Construction on $41 Million Wastewater Treatment Project to Start This Year

Traverse City commissioners will receive an update tonight (Monday) on an estimated $41 million project to upgrade the city’s wastewater treatment plant – planned to be funded through a low-interest state loan and possible city bonds and repaid over two decades through sewer fees. Construction is planned to start this fall and last through summer 2028.

The major repair project is intended to address aging infrastructure, increase reliability, improve hydraulics, and fix a deficient UV disinfection system at the city plant located on Hannah Street near Boardman Lake. Built in 1932, the plant serves approximately 15,000 city residents and 30,000 township residents in addition to local industries, according to the city’s website. City staff detailed several areas of operations in need of repairs and the dates the equipment was first built in a previous presentation to commissioners, including:

> Preliminary/Headworks Screening (1994): Lacks redundancy and sufficient hydraulic capacity.
> Grit Separation (1950s, 1970s): Performs inadequately, failing to balance flow during peak influent rates.
> Primary Clarifiers (1930s, 1950s): Significant corrosion and frequent costly repairs required.
> Primary Effluent Screw Pumps (1970s): Operating beyond their expected useful life.
> UV Disinfection System (1998): Reaching end of life and under an Administrative Consent Order (ACO) from the Michigan Department of Environment, Great Lakes, and Energy (EGLE). The new system must be elevated to prevent damage during high water events.

The ACO from the state means the city is under a deadline to replace the UV system by July 2026. It’s reached the end of its useful life and will be upgraded to withstand 100-year-flood levels. The city also plans to improve preliminary treatment areas to reduce the amount of grit and particles making it downstream, which can help reduce operating costs. In response to complaints about odors emanating from the plant, the city recently noted that upcoming construction work is “focused on the areas most prone to unpleasant orders and will play a role in mitigating them.”

Cost estimates have steadily risen over the last few years as the city has worked through the design and engineering process with contractors Fleis & VandenBrink and Commercial Contracting Corporation. Initial estimates in 2023 put the project in the $23.5-$29 million range, which rose to $26.1-$35.8 million last year when approximately 30 percent of the design work was completed. The more design work is completed, the more accurate a picture typically emerges on costs. With 90 percent of design now complete, the updated construction estimate is $36,748,580. Additional costs for design and engineering services, construction oversight, and contingencies put the total project budget at $41,077,580.

The city has been approved for a state loan of $31.175 million through the Clean Water State Revolving Fund (CWSRF). The Michigan Department of Environment, Great Lakes, and Energy (EGLE) recently opened a 30-day public comment period on the loan, providing a detailed summary of the project and the opportunity for residents to give feedback. EGLE found in its evaluation that the project will “decrease the amount of total suspended solids discharged to the Boardman River during wet weather events, improving the water quality of the effluent to the river.” Short-term construction impacts should be “minimal,” the state wrote, concluding: “The water quality benefits anticipated from the project are expected to outweigh any short-term adverse impacts. Improving the efficiency and reliability of the system will provide long-term beneficial impacts.”

The state loan is low-interest – 2.5 percent – over 20 years. City commissioners recently approved raising the city’s bonding ceiling to $42 million to cover project costs. According to staff, the city could borrow additional CWSRF funding to close the budget gap beyond the initial $31.175 million loan – otherwise the city will need to bond the difference. A memo from the city’s bonding firm notes that the loan and any bonds will be repaid over the next two decades “solely from the user charges of the city’s sewer system.”

City staff gave a presentation to commissioners in December on a proposed overhaul to the city’s sewer and water rates, driven in part by an estimated $54 million in sewer projects – including the plant repairs – and $30 million in water projects on deck in the coming years. “These are huge projects,” Deputy City Treasurer Jahna Robinson said. “We haven’t seen projects like these in a very long time.”

Robinson noted that water and sewer are enterprise funds, meaning “the cost of providing those services has to be recaptured by billing for those services.” There are no general fund appropriations from the city’s budget for water and sewer, she said. Therefore, rates charged must be sufficient to cover operating costs. Representatives for the city’s water rate modeling software, Waterworth, said the goal is to gradually spread out rate increases in the coming years to cover those costs – rather than do nothing for a decade and suddenly have a major hike. Any rate increases for 2025-26 will be publicly discussed and voted on as part of the city commission’s upcoming budget process.