Alternative to renovating existing police station; due diligence awaited
Editor’s note: See updated story on Ocean City’s decision not to pursue purchase.
OCEAN CITY — If it seems like there’s a rush to buy the former Crown Bank building before all the due diligence is in, well, there is.
Ocean City Council approved — on first reading — the $12.6 million purchase at its Sept. 18 meeting.
The proposal is to buy the building at the corner of Eighth Street and Asbury Avenue and turn it into the new police station instead of renovating and enlarging the current one at 835 Central Ave.
The approval is just the first step. The ordinance will come back before council for second reading and a public hearing at the Oct. 9 meeting. The vote on first reading just moves the ordinance forward. Council is not obligated to follow it with approval Oct. 9.
The rush is on because of New Jersey’s “mansion tax” on high-value property purchases. It would impose an additional tax on the sale. For the downtown high-rise, that tax would amount to about $400,000. According to city Solicitor Dorothy McCrosson, the tax could be avoided if the contract for the sale is signed before Nov. 15.
Concerns raised at the meeting from council members and citizens is whether enough due diligence has been done to determine whether the building makes sense for the new police station and what would be done with the small-business owners who currently occupy the building.
The city currently leases two floors of the building for the police and the courts as plans moved ahead for the $30 million project to renovate and expand the current aging and outdated police station on Central Avenue. The city also is close to finishing the new police substation on Eighth Street abutting the boardwalk.
McCrosson said after the administration leased space in the Crown Bank building, it worked out so well it begged the question of whether it was more cost-effective to use that building instead of going through with the work on Central Avenue. She noted the purchase price also includes two parking lots behind the building that face Central Avenue.
Were the city to complete the purchase, it would own all of the parking lots on Central Avenue between Eighth and Ninth streets, having acquired others from Éclat Investments, brothers Raj and Yogi Khatiwala, who purchased them when buying the Crown Bank building.
McCrosson explained the general process for an acquisition has been compressed because the mansion tax law went into effect in July. Typically, she said, there is more time for due diligence and determining the funding mechanism for a purchase.
She pointed out council was getting the ordinance before the due diligence is in, but most of it would be ready in time for the Oct. 9 meeting for their consideration before a second vote.
That due diligence includes a review of the structure of the century-old building and the cost for renovations and repairs to maintain it well into the future.
“That way you can compare it to the cost of construction and renovation at 835 Central Avenue,” she said, noting the $30 million cost there may be higher than that January 2024 estimate.
“We just want you to have the facts so you can make the best decision for the taxpayers,” McCrosson said. “You can move this forward tonight on introduction and still have all your options to support or vote against the acquisition at second reading once you have all the facts.”
Before council began weighing the decision, it heard from members of the public critical of the choice of the building and lack of due diligence available.
Gloria Baker, who owns a business on the first floor of the building in Shoppes at The Asbury, assailed the idea of the city buying the building, claiming it was bad for the downtown and would be devastating for her.
Baker said finding affordable space on Asbury Avenue was like finding a needle in a haystack and “being forced by your local government to close your successful business is quite shocking.”
The Shoppes, similar to Stainton’s Gallery of Shops across Asbury Avenue, has a number of small retailers in a larger space.
Baker said if the city bought the seven-story building, it would put her out of business.
She said the Ocean City Regional Chamber of Commerce has done a great job promoting the downtown, “which is part of the lifeblood of the community” and for vacationers.
“A downtown with police headquarters right in the middle of it, court, jail, numerous armed police and detectives walking the street, and everything that comes with a police headquarters will change the fabric of the district,” Baker contended.
She noted with the building of the substation and the availability of open space at the city-owned lots at 16th and Haven, there wasn’t need for the department to be in the downtown.
“I’m in support of police, but how much space do they need?”
A letter was read on behalf of Erica Onofrio, who leases office space upstairs in the building for her Soul Dreams Studio. She wrote that she isn’t getting rich with her yoga studio but it is providing an income for her and her family and that she was lucky to find space.
Onofrio wrote that the commercial rental costs are too high and she feared if she lost that space she would have to move off the island.
David Breeden, president of Fairness In Taxes, said he fully supports police and believes they deserve a state-of-the-art facility, but questioned how options have changed for a department over the years.
A public safety building, he said, has been like Ocean City’s version of “The NeverEnding Story” and has been talked about “for what seems like a lifetime.”
He pointed out that five years ago the plan was for a combined police and fire headquarters at Fifth Street and Asbury Avenue (site of the current fire HQ), before it was changed to renovating and expanding the current police station and court in a building even older than the Crown Bank building.
Going from a 130-year-old building to a 100-year-old building doesn’t seem in the best interest of the city, Breeden asserted.
However, he said, he is willing to be convinced but he couldn’t do it without more information because there are no details on the financial costs beyond the $12.6 million acquisition.
Fourth Ward Councilman Dave Winslow said he was skeptical in July about the idea of the Crown Bank building, but had a tour and said the spaces occupied by the police are state-of-the-art.
He supported voting in favor of the purchase and moving it forward while they waited for the due diligence because their vote didn’t obligate them to approve it Oct. 9.
Winslow said putting the police station in that building could get the city to its end goal of a new station faster. He responded to Baker’s criticism, saying the first floor would remain a public space and wouldn’t look like a police state with armed guards.
“It could save taxpayers a significant amount of money,” he said. “It comes down to an economic decision.”
Second Ward Councilman Keith Hartzell said the city should keep the business tenants because there isn’t other space available in the downtown.
He said he got a lot of grief from people when there were a number of vacant storefronts and critics were claiming the downtown was going downhill, but that he knew in confidence that there were leases coming. Hartzell added that there were already businesses lining up to lease a property downtown that wasn’t even built yet.
He said he had an obligation to protect retail space in the downtown.
At-large Councilmen Sean Barnes and Tony Polcini said they want the due diligence before a final decision. Barnes said he understood the concerns of the business owners on the ground floor and Polcini said he wanted to see them stay there.
McCrosson pledged the administration would provide the bulk of the due diligence before council’s next vote.
Council voted 6-0 to approve the purchase on first reading.
– By DAVID NAHAN/Sentinel staff