OCEAN CITY — Absent estimated price tags for the projects proposed, resort officials this week approved on second-reading a future bond sale totaling nearly $49 million.
The Mayor and Council had before them on Monday the second reading of an ordinance authorizing the sale of general obligation municipal bonds totaling nearly $49 million. The bond sale includes multiple capital projects, including funding for the downtown recreation complex redevelopment, the relocation of the existing firehouse at 74th Street to a new location in front of the Public Safety Building at 65th Street and the next phase of the Baltimore Avenue corridor redevelopment.
Also included in the proposed bond sale is the refinancing of bonds issued in 2012 at around $20 million. By taking advantage of historically low interest rates, the $20 million still on the books since 2012 can be refinanced through the proposed bond sale, resulting in a savings of nearly $1 million.
Two weeks ago, when the Mayor and Council approved the bond sale ordinance on first reading, concerns were raised about costs estimates for the individual capital projects. A question was raised if the individual costs estimates for the projects could be left out of the ordinance to provide flexibility in moving around funds from the bond sale.
This week, City Solicitor Heather Stansbury said the ordinance could be legally approved without cost estimates for the individual projects included. She outlined a couple options for the elected officials, including leaving the ordinance in its original form, or amending it to remove the estimates.
“My legal advice is you can adopt this ordinance without that column two if this council doesn’t want to include the price tags,” she said. “Bond counsel advised these funds can be moved around.”
The reason concerns were raised about including the specific price tags is because of the uncertainty of at least one of the major projects on the list. The existing Station 3 firehouse at 74th Street is functionally obsolete. When it was determined the lot size at 74th Street could not accommodate the new firehouse, attention turned to the vast parking lot at 65th Street.
The debate about the firehouse funding continued two weeks ago when the bond sale ordinance was first presented. After the plans for the new firehouse were presented with a soaring $11.2 price tag, the Mayor and Council directed City Engineer Terry McGean and Fire Chief Richie Bowers to go back to the drawing board and look for ways to bring the cost down closer to the original $5.5 million estimate. McGean and Bowers are expected to make a presentation on the revised plans next week.
However, the new Station 3 firehouse was still listed in the bond sale ordinance at $11.2 million. The thinking was if the new firehouse design revisions came back significantly lower, the funding overage could be directed at the Baltimore Avenue corridor redevelopment project.
The town is in the design phase for redeveloping the Baltimore Avenue corridor from North Division Street to 15th Street, including undergrounding utilities, landscaping and an overall streetscaping of the corridor. The project is expected to cost around $20 million when all is said and done, but the bond sale ordinance on the table this week included funding for the next phase.
The plan is if the Station 3 firehouse cost estimate comes in much lower than the $11.2 million price tag, the additional funding could be funneled to the Baltimore Avenue project. In addition, if the downtown recreation complex redevelopment receives grant funding, its bonded cost could be reduced and the extra funding could also be directed to the Baltimore Avenue project.
Councilman Peter Buas asked about the timeline for funding the Baltimore Avenue project.
“Any idea what the next step is for Baltimore Avenue?” he said. “When is the next time we’ll hear about funding for Baltimore Avenue?”
McGean explained where the project was in the development process.
“You’ve forward-funded $1.5 million for the project,” he said. “That will take us through our design fees and Delmarva Power’s design fees. We have a year of design work. At some point, we’re going to come back with a final estimate. My thought is, the more funding we can get in this bond, it will lessen to need to forward-fund from the general fund.”
The council ultimately voted unanimously to approve the general obligation municipal bond sale at an estimated $49 million, without the cost estimates for the individual projects included, which will give the town the flexibility to move funds around for the individual projects.
Meanwhile the town has scheduled a public workshop on the Baltimore Avenue redevelopment project for next Thursday, Sept. 30, from 5-8 p.m. at City Hall. The workshop will begin with a review of the project’s scope and some design alternatives will be presented. Attendees will then have to opportunity to comment on the design alternatives and offer suggestions for other improvements. City staff and the design team will also be on hand to field any questions.
