$9 Million Purchase Of Lot Stops Unwanted Housing, Officials Say

OCEAN CITY, NJ — It’s not clear what Ocean City will do with the car dealership lot across from the Ocean City Community Center after city council set aside $9 million for its purchase at last week’s meeting, but one thing is clear: the city doesn’t intend to put any type of housing on the property.

Ocean City Council gave final approval to a proposed bond ordinance to appropriate $9 million, including the borrowing of $8,550,000 in bonds or notes, for the acquisition of the property following a public hearing at its meeting on Thursday night, Sept. 13.

The approval puts funding in place to purchase the majority of the property. It would purchase 1.856 acres (80,850 square feet) of the lot from Klause Enterprises. Ocean City Council approved a separate proposed ordinance introduced at the Sept. 13 meeting would the city to acquire the rest of the lot by purchase or condemnation. No price tag was attached to this proposal, and the public hearing and final vote is scheduled for the Sept. 27 council meeting.

The entire lot was originally slated to be the site for 44 Coastal Cottages, but that never materialized. The Klause Family then offered to sell the city the portion of the lot covered by the bond ordinance for $9 million, City Solicitor Dorothy McCrosson said. According to the city administration, the family had obtained a court order that would permit the development of 29 Coastal Cottages and a single-family home on their portion of the lot. Mayor Jay Gillian said he believed they would be able to sell that land quickly to a developer.

“The idea was to eliminate the possibility of housing being put there,” McCrosson said. “The owners want it to be put to municipal use.”

Last month, Ocean City reached an agreement with the Fair Share Housing Council on an obligation of 1,687 low- and moderate-income units by 2025. The city has outlined a plan for where to put the housing, and you can read about it here.

Some residents have voiced concerns about housing being put on the site. They are also concerned about putting a police station in the area because of how easily that section of the island floods.

“No one wants housing in that area, so we should take the opportunity to take that away and put something great there,” Ocean City Councilman Antwan McClellan said. “Whatever we do will be comparable to the rest of the neighborhood, and it will be beautiful.”

“I’m not for the project because of what could go there, but I’m damn certain I don’t want Coastal Cottages there,” Ocean City Councilman Michael DeVlieger said. “If we walk away from this deal, we deserve what we get. And guess what we’re going to get. We have an obligation to preserve Ocean City, and whatever we put there will be an improvement.”

It will also be presented to the public in several meetings before final approval, Councilwoman Karen Bergman pointed out. She also emphasized the importance of preventing more housing from going up in that area.

“Even if (the appraisal) is off by $500,000, do we not buy it because of that?,” she said in reference to a citizen comment about the appraisal not being accurate. “Then a developer comes in to develop it. Sometimes, even if you don’t know what’s going somewhere, you know what you’re preventing, and that’s just as important.”

In a statement distributed to the media, Gillian said the city received two appraisals on the property. Two appraisals determined the market value to be $9 million and $8.3 million, an 8.8 percent variation, Gillian said. The tax assessment will be based on whatever Ocean City ultimately decides to do with the property.

The city was in a similar situation last year where it concerned 50 Tennessee Avenue. Councilmen Bob Barr and Keith Hartzell cast the dissenting votes in a 5-2 decision that would have allowed for the $700,000 purchase of the property with no expressed plans for the property. However, at the conclusion of the due diligence period, the city decided not to follow through with the purchase.

In this case, the city signed a tentative agreement concerning the property on May 29. It then conducted environmental and structural reviews as part of its due diligence period.

The full environmental report was scheduled to be available to the city this week, and McCrosson said the owners said they will handle any problems that arise as a result of the study. The owners are standing firm on the price, however, and the city is determined not to see housing built in that area. The vote in favor of the purchase was 7-0, including votes by Hartzell and Barr.

“Everyone agrees we’re overdeveloped. The only way to stop it is to buy it, and the only way to buy it is to agree to the asking price,” Hartzell said. “The owners could make more money, especially if they wait a while. They know that. We know that. We’ve been offered something we want at a fair price.”

Ocean City Council Vice President Anthony Wilson said the purchase is good because it allows the city to keep its options open.

“Whatever we put there will be better,” Wilson said.

See related: Ocean City Moves Toward Purchase Of $9 Million Car Dealership Lot

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