Ocean City To Fund Convention Center Expansion Study

OCEAN CITY – With recent confusion at the state level over the extended funds for the Convention Center economic study, the Mayor and Council decided Monday to move forward with the economic study, despite the current lack of state funding.

City Engineer Terry McGean came before the Mayor and Council on Monday to explain the recent loss of additional funds and also to request that the economic or feasibility study continue regardless.

According to McGean, the bond payments used for the city’s share of the cost of the original economic expansion comes from a fund utilizing proceeds from the 1 percent food tax collected in Ocean City.

In the last General Assembly session, the state increased the amount that the city could use from the food tax fund from $15 million to $20 million. That money would account for the city’s share of the convention center expansion.

McGean explained that the purpose of the increase was to allow the city to perform an economic study and, if warranted, prepare designs for an expansion. The economic study would outline whether or how much expansion is needed.

The $5 million increase spurred the city to pass a resolution to allow the forward of $200,000 from the General Fund for the study. The $20 million approved by the General Assembly would have later reimbursed that $200,000.

“Subsequent to the passing of that resolution,” McGean explained, “the Attorney General for the state wrote an opinion to the governor questioning the constitutionality of the way the law that increased the borrowing amount of $15 million to $20 million was passed.”

McGean further explained that the Attorney General’s letter resulted in the temporary loss of the extended $5 million. He also said that there is a chance that the $5 million would not be reinstated.

City Solicitor Guy Ayres explained that time constraints prevented the bill from being properly introduced to the General Assembly and suggested the bill be properly reintroduced at the next session.

“I think everyone agrees that the best way, is to ask Delegate Mathias to introduce the legislation this coming session,” Ayres said.

With the $5 million hanging in the balance, McGean explained that the Mayor and Council must decide whether to proceed with the economic study.

“I would like to go ahead and proceed with the feasibility study now, however that does put us at risk for $200,000,” McGean said.

McGean explained that if the $5 million extension failed to be reinstated, then the funding for the study could come from the Convention Center Capitol Improvement Fund or the normal operating expenses of the Convention Center. In both instances, the deficit could be covered 50 percent from the City and 50 percent from the Stadium Authority.

Although McGean recommended that the council move forward with the study, he did not provide the same advice for the second half of the expansion project.

“I would not spend any money on design until this issue is dealt with at the General Assembly,” McGean advised.

Councilwoman Margaret Pillas was concerned about the uncertainty.

“If we do not get this $5 million authorized, does that mean that the Convention Center cannot be expanded?,” she asked.

McGean explained that without the $5 million the city would be out $200,000, or $100,000 with the Stadium Authority’s partnership.

“That doesn’t mean that we’ve just thrown that money away,” he emphasized. “The feasibility study will still be valid.”

The loss of the $5 million extension from the state level would essentially put a hold on the design and, if warranted, the expansion.

McGean explained that the purpose of the study is to provide different and more involved results that economists at the local and state level could analyze. From the results, plans could be made on ways to expand the scope of the Convention Center.

McGean explained that the study would look at market components and then analyze differing ways to capture those markets.

“This study is not an architectural study,” he said, explaining that the first step would be an economic or marketing study that would warrant expansion with the possibility of architectural expansion.

After hearing the issues at the state level and the reasons to continue with the study, the council voted five in favor, with Councilwoman Pillas abstaining and Councilman Lloyd Martin absent, to continue with the economic study and to take the necessary steps to have the $5 million extension reinstated.

“I have full confidence that the State of Maryland is going to continue to be a partner in the Convention Center,” said Mayor Rick Meehan. “It’s been very successful for Ocean City and for the state.”  

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