Norwich ― After years of planning and design work, negotiations with state environmental officials, project changes and cost increases, the biggest utility project in city history is about to break ground.

The City Council last week authorized $199.2 million in bonding, secured solely by Norwich Public Utilities sewer revenue, to build a new wastewater treatment plant to replace the aging plant on Hollyhock Island. The manmade island sits in the center of Norwich Harbor, where the Yantic River splits into east and west branches as it spills into the harbor.

The project will be financed with 36% grant funding and the remaining 64% with a 20-year, 2% low-interest loan through the state Clean Water Act.

NPU has proposed a one-year, 12.1% rate increase for sewer service starting Nov. 1 to start covering the costs for the new plant. NPU General Manager Chris LaRose said the 36% state grant and favorable interest rate would help keep costs down, but NPU also is seeking additional state and federal grants to help reduce the loan amount.

“This is a difficult choice, but it is the one we must do,” Mayor Peter Nystrom said prior to the vote to approve the bonding ordinance. “It’s about the quality of the river. It’s also about securing, at this time, probably the best deal we’re going to get.”

Nystrom said normally, municipal utilities receive only 20% in grant funding, but NPU will receive a grant for 36%. NPU officials thanked the DEEP and Norwich’s state legislative delegation for securing the additional funding.

“When this is complete, we’ll have a very significant nitrogen reduction in our river,” Nystrom said. “And that’s to the benefit of all, the people in this room and future generations.”

Also last week, the state Department of Energy and Environmental Protection approved design and construction plans, NPU officials said Friday. NPU expects to sign a contract this week and give selected contractor CH Nickerson of Torrington the go-ahead to start construction by early November.

A groundbreaking ceremony is planned for late October.

The project will transform the NPU sewage treatment system, greatly reducing nitrogen pollution from the Thames River and Long Island Sound and the now frequent raw sewage overflows into waterways during major rainstorms.

When completed, the new plant will expand the city’s sewage treatment capacity from 15 million gallons per day to 20 million, allowing for increased economic development, utility officials said.

Part of the project includes spreading excavated material from the plant construction onto the city’s old landfill at the northern end of Hollyhock Island. The landfill, which never was capped properly, will receive a new cap when the project is completed and could become a future site for solar power generation.

“There is no way to underestimate the impact this project will have on the Yantic River, Shetucket and the Thames, and ultimately Long Island Sound,” NPU spokesman Chris Riley said.

The current plant was built in 1955 and upgraded in 1973. Equipment that was supposed to have a 20-year lifespan is still in use. The plant’s treatment systems fall short of current water pollution requirements, and NPU faced the prospect of fines for failing to comply with Clean Water Act regulations if the new sewer plant was delayed much longer.

Larry Sullivan, NPU water division integrity manager, said the environmental improvements will be realized in the fourth year of the five-year construction period.

Because the new plant will replace the existing equipment on the same grounds, the project will be series of construction and demolition, Sullivan said, while ensuring there is no disruption in sewage treatment service.

As one new component is built, its older predecessor will be demolished to make way for the next component.

“If you had a blank piece of land, we could get it done in two years,” Sullivan said.

c.bessette@theday.com