A $2 million settlement from Washington State Ferries will be spent on water-related projects, and only with a supermajority council approval, the city council resolved this week.

“Earlier this year the council passed a motion that the funds may only be used for one-time capital projects and that the money may not be used for ongoing programs, maintenance or staffing costs,” said Council Member Bob Scales. “This resolution simply memorializes the prior council motion.”

The resolution affects the funds in three ways. First it creates a new reserve fund called the “Capital Improvement Opportunity Reserve” to hold the $2 million from the WSF settlement.

It also requires that money from the Capital Improvement Opportunity Reserve will be used for one-time projects with a water-related use, and may not be put toward ongoing staffing, maintenance or program costs.

Finally, the resolution requires a supermajority vote — a minimum of five council members — to approve the use of any funds from the Capital Improvement Opportunity Reserve.

“For the last year the $2 million has been sitting in limbo,” Scales said. “It has not been placed in any specific reserve account and there is some confusion among staff and council members about how to characterize this money. I proposed that we place the money in a restricted reserve fund and that the money may only be used if there are at least five votes on the Council.”

Debate over what to do with the money has lingered over the past year and culminated in two public meetings last month where residents brought forth their own ideas from improving Waterfront Park to upgrading bicycle lanes.

According to Council Member Debbi Lester, some community members suggested that the funds be used as seed money to help secure grants for projects, and in some cases could be paid back. This way it may be possible to have the money go further and help a larger number of projects.

Since receiving public feedback, the city council has been entertaining the idea of forming a task force, or ad hoc committee, of community members that will help manage and guide the future use of the funds.

“What that would do is take it out of the political realm and it would gather people with backgrounds and expertise that council members may not have,” Lester said. “It becomes a more thoughtful and researched process.”

The $2 million comes from a 2010 settlement between the city and the WSF over an acre of land in Eagle Harbor used for ferry maintenance. Use of the funds was originally set to be water related, but WSF removed that restriction during settlement negotiations.

“It would be great to have one or two members from (the groups who fought for the money) sit on a task force or an ad hoc committee to help guide the process,” Lester said. “We wouldn’t be here with a settlement if it weren’t for the efforts of concerned Bainbridge Island citizens who worked hard on this.”

There remains a number of ideas for the money that council members would like to entertain, but any further decisions regarding WSF settlement funds, such as forming a community task force, are among a list of items to address when the new council takes over at the start of next year.