Oak Harbor to save millions on sewer loans

The City of Oak Harbor received the green light to obtain a low-interest loan of state and federal dollars to help fund the new sewage treatment plant.

Borrowing money for sewage treatment may not seem sexy, but Finance Director Doug Merriman said the low interest rate of 2.7 percent will save the city about $6.1 million in interest payments over the life of the financing period.

What’s more, the $11.46-million loan is just for one year of the project and city officials plan to apply for the loan throughout the multi-year project, so the savings could balloon.

And that’s good news for ratepayers.

“If we continue to be accepted in future funding cycles, that will definitely pull rates down from our original projections,” Merriman said.

Meanwhile, archaeologists, geotechnical scientists and real-estate experts hired by the city have been analyzing the Whidbey Island Bank building and surrounding land. The city entered into a purchase and sale agreement with the company for $2.6 million; the city will buy the property and build the treatment plant in the back parking lot if everything checks out.

City Engineer Joe Stowell said the work is ongoing, but the experts haven’t found anything in the parking lot that would nix the project so far. He said the 35,000-square-foot building has some small issues that would likely have to be addressed, depending on what the city plans to do with space.

“Everything is going along just fine,” he said.

The Department of Ecology released the list Friday of public projects throughout the state that were chosen to receive the funds through the Water Quality Program’s revolving loan for the year 2015. The city’s loan will help cover the cost of design work and construction on the wastewater outfall and treatment plant.

Merriman said the competition for the loans is pretty fierce. He said it took him and officials from the public works department about five weeks to put together the application.

Provided for by the federal Clean Water Act, the program is funded by an annual EPA capitalization grant, state matching funds, and principal and interest repayments on past loans.

This program provides low-interest and “forgivable principal loan funding” for wastewater treatment construction projects, eligible pollution control projects, and certain green projects, according to Merriman.

Mayor Scott Dudley said the inclusion of Oak Harbor’s project on the list is great news for a project that will likely be the most expensive in the city’s history.

He said the city ratepayers deserve a break, especially after absorbing a $2.20 monthly increase in the monthly storm drain fees to cover a portion of the cost of unearthing a Native American burial ground during the Pioneer Way project.

Stowell said he’s working with the city’s contractor and other city officials to create a new estimate for the cost of the treatment plant, which will then allow them to estimate the future rate increases for sewer service.

An earlier estimate was $93.5 million, but that assumed Navy participation — which isn’t going to happen at this time, said Navy officials — and a much higher interest rate on a 30-year bond.

Under the Water Quality Program’s revolving loan program, the city will pay only 2.7 percent on a 20-year loan.

He added that the city will continue to seek other funding sources, including grants, as the project progresses through 2017.


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