President Trump’s federal trade policies are driving up the cost of a major local sewer project.
Tariffs and market uncertainty added more than $33 million to the cost of constructing a new pump station at the Mill Creek Wastewater Treatment Plant, according to the Metropolitan Sewer District of Greater Cincinnati.
The project aims to reduce the amount of untreated sewage and stormwater that overflows into local streams during heavy rains. It's part of MSD's federally mandated sewer system overhaul to bring the utility into compliance with the Clean Water Act.
MSD Director Diana Christy says construction of the 700 million gallon per day pump station requires large quantities of steel and concrete — both of which are materials Trump increased tariffs on. Much of the equipment needed also is imported.
“The pumps and the components of the pumps themselves — each of these are massive motors — and many of these things are coming from overseas,” Christy said “So, these are the types of equipment and raw materials that we're seeing these costs attributed to.”
Market uncertainty, both around tariffs and the long time frame for the project, also factors into the increased cost.
“It's about seven years from start to completion, and these prices we have now through our bids, this is part of a guaranteed maximum price, so we are getting certainty of a maximum,” Christy said. “There is a large contingency built in for this uncertainty.”
Christy says MSD explored cost-saving measures earlier this year, and decided to go ahead with a few, like reusing the existing concrete foundation. But, it was too late to make any major changes. Design and planning for the pump station project has been ongoing for a few years.
“At this point we can't scale it back. There's no other materials that we can purchase. We really are at a point where we have to proceed with what we have in the design,” Christy said.
How will this impact sewer rates?
Christy says the increased cost of the project may require rate increases, but not large ones.
MSD is expecting to receive a loan for the full cost of the project from the Ohio Environmental Protection Agency through the Ohio Water Development Authority.
“That really does help with how we finance really large projects like this and take some of the cost that, otherwise, our ratepayers would be forced to pay. With rate increases today, it allows us to spread those costs out over time,” Christy said.
She says MSD would pay back the loan for 30 years.
Commissioners approve increased funding
The Hamilton County commissioners approved more than $319 million of funding for the Mill Creek Wastewater Treatment Plant High Rate Treatment Pump Station at their Aug. 28 meeting.
The amount of funding needed increased from an earlier estimate of $269 million, MSD told the commissioners.
Here is a breakdown of the $50 million cost increase, according to MSD:
- $33.2 million: increase in construction cost from 60% design estimate to bids, due to tariffs and market uncertainty (11.3% increase)
- $10.7 million: increase in design development between the 30% and 60% design estimate (3.8% increase)
- $2.8 million: increase in construction services for Owners Advisor contract, associated with extended construction schedule
- $2 million: increase in miscellaneous expense due to Ohio Water Development Authority (OWDA) loan origination fee and permit fees
- $1.3 million: increase in design fee related to changes to disinfection process per the outcome of value engineering
Tariffs create 'a significant challenge' for county, commission president says
Tariffs are making many of the materials needed for construction, from lumber to steel, more expensive across the country. Commission President Denise Driehaus says the pump station construction cost increase is one of the first local impacts of federal tariffs that Hamilton County has seen.
“That creates a real challenge for us, not only for this project, but for all of the projects that we will be looking at, whether it's an MSD project, or the engineer’s roads and bridges,” Driehaus said. “We have a lot of projects underway, and those kinds of increases are going to be a significant challenge.”
She says added costs may mean some projects have to be downsized, delayed, or eliminated.
“We’re all going to be paying the consequences for these federal policies, and I hope people understand that, because it's just going to create some real pressures on our budget,” Driehaus said.
Read more: