OCEAN CITY — Resort officials have approved on first reading an ordinance authorizing the purchase of the World Gym property on the bayside at 67th Street, but not before a debate about its short-term use and a veiled threat of a petition attempting to stop the sale.
The Mayor and Council had before them on Monday an ordinance for first reading that would authorize the town to purchase the existing World Gym property at 67th Street for a little over $1.2 million. The 18,000-square-foot parcel is one piece of a larger collection of properties needed by the town for a new water treatment plant in the future.
The existing water treatment plant at 44th Street has been in service for over six decades and has outlived its useful life. To that end, the town has been piece-meal purchasing parcels in the area of 67th Street for the purpose of planning and ultimately building a new water treatment plant. Already, the town has purchased the old VFW property in the area of 67th Street for the same purpose.
In September, the council voted to begin condemnation process for the gym property, which had been in foreclosure. Later that month, Wells Fargo purchased the property for $1.13 million at a public auction on the site. Because the town as a municipality was not allowed to participate in the public auction during a trustee sale, the town took the pre-emptive step to begin the condemnation process for the land.
Once Wells Fargo bought the parcel at auction, the town was free to negotiate a fair market price for the property, which has led to the proposed purchase for $1.2 million initiated on Monday. The purchase price would be funded through the town’s water department enterprise fund, a self-sustaining fund generated by water system user payments.
The condemnation in September followed by the ordinance proposed at first reading on Monday raised eyebrows for some in the community who suggested the town was essentially “taking” the property. Before the ordinance came to vote on first reading on Monday, Councilman Matt James clarified the legitimacy of the purchase process.
“We are purchasing this property from the owner and not taking it,” he said. “I just wanted to make that clear because we’ve heard some complaints.”
Councilman John Gehrig said he agreed with the process, but questioned what the short-term future was for the property once the purchase was complete. An outline in the packet suggested the existing buildings on the site would be demolished in advance of the future development of the new water treatment plant.
“When did we discuss what to do with this property once it is purchased?” he said. “I don’t want to be bound to it being used in a certain way. I’d just like that to be discussed.”
City Manager Doug Miller said purchasing the property was a necessary first step and its future could be determined in subsequent discussions.
“We’ve had some discussions and Councilman James in correct,” he said. “There are different parts to this. The first is the purchase, then we can decide what to do with it and how to proceed.”
Councilman Mark Paddack agreed with Gehrig and said further discussions were needed before any decision to demolish the existing buildings on the site.
“I’m of the same mind as Councilman Gehrig,” he said. “Just off the description of this, it says the structure will be demolished, but we don’t know when because we’re not sure when the water treatment plant will actually be built.”
Paddack pointed out there is an additional adjacent property that might be part of the water treatment plant puzzle.
“Next door to this is the Sandpiper property that is still owned by the company,” he said. “I’m not sure how that property falls into this in the big picture. It looks like the city is going to have the right of first refusal on that property, too.”
City Solicitor Guy Ayres said the groundwork for the purchase of the Sandpiper Energy parcel was already in the works.
“Although we haven’t nailed down the price, they’ve agreed to sell it now,” he said. “They would stay there at a minimal rent for a year until they are able to relocate everything they are doing with the transition from propane to natural gas. It’s all part of a larger package.”
However, Paddack asserted there should be additional discussions about the short-term future of the gym property before a decision is made to demolish the buildings on the site.
“There are things I’d like to discuss with the rest of the council before we decide to demolish a building,” he said. “I don’t know that we need to demolish something that could be a short-term revenue generator for the taxpayers until the city actually needs the property.”
However, Ayres said there were complicated issues involved with the city purchasing a property and then leaving it in its current condition.
“That’s fine, but you just have to realize the town would enter into a proprietary use which, number one, the town would technically have to pay taxes on it,” he said. “You’d want to make sure you get enough rent to cover that. Secondly, the property is being sold ‘as is’ with no warranties as to the condition and if something happens on the property, there are liability issues.”
For his part, James said setting the purchase in motion with the approval of the ordinance on first reading was a necessary first step and should preclude any discussion about its short-term use.
