OC OK’s Ordinance to Acquire Former Car Dealership

That multimillion-dollar deal fell apart after the group Fairness in Taxes (FIT) launched a petition drive to force a referendum on the bond ordinance approved to fund the purchase.

Now, Ocean City is set to try again.

This was the final vote on the ordinance, which was approved with little discussion among council members. Council President Peter Madden polled members, with each saying they had no questions on the ordinance.

“I’m all for it,” said Councilman Michael DeVlieger.

Some members of the public had questions, however. At the required public hearing on the ordinance before the vote, neighbor Janice Rea raised concerns about flooding in the area and questioned what the city would do with the property once it owns it.

“I’ve read that it might be open space if we purchased it, or it might be municipal buildings,” she said. The city has looked at the property as a potential new home for its public safety building, now housed in a century-old former school close to City Hall.

“I think the mayor’s primary goal in acquiring these properties is to make sure it’s not developed for residential use,” said city Attorney Dorothy McCrosson. “There are several municipal uses that have been discussed for this site. The mayor intends to have a town hall meeting to discuss potential uses for this property.”

The time and place for that meeting have not yet been set.

The city has a contract to use part of the property for extra parking for the community center, but the single-story building and most of the land have been empty since the dealership closed in the winter of 2018.

Klause Enterprises, made up of brothers Jerry and Harry Klause, owns most of the property, which encompasses a city block. The brothers had negotiated the previous $9 million deal with the city.

Other parts of the property are owned by John Flood, a former council president who unsuccessfully challenged Jay Gillian for the mayor’s seat last year, and the Palermo family.

Last spring, the Planning Board approved an application by Klause Enterprises to develop the property for 21 single-family homes.

The city had negotiated a $9 million purchase of the Klause portion of the land. In previous public comments, Jerry Klause indicated he was willing to develop the land if the city purchase did not move forward.

Under the recently finalized ordinance, the city could also use eminent domain to acquire the land.

“This ordinance authorizes the administration to enter into negotiations for the car dealership property and if the negotiations fail, to commence condemnation action. It’s the first step in acquiring those properties,” explained McCrosson before the council vote.

In response to a question from the public, McCrosson said the city will use a professional appraiser to set the value of the land based on its highest and best use, not on what currently exists at the site.

“Highest and best, is that what somebody could build there?” asked Councilman Keith Hartzell.

“It’s a term of art in the world of appraisals and the way I would describe it is what could be built there with the proper approvals,” McCrosson replied.

No one from FIT spoke at the public hearing on the ordinance. In previous comments, FIT president David Hayes said his organization supports the city buying the property, but believes the negotiated price to be exorbitant. He has also argued that the city needs to settle on a plan for the area before buying the land.

The dealership had been in operation since the 1930s. It covered most of the block between Simpson and Haven avenues from 16th Street to the parking lot of the Ocean City Community Center at 17th Street.

It falls in a mixed-use neighborhood, with residential properties on one side and a car wash and CVS on the other. For years, the city’s largest grocery store stood nearby, but that property is now a city recreation field.

To contact Bill Barlow, email bbarlow@cmcherald.com.

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