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Seth Grossman is guest on WPG Radio.
Eustace Mita Struggles To Get Permits To Replace Closed Amusement Park With Much Needed Icona Hotel in Ocean City.
Teachable Moment: Liberty and Democracy Are NOT The Same. They Are Opposites. Liberty Creates Prosperity. We All Benefit When Creative and Talented People Are Free To Use Their Time, Money, and Ambition To Create, Build and Produce. Democracy Only Works When Constitutions Limit The Power of Government So It Can’t Destroy That Freedom.
Without Those Limits Democracy Rewards Those Who Produce Nothing. It Lets Them Control, Discourage, and Punish Those Who Invent, Create, Build and Produce. That Is Why We Have High Prices and Stagnation In New Jersey Today.
Hotel developer Eustace Mita calls in.
Above Image: Eustace Mita at his Avalon Icona Hotel – Photo by sevenmiletimes.com
Eustice Mita built several successful class Icona resort hotels in Avalon, the Wildwoods and Cape May. Last year, Mita bought the site of the closed Wonderland Amusement Park at 6th Street and the Boardwalk in Ocean City. The Gillian family was forced to close Wonderland after years of losing money.
Last February, Mita submitted plans to build a first class 325 room Icona Hotel there. However, many community leaders and citizen groups oppose him. They are urging city officials to block the project by denying needing permits. During the past few months, Mita has been forced to spend enormous amounts of time and money to win political support for his project. Why?
Why does a property owner need government permission to replace one resort commercial business with another in a resort commercial zone? When America was great, no such permission was needed. They could easily change the use or property from one business to another to quickly give tourists what they wanted. If an amusement park on property was losing money, they could replace it with a hotel. If a hotel was losing money, they could tear it down and built an amusement park. This is how Atlantic City grew from an empty sandbar in 1854 to the World’s Playground in less than 50 years. Tourists pay to get what they want, and if they don’t get what they want in one place, they go somewhere else.
Right now, a number of “community leaders” in Ocean City claim that a new Icon Hotel on the site of the closed Wonderland Amusement Park would “destroy the character” of Ocean City. Imagine what these same “leaders” would do if there were already a hotel on the site that was losing money. Imagine what they would say if the owner wanted to tear down that hotel and build an amusement park. Wouldn’t those same “leaders” claim that putting an amusement park on the site of a hotel would “destroy the character” of Ocean City.
For years, owners of properties in resort commercial zones did not need special government permits or approvals to do this. They simply had to show that the new buildings were safe, and did not disturb neighbors from enjoying their properties.
All that changed in New Jersey since the 1960s. Ocean City, like most New Jersey towns adopted comprehensive “master plans” and zoning laws. For many reasons, most of the new zoning laws made it illegal for any business owner to build almost any new building anywhere.
If a business owner wanted to build almost any new project, he or she had to persuade city officials to approve a special new zoning plan for his or her property. This could be done through a zoning “variance” or the creation of a “redevelopment zone. These special zoning plans are very expensive and take a very long time. They also require political support. That means business owners are usually forced to donate to the “right” political campaign, hire the “right” architects, lawyers, engineers and consultants. This process often takes years. Often, their applications are denied.
America was never like this in the past. In 1900, Henry Leeds bought the old wooden Chalfonte Hotel at North Carolina Avenue and the Boardwalk in Atlantic City. During the summer of 1903, Leeds submitted plans to City Hall for a new 8 story brick and steel skyscraper hotel at the site. His plans were approved within several weeks. After Labor Day, 1903, the old wooden hotel was demolished. Demolition was finished by Halloween, 1903 and new construction began. The new 8 story brick and steel Chalfonte Hotel was open by July 4 weekend in 1904., exactly one year later. Until the 1960s, most resort construction projects were approved and built within one year. Now, it take years just to get the permits.
In 1957, Ayn Rand wrote the novel Atlas Shrugged which predicted this. It tells of creative geniuses who want to be free to invent and build new businesses and products that benefit everyone. However, their efforts are smothered politicians and politics who want to control society.
