OCEAN CITY — The next step in acquiring land for a future water treatment plant at 67th Street took place this week with the approval on second reading of an ordinance authorizing the purchase of a piece of property at 67th Street from Sandpiper Energy.
Last spring, the town completed the purchase of an adjacent property that hosts the World Gym on 67th Street amid some controversy. In the months since, resort officials have worked out a lease allowing the gym to remain open on the property until it is needed for the future water treatment plant.
Sandpiper Energy purchased the property in 2013 for $1 million, according to state’s Department of Assessment and Taxation (SDAT) as part of its ongoing conversion throughout town from propane to natural gas. With that project moving along, Sandpiper will eventually no longer need the parcel at 67th Street.
However, much like the agreement with the World Gym, the proposed sales contract with Sandpiper would allow the utility company to utilize the property for at least three years through the conclusion of its conversion project. Under the terms of the sale, the town would be the new property owner and lease the parcel back to Sandpiper for $1 per year until the town needs it for its larger future water treatment plant.
The ordinance approved on Tuesday authorizes the Mayor and Council to purchase the Sandpiper property for $1.1 million. The town will pay for the property through an upcoming bond sale, but the purchase will ultimately be reimbursed through the water and sewer enterprise funds, which are supported by ratepayers.
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.
Before the ordinance could be brought to a vote, however, resident John Medelin voiced some concern about the proposed property purchase, including the appraisal process for determining its value.
“I always get concerned when I see the town buying property and taking it off the tax rolls,” he said. “I looked at the appraisals and they were based on the sales of similar properties in Delaware and in Snow Hill, I believe, but not based on comparable sales in Ocean City.”
Medelin also voiced concern the town was overpaying for the property, which would be leased back to Sandpiper Energy for at least three years at $1 per year. He said a SDAT review revealed the parcel was only assessed at around $61,000. Council Secretary Mary Knight said if that was accurate, the assessed value should not raise concerns about the property coming off the tax rolls.
“If it was assessed at $61,000, the impact on the tax rolls would be minimal,” she said. “That’s the good news with this.”
After some debate, the council voted 6-1 to approve the ordinance with Councilman Matt James opposed. At first reading, James said he was opposed because he believed the town was overpaying for the parcel on 67th Street.
