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The Williamsport Sanitary Authority broke ground Tuesday on a $100 million-plus project mandated by state and federal regulations designed to improve water quality in the Chesapeake Bay.

The ceremony featured the traditional gold-painted shovels and commemorative photographs of board members, staff, engineers, construction personnel and invited guests, which included Mayor Gabriel J. Campana.

Executive Director David DiNicola read a brief statement before the ceremony, referring to the project as a "compliance program" and promising the authority would continue to seek funding for the project to reduce the impact on ratepayers.

To date, the effort has secured about $1.7 million in grants through the state and about $10.5 million in low interest loans through PENNVEST.

The first phase of work will focus on the central treatment plant and begin with demolition of two nearby structures, which until acquired by eminent domain were occupied by businesses that have relocated.

The newly acquired land will be used for construction of a $10 million, 2-million gallon capacity combined sewer overflow tank.

More than $60 million worth of equipment will be purchased and installed in the Central Treatment Plant before the spring of 2013 to bring it into compliance with the new nutrient-reduction guidelines.

The final pricetag for work at the central and west plants combined is estimated at $110 million - a figure calculated in 2007 and acknowledged as likely to inflate.

Demolition of the former businesses will begin immediately and construction of the tank should be under way by the end of the year with a March 2011 completion anticipated.

The project is targeted for completion by February 2013.

The ceremony began with comments by Thomas Frazier, authority chairman. He predicted a "tough three or four years" as the project unfolds and the authority continues gathering the financing for it.

Authority personnel have said their success in finding grants has been limited because authority rates are lower than elsewhere in the state.

That situation likely will change given that rates are projected to triple in the coming years from the debt of the project - increasing an average residential property's sewer cost to above $500 annually, according to authority estimates.

The mayor thanked the authority for its "hard work" and focused on the project's benefits.

He said it would help "stimulate" the area by creating more jobs and thanked the authority in advance for the permit fees all the construction would provide the city government.

Joseph Gerardi, building official and supervisor of the codes department, later confirmed the mayor's optimism.

He said the $80 million patient tower portion of Susquehanna Health's 2012 Project has brought in about $400,000 in building permit fees this year, and - by comparison - the sanitary authority project could generate about $500,000 over the new few years, including about $125,000 in 2010.