Petition Aims To Block $9 Million Car Dealership Lot Purchase

OCEAN CITY, NJ — Ocean City is fighting back against a petition aimed at stopping the $9 million purchase of the car dealership lot across from the Ocean City Community Center. The petition was reportedly launched by two members of the Ocean City group Fairness in Taxes (FIT).

At Ocean City Council’s last meeting, 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. 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.

David Hayes and David Breeden are looking to initiate a public referendum on the $9 million bond ordinance, according to the Ocean City Sentinel. They believe they need to get about 400 signatures, which is about 10 percent of the city’s population, to stop the ordinance.

The basis for the petition is an argument made before the Sept. 13 vote on the proposal by former FIT President Michael Hinchman that the appraisals the city relied upon to come up with the total overestimate the value of the property.

“I want anybody who might consider signing this petition to be aware of the potential consequences of this action,” Ocean City Mayor Jay Gillian said in an update issued Wednesday night. “The owners of the lot have the ability to build 29 coastal cottages and a single-family home on the lot, and if the city does not purchase the property, they will.”

In a statement previously 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. In his comments during the public hearing, Hinchman said the variation was more than 10 percent.

“The members of FIT seem to think they know better than two independent and highly qualified real estate appraisers what the value of this property is,” Gillian said. “These professional appraisals are accurate and important, but the most important factor is what the owners will do with this city block.”

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.
On Wednesday night, Gillian provided a letter from the Klause Family that can be found below:

To City Council, Administration Officials, and The Mayor:

Yesterday Dottie told us David Nahan inquired about the process to force a general referendum on the purchase of our property at 16th Street. If 400 or so voters sign a petition by October 10, City Council will be stopped from bonding the funds needed to complete the purchase until the results of that referendum. This will effectively kill the deal and Harry and I will be forced to go into the real estate development business.

We are the most reluctant real estate developers Ocean City has ever seen. Not because of the money, we would make more. Not because of the effort, Klauses know how to work. It's because on rare occasions personal interest and civic mindfulness walk in tandem.

This year marks the 100th anniversary of our grandparents, Emil and Mary Palmer, moving their family to Ocean City from Philadelphia. At the first meeting we had with the Mayor to discuss the purchase, Harry and I recounted the many stories of our family’s century living here.

This town has been very good to the Palmers, Floods and Klauses and my grandmother, who had the entrepreneurial spirit and foresight to purchase this property in 1956, would want us to sell it to the City and get a fair price. You, and I’m sure the majority of voters in town, understand this is the right thing for the City and a unique opportunity. But there are 400 people who will sign this petition by October 10.

We are not presuming to tell you how to govern or communicate with the public, but we believe the positive benefits of the purchase for the City need to be articulated by you at tomorrow’s Council Meeting.

While a tract of almost 2 acres of land is certainly unique, we think the building is the best asset for the City. We have a solid quote to remove the building and blacktop for $90,000.00. The reason the price is low is because the building will not be razed but deconstructed, relocated and sold. It’s a giant erector set. How much would it cost for the City to build a 20,000 square foot building? I think the Firehouse at 29th street cost $400 a square foot. That's almost the whole price of the purchase.

What can you do with the building? How about indoor soccer and baseball camps in the winter or community movie nights. I’m sure the Recreation Department and Community Center could fill the place up.

It does flood at 16th Street but the only time water ever got in the building was Sandy, one time in 45 years. Maybe it’s not the best place for a Police Department but where will the Police go when 8th and Wesley is remodeled? Look how useful the property was this summer for the Police and for Community Center and Night In Venice Parking.

$9 million is a lot of money. In 2001, we sold Palmer Field to the City for $3 million. That’s still a lot of money and the market price at the time for 24 duplex lots. How good does that purchase look today?

This seems so obvious but it needs to be spelled out. In the absence of this narrative, the weeklong news cycle of the Sentinel will fill the void. You’re playing long ball for future generations and these people are playing pepper.

Personally I’ve been through this grist mill three times in Ocean City, trying to develop our property at 13th and the Boardwalk in the 70’s, my house on the North End and the Charter School. We are entering a logic free zone. Business deals are not like fine wines that improve with the fermentation process.

Thank you for your consideration.

Harry and Jerry Klause

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

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