WESTBROOK – Citing concerns over the risks involved in a proposed $2.05 million lease-purchase agreement for energy improvements at the city’s schools, the Westbrook City Council rejected the idea at a meeting Monday.

The Westbrook School Department had been seeking authorization from the council to take on the huge debt to pay for a series of energy improvements at the city’s schools through a 15-year lease-purchase agreement with Honeywell International at an interest rate of 4.26 percent. The proposal called for the school department, through the city, to borrow the money for the project from Androscoggin Bank, not through a traditional municipal bond. The council voted 5-2 (Councilors Brendan Rielly and Paul Emery in favor) against the proposal, killing it.

The school department intended to take advantage of a Maine Board of Education program to use money from what is known as a Qualified Zone Academy Bond, a federally funded bond that would pay for the interest on the debt. School Superintendent Marc Gousse said the principal of the debt would have been paid through energy cost savings that were guaranteed by Honeywell.

Some of the projects included in the proposed agreement with Honeywell included weatherization upgrades to the various school buildings, hot water system upgrades, converting from oil to natural gas for heating, water conservation upgrades and improvements to heating and ventilation systems.

Westbrook City Administrator Jerre Bryant said that the council was reviewing the financing of the project, not the merits of the project itself. He said while he could see the need for improving energy efficiency in the schools, he did not feel that a lease-purchase agreement with an interest rate that was higher than what the city could get with a traditional bond was the right course of action.

Bryant added that he would support moving forward with some of the projects proposed by the school department as part of the lease-purchase agreement with Honeywell, but those would have to be paid with existing school department money or through a traditional municipal bond.

“I very much want to work in support of the school department, (but) I do not feel it is an appropriate funding vehicle for this project,” Bryant said.

The city’s administration expressed some concerns over the federally funded bond, saying that if the federal government failed to renew the funding for it, the city would be obligated to pay the interest on the bond. Bryant said he found that risk unacceptable. “Based on my review of the terms and conditions of the financial plan and input from both bond counsel and general legal counsel, as well as the city’s financial adviser, I didn’t feel comfortable supporting it based on the risk factors,” Bryant said.

Gousse acknowledged Wednesday there was some risk in the proposal, but he said he felt the savings that would have been realized outweighed that risk.

“I certainly respect the council and the administration, and I certainly wouldn’t bring a proposal forward that would have put the city and schools in harm’s way,” he said. “There are always risks in anything we do, but you have to weigh the risks.”

The administration also took issue with the timing of the school’s request. Under the terms of the Qualified Zone Academy Bond program, the school’s funding for the project had to be in place by Dec. 31. With two council votes required to approve the funding, it did not leave the administration or the council much time to digest the agreement and give it full consideration, Bryant said.

Bryant said the school department requested that the issue be put on the council’s agenda for the Dec. 3 meeting on Nov. 21, and the materials supporting the project were given to the city the week prior to the meeting.

Councilor John O’Hara agreed that councilors didn’t have enough time to give the issue the study it deserved.

“I thought the time frame was very poor in getting information to the council,” he said on Wednesday. “We’ve got to have more time to digest (something like that).”

O’Hara said he would be in favor of considering any project that is going to reduce energy costs and potentially save money for the city, but he added that there wasn’t enough lead time to consider the pros and cons of this particular proposal.

“The timing wasn’t there,” he said.

Gousse said the school administration, which had been working on the project for about a year, did not initially feel that the project’s financing needed council approval. He said the reason why it did not make the request prior to Nov. 21 was because the school department learned in early November “through legal counsel that this item, if approved, would have to be brought before the council.”

Bryant said that “only the City Council is authorized” to incur a debt like the one the school department was proposing.

School Committee Chairman Ed Symbol said the School Committee’s Finance Committee had reviewed the proposal and with the consent of the School Committee and the school administration, had sent the matter on to the council for approval.