(Dec. 7, 2018) Ocean City Council’s recently accepted $1.2 million bid for the former World Gym property on 67th Street to be used a new water treatment plant has prompted questions about fiscal oversight and short-term land uses.
The council passed an ordinance on first reading Monday authorizing the city to buy the building from Wells Fargo Bank, which took the property at a foreclosure auction for roughly $1.134 million in September.
The council voted in closed session during September to condemn the property while it was in foreclosure proceedings.
In October, the three parcels at 107-109 67th Street were appraised at $1.4 million and the council voted in closed session on Nov. 5 to pursue the acquisition.
At Monday’s meeting, however, Councilman Matt James addressed complaints that the council had obtained the property through condemnation proceedings.
“I wanted to make it clear we are purchasing this property from its owner and we are not taking it,” he said. “We plan to buy it with funds from Water Enterprise fund.”
The proposal would be the city’s latest property acquisition in the vicinity, following its $795,000 purchase of the Veterans of Foreign Wars Post 8296 on 66th Street last October.
Councilman John Gehrig questioned the immediate plans for the parcels after the purchase is completed.
“I believe it might be part of the contract how the property is left,” he said.
City Manager Doug Miller confirmed the purchase contract included a provision specifying the demolition of two buildings totaling roughly 1,200 square feet on the land.
“Maybe before the next reading we should be certain that’s how we want to proceed?” he said.
The contract further states that the parcels would be used for parking until the water plant project breaks ground.
Councilman Mark Paddack, noting that the timeline for the treatment plant’s construction is vague, backed Gehrig’s request to consider what steps the council might take between the time of the property’s acquisition and when construction begins
“We’re not sure when the … water treatment plant is going to actually be built,” he said.
Paddack also inquired about the possibility of acquiring a parcel occupied by Sandpiper Energy just west of the 67th Street location.
City Solicitor Guy Ayres said a firm price for that property has not been determined.
“They’ve agreed to sell it now and they would stay there at a minimum rent per year until they can relocate everything they’re doing in their transition from propane to natural gas island on the island,” he said. “It’s all part of a larger package.”
“They’re paying as they go, so this could take a couple of years,” Paddack replied. “There’s some things I’d like to discuss with the council before we decide to demolish a building.”
Ayres said the decision on buying the gym parcel was a separate step in the process.
“We can’t demo the building until we own it,” he said.
Paddack then asked if the existing structures could be rented until the treatment plant breaks ground.
Ayres said that scenario would involve the city with a proprietary use, which carries separate financial and legal considerations.
“Number one, technically the town would have to end up paying taxes, so you want to make sure you get enough rent to cover that,” he said.
Additionally, Ayres said the property is being sold as is, without warranty in terms of condition.
“If something happens on that property, since you have it in a proprietary fashion, then there’s liability issues,” he said.
Offering opposition testimony was resident Tony Christ.
“There are quite a few people I’ve spoken with who have a different view than the council,” he said. “They don’t feel that the money’s being raised out on the enterprise fund gives them any assurance it won’t negatively impact their utility bills [or] their water bill … in the future.”
Christ also questioned the wisdom of building a fresh water treatment center near Coastal Highway near shopping centers and condominiums.
“I encourage the council to do what they will,” he said. “They’re going to do it anyway. I certainly hadn’t planned on doing another petition during Christmas, but Guy, you know the drill, three days after the second vote, right?”
Further, Christ characterized the council as being “loose,” with public funds.
“You think you’re acting like businessmen, but we can start with a litany of examples if you want to talk about the laws of acquisition and others, where you didn’t look very good as time passed because you’re not businessmen, you’re government,” he said.
Following council’s unanimous vote to pass the ordinance on first reading and revisit specific steps before final approval on second reading, Councilman Dennis Dare took exception to Christ’s comments.
“When we talk about the water department being an Enterprise Fund, that means in reality [it] is a standalone department,” he said. “It only uses revenue that comes in from water bills [and] pays other departments in the city for services rendered.”
To prepare for the new treatment plant project, the water department completed a master plan, Dare said.
“We looked five years out … at the water tank that needs to be redone [and] water lines that need to be redone,” he said. “The budgets are very exact. In fact, we’ve been able to reduce the water rates from what was proposed several times because of good planning.”
The project would not affect utility rates beyond what already been approved, Dare said.
“The water treatment plant that needs to be replaced at 44th Street is 60-70 years old … and at its end of useful life,” he said.
Dare described Christ’s concern over rising water rates as ironic, while recalling their first meeting decades ago during his tenure as city manager.
“He was looking to buy a piece of property in town that was in arrears with their water bill and he wanted me to forgive the water bill,” he said. “Repeatedly, he asked me about that, and I think to this day he probably has become a fixture at these council meetings because of that.”
Dare said if that request had been approved by the mayor and council, other ratepayers would have had to foot the bill.
“That’s why we’ve had a policy for the 30 some years I’ve been at City Hall that if you waste the water, you pay for it, not everybody else,” he said.