City Rejects FIT Petition over $9M Bond

OCEAN CITY – A planned $9-million purchase of a former car dealership at 16th Street and Simpson Avenue continued to dominate the conversation in Ocean City. The city clerk rejected a petition drive aimed at bringing the matter to a referendum, and fresh voices spoke in support of the move.
The watchdog group Fairness in Taxes (FIT) gathered 467 signatures on a petition seeking to overturn the bond ordinance funding the lot purchase. Members of the group had said they needed 400 signatures, while city officials had indicated the number was closer to 600, based on 15 percent of voters in the last election that included members of the Assembly.
City Clerk Melissa Rasner read her ruling into the record at the Oct. 11 City Council meeting. She said of the 467 signatures, 400 were qualified, while she found 67 to not be registered voters. But, she said, based on state laws, 597 qualified signatures are required, so the group’s petition did not block the bond ordinance taking effect.
“Based on the foregoing, I found subject’s petition to be insufficient,” she said. 
Members of FIT who spoke at the meeting did not mention the referendum, but afterward, FIT President David Hayes disputed the clerk’s decision.
“That is not right. We know the state law,” he said. He said the organization would speak to its attorneys about the matter.
The organization sought to block the bond ordinance and thereby block the approved purchase of the land. Members have stated they support the purchase, but believe the $9 million is an inflated price.
After the meeting, Hayes distributed a release including emails between property owner Jerry Klause and city attorney Dorothy McCrosson they argue show a too-cozy relationship between the city and the seller.
The issue has roiled Ocean City for weeks, making headlines and dominating the public discussion, beginning with an angry accusation from former FIT president Michael Hinchman in September, when he told council members the value of the lot set by two appraisers was millions of dollars too high.
Ocean City has commissioned a third appraisal on the property, with results expected sometime this week.
Hinchman spoke again at the Oct. 11 meeting, which also saw comments from some who want to see the sale approved. They included Ocean City resident William Hughes, the former U.S. ambassador to Panama and a 20-year congressman representing New Jersey’s Second Congressional District.
Back in the 1950s, Hughes told City Council, Ocean City pushed for as much development as possible in order to increase the ratable base. He said that was needed, but the city failed to set aside enough land for public purposes.
“The city is built out almost wall-to-wall,” he said. He commended Mayor Jay Gillian and City Council for moving to buy the land, saying it’s difficult to assign a value because there is nothing comparable to having close to two acres in the barrier island resort.
“My hope is that when you receive this third appraisal that you can come to a meeting of the minds. But if you can’t, don’t walk away from it. That would be an absolute mistake and we’d all suffer if that occurred,” he said. “It’s important to stay the course because we’re going to need that property.”
Other speakers also supported the city purchase. Resident Mary Louise spoke of the potential use for the land while suggesting the purchase of the land has become a political item for FIT.
“I think there’s underlying agendas for certain people,” she said.
“Evil people,” added Hinchman, sitting next to her at the meeting.
After a brief exchange, Council President Peter Madden said, “Michael, if you’d like to leave?”
“No, I’ll stay,” Hinchman replied.
“Then behave yourself, please,” added Councilman Keith Hartzell.
When it was his turn to speak, Hinchman said he was going to try to keep his cool. He had raised his voice at his previous appearance.
Hinchman told council Oct. 11 that he had met with Harry Klause to talk about the issue. He handed out a sheet from what he described as the flawed appraisal, again arguing that the appraiser overvalued the lots on the property.
He said the current argument lacks facts.
“Please just be factual,” he said at the end of his comments.
Hayes told council that he was elected the new FIT president Oct. 5. He said this is the 30th year for the group, with many new people on the board.
At the public comment portion at the start of the meeting, he said FIT is focused on many issues, “and I look forward to working with the mayor, the administration and City Council to make Ocean City the home we are all proud of.” He did not mention the lot purchase during the meeting.
According to city officials, Harry and Jerry Klause came to the city to offer the property for sale, with a firm price of $9 million. Previous plans included a proposal for single-family houses on the land, in a project coordinated with their cousin John Flood, who challenged Jay Gillian for the mayor’s seat this year.
That deal has fallen apart, and Flood has publicly criticized the latest proposed deal with the city. At the last meeting, council approved an ordinance allowing the city to either negotiate a purchase or condemn the remaining properties on that block, including parcels owned by Flood’s corporation and one owned by the Palermo family.
The property was the site of a car dealership, originally opened by Emil Palmer in 1933, the grandfather of Flood and the Klause brothers. The site remained a car dealership for decades, but the most recent version closed early this year.
In previous meetings, Gillian stated that the site could quickly be developed for single-family houses, an assertion some critics of the deal dispute. The city has studied the property as a potential site for a new police department, but officials have not committed to a particular use.
To contact Bill Barlow, email bbarlow@cmcherald.com.