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Council moves for six years of utility hikes instead of three

The Oak Harbor City Council made it clear this week that proposed utility rate hikes, which represent about a 45 percent overall increase over six years, needs some polishing, particularly in areas of transparency.

The City Council has been looking at increasing rates for all four of its utilities — water, sewer, storm drain, and solid waste (garbage and curbside recycling pickup) — since 2009. But is wasn’t until this past Tuesday that members got their first look at an actual proposal put forward by city staff. Council members were in agreement that the city needs to be clearer concerning its long-range plans for utility hikes.

“The citizens of Oak Harbor deserve to see the numbers we’ve talked about,” City Councilman Jim Campbell said.

Over the past year, the City Council has on several occasions been briefed on a detailed plan to increase rates over a six- to nine-year period. However, the proposal before them Tuesday included rate increases for just three years and three utilities.

Campbell, along with nearly every other council member, said the public needs to be apprised of the city’s long-term plans, even if they are subject to change. It was also suggested that the ordinance needs a provision requiring the rates be re-evaluated on an annual basis to ensure they are fair and equitable.

The rates proposed are based on a study performed by Seattle-based HDR Engineering, Inc. The firm, hired in 2009 at a cost of $134,995, was tasked with completing what’s believed to be the city’s first-ever, cost-of-service analysis, a document examining existing rates, future revenue needs, and prospective increases.

The results were unveiled in two public workshops before the Council earlier this year. The study suggested rate increases for all four city utilities, most of which would occur annually over an average of six years. Due to the identified revenue needs, some of the rate hikes are significant.

Sewer rates are by far the most aggressive, increasing from 3.5 percent in the first year, 2011, to 5 percent by 2012. The rate would spike in 2013 to 10.5 percent, and stay constant until 2016 when it would climb to 12.5 percent. Cumulatively over the six-year period, the rate would increase 65 percent from what it is today.

Water rates, the next largest increase, would go up 38.9 percent over six years. The first hike would occur in 2012, climbing by 8 percent and would remain the same until 2014 when it would decrease to 6 percent. That rate would stay the same until 2016.

Storm drain rates would climb 3.5 percent every year from 2011 to 2015, representing a total increase of 21.7 percent over five years.

Solid waste rates were also examined, but they are not included in the current proposal before the City Council due to the first increase not being slated to take place until 2014. If approved in a later ordinance, the hike would be just 2.5 percent per year until 2016, accounting for a total increase of 7.7 percent.

A proposal for solid waste rates is expected to go before the City Council some time within the next six months.

Based on the study’s findings, all the prospective increases combined means the average Oak Harbor resident will be paying 45.3 percent more for utilities than what they are paying today.

However, the rate increases are complicated and won’t always be so clear cut. Over the past few months, the City Council has adopted several policy changes that affect what people pay by skewing the percent increases. For example, water utility rates became more conservation oriented. It changed from a more you use the less you pay system, to one in which the less you use the less you pay.

The changes make the rate hikes difficult to understand and will make it hard for customers to look at their bill today and really understand what the impact will be in six years, according to City Councilman Jim Palmer.

“It is confusing for the average citizen to understand these rates,” said Palmer, during Tuesday’s meeting. “It would be nice to find a simpler way.”

The utility study attempted to make the impact clear by including estimates for what the average person will pay, and several presentations to the council, which were open to the public, were provided. Unfortunately, when you make such big changes, it’s bound to be complicated, Oak Harbor Public Works Director Cathy Rosen said.

To help mitigate the impact, Rosen promised that city staff would be available to the public, whether it’s to just answer questions or to produce detailed trends of utility bills and suggest ways to reduce usage.

“I’m not sure what else we can do,” Rosen said.

The proposed rate hikes will go back before the Council on Oct. 5. at City Hall, located at 865 SE Barrington Drive.

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