“I think it’s important that we have this discussion, but I also point out the importance of passing this on first reading tonight,” he said. “It is the will of the council to ultimately own this property.”
Council Secretary Mary Knight pointed out once the property was purchased, it could be put to good use before the town needed it for the new water plant.
“If the building was demolished, it would be parking until we need it for the water plant,” she said. “There is a need for parking in that area. There wouldn’t be a building there to maintain with taxes to be paid and liability issues, etc. I just want the public to know that.”
At that point, Council President Lloyd Martin asked if there were any public comments on the proposed ordinance and citizen Tony Christ was happy to oblige.
“There are quite a few people I’ve spoken with that have a different view of this than the council,” he said. “They don’t feel that the fact the money being used out of the water enterprise fund gives them any assurances that there won’t be an impact on their utility bill, their water bill or their fixture bill.”
Christ also pointed out some in the community believe the new water treatment plant would be better sited as part of the larger public works campus being redeveloped a few blocks south in the bayside area roughly between 64th Street and 66th streets.
“They also feel drawings could be done with the existing property on 64th and 65th streets that don’t place a new water plant across the street from a new shopping center, 300 feet from $600,000 condos and 100 yards from Coastal Highway,” he said.
Christ, who has brought petition drives against various Mayor and Council actions in the past, threatened to start a petition against the proposed purchase of the gym property.
“I certainly hadn’t planned on doing a petition during Christmas, but I don’t think people appreciate this,” he said. “Frankly, you guys are too loose with public money. You think you’re acting like businessmen, but we can start with a litany of acquisitions in which you didn’t look very good in context. You’re not a business, you’re a government.”
The council voted unanimously to approve the ordinance authorizing the purchase of the gym property on first reading, with the promise to continue to discuss its short-term use prior to final approval. Later, during the council comment period, Councilman Dennis Dare addressed some of the issues raised by Christ.
“I want to set the record straight,” he said. “Mr. Christ just threatened a petition over the water treatment plant plans we’re making and I think the public needs to know a few things.”
Dare, the former long-time city manager and city engineer, then explained the function of the town’s self-sufficient enterprise funds.
“First, when we talk about the water department being an enterprise fund, that means in reality it is a stand-alone department,” he said. “It only uses revenue that comes in through the water bills. It is completely independent as far as finances go.”
Secondly, Dare explained the proposal to purchase the gym property and assemble other parcels in the area for the purpose of developing a new water treatment plant came only after years of careful planning.
“What we have done many times is a master plan for the water department where we look five years out,” he said. “We look at water tanks that need to be redone. We look at water lines that need to be redone and we look at the cost of chemicals and how that is trending. The budgets are very exact. We’ve actually been able to reduce water rates from what was proposed several times because of good planning.”
Dare then explained the need for the new water treatment plant.
“The water treatment plant at 44th Street is 67 years old and needs replacing,” he said. “It’s at the end of its useful life. It also doesn’t have the capacity needed, so a new plant is needed. The master plan takes that into account and the rates are set for each of the five years. It’s a well-thought-out project and it’s not going to affect the rate structure.”
Finally, Dare then essentially called out Christ and his not-so-veiled threat of a petition drive.
“It’s kind of ironic that Mr. Christ brings up the fact that buying this property could affect the water rates,” he said. “It won’t affect the rates. The first time I met Mr. Christ is when he walked in my office and he was looking to buy a piece of property in town that was in arrears with the water bill. He wanted me to forgive the water bill so he didn’t have to pay for it. He repeatedly asked me about forgiving that bill. To this day, he has become a fixture at these council meetings because of that.”
Dare said it was disingenuous for Christ to threaten a petition when he was essentially guilty of the same action for which he was accusing the council.
“If I would have forgiven that water bill, you know who would have paid that? The other ratepayers,” he said. “Everybody else in town would have paid for that. That’s why we have had a policy against that for the 30 years or so I’ve been in City Hall. It’s kind of hypocritical for him to come in here and threaten a petition and say we’re going to do something like that when 20 years ago he was in here asking me to do something that would effect everybody else’s water bill adversely.”