OCEAN CITY — Resort officials this week approved the purchase of the downtown post office property for over $1.3 million, while allaying fears the pending sale could seal the fate of the decades-old facility in the future.
On Monday, the Mayor and Council approved on second reading the purchase of the commercial property at 410 Philadelphia Ave. that currently hosts the U.S. Post Office’s downtown Ocean City branch. In a separate ordinance approved on first-reading on Monday, the Mayor and Council set in motion the mechanism for paying for the property in the form of a bond sale in the amount of $1.35 million.
The bond, expected to be issued in December, would by paid off over a period of 10 years, the first five of which, at least, would be paid by the continued lease of the property to the U.S. Post Office. The property was made available for sale by the private owner whose husband passed and left it in his estate. The private owner currently has a lease agreement with the U.S. Post Office and that lease will be renewed for the next five years.
The revenue the town generates from the lease to the post office is expected to more than cover the debt service from the bond sale for the first five years, or half of the total terms of the bond. The town intends in the future to use the property to expand the adjacent municipal parking lot at 4th Street, but as long as the post office remains viable downtown and continues to renew the lease, it will remain in its current purpose. However, some have indicated a fear the sale is a sign of the pending doom of the downtown post office, but Councilman Wayne Hartman tried to allay those concerns this week.
“I have heard some concerns about the town purchasing the property and the post office going away,” he said. “My feeling is with the town purchasing the property, the post office is going to be there for at least another five years. The rent the town receives from it is more than what it is costing us to acquire the property.”
Hartman said the situation represents a win-win for all parties, including the seller, the town and the post office.
“It’s win-win in two ways,” he said. “We have a purpose for the property, and second, if the city didn’t purchase it and it went into different hands, the downtown could lose its post office. I know some on the council didn’t want to pull the string if it meant losing the post office, me being one of them.”
Council President Lloyd Martin agreed the rent from the current tenant, the U.S. Post Office, would cover the town’s semi-annual debt service.
“The revenue coming in from the post office for the lease will pay the purchase price for at least the first five years,” he said. “That’s guaranteed as long as the post office does not go out of business.”
City Solicitor Guy Ayres provided a brief history of the property and its valuation.
“When the owner acquired this property because of the death of her husband, it was valued in the estate at a higher price than we are paying for it,” he said. “We’re able to take advantage of this price because the real estate market went down a few years ago. It’s gradually coming back, but it has not reached the valuation it had in the estate.”
Ayres said the current contract price represents somewhat of a bargain for the resort.
“If we wait five years to buy this property, anybody familiar with real estate knows it’s not going to go down any more,” he said. “It’s going to continue to go up. Because the rent from the post office will carry it during that time period, you all have made a business decision that now is the time to buy it.”
Council Secretary Mary Knight said the lease renewal by the post office suggests there are no plans to shutter the facility any time soon.
“The five-year lease begins in February 2017 and the post office has signed it,” she said. “That’s an indication to me that the post office is going to be there at least until February 2022. We do have a signed five-year lease.”
Immediately to the south of the property is a city-owned parking lot.