OCEAN CITY – The fate of a proposed redevelopment of a historic bayfront property downtown still hangs in the balance this week after resort officials could not pull the trigger on a proposed lease of parking spaces.
The Mayor and Council had before them on Tuesday a proposed lease agreement with the developers of the bayside property at the base of downtown on South Philadelphia Avenue. The plan calls for a 90-room hotel and spa complex with restaurants and other amenities.
Over the years, the site was once planned as Jennieville, a mixed-use project, and Holt’s Landing. Most recently a site plan for an eight-story condo project had been approved, but that project never came into fruition. Off and on for decades, there have been attempts to redevelop the old Holt’s Landing property at South Philadelphia Avenue to no avail. Recently, a development group that has done other notable projects in the resort has begun moving forward with a potential resort hotel complex on the site, but has run into challenges with meeting the required amount of parking for the odd-shaped parcel.
The project as proposed has 61 total parking spaces on-site, including 47 standard spaces, four handicap spaces and 10 compact spaces. The project developer last fall proposed leasing an additional 52 spaces off-site, potentially from the old town-owned Whiteside property, which, for years, served as a downtown public works department annex, but has since been used as a public parking area.
At the time of the proposal in October, the Mayor and Council directed staff and legal counsel to go back and work on terms for the lease of off-site parking for the project. With the 61 on-site parking spaces and another 52 leased from the town, either from the Whiteside lot or other spaces within 600 feet of the property, the total would reach around 113 total spaces for the 90-room hotel complex. Last month, the Board of Zoning Appeals denied a request for a 12-space waiver for the project.
In the months since, a new entity has emerged, H&S Parking LLC, which includes project developer Christos Sarantis and the Harrison Group, which may in the future redevelop the old Oceanic Motel property at the Inlet. H&S Parking has requested an agreement to lease up to 104 parking spaces from the town to accommodate the hotel project and a future redevelopment of the Harrison Group property.
On Tuesday, staff returned to the Mayor and Council with a recommendation for the terms of the proposed lease. The proposal called for a lease of parking spaces from the town to the developer at a number and location determined by the Mayor and Council. The annual rate for the leased spaces would be $2,000 with an annual increase equal to the summer peak rate for downtown parking each year. The terms of the lease would run for 99 years beginning in April 2022.
After a lengthy debate, however, the council decided the proposed parking lease agreement would be better discussed in an open public meeting on a Monday with downtown residents having an opportunity to weigh in and not during a Tuesday work session. Councilman Peter Buas made a motion to lease the requested spaces at a rate of $2,300 annually per space for a term of 10 years with an option to renew after the 10-year period, but the motion got little traction.
Attorney Hugh Cropper, representing the developer, Sarantis, and H&S Parking, said the project as proposed represented an opportunity for the parcel to be developed with an attractive hotel and spa complex after years of sitting vacant.
“It has been approved for different uses over the years,” he said. “There have been seven or eight site plans approved for the property and nothing has been able to move forward. This property only has one point of access. It’s a very unique property and nobody has been able to develop it.”
For his part, Sarantis said he knows there are challenges with finding the appropriate number of parking spaces, but said the finished product would be worth overcoming those challenges.
“It will be an exciting addition for Ocean City,” he said. “I know parking will be an issue. We’re looking to keep it in the family. I truly believe the revenue from the parking will be beneficial to the town. It will increase the value of the surrounding properties.”
Mayor Rick Meehan said the project as proposed represented a great opportunity for the town despite the parking challenges.
“Thank you for wanting to invest in Ocean City,” he said. “If you look at our comprehensive plan, it talks about a bayside boardwalk, it talks about moving people around downtown. The comprehensive plan says that area is recognized as a prime area for hotel development.”
Meehan said the project as proposed could serve as the catalyst for the redevelopment of the downtown area.
“If you look at it overall, this will create another landmark,” he said. “That’s what has been envisioned there for years. It will get more business into the downtown area. This checks a lot of those boxes.”
Buas said the intent of his motion was to find a way to lease the needed off-site parking spaces at fair market value, but also to encourage the developer to find other downtown parking. That’s why he set the proposed annual rate per space at $2,300, or higher than what was recommended by staff.