We often discuss these issues at our Liberty and Prosperity breakfasts every Saturday. Liberty is a form of government and a way of life that lets each individual to make the most important decisions in his or her own life. If you make good decisions, you should benefit from them. If you make a bad decision, you, not somebody else, should deal with the consequences.
Democracy works in a far different way. In a democracy people elect politicians who make decisions that affect the lives of others. When politicians make decisions affecting others, they rarely benefit if their decisions are good, and they are rarely punished if they are bad. Atlantic City is littered with failed projects. Taxpayers borrowed and spent hundreds of millions of dollars to build them. They include an empty baseball stadium, a mostly empty Boardwalk Entertainment Hall (built for Atlantic City’s long-gone Miss America Pageant and professional Hockey team. They also include a mostly empty Convention Center and train station. Although all of these projects were colossal failures, the politicians who built them with taxpayer money were rewarded! They were elected and re-elected with generous campaign donations and political support from people who made enormous profits building and financing them. Taxpayers who would not have shared in any profits if the projects succeeded paid higher taxes to cover the losses.
Financial expert Michael Lewis described this in his book The Big Short: “What are the odds that people will make smart decisions about money if they don’t need to make smart decisions–if they can get rich making dumb decisions?”
Before the 1960s, projects like this were built by private businesses with their own money.
What is going on in Ocean City is a total misuse of zoning laws. Zoning laws should not let people who don’t own the land and who don’t invest a nickel to build on the land to decide what gets built there. The whole purpose of zoning is to prevent someone, you know, from putting something on their land that hurts people next door. Like a fish processing plant or a junkyard.
There is a problem with letting people with no skin in a game decide how to play it. That is because most people are comfortable with what is already here, and cannot imagine something new being better.
People who have nothing to do with investing money or the blood and sweat and tears that goes into making a business succeed should not make business decisions on how owners use their own money, energy and property to run their own lawful businesses in areas of a city that are zoned for business.
Basically, the Boardwalk of Ocean City, from Sixth Street down to Twelfth Street, is a resort commercial area. It should not matter whether the owner of a business there has a hotel, an amusement park, a restaurant or a retail shop. Here, the owners of the of that property at 6th Street tried for years to make money with an amusement park, and they couldn’t do it for a whole lot of reasons. You know, it could be because of the cost, because the lawsuits, because of all these things make it unprofitable to run an amusement park there. So, either you let it it empty or you let it be an empty parking lot.
Everybody benefits when an owner is free to use his or her own money to create something new that will succeed and make money and pay taxes. So, I really feel bad that Eustace Mita has to go through this. But then on the other hand, it’s so important for businessmen like him, to promote organizations like ours. Because we are teaching the important protecting the rights of everybody so you don’t need favors and friends in government to start a successful business.
And by the way, here’s something else that’s completely forgotten. Everybody complains about the high price of everything in New Jersey. Housing is too expensive. Apartments are too expensive. Rents are too expensive. Stores are too expensive. One of the reasons is back fifty years ago, if you spent a hundred dollars to build something, all your money would be spent on the construction and the materials and the labor. Right now, most builders say that they are spending roughly half their money on political campaign donations, and expensive lawyers, planners and architects with political connections. These costs are hidden in the price of everything you buy.
EUSTACE MITA JOINS THE CONVERSATION: John, it’s my pleasure. Do I hear Seth is on there too? Yes. Yes. I am. Seth, how are you?
SETH GROSSMAN: I’m doing fine, and I’m as frustrated as you are with all this because the the the whole culture and the law I mean, you are doing what made America great. You bought a property with a failing business. You’re proposing to invest your own money, your own time, your own sweat, your own labor to to make a success out of a piece of property that’s a failure. And instead of being allowed to succeed, you have all these people with no stake whatsoever in the project, blocking you and tearing you down. And I just find it disgusting. And I, you know, and that’s that’s one of the purposes of liberty and prosperity, to to to teach Americans how to be Americans again and to not have politicians control the economy. Let the people who benefit from, making good decisions, you know, make those decisions. So anyway, you you’ve heard my speech a million times before, but but Ireally am rooting for you. I sympathize with you, and I really wish that that you did not have to seek special zoning, approvals and favors from politicians. I wish the zoning laws would make it legal that if you replace one commercial use with another commercial use in a commercial zone, you shouldn’t need any permits or any approval. And you should just be able to build. This is what made Atlantic City great. This is what made Ocean City great for years.
