Lease Dispute Shelves Resort Park Project

OCEAN CITY – The Downtown Recreation Complex will not be included in the upcoming bond sale, a decision that was the direct result of a 15-year lease proposal that was presented to the Mayor and Council Tuesday.

At a work session Tuesday, City Manager Dennis Dare presented the Mayor and Council with the county’s proposed lease agreement. The town has been waiting for a lease proposal for weeks, expecting a long-term or 99-year lease that would cover the land between 3rd and 4th streets. The town finally received a proposal last week, outlining a 15-year lease, which has proved to be far from what the Mayor and Council expected.

The Downtown Recreation Complex project contains two parts, the skate park renovations and the construction of a new park area. The park promises to increase the aesthetic appeal of the area, slow traffic along St. Louis Ave., connect the essentially separate sections of the current park, and revamp the downtrodden fields and area. Overall the project is estimated to cost the town $3.75 million. Due to the fact that the land belongs to the county, the town decided to seek a long-term lease agreement that would provide assurance that the $3.75 million of work would be secure for a long period of time.

The council made the decision in September to move forward with the project as one unit and to go to bond on the $3.75 million project. The hope was to get the funding for the project now while bonds were favorable, to save money in the long run, and to get the major construction completed at one time.

In order to proceed with the project, a 20-year bond would be needed and would warrant the need for a long-term lease agreement. The council said in the past it did not anticipate any problems with the county over a long-term lease agreement.

Problems arose this week, however, when the Mayor and Council was presented with the 15-year lease proposal from the county. Dare explained that the draft of the lease posed a few items of issue, the first being the 15-year proposal that falls short of the requested long-term lease. Dare maintained that the town would require, at minimum, a lease that would match the 20-year bond. The second item presented was a “rental value” that calls for over $1 million per year, to take effect if a tax differential of any form ever takes affect. There has been speculation for weeks that the county might use tax differential as a bargaining chip in an effort to discourage the town from going through with a tax differential study.

“The bottom line is there are a number of issues that need to be addressed before this lease can be signed,” Dare said.

As a result, Dare recommended that the Mayor and Council remove the Downtown Recreation Complex from the upcoming bond sale list and not borrow $3.75 million for the project. The town is set to sell bonds on Dec. 12 while the bond market is still favorable.

Dare also recommended that in lieu of borrowing $3.75 million for the project, get a loan of $200,000 that would be used for design work on the second half of the park. As a result, the issue would be tabled until next year with a lease being negotiated in the meantime.

Council President Joe Mitrecic voiced his disappointment over the removal of the Downtown Recreation Complex from the bond list, stating that in his opinion, it was the most important item on the list.

“The inability to strike a lease with the county has forced us to pull this out,” he said, emphasizing that the park’s fate lies in the hands of the county.

Councilman Jim Hall was discouraged as well, saying, “It would be our central park to downtown Ocean City.” Hall urged residents to contact the county over the situation.

Councilwoman Margaret Pillas added that property owners in the downtown area, who ultimately want the area cleaned up, should contact the county as well.

“We are all very, very displeased with this and disappointed,” said Councilwoman Mary Knight.

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