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The city of Watertown was frozen out of funding for a major upgrade to the municipal ice arena when the state announced Wednesday that $90.2 million was awarded for 82 projects in the north country.

City officials learned Thursday that, for a second consecutive year, the city did not obtain funding through Gov. Andrew M. Cuomo’s North Country Regional Economic Development Council for nearly $5.7 million in improvements to the ice arena at the Alex T. Duffy Fairgrounds. The project also was not funded last year.

“It’s a long-shot process,” Mayor Jeffrey E. Graham said, adding that he planned to “just move on” after getting the news.

Upgrades at the arena have been a goal of the city for a number of years and have been a pet project for the mayor. In 2009, Bernier, Carr & Associates completed a 10-year plan that included replacing the roof, installing a new stage, building additions for a new locker room and space to house the Zamboni, adding a pair of new entrances and making a series of other improvements.

At this point, the city does not have an alternative plan to fund the improvements, he said.

Mr. Graham had hoped the Thousand Islands Privateers hockey team’s playing its games at the ice rink this season would have made a difference because it added an economic development component to the project that it did not have in last year’s application, he said.

Despite losing out on funding for the arena project, the city was awarded money for another project, Mr. Graham said. The city will receive $585,646 to decommission the sludge incinerator at its pollution control plant and replace it with an expanded anaerobic digester and micro-turbine that will produce alternative energy on site.

Under the new process, sludge also would be turned into a mulch material that can be used as fertilizer.

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