By DONALD WITTKOWSKI
Reflecting a strong financial recovery from the COVID-19 pandemic, Ocean City officials unveiled a proposed $88.8 million municipal budget for 2022 that keeps local property taxes stable and includes a record amount in surplus funding.
During a detailed presentation on the spending plan Thursday night to members of City Council, Chief Financial Officer Frank Donato said the resort’s robust real estate market helped to keep the tax rate the same.
“The injection of extra revenue in this budget has really helped to maintain a zero-tax increase,” Donato said, referring to the city’s booming homes sales and construction projects.
He noted that the real estate market has been fueling growth in the local tax base. This year, the city saw $174.5 million in new ratables and now has a total tax base of nearly $12.3 billion, budget figures show.
Shaking off the sluggish economic effects of the pandemic in 2020, the city’s beach tag sales and parking revenue rose to record levels last year amid a “phenomenal” summer tourism season, Donato said.
In 2020, the pandemic had caused a revenue decline in critical areas that are usually reliable moneymakers year after year, including parking fees, the municipal court system and the city’s Aquatic & Fitness Center.
Also underscoring Ocean City’s strong finances this year, the budget surplus shot up to a record-high of $10.4 million. Of that amount, $5.4 million was used to help underwrite the budget, while the remaining $5 million will stay in reserve in case it is needed later.
“The most important aspect of the (financial) strength of a community is the fund balance,” Donato said of the budget surplus.
He added that the record surplus is an indication that the city’s revenue sources are “firing on all cylinders.”
Donato repeatedly stressed that the entire community will benefit from the city’s strong finances, including the stable tax rate. The average property owner with a home assessed at about $650,000 will pay $3,068 annually in local taxes, he said. That figure does not include school or county taxes.
Council and Mayor Jay Gillian’s administration will now begin negotiations on the budget. As the city’s governing body, Council has the power to make changes with the spending plan.
The budget is expected to be formally introduced by Council at the April 7 meeting. A public hearing and final Council vote on the spending plan are tentatively scheduled in May.
Members of Council thanked and commended Donato and City Auditor Leon Costello for the presentation on the budget.
“Great job,” Council President Bob Barr told Donato and Costello. “I look forward to sitting down with both of you.”
In other business Thursday, Council approved two bond ordinances to help fund the purchase of three separate tracts of land that will be converted into public open space.
Overall, the three sites comprise a full block of land bordered by Haven and Simpson avenues between 16th and 17th streets next to the Ocean City Community Center. The land will be added to a corridor of open space protected from dense housing construction.
However, the red hot real estate market has increased the value of the land since the city first began acquiring it. As a result, the city will pay millions of dollars more to close the deal.
One of the bond ordinances is for $3.15 million to help the city buy two sites at 109 16th Street and 1600 Haven Avenue from Palmer Center LLC, a group headed by real estate developer and former City Councilman John Flood.
Of that money, about $1.6 million reflects the higher value of the land and another $1.6 million will go for environmental cleanup. City Solicitor Dorothy McCrosson said the city will seek repayment of the environmental cleanup costs from Palmer Center LLC after the remediation is completed.
Soil contamination found at one of the former Palmer Center properties is suspected to have come from a former dry-cleaning business, McCrosson noted.
With the extra $1.6 million added to the purchase price, the total cost of buying the Palmer Center property will increase from $5.6 million to $7.2 million, she said.
The second bond ordinance approved by Council is for $3.11 million in funding to complete the purchase of land that once served as the site of the former Perry-Egan car dealership. The property is bordered by 16th Street, Haven Avenue and Simpson Avenue and was owned by brothers Jerry and Harry Klause of Klause Enterprises.
The Klause brothers had wanted to build a 22-unit housing development on the site before the city stepped in to acquire the land. The city initially planned to buy the Klause property for $6.9 million, but rising land values will up the price to $9.96 million, McCrosson said.
With the acquisition of the Palmer Center and Klause properties, the city plans to dedicate a five-block area from 15th Street to 20th Street to open space and public use. The public corridor of land will stretch from Emil Palmer Park to the Ocean City Community Center and up to the Ocean City Intermediate School.
