City hears county proposal to use rural economic development funds for Mulberry Village road work; council offers support pending funding

At the Oak Harbor City Council meeting on Oct. 7, Grants Administrator Wendy Horn described a request to use Island County's rural county economic development (RSED) program to fund road infrastructure for the Mulberry Village affordable-housing project.

"The Island County adopted the rural county economic development tax per RCW 82.14370," Horn said, adding that RSED monies "can be used to finance public facilities serving economic development purposes, construction of affordable workforce housing" and that the program provides grants only to local governments.

The proposal presented to the council explained that Opportunity Council and Shelter Resources are leading Mulberry Village, and that Island County is seeking $2,000,000 from its RSED fund to pay for the road infrastructure through the complex. Horn said the city previously submitted a letter of support and indicated it could assist in managing and administering funding for the project if the county commissioners agreed.

Why it matters: Mulberry Village is presented as an affordable housing project that would add below-market-rate units in Oak Harbor after decades with little new subsidized housing. Council members framed the road work as both an infrastructure need and a way to lower development costs to keep housing at below-market rates.

Council discussion focused on funding certainty, permitting and traffic implications. Councilmember Marshall asked whether roads would be built if all other funding were not in place; staff and a county representative said permitting would not proceed until the project had the majority of its funding secured. Horn said Opportunity Council had applied for a $1,000,000 Department of Commerce Connecting Housing to Infrastructure (CHIP) grant in 2024, reapplied for the 2025 cycle and expected a January decision.

Cody Bakken, identified as the Island County staff member who manages the RSED program, was in the chamber and available to answer technical questions. Councilmember Wiesner described Opportunity Council as a reliable partner and said he had no objections to the city serving as a pass-through administrator for RSED funds for a project inside city limits.

Traffic and transit impacts drew questions. Councilmembers noted that two existing bus stops near the project produce backups that could worsen as new units are occupied; they asked staff to follow up with Island Transit about stop placement and operations. Councilmember Romero and others said the Mulberry connection to the road network (identified in council comments as Mulberry Street linking toward "Swan Town Road") could relieve bottlenecks at nearby intersections.

Funding mix: In the presentation council and Opportunity Council materials cited a mix of potential sources under consideration, including the county RSED request ($2,000,000), a $1,000,000 CHIP application, possible HUD or Housing Trust Fund applications, and private lending (presentation materials referenced a prospective bank partner). Council discussion repeatedly emphasized that substantial private or other funding would need to be secured before permitting and construction could begin.

Outcome: The item was presented for information; no council vote was recorded on Oct. 7. Councilmembers expressed support for the city to assist in administering funds if Island County approves the RSED award and Opportunity Council secures the rest of the financing.

Next steps: Decision points rest with Island County and state/federal grant awards. Opportunity Council and Island County will need to finalize funding; staff said they will track permitting conditions and coordinate with Island Transit on bus-stop impacts as units are planned and filled.