OCEAN CITY – Making good on a prior approved agreement last month, resort officials last week voted to not rescind the lowest minimum bid for a downtown beach equipment rental franchise despite other interest in the parcel.
In December, the Mayor and Council were presented with the results of bids for the downtown beach rental franchise parcels south of 27th Street and voted to approve the successful bids. The town’s beach equipment rental franchise parcels, or informally, beach stands, are auctioned in a three-year cycle with geographic areas including the north end, the middle and the south end, which came up for auction in the latest cycle.
All in all, the south-end beach franchise auction was highly successful, resulting in $418,500 for the downtown section, representing an increase from the $337,500 collected when that section was last auctioned three years ago. However, one anomaly was Caroline Street, where no beach stand operator bid on the parcel.
As a result, long-time beach stand operator Drew Haugh offered to take on the parcel for the minimum bid of $500 according to the town’s code. Now, beach stand bids vary greatly in general and are largely driven by what hotels or other amenities are in the area and drive potential customers to the parcels. For example, while no operator bid on Caroline Street during the official auction, the parcel one block north was successfully bid at $37,500 and the parcel one block south was successfully bid at $22,000.
Because Haugh was the only operator at the time to express an interest in Caroline Street for the minimum $500, he was awarded the rights to the parcel per the council’s larger approval of the entire downtown package. However, last Tuesday, City Clerk Diana Chavis told the council other operators have since expressed interest in the Caroline Street parcel and recommended rescinding its approval and reverting to a sealed bid policy for those parcels on which no operator bid during the regular auction.
“During the public auction in December for the south-end beach equipment franchise parcels, there were no bids received for Caroline Street,” she said. “Later, I received a bid from operator Drew Haugh stating his interest in acquiring Caroline Street for the minimum bid of $500.”
Chavis said she included the Haugh’s proposed $500 minimum bid in her larger presentation of the downtown beach equipment franchise parcels to the Mayor and Council in January, which were approved. However, another party questioned the $500 minimum bid for the Caroline Street parcel and expressed interest in acquiring it.
“Drew expressed an interest in the Caroline Street parcel at the minimum bid of $500 and that was part of the package you all approved,” Chavis said. “Now, we have at least two interested parties. After conferring with the city manager and the city solicitor, it was determined a better practice would be to conduct a sealed bid if a parcel receives no bid at auction and interest in the parcel is expressed at a later date.”
However, the council ultimately decided to honor the $500 minimum bid for the Caroline Street parcel it approved as part of the larger downtown package last month. Councilman John Gehrig said other operators had the opportunity to bid on the parcel and did not during the auction and the town should honor what had been approved.
“Drew and the other operators are all current operators,” he said. “He expressed an interest in Caroline Street at the minimum bid of $500, which is our policy. All parties had an opportunity to bid on the parcel during the auction. We have already approved this. I have no problem with changing the policy going forward, but I think we should stick to the current policy on this one.”
Councilman Frank Knight agreed.
“We made a deal and approved it as part of the franchise agreement,” he said. “I agree. I don’t think we should rescind anything.”
The council ultimately approved sticking to the agreement under the current policy, but did not rule out revisiting the issue in the future.