Streator to weigh options on $1.45 million oxidation ditch project difference

An increase in equipment and labor costs has put Streator in a situation where it must find about $1.45 million to complete work on an oxidation ditch for the wastewater treatment plant.

The city, however, has some options for how it can make up that difference, the City Council learned Wednesday during its regular meeting.

The city is set to receive $1.2 million in federal grant funding from the U.S. Environmental Protection Agency and budgeted $800,000 in city sewer revenues for what it expected may be about a $2 million project.

Since the time of the grant’s application in April 2022 to May 2024, the cost of major equipment used in the low bid for the project rose about $450,000, and labor costs have increased, meaning the city’s forecast was about 10% to 15% low.

Mayor Tara Bedei said Thursday that it’s a “very unusual occurrence” to see this much of a difference in the estimate, noting that city staff has a strong track record of accurately estimating project costs.

The grant has a July 1, 2025, deadline.

One option would be for the city to proceed with the project, using cash reserves to pay for it, but that would not come without the cost of stalling some other projects and depleting funds counted on for emergencies, City Engineer Jeremy Palm told the City Council on Wednesday.

The city could use $500,000 in 2024 and 2025 from its sewer depreciation fund. This would mean the city would need four fiscal years to return the fund to its current level of $1.5 million, Palm said. This would eliminate the small-scale sewer maintenance project in 2025, which involved the cleaning and lining of sewers; the Coal Run Creek/Unsewered Area Project from 2025 to 2027 would be reduced in scope; and wastewater treatment plan projects would be reduced in scope until 2029, Palm said.

Depleting these funds also reduces Streator’s ability to use cash on-hand for emergency sewer repairs, Palm said.

Another option involves borrowing money from the Illinois EPA low-interest loan program. This option pushes the timeline of the project back to 2026 and risks the possibility of additional price increases. The city also would need to get approval from the U.S. EPA to extend the timeline of the grant to July 1, 2026.

The earliest a decision could be made from the Illinois EPA on a Streator loan would be January 2025, but the city also would be eligible for forgiveness of one-third of the principle. If the city borrowed the required $1.15 million, the estimated 3% interest over the 20 years of the loan would be about $253,814 to $380,720.

The City Council didn’t take action Wednesday, and action wasn’t necessary. Palm said the city has 90 days after taking bids to take action on them, which would put the City Council on a timeline to make a decision by its Aug. 7 meeting.

Oxidation ditches are a biological wastewater treatment process that use long solids retention times to remove biodegradable organics from sewage. The motors and electrical equipment in Streator’s oxidation ditch are the originals from 1992, Palm said. The motors and equipment have been well maintained, but the update would install energy-efficient items that could reduce the energy consumption of the plant.

“This is an important part of the wastewater treatment process,” City Manager David Plyman told the City Council. “This is the primary process.”