City Council

Oak Harbor City Council Regular Meeting Minutes August 6, 2025 This was both a physical meeting location and a virtual meeting. Meeting was viewable via YouTube at www.youtube.com/cityofoakharbor, on Facebook, and on Cable Channel 10/HD 1090 following the meeting. CALL TO ORDER Call To Order and Native Lands Acknowledgement - Mayor Pro Tem Hizon called the meeting to order at 5:30 p.m. She included the acknowledgement that the meeting was being held on the ancestral lands of the Coast Salish people and paid respect to those past and present. Invocation – Led by Pastor Mark Bahr, Redeeming Grace Church. . Pledge of Allegiance – Led by Mayor Pro Tem Hizon. ROLL CALL City Council Present: Staff Present/Videoconference Mayor Ronnie Wright - absent City Administrator Sabrina Combs Mayor Pro Tem Tara Hizon Deputy City Administrator David Goldman Councilmember Jim Woessner - absent Public Works Director Steve Schuller Councilmember Bryan Stucky Parks and Recreation Director Brian Smith Councilmember Eric Marshall Police Deputy Chief Kevin Barton Councilmember Christopher Wiegenstein Fire Marshal Paul Schroer Councilmember Barbara Armes City Engineer Alex Warner Councilmember James P. Marrow Harbormaster Alyce Henry Central Services Manager Sandra Place Grants Administrator Wendy Horn Accounting Manager Chas Webster Communications Officer Magi Aguilar Executive Services Coordinator Macalle Finkle Also in attendance: City Attorney Robert Zeinemann of Kenyon Disend, PLLC and Attorney Kimberly Waldbaum of KBM Lawyers EXCUSE ABSENT COUNCILMEMBERS Mayor Pro Tem Hizon greeted all in attendance and noted she was presiding at the request of Mayor Wright. She noted Councilmember Wiegenstein was participating remotely and that Councilmember Woessner had asked to be excused and requested a motion to do so. Motion: Councilmember Marshall moved to excuse Councilmember Woessner, seconded by Coun- cilmember Marrow. The vote on the motion passed unanimously. 1. APPROVAL OF AGENDA Regular Meeting Minutes August 6, 2025 Page 1 of 17 Mayor Pro Tem Hizon requested any changes to the regular agenda. Hearing none, it was approved as presented. 2. EXECUTIVE SESSION a. Executive Session per RCW 42.30.110 (i) Mayor Pro Tem Hizon announced that the Council would now enter into an Executive Session per RCW 42.30.110 (i) to discuss with legal counsel litigation or potential litigation. She announced the antici- pated duration of the executive session was twenty minutes. Mayor Pro Tem Hizon noted action might or might not be taken upon return to the open session of the meeting and that executive sessions are not open to the public. The Council entered executive session at 5:36 p.m. At 5:56 p.m. the Council came out of the executive session and resumed the open session of the meeting. 3. CONTRACTS & AGREEMENTS a. Settlement Agreement and Release of Claims – Harbor Land Company, et. al Mayor Pro Tem Hizon noted that as discussed in executive session, the Council would now hear from City Attorney Robert Zeinemann to review the Settlement Agreement and Release of Claims. She ob- served that attorney Kimberly Waldbaum of KBM Lawyers, representing the Washington Cities Insur- ance Authority (WCIA) was also in attendance. City Attorney Zeinemann explained that on August 11, 2015, a lawsuit was filed by Harbor Land Com- pany, et. al. against the City. The plaintiffs alleged that flooding from the previous year that occurred on their properties was related to a storm drainage culvert that is under Goldie Road. The City and the City’s insurer, Washington Cities Insurance Authority (WCIA), have negotiated with the plaintiffs over a number of years and have tentatively agreed upon a Settlement Agreement and Release of Claims with the following terms (summarized): The settlement cost of $70,000 will be shared equally between the City of Oak Harbor ($35,000) and its insurer, WCIA ($35,000). The plaintiffs agree to construct and extend the public stormwater convey- ance system to adequate outfall points per the Oak Harbor Comprehensive Stormwater Management Plan at their own expense. Any development on the Plaintiffs’ properties will comply with current City of Oak Harbor land use and development requirements. The City agrees to sell two parcels of land that are in proximity to the Plaintiffs’ property for 1) the minimum of their assessed value (estimated at $172,000) or 2) their appraised value up to a maximum of $206,000, within six months of the execution of the settlement agreement. Land appraisal costs will be shared equally between the City of Oak Harbor ($1,250) and plaintiffs ($1,250). City Attorney Zeinemann explained this will resolve the lawsuit with no admission of liability or wrong- doing by either party. He praised the work of attorney Waldbaum and her team and the work of City staff who have worked on this over the years. Attorney Waldbaum also thanked City staff, especially present and past City Engineers and Deputy City Administrator Goldman for their assistance. Mayor Pro Tem Hizon confirmed no public comments had been received and requested any comments from the members of the public in attendance. Hearing none, she called for any additional discussion or a motion. Regular Meeting Minutes August 6, 2025 Page 2 of 17 Motion: Councilmember Marrow moved to approve the Settlement Agreement and Release of Claims between Harbor Land Company, et. al. versus City of Oak Harbor. Councilmember Stucky seconded the motion, which passed unanimously. 