An impasse between Island County and the city of Oak Harbor over growth planning reached a critical point this week as exasperated commissioners made a decision that may affect the availability of housing for years to come.

At a workshop meeting Wednesday on the ongoing comprehensive plan update, the commissioners were offered three options by planners and decided to reassess population projects for the next 20 years, revising them downward. According to county officials, that means the city will not be able to expand its urban growth area, or UGA, which is the land outside city limits where urban growth is encouraged and supported. Only property in a UGA can be annexed into the city.

Oak Harbor officials have seemed eager to expand the UGA. In a memo from April, city planners wrote that the UGA will be needed to increase by a minimum of 222 acres to accommodate 1,333 units that won’t fit inside the existing city limits and existing UGA.

Now it looks like there will be no expansion at all.

The commissioners said they were reluctant to take the step but they felt they had no choice after failing to reach an agreement with Oak Harbor officials over UGA planning. Specifically, the city’s policy is to rely on developer-led annexations to grow the city. The county, however, maintains that this policy is unlikely to lead to affordable housing being built in the UGA — as required by the state — and wants the city to commit to an annexation plan, which may mean city taxpayers would have to fund extension of infrastructure. Over the years, many city officials have argued that development should pay for itself.

The policy disagreement has led to hard feelings.

Commissioner Janet St. Clair said she didn’t consider the city to be a “good faith partner” while Commissioner Melanie Bacon said she was disappointed in the city. Assistant Planner Emily Neff expressed frustration that city planners were unwilling to provide more details about their capacity analysis.

“In the case of an appeal, we would need to justify why we’re planning a UGA expansion, and if we don’t have that information, we put ourselves at risk,” she said.

A statement from Oak Harbor said that the county “has focused too heavily on the city’s current capacity to handle growth while not adequately planning for” the UGA. The city suggested the phasing of infrastructure and annexation in the UGA.

“The city’s difference with the county is about when those discussions should occur, not whether they should occur,” according to the statement.

The city also faulted the county for dropping out of ongoing discussions about the issue, which have been going on through a paid mediator since September.

“The county ended mediation talks early without discussing annexations or UGA capacity,” according to the city’s statement.

The county and the three municipalities on the island are in the process of updating their comp plans, which are policy documents that guide development over the next 20 years. The plans are mandated under the state Growth Management Act, which aims to guide development in a way that is environmentally responsible, economically sustainable and socially equitable. A cornerstone of the plan is to avoid urban sprawl by increasing housing densities inside cities and places with urban infrastructure.

State lawmakers amended the Growth Management Act to require local governments to plan and accommodate housing affordable at all income levels. In addition, new rules push even more population growth into urban areas.

The first step was for the county and each municipality to adopt population projections. The state offers three different projections — high, medium and low. Early in 2024, the county and municipalities adopted the medium population projections that sets the current 87,000 people to grow to nearly 103,000 in 20 years.

Under the state’s direction, the bulk of the housing for population increases should be planned for urban areas, which in Island County largely means Oak Harbor. The city agreed to take 63% of the growth.

Under law, the county is responsible for setting UGAs, with consultation with cities, according to the Municipal Research and Service Center. If there’s a challenge to a UGA expansion — which has happened before — then the county is responsible for defending the decision before the Growth Management Hearings Board and possibly in court.

County and city planners have been at odds over population allocations and density planning for many months.

In February, the county hosted the city council for a rare joint meeting to discuss growth planning. County planners were concerned with the city’s plans to place the bulk of low-income housing growth in the UGA, where there is limited infrastructure — especially sewer — to support apartments. As a result of the meeting, the council members agreed to rezone more areas within the city for multi-family development, although several of them said the zoning was just a numbers game and didn’t guarantee actual development.

City and county planners, however, couldn’t come to an agreement on another, related issue.

On Wednesday, Neff said that the city would not commit to an annexation plan for the UGA. The city “continues to insist” that developer-led annexations are the only way that the UGA will become part of city limits. But county planners believe that the high cost of extending sewer and other infrastructure makes it unlikely that any developers will build affordable housing in the UGA.

Neff said the city wants the county to rezone the UGA for denser development. She said the county is willing to do that, but it won’t solve the problem.

St. Clair also questioned how rezoning would accomplish density if the underlying need for density is infrastructure, which the city isn’t willing to initiate.

“That’s the Catch-22 we are dealing with,” Neff said, adding that other jurisdictions created annexation plans as part of their comp plan updates.

The planners offered the commissioners three options to move forward with comprehensive planning. The first was the reassessment of population forecasts, which was the option the commissioners ultimately chose. The decision will reduce the forecasted growth in the city by 1,797 units, which means there will be no need for more UGAs. The planners and commissioners acknowledged it is not a perfect option since it will perpetuate the problem of not enough housing where it is needed and too much low-density development in the UGA.

The second option was more of a compromise and would involve both reassessing the UGA rezone, as the city requested, and a population reassessment. That would require hiring a consultant to assess capacity for rezoning. It would cost between $100,000 to $200,000 and mean that the comp plan would be completed six to nine months late. The problem, county planners said, is that the city still wouldn’t produce an annexation plan.

The third option was to do what the city wants and rezone the existing UGA while considering new UGA expansions. This option would cost the county between $200,000 to $400,000 and delay the comp plan by a year.

The commissioners quickly agreed that the third option was not viable. They said it clearly does not comply with the Growth Management Act by perpetrating low-density sprawl and not accommodating low-income housing. They said adoption of the options would surely lead to legal challenges that they would lose.

City officials, on the other hand, disagree with the county that developer-led annexation would not provide adequate affordable housing.

“The city states it has existing tools and can develop additional mechanisms to require affordable housing provisions when developers fund infrastructure extensions,” the city statement says.

City officials maintain that they have “consistently supported annexation discussions” and have “communicated this position to the county.”

“The city has proposed interagency annexations allowed under state law, which would allow both jurisdictions to discuss annexations, zoning and development phasing in a structured process,” according to the statement from the city. “The county has not engaged in annexation discussions to date.”

The city acknowledged a difference in approach between annexing already-developed county areas versus undeveloped properties.

“For future growth planning, the city seeks to annex undeveloped areas within both the existing UGA and any proposed expansion areas,” the statement says.

The county planning department is in the process of convening the Countywide Planning Group and will follow the process to amend the Countywide Planning Policies.