Ocean City Tourism Commission balks at special event fee changes

Staff tweaking proposal

Ocean City staff members were told to go back to the drawing board last week after members of the Tourism Commission balked at their proposal to overhaul the resort’s special event fee structure.

At a March 15 meeting, commission members expressed cautious interest in the proposed plan, which aims to get the city more money for the work employees put in during events. But red flags went up when the plan’s projected costs resulted in fee increases of well over 100 percent for some smaller events.

"I think we need to be cognizant. It’s the first impression people see. We need to make it a little more consumer friendly," Mayor Rick Meehan, a commission member, said of the proposal.

Meehan agrees that the fees should be reviewed, but he and other commission members, especially Councilman John Gehrig, want any changes to be fair.

About a year ago, Meehan suggested staff members look into the city’s special event fees after learning that Virginia Beach charges $400 a team for a sand soccer tournament. The fee covers all operational costs and falls within the realm of what the promoters of the large event can afford.

Since the 1990s, Ocean City has held a similar tournament every year and charges only a small fee to use the beach. As compared to Virginia Beach, that leaves thousands of dollars in revenue on the table.

Sometime after the mayor’s comments, Tom Perlozzo, the city’s director of tourism and business development, said City Manager Terry McGean formed a task force to review how special events affect city staff, which resulted in the suggested changes to the overall structure presented last week.

"We need to start thinking in a way that we can maximize revenue, create the space and experience that we’re looking for, and do it efficiently," Perlozzo said.

Special Events Director Frank Miller explained that the plan raises costs for the organizers through ticket sale percentages and space rentals, and encourages third-party contractors for security and emergency services. It also aims to make scheduling easier by putting events into tiers based on size and moving the application process for holding special events online.

Miller said the current structure puts a strain on staff and results in lower revenues because it incorporates many flat rental fees that do not account for event size or attendance, and does not include application fees, among other details.

He added that the resort has not changed its fees since 2014 and that many are well below what other beaches charge.

As it stands, though, the rough numbers Miller presented showed that smaller events could pay significantly more through the new structure, prompting Meehan, Gehrig and several other commission members to speak up against the proposal.

Miller said the numbers he showed could change based on the specifics of the events and urged the commissioners to view the projections as examples rather than actual fees. He explained that event tiers could shift according to factors such as risk potential and the existence of alcohol. In turn, larger events could jump to higher, more expensive tiers, and smaller ones could drop down.

The risks and other components that he referred to as an event’s "energy" would be determined by the answers to an application questionnaire that event organizers would fill out online.

He also told the commissioners that the proposed application would be based on tiers and non-refundable, although McGean added that the fee formula would allow some flexibility. Other charges would include fees for late payment and for changing event details after submitting applications.

The town could also offer significant discounts for off-season events, and staff members would be able to negotiate with promoters on some other details.

McGean pointed out that the city has never charged promoters for the time staff members take to review event proposals prior to their approval. He added that review fees are not determined based on event size, resulting in larger ones getting better deals.

"How this was handled in the past, [for example] when the fire marshal reviews [an application] it’s a $50 tent fee. And it was a $50 tent fee, whether it was one little tent or literally whether it was [Oceans Calling Festival]," Meehan said. “… The idea was to begin to get a better handle on those costs."

After nearly an hour of discussion, commission members directed Miller, McGean and Perlozzo to rework the proposal to reflect the commission’s concerns and bring it back at the next meeting. If the commission members accept the new proposal, it will move to the City Council.

This story appears in the March 24, 2023 print edition of the OC Today.