Oak Harbor officials are perhaps taking too much credit for getting a lower interest rate on bonds being sold to improve the marina. Originally the interest rate was predicted to be 5.6 percent, but it later fell significantly to 4.03 percent. This is expected to save $700,000 in interest over the life of the $2.56 million in bonds to be sold. At a  recent  council meeting, several people patted themselves on the back a bit too enthusiastically.

The unfotunate truth is that the reduced interest rate isn’t surprising and is hardly commendable. The city simply put all property owners on the hook for paying back the marina bonds.

Originally, the plan was to sell revenue bonds, paid back by money made by the marina. Bond buyers aren’t fools and demanded a significant premium for buying these babies in a bum economy. It was a bonus the marina couldn’t afford to pay.

Instead, every property owner in the city is guaranteeing the marina improvements will be paid off through general obligation bonds. These make sense for schools, but not for special-interest hobbyists like boaters. If marina revenues falter, all property owners will pay. If the council thought this was a good idea it would have proposed it to start with rather than trying to sell revenue bonds.

It doesn’t take a great imagination to come up with a scenario where the marina can’t pay its bills. All one has to do is look at front pages around the world: A major earthquake and/or tsunami would do the trick, as would a wind-whipped fire or if the Great Recession turns into the Great Depression II, which might put more yachts on the market than in the water.

The council had no choice but to adopt general obligation bonds with marina improvements, mainly dredging, already so far along. But in the future, they may want to know how much a project will actually cost, including interest, and who will end up holding the bag before they allow work to begin.