People with boats in Oak Harbor Marina could begin seeing a significant increase in their moorage rates.

At its July 6 meeting, the Oak Harbor City Council agreed to put out a call for bids for companies interested in dredging portions of the marina. If a bid is awarded the city will likely take out a 20-year bond to pay for the project, which is expected to cost at least $1.51 million. The bond would be funded from marina-generated revenue, namely that of increased moorage fees.

The council just approved a rate increase this past December, and the prospect of another rate hike so soon is not popular with some boat owners. It’s a matter of poor timing and the economy, said John Encinas, an Oak Harbor resident and the owner of a 16-foot power boat.

“If they had done this three years ago, nobody would have said anything,” he said.

There is no question the marina needs to be dredged, but the city should have been raising the money for the project over the past 10 years, he said. Hitting people with large rate increases over a short period of time during a recession puts a lot of financial pressure on boat owners.

But other boat owners, such as Arne Nielsen, the owner of a 25-foot sailboat on “A” dock, support the project even it means higher prices. His boat is often stuck in the mud due to the combination of low tides and extreme silt buildup.

“It will be worth it even with the increased rates,” Nielsen said.

Dredging is part of the marina’s five-year redevelopment plan, a document adopted in 2006 that called for a total of $19.2 million in improvements. According to Harbormaster Mack Funk, the document was well thought out but the exceptional cost made it unrealistic to do all at once.

“It’s a great plan but it’s a show-stopper,” Funk said.

To make the project more financially manageable, it’s been broken into phases. The first was completed earlier this year with the installation of a new gangway, concrete docks, and electrical and utility improvements.

It cost about $728,912 and was funded from the marina’s cash reserve. The council’s December rate hike, which called to raise rates 5 percent annually over the next three years, was designed to supplement that fund and help pay for later phases, such as the replacement of floats or the removal of the sunken barges on the southern end of the marina.

It’s still too early to know just how much rates will increase to pay for phase two, however, as the scope of the project has yet to be determined.

The council did discuss dredging the entire marina at an estimated cost of about $4 million, but decided instead to seek bids for dredging only specific areas. They include all of “A” and “F” dock, and undetermined areas around “B,” “C,” “D,” and “E” docks.

Any rate increases, which will require the council’s OK, will depend on the bid amount received.

According to a report released by Reid Middleton, the Everett-based engineering firm the council hired at a cost of $145,322 to plan phase two, the council would need to raise rates by $1.16 a foot to pay for dredging just “A” and “F” docks. To dredge the entire marina, rates would need to increase by $2.89 a foot, the report said.

Addressing the council Tuesday evening, City Administrator Paul Schmidt said a rate hike of that magnitude would likely hurt the marina’s financial solvency as it would result in the loss of customers. Some may go to neighboring marinas, such as those in Cornet Bay and Anacortes, while others may choose to keep their boats at home, he said.

“There is always the concern that if we have rates that are intolerable to a certain number of customers our occupancy rate goes down,” Schmidt said.

That would put the marina in a downward spiral as it would have to increase rates again to pay for the loss of revenue, he said.

However, Schmidt recommended that the council seek bids for “A” and “F” docks. Silt buildup is so extreme that some floats are beginning to take damage from hitting the bottom on low tides. There is also a time element involved, as the city’s dredging permit with the Army Corps of Engineers is set to expire Oct. 31.

City Council members Beth Munns, Jim Campbell, Danny Paggao, Rick Almberg, Bob Severns voted to seek bids for dredging “A,” “F,” and portions of the remaining docks based on the unit price of material removed while Scott Dudley voted against. Dudley supported the motion but wanted to also seek a second bid for the entire marina.