OCEAN CITY – Officials say a request to use Inlet parking lot revenues will allow a downtown corporation to pay off debt associated with its model block project.
On Tuesday, the Ocean City Mayor and Council had before it a request from the Ocean City Development Corporation (OCDC) to use $625,000 in Inlet parking lot revenue to pay off existing debt for the organization’s model block properties.
OCDC Executive Director Zach Bankert said eliminating the debt would put the organization in a better position to develop the model block and purchase additional parcels in the future.
“To date, we still carry a debt of about $625,000 associated with the model block property,” he told the council. “The debt on that is an adjustable bank note, and that is soon to adjust with the interest rates where they are. We would like to use the Inlet parking funds to pay off that debt because we aren’t quite for sure what that new rate is going to be, other than high.”
Since 2003, the OCDC has received a portion of Inlet lot revenues as a reserve fund of sorts for projects in the downtown area.
Bankert told officials this week the organization’s largest project has been its model block project, located between Dorchester and Somerset streets.
“We’ve spent a lot of time and effort purchasing properties on the model block and then demolishing the derelict ones,” he said. “Currently it sits as a very popular parking lot.”
But officials say they are seeking $625,000 to pay off debt associated with the project. City Manager Terry McGean said the Inlet parking lot fund had nearly $1.2 million dedicated to OCDC.
“The way the code is set up is the fund was designated for the Ocean City Development Corporation, but it does require the council’s approval by ordinance,” he said. “The actual fund balance earns interest. As of last week, it was $1,165,697.”
When asked why an ordinance was required, City Solicitor Heather Stansbury said it was identified in a 2003 ordinance establishing the parking lot fund.
“Arguably, perhaps there could be interpretation, because of a missing comma, that passage of an ordinance is not necessary,” she explained. “But with the help of the city clerk, we’ve gone back, and since the advent of this fund, you have done it by ordinance … We thought potentially OCDC could come here today, get their approval and move forward. But this is the safest and most cautious approach.”
Councilman Frank Knight questioned if OCDC had access to other funding sources.
He noted the organization’s financial commitment to a new mixed-use building for the Ocean City Police Department.
“So this wouldn’t interfere with your $2 million commitment to the mixed-use facility?” he asked.
OCDC representatives said the organization would use its own funds to help finance projects.
“We would continue to pay the note on the beach patrol building and then the new OCP building,” said OCDC Board President Kevin Gibbs.
With no further discussion, the council voted 6-0, with Councilman John Gehrig absent, to approve OCDC’s request and to instruct the city solicitor to prepare an ordinance for first reading.
“Paying this off will allow us to be able to find more investible partners and also to be able to put OCDC in a much better financial situation …,” Gibbs said.