4. PUBLIC COMMENT PERIOD Mayor Pro Tem Hizon noted members of the public could comment on Consent Agenda items or sub- jects of interest not listed on the agenda at this time and there would be an opportunity to comment on the remaining agenda items during the meeting as appropriate. She explained the public may also visit the City’s website prior to meetings for methods to submit public comments, or contact the City Clerk, Julie Nester, by phone or email. When submitting comments, please include your name and address. Public comments sent anonymously or from a non-verifiable address will be shared with the Mayor and Council but will not be displayed. Comments on public hearing items will be taken during the public hearings portion of the meeting. The City received several new public comments since the last regular meeting, most of which were regarding the Marina and a potential Business and Occupation (B&O) Tax. Mayor Pro Tem Hizon noted those would be displayed during the public hearing portion of the meeting.. Comments on non-agenda items were received from: 1. Kenneth Houch of Oak Harbor regarding the inadequacy of public restroom facilities for the 4th of July parade. 2. Kevin Foy of Oak Harbor regarding an increase in jet noise. The comments were displayed. Mayor Pro Tem Hizon asked if there were any members of the public present who wished to speak to any other items not listed on the agenda or on the consent agenda. She noted the Deputy Clerk would call on speakers in the order in which they signed in to speak and asked speakers to step forward to the microphone, state their name and address, and to limit comments to three minutes. Executive Services Coordinator and Deputy City Clerk Finkle noted no others had signed up to speak on non-agenda items. No one in attendance requested to speak at this time. Hearing no one else with a desire to address the Council, the public comment period was closed. 5. CONSENT AGENDA Consent Items a. Approval of Minutes: City Council Meeting of July 1, 2025, and City Council Workshop of July 22, 2025 b. Approval of Accounts Payable Vouchers and Payroll c. 2024 Water Main Replacement and Overlay Final Contract Voucher d. Purchase Authorization – Dell Laptops e. Confirmation of Appointments to the Lodging Tax Advisory Committee (LTAC) f. Contract Authorization: Downstairs City Hall Copier g. Amendment of the Professional Services Agreement with RWD for Pickleball Court Design and Permitting Mayor Pro Tem Hizon called for any changes to the consent agenda. Hearing none she called for a motion for approval. Motion: Councilmember Marshall moved to approve the consent agenda. Councilmember Marrow seconded the motion, which passed unanimously. Regular Meeting Minutes August 6, 2025 Page 3 of 17 6. MAYOR & COUNCIL COMMENTS a. Mayor’s Comments Mayor Pro Tem Hizon provided the following comments on behalf of Mayor Wright: • Shout out to our Parks and Recreation Department: I'd like to start my comments today by thanking Parks and Recreation for the summer programs they are providing including Camp Windjammer going on now - kids are loving it, Pirates and Mermaids earlier this summer was a huge hit, and they’re working on a harvest festival at the Marina, so stay tuned! • Grant Award: As noted briefly at the Council’s July 22nd Workshop, On June 25th, the Island Regional Transportation Planning Organization (IRTPO) Executive Board voted to allocate $950,000 in federal funding in 2025 to the City of Oak Harbor for design and permitting of improvements to Midway Boule- vard. Midway is a key arterial through the City’s commercial business district and extends about 1.2 miles from State Route 20 in the north to Pioneer Way and the harbor in the south. The IRTPO was facing the loss of approximately $1.1 million in federal funding this fall and were pleased to award these funds to the City, citing that our staff was prepared to move forward with the project. • Out and About: It was the Mayor’s pleasure to attend Regency on Whidbey’s 25th Anniversary Open House and ribbon cuttings, and to enjoy time speaking with residents and guests. Thank you to Re- gency for all they do in our community and Mayor Wright extends his special thanks for the excellent care given to his wife, Peggy. Thank you to Councilmembers, staff, and our Police and Fire Depart- ments for participating in Community Events as well. • Kid’s Fishing Derby: The Marina was pleased to once again be the site of the Annual Kid’s Fishing Derby on July 26th. Approximately 50 youngsters participated and had a fantastic time. Thank you to Councilmember Armes for attending. • Whidbey Playhouse: Congratulations to the entire cast and crew of Beetlejuice Junior. Mayor Wright attended this wonderful musical and walked away with a cool Beetlejuice mug. Arts Commissioner Karla Freund’s granddaughter portrayed Lidia in the show. The photos shown on screen are courtesy of the Whidbey News-Times. • National Night Out: Thank you to our Police and Fire Departments and everyone who was onsite to support last night’s event. Mayor Wright attended with members of our staff, and Councilmembers. • Upcoming Events: - Buskers on the Corner this Friday August 8th starts at 5:30pm - Sherwood Community Day this Saturday, August 9th at Windjammer Park- Dave Paul will be there to discuss the importance of inclusive communities and our very own Parks and Recreation Director Brian Smith will be onsite to discuss inclusive playgrounds. - Every Wednesday until