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Ocean City mayoral candidate John Flood’s company Palmer Center LLC has a suit pending against the city over a zoning ordinance. The company has filed an application to build 10 housing units at 16th Street and Haven Avenue.

OCEAN CITY — City Council recently took steps to settle a lawsuit involving a former council president who unsuccessfully ran for mayor this year.

On July 26, council will hold a public hearing and final vote on an ordinance that would allow single-family houses in much of the city’s drive-in business zone.

If approved, the ordinance would not allow what are known as “coastal cottages,” single-family homes that were briefly allowed in that commercial zone in an attempt to spur more affordable housing in the city. Coastal cottages are smaller and built at a higher density than regular single-family homes.

The ordinance is aimed at resolving a suit with Palmer Center LLC, a company owned by former Council President John Flood.

The city approved that use in 2012, but by 2016, the city had backed away from the ordinance, which officials at the time described as controversial and unpopular. By that time, construction was underway on one coastal cottage project by another developer and Flood’s company had an application in for a project at 16th Street and Haven Avenue. Flood has preliminary approval to develop a 10-unit project in a small strip of land next to the Emil Palmer athletic field, named for Flood’s grandfather.

Flood challenged the city’s zoning change in court.

That challenge, and another legal action involving his son, Justin Flood, came up in the mayor’s race, when incumbent Jay Gillian bowed out of the only planned debate. Gillian said he could not attend the April 27 event, sponsored by the group Fairness in Taxes, saying attorneys had recommended he not participate. Flood attended without an opponent.

When the ordinance was introduced June 28, city attorney Dorothy McCrosson told council members it was in accordance with a settlement agreement with Flood’s company. If approved, the amendment to the city’s zoning ordinance would allow single-family houses in the commercial zone, including the property for which Flood had approval to build coastal cottages.

It will not include the blocks along Ninth Street, nor on West Avenue, and is limited to lots that are at least 115 feet deep. Single-family houses will be listed as a conditional use within that zone, with height limits, setback requirements and other zoning rules to be the same as those within the nearby R-130 residential zone.

The drive-in business zone runs in an uneven line roughly from Sixth Street to 14th Street, from Haven to West Avenue, covering Ninth Street from the bridge almost to Asbury Avenue. There is a second, non-contiguous section along Haven Avenue from 16th to 17th Street, in which falls the Flood property. The zone is one of several commercial districts on the island, and includes several businesses as well as parks and residential units.

The ordinance is set for a public hearing and final vote at council’s July 26 meeting, set for 7 p.m. at City Hall, 861 Asbury Ave.

Councilman Anthony Wilson recused himself from the first vote on the ordinance, although McCrosson told him it was not necessary. Wilson owns property in the drive-in business zone.

“This does not benefit you in particular any more than anyone else in the DB zone,” McCrosson said. Councilman Keith Hartzell also owns properties within the zone but voted to introduce the ordinance, which McCrosson said would not affect his properties at all.

Hartzell had recused himself from previous votes that impacted the zone, but decided to vote on this ordinance.

“I feel I have zero conflict here,” he said.

A second legal action involving the Flood family remains unresolved. At the June 28 meeting, council held a closed-door session during which McCrosson updated members on litigation involving Flood’s son, Justin.

In July 2015, the city filed a request for declamatory judgement in Superior Court. In essence, the judgment would certify that the city met its obligations to offer affordable housing, which in turn would give the city immunity to challenges to its zoning law by developers. Justin Flood’s company, Flood Development LLC, filed a motion to intervene in that matter last September. City officials have said his plan would be to develop the 16th Street site as affordable housing in exchange for a larger development at market rate on Eighth Street near the Boardwalk.

After the closed-door meeting, McCrosson said she could not comment on whether the city was close to a resolution in that matter.

Contacted after council’s ordinance vote, John Flood declined to comment.

In the May nonpartisan election, Ocean City voters returned Gillian for a third term as mayor. Results posted to the city’s website show Gillian with 1,942 votes to 1,121 for Flood. Gillian was sworn in July 1 at the Ocean City Music Pier.