Chattanooga officials are taking out an up-to-$186 million low-interest loan that will fund several large projects associated with the city's consent decree, a 2012 settlement with the Environmental Protection Agency designed to prevent sewer overflows into the Tennessee River.
On Tuesday, the City Council authorized staff to begin the process of issuing and selling the bonds. The EPA invited the city to apply for those funds in December 2021. They are available through the Water Infrastructure Financing Innovation Act.
"We were invited to get this loan specifically because of the projects we have in the pipeline that they see as demonstrating a commitment to protecting access to clean water," Ellis Smith, the director of special projects in Mayor Tim Kelly's office, said in a phone call Thursday.
According to a fact sheet the city prepared in February, the loan will support construction of three equalization stations near connections with the Hamilton County Water and Wastewater Treatment Authority, which will increase capacity in the regional system during heavy rain and eliminate sanitary sewer overflows in those areas.
It will also fund several improvements at the Moccasin Bend Wastewater Treatment Plan, including the implementation of a thermal hydrolysis process to help separate and eliminate biosolids, upgrades to wet weather treatment and the replacement of the oxygen plant.
Smith said the city will also continue the process of identifying and replacing old sewer lines.
Most of the city's projects focus on either two goals, he said: Adding capacity in the system to absorb rainfall or upgrading the city's ability to treat wastewater.
The city announced in February that it was assembling $337 million worth of funding to make investments in its stormwater and wastewater system that would address overflows and satisfy the terms of its consent decree.
That included the $186 million available through the Water Infrastructure Financing Innovation Act. The remaining funding, the city said in a February news release, will come from a combination of other sources, including state revolving loan funds and cash from Chattanooga's enterprise sewer fund.
Kelly said in early October that the city is now about halfway through a 17-year program to make improvements required under its consent decree, which the city anticipates will cost about $1.1 billion.
Chattanooga leaders recently celebrated the construction of three giant storage tanks at the Moccasin Bend Environmental Campus. The tanks can hold millions of gallons of stormwater and sanitary sewage during heavy rainfall to prevent stress on the sewer system.