OCEAN CITY – The city has settled litigation with Klause Enterprises by agreeing to pay $20 million for a former car dealership property at 16th Street and Simpson Avenue, more than twice the amount agreed to in a 2018 deal.

In 2018 the city agreed to pay the owners $9 million for the property. A citizen group, Fairness in Taxes, opposed the deal, arguing that the city was paying too much for the land, and started a petition drive to place the decision to purchase the property for that price on the ballot for voters to decide. The petition drive was successful and, as a result, the city withdrew its offer.

The city has long coveted the property, which Mayor Jay Gillian said would be used for open space. The mayor had repeatedly expressed his opposition to use of the property for a residential development; an early plan of Klause Enterprises had been the creation of a community of “coastal cottages” on the site.

Having lost the ability to purchase the property, the city employed the process of eminent domain to take it over. The law requires that the city pay the owner fair market value; determining that value has been the issue in the courts.

In November a jury put a value of $17.8 million on the property, and the city said it would appeal. The new valuation occurred after the Covid pandemic helped set off a surge in shore property values. The $20 million price tag includes interest payments on the $17.8 million jury designation.

At the Jan. 11 meeting of the City Council, the long struggle over the property came to a conclusion. The council approved a $9.9 million bond ordinance that, when added to bond funds already authorized, provides the $20 million necessary for the settlement.

Councilman Tom Rotondi said, “Let’s stop the bleeding and move on.” Rotondi earlier said it would be detrimental to the city to continue the litigation.

One proposal for the property’s future use is to keep the land as open space, with a portion used for parking for the adjacent community center. In connection with that, the council passed a resolution authorizing an award to Engineering Design Associates for the preparation of site plans for the construction of an elevated parking area on a portion of the property.

Speaking on the situation the city found itself in regarding the property, Rotondi said, “We are in a situation we shouldn’t have been in, but we are in it.”

The vote on the $9.9 million bond ordinance was unanimous.

Contact the author, Vince Conti, at vconti@cmcherald.com.