Island County commissioners are tightening the rules for an economic development grant program to encourage municipalities and other government agencies to submit better applications for worthier projects.

Next Tuesday, the commissioner are scheduled to finalize the changes to the rules for doling out Rural County Economic Development Infrastructure grants, which come from a 0.09 sales tax rebate to the county from the state’s portion of sales tax collected locally. The goal of the grant program is to improve the economy of Island County by creating and retaining ongoing, private sector jobs.

The proposed changes will require larger matches and a clearer link to economic development planning. In addition, infrastructure for workforce housing is being added as an eligible use of the funds.

At a recent workshop meeting, County Administrator Michael Jones was blunt about the quality of some of the applications the county has received in past years.

“We are getting applications that aren’t necessarily well founded and well put together,” he said.

Jones pointed to a couple of past applications as examples. The county awarded the city of Oak Harbor, under the former administration, a $675,000 grant in 2020 to purchase and redevelop Mariners Haven, a private boatyard with two buildings on three acres adjacent to the Oak Harbor Marina. After spending thousands of dollars on an appraisal and environmental studies, city officials recently told the county that they no longer plan on buying the property.

Jones said the city didn’t say why it was giving up on the project. The city didn’t go into detail about the reasoning when asked by the News-Times.

“Due to the diligence period, the prior city administration came to the conclusion that the city’s purchase of the boatyard business would be suboptimal,” the city’s response stated.

Last November, the prior city administration asked and received an extension of the grant for another year. The city had discovered that the building needed a new roof and that the site was contaminated with polyfluoroalkyl substances, tributyltin and butyl benzyl phthalate.

In addition, Jones said the city of Langley is asking for an extension of a $3 million grant the county awarded five years ago for infrastructure projects. While it may be a worthy project, having the grant money tied up for so long means other projects weren’t funded, he said.

The commissioners also pointed to problematic applications from the past. Under the previous mayor, Oak Harbor asked for money for a road to a proposed regional sports complex that now isn’t even going to be built after all. The city also applied for a grant to fund a road for the U-Haul business that would have supported only three jobs. Neither of the applications were approved.

In a memo on the program, Jones said current program guidelines “allow for an extremely flexible approach to grant awards” and require a very low match of 10% of the project cost.

“There is not a strong connection between job growth or job retention, and the funds awarded for projects,” he wrote. “There is a weakly applied requirement for connection to an economic development planning strategy. The highly flexible guidelines tend to encourage project submittals that are not well developed, and some appear to have limited commitment from the applicant jurisdiction. This has contributed to long delays with some projects and to some applications being withdrawn after awards are made.”

Under the proposal, the grant match will be raised to 25% or 50%, depending on the project characteristics. Specifically, a 25% match will apply to projects for demonstrated job expansion prospects while 50% would be required for more speculative, “build-it-and-they-will-come” projects. The applicants would be allowed to borrow money from the county program for the match, which would then be paid back at very low interest.

Jones and the commissioners agreed that increasing the match percentage will encourage “buy in” and ensure that the applicants are serious enough about a project to put their money on the line.

A press release from the county explains that only local government agencies within Island County are eligible to submit grant applications, “but changes to the program encourage local jurisdictions to partner with existing and new businesses.”

“The businesses can be ones that currently operate in Island County or are relocating to Whidbey or

Camano islands,” Jones said.

The change will also require the proposed projects to be linked to the County Comprehensive Economic Development Strategy or very clearly included in the local jurisdiction’s comprehensive plan. In the past, Jones said, the link to proposed projects to a district’s comp plan has been very loose.

Finally, the change will allow infrastructure for workforce housing to be an eligible use of the funds. The county commissioners have set workforce housing and affordable housing as top priorities.