Officials have broken ground on a water recycling plant in East County, amid negotiations to resolve a pipeline dispute that threatens the $950 million system.

More than 150 people gathered Wednesday in Santee to celebrate the Advanced Water Purification Project, which should eventually treat more than 11 million gallons a day.

With a giant Volvo excavator rumbling in the background, shovels were driven into the dirt in the hopes that the plant can be up and running within about three-and-a-half years.

This is a “historic milestone,” said Allen Carlisle, CEO and general manager of the Padre Dam Municipal Water District, which is part of the project’s vast network of partners.

Carlisle was joined by leaders from the federal government, local city council and everything in-between. He said the plant will help the region be less reliant on outside sources amid a historic drought.

“Climate change anxiety” will convert to “climate change confidence” when it comes to water, said David Gibson, from the San Diego Regional Water Quality Control Board.

The ceremony took place on a dirt field just north of the public part of Santee Lakes, where the project’s visitor center will eventually stand.

Leaders said the plant should create about 2,500 jobs between construction and operation.

At the same time, the project’s governing body, known as a Joint Powers Authority, continues to discuss a stalled deal with San Diego.

The city initially backed out of paying for a multi-million-dollar pipeline over concerns about where the money would come from, leading both sides to threaten legal action.

San Diego later offered a compromise, and there is now a “reasonable likelihood of success,” Jay Goldstone, the city’s chief operating officer, said in an interview at the ceremony.

After two meetings last week, San Diego agreed to pay $33 million while the East County authority would cover $7 million, he said.

The sticking point is what would happen if East County’s plant is finished before the pipeline. If the eight-mile “brine line” isn’t ready to transport waste left over from the recycling process, the sewage could instead head to San Diego — which could potentially overwhelm the city’s system, officials have said.

Another meeting between the two sides was scheduled for Friday, Goldstone said.

During the ceremony, Carlisle, the head of Padre Dam, also announced that Wednesday was his last on the job.

He’d long planned to retire at 55, he said. Carlisle and his wife plan to move to Mexico to work at Rancho Santa Marta, which houses and educates homeless, orphaned and abused kids, he said.

Carlisle passed the baton — literally, in this case — to Kyle Swanson, who has been Padre Dam’s assistant general manager for the past several months.

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