August 20th enjoy Sounds of Summer at Windjammer Park. We had to move our Council meeting from August 5th to August 6th due to National Night Out so we can't be there but will plan on being at the others. • The Wright Blend: Save the date for our next Wright Blend event, prior to the Buskers on the Corner end of Summer Bash on August 22nd. Our special guest will be NASWI Commanding Officer Nathan Gammache. Find us on the corner of Pioneer Way and Dock Street starting at 4:00 p.m. • Advisory Board Vacancies: We still have openings on several of our City Advisory boards and com- missions. See the City’s website for information on how to apply. Regular Meeting Minutes August 6, 2025 Page 4 of 17 • Stay Connected: Stay connected to City information and activities at any time by visiting our website and our Facebook page. b. Councilmembers Councilmembers Armes, Marrow, and Wiegenstein provided their respective comments. Councilmember Armes reported the Veterans of Foreign Wars (VFW) Kid’s Fishing Derby event at the Marina was a delightful family experience met with much enthusiasm by the children and families that participated. Councilmember Marrow thanked Councilmember Wiegenstein for attending today’s meeting online. Councilmember Wiegenstein acknowledged his appreciation for the well wishes he had received. 7. PUBLIC HEARINGS & MEETINGS a. Ordinance No. 1998: Adoption of a Business & Occupation Tax Deputy City Administrator and Finance Director Goldman provided background information and re- viewed the options discussed by the Council at the May 6, 2025 Council meeting and the July 22, 2025 Council Workshop, as well as during previous Council meetings and workshops, where multiple agenda items were presented related to: 1) Adoption of a local Business and Occupation (B&O) Tax to fund community identified projects that were discussed by City Council, including the Oak Harbor Marina and 2) Future of the Oak Harbor Marina. Background: On May 21, 2024, a proposed ordinance was presented to City Council for local B&O Tax implementation, which was not adopted. On December 18, 2024, Deputy City Administrator Goldman led two public local B&O Tax Talks where he presented the details of a potential local B&O Tax and answered questions from the community. During the discussion about the potential for the creation of a Port District at the January 21, 2025 Council Meeting, the implementation of a local B&O tax was discussed. During the discussions at the February and March 2025 City Council Workshops regarding the implementation of a local B&O Tax, council provided feedback to staff regarding the characteristics of an Oak Harbor local B&O Tax. Based on that feedback, letters and information were sent to the largest 100 businesses in Oak Harbor providing information on the local B&O tax and providing an avenue to provide feedback. On May 20, 2025, a proposed ordinance was presented to City Council for local B&O Tax implementation, which was continued to the August 6, 2025 City Council meeting. Based on that feedback, the local B&O tax brought forward for Council consideration and approval today contains the following characteristics: Gross annual receipts exemption threshold = $100,000 to $5,000,000. Rate = 0.002. Retail rate greater than 0.002 requires voter approval. Effective date = October 1, 2025. Initial collection date = April 31, 2026; quarterly thereafter. Deputy City Administrator and Finance Director Goldman reviewed Marina Projects and Revenue Options: • Phase I: Dredging (minimum/maximum items) - 2026 • Phase I: Breakwater (two options) - 2027 • Phase II: Dock (two options) - 2028 or beyond Regular Meeting Minutes August 6, 2025 Page 5 of 17 Details applicable to all Marina Projects: • Fish Window (the period during which in-water work can be performed for our area) – Mid- August through Mid-February. • Advised to book contractors by Spring. • Costs provided by Moffatt & Nichol and include an adjustment of 4.5% annual inflation. • Dock and Breakwater costs include an additional 15% for unknown future mitigation costs. Revenue Options: • Retired Debt Service • Property Tax Levy Lid Lift • Property Tax Excess Bond Levy • Sales Tax • Utility Tax • Business & Occupation Tax (B&O) • Marina Fees • Lodging Taxes • Port District – New • Port District – Expand existing • Metropolitan Park District Regular Meeting Minutes August 6, 2025 Page 6 of 17 Existing Revenues: B&O Tax: Potential Amounts: $825,000 to $1.68M (2025) Approval Method: Councilmanic / Voter (50%+1) ONLY if retail tax rate exceeds 0.2%. Term: No expiration date Restrictions: Any lawful governmental purpose Direct Payer: Business owners Potential Impact: Business owners or their customers References: RCW 35.21.710, MRSC Revenue Guide Details: State Minimum Gross Tax Receipt Exemption = $20,000 Staff capacity considerations Collections prior to debt issuance can be used to reduce needed borrowing. Should the City Council approve a B&O Tax, staff will conduct outreach to the business community, create tax forms and worksheets, procure the services of an electronic tax collection vendor, create internal processes and train relevant staff, and update the City’s website (in phases) with B&O infor- mation item such as B&O background, FAQs, tax forms, and links to the electronic tax collection portal. Staff would intensify outreach with the approach of the first payment deadline. Regular Meeting Minutes August 6, 2025 Page 7 of 17 Lodging Tax: Potential Amounts: Up to $275,000 Approval Method: Council/LTAC Term: No expiration date Regular Meeting Minutes August 6, 2025 Page 8 of 17 Restrictions: Tourism marketing, special events designed to attract tourists, operations/capital costs of tourism related City facilities (including repayment of debt), operations of non-profit tourism related facilities, LTAC staff support. Direct Payer: Lodging Customers Potential Impact: Lodging Customers References: RCW Chapter 67.28, MRSC Should the Council approve of an application for LTAC funding: Step 1 - City Council authorizes the overall amount of Lodging Tax funding for the year. Step 2 - City applies for funding during the application period. Step 3 - LTAC reviews and recommends a list of applicants with funding levels. Step 4 - City Council votes to accept applicant funding levels or change funding levels and sends them back to the LTAC to review and comment (45 days). Currently there is one recurring applicant – Whid- bey and Camano Islands Tourism via an Interlocal Agreement. Property Tax Levy Lid Lift or Excess Bond Levy: City Council adopts a resolution calling for an election with ballot measure language, with authorization to issue bonds (excess levy only). Utility Tax: City Council adopts an ordinance updating utility tax rates. Additional Marina Dredging Fee or new Breakwater Fee: City Council adopts a resolution updating the City’s Master Fee Schedule. Other Non-City Revenue Options: Port District - New: Step 1 – Petition signed by at least 10% of voters in the last general election with boundaries and 3 or 5 Commissioner positions. Step 2 – After the Island County Auditor certifies signatures, the Island County Commission holds a public hearing and approves/rejects. Step 3 – If approved, a ballot would be held in a special election with Port District candidates running in the same election. Step 4 – If 50%+1 of voters approve, a Port District is formed and Port Commissioners elected. Port District - Existing: Step 1 – Port District Resolution or petition containing name of 10% of registered voters in expansion area for ballot to voters in expansion area in a General or Special election. Step 2 – If 50%+1 of voters approve, a Port District is formed and Port Commissioners elected. Increase in the number of Commissioners from 3 to 5 – Similar procedure as in Step 1. Candidates to be elected at the next General or Special election. Metropolitan Park District (MPD): Step 1 – Resolution by governing bodies with jurisdiction over the proposed district or by petition signed by at least 15% of registered voters residing in the proposed district to voters on ballot in the next General or Special election. The maximum levy defaults to 0.75 mills if not limited in the ballot. Candi- dates can appear in the same election. Step 2 – If 50%+1 of voters approve, an MPD is formed. Step 3 – Within 6 months of election certification, size and membership is determined by an interlocal agreement between the City and Island County. Regular Meeting Minutes August 6, 2025 Page 9 of 17 Deputy City Administrator and Finance Director Goldman reviewed the first seven scenarios for Marina Projects and Funding Options. These were summarized as follows: Deputy City Administrator and Finance Director Goldman suggested a proposed action plan and passed out a reference sheet of the scenarios for the Council to use in determining which scenarios they would support. Regular Meeting Minutes August 6, 2025 Page 10 of 17 Mayor Pro Tem Hizon opened the public hearing and confirmed a number of comments had been received. These were displayed. Comments were received from: 1. Adil Chaudhry of Greenbank, a tenant at the Oak Harbor Marina in support of the Marina. 2. Sandra Freeding Myers of Oak Harbor, in support of the Marina but in opposition to a B&O Tax. 3. Susan DuPuis of Oak Harbor, in support of a B&O Tax and in support of a Port District. 4. David Paolette of Coupeville, a tenant at the Marina, in support of a B&O Tax. 5. Brian Kahrs of Freeland, a tenant of the Marina and in support of improving its economic vitality. 6. John Chaszar of Oak Harbor, noting Councilmember Marshall should recuse himself from any vote regarding a B&O Tax since he is the Executive Director of the Chamber of Commerce. 7. Susan Mador of Oak Harbor, stating the City does not need a marina and should close it. 8. Scott Fox of Coupeville, a tenant at the Marina in support of a B& O Tax. 9. Mark Frederickson of Oak Harbor, a live-aboard tenant at the Marina, in support of a B&O Tax. 10. Willaim Weinsheimer of Oak Harbor, in support of a B&O Tax and Marina needs. 11. Barb Peskuric of Oak Harbor, President of the North Puget Sound Dragon Boat Club, a non- profit group located at the Marina which has been in existence for 19 years, in support of a B&O Tax. Mayor Pro Tem Hizon requested comments from those members of the public in attendance. 1. J.J. Jones of Oak Harbor identified himself as a 46-year resident and a 25-year Marina tenant, and Chair of the Marina Advisory Commission, and urged passage of a B&O Tax to fund dredg- ing and the breakwater. He noted that the Marina reflected fifty years of infrastructure neglect by the City with all operations being paid thus far by Marina tenants. He noted the breakwater is the wrong type and for the Marina and encouraged the City to find another consultant than the current firm of Moffat & Nichol. Mr. Jones noted his bill at the Marina had done up 35% and stated the only Marina that was close in similarity was the Brownsfield Marina. 