Wednesday, November 30, 2022

CFPUA: Costs rise for construction of new wastewater treatment facility, now topping $250M

The aging Southside Wastewater Treatment Plant on River Road will be upgraded in the next decade, with a new estimate of $250 million for the build. (Courtesy/CFPUA)

WILMINGTON — A wastewater project, needed to accommodate expansive growth in the county, has doubled in price since first explored by Cape Fear Public Utility Authority in 2013. According to CFPUA, it will likely raise customers’ rates about 13% over the course of a decade.

The utility company’s long-range planning committee discussed funding strategies Monday to build a new Southside Wastewater Treatment Plant to replace the current one, located at 3436 River Road. First designed nine years ago, with projections to top out at $120 million, the facility’s price has climbed closer to $250 million.

READ MORE: CFPUA granted motion to intervene as Chemours challenges discharge permit

Also known as the M’Kean Maffitt Wastewater Treatment Plant, the 1970s facility has capacity to distribute 12 million gallons per day.

“The plant existing is 50 years old with ‘70s technology,” deputy executive director for treatment and engineering Carel Vandermeyden said Monday. “It’s aging infrastructure and approaching the end of its useful life.”

Before deciding to expand the southside plant, CFPUA shifted more capacity to the north, to extend the south’s usable life. The Northside Wastewater Treatment Plant — serving the northern portion of the county — has capacity to treat 16 million gallons per day, according to Vandermeyden.

Looking to the future, Vandermeyden explained capacity needs to be shifted back to the Southside. The Northside is expected to reach its max 16 million gallons per day by 2029, due to rapid population growth, specifically in the Sidbury, Holly Shelter Road and Greenview Ranches areas.

“It takes about five years to design and construct a wastewater plant, so we need to start now,” Vandermeyden said.

The rebuilt Southside plant would also treat 16 million gallons per day, which incorporates room for expansion.

To prepare for the project, CFPUA identified in its capital improvement budget $150 million in 2019, based on an updated 2013 estimate. After evaluating additional factors, including  inflation and the volatility in the construction market, costs are estimated between $217 million and $238 million, a roughly 60% increase.

The range includes a 10% to 20% contingency, which CFPUA executive director Kenneth Waldroup said should account for future inflation.

Adding in another $8 million to update the design, plus nearly $3 million for sustainability efforts, the final price tag could be closer to $250 million.

Vandermeyden said, on top of that, the project will use copious amounts of steel, concrete and copper — materials “outpacing general inflation.”

“So was what we spent a waste of money?” commissioner and CFPUA member Rob Zapple asked of the $9 million already doled out for engineering in 2013.

Vandermeyden explained that’s not exactly the case. The cost to update the plans is less expensive than the $25 million it could cost to start from scratch, which includes construction inspection. The authority can still utilize its 2013 plans to some extent.

Committee chair Larry Sneeden pointed out if the project had proceeded as planned a decade ago, it would likely be completed by now, with a roughly five year timeline from design to construction. Yet, CFPUA held off and resolved instead to divert capacity to its other plant.

Vandermeyden also reasoned the delay with CFPUA’s $43-million granular activated carbon project recently completed at Sweeney Water Treatment Plant. Taking on two large capital projects at once would have been too much, he explained.

The GAC filters already have increased customers’ bills by roughly 8%, or $5 per month — with another 8% rise expected next year.

“70% of the rate increase over the next two years is because of Chemours,” Waldroup said. “A victory in the litigation with Chemours could help.”

CFPUA sued Chemours in 2017 to cover the costs needed to upgrade its plant, blaming the Fayetteville company’s PFAS pollution in the Cape Fear River as the need for the expensive filters. Discovery in the case is ongoing and a trial is not expected until 2024.

Another utility increase would be needed to help offset the cost of construction for the Southside plant. 

CFPUA deputy executive director and chief financial officer John McLean gauged a 13% boost — or an average of $4 per month.

The average customer bill for water and sewer combined is currently $69 per month, according to Waldroup. By 2029, projected increases show a rise to $93 per month.

CFPUA is forecasting no rate hike in fiscal year 2025, but a 2.5% jump in fiscal year 2026; another 6% in 2027, 1.5% in 2028 and a 13.5% increase in 2029. 

Zapple asked if spreading the increase out more consistently was an option, as to protect customers from a 13.5% spike on their bills. Waldroup said it was still on the table, since nothing is finalized.

McLean explained there are a variety of funding strategies to weigh, including a public bond sale, federal low-interest loans and state loans. One option could come with a Water Infrastructure Finance and Innovation Act federal loan, but McLean said one has never been approved in North Carolina. WIFIA is a federal credit program established in 2014 and overseen by the Environmental Protection Agency to fund up to 49% of water and wastewater infrastructure projects.

“The longer term and the deferred interest, some of the things that actually make these financings attractive, the LGC pushes back hard on,” he added. “So that’s one reason we’re going to be meeting with a bond counsel next week to start going through what may be some of the machinations needed to accomplish this.”

The likely route would be a combination of all proposed funding options, Waldroup said. 

While financing details are being worked out, the authority needs to determine how to proceed with the build. Engineering manager Craig Wilson laid out two construction routes — design-bid-build or design-build — to pursue the needed Southside facility upgrades. 

A design-bid-build would include two contracts: one with the engineer to design the plans and another with a construction contractor. Both would be chosen with the request for qualifications process.

Wilson recommended the design-build process, which utilizes a single contract with a design-build team. He said that option has several perks including crafting the project within a specific budget, rather than choosing the lowest bidder.

“There is a guaranteed maximum price through transparent open books,” Wilson said, meaning CFPUA will have access to all the numbers throughout the process to monitor any budget excesses.

He explained construction could also begin when engineering design is about 60% complete, as opposed to waiting until design plans are almost finished. This could shave off about nine months of the process and allow the project to wrap by winter of 2028.

Consensus was reached to recommend to the board a design-build process, though it is only a recommendation; the CFPUA board will give final approval in December. If agreed upon, Wilson said he can submit a request for qualifications for a design-build team by April 2023.

The financing committee will also discuss the Southside plant at its Dec. 7 meeting.


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