OCEAN CITY — City Council wants to buy 1.86 acres next to the Ocean City Community Center for $9 million to prevent high-density housing from going up there.
The price is nearly triple its assessed value, according to tax office records, but between two appraised values the city got from independent appraisers.
Council introduced an ordinance last week to bond $8.55 million for acquisition of a former car dealer property, with a $450,000 down payment, and will have a public hearing and vote on the ordinance Sept. 13.
Officials said they have not decided whether to use it for open space or something else.
The four lots in Block 1606 have a combined assessed value of just over $3.4 million — with $800,000 of that representing a building and other improvements, according to the Tax Assessor’s Office.
The lots are owned by Klause Enterprises, according to city tax records. That’s a partnership of former car dealer Harry Klause, who pleaded guilty to wire fraud related to auto title problems involving his business Harry Klause Cars and Trucks in 2013, and his brother. Harry Klause was later sentenced to three years of probation and four months of house arrest.
Klause, reached at his current job at Ocean City Cars and Trucks on Asbury Avenue, said he was busy selling cars and could not talk in time for the newspaper’s deadline.
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Long the site of the Perry-Egan car dealership, and for the past two years Ocean City Chevrolet, the property also has approvals for 30 housing units, according to city officials. Ocean City Chevrolet closed in January.
“This is a rare opportunity to acquire a multi-use site that could benefit everybody in Ocean City,” Mayor Jay Gillian wrote in a city email. “The property could be used for open space, parking, recreation or as a home for a new police station. What we don’t want is more housing.”
City spokesman Doug Bergen said the assessment, redone in 2014, was based on its use as a car dealership. But appraisal is based on highest use, which would be for residential lots.
He said independent appraisals helped set the value, as required by law when public dollars are used.
“As with any real estate transaction, value is determined in negotiations with seller,” Bergen wrote in an email. “Public land acquisitions must fall within a percentage range of appraisals from independent experts, and they came in at $9.2 million and $8.3 million (avg. $8.75 million).”
The lots are in the city’s drive-in business zone, in which coastal cottages were a permitted use for several years. Coastal cottages allow for two housing units per residential lot, and the site has gotten Planning Board approval for 29 cottages and a regular home, Bergen said.
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Even though coastal cottages are no longer an approved use there, the project is grandfathered in because of the approvals, he said.
John Flood, a former city councilman who ran unsuccessfully for mayor against Gillian in May, also owns lots in and around the same block but those lots are not part of the sale, Bergen said. Flood is suing the city over the repeal of the coastal cottages ordinance.
Tax records show Klause and Flood own the majority of property from 16th to 17th streets between Simpson and Haven avenues, including the lots that house CVS, Car Caress, Jersey Shore Dental Associations, 16th Street Seafood and Ford Scott Associates.
Gillian said the purchase would preserve a public-use corridor that stretches from Emil Palmer Park at 15th Street to the Intermediate School fields at 20th Street.