OCEAN CITY – Resort officials this week approved a bond reimbursement resolution, allowing three capital projects to move forward.
On Monday, the Mayor and Council had before them a resolution acknowledging the council’s intent to reimburse expenditures for three capital projects using the proceeds of tax-exempt debt. City Solicitor Heather Stansbury said the resolution included funding for two capital projects included in the fiscal year 2024 capital improvement plan and funding for one capital project discussed at a recent work session.
“This is the Mayor and Council declaring its intent to reimburse expenditures to be incurred with respect to certain projects or programs or from certain funds with the proceeds of debt to be issued by the Mayor and City Council …,” she said. “The first is for Montego Bay street reconstruction and rehabilitation, not to exceed $4.5 million. The second is 94th Street bayside water main installation, not to exceed $2.2 million. And the third is the final design and construction of a new mixed-use police substation and housing facility located at Somerset Street parking lot, not to exceed $4.26 million.”
Last week, City Manager Terry McGean presented the Mayor and Council with a new design and cost estimate for a proposed mixed-use building on Somerset Street. While he noted that construction costs have increased by roughly $2 million, the new plan would provide employee housing and a new Ocean City Police Department substation.
The proposal also called for a cost-share arrangement between the town and the Ocean City Development Corporation (OCDC), with the nonprofit contributing half of the funding through its share of the Inlet parking lot revenue. For years, the OCDC has received a portion of the weekend Inlet parking lot revenue as a reserve fund for projects it has, or intends to develop, in the downtown area.
In an update Monday, McGean said the cost share arrangement between the town and OCDC would result in an annual debt service of $300,000.
“To clarify for the record, I was in error at the work session regarding the debt service amount …,” he said. “The total annual debt service for $4.26 million is $300,000 per year. That would be split, $150,000 from the city and $150,000 from the OCDC.”
When asked if the debt service obligation for the Somerset Street development was inconsequential when compared to other projects in the town’s capital improvement plan, McGean said it was. With no further question, the council voted 5-1, with Council President Matt James opposed, to approve the bond reimbursement resolution.
“For the record, I support the first two projects,” he said. “I don’t think project number three is the best use of money at this time, in that location for that project.”