What next for monster truck building lease?

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WILDWOOD — A $1.6 million contract for the lease of a boardwalk building and portion of the beach have been rescinded but Mayor Ernie Troiano said the city isn’t calling it quits on the property just yet.

“We’re not done with that building,” Troiano said. “Maybe a 50-year lease is too long, maybe it isn’t. We’re going to look at it and it is definitely going to be revisited.

“We’re not done and we’re not calling it quits,” Troiano added.

The withdrawal of the contract comes after a group of city residents, calling themselves Concerned Citizens for Wildwood, presented petitions challenging the lease of 4101 Boardwalk, which is commonly called the monster truck building. The petitioners, Dara Baltuskonis, Mike Mursh, Edward “Chip” Harshaw, Mary Ann Giblin, and Kathleen McCullough, also opposed two other ordinances, one issuing the $1.3 million purchase of 3400 Pacific Ave. and another ordinance allowing the purchase. Those ordinances were also expected to be rescinded on Dec. 12, after this week’s deadline.  

Without the money from the lease of the boardwalk property, leaves the city with a $1.6 million hole in its budget.

Commissioner Pete Byron, who oversees revenue and finance, said he had a meeting with the city’s auditor and Jeanette Powers, the city’s chief financial officer, to see what the city had to do because it wouldn’t get the $1.6 million from Eastern Exchange, LLC., the company that leased the building.

Powers said that just because the $1.6 million contract didn’t come in, it doesn’t mean the city’s budget stops.

“The $1.6 million is on the revenue side of the budget,” she said. “So since we are short on the revenue side this year, it might result in a deficit in operation that has to be raised in revenue in next year’s budget.”

Powers said that the amount of revenue doesn’t have to equate to $1.6 million. She explained that revenue is a changing thing, so if the city makes more money somewhere else, the hole doesn’t have to be as big as $1.6 million.

Byron said the city is prepared to continue to move forward. He said that the city will make cuts where needed and continue to come up with new revenue sources.

“We have city employees retiring soon and we won’t be filling their positions,” Byron said of one way the city plans to save some money.

This year’s $24.4 million budget includes a local purpose tax rate of $1.088 per $100 of assessed property value, which remains unchanged from last year, and a tax levy of $17 million.

This year’s budget was not introduced until July 25, and was delayed when the state wanted more information on the deal with Eastern Exchange, and for the lease agreement to be formally approved by the state before the budget came to a final vote.

The state Department of Community Affairs finally cleared the budget for adoption and the budget was approved during a Sept. 12 meeting.

The money from that lease was a key portion of the budget, which city officials said got Wildwood clear of a $3 million hole without increasing taxes and without layoffs.

“I bet that group [the petitioners] is tickled to death that there is a gap now,” said Troinao. “They want to see the taxes raised so they can file another recall. Well, I guess we’ll just have to disappoint them.”

In 2011, Wildwood's budget was $23 million and supported by a $17.1 million tax levy. A $2.15 million emergency appropriation was added to the budget to avoid a 42-person layoff plan that was imposed by the city's previous administration.

When Troiano, Commissioner Byron, and Commissioner Tony Leonetti ran for office, they campaigned with the promise that no layoffs would be implemented if elected. Once in office, they were faced with a $3 million shortfall.

“They [the previous administration] buried this town,” Troiano said. “We’re not going to do that.”

Despite the $1.6 million lease falling through, Troiano said that there would be no layoffs.

He said the city had other recurring revenue sources, like the storage boxes on the beach, that it plans to tap into. Another possibility, he said, includes a plan to move forward with a solar farm on the site of the city’s former landfill on the back bay.

Under the city’s former administration, the plan was to turn property located on Susquehanna Avenue between Baker and Lincoln avenues into a solar farm and a public open space with room for biking and walking trails and outdoor activities like kayaking.

Despite the change in government, Troiano and his fellow commissioners said they still have hopes the back bay can generate revenue and green energy for the city.

However he didn’t comment on any specifics regarding the future of the solar park.

The mayor did suggest that that the gap in the budget could be made up with a tax on amusement piers, because they had filed suit against the city and Eastern Exchange to nullify the $1.6 million lease of the monster truck building and 19 blocks of beachfront.

“Maybe we’ll just raise taxes on the amusement piers,” Troiano said. “Since they don’t want any competition.”

2701 Associates, whose principal is Will Morey, and 3600 Boardwalk Corporation, headed by Robert DiPeso, filed the suit in October and are asking for the Cape May County Superior Court to nullify the $1.6 million lease.

Their first argument, according to the lawsuit, is that the lease violates state law, second, agreements were allegedly illegally entered into, and last, the city violated the Open Public Records Act by not providing documents about the lease details.

The suit claims that in New Jersey, municipalities bordering the Atlantic Ocean may lease beach property for a maximum of 10 years by law. The lease between Eastern Exchange and the city has been negotiated for 50 years.

It also claims that the lease, when first up for public bid, was advertised as the Monster Truck building, and only 50 feet of beach front for “big truck rides.” The lease signed with Eastern Exchange includes 500 feet of beachfront, as well as the ability to have amusements, concerts, and festivals at the site. The festival agreement entered into with Eastern Exchange was never up for public bid, the suit claims.

Troiano noted that before the city approved the municipal budget, the state had requested additional documentation about Eastern Exchange and the lease agreement. After the documents were reviewed by the state, it found no issue with the lease.

“I guess some people don’t like competition,” he added. “They had an opportunity to bid on it and they didn’t. We had one company bid on the project and that was Eastern Exchange.”

Jack Morey, of the Morey Organization, responded to the mayor’s comments by saying his company “supports and encourages appropriate investment and development in Wildwood.

“We reluctantly participated in the filing of a lawsuit to void the 50-year lease that the city signed with Eastern Exchange because that lease was not properly advertised or bid, because some of the development it contemplates is inconsistent with the city’s own development requirements and is detrimental to the public interest and because state law expressly prohibits municipalities from entering into leases with terms of more than 10 years,” Morey wrote in response to a request for comment.

“We welcome fair and open competition and the appropriate use of public resources to address the city’s budget,” Morey stated.

When asked about putting the issue of the lease before the public in a referendum vote, as the petitioners had wanted to do, Troiano said he wasn’t sure if letting the commissioners or a voting public decide was the right choice.

“I figured that we wouldn’t have to go through a whole referendum if people would call or speak up if they had an issue,” Troiano said. “Whether they liked it or not, I figured that if the public had an interest they would call us.”

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