Oak Harbor lowers utility rates

Utility rates for Oak Harbor residents will lower by an average of $4.41 a month in 2023.

In what may be a first in Oak Harbor, utility rates for residents will lower by an average of $4.41 a month in 2023 and remain at the same level in 2024 and 2025 due to a decrease in the sewer rate.

Lowering the rate was based on a study done by Financial Services Consulting Group, a management consulting firm based in Minneapolis. The new rate schedule is a change from a 2020 study that concluded rate increases would be necessary for years to come.

“It’s definitely not common that we recommend a rate decrease,” Chris Gonzales of the Financial Services Consulting Group told council members this week.

Currently, the average customer pays about $215 a month in sewer, water, solid waste and stormwater utilities.

The ordinance inspired a lot of conversation among city council members at the meeting Tuesday, although no public comment was received.

“I just want to make sure we’re not going to have to play catch up,” Councilmember Jim Woessner said and asked how the city was able to lower the sewer rate.

Finance Director David Goldman said the city had a “substantial amount” of American Rescue Plan Act funding that was made available and allocated by council for water and wastewater projects.

“Partially because of that, we’re able to take a good look at the different rates and how we’re funding capital for the next few years,” he said.

Goldman also said that while the lower rate will likely be sustainable for the next three years, staff may have to revisit it if something unexpected happens, such as Anacortes raising the amount it charges Oak Harbor for water.

Public Works Director Steve Schuller said that inflation or new environmental regulations could possibly raise the rate as well.

Increasing system development charges — fees on new developments to recover an equitable share of costs — could also help keep rates low, according to both Goldman and Gonzales of the Financial Services Consulting Group. Raising the city’s system development charges was another recommendation from the consulting group.

Councilmember Bryan Stucky said the city had been considering a utility rate increase, so lowering the rate, even by a few dollars, was an improvement.

“This is not a great accomplishment but hopefully the start of turning things in the right direction,” he said.

Councilmember Shane Hoffmire said this was a great improvement from the monthly utility rates that were projected to rise by approximately $31.07 from 2023 to 2027, as reported by The News-Times in October of 2020.

“A $4.14 decrease might not be much but it’s so much better than the alternative,” Hoffmire said.

Councilmember Beth Munns and Woessner brought up concerns about the city’s $116 million debt still owed on the wastewater treatment facility. Woessner said he was concerned that the lowering rate may prevent the city from completing projects such as replacing the water line on Whidbey Avenue.

“I’ve got several hundreds of thousands of dollars in there to continue to address issues at the clean water facility,” Schuller said. “Is that going to be enough? I don’t know because I don’t know exactly what those costs are going to be.”

Goldman said the city’s debt would not lower substantially until 2042.

“We have much work to do beyond this first step,” Hoffmire wrote in a statement afterward. “The debt service for the $116 million still owed on the treatment plant is a burden that should have never been imposed upon this community. Knowing that $91 million of that debt comes in the form of state revolving fund loans, continuing to push for the forgiveness of some of these loans must remain a mission.”

Hoffmire previously promised not to vote for a rate increase in the next four years.

During the meeting, Hoffmire said a project like the wastewater treatment plant normally would have been 50% grant funded but Oak Harbor only received 2%.

“We need some help,” he said. “There has to be some forgiveness on these state revolving fund loans.”

Despite the concerns brought up at the meeting, council voted unanimously to approve the ordinance and lower utility rates through 2025.