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Oak Harbor, Navy renegotiate sewage treatment contract

City expects windfall soon

The Navy has agreed to pay a new rate for sewage treatment on the Seaplane Base that is about 10 times what it’s been over the last two decades.

Oak Harbor Finance Director Doug Merriman announced at the City Council meeting Wednesday that city staff has successfully renegotiated a contract with the Navy to provide wastewater treatment. The city runs the treatment lagoons on the Seaplane Base, which treat sewage from both Navy facilities on the base and some of the city’s wastewater.

Merriman explained that under the 1987 contract, the Navy paid the city for the treatment at a rate of $0.35 per thousand gallons. Under the new contract, the Navy will pay $3.04 per thousand gallons.

“This more accurately represents the actual cost of treatment,” Merriman said, later adding that the city is “finally being compensated for our costs.”

He explained that under the old contract, the Navy paid between $3,200 to $3,300 a month to the city. Now, the Navy will likely pay between $32,000 to $33,000 a month.

In addition, the fee is retroactive back to Oct. 1, 2007. Surprised, Councilman Rick Almberg asked if that means the city will get a $300,000 check from the Navy soon. Merriman said it did.

Merriman explained the contract is for only two years so that the fee can be adjusted more often, or the city can get out of the agreement if officials decide to build a treatment plant elsewhere.

The money from the Navy will go into the city’s dedicated wastewater treatment fund. Merriman said anticipation of the extra cash is the reason why the city didn’t raise sewer rates for city customers this year.

The finance director explained that city officials 20 years ago agreed to allow the Navy to pay a low, fixed rate because the city had an urgent need for more sewage treatment capacity. By taking over operation of the Seaplane Base lagoons, the city didn’t have to spend $15 to $20 million to build a new facility.

Merriman said Navy officials tried to use this argument to negotiate a low fee once again, but city staff members “convinced them to look at it a different way.”

City Administrator Paul Schmidt thanked Merriman, Public Works Director Cathy Rosen and members of the development services department for their successful negotiations. He pointed out that the city hired a consultant to negotiate with the Navy to purchase the Navy’s sewage facilities, but the $400,000 effort was largely unsuccessful.

“We didn’t get near the results we had negotiating this internally,” he said.

The treatment lagoons themselves are built on federal property, but the city owns the majority of the improvements.

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