OCEAN CITY – Resort officials agreed to review some elements of a new special event fee structure following a lengthy discussion this week.
On Tuesday, Special Events Director Frank Miller presented the Mayor and Council with proposed revisions to the town’s special event fees and processes. He said the overhaul was meant to cover staff costs associated with special events and bring costs more in line with demand and value, among other things.
“Really what prompted this was twofold,” he said. “One was that we have seen a major step in the number of events and size of events we host here in Ocean City, Maryland, and that has opened the floodgates on us considering new elements and taking a much finer look at individual details on these larger-scale events. The other was we had done a familiarization trip to Virginia Beach and found out there are opportunities we could be using in terms of how we structure our fees here in town compared to how some of our competitors maybe doing fees.”
In his presentation this week, Miller said the new fee structure would divide special events into tiers. Tier one, for example, would include gatherings of up to 1,000 people and would only require a permit, while tier four would include multi-site events of more than 6,000 people with a higher impact on city resources. Tiers three and four, he noted, would not only require council approval, but would include negotiated agreements.
“We used to do a lot of memorandums of understanding, MOUs,” he said. “That is in the past. We have moved to a much more legal format agreement framework to protect the town and user.”
Miller added the new fee structure would be based on profit status, new or existing event, and the time of year in which an event is held. The formula also sets new application fees, vendor space fees and cost-per fees, which would be based on ticket sales or the number of registered participants. Simply put, officials said the new structure was meant to attract special events, provide fair fees and minimize reliance on city resources.
“We are hoping to get this implemented by January 1, 2024,” Miller said. “We’re also hoping to roll out the online application process next month if possible and start working with that to push through any types of complications we might have.”
While he supported some increase in special event fees, Councilman John Gehrig said he had concerns that the new structure would result in significant costs to promoters. He noted that under the new model, fees for the OC Air Show would increase from $100 to $58,000 while fees for the St. Patrick’s Day Parade would increase from $88 to $3,023, to name a few examples.
“This isn’t just adjusting fees,” he said. “This is major. I think we are punishing promoters at a time when we need to be embracing promoters.”
Gehrig questioned the reasons for changing the entire fee structure. He said he had concerns the new structure would discourage promoters from coming to Ocean City.
“We look at direct expenses and indirect expenses, but we only look at direct revenue …,” he said. “We don’t look at the reason we actually do the events. The reason we do these events is to bring people into town and the economic impact.”
City Manager Terry McGean said staff reviewed the town’s fee structure after looking at other event venues and resorts.
“For an event, this is prime real estate,” he said. “We are giving them something that is really valuable. But there seemed to be a consensus on the council we weren’t getting the value back for what the promoter is getting.”
Mayor Rick Meehan agreed, noting that with beach events, there was a discrepancy between what promoters were charging participants and what the town was charging the promoter.
“I thought it was a good idea to take a look at this to see if in fact what we are getting is a fair return,” he said. “Granted, the bonus is we are bringing all these people to town.”
Meehan, however, agreed with Gehrig on some points.
“Across the board, one size doesn’t fit all,” he said.
McGean added that the proposed fee structure would also address concerns regarding nonprofit events.
“The concern is we’d get nonprofits who were really for-profits charging per participant …,” he said. “What we said if you are a new nonprofit event and charging per participant, we would treat you the same as a for-profit event.”
For his part, Councilman Peter Buas said he had concerns that cost-per fees could be negotiated for tier three and tier four events. He also shared concerns that the new fee structure would create a barrier to entry for smaller events. Sports Marketing Manager Don Abramson said it was an issue to keep in mind.
“We have a huge potential if we handle this situation right,” he said. “Can we raise [fees] a little bit? Absolutely. We just have to be careful with scaring off the smaller ones.”
Gehrig also questioned how revenues generated by the new special events fees would be dispersed. McGean said use fees, for example, could go back to special events, while in-kind costs such as equipment and labor, would go back to the various departments such as public works and police.
Gehrig, however, said he took issue with in-kind service charges, as they were the biggest costs charged to promoters. After further discussion, officials agreed to have staff review the fee structure based on comments made by the council.
“Really, the holdup and what we need to do more work on and bring back to you is the in-kind services fees,” McGean said.