In the face of threatened lawsuits, the Oak Harbor City Council directed the city administrator to try to negotiate settlements with the parties involved in the Dillard’s Addition sewer snafu.

If nothing is resolved, Councilman Larry Eaton said he may call for a special investigation to get to the bottom of the donnybrook.

“There’s good people on both sides of this argument,” he said, “and I am just really confused and frustrated with this issue.”

The council listened to nearly three hours of testimony about the controversial sewer system before continuing the hearing, at the urging of the city staff, to the Oct. 16 meeting.

In the meantime, Councilwoman Sue Karahalios made a motion that City Administrator Paul Schmidt, with the city attorney, negotiate with the parties involved to see if settlements can be reached. The council unanimously agreed.

The hearing began with a 40-minute executive session to discuss threatened legal action.

Unless some sort of compromise is worked out, the decision ultimately facing the council is whether to approve a developer’s reimbursement agreement — also known as a latecomer’s agreement — for the low-pressure, grinder-pump sewer system that was installed in the waterfront Dillard’s Addition neighborhood.

Many of the 10 residents who spoke in opposition to the sewer system and reimbursement agreement had harsh words for the city.

“Moving to Dillard’s has shown me how far-reaching the hand of a developer can be,” said resident Julee Haven. “The Dillard sewer discussion clearly exposed how far the city has sunk to favor yet another developer at the expense of yet another neighborhood.”

If approved, each of the 30 residents of the neighborhood would have to pay their proportionate share of the cost of building the system. But there’s also the cost of purchasing grinder pumps and hooking in. In all, it’s estimated to cost about $15,000 per resident.

Schmidt told the council that staff will recommend that they approve the agreement since the applicant met all the requirements. He previously said that staff would also recommend that the council delay the requirement that residents hook into the system within six months after the reimbursement agreement is passed in order to give the city time to create a hook-up incentive plan.

The man seeking the developer’s reimbursement agreement, however, said he would want interest if the requirements are stalled.

Rob Anderson, the owner of a Nevada engineering firm, spoke at length about how he came to be in the middle of the fight between the city and Dillard’s Addition residents.

Anderson said he and his wife purchased a home in the neighborhood and completely refurbished the property, turning it into two homes. He said he and his wife live in one and plan to sell the other.

Anderson said it didn’t make sense to install two septic systems since city code required the entire neighborhood to hook into city sewers long ago. He felt he was being a good neighbor by installing a sewer system for the area. He ultimately installed the only type of sewer system city staff would approve.

“We thought we were doing a good thing,” he said, “and honestly, had I realized or even imagined that it would have gotten to this level of scrutiny and public debate and emotion, I am not sure we would have selected the alternative we did.”

Contrary to accusations by others at the meeting, Anderson said Schmidt, City Engineer Eric Johnston and Development Director Steve Powers did not favor him or bend to his whims.

“In every instance, they have bargained for the city of Oak Harbor and its good residents,” he said.

In fact, Anderson insisted that he is not a developer, even though he is seeking a developer’s reimbursement agreement as “Granite Parks Holdings Company LLC” and he’s consistently identified as “the developer” in city paperwork and by city staff.

Most of the residents who spoke had a wide range of beefs with the city.

Marc Goetz, the owner of a home in the Dillard’s neighborhood, argued on a wide range of issues. He claimed the city’s own consulting engineer agreed that a gravity system would work in the area, contrary to the city’s assertion that it would be a risk to the environment. He said residents should pay according to how much the sewer system increased their property values.

Goetz claimed that, under state law, the city should own and maintain the grinder pumps. He cited an email from the city engineer to Anderson which states “there is a bit of a gray area when it comes to who owns and maintains individual pumps.”

Also, Goetz argues that the city should design a regular gravity sewer system to serve the entire basin surrounding the neighborhood. He claimed that would add 196 additional sewer connections, lowering everyone’s costs.

Others were upset because they felt mistreated by city staff and the administration, particularly since Dillard’s residents weren’t personally notified about the sewer going into their neighborhood before construction started.

Duane Dillard complained of being rudely treated, of not receiving full information from the city, of canceled meetings and six months of delays. Also, he argued that the grinder pump system was simply the wrong choice.

“The low pressure grinder pump system costs keep going and going, just like the Energizer Bunny,” he said.

Schmidt, on the other hand, began the hearing by defending the city’s decision-making. He said the city followed all laws and requirements, including public disclosure rules. He said the grinder pump system is not only the safest for the sensitive, waterfront environment, but is by far the most cost effective, citing a consultant’s report.

Also, Schmidt said staff recently visited Gray’s Harbor County, where there are about 300 grinder pumps in operation.

“They have considered them a very reliable alternative for a public sewer system,” he said.

You can reach News-Times reporter Jessie Stensland at jstensland@whidbeynewstimes.com or call 675-6611.