Even as the Cedar Rapids City Council unanimously approved a $348 million bid this week for a wide-ranging improvement project at the city’s Water Pollution Control facility – about $70 million higher than the project’s originally projected $277 million price tag – officials said they will continue to seek ways to lower the project’s overall cost to the city.
The $348 million bid for the project approved at the council’s Aug. 13 meeting – from Bowen Engineering Corporation of Indianapolis – was actually the lowest of the two bids submitted. The other bid, from Weitz Industrial of Cedar Rapids, was for $430 million.
The total budget for the Water Pollution Control Facility project is estimated at $350 million, including engineering construction and the construction administration expenses, city finance director Abhijit Deshpande told the council. The budget also accounts for $35 million in value engineering savings through negative change orders.
Planning for the latest Water Pollution Control Facility upgrade began in 2015, including outreach meetings with key industrial and residential stakeholders. City utilities director Roy Hesemann said the primary elements of the project will incorporate improvements in the plant’s processing of solids, including Aerobic Granular Sludge Basins (AGS), which will facilitate organic waste processing in a smaller footprint; construction of anaerobic digestion facilities “where we’ll have better destruction of biomass”; and a new system to capture biogas from all the waste entering the plant – gas that will be captured, scrubbed, and sold as a renewable natural gas, or RNG, which could make the city eligible for renewable energy tax credits.
The newly upgraded Water Pollution Control Facility will be constructed using a modular design to allow for future expansion, Mr. Hesemann said, and “begins our journey of meeting the Iowa Nutrient Reduction Strategy, as well as provide steady work for local and regional contractors for the next four years.
Other improvements will include various civil improvements, utilities, modifications, and additional backup generation capacity.
City utilities director Roy Hesemann acknowledged the bid for the project was significantly higher than original estimates, and said there were four main reasons for the higher costs:
- A legitimate concern about a limited local labor shortage;
- A limited number of quotes from subcontractors and suppliers being submitted to the general contractors;
- Numerous biomass to biogas projects currently under construction, making it more difficult to get competitive vendor pricing; and
- Many large contracts under construction throughout the Midwest, meaning many contractors are “flush with work” and can’t take on additional work.
The Cedar Rapids Water Pollution Control Facility, at 7525 Bertram Rd. SE near Bertram, was constructed in the late 1970s and brought online in 1980. It is the state’s largest water treatment plant by volume and a vital facility for some of the area’s largest industrial companies.
Mr. Hesemann said the facility serves all of Cedar Rapids as well as Marion, Hiawatha, Robins, Palo and a small portion of Linn County – a population base of approximately 180,000.
“This facility is rather unique, since we do not require industry to pretreat their waste to low domestic strength levels,” Mr. Hesemann told the council in May. “In essence, we are an industrial wastewater plant owned and operated by the city of Cedar Rapids. By treating the high-strength wastes, we treat the equivalent organic loadings of a city of 1.9 million people.”
When plans for the latest upgrade were first made public in December 2021, Mr. Hesemann said that when the facility first came online, it utilized state-of-the-art technology, but that technology is now outdated and no longer supported by vendors.
Major improvements made to the plant since 1980 have included anaerobic pre-treatment of wastewater, lime stabilization, ash lagoons, disinfection upgrades and odorous air scrubbing systems.
After the flood of 2008 that knocked the treatment plant offline for 12 days, $85 million was spent on post-flood repairs, and another $20 million was invested in a flood control project to provide future protection.
“These investments helped to extend the useful life of the facility,” Mr. Hesemann told the council in 2021. “But now’s the time to make generational upgrades.”
About 70% of the WPCF’s volume is comprised of industrial wastewater, and as a result, the Cedar Rapids facility is the largest wastewater treatment plant in Iowa by volume.
“Our goal has always been to provide cost effective, reliable treatment of industrial and residential wastewater to support our region’s economy,” Mr. Hesemann. “WPCF is an economic driver for the entire community, and this project will provide the resources to support our existing industry and attract new industry while being good stewards of the environment.”
The project will be funded through three primary mechanisms: New debt issuance of $318.7 million, $36.7 million in cash on hand, and state revolving funds from the Iowa Finance Authority, in either 20- or 30-year terms.
Mr. Deshpande said based on forecasted revenues and expenditures, the project meets the city’s 1.25x additional bonds test, which is designed to ensure that the city has sufficient revenue covenants before issuing the new debt.
“The Utilities Department continues to pursue grant funds for this project that could reduce the total out of pocket costs to the city, but these grants will not be awarded for several months,” council documents indicate. “Some of these grants also have time constraints that require a significant amount of the construction to be completed by December 31, 2024. Given the urgency of the grant requirements, current inflationary pressures, and the continued aging of the existing WPCF facilities, Utilities Department staff recommends award of the base bid project at this time.”
Mr. Hesemann said the city has also consulted with area industrial leaders, assuring that rates will remain among the lowest in the area.
City council members said they felt that the city needed to proceed with the long-planned project, despite its higher cost.
“If we were to delay this project any further, even though we might find some savings, maybe there’ll be some people out there, but more than likely, costs will continue to increase,” council member Scott Olson said. “And whatever we might find in savings will be offset in finding new people to bid, if there are any out there with (experience in) this specific type of construction … there are very few contractors in the country that do this type of work, and we’re competing against other major cities across the country doing the same thing we are. And so the chances of us finding new faces to bid is probably going to be difficult.”
Mr. Olson also noted that the city has been conservative in its estimates of new revenue from the project, particularly from the future sale of renewable natural gas.
“We had an opportunity to make the numbers look better by assuming those things, and we have not,” he said. “And if they do come through, then they just become a bonus to the city’s financial situation.”
Councilmember Ashley Vanorny praised the ongoing efforts of the city’s utilities staff to keep costs under control.
“You’ve really been fiscally conservative in doing as much maintenance as you can until we’ve gotten to this project, that is obviously quite upscale,” she said. “Additionally, you’ve built it so that we can continue the rapid expansion that we have here in Cedar Rapids, knowing that particularly District 5 has a ton of businesses coming online that are going to need to tap into this. We often fail to realize the fact that we are propping up a lot of our region as well. So we’re providing this resource to the rest of the region, but the rest of the region wouldn’t necessarily be here if they had to do it themselves.”
Councilmember Tyler Olson said the project demonstrates the city’s economic strength, and noted that Cedar Rapids faces two main options to address its wastewater treatment needs.
“One is to wait until it (fails) and do it in an emergency fashion that disrupts the operation of the system and also costs more in the long run, probably leads to significantly higher rates,” Mr. Olson said. “(The other is) to do it in a very deliberate fashion, planned over a number of years, that keeps rate increases in line with what they’ve been historically. And I believe that the ratepayers of Cedar Rapids would like us to pursue the latter – a deliberate approach that gets in front of issues and starts this process with the 50-year-old facility now, so that we don’t have emergency fixes that cause rates to spike. People can understand what rate increases are going to be, they can plan for them and incorporate them into either their personal or their or their business budget.”
Officials hope to break ground on the project in September and complete work by January 2029.
