City Council Approves $9 Million Deal to Buy Private Land

City Council Approves $9 Million Deal to Buy Private Land

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The former Chevrolet dealership is part of a nearly full block of land the city wanted to buy to protect from housing development.

By Donald Wittkowski

City Council agreed Thursday night to pay $9 million to buy a strategically located tract of land that will now be protected from high-density housing construction and may be preserved as open space or serve as the home for a new Ocean City police station.

The 7-0 vote capped some testy exchanges between the governing body and a handful of local residents, who argued that the city is overpaying for the property and should not buy it until there are specific plans for the site.

“The city should not be in the business of real estate speculation with our money,” said resident Marie Hayes, who called the $9 million price tag “exorbitant.”

Council members, however, responded that the deal allows the city the rare opportunity to acquire a large piece of property and protect it from even more housing construction in a town that is already struggling with overdevelopment.

“The only way to stop it is to buy it,” Councilman Keith Hartzell said of the prospect of more housing being built on the site.

The nearly full block of land runs along Simpson and Haven avenues, between 16th Street and 17th Street, adjacent to the Ocean City Community Center. It last served as the location of the Ocean City Chevrolet  auto dealership, which went out of business in January. Prior to that, it was the home of the Perry-Egan Chevrolet dealership.

City Council says the land deal will preserve the site for public use and block any developers from building high-density housing on the property.

The land is privately owned by the Klause family, former co-owners of auto dealerships on the site, City Solicitor Dorothy McCrosson said. Mayor Jay Gillian said the Klause family has offered to sell the property to the city, but is sticking firm to its $9 million asking price.

“We’re very fortunate that the Klauses are providing an opportunity for the city to acquire this property before putting it on the open market,” Gillian said in a statement. “The risk of getting in a bidding war with developers is too great.”

Gillian and McCrosson said the owners have obtained a court order that would allow them to develop up to 29 coastal cottages, plus one single-family home on the land. Coastal cottages are a closely bunched type of housing, allowing for high-density construction.

“Nobody wants coastal cottages in their neighborhood, or that neighborhood,” Councilman Antwan McClellan said.

Echoing the comments of other Council members, McClellan expressed confidence that whatever the city decides to do with the property, whether it’s to build a new park or a police station, it would be more compatible than having a development of 30 densely clustered homes there.

Mayor Jay Gillian, seated next to City Solicitor Dorothy McCrosson, believes the property sale keeps the city out of a bidding war with developers.

As a prelude to a sale, the city had two independent appraisals conducted for the land to determine the market value. One of the appraisals determined the land to be worth $8.3 million, while the other set the value at $9 million, the asking price by the Klause family, Gillian said.

The mayor believes the land would likely “sell quickly” to a developer if the city did not buy it.

“The seller is asking $9 million and holding firm,” he said in his statement. “The sellers have indicated they would prefer to see the property preserved for public use.”

Although the city has not yet developed specific plans for the property, Gillian has discussed the possibility of turning it into green space as part of a “public corridor” of land along Simpson and Haven avenues, from 15th Street to 20th Street, that includes Emil Palmer Park, the Ocean City Community Center and the Ocean City Intermediate School.

Councilman Tony Wilson said the proposal would put “the jewel on the crown” if the city decides to keep the property as open space.

One possible use for the land is for the city to develop a new police station to replace the antiquated Public Safety Building seen here.

Gillian has also mentioned the possibility of redeveloping the site for a new police station that would replace the city’s antiquated Public Safety Building. For about two years, the city has grappled with the idea of whether to renovate the more than 100-year-old Public Safety Building at Eighth Street and Central Avenue or develop a new headquarters for the police department at an estimated cost of $17 million.

One resident, Marlene Sheppard, who lives on 15th Street, next to the property the city is buying, said the site is prone to flooding and would make a bad location for a new police station.

“That area is one of the worst flooded areas in Ocean City,” Sheppard said. She added, “It’s not the place for a police station.”

Sheppard, though, supported the idea of the city incorporating the property within a corridor of open space and public buildings.

Some residents who opposed or raised doubts about the land deal questioned why the city did not first develop a specific plan for the property before buying it.

“What we’re doing here is jumping the gun,” said Dave Hayes, the husband of Marie Hayes, the resident who called the $9 million price exorbitant.

Other residents also criticized the deal, including Stan Pszczolkowski, who said, “I’m a little distressed that we’re going to spend $9 million and we don’t know what we’re going to use it for.”

Another resident, Donna Moore, called on Council to table a $9 million bond ordinance that will finance the property deal. She wanted the deal postponed until city officials could hold a public meeting to collect ideas from residents on what to do with the land. Council, though, gave the funding package final approval Thursday night to acquire the site.

Empty land that is part of the former auto dealership property at 16th Street and Simpson Avenue is included in the $9 million sale.

Michael Hinchman, another resident, accused city officials of committing a “white collar crime” with their decision to buy the property. Claiming that the property is actually worth about $6.3 million, Hinchman blasted the city’s appraisal that estimated the market value at $9 million.

“This is a fraud on the city of Ocean City and its taxpayers,” Hinchman loudly told Council.

Hinchman, who left Council Chambers immediately after speaking, was later criticized by members of the governing body. They said he should have stayed at the meeting to listen to McCrosson’s detailed explanation of how the two independent appraisals were conducted for the land.

“I was greatly offended by the comments by Mr. Hinchman tonight,” Councilman Bob Barr said. “It’s offensive, it really is.”

Barr said Hinchman appeared to be in a “gotcha mood” to try to make Council look bad, but instead ended up insulting the members.

The Council members defended the city’s appraisal process. They said it would be a mistake not to buy a large piece of land that offers so many different options for the city to consider.

“We did our due diligence. We made sure it’s worth that,” Councilwoman Karen Bergman said of the $9 million price.

At the same time it is buying the former auto dealership site from the Klause family, the city is talking to other property owners about acquiring their land to round out the block at 16th Street and Haven Avenue. The owners include John Flood, a former city councilman who unsuccessfully challenged Gillian in the May mayoral election and is now a commercial real estate developer.

Council introduced an ordinance Thursday night to acquire the surrounding land either by buying it or using its power of eminent domain, which allows government to seize private property for a public use after the courts determine a fair price for the land. McCrosson said Flood has indicated that he wants to sell his property.