Council Moves Forward With $2M Property Purchase

OCEAN CITY — Despite the presentation of some last-minute statistical data, Ocean City officials were not inclined to rescind a deal to purchase a downtown parcel that will ultimately be used as a new public works facility for the Boardwalk tram.

Two weeks ago, the Mayor and Council approved an ordinance authorizing the purchase of a handful of parcels in the area of 2nd Street and St. Louis Avenue for a future Public Works maintenance area and staging area for the Boardwalk tram. The tram is currently maintained at a location on South 1st Street known as the Whiteside facility.

The Whiteside facility is nearing the end of its useful life and replacing it has been listed as a high priority in Ocean City’s long-term strategic plan. A potential replacement location was identified as the parcels on 2nd Street and St. Louis Avenue and two weeks ago, the Mayor and Council approved an ordinance authorizing the purchase for $2 million with an upfront investment of $400,000. The remaining $1.6 million will be financed with the sale of a 10-year general obligation bond offered at a low interest rate.

Two weeks ago, former Councilman and fiscal watchdog Vince Gisriel implored the Mayor and Council to reconsider the property purchase, citing, among other things, his perception the town was overpaying for the property. Nonetheless, the council approved the property purchase anyway, causing Gisriel to go back and do some research on similar properties in the same area.

“Two weeks ago, you approved this land acquisition and I thought it should have been tabled,” he said. “This particular property concerns me. My instinct tells me we’re overpaying for that property.”

Gisriel said his instinct caused him to go back and look at the recent assessments for similarly situated properties in the same area. He presented a map of properties on the bayside downtown from the Route 50 Bridge to 4th Street to draw his conclusions.

Gisriel said his research discovered there were 59 commercial accounts in the mapped area of which 53 saw their assessments go down in the most recent reassessment cycle. The average decline for the commercial property reassessments in the same area came in around 14 percent.

In general, of the 92 properties reviewed, 75 saw their assessments decline, while 10 remained the same and seven actually increased. The average decline in assessments for all of the properties in the review came in at nearly 17 percent. Gisriel said his research confirmed for him that the town was overpaying for the 2nd Street property.

“My suspicion was borne out by your own appraisal,” he said. “At $2 million, I think you overpaid for that property by around $200,000.”

Gisriel said a similarly-sized parcel of vacant land in the area of 123rd Street totaling 37,800 square feet was assessed at $1.5 million, while the 2nd Street property came out at around 37,000 square feet and the town paid $2 million, or about $500,000 more. He said while the deal had been approved, there were still opportunities to reconsider.

“There are a couple of options,” he said. “There could be a petition to referendum and there is a 45-day window for that, but I’m not inclined to hit the streets. The citizens would be more than welcome to though.”

Gisriel said a second option could be to simply default on the purchase and explained there was precedence to repeal the ordinance approving the sale. He said there was a clause in the contract that would require the town to pay $10,000 to the seller if the deal defaulted and he urged the Mayor and Council to consider it.

“I think you need to jumpstart your appeal since you overpaid,” he said. “Even if you have to default and pay the $10,000, you’re still saving. If you default and renegotiate to something like $1.5 million, the $10,000 will be worth it. Do the right thing. You have a fiduciary duty to the taxpayers to pay a fair price.”

However, a typically stoic City Solicitor Guy Ayres was uncharacteristically animated in his response.

“It strikes me there is one thing being completely ignored with this,” he said. “The Mayor and Council’s decision was based on factors an assessor didn’t take into consideration. We own the lots to the north and down the road this facility might need to be expanded. No other property in this area of Ocean City would allow us to do that.”

Ayres essentially acknowledged the town was likely overpaying for the property, but asserted it was the right move in the long term.

“There are reasons why we are willing to overpay for this property,” he said. “I think this will be another case when the town will look back and say it was a wise move. It takes land to meet the community’s needs with public works.”

Mayor Rick Meehan said the purchase was advantageous despite the sale price coming in above appraisal.

“If you look at the map, it’s the only parcel in that area that would meet our needs,” he said. “Timing is everything. We know we have to rebuild Whiteside and now is the time to purchase this property.”

About The Author: Shawn Soper

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Shawn Soper has been with The Dispatch since 2000. He began as a staff writer covering various local government beats and general stories. His current positions include managing editor and sports editor. Growing up in Baltimore before moving to Ocean City full time three decades ago, Soper graduated from Loch Raven High School in 1981 and from Towson University in 1985 with degrees in mass communications with a journalism concentration and history.