$1 million loan divides Dewey Beach

The Bayard Avenue construction project is well under way, but Dewey Beach has no way to pay for it.  A $900,000 loan from Delaware Department of Natural Resources and Environmental Control cannot go to settlement until the town amends its charter. Some residents buck the amendment, saying the loan should first be approved by referendum.  If the charter is not amended, the town could be forced to fund the project without DNREC’s low-interest loan.

Dewey Beach Town Charter offers no process for borrowing money from the state. Several months ago, DNREC agreed to loan Dewey Beach close to $1 million to fund drainage repairs on Bayard Avenue that would greatly reduce the problem of flooding in the area.  The project is halfway complete, but the town has not received any money from DNREC.

“We had every expectation that those state monies would be in our hands now,” said Town Attorney Glenn Mandalas, speaking at a town council meeting March 12.  Mandalas said Saul Ewing, DNREC’s Wilmington-based law firm, advised council it must approve adding an official process for borrowing money in the town charter before DNREC will issue funds to Dewey Beach.

Mandalas said Dewey Beach is a relatively new municipality, and the absence of a process has been overlooked until now. He said it is surprising no process was written into the charter, which underwent seven levels of review before being approved by the governor, including town council, attorneys and the General Assembly.  “It’s unfortunate it’s coming in the middle of a project that’s currently under way,” Mandalas said.

Mike Cotten, of Cotten Engineering LLC, is head of the project and told council construction is ahead of schedule.  Cotten said to stop and restart the project would add to project costs.

Mandalas advised council to expedite the amendment because late payments may cause interest charges and add to the cost of the project.  “The town’s healthy financially, but it doesn’t have endless dollars.  So, the sooner we get the DNREC loan, the better,” Mandalas said.

Council voted by a slim 3-2 margin to delay moving the amendment forward, Commissioners Rick Solloway and Jim Laird dissenting.  Instead, council will hold a special called meeting at 10 a.m., Saturday, March 26, to hear public comments about the Bayard project, DNREC loan and proposed amendment.

Towns limit borrowing

The total budget for Dewey Beach is about $2.5 million.  According to the amendment, if the town borrows less than $1 million, a public hearing is required.  If the town borrows more than $1 million, the charter would require a referendum.  The town can never have more than $1.5 million in debt.

Rehoboth Beach, which has a budget of about $14.6 million, allows the town to borrow up to $6 million before a public hearing and referendum are required.  Milton, Lewes, Bethany Beach and Fenwick Island base their limits on a percentage of the total property value within town limits.

Mandalas said the amendment was borrowed from the town charter of Laurel with the cap amount changed.  Laurel’s charter allows the town to borrow up to $15 million before a referendum is required.

Residents object

Resident Anna Legates said she found 14 town charters that would have required a referendum to borrow $900,000 from DNREC.  “I think fast-tracking this and calling it a housekeeping, administrative issue is absolutely a slap in the face,” Legates said.  “We need to go to referendum when that much money’s on the line.”

Former Commissioner Dale Cooke agreed the town should go to referendum.  “You rushed through the project, you rushed through financing,” Cooke said.  “When you rush something through, there’s always problems.”

Rick Judge, chairman of the Infrastructure Committee said he and Town Manager Diana Smith were given formal approval from DNREC to move forward with the project.  “We had public meetings, public hearings both with infrastructure and town council for over a year, updates every month,” Judge said.

Judge said the town already has an invoice from contractor Mumford and Miller for $237,000.  Smith asked council to approve payment of the entire invoice in an attempt to reduce interest charges.  Council voted 4-1, Laird dissenting, to pay $200,000 of the invoice using money from the general fund and the roads and maintenance account.

Time to pay the bill

Mayor Diane Hanson said she is happy with the work that’s been done on Bayard Avenue.  “If I had to do it again, maybe I wouldn’t have voted to move forward quite so quickly, but it’s done.  The project is halfway done, more than that.  Now, the issue is how to pay for it, not whether we should be doing the project,” Hanson said.  The mayor said the town could have been faced with a larger liability if someone had died on Bayard because an ambulance could not reach them.

If council votes to approve the amendment, it would move on to the General Assembly for approval, where it will be sponsored by Rep. Gerald Hocker, R-Ocean View.  Hanson said she spoke with Hocker and Sen. George Bunting, D-Bethany Beach, about the amendment.  “They assured me this would be one of the easier Dewey Beach charter changes,” Hanson said.