(Feb. 13, 2015) Something rotten is afoot in the world of umbrella rentals, or so some city officials seem to think.
The Ocean City Council voted this week to reject a number of surprisingly low bids for beach equipment rental franchises this week, instead moving to set a minimum price per-parcel of $500.
Additionally, the new bids will be taken via sealed, written submissions, instead of a live auction, which netted a number of low-ball bids when held in December.
“It would improve our loss,” said City Clerk Kelly Allmond, who administers the beach franchises. “As of now, there’s a $57,000 reduction in revenue. Adding a $500 minimum would at least give us some baseline.”
Ocean City has a revolving system by which it takes bids for the rights of private operators to rent umbrellas, chairs and other equipment on public beaches. The city’s coastline is divided into three zones, and then into individual parcels.
Each parcel consists of one block’s worth of beach on the southern zone, and parcels become larger moving toward the less-busy north end.
Each zone is auctioned every third year, with contracts lasting for three years with the option to renew at a 10 percent increase.
This year, eight parcels in the mid-beach zone were renewed, and another 10 were auctioned. Six parcels in the south zone, and one in the north, were also auctioned out-of-schedule because their previous holder had gone out of business.
Out of the 17 winning bids, however, nine were far below the nine-year average, resulting in a $57,000 drop from the city’s budgeted revenue, and were rejected.
The 20th Street parcel, for instance, was bid at $3,500 last year, and averaged $2,895 per year over the last three bid cycles. The most recent bid, however, was only $150, a 95 percent drop in price.
No express explanation was offered for the nine abnormally low results, although word within City Hall has long been that infighting or collusion between stand business operators has made prices erratic, just never to this extent.
Bid prices for franchise parcels dropped considerably in 2007 and 2008, as the economic slowdown started to be felt. But last year’s bid totals were up 23 percent.
“Which would indicate that the market is strong, and even more surprising that these parcels are down,” Councilman Dennis Dare said.
“I’m hoping that within the next year, we’ll be able to take a look at how the parcels are outlined and segmented,” Allmond said. “Some of the parcels in the mid-beach probably need to be merged.”
Two years ago, beach stand operators clashed with the city over the fact that beach stand operator Patrick McLaughlin was allowed participate in the auction. McLaughlin had been arrested by the IRS on tax evasion charges, but at the time had rights to nearly half of the city’s beach parcels.
