State panel OKs $20 million loan to Chattanooga to help fix sewer problems

NASHVILLE — Tennessee Local Development Authority members Monday approved a $20 million low-interest loan to Chattanooga for a planned $48.47 million project to correct long-standing problems with sewer overflows and infiltration that landed the city in hot water with federal officials nearly a decade ago.

The Tennessee Clean Water State Revolving Fund loan carries a 2.6% interest rate under the agreement. A state financial sufficiency review indicated that revenues and rates are sufficient for the city to repay the loan.

Of the project's estimated cost, just more than $11.8 million is coming from local funds. The federal government is providing $16.67 million under the American Rescue Plan Act, approved as a pandemic relief measure by Democrats in Congress in 2021.

As security for payments due under the State Revolving Fund Loan Agreement, Chattanooga is pledging its user fees, charges and certain tax revenue if that becomes necessary to meet its obligations.

Plans call for construction of a 5 million gallon equalization basin, a 10 million-gallon-per-day Hixson-area pump station as well as a 20 million-gallon-per-day submersible dry-weather pump station, and associated items.

It's all part of Chattanooga's long-term efforts to prevent sewage overflows under a 2013 agreement with the Environmental Protection Agency.

(READ MORE: City Council OKs $46 million to reduce wastewater flows)

The Chattanooga City Council approved a contract last week with Clark Construction Group. The city's consulting engineer is Jacobs Engineering.

"This project is a major component of the city's plan to reduce system overflows and stay within compliance," Mark Heinzer, administrator of the city's wastewater department, told the Chattanooga Times Free Press last month.

Construction of the new flow equalization stadium and the new pump station would be located at the end of Kanasita Drive, Heinzer said. The city will abandon and demolish the existing Hixson pump station off Adams Road.

The 5 million gallons in extra storage will allow the city to hold excess storm and wastewater during heavy rainfall and then release it back into the system once it has the ability to handle it, typically within 48 hours.

"This project will also provide the city with the system capacity necessary to approve future developments and promote growth throughout the city and surrounding areas as well as increase reliability throughout the sanitary sewer system in the event of power or mechanical failures," Heinzer said.

In 2013, the city entered into the agreement with the EPA, the state and the Tennessee Clean Water Network with the goal of eliminating or significantly reducing sanitary sewage overflows.

The Hamilton County Water and Wastewater Treatment Authority has had its own major problems. County ratepayers are footing the bill for $300 million over the next 20 years as a result of a similar agreement with the EPA.

(READ MORE: Hamilton County sewer authority agrees to $300 million settlement for clean water violations)

Early this year, Hamilton County Mayor Weston Wamp backed off a plan to use $3 million to fund projects using diverted wastewater funds. That came after county commissioners objected.

Contact Andy Sher at or 615-285-9480.