Ocean City is contemplating the purchase of the above named property for $700,000.00. This is a 7,000 sq. ft., twostory building with the northern lengthwise side contiguous to the parking area of the city-owned public boat ramp parking lot. The south side lengthwise is contiguous to the community pool for Ocean Reef Condominium. Between the building and the bay, about 50’, are bike racks for bike and kayak storage, presumably for Ocean Reef condo owners.
It would seem this building was originally built as a storage facility for Ocean Reef. The second floor is office space and the first floor is storage. It was built in the 60’s but appears to be in good condition outside (roof and
exterior). The building is now empty with the longtime tenant having vacated.
There are a variety of questions I posed to council upon the introduction of permission to sell bonds for the purchase. The city solicitor indicated the city has two appraisals which is how the price was determined. They are as follows:
- Who is the seller?
- Is it a fee-simple sale or sale of a condo interest?
- What is the intended use of the building?
- Does the building have a parking easement? If the building does have a parking easement, then the appraisals
may be flawed. Parking for a building of this sort normally require 17-18 spaces. - What is the Elevation?
- The city is in its due diligence phase. Due diligence doesn’t include interior fix-up costs, if any. This would
drive up the ultimate cost. Does the city have a handle on this? - Why pay more than the assessed value?
All council members expressed support of the purchase. I believe that support is premature. Depending on the answer to the questions posed above, this may be an overpriced, bad or perhaps good purchase. In any event, it is
symptomatic of an overriding weakness in city government—not having a sophisticated person in capital planning, analysis, purchasing and execution. Two appraisals (flawed or not) and a real-estate lawyer are not satisfactory resources.
We all know how to play baseball, but given the size and number of projects, the city needs major leaguers. This purchase may parallel the 8th & Boardwalk parking lot purchase in 2011. In that case the city paid $2.1m-the
higher amount of two appraisals, the other coming in at $1.5m which was the assessed amount. The higher appraisal was flawed as it used, in part comparable listings and comparable sales. More importantly, the seller’s newly approved usage by the Panning Board for the site was stuck on appeal. The seller was unable to develop the site and city bailed the seller out and overpaid in the process.
Upon obtaining the appraisals and other information on 50 Tennessee Avenue I will report again,