LYNDEN - The city is on track to start building a new water treatment plant early next year, with a lower cost burden for the city and its residents than had been expected, Lynden officials said.

The cost estimate for the plant based on the final design is $24 million to $26 million, Public Works Director Steve Banham said. He believes it will be the largest public works project in the city's history.

A year ago, the city was planning to spend $5.6 million up front because two low-interest state loans and a county grant-and-loan package wouldn't cover the full cost. But the state loans ended up being larger than anticipated, city Administrator Bill Verwolf said.

"We're fortunate ... to not be putting city cash into it at this point," Verwolf said.

Lynden also was planning 10 percent increases to its water rates to make up the cost. Instead it will raise rates by up to 7 percent through 2015 at least to bring in enough revenue to pay back the loans, Banham said.

When completed, the new plant will replace and double the capacity of the existing treatment plant, which is more than 80 years old, Banham said. The city gets its water from the Nooksack River.

"This has been in the works for several years," Banham said. "The existing treatment facility ... has seen some expansion in the past, but it's way beyond the ability to continue to be expanded."

Barring a last-minute setback, the city will begin accepting bids on the project in mid-January.

"We're in the process of just nailing down all of our finances and signing off on loans," Banham said.

Stremler Gravel, Inc. of Lynden has already been hired for $1.4 million to lay utility pipe and otherwise prepare the area for construction of the plant and a new road. The new plant will be built adjacent to the existing one, off South Sixth Street, south of downtown Lynden.

The work is scheduled to begin Nov. 26 and should be completed within three months, Banham said.

Reach RALPH SCHWARTZ at ralph.schwartz@bellinghamherald.com or call 360-715-2289. Read the Politics Blog at blogs.bellinghamherald.com/politics.