OCEAN CITY — Resort officials this week agreed to solicit bids for the expiring vehicle vending contract, but not before a larger discussion about apparent declining revenue on some franchises awarded by the town in general.
On Monday, the Mayor and Council had before them a request to begin soliciting bids for the town’s one and only vehicle vending franchise. The current franchise is set to expire at the end of the month, and City Clerk Diana Chavis was requesting permission to solicit bids for the next four-year contract.
By way of background, the current franchise is held by Georgeo’s Water Ice, Inc., which drives vehicles around the resort during the summer months offering pre-packaged, pre-prepared food and beverage items to residents and visitors akin to the traditional ice cream trucks, for example.
The town offers just one such franchise and the operator is limited to six vehicles. There are strict limitations on the types of wares offered from the vehicles and strict limitations on where they can operate. For example, the franchisee cannot operate in the majority of the downtown area near the Boardwalk so as not to compete with traditional brick-and-mortar establishments. In addition, the franchisee cannot operate around Northside Park or the convention center so as not to compete with the town’s own food and beverage service operations.
The franchise is offered in a four-year contract and the current contract, which expires on Dec. 31, is around $32,000 per year. On Monday, it appeared the request to solicit bids for the next four-year contract was heading toward easy passage before questions were raised about the bidding process. Councilman Tony DeLuca asked if there was a minimum acceptable bid and raised concerns about declining revenue with the vehicle vending contract and similar contracts scheduled to appear later on the agenda on Monday.
“Is there a minimum bid?” he said. “I’m just concerned about the loss of revenue. When you look at the next few items on the agenda, you can see a trend emerging.”
Chavis said there was no minimum bid attached to the bid solicitation request. However, she said informally she was confident the bidding would be competitive. Mayor Rick Meehan agreed with DeLuca’s concerns and said the time was right to attach a minimum bid to the vehicle vending franchise if that was what the council desired.
“I think Councilman DeLuca’s comments are relevant,” he said. “Lately, there have been some recommendations for change. As time passes, things change, and we’ve seen that with some of the recent bids. This would be an opportunity before this goes out to bid. If you’ve heard any suggestions or changes, now would be the time to do that. To put a minimum bid on some of these things we might want to consider.”
However, Councilman Matt James pointed out the town was not beholden to any bid that came in for the franchise if it wasn’t satisfied with the bottom line.
“We don’t have to accept bids if we’re not happy with them,” he said. “If we’re not satisfied with the numbers, we can always put it back out to bid. I think that’s the route we should take if we’re not happy with the numbers rather than put a minimum bid on it and get bids back right at that number.”
DeLuca said he was comfortable with that strategy, but was merely pointing out some of the franchises awarded by the town were coming in lower than expected.
“I’m just pointing out we need to be cautious with these next two coming up,” he said. “You’ll see the beach photographer franchise coming in about $1.1 million short in revenue and the beach equipment rental revenue looks like its coming in at $37,800 under or $113,000 for three years. That’s revenue that’s declining on the beach.”
Councilman John Gehrig pointed out some of the town’s own policies were resulting in the lower bids for things such as the vehicle vending franchise and the beach photographer franchise and even the beach equipment rental franchises to some extent.
“Some of this is self-inflicted,” he said. “We have ordinances that restrict competition. We have discussed this, but didn’t make changes when we had to the opportunity to do that.”
Gehrig also pointed out the apparent declining bids on certain franchises were the result of market forces and not necessarily because of the bidding processes.
“Secondly, some of this is just capitalism and supply and demand,” he said.
The council voted 6-0 with Councilman Dennis Dare absent to solicit bids for the vehicle vending contract without a minimum bid requirement attached. However, the council also agreed to revisit some of the policies regarding competitive bidding.”
The bid solicitation for the vehicle vending franchise will go out and the resulting bid or bids will be presented to the Mayor and Council during the first work session in February.