OCEAN CITY — The recent auction of the mid-town beach equipment rental franchises to the tune of over $227,000 was approved by the Mayor and Council this week, but not before a debate about waiving the provision that no single operator can control over 50 percent of the parcels.
At Tuesday’s Mayor and Council meeting, City Clerk Diana Chavis presented the results of the recent auction of the beach equipment rental franchises for the middle section of the beach from 34th to 78th streets. Each year, one third of the franchises, which allow operators to rent umbrellas, chairs and bodyboards, for example, to beachgoers, go out to bid so that one section comes up every three years.
This year, the mid-section was up for bid and the auction was held in December. Chavis explained the auction was successful with nearly all 18 parcels successfully bid. Five of the first-term contracts approved three years ago in that section were renewed, while the remaining 13 parcels were bid on by different operators. The total yearly value of the mid-section beach stand bids is estimated at around $227,000, representing a 24-percent increase over the last time the section was auctioned.
However, there was one anomaly that needed to be addressed, according to Chavis. A clause in the town’s ordinance regarding beach equipment franchise agreements prevents any one individual, corporation or partnership from controlling more than 50 percent of the town’s beach parcels. Chavis said there was one parcel in the mid-section that was not bid on last month and one of the operators had expressed an interest in bidding on it. However, that operator already controls 50 percent of the town’s parcels and awarding that lone parcel to him would put him past the mandated 50-percent threshold.
“One parcel received no bids and we sent out field bids to the other operators and received one bid back from the field,” she said. “I’m suggesting you amend the code to give you some flexibility in offering a parcel if we receive no bids.”
Chavis explained the intent of the 50-percent rule in the ordinance and offered a solution to the issue.
“According to the ordinance, you can’t award somebody more than 50 percent of the parcels,” she said. “It exists to give new operators an opportunity to bid and avoid a monopoly. To get around that this one time, can we combine the parcels adjacent to one with no bids?”
The council then deferred to City Solicitor Guy Ayres for an opinion on the 50-percent rule.
“There is no provision in the code to combine parcels,” he said. “You can decide to do away with the 50-percent rule completely, but that would require a code change. You could also decide to waive the 50-percent rule in this case.”
Councilman Wayne Hartman expressed concern with doing away with the 50-percent rule completely.
“I would have concerns about one entity getting control of so many parcels, 50 percent in this case, that if they defaulted or pulled out for some reason, we wouldn’t have anybody in the business available to step in and run them,” he said. “That concerns me. I like the 50-percent rule.”
After considerable debate, the council voted unanimously to approve all auctioned bids with the exception of the one parcel for which no bids were received. The council also agreed to explore the 50-percent rule and how it could best be amended to handle situations like the one that occurred with the most recent auction. In addition, the parcel from 72nd Street to 74th Street would be awarded to the individual who offered to step in and bid on it after there were no bids were received initially, if the council opts to waive the 50-percent rule.
Hartman said that lone bidder should get first crack at it if the rule is changed because his offer had already been made public at the meeting.
