The nonprofit organization that attempted to build low-income housing in downtown Oak Harbor is appealing a judge’s ruling that appeared to put an end to the project.

The Low Income Housing Institute filed an appellant brief with the state Court of Appeals Monday, arguing that Island County Superior Court Judge Alan Hancock erred when he ruled that the project did not conform to the city’s zoning code for the downtown area.

Hancock’s decision was a victory for the Oak Harbor Main Street Association, which had filed a land-use petition disputing the city council’s approval of the housing project. One major bone of contention was the dearth of ground-floor retail space in the 51-unit project that was planned for the lot adjacent to Hal Ramaley Park on Bayshore Drive. Only 2.5 percent of the 40,000-square-foot building would be dedicated to retail.

Downtown merchants and others worried about the loss of retail space in the downtown core.

Hancock disagreed with interpretations of the zoning ordinance made by city planners and the city’s hearings examiner — all of whom recommended approval of the project — and instead found that a development with a primary residential use is not allowed in the “central business district.”

The attorney for the Low Income Housing Institute, however, disagreed. The attorney argued that Hancock was wrong in considering residential use the primary use of the project. The city code defines “primary use” as a use “to which all other uses on the premises are accessory.” The attorney argued that the retail space, no matter its size, cannot be considered accessory under city code because it is not “subordinate and incidental” to the residential use.

Robin Amadon, housing development director for the nonprofit group, said the project would be under construction right now if the lawsuit hadn’t stopped it, and it would have been be a boon to the economy.

Amadon said the many construction workers on the site would spent money downtown and elsewhere while the city would have collected many different types of development-related fees and taxes from the project itself. Plus, she argued that the project would be a huge boost to pedestrian traffic downtown once it was built.

According to Amadon, the Low Income Housing Institute has already invested more than $1.5 million into the project.

“We are very much committed to bringing affordable housing to Oak Harbor, where we feel there is a great need for it,” she said.

The institute first became interested in helping with housing on Whidbey Island when the Affordable Housing Task Force, a joint city and county project, invited the group to a meeting.

Officials from both the city and county expressed excitement at the prospect of a project that would provide workforce housing, as well as some units for people who are at risk of homelessness, Amadon said. At least 20 units would be set aside for veterans.