Since 2018, Johnson County Wastewater and its partners have been studying, planning, strategizing and reimagining the rebuild of the Nelson Wastewater Treatment Plant. It will be the largest capital project in the county’s history — updating our oldest wastewater treatment facility to be the newest.

There has been a massive amount of work and innovation done alongside our trusted partners for more than five years so far (with another six-to-seven years of future work) to strategically phase this project, procure the best project estimates and sub-contractor bids, come up with creative cost-saving ideas and utilize financing options that provide much lower interest rates than traditional methods. The result will be a savings of more than $210 million for the project.

Because of the ongoing strategy and planning, the increase in project costs will not impact the JCW’s rate schedule projections of 5% annual increases through 2031. Johnson County Wastewater has the second-lowest rates in the metro area.

Background on the facility and why a rebuild is needed

Nelson was built in late 1940s and is now at the end of its useful life. Existing technology won’t meet future regulatory requirements for handling wet weather nor removing nutrients. This major project closely follows the reconstruction of the system’s second-largest facility, Tomahawk Creek Wastewater Treatment Facility, which was completed in Spring 2022.

The rebuild of the Nelson facility is a major component of JCW’s 25-year Integrated Plan. This is an innovative and strategic approach to make the upgrades needed to meet regulatory requirements, address wet weather issues, allow JCW to stagger major capital projects, meet water quality standards, maintain the rest of the system and keep rates affordable. Another benefit to having the Nelson project follow Tomahawk Creek was allowing the team to take advantage of wet weather technologies innovated for the Tomahawk project, which proved to be very cost effective.

The same team is working on the Nelson renovation that delivered Tomahawk on time and on budget. Before Nelson, Tomahawk was the county’s largest capital project. Due to this project team, it went extremely well. For example, working with our regulatory agencies allowed us to focus on the wet weather standards that would need to be met, and come up with a creative solution to meet those standards. The outcome saved over $200 million on that project. 

Leveraging innovative financing

The team has taken an innovative approach to financing this project and has secured two different low-interest loan sources, saving an estimated $133 million in financing costs as opposed to the more traditional general obligation bonds.

Approximately 46% of the project will be financed by a $281 million Water Infrastructure Finance and Innovation Act loan. The low-interest WIFIA loan from the U.S. Environmental Protection Agency locked in a 3.01% interest rate and will save JCW ratepayers more than $80 million in financing costs. This loan provides early financing cost certainty for nearly half the total project cost.

A second low-interest loan for $276.74 million will fund almost the balance of the project. The Kansas Water Pollution Control State Revolving Fund Loan from Kansas Department of Health and Environment will fund 45% of the Nelson project at 60% of market interest rate. The first installment of $100 million will have a 2.14% interest rate. The total SRF loan is estimated to save $53 million.

Using creativity to control rising costs

The Nelson project team has come up with several ways to control costs of the Nelson project. One approach, called Value Engineering, utilizes creativity to come up with alternatives that save dollars without sacrificing quality. Continuing to refine and improve on efficiency of delivery has created about $61 million in savings.

In addition, the project team utilized the Guaranteed Maximum Pricing model with a staged and strategic approach to lock in pricing as soon as it was known.  This allowed the team to tackle the components of the project, saving an estimated $20 million as well as 12-18 months of construction duration.

This is a complex and challenging project in a challenging time. The Nelson project is meeting these challenges with teamwork, expertise and collaboration. The team is poised to deliver another successful wastewater treatment facility rebuild that will serve future generations in Johnson County. Please learn more a jcwnelson.com.