Inflation, shoddy work powered water plant cost

Feb. 4—Gilbert Capital Projects Supervisor Jeanne Jensen pointed overhead to a chunk of concrete that had fallen off a jamb, then noted the improperly placed and wrong-size rebar.

Both contributed to the lack of structural integrity at the North Water Treatment Plant at Higley and Guadalupe roads that will now cost Gilbert water customers a big rate increase to address.

The plant treats up to 45 million gallons a day from the Salt and Verde rivers, which then flow to faucets as drinking water for 144,000 residents and businesses in north Gilbert.

"As a function of the method of construction used and some other conditions that are just really challenging, the North Plant was just not physically in the condition where it needed to be to sustain its service for the next 50 years," Jensen said last week.

"The workmanship back in the '90s was not up to par."

The town is rebuilding the 21-acre plant to be bigger and better.

The estimated price tag of $677 million is the primary driver of a pending water rate increase of 134% for customers that would be phased in over three years to lessen the financial impact.

Town Council on Tuesday is expected to approve the hike, which would go into effect April 1.

No way to check work

The North Water Treatment Plant was constructed in the mid-1990s and but because it had to keep running, the town's ability to fully inspect the facility was limited, said Jensen, who is overseeing the current project.

But in 2018, the town gained unprecedented access to buried and underwater structures at the facility during a Salt River Project dry-up of its canals for maintenance and construction.

"As a result, we were able to go through the entire facility and identify at least $70 million in structure repairs that were necessary," Jensen said. "Most of these were due to a lack of construction quality.

"It's important to note that this plant was built prior to the year 2000. The year 2000 is when state statue changed to allow for qualifications-based selection of a contractor."

Before that, the town had to select contractors based on the lowest bid.

But repairing the plant's prematurely failing structures was just one of the challenges the town faced.

There were increased state and federal water-quality regulations to meet.

There was growing inconsistency in the quality of SRP's surface water due to catastrophic wildfires in and around its watersheds and the intense wet-dry cycles.

And the town's population is expected to climb to 330,000 when build-out is reached in the next six to seven years.

The town's temporary remedy to mitigate for the poor quality of SRP's water called for blending it with ground water, to meet the water quality standards.

But using groundwater long-term is not a smart way to go because it's not sustainable unless it's replenished and the town is not using its full allotment of the surface water, according to Jensen.

"The reality is the Gilbert North Plant as it is currently constructed and set up cannot meet the system's long-term needs," she said. "It's simply not able to.

"It has neither the capacity nor ability to do the treatment onsite to (take) us into the future sustainably."

So in March 2022, the town kicked off Phase 1 of the plant's reconstruction, which included installing a new residuals-handing facility to remove soil and fine particles from the SRP canal water.

The town is currently in Phase 4 and the last stage is expected to be completed by the end of 2028.

"This plant functions as the backbone of our supply because it's the single largest source and also the most flexible and variable source that will allows us to meet those demands north of 55 million gallons a day," Jensen said.

When completed, the plant will be able to screen, treat and filter up to 60 million gallons per day, It'll be able to serve 250,000 people at build-out and provide over 70 % of the town's available water supply.

And as the western states continue to wrestle with the ongoing shortages with Colorado River water, more communities are looking to turn wastewater into drinking water.

Gilbert's portable water portfolio consists 41% from the Colorado River, which is delivered through the Central Arizona Project.

Toilet-to-tap, however, is not on the books any time soon for the town.

"At this time the facility does not have those technologies for advanced water treatment built in," Jensen said.

"However, as part of the design, we left both physical space as well as mechanical space for any future treatment requirements whether it be a new regulation or a new source.

"I'm not sure that we would necessarily be entertaining an alternative source such as treated wastewater because we are already using so much of it."

Assistant Public Works Director Eric Baun agreed.

"It's currently not in our plans," he said. "But we didn't foreclose that future."

Project costs soared

The cost to rebuild the plant ballooned from its initial estimate of $457 million in 2021 to the $677 million today.

Jensen said there were no change-orders and blamed the $220 million increase entirely on inflation.

Construction and inflation escalation in the Phoenix metropolitan area is between 60 to 85%, depending on which metrics are used, she said.

She added that the Valley is in a unique position in the country in that many commercial and industrial developers want to build here because of the region's resiliency to natural disasters as well as proximity to ports and other entry points.

"We have a lot of competing efforts for the same construction talent," Jensen said, noting that concert workers and electricians are extremely busy right now.

She noted that value engineering shaved $30 million from the project's cost.

The project has one remaining contract to be awarded this year but Jensen was confident that the $677 million budget will not change as there was more flexibility in what to scope in Phase 5.

"This project is the absolute necessity to provide safe reliable resilient water for the community moving forward," she said.

The town has a second drinking-water treatment plant shared with Chandler that is located in the south. Santan Vista Water Treatment Plant gets Colorado River water through the Central Arizona Project, a source with more reliable water quality.

It was expanded in 2018 and no major renovations or other work is planned for it.

According to Sundt Contruction, which is upgrading and rebuilding the North Water Treatment Plant, it's the largest single investment in clean water in Arizona history.