Council Approves Funding For OCDC Housing Project

Council Approves Funding For OCDC Housing Project
A submitted rendering shows the proposed mixed-use facility.

OCEAN CITY – As part of a larger budget wrap-up session last week, resort officials agreed to provide $25,000 in pre-construction costs for a downtown multi-use facility for the police department, but not before a larger debate about how it is ultimately going to be paid for and parking concerns.

Last week, the Ocean City Development Corporation (OCDC) pitched the concept for a pair of projects in the downtown area including a mixed-use facility at Somerset Street for the Ocean City Police Department (OCPD) and a future seasonal housing project on a portion of the model block. The OCDC is a quasi-public organization dedicated improving the downtown area and for years has been acquiring properties when they come available for future redevelopment.

The OCDC is proposing a mixed-use facility on a parcel it owns on Somerset Street, which would include new storage and space for the OCPD’s bike patrol, public restrooms, an improved bus stop and at least 25 beds of seasonal housing for the OCPD. The overall cost estimate for the project is $2.4 million, which would include a $1.4 million contribution from the town and a $1 million contribution from the OCDC through its share of the Inlet parking lot revenue.

For years, the OCDC has received a portion of the weekend Inlet lot revenue as a reserve fund of sorts for projects it has or intends to develop in the downtown area. The OCDC’s contribution for the proposed Somerset Street project would come from a portion of that Inlet lot fund. For now, the OCDC was seeking a $25,000 contribution from the town to fund a pre-construction management consultant who would work with the project architect on the design, City Manager Terry McGean said last week during a budget wrap-up session.

“The OCDC is committed to paying all of the design fees,” he said. “It’s about $1.5 million. The $25,000 would be our upfront cost.”

McGean said for the purposes of the current discussion, the decision the council needed to make was whether or not to provide the $25,000 in what is essentially seed money for the project. That investment would trigger the OCDC’s next step in the planning and design process, including a memorandum of understanding (MOU) with the town on the project.

“The question is basically do you want to give them the green light to spend their money on design,” he said. “On their end, it’s about $150,000. Our end is about $25,000. There are questions about where the rent will be going, and what the MOU will look like. Those are discussions we have to have.”

McGean said the council could revisit the proposed OCDC project for the OCPD at a later date if it wanted more time to digest the issues.

“If the feeling of the council is it is not something you want to be a part of at this time, you could revisit it after strategic planning,” he said. “That’s the decision you have to make now, if you want them to go ahead and spend the design funds and start working on this, or would you rather revisit this as part of a larger discussion.”

However, he said committing the $25,000 for pre-construction services at this time did not necessarily mean the town was all in on the project.

“My goal is to bring in a construction management firm,” he said. “We would bring in the construction manager early on. That’s what our $25,000 would be for. The $25,000 does not bind us to the proposal. It pays for the hiring of a construction manager to begin to work with the architect to make sure the project is designed efficiently.”

The 25 beds the project would provide for OCPD seasonal officers would come with an estimate rent of $2,500. OCPD Chief Ross Buzzuro was asked if that was in line with what seasonal officers were currently paying for housing.

“We believe so,” he said. “Right now, an officer will pay about $400-plus. We would typically have six officers, so that’s around $2,400, so that gives you an idea of what they’re paying currently. We believe this would be the ideal location.”

Buzzuro said the proposed project could help recruit more seasonal police officers.

“Recruitment has its challenges as you know,” he said. “Part of those challenges if factoring when someone is potentially making a decision to join us. Generally speaking, they live quite a distance away, so housing is a big factor. This would help us greatly.”

When the Somerset project was presented last week, concerns were raised about the potential loss of public parking spaces in the already parking-challenged downtown area. Those concerns were raised again this week by Councilman John Gehrig.

“These are all pieces of the puzzle,” he said. “We can’t just look at every individual piece. We need to look at the whole thing. I support the project and it’s not a deal-breaker at all. The public just needs to know what’s going to happen with parking in the next couple of years.”

