EAST CHICAGO | The city is proceeding with the construction of a new waterworks away from the lakeshore, though on a smaller scale than originally planned.

The project still will cost about $54 million, said Eric Horvath, an engineer with Indianapolis-based American Structurepoint Inc., but the state-of-the-art facility will provide 16 million gallons per day of clean water, rather than the 24 million-gallon plant proposed last year.

"We didn't want to overbuild right now," Horvath said at a public hearing on the project, "because it would cost money."

But the plant will be designed to be easily expanded to provide up to 30 million gallons per day if demand increases, he said.

By moving operations of the current 44-year-old filtration plant away from Lake Michigan, city officials hope to free up 10 acres of prime lakefront property for economic development.

The new facility will be built on 7 acres south of Indiana Harbor Drive -- the former Michigan Avenue -- and east of Guthrie Street, property currently owned by the Redevelopment Commission.

A state program which provides low-interest loans for municipal infrastructure projects has approved the city's borrowing of $16.6 million for the new plant, and released $5.8 million for planning, design and engineering work this month.

The City Council's pledge of $3 million in annual casino tax revenue over the next 10 years, and a 70 percent water rate increase to customers implemented last year will pay for the rest.

Construction, which includes a new pumping station to pull water from Lake Michigan, a 54-inch tunnel to carry the raw water and a 3 million-gallon storage tank, is scheduled to begin next summer, with a completion date of early 2011.

Public comments on the project will be accepted until today and should be directed to project engineer Jessica Bastin, American Structurepoint, 7260 Shadeland Station, Indianapolis, IN 46256, or jbastin@structurepoint.com.

The comments will be included with the city's petition to the State Revolving Fund Loan Program.