Marina contract approved by council, now heads to state and county

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Neighbors express concerns over obstruction of bay views

OCEAN CIY — City Council voted 6-1 in favor of a contract with developer Sean Scarborough for the sublease of the marina at 200 Bay Avenue during its Thursday, June 28 meeting. Councilman Roy Wagner voted against the contract.

The city will now seek approval from the Cape May County Open Space Board and the Department of Environmental Protection Green Acres Program for the lease agreement. At the same time, Scarborough, operating as Ocean City Marina, LLC, will seek permits from the DEP and the US Army Corps of Engineers to complete the promised improvements to the site.

Residents at Thursday’s meeting were not as concerned with the marina portion of the property as they were with the proposed restroom and office on the upland. According to city attorney Dottie McCrosson, Scarborough is proposing a 15.5 foot tall building to house restrooms, showers and a small office. The building will be about the same height as the trees in that area, she said.

Attorney James Crawford, representing some neighbors, said the neighbors support the plan for the marina, but they want the building to be on the northern side of the property so that it does not obstruct their view. He said they also want the public fishing and fish cleaning to be on the south side of the marina.

Barbara Betson of Bay Avenue said, “Just in general, I feel it will be a win-win for us as taxpayers, as well as the tourists.”

She said she felt that moving the building to the northern side of the property would become a distraction for drivers and cause accidents.

Kathleen Federico and Jim Gallagher, neighbors on Bay Avenue, asked that the bathroom building there now, which they said is 90 inches tall, be a template for the proposed structure. They agreed that they only have a small sliver of bay views and did not want the bathroom structure to obstruct it.

Scarborough, who also spoke during public comment said, “we want to keep the building as low as possible.”

He said the current building does not observe proper flood elevation because it is a temporary structure. The new building will be a permanent structure and will have to be taller.

McCrosson said there is a utility easement on north end of the site, and that the utilities for the restroom facility would have to be relocated, and more parking would have to be created, if the building was moved to the north side of the property.

Resident Eric Sauder said he thought the city was pushing the proposal through.

“What I see is a lot of risk to the city with a little potential return,” he said, adding that the public wasn’t given time to digest it.

Resident Michael Hinchman also he thought council was moving too fast.

“It might be a very good proposal … but in the tradition of good government, you don’t vote on something that council got three days ago,” he said.

Resident Chuck Betson of Bay Avenue agreed it was moving too fast, but said he supports the project.

Councilman John Kemenosh said that Scarborough had the chance complete a project like this when he owned the property if he thought it would be profitable. He conceded that the property needed various upgrades and this was a viable option.

“It needs to be fixed,” he said, adding that it seems like the best deal for the city.

Councilman Tony Wilson agreed.

“We have to keep in mind that there is no money in our budget to improve this on our own,” he said. “This is a perfect match for us as far as I see it.”

Councilman Keith Hartzell said that council was briefed on the contents of the contract before it was drawn up, so council had ample time to review the terms before voting.

“Once I understood it, I went back to my notes, what I originally had, and it pretty much matched what I originally had,” he said of the contract.

Wagner, who pulled the item from the consent agenda for discussion, said he wanted to hear from the public before making any comments on the project.

“Overall I think its good, but the bad part is in the details,” Wagner said before voting. “The odds are it’s probably not as good as what the numbers are saying.”

He wanted to wait on approving the contract until July.

The city purchased the marina property from Scarborough in 2009 for $3 million, in part with Green Acres funding. It was subsequently purchased from the city by the county in 2010 with Open Space funding, McCrosson explained. The city is in its second year of a 25-year lease with the county to operate the marina.

According to Cape May County communications director Lenora Boninfante, there is a clause in the lease agreement between the city and the county that changes or improvements to the marina must be approved by the county. According to McCrosson, the county counsel agreed that the public private partnership was something the board could consider as a suitable use for the site.

Wanting to improve the property, but due to the funding it required, the city authorized a request for proposals for the marina on Oct. 13, 2011. After the first bid was received in November, but rejected, the city revised their specifications and resubmitted their RFP. The second bid was received in April. Ocean City Marina was the only bidder in both instances.

City attorney Dottie McCrosson said that she appeared before the county open space board on Oct. 25, 2011 to explain the concept. After the second bid was received, she said she again approached the county. The planning board heard from Ocean City Marina on June 5 and approved the plan for the marina, recommending it to council. McCrosson said she sent a memo to update county counsel Barbara Bakley-Marino, and also spoke with Barbara Ernst, director of the Cape May County Department of Open Space and Farmland Preservation, in mid-June.

McCrosson said the city has also contacted Green Acres to go over the concept, find out if it they found it acceptable and what they expected to read in the contract.

McCrosson said the contracts would not be signed by the city until both county and state approvals were received.

If approved by the county and state, Scarborough will lease the marina portion of the property and operate the marina. As part of the lease, he will develop the property, which would restrooms, docks and boat lifts.

One resident pointed out that the county would ultimately inherent the improvements, not the city, when or if the developer is no longer in control of the marina.

According to the rental agreement, the city of Ocean City, as the lessee, will pay Ocean City Marina, as the lessor, $135,000 annually, broken down into monthly installments.

In the management agreement – a separate document – Ocean City Marina is the manager of the property and the city is the owner. The manager will collect all rents. The annual net proceeds, up to a maximum of $135,000, will be remitted to the city. The city agrees to pay the manager all net proceeds from the property in excess of $135,000 in any one year of operation.

The agreement is for 10 years and will be automatically renewed for up to three, five-year periods at the option of the manager. It can also be terminated by mutual agreement at any time.

During the lease period, the city would continue to maintain the upland portion of the property.

Click here to view the marina rental agreement.

Click here to view the marina management agreement.

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