Last year, the town heard a proposal from the private sector Holtz Builders to develop one or more significant seasonal housing projects in the resort. Holtz Builders, which has a history of developing seasonal housing projects in resort areas, has looked at multiple locations, including the OCDC properties, and Gehrig said the OCDC’s projects seemed to arise from the Holtz proposals.

“This seems like it came up pretty fast,” he said. “Holtz Builders has $20 million ready to invest in housing in Ocean City. They looked at a lot of locations and the model block was one of those. They had $20 million to invest without asking the city for any money.”

Gehrig seemed to be suggesting the town should consider the private sector investment in seasonal housing projects before leaping in with city investments.

“Then, this whole Somerset Street project and the model block project came out after that,” he said. “My concern really is what is the precedent we’re setting here. Are we financing developers? Will this impact what we’re trying to do with Holtz?”

Gehrig said he was not opposed to the OCDC’s proposed Somerset Street project, but said it would be prudent to do due diligence on behalf of the taxpayers.

“I think it’s a great project and I support it,” he said. “I also represent the taxpayers. When someone is offering to pay us for a project and manage it, so we don’t have management fees and we don’t have that $1.4 million or whatever it’s going to be, I just think it’s our responsibility to hear them out.”

OCDC Board President Kevin Gibbs somewhat disputed the notion.

“I am seeing way more pros than cons,” he said. “We’re here to put this money to work for the betterment of downtown. We have so many things going on.”

Again, Gehrig said he supported the Somerset Street project and the OCDC in general. He said he just wanted to make sure it was a prudent and responsible use of city funds.

“You’re absolutely right,” he said. “I’m 100% in. Asking the city to fund the $2.4 million and the management and all of this other stuff. That’s fine. I get it.”

A question was raised about paying for the proposed project entirely with the OCDC’s Inlet lot revenue over time. However, Gibbs said he was reluctant to put the entire Inlet lot fund revenue into the Somerset Street project because it would inhibit the OCDC’s potential to invest in other projects in the downtown area, including a potential parking lot.

“I don’t want to put the full weight of that fund behind it,” he said. “We also want to have the flexibility to get a parking lot if one becomes available. I don’t know if we want to lose that flexibility. We don’t want to completely drain our resources.”

Councilman Lloyd Martin said the council could approve the $25,000 in pre-construction funds for the project and then review the overall plan to fund it.

“We need to work through the details,” he said. “We need to move it forward. They are willing to work with us and they’re a great partner.”

Councilman Rick Meehan asked for clarification on the overall funding plan for the project.

“I’m not afraid to ask this question, just for the record,” he said. “The funding will come from the Inlet parking lot to cover your portion of the cost? That’s what you’re proposing. I think what you need to do as a result of this conversation is to work with the city manager to see what portion of that cost you can really pay out of that fund amortized over 20 years and still leave you a balance of funds that you know you’re going to have on hand to do the other projects you possibly have on the table.”

Martin said the growing seasonal housing issues in the resort made the Somerset Street project a necessity.

“I’m all for this OCDC police project,” he said. “We have a funding source of $1 million per year. We have a town that is clean and safe. Downtown has been a problem for us for a while and the OCDC has done a good job with it. I think it a good idea to move forward with the design service so at least we know where we are. Every department has manpower issues. Part of the problem is they can’t find housing. If we can provide some housing for our people, we’ve done a good job.”

After considerable debate, the council voted unanimously to approve the $25,000 initial contribution to the OCDC project. The next step will be a discussion of the overall funding formula and an agreement on an MOU with the OCDC on the project details.

About The Author: Shawn Soper

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Shawn Soper has been with The Dispatch since 2000. He began as a staff writer covering various local government beats and general stories. His current positions include managing editor and sports editor. Growing up in Baltimore before moving to Ocean City full time three decades ago, Soper graduated from Loch Raven High School in 1981 and from Towson University in 1985 with degrees in mass communications with a journalism concentration and history.