Giving the system to Akron Children’s Hospital, the plant’s biggest customer. Voters will decide if this is a better idea.

The Akron City Council voted 12-1 on Friday to put an issue on the Nov. 5 ballot that would donate the steam system to the hospital. Councilman Bruce Kilby cast the lone opposition vote.

The special meeting, called during the council’s summer recess, was volatile and confused, with council members and Mayor Don Plusquellic often talking over each other and council members at times unsure about what they were voting on. At one point, Kilby was told he couldn’t speak.

“I suggest you get over your hatred for me,” Kilby told the mayor after a particularly heated exchange.

“I don’t like people who lie,” Plusquellic responded.

Plusquellic proposed giving the troubled Akron Recycle Energy System (RES) on Opportunity Parkway to Children’s Hospital, which then would find a permanent owner or operator for the plant.

Hospital officials have said they need assurances the system can continue to meet the heating needs for the hospital’s expanding campus. Children’s Hospital recently started a $180 million, seven-story addition.

Under its charter, the city can’t sell any public-owned utility to another operator or enter a long-term operational lease without voter approval.

Before the vote, Plusquellic gave the council a brief summary of the steam plant’s troubled history. He said the city built the plant, originally designed to burn trash, in 1977 and always used an outside operator for the system. He said the system never generated enough money to cover expenses.

Plusquellic said the city has invested more than $28 million in the plant since 2007, with the bulk going to improvements needed to keep it operational.

The city contracted with Akron Thermal in 1995 to operate the system, but the company went bankrupt. Akron Energy Systems LLC (AES) took over operations in 2009.

Marc Divis, president of Cleveland Thermal, which owns AES, couldn’t be reached for comment Friday.

Bill Considine, president and CEO of Akron Children’s Hospital, was out of town Friday, but Tim Ziga, the hospital’s associate general counsel, spoke to the council, indicating support for the mayor’s plan.

Ziga said the hospital has been in talks with the city and AES for the past year in a half about a 25-year lease to “put the plant on better ground.” He said the hospital considered building its own plant but decided instead that supporting the existing plant would be the better course.

He said the hospital needs a reliable heating and cooling source. When the current system fails, he said, the hospital must cancel surgeries and close some of its units.

“This is a very critical concern for the hospital,” Ziga said.

If the ballot issue is approved, Ziga said, a coalition of downtown business owners and government entities will be formed to work through the details of the steam plant’s future. The goal: forge plans for plant improvements by the beginning of next year, so they could be completed before the hospital’s addition is complete in 2015.

The steam plant provides heating and cooling to more than 50 downtown businesses and locations. Other major customers include Akron General Medical Center, Canal Place, City Hall and the Summit County offices.

Council questions

Council members Mike Williams, Linda Omobien and Kilby asked the most questions about the proposal, primarily focused on the value of the system and the city’s future liability for the plant.

Omobien asked Plusquellic whether he had the plant appraised.

Plusquellic said he didn’t think it made sense to waste money on an appraisal of a plant that is losing money. He said the only value of the plant is as a “community asset.”

Williams asked what would be the city’s liability for the steam plant after it is given to Children’s Hospital. The city has said the hospital wouldn’t be liable for previous plant operations.

Plusquellic said the city and hospital still would need to work out an agreement on the donation that would require council approval. He said the city would continue to provide resources to keep the plant operating until an agreement was reached with an operator. He said the operator then would be responsible for maintaining the plant.

Plusquellic said the city’s long-term liability for the plant, including any environmental issues, would be the same as it is now.

Williams asked what the system generates in annual income. Plusquellic said he didn’t have an exact figure, but that it is around $11 million.

Williams said he supports the plan overall, but disagrees with Plusquellic’s assertion that the plant has no value.

“Ten to 11 million in income is some value,” he said. “On the whole, this makes sense.”

Plusquellic accused the council members questioning the proposal of political posturing, with the meeting falling 11 days before the primary. Omobien, Williams and Jeff Fusco, the three council-at-large members, are competing with Kilby, the current Ward 2 councilman, for three at-large seats in the Sept. 10 election.

Kilby said council members should be able to ask questions without being accused of being political.

“I resent the implication that if we ask questions protecting taxpayer interests, we are against sick children,” Kilby said. “[The plant] does not belong to us. It belongs to the people of this city.”

Kilby asked whether the city could trade water and sewer services to the new operator in exchange for steam heat. He also wondered what would happen to the mineral rights of the property and whether the city would share in the proceeds if the hospital sold the plant for a profit.

Plusquellic said such details would be worked out in the agreement with Children’s Hospital.

“If there’s a huge profit — a windfall because they find diamonds under it — we will protect the citizens,” Plusquellic said.

The exchange between Plusquellic and Kilby concluded when Councilman Ken Jones, who was in charge of moderating the discussion, said, “I think you need to be quiet, Mr. Kilby.”

Kilby, who was permitted to speak again later in the meeting, said he thought the council needed more time to have its questions answered. He pointed out that the deadline for putting issues on the Nov. 5 ballot isn’t until next Friday.

Fusco said the steam plant has been a “tough asset” for the city. He said the voters will decide if donating the system to the hospital is a good idea.

The ballot issue might face opposition.

Warner Mendenhall, an Akron attorney who led a failed recall attempt against Plusquellic and has been involved with other ballot measures, expects a “disorganized effort” against the issue.

“I don’t think we should be giving away a city asset,” said Mendenhall, who has sent emails to his supporters opposing the proposal. “We’re broke.”

Stephanie Warsmith can be reached at 330-996-3705 or swarsmith@thebeaconjournal.com. Follow on Twitter: @swarsmith. Read the Beacon Journal’s political blog at www.ohio.com/blogs/ohio-politics.


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