Kodiak weighs borrowing up to $10 million more to replace its main sewage pump station

The Kodiak City Council votes Thursday on whether to borrow up to $10 million more from the state to replace the pump station that handles most of the city's sewage, after the only construction bid came in at more than twice the engineer's estimate.

The station is the city's largest. "80% of our sewage goes through Lift Station 5 before it goes to the wastewater treatment plant," Chris Lynch, the city's project manager, told the council in September.

It dates to the mid-1970s, and its pumps, controls and electrical equipment have reached the end of their design life, city staff wrote. About 20 years ago, the pipe carrying sewage from the station to the plant failed and sent sewage directly into Mission Lake. A similar failure in 2019 cost the city more than $250,000. Staff wrote that state regulators would likely levy heavy fines if it happens again.

Under a state compliance order the city agreed to, the new station is due by the end of 2027. That date could be extended because of logistics and supply chain delays, Interim City Manager Tim Putney wrote to the council, "but we have no other choice but to complete this project."

The trouble is the price. Brechan Construction bid about $16.3 million in June. The engineering firm DOWL had estimated about $7.2 million.

Most of the gap is in the ground. Brechan priced the main excavation item at $6.75 million, nearly as much as the engineer's estimate for the entire construction contract, according to a bid comparison in the council's work session packet. The estimate for that item was about $440,000. The new station needs an excavation more than 35 feet deep in a congested spot close to the lake, and staff wrote that the digging and the piling to hold back the soil "may not have been fully appreciated in the estimate."

It's the second time a bid has come in far above the estimate. In 2023, the first round brought a $17.7 million bid against an estimate of about $7.1 million, and the city rejected it.

With contingency and other costs, staff put the project's total at about $18.3 million. The city had about $4.6 million left from its existing state loan as of July, and a pending $3.25 million federal grant, leaving a gap of about $10.5 million.

The resolution would raise the city's loan limit from the state's Alaska Clean Water Fund to $17.4 million, from $7.4 million. The loan would be repaid from the sewer utility's revenue, without pledging the city's taxing power, and the council would still have to approve the final loan agreement.