Oak Harbor leaders hope partnering with the Navy on the new sewage treatment plant will give ratepayers some relief from monthly costs that continue to skyrocket.

The Navy’s recent offer, however, will do little to help ratepayers and even has the potential to drive rates higher, according to Rick Almberg, a former city councilman who was closely involved in the treatment plant project. The residential rate in the city for wastewater treatment is currently at $110.47 a month and has been projected to steadily increase in the next few years.

Mayor Bob Severns, however, returned from Washington D.C. Friday after meeting with top officials at the Pentagon. He is optimistic that an agreement can be worked out, even though he concedes the two sides are currently far apart.

“There’s no question that they would like to make a deal,” he said of the military brass. “They want to get out of the water and sewer business.”

In response to the Navy’s earlier request for cost estimates, the city and its consultants determined that the Navy should pay $38.5 million in buy-in fees — plus millions more in annual maintenance and operations costs — in order to connect the Seaplane Base to the city’s new $150-million sewage treatment plant.

The Navy’s counteroffer is $9.5 million, just a quarter of what the city deems fair.

“I was absolutely appalled when I saw this,” Almberg said. “I would recommend that council not even negotiate until the Navy provides an offer that is equitable.”

Officials at Naval Air Station Whidbey Island stressed that they are looking for a solution that is equitable to all parties.

“It is important to understand that Navy must ultimately abide by fiscal regulations and review all options on behalf of all American taxpayers, ensuring the best use of their dollars while we develop the service we require for decades to come,” base officials said in a statement.

Six years ago, the city asked the Navy to partner in the construction of the treatment plant, but Navy officials declined, saying lump sum payments weren’t allowed without specific legislation.

The Navy’s treatment lagoons on Crescent Harbor are aging.

“The Navy prefers to discontinue using the plant on Seaplane Base, and work with local, tribal, state and federal stakeholders to restore the Crescent Harbor Lagoon,” Navy officials said in a statement. “The Navy is committed to continued discussions with the city to seek a mutually agreeable solution on the wastewater treatment plant proposal.”

After the city built the plant on its own, the Navy asked the city for quotes for costs under four scenarios for hooking into the facility. Almberg and other city council members stressed that they would look after ratepayers’ best interests and would not subsidize the Navy.

The city offered detailed proposals, which city officials and a consultant said represented equitable allocation of costs based on a generally accepted methodology.

The Navy recently submitted its six-page, PowerPoint-style counter proposal that offers just $9.5 million, plus annual maintenance and operations costs.

Under the counter proposal, Almberg argued, the ratepayers would be subsidizing the Navy to the tune of millions of dollars.

Severns, on the other hand, said the counteroffer is a negotiations tactic.

“It’s a major negotiations and they are good at it,” he said.

Still, Severns said the city would simply not be interested in an agreement that wouldn’t benefit ratepayers.

“We have a long ways to go to get to the numbers that are going to work,” he said, adding that he hopes to start negotiating as soon as possible.

In its offer, the city proposed that the Navy pay a $25.7-million system development charge, which is essentially the way a new development pays its share of the cost of a facility. Any new development, for example, has to pay a hookup fee for each new home on the system.

The city’s proposal also asks the Navy to pay a $12.8-million latecomer fee, which is similar to a system development fee but takes into account the interest ratepayers have already paid on the project, Almberg said.

The Navy’s counter proposal is to pay no system development charge and no latecomer fee.

The document states that it’s not appropriate to require the Navy to recover the capital costs of the plant “simply because it was not able to do so originally.”

Almberg questions the logic.

“It would be like a developer coming to town and saying I’m not paying the system development charges required by law,” said the former councilman, who was closely involved in the sewage treatment plant project from the beginning.

The city and the Navy proposals also differ on the costs for the collection system infrastructure, collection system improvements and operations and maintenance.

According to base officials, the Navy has options.

“If we cannot reach an agreement, we have a plan to maintain and upgrade the current plant on Seaplane Base, which would remain within current and anticipated discharge regulations,” according to the statement.

“We could also construct a small plant outside the lagoon to replace the current facility and operate it with the same team that operates our Ault Field facility.”