Gasps rose from the audience Jan. 13 as Sussex County Council unanimously rejected a zoning change request for the proposed 665,000-square-foot Atlantic Fields retail development on Route 24 near Rehoboth Beach.

The entire council voted to deny the change of zoning for the 73.5-acre site from AR-1, agricultural-residential, to C-4, planned commercial district. The property is on the northeast corner of the Mulberry Knoll Road-Route 24 intersection.

The vote came after Councilwoman Jane Gruenebaum pointed out problems with the application.

Sussex County Planning & Zoning Commission had added many conditions after its review, but Gruenebaum said they were not enough.  

“There are flaws with this application that even those conditions can't correct,” she said.

The proposed zoning district was created in 2018 for a combination of retail and residential activities. Atlantic Fields included only retail space, she said.

“One important component and reason for the C-4 zone was ‘to create commercial, retail and mixed-use developments that combine shopping, working and living environments,’” Gruenebaum said. “The pending application is not a mixed-use development as it has no provision for housing and misses a key requirement for a unified development.”

The project could have included affordable housing near where people work, helping to reduce traffic, she said.

“Traffic will always be a consideration for a development of this size,” Gruenebaum added. 

The site is in the Henlopen Transportation Improvement District established by the Delaware Department of Transportation.

The state requires developers to improve roads outside their sites and fund work at other nearby affected roads and intersections. But Route 24 work is not anticipated until years after the projected 2028 opening of Atlantic Fields, Gruenebaum said.

DelDOT required an Atlantic Fields traffic study that resulted in plans for projects costing $3 million to $4 million that would include improving Mulberry Knoll Road and Route 24 within the site’s road frontage, and targeted work on nearby roads.

“The sheer magnitude of the size of this project overwhelms the projections of the TID,” she said.

Ben Hoskins, president of applicant Southside Investment Partners, said in an interview after the vote he had not yet determined his next step.

“We disagree with the council,” Hoskins said. “They have contradicted their own comprehensive land-use plan.”

He said he initially found fault in Gruenebaum’s interpretation of the law and would be reviewing it further.

Hoskins said during a Sept. 17 public hearing before the P&Z commission that, in addition to Costco and Target, other committed stores in the proposed $175 million retail center were Nordstrom Rack, Dick’s Sporting Goods, Hobby Lobby and Ross Stores. 

Supporters of the Atlantic Fields project cited the additional retail offerings and the anticipated 1,750 permanent jobs it would have brought. 

However, during public hearings held by P&Z and county council, concerns were raised about traffic, environmental issues and safety around two nearby schools.

The project was estimated to generate 26,271 daily vehicle trips. The average daily volume of traffic on Route 24 at the site in 2022 was 18,591 vehicles year-round and 23,713 vehicles during the summer tourism season. 

The road narrows to two lanes a short distance west of the site, past the two schools. 

As Gruenebaum noted, there is no timetable for the Delaware Department of Transportation to make planned improvements along Route 24, including widening Love Creek Bridge to the west of the site, that would ease the anticipated increase in traffic from the project.

“I really appreciated what Jane said about the application,” said Judy Rose Seibert, treasurer of the Route 24 Alliance Inc., which helped organize opposition to the project.

“I thought the council considered the facts from DelDOT and really took into account the public’s opinions, and that they made a good decision,” Seibert added.

She said she thought traffic concerns alone would be enough to reject the project, although she was surprised by the unanimous vote.

Seibert said she was proud the community had rallied against the project, submitting more than 500 comments and filling the room for public hearings, in some cases requiring use of an overflow room.

Editor’s note: This article will continue to be updated as additional information becomes available.