The city of Akron wants to transfer ownership of its downtown steam-heating and cooling system to Akron Children’s Hospital, one of the biggest customers.
Mayor Don Plusquellic said Wednesday that the city plans to donate its downtown district heating system to Children’s, which would then find a permanent owner or operator for the plant.
City Council must agree to put the proposal on the November ballot for voter approval before the deal can be finalized.
Children’s needs assurances that the downtown district heating system with a troubled past can continue to meet the heating needs for the hospital’s expanding campus in the future, said William Considine, the hospital’s president and chief executive.
The pediatric hospital recently started construction of a $180 million, seven-story addition, which will house a new emergency department, neonatal intensive care unit, outpatient surgery center and other services when it opens in 2015.
“We need a dependable steam source,” Considine said. “Children’s is not going to get into the steam business. But we want to be part of a community solution.”
Children’s could build its own steam plant for $6 million to $9 million as part of its ongoing construction project, Considine said. However, the city-owned plant would likely have a difficult time continuing to serve other businesses if it loses the hospital as a major customer.
“Once they go off, with the large amount of steam that they use, then it becomes very difficult to make the system work for others,” Plusquellic said.
Millions of dollars in improvements are needed at the Akron Recycle Energy System (RES) plant on Opportunity Park to make it more efficient and reliable, according to the mayor. Last year alone, the city spent $6 million on repairs to keep the system operational.
Under its charter, the city can’t sell the public-owned utility to another operator or enter a long-term operational lease without voter approval, Plusquellic said. By donating the plant to the nonprofit hospital with voter approval, more options for finding a long-term owner or operator would be available.
The city-owned system 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.
Many of the customers — including Akron Children’s and Akron General — rely solely on the system for heat, Plusquellic said.
In a letter to the city, Dr. Thomas “Tim” Stover, president and chief executive of Akron General Health System, said the hospital supports the proposal.
The proposed deal includes language protecting Children’s from liability from previous plant operations, Plusquellic said.
The RES plant has had a troubled and costly history, dating to the late 1970s.
The plant originally was built to create steam heat by burning trash but has since converted to other energy sources because of environmental concerns.
In 1984, an explosion traced to a shipment of sawdust mixed with oil and paint from New Jersey killed three workers. A decade later, a dozen employees and haulers were arrested because of ties to a scam to avoid paying plant fees.
In 2007, former operator Akron Thermal filed for bankruptcy protection from its creditors after getting notice from the city of Akron to vacate so another operator could take over.
When the system previously faced financial problems, Akron Children’s advanced payments to the plant operator to make sure the steam heat system remained operational, Considine said.
The city has been contracting with Akron Energy Systems LLC to run the plant since September 2009, when Akron Thermal, the former indebted operator, ceased operations. Officials from the city and Children’s plan to talk to Akron Energy Systems to determine the company’s interest in continuing to operate the system, Plusquellic said.
“We have found them to be very professional, and they have done a good job,” he said.
Cheryl Powell can be reached at 330-996-3902 or email@example.com. Follow Powell on Twitter at twitter.com/abjcherylpowell.