Mayor Defends City’s Proposed $9 Million Property Purchase

Mayor Defends City’s Proposed $9 Million Property Purchase

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A now-closed auto dealership at 16th Street and Simpson Avenue is the centerpiece of a nearly block of land the city is looking to buy for public use.

By Donald Wittkowski

Mayor Jay Gillian gave a spirited defense in favor of Ocean City’s proposed $9 million purchase of a large piece of property that would be protected from high-density housing, but he acknowledged the deal is threatened by a petition drive for a public referendum.

Speaking at a City Council meeting Thursday night, Gillian said the transaction offers the city the rare opportunity to acquire strategically located land that could be preserved as open space or possibly serve as the site for a new police station.

Responding to critics who claim the city is overpaying for the land, the mayor refuted suggestions that he should negotiate with the owners or wait a bit longer to get a lower price.

“It’s $9 million. That’s the number,” he said bluntly. “If you think we’re going to negotiate and get it cheaper, that’s not going to happen.”

Mayor Jay Gillian wants to complete the city’s purchase of the land and protect the site from dense housing development.

Fairness In Taxes, a local government watchdog group, has started a petition drive to put the property sale up for a public referendum, which would give voters the final say over the transaction. FIT members said they want the city to buy the land, but at a lower price.

“We have started a petition for a referendum, and it’s going well,” FIT member Dave Hayes told Council during the meeting.

In an interview afterward, Hayes said the petition drive has thus far collected about 100 signatures. He said around 400 signatures are needed to put a referendum on the ballot. The 400 signatures would represent 10 percent of the total number of voters in the last municipal election, the threshold for a referendum.

Gillian maintained that a referendum would simply delay the sale from going through or kill it altogether. At the very least, the city would likely end up paying more money to buy the land if there are any delays, especially if it is caught in a bidding war for the property, he added.

With Ocean City property values on the rise, it would be a mistake not to grab the land now for $9 million and keep it under the city’s control, the mayor said.

“We want to get this block and try to do something spectacular,” Gillian told the audience.

Dave Hayes, a member of Fairness In Taxes, tells Council the petition drive for a referendum is moving forward.

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.

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.

He 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.

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 owners, Gillian said.

Members of FIT believe the appraisals grossly overvalued the property. FIT President Jim Tweed said the organization wants “better facts” about how the appraisals were conducted. At the same time, Tweed urged Council on Thursday to consider using the city’s power of eminent domain to acquire the land.

Landowner Jerry Klause says his family wants to sell to the city, but is willing to consider offers from housing developers.

The land is owned by the Klause family, former co-owners of auto dealerships on the site. Gillian said brothers Jerry and Harry Klause approached the city about selling the property, but are sticking firm to their $9 million asking price. Council approved a bond ordinance on Sept. 13 to buy the land.

The Klauses have obtained a court order that would allow them to develop up to 29 coastal cottages on the site. Coastal cottages are a closely bunched type of housing, allowing for high-density construction.

The mayor and City Council have made it clear that they don’t want dense housing in a town already struggling with overdevelopment.

In remarks to City Council, Jerry Klause said Thursday his family could make more money selling the land to housing developers. However, he stressed that his family would prefer to work out a deal with the city so that the land could be preserved as open space or converted into another type of public use.

“I can guarantee you, we can make more money than $9 million. That’s just the way it is,” Klause said of the prospect of selling the property to developers.

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

At the same time it is trying to buy 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 approved an ordinance Thursday to acquire the surrounding property either by buying it or using eminent domain, which allows government to seize private property for a public use after the courts determine a fair price for the land.

Donna Moore and Suzanne Hornick, two of the local residents who spoke during the Council meeting, said they would prefer to see the city use $9 million in public funding for flood-mitigation projects instead of buying the Klause land.

Moore wants the deal postponed until city officials could hold a public hearing to collect ideas from residents on what to do with the site. She said a public hearing would represent a “more diverse sampling of the population.”

Councilman Keith Hartzell, center, is urging critics to stop their personal attacks against the governing body over the property sale.

The Council meeting, meanwhile, was marked by a series of testy exchanges between the governing body and critics of the property sale. Gillian joined the Council members in appealing to critics to refrain from any personal attacks against city officials during public debate over the deal.

“This is so insane, this discord back and forth,” Councilman Keith Hartzell said.

Echoing the comments of other Council members, Hartzell stressed that he is willing to listen to critics during normal discussions about the sale.

“Because I disagree with you, doesn’t mean I’m not going to listen to you,” Hartzell said.

Marie Hayes, wife of Dave Hayes, responded to the mayor and Hartzell, “Just because we don’t agree doesn’t mean we’re attacking you.”

Councilwoman Karen Bergman said she takes offense to accusations that she doesn’t listen to the public. Disputing criticism of the sale, Bergman told the audience that other residents have spoken to her in support of the city’s plan to preserve the land.

“This is what people want. They don’t want development on this property,” she said.

Based on what local residents have been telling her, Bergman said she is confident that a referendum would fail, if one even makes it on the ballot.