“The goal is to get high-density development down there,” he said. “Your proposal is lovely. We want to encourage people to go downtown. If the town is going to lease the parking, the rate should incentivize the owner to find more parking downtown and see if there is a better way to alleviate the parking issues.”
Councilman Mark Paddack questioned if every alternative to get more parking on-site had been explored. The project calls for on-site parking on the ground level, but Paddack questioned if a two-story parking garage was a possibility.
“From the constituents, nobody is opposed per se,” he said. “Why can’t the hotel be designed with a two-floor parking garage? What can’t we get two levels of parking on the property?”
Project architect Keith Iott said including a two-story garage would not work with the building height restrictions in place.
“We are proposing a seven-story building with the height of an eight-story building,” he said. “To have a ramp, we would lose 12 to 14 parking spaces. We have designed an 80-foot building with seven stories and we have complied with the setback requirements.”
Iott said the developer had approached the town about buying the old Whiteside lot instead of the proposed lease agreement. He said redevelopment in the town could be the impetus for developing a parking garage at the town’s Worcester Street public parking lot, a concept that has been discussed off and on for years.
“The original intention was an outright purchase of the Whiteside lot,” he said. “If this lot is redeveloped, if the Oceanic Motel is redeveloped, there will be sufficient business downtown to justify a parking structure at the Worcester Street lot.”
Iott said the project is ready to move forward if the parking lease agreement could be worked out.
“We’re ready to move now,” he said. “With us coming first, it will serve as the impetus for redevelopment down there. It’s a once in a lifetime property.”
Sarantis said he was willing to work with the town and meet the town halfway if the parking lease could be agreed upon.
“This is very important to me,” he said. “I had worked out some numbers and I left some room. I just want both parties to be happy. It might be $2,300 if you can show me why.”
City Manager Terry McGean explained how the recommendation for the $2,000 annual rate per leased parking space was derived.
“The reason why staff came up with $2,000 is because that’s what we get at the Worcester Street lot,” he said. “We are not leasing them the Whiteside lot, we are leasing spaces within 600 feet of the property. I just want to be clear on that.”
Council President Matt James said the project as designed was attractive, but he was hopeful there could be a way to get the required parking on-site.
“It’s a wonderful project,” he said. “We’ve been getting a lot of emails from downtown residents. I would much rather see the council allowing them to go higher and accomplish all of the parking on-site.”
Councilman Lloyd Martin said the Whiteside lot wasn’t even part of the downtown parking equation until recently and that he could not support the motion as proposed.
“Whiteside wasn’t even a parking lot until a couple of years ago,” he said. “Now, it is a parking lot. The not knowing bothers me the most. I can’t vote for this motion. That’s where I am right now. I could support a parking garage at Whiteside.”
Councilman Frank Knight said he had concerns about giving up public parking spaces in the already-stressed downtown area and pointed to a recent precedent.
“The request is for 104 spaces,” he said. “That would be 134 spaces being removed from downtown parking. A couple of weeks ago, the council voted down giving up 125 parking spaces for a pedestrian and bike-friendly alley. I can’t vote for giving up 134 spaces downtown.”
Councilman John Gehrig agreed he could not support the motion as presented.
“I think we all like it,” he said. “I think there are other alternatives. Previous developers have paid dearly for meeting the parking obligations. The agreement presented is weak. There is no way I’m voting for it.”
Sarantis, for his part, said he was willing to meet the town in the middle some how on the parking lease issue for the project.
“I want to make it amicable,” he said. “I need you to embrace this project and let us revitalize downtown.”
Meehan said there had to be a way to work out the parking lease issue to allow the project to become a reality.
“When you look back at downtown and some of the buildings, a lot of them got parking exceptions,” he said. “It’s the first step in a process that has been stalled for 30 years. It’s certainly worth a discussion. Hopefully, we can find a way to accommodate your needs and make everybody happy down there.”
After considerable debate, the council decided to revisit the terms of the proposed lease and bring it back to a regular Monday night open session to allow the public a chance to weigh in on the proposal.
