The Oak Harbor City Council continues its deliberate progress toward the Pioneer Way revitalization project.

In an effort to “do it right,” the City Council is shopping around for grants to subsidize the cost of a utility line conversion that would bury the overhead lines underground between City Beach Street and Midway Boulevard.

Visually “removing” the utility lines will minimize outages, increase the amount of unobstructed sidewalk space and make the downtown more aesthetically pleasing, said City Engineer Eric Johnston.

The utility transition from overhead to underground would be done at the same time as the downtown revitalization project, which currently includes storm water and sewer replacement, landscaping, new sidewalks and a one-way, eastbound street design with angled parking. Construction is scheduled to begin in January 2011.

The council previously approved $6.35 million to fund the design and construction of the revitalization project; however, city officials estimate an additional $2 million is needed to bury the power lines.

Puget Sound Energy will pay roughly 50 percent of the cost to bury the utility lines, or approximately $2 million, Johnston said. Verizon, Comcast and Blackrock Cable also have overhead lines, and these companies may or may not foot some of the bill, he added.

A grant or other outside funding source is necessary to convert the power lines.

“The chance of funding this internally is very low,” he said. “The city’s general fund cannot support this.”

A block grant in the amount of $1 million is available for rural cities to “enhance the quality of life for low- and moderate-income residents.”

Under the application guidelines, 63 percent of the Oak Harbor community is considered low to moderate income, Johnston said. The money will be doled out in May by the Washington State Department of Commerce through the U.S. Department of Housing and Urban Development program.

The City Council voted 5-0 in favor of applying for the grant.

The Island County Economic Development Grant program is another possible source of funding, Johnson said. A $1 million ICEDG grant, previously awarded in 2007, will go toward the design and construction of the project. Now city officials have their sights set on another $1 million award this year. The application is due in August and the grants will be awarded in the fall of 2010.

These grants are not guaranteed, Johnson said.

Submitting an application doesn’t mean the programs will award money to Oak Harbor. And competition for grant dollars is fierce.

The design engineer will move forward with a design that includes underground power lines. However, if Oak Harbor is not awarded the grant money, the design engineer will have to redraw the plans for overhead power lines.

City officials do not want to put the design on hold until the winners are announced, Johnson said, because the cost of labor and materials could rise.

On a positive note, the construction time would be shortened if the grants are awarded and the power lines buried.

“By not taking the opportunity, we also incur some costs through construction escalation,” he said.

The estimated $2 million needed to bury the power lines along Pioneer Way does not cover the building owners’ connection cost to the new line, he said.

This detail caught the attention of Councilman Jim Campbell.

“I’m in favor of underground power lines, but I’m going to be very, very reluctant to place a burden on the property owners,” he said at a recent meeting.

Mayor Jim Slowik assured the council that the property owners have been informed of the cost they may incur through the power line conversion.