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Oak Harbor City Council eyes years of utility rate increases
Living in Oak Harbor may soon become more expensive as the Oak Harbor City Council is set to consider rate hikes next week for three of the city’s four utilities.
The proposal, to be introduced Sept. 21, is to increase rates annually for the water, sewer, and storm drain utilities over the next five to eight years. If approved, rates would increase at a minimum of 3.5 percent per year and a high of 12.5 percent. For some utilities, the change would result in monthly bills more than doubling by 2018.
According to City Administrator Paul Schmidt, the new rates are being proposed for several of reasons, but the primary purpose is to keep pace with inflation and administrative costs.
“A lot of people don’t realize this but these are enterprise funds,” Schmidt said.
“Enterprise funds” are money collected for public services or goods in order to make them self supporting. All revenue generated from utility rates, both existing and proposed, can only be used for that specific utility. However, some of the additional revenue will be put toward relevant capital projects.
For example, the city plans to use revenue from the sewer utility to help pay for a new wastewater treatment plant, which has an estimated price tag of $70 million. Money from the water fund will help pay for a new reservoir, and storm drain revenues will help with the cost of repairing a broken outfall.
City staff and the council have been working up to next week’s meeting for months. In 2009, the city hired Seattle-based HDR Engineering, Inc., at a cost of $134,995, to complete a comprehensive study of the existing rates and come up with prospective increases.
HDR’s calculations are based upon bimonthly bills in 2009, though the city has since gone to monthly billings.
According to HDR’s estimates, sewer rate increases would begin at 3.5 percent and grow to 12.5 percent per year in 2018. A bimonthly residential bill in 2009 averaged $36.52, but will increase to $85.77 by 2018.
Storm drain rates would also begin with a 3.5 percent increase but it will remain constant until 2015. The average 2009 residential bill of $9.14 would grow to $11.07 by 2015, the report says.
Water rates are proposed to increase by 8 percent in 2011, followed by a 6 percent increase by 2015. The average, bimonthly 2009 residential bill of $29.50 would settle at $40.98 by 2015.
HDR also looked at solid waste, but it determined that existing rates will be sufficient until 2013.
But for individuals, the rate increases can be more complicated. The council has made several policy changes over the past few months that will affect how much people pay.
“It’s not just as simple as saying your water bill will increase 3.5 percent,” Public Works Director Cathy Rosen said.
Earlier this month, Sept. 7, the council adopted several water and sewer ordinance changes. Water rules became more conservation focused, transitioning from a “more you use the less you pay system” to a “less you use the less you pay” system. Also a flat fee based on meter size was adopted to address identified administrative costs, and a price break for multi-family residential customers with a single meter was instituted.
A multi-family residential structures are considered a four-plex or larger, Rosen said.
As for sewer rules, multi-family residences again got a break over single-family housing, as the occupants of a single-bedroom condo will likely not produce the same volume of wastewater as that of a family living in a four-bedroom home.
Finally, changes to stormwater rules were made in August. The most significant included the phasing out over a five-year period of special rates provided to public benefit nonprofit organizations and schools.
The idea behind all the rate hikes is to make it easier on the public with gradual annual increases. Some, such as the sewer rates, will be significant and hopefully this will help ease the burden, Rosen said.
“We’re trying to take little steps,” she said.
The utility rate proposals will go before the council for an initial introduction Sept. 21. It will be heard again Oct. 5, at which time a public hearing will be held and the council will likely vote on the increases.