2. Beth Munns of Oak Harbor, former City Council member and former Mayor Pro Tem, noted the many activities the Marina supports, such as kid’s regattas, the Youth Sailing Program, and the Junior Varsity and Varsity sailing programs and competitions, along with other activities such as smelting and the dragon botas. She observed the Marina was a community center but has boats on the ground at low tide. She urged the Council to support a B&O Tax at the $5 Million or more level, noting the Marina had been a gift from the US Navy and should be taken care of, 3. Marita Ashley of Oak Harbor, a Marina tenant and member of the Marina Advisory Commission noted the Marina was a gem with excellent staff. She stated the Marina was one big storm away from lost if the breakwater failed and that she had heard from other tenants that uncertainty that needed dredging and repairs would be addressed was causing them to look at other options. Ms. Ashley voiced support for a B&O Tax at the $4-5 Million level. 4. Jeff Ward of Oak Harbor noted he does not have a boat in the Marina but had used the Marina in various ways with his son in the sailing program and his wife participating with the Dragon Boats and just walking around the Marina. Mr. Ward noted his wife was a small business owner and he encouraged support for the Marina. Hearing no other comments, Mayor Pro Tem Hizon closed the public hearing and called for a brief recess. RECESS – the Council recessed at 7:09 p.m. and resumed the meeting at 7:14 p.m. Regular Meeting Minutes August 6, 2025 Page 11 of 17 Mayor Pro Tem Hizon thanked Deputy City Administrator and Finance Director Goldman for the pro- posed action plan and reference sheet. She noted he also had an interactive worksheet to address questions and suggested the Council first go down the line to ask any questions of Deputy City Admin- istrator and Finance Director Goldman regarding the mathematics of his presentation. Councilmember Stucky noted that from looking at the 2025-2026 Budget, it appeared the Marina had been operating at a deficit and asked if there was a plan to stabilize that deficit. Deputy City Adminis- trator and Finance Director Goldman noted that in the annual report the deficits shown were actually transfers to the Marina Capitol Project Fund. Parks and Recreation Director Smith reiterated this and noted the Marina was operating “into the good.” Councilmember Wiegenstein noted he had no questions regarding the numbers presented. Mayor Pro Tem Hizon inquired where the $410,000 Maintenance Dredging Reserve would come from and clarified regarding the B&O options at the $4 Million level that would affect 29 businesses. Deputy City Administrator and Finance Director Goldman agreed and explained the dredging reserve would be determined by which scenario and projects were selected by the Council. Councilmember Marrow thanked Deputy City Administrator and Finance Director Goldman for his dili- gence, exactness and professionalism. Councilmember Marshall asked to see Scenario 7 with the addition of the $410,000 dredging reserve funding. Deputy City Administrator and Finance Director Goldman noted it would then be the same as Scenario 6 with an additional amount of $857,000 needed per year. Councilmember Marshall asked to see the results of an added 1% Utility Tax and a B&O Tax at the $5 Million level. He noted the issue he had was that it left the City with just $40,000 in reserves and inquired whether that was sufficient to administer the B&O Tax. Deputy City Administrator and Finance Director Goldman noted it should be sufficient citing that staff could handle the administration for the 29 businesses affected. Councilmem- ber Marshall requested a review of Scenario 4 with a B&O level of $4 Million and a Utility Tax at .4% and a reduction of any LTAC contribution to $25,000. Deputy City Administrator and Finance Director Goldman noted in that instance the Utility Tax would need to rise to .44%, providing another $15,000, which was doable for staff. Councilmember Armes inquired whether this would qualify for LTAC funding, whether the amount could be raised and what the criteria were. Deputy City Administrator and Finance Director Goldman reviewed the restrictions for the use of LTAC dollars as follows: Tourism marketing, special events designed to attract tourists, operations/capital costs of tourism related City facilities (including repayment of debt), operations of non-profit tourism related facilities, and LTAC staff support. Mayor Pro Tem Hizon next turned to the Council to state their scenario preference and why. Councilmember Stucky stated he was not in favor of a Utility Tax or a Property Tax, so it came down to funding using existing debt, a B&O Tax and a potential for LTAC funding. He noted he did not think there would be a large exodus of businesses if the City instituted a B&O Tax and did not expect to see increases in costs. He noted if the Council did nothing, the community would be upset. Councilmember Stucky observed he was against a B&O Tax last year, but with few businesses affected he would sup- port Scenario 6 and would support applying for an LTAC grant later and no Utility Tax. Councilmember Armes agreed it was a difficult decision. She stated she had spent a lot of time at the Marina and did not wish to see the City lose that asset, noting the City was trying to bring added activ- ities to the Marina. She stated she would support Scenario 6 as well. Regular