Debate Continues About Coastal Cottages On Car Dealership Lot

OCEAN CITY, NJ — The debate over whether Coastal Cottages can be built on the site of a former car dealership Ocean City intends to buy for $9 million. The controversy centers around a court order city officials say allow for the development of 29 Coastal Cottages on the site. Former councilman John Flood disputes that claim, saying the order doesn't cover the application, which was filed in June.

Ocean City Mayor Jay Gillian provided a copy of a court order that shows the city’s planning board must consider Coastal Cottages as a permitted use on the island on Tuesday. The order was issued by Cape May County Superior Court on March 6, 2017, in response to a suit from Klause Enterprises, Martin Prince and Palmer Center about building Coastal Cottages in the city.

The order settled a dispute about an application for a project that was filed while Coastal Cottages were being built as an experiment in the city a few years ago. After the application was filed, the city decided to take a pause on the concept and ultimately decided not to allow any more Coastal Cottages to be built on the island.

That suit was filed to allow a project that had been submitted before that decision came down to continue, and the judge ruled the project must be allowed to continue, as a permitted use.

The issue was brought back into the forefront after Ocean City Council unanimously approved a proposed bond ordinance to appropriate $9 million, including the borrowing of $8,550,000 in bonds or notes, for the acquisition of 1.856 acres (80,850 square feet) of the lot from Klause Enterprises.

They have not decided what to do with the property, but city officials have said it is important for the city to own the property to prevent a developer from putting housing on the site.

Gillian has said that the Klause Family has obtained a court order that would allow it to build 29 Coastal Cottages on the site should the deal fall through. Members of the watchdog group Fairness in Taxes have launched a petition to halt the deal and put it on the ballot for a public vote.

In a letter former Ocean City Councilman John Flood sent to city officials this week, Flood claimed the court order doesn't allow for 29 Coastal Cottages to be built on the site under the new application, filed by Prince in June.

“The March 6, 2017, decision remanded the 44 Coastal Cottage application back to the Planning board,” Flood wrote in the letter, which was also shared with the media. “Palmer Center was a part of that application and has since withdrawn its property from the project. I have not authorized any amendment to the application and verified last week that no such amendment has occurred. Therefore, there is no imminent threat of the dealership property getting developed into coastal cottages.”

On Tuesday, Gillian issued a copy of the March 6, 2017, order to the media.

“The same Planning Board applicant subsequently filed an amended application to build 29 coastal cottages on the portion of the property not owned by Palmer Center LLC,” Gillian said. “The fact that the property owned by Flood’s company is no longer part of the application does not change the requirement for the city to abide by the court’s ruling. Appraisers were given the appropriate information about the court’s ruling so they could make an accurate determination of fair market value.”

Gillian is saying the court order still applies to the 29 Coastal Cottages that were proposed in June. Flood is disputing that statement. He says that because it is a new application, the previous order doesn't apply.

Prince filed that application on June 12. Gillian previously said the city signed a tentative agreement to purchase the property for $9 million on May 29.

At the Sept. 27 council meeting, Fairness In Taxes member David Breeden referred to this application and asked why the city wouldn’t be able to block these Coastal Cottages the way they did in 2016.

Gillian didn’t provide a copy of a specific court order saying 29 Coastal Cottages can be built on that property in connection with the most recent application on Tuesday. He went on to say that “the owners of the property do have at least one other offer from a developer.”

“It remains my belief that if voters believe in preserving this city block for public use, they should not sign the petition seeking a public vote,” Gillian said. “Our tentative sales agreement expires Oct. 31. After that date, the property can and likely will be developed.”

Fairness In Taxes has questioned the appraisals the city is relying on to come to the conclusion that the property is worth $9 million.

Gillian previously 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 appraisals were based on ‘hypotheticals’ derived from factually flawed information,” Flood said in his letter. “Both appraisers were told to assume Coastal Cottages were permitted conditional use in the zone even though the use was revoked in 2016. They cited a plan for 29 Coastal Cottages as if they ‘had approvals in hand,’ yet the application for 29 coastal cottages wasn’t filed until June of this year, two weeks after the city had signed the agreement of sale and months after the appraisal date.”

On Sept. 27, Ocean City Council unanimously approved a proposed ordinance to acquire the rest of the lot by purchase or condemnation. No price tag was included in the proposal.

“Most people don’t realize that the $9 million purchase price is only for approximately 56 percent of the privately-owned land between Palmer Field and the Community Center,” Flood wrote. “The other roughly 40 percent is owned by Palmer Center and around 4 percent is owned by the Palermo Family. The City has offered Palmer Center considerably less than the prorated value of the Klause transaction. At the same time the city is going out of their way to justify the Klause’s ‘take it or leave it price.’ They are essentially telling me take our considerably less offer or we’ll condemn (eminent domain) your property. How is this fair? If the city thinks they can get a better value for my property via eminent domain, why wouldn’t they get the same better value for the rest of the property?”

See related:
Council Approves Property Purchase As Petition Debate Continues
Petition Aims To Block $9 Million Car Dealership Lot Purchase
$9 Million Purchase Of Lot Stops Unwanted Housing, Officials Say
Ocean City Moves Toward $9 Million Purchase Of Car Dealership Lot

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