Oak Harbor considers creating a taxing district for roads

Oak Harbor city officials are considering creating a quasi-judicial corporation with an independent taxing authority to raise money for road work.

At a council workshop Wednesday, Senior Planner Dennis Lefevre presented the idea of starting a transportation benefit district to create a stable funding source for city transportation projects. Under state law, the council members would be the governing body of the district, even though it would be a separate legal entity.

Lefevre explained that the transportation benefit district has five options for raising money.

The most commonly used method is through an increase in the vehicle license fee, Lefevre said. It may be increased by $20 or up to $40 after two years. With nearly 16,000 registered vehicles in the city, it would raise about $315,000 in a year, he said.

Anacortes and Sedro-Woolley have transportation benefit districts funded by license fees.

Another commonly employed option is an increase in the sales and use tax of an amount not to exceed two-tenths of 1 percent. This option would require voter approval. If passed, the tax would raise about $911,000 a year in Oak Harbor and would be in effect for 10 years.

Bellingham, Mount Vernon and Marysville have districts funded with the sales and use tax.

Other options are a commercial and industrial building fee, an ad valorem tax and vehicle tolls on roads.

Asked which method would be fairest, Lefevre pointed to the sales tax.

“Sales and use tax is probably the most equitable for use in our system,” he said.

Lefevre said the city’s need for road funds is clear. Unlike most grants, funds from a transportation benefit district can be used for road maintenance and repair, which the city has historically had trouble funding. The city is currently working with a consultant to look at the paving needs and create a prioritized plan of attack.

Road work would have to be included in the city’s six-year transportation plan to be eligible for transportation benefit district funds, Lefevre said.

Councilman Joel Servatius said residents in the city care about the condition of roads.

“Streets are at the top of the want list, the complaint list,” he said.

The council members present at the workshop agreed that a proposed ordinance establishing a transportation benefit district should be brought forward for further consideration. The council would have to hold a public hearing on the matter before it could be adopted.

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