Meeting Minutes August 6, 2025 Page 12 of 17 Councilmember Marshall stated he would like to address any concerns about a conflict of interest in his role as the Executive Director of the Greater Oak Harbor Chamber of Commerce. He noted that while he was a small business owner and was opposed to a B&O Tax, the Oak Harbor Chamber had not taken any position on a B&O Tax. Councilmember Marshall stated he had consulted with the City Attorney and there was no conflict of interest indicated and that he had also spoken with Mr. Chaszar who raised the concern. Councilmember Marshall noted his support for Scenario 7 but noted he could also support Scenario 4 with no B&O Tax, an additional Utility Tax and an added dredging fee. He observed the Council had discussed an end goal of the creation of a Port District or a Metropolitan Park District and noted whatever investment made now would be the City’s to pay for. He stated the Marina was a community asset and the Council should invest to take care of the immediate needs, giving the City two years to look into the creation of a Port District of Metropolitan Park District. Councilmember Marshall observed that if the Council were to implement a B&O Tax now, that money would be obligated to pay the debt service. Mayor Pro Tem Hizon asked Deputy City Administrator and Finance Director Goldman to bring up the presentation slide for Scenario 7. Councilmember Wiegenstein thanked Deputy City Administrator and Finance Director Goldman, City staff and the Council for the deliberations. He noted he was struggling with implementing a tax of any kind and encouraged those citizens who wanted to save the Marina to get a committee together to raise support for a Port District since the City could only band-aid the Marina’s needs and could not afford to grow it. Councilmember Wiegenstein stated he did not want to saddle citizens with debt and that the Marina was built by the Navy, the destruction of the harbor was done by the Navy, and he believed the Navy would pay to remove the Marina. Councilmember Marrow noted his baseline assumptions were that the Maraina serves the greater Oak Harbor area and that it would be a failure of government to not support it and that if the Marina were allowed to continue to silt in or was removed, Oak Harbor would be a mud flat. He noted he was set upon Phase 1, with Phase 2 being a way off. For the financial piece, he noted many had said the breakwater is well-designed. Councilmember Marrow stated he thought replacing the breakwater was unwise, preferring a renovation with careful improvements. He noted the minimum dredging would still provide 10-15 years of use and that starting from scratch was unwise, therefore he favored Scenario 7 or Scenario 6. Mayor Pro Tem Hizon observed that she approached the matter much as Councilmember Marrow, in that the Marina should not be allowed to fail and that to pay for it, the Council should do the most good for the greatest number of people at the greatest benefit and least cost. She noted that Marina users had borne all costs and the fees charged to them have been responsible for funding Marina operations and maintenance, but that when it came to larger capital costs, the City should handle those. Mayor Pro Tem Hizon also agreed with Councilmember Stucky about not charging utility customers, leaving the option of a B&O Tax. She observed that in regard to the statement about having a small number of businesses shoulder costs, it should be noted that the businesses in question are those that generate hundreds of millions of dollars, many of which were those that directly benefit from the boating popula- tion, and that the fees charged to these businesses from the B&O Tax would be less than the loss of customer revenues from boaters. Regarding Phases 1 and 2, she noted Marina rates would have to go up but not at 35% or Marina tenants would leave and go elsewhere. Mayor Pro Tem Hizon reiterated that the Marina was one bad weather event away from losing the breakwater and that to not take the opportunity to have a funding source to allow the City to borrow the funds needed to do repairs would be irresponsible. She noted she would support a B&O Tax of $4 Million or higher. She observed in comparison, if the City were to decommission the Marina, everyone in the City would bear the cost to do so. Mayor Pro Tem Hizon supported Scenario 6 as the most responsible and agreed about the use of LTAC grants. She also agreed that the formation of a Port District could be a major solution and noted that formation would need to be community driven and approved by the voters. Regular Meeting Minutes August 6, 2025 Page 13 of 17 Deputy City Administrator and Finance Director Goldman summarized that thus far he had heard the Council’s consideration of Scenarios 4, 6, and 7. He noted the approval of creating a B&O Tax would require four votes in favor from the majority of the total Council, and that an increase to Utility Taxes would also require four votes in favor, while a request for an LTAC grant or implementation of a dredging fee would need only a regular majority vote of the Council in attendance. Councilmember Armes expressed that she would like to see an initiative for the formation of a Port District be on the February/March ballot to give the Council an understanding on where the community is on that issue. Councilmember Stucky noted his appreciation for Councilmember Marshall and his perspective, ob- serving that by his estimation, the