City Council Approves Marina Proposal

City Council voted 6-1 on Thursday night to move forward with a plan to bring an improved marina to the 200 block of Bay Avenue.

With only Councilman Roy Wagner dissenting, City Council approved an agreement for a public-private partnership to bring more recreation to the undeveloped property on the bay.

Wagner, in his final meeting before retiring, argued that "concerns should be ironed out and vetted" before a vote.

The idea behind the proposal is fairly simple: to create more opportunities for the public to use an underutilized piece of open space. But the proposed partnership is fairly complex and involves issues of price, process and proximity to neighbors.

Ocean City resident Eric Sauder summed up much of the public opposition when he said, "I see a lot of risk for the city with very little potential return."

Sauder also asked City Council to consider the fact that the public hasn't had a chance to learn about the proposal. The idea was presented to the Planning Board on June 6 and to City Council on June 14 in public meetings, but neither presentation was listed on public agendas. The first advertised public information session was on Monday, June 25, just three days prior to City Council's vote.

Barbara Betson, a resident of the 200 block of Bay Avenue and neighbor of the property, spoke for supporters of the project when she called the idea of a private developer paying for public improvements a "win-win" situation for taxpayers and tourists.

Through much of Thursday's meeting, members of the administration and council addressed questions and concerns about the project.

The Agreement

City Solicitor Dorothy McCrosson presented City Council with both a timeline of the proposal's development and an explanation of the agreement up for a vote.

City Council approved a partnership with Ocean City Marina, LLC, whose principal is Sean Scarborough.

The agreement (see attached PDFs) calls for Scarborough to pay for all improvements to the site. An estimated $1.5 million in improvements would include the following:

• Refurbishing two existing piers and installing mechanical lifts at 27 boat slips.
• Installing a third floating pier for a public fishing pier, public kayak/paddleboard launch, personal watercraft slips, disabled access slips and a transient slip.
• Building a state-required restroom facility/office building.

In return, Ocean City would "rent" the improvements back from Scarborough for $135,000 per year over the course of a 10-year lease ($1.35 million).

Scarborough would be responsible for renting the 27 boat slips, 33 personal watercraft slips and two disabled-access boat slips and operating the marina. He estimates rates of $4,200 to $6,300 per year for boat slip rentals.

The rental revenue would go first to pay for the operating expenses of the marina. After that, all revenue up to $135,000 would be returned to the City of Ocean City. And any revenue beyond that would be profit for Scarborough.

Scarborough estimates first year revenues of $83,000 and a short progression to reach $135,000 in annual revenue. To pay for the estimated shortfall in the first few years, Scarborough would pay Ocean City $102,530 under the agreement.

"The concept is revenue-neutral," McCrosson said, "but it is based on projections."

To return $135,000 to the city, the marina would have to rent all 27 slips for $5,000 annually. That calculation does not add personal watercraft slip rentals or subtract operating expenses.

Process

McCrosson reviewed the timeline of the proposal that stretched from Ocean City's purchase of the property for $3 million in June 2009

• June 2009: City of Ocean City purchases the property for $3 million (with the help of $738,000 in state Green Acres money).
• December 2010: Ocean City sells the property to Cape May County for designation as open space. (With a sale price of $2,261,225, Ocean City breaks even on the exchange.) Ocean City leases the property back for $1 per year for 25 years.
• October 2011: Ocean City advertises for bids from companies experienced in operating marinas. City consults with Cape May County Open Space Department on concept.
• November 2011: Ocean City opens only bid submitted — from  Ocean City Marina LLC.
• Spring 2012: New specifications advertised and sent to 10 companies the city believed might be interested in bidding.
• April 2012: City opens only bid — from Ocean City Marina LLC
• May 2012: City consults with Cape May County Open Space Department on concept.
• June 2012: Presentations to Planning Board (which recommends proposal), City Council and the public. Another meeting with Cape May County Open Space Director Barbara Ernst.

McCrosson said the next steps in the process will include Ocean City Marina, LLC seeking permits from the federal Army Corps of Engineers and state Department of Environmental Protection, while the city works for approvals from the state Green Acres program and Cape May County, the owner of the property.

Neighbors

In public comment, neighbors expressed concerns about the placement and height of the proposed restroom facility and the prospect of owners spending the night on their boats.

The state requires that it exist, and as a permanent structure it would have to be elevated to meet federal base flood elevation standards. The estimated height of the building would be about 15 and a half feet, according to McCrosson.

Neighbors Kathleen Federico and Jim Gallagher expressed their concern with a 15-foot building blocking their view of the bay.

City officials said spending the night on boats would be prohibited.

"Lightning might strike me down, but I'm supporting Sean Scarborough," said Chuck Betson, who recalled his opposition to other Scarborough projects in the neighborhood.. "It's awesome to be able to see the public able to use the marina there."

"There's no money in our budget to improve this on our own," Councilman Tony Wilson said. "I don't think we'll have a better opportunity to do this."