Escalon City Council reviews funding gap, timeline for surface water and wastewater projects

Escalon City Council received a status update Wednesday on two major water infrastructure efforts: a proposed surface water connection estimated at about $14,000,000 and a planned wastewater treatment plant upgrade the city estimates at about $40,000,000.

City Manager (City Manager) told the council the city applied for a federal grant request of $3,000,000 for the surface water project and expects to learn whether it will receive any award by the end of February. “We applied for $3,000,000. We don't know if we'll be successful in getting any grant or the $3,000,000 through the federal program,” the City Manager said. He said the city has collected “a little over $7,000,000” toward the roughly $14,000,000 project and that the city has secured, but not yet received, $1,100,000 in community project funds through Congressman Harter's office. He also reported $1,800,000 in water sales to the city of Tracy as part of the funding picture.

The City Manager said the city expected about a 40% chance of winning the federal grant based on competition and the project profile and that a grant award would significantly narrow the funding gap. He described the long-term rationale: “Groundwater quality and quantity is increasingly a challenge,” and added that existing wells are aging; the newest well is expected to cost about $3,000,000 and two of the city's wells are “nearing their life expectancy.”

The council was also briefed on the wastewater treatment plant upgrade, which staff described as the larger and more complex project. The City Manager said the plant faces state compliance requirements that contributed to a cease-and-desist order and a notice of violation; staff have been improving compliance, which “buys the city a little bit of time.” He said the plant upgrade concept currently sits near $40,000,000 and staff are exploring options to reduce the immediate ratepayer impact by phasing the work over several years if feasible. The city has engaged consultant Blackwater to validate prior conceptual work and to develop design and phasing scenarios.

The City Manager and staff stressed that industrial dischargers contribute variably to the plant's operating costs and that the city is examining discharge permits and possible rate adjustments. Staff presented a chart showing industry contributions last year totaled about $1,600,000 (about $1,200,000 from Premier Brands and roughly $400,000 from Eckerd), while the plant's annual operating cost is about $3,800,000. Staff said industry flow and constituent loads are highly seasonal — “90% in season” at peak, and lower in the off season — and that the city is pursuing ways industry might mitigate costs on their side of operations to reduce overall upgrade costs.

Staff said the city has implemented pilot studies to test technologies that might reduce treatment costs, but so far some pilot work has not produced a usable solution. To coordinate the many moving parts — compliance, industry participation, consultant design work, and potential phasing — staff said they are evaluating whether to hire or contract a project manager to expedite planning and negotiations with state regulators and industry.

The council did not take policy action on either project at the meeting. Staff said they will return with next steps after the federal grant decision for the surface water project; the City Manager said that if the grant is not awarded the city will pursue other funding sources and return to council for direction. The council also was reminded of a public workshop on the Murphy Ranch project scheduled for March 3 at 6:00 p.m., which will be a joint Planning Commission and City Council workshop, and staff said a proposed strategic plan for fiscal years 2025–26 will be presented at the same meeting.

Why it matters: The two projects together address long-term water supply reliability and state-driven wastewater compliance and could affect rates for residential customers and industrial users. The surface water project could substantially reduce reliance on aging wells; the wastewater upgrade is driven by regulatory compliance and current plant limitations.

What’s next: Staff will report back after the federal grant decision (expected end of February), continue consultant work with Blackwater on validation and design, and refine phasing and funding scenarios for council review.