two of them voted in opposition to the other more than with other members of the Council. Regarding a potential B&O Tax, Councilmember Stucky explained that only the amount received by a business which was over the threshold would be subject to the tax. He ques- tioned whether Councilmember Marshall thought this would be detrimental. Councilmember Marshall did not, but noted the City did not have knowledge of what all of the busi- nesses at that threshold would be, with not all being retail companies, and some that might consider relocation to other area cities that did not have a B&O Tax. Councilmember Stucky noted he had talked to several businesses who were not concerned over the potential B&O Tax. He reiterated that he had been against a B&O Tax until about a month ago and that he favored it over an additional Property Tax or Utility Tax. He noted formation of a Port District would be for the voters to decide and that he still preferred Scenario 6. Councilmember Wiegenstein stated he had no further comments. Councilmember Marrow stated he echoed Councilmember Woessner’s comments from the recent Council workshop discussion about trying to attract smaller businesses and especially clean industry to Oak Harbor and his concern that a B&O Tax could be considered a detriment. With all Councilmembers heard from, Mayor Pro Tem Hizon called for a motion. Deputy City Administrator and Finance Director Goldman noted Scenario 6 with a B&O Tax had the most support. He explained in that scenario, the first blank of the suggested motion would be $5 Million, and the second blank would be $1.25 Million. Councilmember Marshall noted Commissioner Stucky made a compelling argument and recommended the Council consider going for full funding if they thought the formation of a Port District or a Metropolitan Park District was not realistic, and to do it right and do a full dredge and breakwater replacement. He noted Scenario 5 would do that with a $4 Million B&O Tax level, and a Utility Tax of $0.20 cents a person, which spreads out the funding and accomplishes what really needed to be done. Mayor Pro Tem Hizon reiterated that Scenario 5 had a B&O Tax at the $4 Million level, a $30,000: LTAC annual funding grant request, a dredging fee increase, and a Utility Tax of $0.20 cents, which she would support. Councilmember Stucky observed that tonight the Council was voting on a B&O Tax and giving direction to staff on a scenario. He noted he is the Chair of the Whidbey and Camano Islands Tourism Board and that a lot of cities were not contributing to tourism. He stated he was okay with pursuing Scenario 5 and a higher $55,000 LTAC pursuit and no Utility Tax. If that did not work, he stated he would like to revert to Scenario 6, noting the Marina brings in tourism. Regular Meeting Minutes August 6, 2025 Page 14 of 17 Councilmember Armes noted that regarding the LTAC, the Marina has the “on-call” bus system via Island Transit and that might give the Council and idea of the numbers of people coming into town. The Marina also has bicycles for use by those visiting the Marina. Councilmember Stucky asked Grants Administrator Horn whether the LTAC could do as they do with Whidbey and Camano Islands Tourism and contract for a grant to the City, but in perpetuity. Deputy City Administrator and Finance Director Goldman noted there was nothing in State law that limited such a grant to three years. Mayor Pro Tem Hizon noted that regarding an LTAC grant, applying was a good idea, but felt it would be a mistake to rely on it and that she would not disfavor a vote for Scenario 4 over a $0.20 cent Utility Tax. Mayor Pro Tem Hizon requested a vote on a B&O Tax amount at this time. Councilmember Wiegenstein noted the Council was talking in circles again about a scenario and should make a motion to see what would be supported. Motion: Councilmember Armes moved to approve Ordinance No. 1998, Amending Title 3 of the Oak Harbor Municipal Code to add a new Chapter 3.98, pertaining to the adoption of a local Business & Occupation Tax with a gross receipts’ threshold of $4 Million per annum and $1 Million per quarter with an effective date of October 1, 2025. Mayor Pro Tem Hizon seconded the motion. Councilmember Stucky confirmed this would change the total number of businesses affected from 26 to 29. In looking at other municipalities that have a B&O Tax, their thresholds were much lower. If the Council were to choose to change the threshold, they would need to go through this process again. Councilmember Marrow noted there were many involved in the motion and that he was aware of the realities of the politics involved and stated his strong support of the motion. Mayor Pro Tem Hizon observed that sometime the art of leadership called for compromise. Councilmember Stucky inquired whether October 1, 2025 was enough time for staff to put the B&O Tax into place. Deputy City Administrator and Finance Director Goldman explained that in the details of the draft ordinance there is a six-month delay with thirty days’ notice given to those businesses affected. Staff have outlined the program and will start with that notice to go out the beginning of next month. Vote: Hearing no further discussion, Mayor Pro Tem Hizon called for a vote on the motion, which passed 5-1 with Councilmembers Armes, Stucky, Marshall, Marrow and Mayor Pro Tem Hizon in favor and Councilmember Wiegenstein opposed. Councilmember Marrow. Noted the whole deliberation process was intentional to