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IU Heating Plant Won't be Outsourced:
IU to ask trustees for $34 million to fund renovation
by Steve Hinnefeld
(812) 331-4374
shinnefeld@heraldt.com
Bloomington Herald Times
March 2, 2006
After more than a year of study, Indiana University officials have decided not to outsource the operation of the Bloomington campus Central Heating Plant.
They will instead ask IU trustees this week to approve a $34 million renovation that will enable the plant to comply with new federal clean-air rules.
State government officials signed off on the plan Wednesday, said Terry Clapacs, the university's vice president for administration.
"We're very pleased with this recommendation," Clapacs said. "It says that, in the eyes of the state government efficiency and financial planning office, IU has continued to operate efficiently."
In another development, officials now believe the initial renovation will keep the plant in compliance with air-pollution regulations. They previously thought a three-phase renovation costing $80 million would be needed.
Trustees will consider the proposal at a facilities committee meeting today and a business meeting Friday in the Indiana Memorial Union.
IU began looking into outsourcing the heating plant at 11th and Walnut Grove streets in late 2004. Officials said they were open to contracting with a utility to run the plant or to letting a company build and operate its own facility to generate steam for heating buildings.
Gov. Mitch Daniels endorsed private-sector operation. Last spring, the General Assembly approved $45 million for renovation of the 60-year-old plant but ordered IU to first explore alternatives such as "privatization, joint ownership, phased construction and joint operation of improvements."
IU asked for proposals, and it got offers from six consortia. But after study, Clapacs said, officials decided none were as cost-effective as having IU renovate and continue to operate the plant.
He said the renovation will let the plant burn coal and natural gas and meet clean-air guidelines that take effect in November 2007.
A letter from Chris Johnson and David Chellgren of the state government efficiency and financial planning office signed off on the project.
"We believe IU conducted a very open and fair process to solicit and evaluate private- sector proposals for campus steam supply," said the letter to Charles Schalliol, the state budget director.
IU will use $7 million of the state-approved funding to build a 76,000-square-foot service building on Range Road on Bloomington's northeast side. The old service building adjacent to the heating plant will be razed for a science building.
*This article was copied with permission from http://www.heraldtimesonline.com/stories/2006/03/02/news.0302-HT-A6_DEH53389.sto.