At a special Service Delivery Committee meeting, Houston Public Works presented a plan to build a new East Water Purification Plant and recommended a delivery approach intended to speed construction while limiting disruption to existing operations.

Council Member Tarsha Jackson, chair of the Service Delivery Committee, convened the hybrid meeting and invited staff to present the East Water Purification Plant Enhancement Project, which Houston Public Works leaders said supplies water to roughly 90% of residents inside city limits who are served by the system.

Sameer Salanki, chief financial officer for Houston Public Works, told the committee that the department has secured a low-cost SWIFT loan commitment from the Texas Water Development Board for $966,000,000 and is pursuing Water Infrastructure Finance and Innovation Act (WIFIA) financing that could cover up to 49% of the project. "We were able to secure some low cost financing through them to the tune of $966,000,000," Salanki said. He added that combining TWDB and WIFIA loans, plus Houston Water utility contributions and a local contribution, brings the preliminary total near $4.2 billion.

Ravi Kalyatode, senior assistant director for drinking water operations, reviewed the need for the project and the alternatives the department evaluated. Kalyatode said Plant 1 and Plant 2 were built in the 1950s and Plant 3 in the 1980s; the combined rated capacity is 362 million gallons per day (MGD) but the plant currently produces far less on average. "There is a gap between 362 and what we are actually able to get out of this plant," he said, noting average output and that the system must rely on groundwater backup during shortfalls.

Kalyatode said the department studied three alternatives and recommends alternative 3: build a new plant in the monofill area west of Plant 3 with enhanced treatment processes including coagulation, flocculation, plate settlers and ozone. "Our recommendation is to go with alternative 3," Kalyatode said, adding the approach shortens schedule risk because the new plant can be constructed with minimal interference to existing operations.

On delivery, staff recommended a construction-manager-at-risk (CMAR) model with two separate city contracts: one for the designer and one for the CMAR. The team said that approach allows early work packages and construction input during design and that market outreach indicated contractor preference for the model.

Schedule and scope details presented by staff call for initiating procurement in the summer of 2025, an early substantial-completion milestone to deliver 90 MGD (presenters listed the milestone as "02/1931"), and final completion (listed as "02/1934"). The department described those dates as project milestones identified in the presentation materials.

Budget estimates provided to the committee place the total project cost in a range of $3.3 billion to $4.2 billion. Staff said the construction cost estimate is roughly $2.8 billion to $3.2 billion, with administration, engineering and permitting in the $0.5 billion to $1.0 billion range. Sameer Salanki said the TWDB SWIFT financing yields an interest-rate discount the department estimates could save about $200 million to $250 million over the life of the loan compared with open-market borrowing.

Funding plan details presented to the committee include the TWDB SWIFT commitment of $966,000,000; potential WIFIA financing covering roughly 49% of the project (presenters described that as about $2,000,000,000); approximately $1,100,000,000 from Houston Water utility participation; and a smaller local contribution to reach the high-end estimate. Staff said the first SWIFT loan installment would be $350,000,000 and that the council must approve the SWIFT application and the financing agreement for the initial disbursement.

Committee members asked about capacity, rates and timing. Staff said a new 360 MGD plant plus retention of Plant 3 at 180 MGD would put the system in the neighborhood of 500 MGD. On rate impacts, staff said the system does not currently have the revenue at current rates to pay the full program cost and that debt service could be "a few hundred million dollars per year." The department said it will complete a cost-of-service study with a rate consultant and return rate recommendations to council; staff estimated the comprehensive study will take about a year, and any resulting rate vote would follow that process.

Staff also described ongoing capital investments to extend life for Plant 1 and Plant 2 by roughly 10 to 15 years while the new plant is built. The presentation noted the department is using processes similar to the Northeast plant to achieve common operations and maintenance protocols.

No council votes or committee motions were taken at the meeting; presenters said council action will be required later for loan approval and financing agreements.

The committee chair closed the meeting after questions. Staff said procurement for the designer and CMAR is expected to be advertised in early summer 2025 and that the next Service Delivery Committee meeting would be in May. For more information, staff provided a contact phone number and email.