EUSTACE MITA: Seth. Let me say this. Don’t stop giving your message. Do not stop. And one thing I love about Seth, John, is he’s tireless. And the only way that we’re going to get bureaucracy out of the way is if we have people like you and John and and hopefully myself, and we just don’t give up. I mean, every development, anything I’ve ever done in my life in development, I look at the pros and I look at the cons. This is the only, project that I’ve ever seen in my life that only has one con to it. And that con is to me because of the financial risk to build this. Other than that, everybody in Ocean City wins. The constituency of the people who, live there all year round, they they win. The people who are there in the summer for a week, they win. The people own residences, they win. And and it’s very simple. We we lose sight because we’re winning so we’re losing so slowly. We think we’re winning.
Let me explain. Number one, the number one revenue generator in all of our, you know, barrier islands from Cape May to Atlantic City is tourism. The number one supported tourism is hotel rooms because it’s a transient guest. They are the ones who say, you know, our average guest stay is three days. So they say, I’m going to come down for three days. I’ve got to go to Kohrs, I’ve got to go to Mack And Mancos. I’ve got to go play mini golf. I’ve got to go to to, Funland. I’ve got to go to Playland. And these are the people who fuel our economy. That’s why our that’s why I say to the people in Ocean City, of which I’m a resident, why are we only paying, you know, a a dollar 11 per? Because we have this tourism coming in. Yeah. It’s the same thing called Barons, but we lost 70% of our hotel rooms. And somebody on city council said to me, well, you know, that’s not true. We took two years. We did the research. We named every hotel, every address. We went from 3,000 rooms thirty years ago to a thousand. And somebody says to me, you know, also another politician says, well, Airbnb, we don’t need hotels because Airbnb’s taken up that space. Well, the exact opposite is true. Airbnb hasn’t hurt the hotel business where we are one iota. What Airbnb has taken share market from is all the realtors who rented the homes at a 12% commission, which was fair, by the way. But, you know, it’s hard to compete when Airbnb comes in and you pay 2% or you pay 3%. But that is not the transient customer that we’re talking about. The Airbnb, the renters, they come in for a week. They go to ShopRite. They go to Acme. They stock up. They have a little barbecue out there. The ones that we want are the ones who say, I’m going to Asbury Avenue. You know, I’m gonna support the shops on Asbury. I’m going to support the Boardwalk merchants. When we first introduced this, John and Seth, you know, the boardwalk merchants didn’t know how to take it. But once we educated them like you do, Seth, once we educated them and showed, hey. Listen. We’re we’re going To lose the business, and then there there’s not going to be boardwalk merchants. You look at Avalon and Stone Harbor. When we were growing up, Avalon’s Boardwalk started at Eighth Street, and now it’s at 20 starts at 20 First Street, and you had arcades and plural arcades. You had restaurants, floral. You had movie theater. And, you know, those things are gone now because when Avalon tore down a hotel, they would put up all residences. Now just look at Ocean City. Ocean City has done the same things. You know, the Bellevue, the most recent, the Bellevue Hotel on a street that was just torn down three years ago. It’s six triplexes. Watsons, when I was growing up, very popular restaurant on Ninth Street, Watsons. That’s 10 duplexes. You look at my wife when I was dating her, Sue, she worked at Campbell Seafood. That’s, you know, on 30 Second Street in in Asbury. That’s now five duplexes. So every time you knock a hotel down and you replace it with residential, then what happens is you’re losing that transient guest, that transient customer. That that so it makes sense it makes sense. I just wanna want you to answer this. What do you say to those who are saying the objection to you building the hotel is it it upsets the integrity of Ocean City? Somebody had to come up with that. I don’t know what that means. Do you know what it means? Well, no. I don’t know what it means, but I’m gonna give you a guess. Here’s my guesstimate because I’ve said, hey. Listen. I’ll meet with any group anytime. I