A severe winter storm in 1920 caused significant erosion of the shoreline from the lighthouse to East and West 8th streets on the bay and ocean side of Barnegat City, eroding the shore up to the base of the lighthouse and prompting the abandonment and removal of the keeper's house by the United States Lighthouse Service. The Oceanic Hotel owner planned to open it in the spring of 1920, but limited prospects for turning a profit and the dangerously close tides caused him to sell the hotel for salvage. Locals stripped and demolished the hotel a section at the time from the east end. The 1920 winter caused some damage to the hotel as well. Life-Saving Station No. 17 also had to be moved from its site at the end of East 5th Street to the middle of the block on East 7th Street. It was later replaced by a modern station across the street which still stands today as the Borough Hall. On the bay side, the port at 6th Street, populated by docks, boats, and fisherman and their families living in small cottages, began to erode as the inlet current wrapped around the contour of Barnegat City and scoured away at it from both sides. The disappearing town, as newspapers morbidly began writing of Barnegat City, which included frequent claims of the lighthouse near toppling and, in some sensationalist cases, claims that the lighthouse had toppled in a most recent storm, saw the end of the developers dreams from 1881. The block upon block of cottages they envisioned would be built, but it would take the next 60 years to be completed. In 1923, train service was discontinued from Barnegat City Junction at Ship Bottom to the entire north end of the Island, including the towns of Surf City and Harvey Cedars, and the tracks taken up shortly after due to low ridership, increasing maintenance costs to keep the aging railways passable, dilapidated locomotives and cars, and the growth of automobile traffic. This fate would follow for the southern branch of the Island railroad in 1935 when the train bridge was washed out in a nor'easter, while the regional shore lines would shutter in the 1940s.