show the Council had done their due diligence. Deputy City Administrator and Finance Director Goldman noted that staff would put all items for funding together for applying for bonds in April of 2026. He observed that staff would pursue Scenario 5 and apply for a LTAC grant at a higher rate and not implement a Utility Tax, and with an added dredging fee, necessitating updates to the Master Fee Schedule. Mayor Pro Tem Hizon noted this would be for funding full dredging. Regular Meeting Minutes August 6, 2025 Page 15 of 17 Recess: Mayor Pro Tem Hizon called for a five-minute recess at 8:35 p-.m. and reconvened the meet- ing at 8:40 p.m. b. Ordinance No. 2000: Creating Oak Harbor Municipal Code Chapter 3.99, pertaining to the ad- ministrative provisions for the City's Business and Occupation Tax Deputy City Administrator and Finance Director Goldman reviewed the necessary administrative provi- sions pertaining to the City’s Local Business & Occupation (B&O) Tax. He reviewed the legal authority under Washington Constitution Article XI, Sec. 12 and RCW Sections 35A.82.020 and 35A.11.020. The City has not previously instituted a B&O Tax. He explained that a separate chapter was required by the State of Washington. Mayor Pro Tem Hizon opened the public hearing. She confirmed that no public comments had been received. Hearing no one with a desire to address the Council, she closed the public hearing and called on the Council for their comments. There were no comments from the Council. Motion: Councilmember Armes moved to approve Ordinance No. 2000, Amending Title 3 of the Oak Harbor Municipal Code to add a new Chapter 3.99, pertaining to administrative provisions for the City’s local Business & Occupation Tax with a gross receipts threshold of $4 Million per annum and $1 Million per quarter and with an effective date of October 1, 2025.The motion was seconded by Councilmember Wiegenstein and passed unanimously. 8. OTHER ITEMS FOR CONSIDERATION a. Transportation Improvement Board Grant Application. Grants Administrator Horn reviewed the application for an Arterial Pavement Preservation Grant. The Transportation Improvement Board (TIB) is an independent state agency, created by the legislature. The TIB’s purpose is to fund transportation projects to enhance the movement of people, goods and services. The agency is funded through the statewide gas tax revenues, which is three (3) cents of the forty-five (45) cent tax. The Arterial Preservation Program (APP) provides funding for the overlay of federally classified arterial streets (principal, minor) in cities with a population greater than 5,000 and an assessed valuation of less than $3 billion. Although the program offers critical preservation assistance, it is not enough to substitute for a city's street maintenance program. Therefore, the program is limited to overlay to defray high-cost preservation projects, allowing cities to concentrate limited resources on lower-cost preven- tative maintenance. The City has successfully applied for and been awarded three TIB grants for street projects in the last three years, including NE 7th Avenue improvements, West Whidbey Avenue improvements and Swan- town Avenue improvements. The City of Oak Harbor Engineering Department identified SE Barrington Drive as a good candidate for the APP as the water and sewer utilities are in good condition. The request will include a two-inch grinding of old pavement and overlaying new pavement on SE Barrington from State Route 20 to SE 8th Avenue, as well as restriping to add bicycle lanes and replacing up to eleven Americans with Disa- bilities Act (ADA) ramps.. Staff will request up to $900,000 with the final amount to be determined. The grant requires a twenty percent match, which would come from the Streets Fund. Applications are due by August 15, 2025. Regular Meeting Minutes August 6, 2025 Page 16 of 17 Mayor Pro Tem Hizon noted no public comments had been received and opened the floor for comments from those members of the public present. Hearing none, she called upon the Council for their questions and comments. Councilmember Stucky provided his respective comments. Motion: Councilmember Wiegenstein moved to approve a grant application to the Transportation Im- provement Board Arterial Pavement Preservation Program for SE Barrington Drive Overlay - State Route 20 to SE 8th Avenue.. Councilmember Marrow seconded the motion, which passed unani- mously. b. Approval of Accounts Payable Vouchers Mayor Prio Tem Hizon noted that due to Councilmember Marshall’s position as the Executive Director of the Greater Oak Harbor Chamber of Commerce, he was recusing himself on any vouchers pertaining to the Chamber. She confirmed no public comments had been received and there were no comments from the public in attendance. Councilmember Marrow noted he serves on the Board of the Chamber as a non-voting member. Motion: Councilmember Wiegenstein moved to approve recommended action to approve Accounts Payable voucher(s) for the Chamber of Commerce. Councilmember Marrow seconded the motion, which passed 5-0-1 with Councilmember Marshall recusing himself and abstaining. ADJOURN There being no further business, Councilmember Wiegenstein moved to adjourn the meeting, se- conded by Councilmember Stucky. The vote on the motion was unanimous, therefore the meeting was adjourned at 8:52 p.m. Transcribed during the live feed by and certified by Julie Nester, City Clerk Regular Meeting Minutes August 6, 2025 Page 17 of 17