don’t care if it’s two people, 200, two thousand. So we’ve had big groups at Ocean City Tabernacle. We’ve had, big groups at the library. We’ve been on Zoom. We’ve been on the news. And here’s what here was the four big things, John, that they came up with. Number one, they said, well, you know, if this happens, he’s gonna bring alcohol. Well, the opposite the exact opposite is true because the laws in Ocean City trump the state laws. So there’s not gonna be alcohol. Right. Number two is number two is, we know it’s gonna be a high rise, and we don’t need high rises on the boardwalk. The exact opposite is is true. Flanders, 9 stories. Portico, 9 stories, both on the boardwalk. Our building, eight stories. The building one block away from this Gardens Plaza, 15 stories. So we are actually the least height of all of them. So that knocks that one out. The third thing they talk about is parking. Well, it’s gonna bring, you know, all this traffic, so on and so forth. The exact opposite is true again. Wonderland, on a Saturday or a Sunday, would average 3,000 people. Our hotel at full capacity, which we average, you know, 250 rooms, four people per room. That’s a thousand people. So that’s two thirds less than what Wonderland has had for the last thirty some odd years. Now so we not only do we not have a parking problem, ICONA is bringing a parking solution. Wonderland has zero parking. Icona Ocean City would have 375 spots, a thousand people versus 3,000. So we’re bringing a parking solution, not a problem. Now the fourth thing they say is, well, if we let ICONA do it, then everybody’s going to do it. Well, first of all, the exact opposite is true again. If anybody was going to do it, why haven’t we had a new hotel and, quote, unquote, America’s greatest family resort and a what’s a what’s a resort? A resort is food, entertainment, and hotel rooms. We I I mean, I have such admiration for all our food people in Ocean City because it’s hard to make money when you don’t have booze. So love them all to death. Entertainment, we have the music here. It’s a great piece. Hotel rooms, we haven’t had a new hotel in, quote, unquote, America’s greatest family resort in over half a century. Jeez. Think about that, guys. Half a century. The last new hotel was portable 1965 on the boardwalk, by the way. So as far as I’m saying, everybody’s going to want to do it. You if we didn’t have eight hotels, I couldn’t do it. You know, even the people who are, like, trying to beat this, you know, just kill us, even they admit you can’t make a profit. But because I’m a hometown boy and and, you know, my love for Ocean City brought up my children there and now our grandchildren, 17 grandchildren we have. And, so, you know, there’s nobody behind me. And I’m at the point of my life, guys, where, hey. If it you know, this is it’s it’s going to be in itself because the way we designed it, it’s going to be an attraction itself. People are going to come just to see the hotel because it looks like something like the Grand for Floridian.
JOHN DEMASI: Yeah. I know. I noticed that. Yeah. I noticed that. Yeah. Yeah. So anyway Oh, look. Thanks for coming on. We’ll try to schedule you, at a time where we can really devote a large segment of the show. But you’ve jumped in on Seth’s time, which is okay. I know he doesn’t mind. And we certainly will continue to follow this story, but I’m all for you. And I think, you know, this this whole zoning thing and integrity of Ocean City, it’s a bunch of garbage to me. And, you know, it makes sense to build it. It’s a no brainer to me. So, thanks for coming on and spending a few minutes with us, and, we wish you luck, really. Good luck. John, I appreciate it, Seth. I appreciate it. Let’s make Ocean City great again. Have a great weekend.
SETH GROSSMAN Yes. Remember that Eustace Mita is not asking for anything other than permission to build a great project on his own land. And the fact that he has to do so much politics and begging to do what used to be a right of every owner of an investor of real estate. You know, right now we have all these failed projects of people who use government money to build stadiums that failed, that build water slides that failed, and here someone wants to use his own money. Where if it fails, he loses. And so many Ocean City voters don’t want to let him do that. It’s just, astonishing, but to be continued on another week.
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