Annapolis officials are poised to approve spending $12.5 million to start building a state-of-the-art water treatment facility as part of Mayor Joshua J. Cohen's proposed capital budget for fiscal year 2013.

The city council has granted initial approval for the project to move forward after considering — and rejecting — an alternative plan for the city to receive its water from Anne Arundel County. The council is expected to approve funding to start work on the new plant when it votes on the budget in the next few weeks.

The city's aging water treatment plant and its distribution system will be completely rebuilt by the end of 2014 at an estimated cost of $50.6 million.

The city has opened the bidding process and expects to have an agreement in place by November – a deadline imposed by state officials for the city to take advantage of about $18 million in low-interest loans from the Maryland Department of the Environment.

The $12.5 million in funding for fiscal year 2013 represents about $230,000 in grants and the rest in a loan from the state at 1.35 percent interest. The city plans to apply for additional loans to fund the project next year.

"I'm thrilled that this is moving forward," said Cohen, a Democrat. "It goes without saying that water and sewer are some of the most critically important services. This water plant is one of the ways in which the city is addressing the longstanding liabilities that need to be addressed."

Cohen added, "It's the type of thing that's not particularly sexy and high profile. It's literally been out of sight and out of mind for so long. I'm committed to addressing the city's fiscal and infrastructure issues head-on."

The existing plant, built in 1927 on the outskirts of the city along Defense Highway, has become a drain on municipal finances in recent years, requiring frequent maintenance and monitoring because of its age, said David Jarrell, director of the city's Department of Public Works.

The department frequently has difficulty locating parts to fix mechanical problems, and unlike more modern facilities, it must be staffed constantly, he said. The city distributes up to 6 million gallons of water daily.

"Our plant is so old that we have to have an operator around the clock, 7 days a week, 24 hours a day," said Jarrell. "Everything's antiquated. It works fine when it's working, but it's just difficult to keep up and running."

A recent feasibility study examining the difference in costs for Annapolis between a city-operated plant and one operated by the county indicated a virtual tie in construction prices. However, it would cost the city more in overhead and maintenance costs over 50 years to use a county plant rather than run its own, according to the study.

Under the proposal, the county would have owned and operated its plant, with the city paying maintenance and usage fees.

John R. Hammond, the county's chief administrative officer, said the county and city have long discussed the issue. The city already relies on the county for sewer services.

Alderman Ross H. Arnett III said he concluded that the city should continue to own and operate its own plant.

"You can't have some other entity controlling your water," said Arnett, a Democrat who served on a citizens group that studied the issue. "It seems like we should do it ourselves. We'll have much more control over what we do, the quality of the water and how much we charge."

Last year, the city council approved an increase in water and sewer fees. A water bill showing about 5,000 gallons of use increased to about $60 – up from about $33, according to the city.

nicole.fuller@baltsun.com