The Holmes Harbor Sewer District unanimously agreed Thursday to stop billing vacant properties that aren’t connected to its sewer system.

The move came in response to a recent state Supreme Court decision that said the district cannot assess sewer charges to undeveloped properties in the Holmes Harbor subdivision if those properties are not connected to the neighborhood’s treatment system.

The court case started when the sewer district sued a development company in the Holmes Harbor subdivision that refused to pay the monthly charges.

At the district board’s first meeting since the high court’s decision Nov. 23, the board agreed to stop charging all owners of vacant properties.

The case now returns to Island County Superior Court and Judge Alan Hancock for a summary judgment in favor of Holmes Harbor Home Building, the company that owned 80 vacant lots.

“This is about all we can do until Hancock has an opportunity to deal with it, within his view of what the Supreme Court decided,” said board president Stan Walker.

“This comes back to Hancock as a rather complicated mess,” Walker added. “But what the court clearly did say is, we cannot bill vacants. So we won’t do that.”

The budget hit is sizable, he said.

The revenue from undeveloped lots is about two-fifths of the district’s operating revenue, Walker said.

The district spends about $267,000 annually on maintenance and operations, according to the state’s 2004 audit of the district.

Homeowner rates won’t go up

Residential rates for developed lots will not be immediately increased.

“We have some savings that we can use to deal with this, at least through the first quarter,” Walker said.

“We don’t want to jack rates around so people are totally confused.”

But Walker hinted that some increase may eventually be necessary.

“We don’t want a lot of speculation about this. What we want is people to understand that this district is going to keep operating. And it may or may not cost a little bit more money, but we’ve got to do whatever it takes to make it work,” Walker said. “That’s fundamentally it.”

Although vacant properties won’t be billed, developed properties that have homes still on septic systems will be charged fees.

Some of the original homes in the subdivision near Freeland are still on septic systems. So far, district officials say that’s about six properties.

Subdivision dates back to 1960s

The Holmes Harbor development was first platted in the 1960s as a 500 lot-subdivision, and the sewer district was created in 1976 to create a sewage treatment system for the golf course community.

To pay for current and future sewage treatment, the district began assessing all property owners a fee. Vacant lot owners had been paying $48.33 per month per lot as of August 2002 to pay for current and future sewage treatment; property owners with a home on their land paid that amount, plus an extra $10.

Roughly 200 lots in the subdivision are undeveloped. Holmes Harbor has seen rising growth in recent years, however.

A total of 78 lots have been developed this year, up from 40 last year.

At Thursday’s meeting, commissioners avoided talk of rebates to property owners who have vacant lots until the court case is over.

“The other shoe hasn’t dropped yet,” said Commissioner Margaret Wingard.

“Even in a payback, there’s different options,” Walker said.

“It’s complicated,” he said. “And quite frankly, I don’t want to make a public statement that’s going to make the judge angry.”