OCEAN CITY – Despite some private-sector pushback, resort officials this week approved on first reading an ordinance that would convey the air rights over a town-owned alley to the developers of the proposed Margaritaville project.
On Monday, the Mayor and Council had before them an ordinance for first reading that would, if approved, convey the air rights over a portion of Washington Lane to the developer of the Margaritaville project. The proposed project over 12 different lots would include 265 hotel rooms and three restaurants, including the JWB Grill with high-end steaks and seafood, the Landshark Bar and Grill, and a coffee shop and provisions store in the lobby.
The project would also include three outdoor pools and one indoor pool, a wellness center and gym, 14,000 square feet of flexible convention center space, retail stores facing the Boardwalk and many other upscale amenities. The project would replace the old Phillips Beach Plaza property along with associated parcels within the full city block.
However, a portion of Washington Lane bisects the east and west sides of the property. To that end, the developer, MHROC LLC, requested the town convey the air rights over the alley in order to connect the different elements of the project.
Under the proposal, that 16-foot wide portion of Washington Lane that bisects the Margaritaville property would remain a public right of way and the developer would make significant improvements to it. For example, the existing 16-foot-wide alley would be widened to 23 feet, allowing for two vehicles to safely pass through that section of Washington Lane.
In addition, five-foot-wide sidewalks would be added on either side of the alley, along with a dedicated three-foot-wide bicycle path. Because of the changes, the portion of Washington lane that bisects the Margaritaville property would have to be realigned by about nine feet, so it would align with the sections of the alley to the north and south.
Before the ordinance conveying the air rights was passed on first reading on Monday, Mayor Rick Meehan sought clarification on the timing of the conveyance. In other words, the air rights would not be conveyed to the developer if the project did not come to fruition.
“This authorizes it to be done, but not before we have all of the final approvals for this project, correct?” he said.
City Solicitor Heather Stansbury explained the procedural nuances.
“What would happen is, if this were to advance, we would not record the easement,” she said. “We could make it more specific in that this ordinance would only be carried through upon final site plan approval for this project.”
Stansbury said if the Margaritaville project was not ultimately approved, the ordinance conveying the air rights would not be upheld. She said language could be added to the ordinance to make that clear.
“If this project ran into some problem down the line, you would have to repeal this ordinance,” she said. “Presently, that is the way it is set up. This conveyance is not going to happen until final approval for this project.”
Meehan was reassured the language changes made that clear.
“That’s what’s important,” he said. “It is this particular project, otherwise, it does not get approved. I’d feel better if that was in there. I think it reads better and it’s more direct as to what the intent is of the Mayor and Council and how they’re doing it for specific reasons and under specific conditions.”
Before the council could vote, however, local attorney Pete Cosby, representing a neighboring hotel, called the project-specific ordinance into question.
“The town is jumping through hoops to accommodate the density of this project,” he said. “This is projected as one main building, and this ordinance conveying the air rights supports that fiction as it allows the physical connection between the westerly part of the project and the easterly part of the project.”
Cosby questioned the proposed density of the project and the town’s continued accommodations to make it work.
“It is my contention this is a disguised parking garage,” he said. “This fiction is running through all of the zoning changes that are being made to accommodate this project. It’s like cramming 10 pounds of potatoes into a five-pound bag. This project is too dense. It’s not going to serve the neighborhood.”
Cosby also contended the town was essentially giving away the air rights under the guise of a trade-off with the developer.
“Number one, air rights have value,” he said. “In the past, when you’ve closed an alley, developers had to pay for the alley. In this case, you’re accepting a trade-off. They’re supposed to be giving you extra width to the right of way in exchange for the air rights. That’s really a red herring. To make this project work, they have to have the width of the alley anyhow. They’re only giving you what they need to accommodate this project. The density of this project is out of control.”
Cosby urged the council to pump the brakes on the air rights conveyance ordinance.
“I think you’re putting the cart before the horse,” he said. “This ordinance should not be passed until this project can demonstrate it has the land area to accommodate it. I don’t think we should be jumping through hoops to accommodate the devastating density of this project.”
The council ultimately approved the ordinance on first reading with a 6-1 vote, with Council President Matt James opposed.