A developer and the city of Oak Harbor finalized a unique agreement that allows flexibility in the construction of a housing project on the hillside next to Walmart.

Members of the Oak Harbor City Council approved the development agreement with Pacific North Group Inc. during a regular meeting Tuesday. The motion passed nearly unanimously, with Councilmember Jim Woessner abstaining due to a financial conflict of interest.

The decision means the stalled project can move forward. In March 2020, the city’s hearing examiner approved an application from developer Scott Thompson, now of Pacific North Group, for a planned residential development of 192 single-family homes on 20 acres. The land was cleared of trees, but no construction has occurred yet.

Oak Harbor Development Services Director David Kuhl, who said he’s been in constant contact with the developer, pointed out that the hearing examiner’s decision came just as the pandemic was getting started and affected progress. He explained that a development agreement with the city is the necessary step after the hearing examiner’s decision.

The development agreement is unique in a couple of aspects. In fact, Kuhl wrote in the agenda bill that it may be a first of its kind in the state.

“We wanted to be as flexible as possible but also make sure the city is covered for any liability,” he said at the meeting.

Kuhl explained that city code states that a developer has five years to file a final plat after the hearing examiner decision, plus a one-year extension is allowed. Under the agreement, Pacific North Group will be able to take advantage of a proposed future code change that would add a second one-year extension.

Normally, developers have to abide by the code at the time of agreements or when permits are issued, but the contract makes an exception for the hillside project.

In addition, the agreement adds four “segments” to the first of two phases of construction. The first segment would be the construction of ten model homes. Ten additional homes would be built in each of the other three segments.

Standard development practice in the state, the agenda bill states, is to wait to sign off on a final plat until the entire infrastructure for a project is completed.

The agreement, however, allows the final plat to be filed before infrastructure is completed but restricts the sale of lots until the infrastructure is installed.

All infrastructure must be in place before moring forward with next segment, Kuhl said. In addition, the developer must get performance bonds to protect the city from any potential liability.

He also explained, however, that it’s not a very easy process for the city to cash bonds in the case the development doesn’t move forward as expected.

The council members agreed that it makes sense to allow the developer flexibility, especially during such unprecedented times. Councilmember Jeffrey Mack said the project will provide much-needed housing in the community and the addition of sewage customers could help control rates.

Councilmember Joel Servatius pointed out that the pandemic increased the cost and predictability of construction; he said the price tag for a simple 2-by-4 board at Home Depot more than quadrupled earlier in the pandemic.

“I don’t think flexibility is a bad thing,” he said. “I don’t think thinking out of the box is a bad thing.”