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City planners recommend delay on Rehoboth Grand

Lawsuit between developer, property owner takes standing over rezoning request
August 19, 2019

Story Location:
330 Rehoboth Avenue
Rehoboth Beach  Delaware  19971
United States

If the Rehoboth Planning Commission has its way, a proposed four-story hotel on the corner of Rehoboth Avenue and State Road won’t proceed any further until a dispute between the 99-year lease holder and property owner has its day in court.

During a meeting Aug. 9, planning commission members voted unanimously, 6-0, in favor of a recommendation that the city’s board of commissioners delay any decision on the rezoning of the residential portion of a 42,500-square-foot property until after a lawsuit between property owner J.J. Stein III Inc. and lease holder and developer Limitless Development Construction Consulting is settled.

Before making the motion to delay action, Commissioner Rick Perry, an attorney himself, said he didn’t think it made any sense to move forward at this point. Fellow Commissioner Jeff Trunzo also was adamant that moving forward on rezoning was a bad idea. Also voting for delay were Chair David Mellen and commission members Susan Gay, Francis Markert, and Joyce Lussier.

In January, Limitless Development introduced to the commission a four-story, 90-room hotel, called Rehoboth Grand, on the corner of Rehoboth Avenue and State Road. Plans call for an indoor pool, 92 parking spaces, and retail and spa space.

Roughly 23,000 square feet of the parcel along Rehoboth Avenue is zoned C-1 commercial. The remaining portion of the property, along State Road, is zoned R-1 residential; it has been a parking lot, used by the commercial business, for as long as anyone can remember.

Property owner J.J. Stein III Inc. filed a complaint in Delaware Superior Court in November 2018 against Limitless Development asking for termination of the ground lease. Additionally, the property owner has asked for a monetary judgment in an amount less than $2 million.

Prior to the meeting, attorney Hal Beerman, representing J.J. Stein III Inc., sent a letter to the planning commission protesting the rezoning attempt by Limitless.

During the meeting, attorney David Hutt, representing Limitless Development, described it as a bit of a surprise the Steins were protesting the rezoning request. He said getting the entirety of the property under one zoning classification would be beneficial to the property owner.

If somebody else is going to go through the effort, it’s surprising there’s an objection, said Hutt. Any redevelopment is going to run into the issue of the property’s split zoning.

Attorney Lisa Brown represented the interests of J.J. Stein Inc. at the meeting. She said she wasn’t there to argue the merits of rezoning; she was there to say there’s an ongoing lawsuit, and nothing should be done until that issue is settled. She said the Steins may be willing to pursue rezoning in the future, but not while the lawsuit is ongoing. They would almost certainly not agree to allow Limitless Development to continue its pursuit, she said.

Prior to the vote to delay action, a number of residents from the neighboring community argued against the possible rezoning. They said they bought into their neighborhood years ago with the understanding that the worst that could happen is that the parking lot would be developed into homes. The neighbors said they were concerned with noise, light pollution, smells and environmental impacts on their properties if a hotel were allowed to be built.

Planning commission members Paull Hubbard, Michael Strange, and Lee Weber were absent.