Oak Harbor weighs revised Opportunity Zone bid for key city tracts

Oak Harbor may soon decide whether to chase a new federal incentive for two of its most visible tracts, including the central business area and a corridor stretching from Pioneer to Seaplane Base, even as city leaders question whether the paperwork will deliver enough real investment to matter.

The city’s revised Opportunity Zone bid came up during a council workshop as staff weighed a program meant to steer private capital into under-served places by giving investors tax advantages. Community Services Director Stacy Pratschner framed the move as an updated economic tool for rural communities and other places that have struggled to attract private money, but the council’s reaction was far from uniform.

Councilmember Bryan Stucky said he was not convinced enough residents, or even business owners, understand how the program works. He also questioned whether staff time and application work would produce enough development on the ground to justify the effort. Kristina Hines, who leads the Economic Development Council for Island County, said the tax structure is complicated enough that it often requires accountants and attorneys to navigate, but she argued that an Oak Harbor zone could still pull capital from outside the immediate tract and give the city another lever to promote growth.

That debate carries extra weight because Oak Harbor already has an Opportunity Zone in the central business area, and it has sat unused for nine years. City officials now have to decide whether a revised designation would change that outcome or simply put a new label on the same gamble.

The state application window opened April 28 and closes May 28 at 5 p.m. Washington Commerce has set the Opportunity Zones 2.0 process around final Treasury guidance on which census tracts qualify, and the governor will have a 90-day designation window beginning July 1 to forward recommendations for federal submission. The state says Washington currently has 139 Opportunity Zones across 36 counties, but the new round would narrow that to 99 zones, a reduction of roughly 20 percent.

At the federal level, the IRS says the revised law made Opportunity Zones permanent and set designation cycles every 10 years, with the first new zones taking effect Jan. 1, 2027. The agency describes the program as an economic development tool created under the Tax Cuts and Jobs Act of 2017, offering tax benefits to investors who place eligible gains into qualified funds.

For Oak Harbor, the question is not just whether downtown storefronts might finally see a payoff. It is whether a designation that once sat dormant can be turned into housing, jobs and private reinvestment across a much wider slice of the city.