Halifax is refusing to take ownership of two new sewage treatment plants or pay the builder until "substantive" problems are fixed, Mayor Peter Kelly says.

The Halifax and Dartmouth plants are key to the Halifax Regional Municipality's $330-million harbour cleanup project. A third plant in Herring Cove is scheduled to open in spring 2009.

The plants are currently in the hands of the builder, D&D Water Solutions, a partnership between Bedford-based Dexter Construction Co. Ltd. and Degremont.

Kelly said the municipality wants to be assured the plants are problem-free before taking ownership.

"There is not a permanent solution yet," Kelly told CBC News on Tuesday.

The plant in Halifax, which was officially opened in February, has a number of deficiencies that have existed for months and have still not been fixed, according to a staff report prepared for council in August.

The report highlights a number of concerns, from odour problems to mechanical malfunctions that saw foam spewing up from underground pipes.

People in the area have complained repeatedly about bad smells coming from the plant on Lower Water Street.

The plant in Dartmouth is still in the testing phase.

Kelly said the municipality had been asked to take over the sewage treatment plants but refused this fall.

"Until these substantive issues are addressed, we're not taking ownership," he said.

Ownership of the plants was expected to be transferred shortly after the official opening in Halifax.

D&D Water Solutions is refusing to talk about the matter with CBC News. The company's contract with the municipality is about $140 million.