GEARHART — A long-standing water purchase agreement between Gearhart and Warrenton could see changes as Warrenton, with an eye toward the city’s water capacity, looks to update the agreement and raise rates.

Gearhart has been purchasing water from Warrenton for decades to help meet peak season demands. A memorandum of understanding in 2012 allowed Gearhart to purchase water at a discounted rate. The initial agreement was based on the assumption Gearhart would strive toward the ability to supply its own water, but water supply has remained insufficient.

In May, Warrenton prepared an update to the agreement that, among other things, stipulates Gearhart will continue to pay the discounted rate for one more year, after which it will transition to paying an out-of-town rate — the same rate unincorporated communities such as Clatsop Plains and Surf Pines pay to Warrenton.

Unlike the unincorporated communities, however, Gearhart is responsible for maintenance on portions of Warrenton’s water line that run through city limits — an arrangement that Gearhart city staff see as justifying the lower rate.

At a Gearhart City Council meeting in early June, City Attorney Peter Watts cited the rate increase as “the least of (his) concerns about the proposal.”

More alarming, he said, was a clause requiring that any new development larger than one housing unit in Gearhart be approved by the Warrenton building, planning and public works departments.

“That’s simply not how it works. We have our own (comprehensive) plan, and we have our own building process … If we were to allow another city to have some sort of parallel review, I feasibly don’t think we could get through it,” Watts said. “And because their standards are different than ours, and all their rules are different than ours, I think we would just end up getting sued.”

Watts described the proposal as too risky.

“Practically speaking, I don’t think we can agree to it,” he said. “Legally speaking, the legal risk is extreme, and frankly, I’ve never had another jurisdiction suggest that sort of arrangement.”

The updated agreement would also include a cap on the amount of water Warrenton will sell to Gearhart in the summer months: no more than 40 million gallons from June to August. Gearhart’s water purchases currently fall below this threshold, but Watts emphasized the need for Gearhart to continue to pursue more water rights to avoid being pushed into a moratorium — and to become less dependent on Warrenton in the future.

“The letter was written in a way that, in my reading, made it seem that Warrenton didn’t want to sell water to us, which was surprising, because … their cost is minimal, they have the capacity, and we’re maintaining their line,” Watts said. “So I’m kind of wondering why they wouldn’t want to sell it to us.”

In Gearhart’s budget message for the next fiscal year that starts in July, the city described the water operating fund as on a financially unsustainable course. The city agreed to transfer $341,000 from the water reserve fund as a supplemental revenue source.

Along with paying more for Warrenton water, customer rate increases are also possible in Gearhart to help adequately fund water operations.

Warrenton City Manager Esther Moberg emphasized that Warrenton has no problem with selling Gearhart water, but that the increased demands reflect concerns about Warrenton’s water capacity going forward.

“It’s not that we no longer want (Gearhart) to be a customer, but we have to be aware of our own impacts,” Moberg said. “We may potentially in the next three to five years have 400 units of housing coming online in our city … We have to be cognizant of the big picture, and not just Gearhart.”

Moberg said Warrenton has to consider water capacity.

“I think they were just thinking we would just dust off the old 2012 (agreement) and just have signatures and that was it, but it’s old,” she said. “We have to look at our own capacity.”

Moberg also noted that Warrenton has no intention of overseeing Gearhart’s development projects, and that language in the agreement may be softened to reflect that as negotiations move forward.

“We do want, as a courtesy, (to be) informed of their building of multiunit housing and things like that, but I think there was a misconception — we’re not trying to oversee their building plans or anything like that,” she said. “We’re not trying to halt their building projects. We just simply want to know if there’s going to be more impact or more requests to purchase water.”

City staff from Warrenton and Gearhart plan to meet more in the coming weeks to finalize an agreement to present to city councilors.

“It’s just making sure we’re in agreement (and) trying to make sure this benefits Warrenton as well as Gearhart,” Moberg said. “We’ll just get through this.”