News

Utility hike under scrutiny

Inflation and dramatic spikes in the city of Oak Harbor’s fixed costs are prompting what looks like a 7.12 percent average utility rate increase for homeowners.

At least two City Council members, however, are firmly against bringing the proposed ordinance to the public, which is scheduled for introduction at the May 20 meeting, at least before an independent rate study can determine how Oak Harbor’s utility costs compare to other similarly-sized municipalities.

The increase has been on the horizon for months. Finance Director Doug Merriman broke down the ordinance-in-progress for the council and public at an earlier meeting.

Previously, staff presented a proposal for a rate increase of nearly 14 percent, but that number has been cut in half. City Administrator Paul Schmidt said last week that they are now taking a different approach in calculating the rate by possibly limiting the number of infrastructure projects the city will schedule over the next year.

“We took this approach to incorporate the cost impacts and to address inflation,” he told members of the Public Works and Utilities Standing Committee.

The ordinance, formulated and scrutinized by Merriman and the finance committee, will be introduced at the May 20 City Council meeting, said Public Works Director Cathy Rosen, at which time a public hearing will be set for June.

Each utility customer’s bill reflects four separate services. However, only water, which will increase 15.10 percent, and storm drainage with a separate 18.76 percent jump, currently warrant rate hikes.

If the city were to choose the worst case scenario, water rate requirements alone would increase by almost $750,000, or 24.6 percent. The reasons cited are water supplier Anacortes’ skyrocketing rates; the state mandate to pay for the relocation of water lines in the vicinity of state highway projects; and the construction of a 3 million gallon water reservoir and other line extensions.

In contrast, the storm drainage requirements are all directly tied to the city, Rosen said.

The public works director said a rate study will be necessary to determine where Oak Harbor stands in comparison to other municipalities.

Rick Almberg and Bob Severns, two of the three City Council representatives on the committee, were opposed to introducing higher rates prior to the rate study, which Rosen said would be undertaken over the summer and project out five years.

Using a hypothetical scenario, Almberg asked Schmidt how the city would function without a rate increase. Given the substantial mandated costs, the city administrator was less than eager to even imagine the situation.

“That’s what we’re trying to avoid,” Schmidt said.

Mayor Jim Slowik said the key issue is the importance of the five-year comparative rate plan, “so that we can see some rate increases coming.”

Severns, a local businessman well-versed in budgetary issues, said he could wrap his head around the fixed costs like Anacortes’ passed on increase. What he found troubling was the inclusion of what appeared to be one-time projects, like manhole replacements.

Almberg agreed with his colleague, adding that he found the breakdown of the rate rationale confusing, or at least ambiguous.

“If we don’t understand it, how’s the public going to understand it? I’m seeing apples and oranges here,” he said.

Development Services Director Steve Powers explained that “one-time” projects should instead be viewed as the most current undertaking the city is able to finance.

“Think of it as a capital project contribution,” he said. “Once one is done, there are others on the storm drainage list. It is not just that project, but ongoing.”

“When you look at water, those are ongoing costs forever,” added City Engineer Eric Johnston.

Schmidt estimated the cost analysis could take up to six months, which would translate to considerable mounting costs for the city.

Almberg could not be dissuaded. Comparing the rate issue to an onion, he lamented the growing number of layers to peel away. Regardless of the City Council’s decision on the rate ordinance, he said the presentation at the meeting would need to clearly explain the fixed costs, the “real numbers” and “the real need.”

“I think the public will support the need when laid out,” he concluded. “I think when it comes before the council, there should be a ‘Plan B.’ There should be a contingency plan.”

After the ordinance is introduced to the City Council May 20, the public will have an opportunity to provide feedback at a June public hearing.

Inflation and dramatic spikes in the city of Oak Harbor’s fixed costs are prompting what looks like a 7.12 percent average utility rate increase for homeowners.

At least two City Council members, however, are firmly against bringing the proposed ordinance to the public, which is scheduled for introduction at the May 20 meeting, at least before an independent rate study can determine how Oak Harbor’s utility costs compare to other similarly-sized municipalities.

The increase has been on the horizon for months. Finance Director Doug Merriman broke down the ordinance-in-progress for the council and public at an earlier meeting.

Previously, staff presented a proposal for a rate increase of nearly 14 percent, but that number has been cut in half. City Administrator Paul Schmidt said last week that they are now taking a different approach in calculating the rate by possibly limiting the number of infrastructure projects the city will schedule over the next year.

“We took this approach to incorporate the cost impacts and to address inflation,” he told members of the Public Works and Utilities Standing Committee.

The ordinance, formulated and scrutinized by Merriman and the finance committee, will be introduced at the May 20 City Council meeting, said Public Works Director Cathy Rosen, at which time a public hearing will be set for June.

Each utility customer’s bill reflects four separate services. However, only water, which will increase 15.10 percent, and storm drainage with a separate 18.76 percent jump, currently warrant rate hikes.

If the city were to choose the worst case scenario, water rate requirements alone would increase by almost $750,000, or 24.6 percent. The reasons cited are water supplier Anacortes’ skyrocketing rates; the state mandate to pay for the relocation of water lines in the vicinity of state highway projects; and the construction of a 3 million gallon water reservoir and other line extensions.

In contrast, the storm drainage requirements are all directly tied to the city, Rosen said.

The public works director said a rate study will be necessary to determine where Oak Harbor stands in comparison to other municipalities.

Rick Almberg and Bob Severns, two of the three City Council representatives on the committee, were opposed to introducing higher rates prior to the rate study, which Rosen said would be undertaken over the summer and project out five years.

Using a hypothetical scenario, Almberg asked Schmidt how the city would function without a rate increase. Given the substantial mandated costs, the city administrator was less than eager to even imagine the situation.

“That’s what we’re trying to avoid,” Schmidt said.

Mayor Jim Slowik said the key issue is the importance of the five-year comparative rate plan, “so that we can see some rate increases coming.”

Severns, a local businessman well-versed in budgetary issues, said he could wrap his head around the fixed costs like Anacortes’ passed on increase. What he found troubling was the inclusion of what appeared to be one-time projects, like manhole replacements.

Almberg agreed with his colleague, adding that he found the breakdown of the rate rationale confusing, or at least ambiguous.

“If we don’t understand it, how’s the public going to understand it? I’m seeing apples and oranges here,” he said.

Development Services Director Steve Powers explained that “one-time” projects should instead be viewed as the most current undertaking the city is able to finance.

“Think of it as a capital project contribution,” he said. “Once one is done, there are others on the storm drainage list. It is not just that project, but ongoing.”

“When you look at water, those are ongoing costs forever,” added City Engineer Eric Johnston.

Schmidt estimated the cost analysis could take up to six months, which would translate to considerable mounting costs for the city.

Almberg could not be dissuaded. Comparing the rate issue to an onion, he lamented the growing number of layers to peel away. Regardless of the City Council’s decision on the rate ordinance, he said the presentation at the meeting would need to clearly explain the fixed costs, the “real numbers” and “the real need.”

“I think the public will support the need when laid out,” he concluded. “I think when it comes before the council, there should be a ‘Plan B.’ There should be a contingency plan.”

After the ordinance is introduced to the City Council May 20, the public will have an opportunity to provide feedback at a June public hearing.

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