Grant Sought For Baltimore Avenue Project

Grant Sought For Baltimore Avenue Project
Baltimore Avenue near 2nd Street is pictured last summer. Photo by Chris Parypa

OCEAN CITY – Officials are seeking a $20 million grant to redevelop Baltimore Avenue.

On Monday, City Manager Terry McGean presented the Mayor and Council with an update on the Baltimore Avenue redevelopment project. While the project was delayed earlier this year because of funding, he said officials were seeking a federal grant to offset costs.

“Currently we are pursuing a $20 million federal grant for the project,” he said.  “If the federal funding is approved, work could potentially start as early as next fall. We know that federal funds could have additional environmental approval steps, which could delay the start of that.”

In March, the Mayor and Council agreed to postpone a phased redevelopment project along Baltimore Avenue to give city officials more time to seek grant funding to offset a roughly $20 million cost increase.

Some of the work proposed for the phased Baltimore Avenue project includes undergrounding utilities and improving the overall streetscape. While the project was first presented with a price tag of $20 million – funded in part by a municipal bond sale and a combination of potential state and federal grants – the estimated price tag has more than doubled.

McGean told the Mayor and Council this week construction would be spread out over four years. In year one, crews would underground utilities from 15th to 9th streets. In year two, crews would streetscape from 15th to 9th streets and underground from 9th to 5th streets. In year three, crews would streetscape from 9th to 5th streets and underground from 5th to North Division streets. And in year four, crews would finish the project by streetscaping from 5th Street to North Division Street.

“In anticipation of the project restarting, Hal [Adkins, public works director] and I did meet with Delmarva Power,” McGean said. :They are continuing to struggle with material shortages and long delivery times. Transformers right now – this is kind of the worst case – can potentially be as far out as 70 weeks. Therefore, we still feel the above four-year phasing plan is the most realistic plan.”

McGean added that Delmarva Power’s costs have also increase, but that it could be absorbed by an inflation factor built into the budget. He said the project would be financed with two $10 million bonds, one in year one and another in year three.

This allows more debt to come off the books as we bond the project, number one,” he said. “Number two, there are arbitrage requirements with the IRS. Essentially, if you do not spend the money that you borrowed in two years, and you are earning more interest on the bond money you have in the bank than the amount of interest you are paying on the bond, then you could be subject to penalties.”

He continued, “Given that we have a four-year project, it doesn’t make sense to borrow the money all upfront.”

When asked about the timeline, McGean said the earliest the Baltimore Avenue project could start was next fall.

“That would be our best-case scenario,” he said.

Mayor Rick Meehan noted that the town has reached out to Rep. Andy Harris, Sen. Chris Van Hollen and Sen. Ben Cardin to garner support for the town’s federal funding request.

“That funding request was put in by Congressman Harris,” he said. “So we’ve had the opportunity, Terry and I, to meet with a representative from Sen. Van Hollen’s office, and both the senator and Sen. Cardin are supporting that funding request at the federal level.”

In January, staff presented the Mayor and Council with a draft capital improvement plan that listed a major redevelopment project along Baltimore Avenue beginning in the current fiscal year.

In March, however, the Mayor and Council agreed to amend the planning document and postpone the Baltimore Avenue project to allow for a larger, phased redevelopment of the corridor.

About The Author: Bethany Hooper

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Bethany Hooper has been with The Dispatch since 2016. She currently covers various general stories. Hooper graduated from Stephen Decatur High School in 2012 and the University of Maryland in 2016, where she completed double majors in journalism and economics.