The Rehoboth Beach Board of Adjustment approved two variances June 23, paving the way for the redevelopment of 330 Rehoboth Ave. However, instead of a hotel, as proposed before, the developer is now seeking to establish two single-family home lots and a mixed-use area on the property.

The proposed redevelopment of this property has been on the books since 2019. The lot is about 42,500 square feet, of which about 23,000 square feet along Rehoboth Avenue is zoned C-1 commercial, and about 19,500 square feet along State Road is R-1 residential.

The developer, 330 Hospitality Group LLC, is a partnership between Lockwood Design and Construction’s Don Lockwood and former Gallo Realty owner Bette Gallo. In an effort to pave the way for a four-story hotel, they applied to have the residential portion rezoned to commercial. The planning commission denied the request; city commissioners upheld that denial upon appeal.

The development group went before the board of adjustment June 23, but with a different proposal for the property. Professional engineer Carlton Savage of Scaled Engineering represented the LLC at the hearing. As proposed, the residential space would be subdivided into three parcels – two rectangular single-family home lots facing State Road and one irregularly shaped pentagon that abuts the commercial portion.

Savage said the plan is to use the commercial area for a three-story, mixed-use building with two floors of office space and residential on top, and then use the abutting residential portion of the property as parking.

City code doesn’t allow parking lots in the residential zone, but this specific lot has been a parking lot for many decades. Savage requested the board grant a variance to allow the continued use of the remaining residential portion of the lot as parking.

Board members generally agreed the lot needs to be redeveloped because the building on Rehoboth Avenue is an eyesore and the city’s comprehensive development plan calls for the revitalization of the western end of Rehoboth Avenue. The board recognized the new plans appear to check those two boxes, but there was concern about granting a variance that would then allow the developer to pursue a different avenue.

After a lengthy discussion, the board approved two variances that allow the new plan to move forward to a formal planning commission process.

The first was related to the continued use of residentially zoned land as a parking lot. The second was related to maximum lot coverage and minimum natural area on the pentagon-shaped residential portion. Both variances are contingent upon the planning commission approving the subdivision of the R-1 portion.

Board Chair Barry Brandt voted no on both variances because he said the applicant should have gone through the planning commission’s subdivision process to create the two residential lots and ask the commission to rezone the oddly shaped residential portion to commercial. If that process had been done and then variances were needed, the applicant could have come before the board of adjustment, he said.

Board approves variance, denies appeal

The board also heard two other cases.

First was a variance request from the property owners at 69 Oak Ave. to allow an accessory building in excess of 12 feet tall, as measured from grade. The proposed height of the building is 3.5 inches taller than allowed. Natural grading of the existing property was cited as the main argument for the hardship, and the board agreed.

After that, the board heard an appeal by the owners of 17 Lake Ave., who were challenging a decision by the city’s building inspector that denied the use of a three-story garage apartment. The existence of this apartment has been an issue with city officials through multiple property owners since the early 1990s, when a Chancery Court judge ordered the removal of all elements that would make the first and third floor habitable, and ruled that it could not be rented.

The appellants argued the city amended code in 1992 to permit garage apartments as legal, nonconforming buildings, as long as they were registered within a certain time period. Town records show an application was submitted, but never signed by the city’s building inspector at the time.

Ultimately, the board agreed with the building inspector and denied the appeal.