OCEAN CITY — The door was left open this week for continued dialogue to keep the World Gym at 67th Street open at least temporarily with the town in the process of buying the property for a future water treatment plant on the site.
Late last year, the Mayor and Council approved an ordinance authorizing the purchase of the World Gym property at 67th Street for a little over $1.2 million. The 18,000-square-foot property is one piece of a larger puzzle of properties needed for a future water treatment plant.
The purchase is complex to be sure, but in simplest terms, the property went into foreclosure last year when it became apparent the former owner had fallen into arrears on state and local taxes. As a result, the property was offered at public auction and ultimately purchased by Wells Fargo.
However, because the town, as a municipality, was not eligible to participate in the public auction during a trustee sale, Ocean City officials took the pre-emptive step to begin the condemnation process for the property.
Once Wells Fargo bought the parcel at auction, the town was free to negotiate a fair market price for the property, which led to the proposed purchase for $1.2 million. However, left in limbo through the process has been the gym business itself and its roughly 400 members. Pete Brooks was the original business owner who held the property when it went into foreclosure and no longer owns it.
It was learned this week the business including the equipment, but not the property, was purchased by Todd Clark about a year ago. Brooks has remained on hand as the general manager of the gym. It was also learned this week Clark made overtures to the city to find a way to keep the gym open for its members until the town needs the property for the future water treatment plant or until a new location can be found.
Complicating the issue even further was a petition drive led by private citizen Tony Christ to keep the gym open, or, in the alternative, make the town look elsewhere for property on which to build the water treatment plant. The petition failed to meet the required number of signatures, but the effort to keep the gym open at least until the town needs the property for the water treatment plant, which could be a few years down the road, remains an option.
During the public comment period of Monday’s Mayor and Council meeting, Christ urged the elected officials to continue to negotiate a lease agreement with the gym’s new owner in the interim despite the failed petition effort.
“I’m here to appeal to the council to consider renting the property to the gym on a month-to-month basis and I’ll give you some reasons,” he said. “The obvious thing is the employees would be unemployed. You would also have 400 gym memberships go across the bridge to West Ocean City. There are also retail businesses across the street that would feel the impact.”
For his part, Brooks said he is no longer the owner, but rather merely an employee of the gym. He outlined a pattern of emails sent back and forth about a possible lease agreement suggested the town wasn’t interested in renting the property to the gym. Brooks also pointed out it appeared the town was not seriously negotiating a lease because of his own past financial issues.
“The town asked for 12 months’ rent up front,” he said. “That is not a genuine offer. The city basically sent the message it wasn’t interested in renting to us. I don’t own the business. If I wasn’t the general manager, would there have been a different offer? I’ve never heard of asking for 12 months up front.”
Throughout the debate, there appeared to be some confusion over the ownership of the business. It appears for some on the council, it was unknown until Monday that Clark now owned the gym business. Nonetheless, Council Secretary Mary Knight pointed out the financial issues with the property prior to the town’s efforts to purchase it.
“I only know that the property was in foreclosure and there were $100,000 in back taxes not paid,” she said. “You have to remember I represent the residents of Ocean City and the people who come here.”
Brooks pointed out Clark was now the business owner and the auction purchaser, Wells Fargo, had agreed to pay the tax liability on the property as part of its contract.
“The purchase agreement with Wells Fargo states the taxes will be paid by the seller,” he said. “You can’t punish Mr. Clark for my tax liability. I haven’t owned the property for over a year. It’s not fair to punish him for my past. He had nothing to do with it.”
Mayor Rick Meehan said regardless of the business ownership questions, the town had a fiduciary responsibility to its taxpayers.
“Our biggest concern was that the taxes weren’t paid,” he said. “We had to protect ourselves to ensure we won’t be put in that position again. We have to make sure we represent our taxpayers. We also have other gym owners who feel they are being treated unfairly because they are paying their taxes. We’ve also had inquiries from other gyms to lease that space.”
Brooks pointed out the town would not likely find another gym to come in and take over the property for a few years until it was needed for the water treatment plant.
“Why would anyone purchase or lease that property when you announced you are taking it over?” he said. “You guys came in and just blew that out of the water.”
Meehan also pointed out potential liability issues with renting the facility, which has reportedly fallen into disrepair somewhat.
“We were concerned about becoming a landlord,” he said. “We didn’t want to be in a position to have to make repairs and bring the building up to code for something that will be torn down in a few years. We didn’t want to be put in that position.”
Nonetheless, Brooks could not be dissuaded the town had not been negotiating with Clark in good faith because of the former tax issues and urged the council to reopen the conversation.
“When you asked for a year up front, that sent the message that you aren’t interested in renting it,” he said. “We’re just asking for an open dialogue.”
The Mayor and Council heard from a litany of other supporters hoping to keep the gym open some how in the interim including local resident Barbara Webber.
“Going to the gym has been a lifesaver for me,” she said. “It’s not just a gym. It’s like a family. It’s a very positive place and an asset to the community.”
Local resident and gym member Steve Grossnickle also asked the council for consideration to negotiate to keep it open.
“These types of businesses and places like this where people gather become part of the fabric of the community,” he said. “I know there are great fiscal responsibilities that you have. Even though this is a seasonal community, it’s still a strong community and a lot of the relationships that form in places like this are the strength of the community. Sometimes, the benefits don’t appear to outweigh the fiscal benefits, but sometimes they do and I think this is one of those cases.”
Kathi Brown, a trainer at the gym, also asked the elected officials to find a way to buy more time for the facility.
“I ask you to give us time to look for something else,” she said. “We’re just asking to keep our members happy and healthy and together for a little more time.”
After the public comment period, Councilman Mark Paddack confirmed he had been in contact with Clark earlier MOnday afternoon about finding a way to negotiate a lease and that Clark would have been there Monday night but instead was handling a family health crisis. Paddack made a motion to reopen the negotiations with the new owner to lease the gym space until such time as the city needed it for the treatment plant.
Paddack pointed out his own relationships forged decades ago at a now defunct midtown gym as reason for at least trying to find a solution.
“The friendships made in that social setting 30 years ago have lasted today,” he said. “I hear the passion from those members here today. We understand the importance of that social setting.”
Paddack said there might be an opportunity for a win-win for all parties if the lease negotiations were reopened.
“It’s my belief that we can come to a mutual agreement that benefits all,” he said. “That way, the gym can remain in place until it’s time for us to do our project or until they find a new location.”
Paddack’s motion to reopen negotiations passed by a 4-0 vote with Council President Lloyd Martin and Councilmember Tony DeLuca absent. It was pointed out the negotiations should begin in earnest with the eviction process pending soon.