Sewer district to get $250 million federal loan for upgrades
UNION CITY >> The Union Sanitary District will receive a $250 million federal infrastructure loan to upgrade its aging waste treatment facility.
The cash infusion will help support the district’s roughly $510 million plan to significantly upgrade its 33acre wastewater treatment facility in Union City, the largest improvement project it has ever undertaken. The project will take an estimated seven to 10 years to complete, officials said.
Aging equipment, including massive aeration tanks and clarifiers that treat wastewater in stages, will be replaced. New infrastructure will be installed to help the facility remove about half of all nitrogen in wastewater, as well as up to 90% of ammonia before it is pumped back into the bay, easing the district’s impact on local waters.
“We are happy to support Union Sanitary District and their project, which will help protect our cherished San Francisco Bay,” Martha Guzman, the Environmental Protection Agency’s regional administrator for the Pacific Southwest, said in a statement.
Guzman announced the loan Wednesday in a news conference with local and state officials. The loan is overseen by the EPA and made possible by the Water Infrastructure Finance and Innovation Act of 2014.
Through the 2014 act, “we are improving California’s water infrastructure to better deliver safe drinking water, protect our natural resources and build stronger, more resilient local economies,” Guzman said.
“We look forward to accelerating investments in water infrastructure under the bipartisan infrastructure law,” she said.
Much of the major equipment at the district’s main facility, located on the edge of the bay, is from the late 1970s and early 1980s, according to Paul Eldredge, the district’s general manager.
“They’re showing their age, and they’re unable to keep up with the technologies and the treatments we’re trying to accomplish,” Eldredge said.
Eldredge said the loan, which will have a low interest rate of roughly 1.8%, and a flexible payback deadline, will save the district and its customers about $50 million over the life of the project.
The district’s board of directors earlier this month approved awarding a $120 million construction contract to W.M. Lyles Co. of Fresno to build the first phase of the project, which will mostly involve upgrading and adding aeration basins.
District staff said W.M. Lyles was the low bidder, but the amount still came in about $34 million higher than the district engineer’s estimate.
Eldredge said the long timeline for the various projects, as well as a spike in material costs, a tight labor market and supply chain constraints, contributed to the higher bids.
The overall project will also include building a new building that will house administration, operations and maintenance divisions, according to the district.
Eldredge said those three functions currently are housed in three separate buildings, all of which either needed to be renovated or replaced.
Though the loan is estimated to save the district significant money over time, Eldredge said it would not prevent planned rate increases already approved. District directors agreed in May 2020 to raise rates for customers by about 45% over five years.
At the time, the district said more than half of that money would be needed for about $644 million worth of infrastructure upgrades over the coming decade, including the wastewater facility project, as well as routine maintenance on nearly 840 miles of sewer lines and pump stations.
Eldredge said the total cost is now closer to $713 million, and that figure is expected to rise again by tens of millions of dollars if the cost of the next phase of construction of the wastewater project also is higher than estimated bids.
“The initiative that we’re talking about is really the culmination of efforts that began years ago, really in earnest in 2015. We’re pleased that we’re at this point and we’re able to proceed. It’s been a long road to get here,” Eldredge said.
The district provides sewer services to more than 350,000 people in Fremont, Newark and Union City.