OCEAN CITY – Beach stand operators continued this week to express their concerns about having one owner permitted to own half of Ocean City’s beach equipment franchises while bid prices are increasing and the economy continues to struggle.
Patti’s Beach Service owner Patti Murrell has been in business for over 37 years and came before the Mayor and City Council during Monday’s meeting to ask for a change for the amount of beach stands one operator can own.
In November of 2008, the Mayor and City Council voted to amend the City Code’s Section 39-28, which stated that no sole proprietor of beach stand rental equipment could own more than a third of the total parcels. The new rule states that one beach stand operator can own up to 50 percent of the 70 existing beach parcels that are auctioned off each year.
“I am not aware of any other beach stand owner that is in favor of this change,” Murrell said. “Because of this change, most of us have lost lucrative stands and other locations to this person because of how high the bids have gone up. Most of us realize that the stands will never do better than they are doing now and we bid accordingly. We lose these locations because we reluctantly have to stop bidding after the price has gone way beyond a minimal profit margin, sometimes a no-profit margin.”
Murrell asked the Mayor and City Council to consider scheduling the issue for a future work session for further discussion.
“It should not be all about the money in this case,” she said. “I know that the money is most important to the town but in this case you have risk factors. The town has other beach stand owners who have done a good job servicing the vacationers for years and years, and that are being squeezed out because of this change … please reverse this decision now.”
Trudy Stock of S & H Beach Service has been servicing beach goers with equipment since the 1970’s and one time the company manned at 50 streets.
“Recently the economy has caused financial setbacks, for example the cost of painting, supplies have become more costly, and the bids have increased drastically … I do not want to stand up here and complain, I want to provide positive suggestions,” Stock said. “One suggestion is a working council meeting with the current beach stands vendors so that we can address the bidding process, liability insurance, costs of equipment and a lot of other issues that are going on.”
Council Secretary Mary Knight, who was filling in for Council President Lloyd Martin during Monday evening’s legislative session, said she would ask Martin to schedule a work session to discuss the concerns of the beach stand operators.
Mayor Rick Meehan pointed out that when the change in percentage of what one operator could own was made in 2008, the amendment went through two reading, which provided ample time for the public comment.
It was just last month when the Mayor and City Council approved to proceed with the 2012 Beach Equipment Auction for north-end parcels.
At that time, City Manager David Recor explained the town franchises 70 beach equipment parcels spanning the entire Ocean City beach. The 70 parcels are divided into three sections, the south end, mid beach and north end. Every year on a revolving schedule one of the three sections is auctioned and this year, the north end, which is 85th Street to the Maryland/Delaware line, is up for bid.
The highest qualified bidder of each parcel receives a three-year contract to rent umbrellas, chairs, body boards and cabanas on the beach. Each contract provides one option to renew at an annual fee of 10 percent greater than the initial term.
During this meeting, Councilwoman Margaret Pillas acknowledged the number of letters the council has received from beach equipment operators concerning the town’s code that allows for 50 percent of the franchise to be owned by one operator and asked for a discussion to take place considering returning the town’s policy back to a third.
Meehan furthered that the amendment has resulted in an increase in revenue received from the beach parcels and just this past year the town collected over $175,000, which was the highest figure collected from the franchise in history.
Beach Equipment Franchise owner Will Edmunds came before the council following the vote to bid out the north-end parcels during the citizen comments portion of the meeting asking for the discussion to take place regardless.
“Myself and quite a few of the other operators feel pretty strongly about this one third and I know the council is well aware of it,” he said.
Edmunds brought up franchisee Patrick McLaughlin, who is the owner of 50 percent of the beach equipment parcels and was recently sentenced to 10 months in jail followed by one year of supervised release for failing to file individual income tax returns and failing to report employment tax withholdings in the amount of almost $300,000. McLaughlin also holds the title to both of the town’s beach photo franchises.
“We feel that our business has been very impacted over the last 10 years,’ Edmunds said. “I know myself and a lot of the other operators have lost a lot of concessions and are paying a lot more, and we have really been impacted by this.”