MANKATO — An $86.5 million modernization of Mankato’s regional wastewater treatment plant — one of the biggest projects the city has tackled in decades — could be underway by May after being halted by high costs two years ago.
The necessity of investing in the aging plant was thoroughly documented in a 2017 consultant’s report, but city officials learned in February of 2022 that cost estimates were woefully short of reality. When bids were opened, contractors were offering to do the work for anywhere from $60.1 million to $67 million — 33% or more above the expected $45 million cost.
With major components of the plant, particularly the 65-year-old digesters, at the very limit of their projected life, there was no thought of simply dropping the project. After all, more than 65,000 Mankato-area residents depend upon the plant every time they flush, as do tens of thousands more who live elsewhere but come to Mankato, North Mankato and several smaller neighboring communities for work, recreation and shopping.
“There’s a lot of risk in not getting this done,” Public Works Director Jeff Johnson said at the time.
Throughout 2022 and 2023, city leaders did extensive lobbying for funding assistance, engineering staff looked at changes to the project that might contain cost hikes, and a consultant worked on a strategy to more accurately estimate the expense. Despite the cost-containment efforts, steep inflation in the building sector and in building materials has pushed the new estimated cost of construction to $75 million. Other related costs drive the total even higher to $86.5 million.
But the city’s financing plan can match that amount. Just over half — $44.5 million — would be paid with local funds from ratepayers, including money previously paid and set aside for the looming work and future charges to sewer customers in Mankato, North Mankato, Eagle Lake, Madison Lake, South Bend Township, the Lake Washington Sanitation District and Skyline. (Lake Crystal is also seriously considering joining the regional wastewater treatment system.)
Another $35 million in revenue would be from direct appropriations for the project authorized by the Minnesota Legislature and Gov. Tim Walz last year. Another $7 million would come from a pot of money the state grants to local wastewater projects statewide.
Even as efforts were underway to find the money, the project design was being evaluated for ways to ensure construction inflation wouldn’t put the most vital improvements out of reach once again when bids were sought this winter.
“We had to make some compromises on a few things,” Assistant City Engineer Michael McCarty told the council Monday night. “… We’re never thrilled about taking components out of a project because they’re all valuable improvements.”
The revised designs, though, would still complete the critical fixes. Those include the construction of three new digesters — the heart of the treatment process where microorganisms spend weeks decomposing biosolids — and the accompanying ground-mounted collection dome that captures methane gas to be burned in the plant’s boilers.
The digestion complex, along with the disinfection system that would also be replaced, date back to the 1950s, meaning some of the components have been withstanding the plant’s highly corrosive environment for nearly seven decades.
Along with the adjustments in the design, two strategies aim to avoid another project-scuttling surprise when bids are opened in March. First, the city’s consultant worked with a contractor who will not be bidding on the project to develop a more accurate cost estimate this time, according to a memo to the council.
“Additionally, staff has identified the biosolids storage facility and remodeling of the operations building as components of the project that can be bid as alternates,” the memo states. “These components, while important to the overall operations of the facility, can be deferred if funding is needed for the core improvements to the digesters and disinfection facilities.”
The latest estimate puts the construction cost of the base project at $67.5 million with those alternates adding a combined $7.5 million to the cost. Contingency funds, engineering costs and other expenses bring the total price to $86.5 million. The bidding strategy will allow the council to drop one or both of the alternate improvements if the lowest bid requires all of the available funding just to complete the basic project.
Both of the alternates could be completed at a future date, and there is also the possibility of some additional funding. U.S. Sens. Tina Smith and Amy Klobuchar and Congressman Brad Finstad are attempting to get several million dollars for the Mankato project included in federal appropriations bills, although the potential for the earmark remains murky because of the ongoing inability of the Republican-controlled House and the Democratic Senate to agree on a new federal budget.
“We have not received any information from them (since November),” City Manager Susan Arntz said.
But even the base project would represent “the largest infrastructure project Mankato’s probably going to see for the foreseeable future,” Arntz said.
If the bids come in at or below anticipated levels, a winning contractor is to be selected in April, construction would start in early May and the work would continue for three or four construction seasons.