Ketchikan council to vote on $1.9 million design for a separate drinking water line

The Ketchikan City Council will vote Thursday, Nov. 5, at 7 pm on a $1.9 million contract with Jacobs Engineering to begin designing a new line for untreated water from the city's only water source. A $1.5 million forgivable state loan, also on Thursday's agenda, would pay for most of it.

The line would carry Ketchikan's drinking water around most, but not all, of the tunnels and pipes it shares with a hydroelectric plant. City staff say that separation must happen before the old system can be inspected or repaired. Without it, Jacobs says, repairs would likely mean a long-term systemwide boil water notice.

Staff also say the line would end the need to divert Granite Basin water to protect the city's filtration waiver, letting the hydro plant run at full capacity.

The project's cost estimate has grown since the council awarded Jacobs its first contract on the work in December 2024. Construction is not yet funded.

Ketchikan's drinking water and the Ketchikan Lakes hydro plant have shared the same tunnels and pipes since 1926. City staff wrote that the tunnels are "long overdue for inspection" and said the Federal Energy Regulatory Commission has requested one. Three 36-inch gate valves in the system leak.

The proposed 7,500-foot pipeline and access road along Ketchikan Creek would let the utility drain and repair the lower part of the system. The dam, tunnels, spillway and 54-inch pipelines above the diversion point would still serve both water and power customers.

The contract covers Phase 1, the first of five design phases, bringing the line's design to 10% complete. It also funds a study of a new lake intake and a report on the risks that would remain after the project.

In December 2024, design was estimated at about $1.7 million and construction at $12 million or more, roughly $13.7 million in all. The city's current capital budget sheet puts design at $6.2 million to $6.5 million and construction at $20 million or more, about $26.5 million total. Two staff memos instead put construction at "$26 million or more."

The 2024 estimate put the line in service by the end of 2030. The capital sheet now lists Dec. 30, 2031. Water Division Manager John Kleinegger wrote that construction is expected to begin no earlier than four to five years from now and that the line could be in service as early as 2032.

Assistant City Manager Shawn Hart says the state loan is fully forgiven and creates no debt. Ketchikan Public Utilities reserves of $399,000 would cover the rest of Phase 1. For the full project, the capital sheet assumes $16.5 million in borrowing and $10 million in grants. Apart from the state loan, neither is secured. Kleinegger wrote that construction grants or loans will be sought once the design reaches 35% in Phase 2.

The council raised water rates 8% in January on a 5-2 vote. In December 2025, Finance Director Michelle Johansen told the council the increase would average $66 a year on a customer's bill. The packet does not say what the new water line would mean for rates.

This new phase would go to Jacobs without a new solicitation, under a city code section that Hart's memo says applies when a contractor is the best choice based on prior work. Jacobs also held an $891,885 city contract to help negotiate the city's filtration waiver, which Alaska News reported Sept. 12 let Ketchikan avoid a $70 million filtration plant.

If the council approves the contract, Jacobs would begin field work in May or early June 2027, after federal access approvals, and finish Phase 1 by March 1, 2028.

Residents may speak to the council Thursday during persons to be heard.