SNOW HILL – County officials agreed to send a letter to the state in support of a seasonal housing project proposed in West Ocean City.
The Worcester County Commissioners voted 5-2 this week to write a letter in support of a proposal from Holtz Companies for seasonal workforce housing in West Ocean City. The company is seeking long-term, low-interest financing from the state in order to develop the project, which could house more than 2,400 workers.
“If ever there was a need for something like this it’s now,” Commissioner Bud Church said.
James Bergey, joined by Holtz Companies’ Dan Bullock, approached the commissioners Tuesday to outline plans for a dormitory-style workforce housing project in West Ocean City. Bergey said the businesses in Ocean City were dealing with a severe labor shortage. During the pandemic they struggled to afford the high cost of labor as well as with finding housing for workers.
“Why is this important to Worcester County?” Bergey said. “To keep the businesses viable and profitable and paying real estate taxes it’s very important.”
He said hotels in Ocean City last year not only had to pay their workers more but had to set aside rooms for them to stay in.
“You can imagine it was a traumatic cost and a very difficult time,” he said.
In recent years, older properties that were historically used to provide student housing during the summer have been redeveloped. While that has increased the tax base, it means there’s insufficient affordable housing for seasonal workers.
“The minimal housing stock that’s left for students, the people that have those see the opportunity to keep raising the price,” he said. “So a typical student that’s coming…instead of paying a reasonable $150 a week they’re paying over $200 a week.”
He added that because properties were reassessed, many Ocean City business owners would be paying more in property taxes.
“A $10 million hotel was paying the county $85,000 in real estate taxes,” he said. “With a 12% increase, they now have to pay this year $95,000. So as you can imagine, to keep Ocean City viable … the county and the city need to step up and help with this critical issue of student housing.”
Bergey said the only properties large enough for the kind of project Holtz Companies wanted to pursue were in West Ocean City. Bergey said they’d identified two potential properties. In order to do the project, the company is going to ask the state for a bond, as low-cost financing is the only way to accomplish what is expected to be at least a $60 million project, according to Bergey. He described it as similar to the process used to build Atlantic General Hospital. A nonprofit would be created that would be responsible for holding the property and paying back the bond.
Bullock said the company had done similar projects elsewhere successfully. He noted that onsite security and staffing ensured that there were no issues.
When asked if Ocean City would be handling the EDUs (equivalent dwelling units) and sewer capacity for the project, Bergey said the resort would handle that as well as bus service.
Commissioner Chip Bertino asked if the property would seek a tax waiver.
“It’s something that is going to unfortunately probably be necessary to make it affordable,” Bergey said, adding that the taxes on a project this size would be $500,000 to $600,000 annually.
Bertino said he liked the concept but not the fact that the county would lose tax revenue.
Bergey said the county had benefited when old seasonal housing properties were redeveloped.
“There’s just no housing left,” he said. “I know clients that I’ve had that bought old hotels that were specifically housing kids. When they redeveloped them, Ocean City, the county, the state, everybody made out because the property taxes more than quadrupled but there was no more housing. There is a severe lack of housing stock in Ocean City.”
Commissioner Jim Bunting said the property being considered was near residential property and he wasn’t comfortable supporting the project without hearing from those residents. He added that Holtz Companies was going to make money on the project.
“I’ve got a lot of questions on this one,” he said.
“I like this project, don’t get me wrong, but I don’t like the fact an out-of-area company is going to benefit with profit on the backs of taxpayers,” he said.
Bergey said that like with the hospital project, in this scenario dollars spent building the project could be tracked to ensure they went to Maryland companies. He said Holtz Companies would just manage construction.
Commissioner Joe Mitrecic said there would not really be a cost to taxpayers.
“The tax on the property right now is $1,350, something like that,” he said. “If it’s never developed it stays at $1,350 forever. So it’s really not a cost to the taxpayers, it’s tax money that would not come in in the future if we went down that road. When people hear it’s a cost to the taxpayers they think the taxpayers are subsidizing when they’re really not.”
The commissioners voted 5-2, with Bertino and Bunting opposed, to send the state a letter of support for the project as proposed.