| WIFIA loan helps “Secret City” rebuild treatment plant
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WIFIA loan helps “Secret City” rebuild treatment plant

A city built in months to help develop the atomic bomb during World War II now needs several infrastructure upgrades.

“We basically need to rebuild a town that was built all at one time,” said Mark Watson (pictured below), city manager of Oak Ridge, Tenn. “It has all deteriorated at the same Mark Watsontime.” 

One of those projects is a new drinking water treatment plant that will be partly financed by a loan through the U.S. Environmental Protection Agency’s Water Infrastructure Finance and Innovation Act (WIFIA).

“We had a $42 million project spread over 15,000 community customers and one big customer, the Department of Energy,” Watson said. “How do we finance that? We had to come up with something unique that wouldn’t create such a rate shock.”

WIFIA provides long-term, low-cost supplemental loans to improve the nation’s water and wastewater infrastructure. In 2017, EPA selected Oak Ridge, a utility member of the American Water Works Association, as one of 12 projects nationwide. The city closed on the WIFIA loan in late 2019. 

Design and construction of the new 16-million-gallon-per-day ultrafiltration membrane treatment plant is expected to cost $42.2 million, and the WIFIA loan will finance nearly half of that figure, up to $20.7 million. The Tennessee Drinking Water State Revolving Fund will help finance the remaining project costs.

Unique opportunity for WIFIA

Oak Ridge, also known as The Secret City, was one of three communities across the nation built exclusively for the Manhattan Project in the early 1940s. Within three years, the town grew from 3,000 to 75,000 as people quietly moved in to work on the top-secret mission. The entire community was fenced during the war; guard towers still exist as historical reminders of the site’s significance. 

Current drinking water plantThe U.S. military built the area’s infrastructure within months, including the conventional drinking water plant, stationed on top of a ridge. In 2000, the federal government handed over operations of the water system to the city. (Pictured left, current water treatment plant)

“There’s been no other plant in between and no major structural rehab, but continual deterioration through the years,” Watson said.

Faced with this unique situation, the city became a prime candidate for the loan. At 30,000 residents, Oak Ridge was relatively small and had a partner with the state to help cover the rest of the loan, ensuring the project would be successful. 

Small city challenges

But being a small city had its challenges when applying for the loan, Watson said. The two-year application process took an immense amount of staff time, especially from the public works and finance departments. 

EPA did its best to recognize Oak Ridge’s administrative limits and provide aid under the agency’s constraints while also considering and becoming familiar with state laws that Oak Ridge had to operate under, Watson added.

He suggested that other small cities looking into applying for WIFIA consider hiring third-party support to see the application process through. 

“There’s a lot of information that is requested and lots of administrative costs,” he said. “We all had our normal duties, and we had some challenging times. It got quite busy as budget season rolled around. But you still had to keep the project on track.”

Despite the additional sweat equity, closing on the loan and getting started on the new plant (planned to open in July 2022), was all worth it, Watson said. 

Benefits of perseverance

City officials estimate the WIFIA loan will save Oak Ridge an estimated $7 million compared to typical bond financing. And it will allow the city to issue steady and tolerable rate increases over the course of the loan instead of sudden sharp hikes.

“That’s the beauty of the long duration; it’ll limit rate shock and big jumps all at once,” Watson said. “It’s good for us. We’ll be able to absorb it a little bit at a time.” 

The project also includes construction of raw water intake pumps, traveling screens, a finished water pump station and water pipelines, as well as rehabilitation of existing finished water tanks. 

And it won’t be in the same location on top of a ridge, which required expensive and energy-intensive pumping. Instead, it’ll be built near the city’s raw water source, on the side of Melton Hill Lake, and will extract water from an existing pump structure only a few hundred yards away instead of a few miles, cutting down on the city’s energy costs. 

“You have to have perseverance and determination as a small city to get through the process,” Watson said. “But it can be done.”

AWWA is hosting a June 14-16 workshop with finance professionals to discuss ways the Water Infrastructure Finance and Innovation Act, Clean Water and Drinking Water State Revolving Funds, and other programs can work together to help utilities solve their water infrastructure financing challenges.
 

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