SOMERS POINT — That’s a lot of margaritas.
Mexiquila restaurant is trying to make up more than $100,000 after the city said its application for a tax abatement was approved in error.
The restaurant’s director of operations and his attorney voiced their displeasure late last month for what they say was an unfair rejection of the business’ application — nine months after being notified it was approved.
Attorney Michael Lario Jr. of Nehmad, Davis & Goldstein, representing LBH LLC, owner of the eatery that replaced Clancy’s by the Bay on Maryland Avenue, told City Council on Nov. 21 that his client had received notification in January 2024 that the business had been approved for a five-year tax abatement.
The relief amounted to about $105,000 over that term, and Payton Bowman, director of operations, acted accordingly by investing that expected windfall on other parts of the $2.45 million renovation and rehabilitation of the once-proud property.
However, Lario said, the company received word in October that the approval had been granted in error, without City Council’s approval, causing his client undue financial hardship.
The attorney said the tax-abatement ordinance allows the city to provide relief in certain situations and provides guidance for both residential and commercial properties that would qualify.
“Under intent and purpose, it discusses promoting rehabilitation of commercial structures in the city, improving property values, fostering civic beauty, protecting and enhancing city attractions,” Lario said.
LBH bought the property in July 2022 and completed a sweeping renovation.
“The building was in pretty significant disrepair. It was coming off COVID-19 and it needed substantial capital improvements,” Lario said.
The project included replacing the roof, foundation work, asbestos removal, replacing windows and other interior and exterior renovations, including paving and striping the parking area “to bring an outdated building into the 21st century.”
“The results largely speak for themselves; it is really a sharp, attractive, modern-looking restaurant,” Lario said.
The attorney said that after receiving word in January 2024 that the abatement was approved, his client invested that amount in other parts of the renovation project.
“It’s a considerable amount of money that the applicants received notification had been approved,” Lario said. “Based on that approval, certain money was reinvested back into business.”
Bowman said it was not pleasant news.
“When we received the letter, we were in shock. We did take a pretty strong stance of deciding to come to Somers Point — originally we’re from the Philadelphia, Cape May region,” he said, noting Somers Point is known as pro-business and favorable to development and is an up-and-coming area.
Bowman said they recognized the building was in disarray, and had to decide whether to repair or completely replace sections.
“Throughout the construction process, there were many improvements that we thought would be better to wipe the slate clean,” he said, listing asbestos that could have been encapsulated but they chose to remove it, replacing the roof instead of repairing it and repaving the parking lot instead of just patching it.
“When we took it over there were literally puddles in the parking lot with seagulls floating in it,” Bowman said.
Lario argued that the property qualifies in every way for the abatement and should be granted one.
“Just looking at this application strictly through the lens of your tax abatement ordinance, if you look at what the site was previously — it was an older restaurant, becoming somewhat of an eye-sore, had the potential in the future of becoming a blighted site — for the applicant to come in to invest a significant sum, make it an attractive structure, that’s the purpose of the abatement,” he said.
Lario noted the tax relief would apply only to the added improvements to the assessed value, about $1 million, and not the underlying tax obligation.
“We think if you look at your ordinance, this application is in a strong situation that the tax abatement would apply,” Lario said.
He also spoke to what he called the “equity.”
“The applicant received notification and he relied on that notification. Based on that documentation, certain investments were undertaken,” Lario said.
“When we realized we were going to be able to save some money on taxes, we actually rented the property next door for employees to park in,” Bowman said. “The neighbors that come into the restaurant really thank us, say it’s much cleaner, no noise at the end and not having employees parking throughout the neighborhood on the street.”
He said they have about 65 employees.
“We are in the business to make money and ultimately survive, and in our business every penny counts,” Bowman said. “If we don’t have the savings, then we have to reevaluate everything.”
Lario called it an unfortunate situation but feels strongly that the property meets the requirements for approval.
“We strongly support council approving this application,” he said.
Lario also objected to the application fee of $36,000.
He said the city’s ordinance requires a fee of 1.5 percent of anticipated construction costs.
“For a project of this scope, the anticipated construction costs were $2.45 million,” Lario said.
He argued that case law stipulates there must be some correlation between the fee and the actual administrative cost associated with processing the application.
Lario noted the ordinance grants council the ability to amend the fee.
“We’re hoping for a more reasonable application fee,” he said.
City Council was set to discuss the situation in closed session that evening.
– STORY and PHOTOS by CRAIG D. SCHENCK/Sentinel staff