Dewey commissioners work to penalize tax scofflaws

Beach commercialization, Verizon discussed; vehicles parked in lifeguard spots face towing
April 19, 2022

Dewey Beach commissioners continued discussion April 8 on enforcing rental property owners’ compliance with licensing and accommodations taxes.

Per town code, owners who rent properties must purchase a residential rental license and pay 3 percent accommodations tax on those rentals to the town each year. 

Town Counsel Fred Townsend said the current code imposes a 10 percent per month fine for tax payment noncompliance, which could compound quickly and may be ruled unconstitutional in a court. He recommended reducing the fine from 10 percent to 1.5 percent to align with fees in other towns.

A $500 fee for noncompliance already exists in town code, Commissioner Gary Persinger said, and every other town in the same situation must rely on property owners’ self-reported gross rental receipts.

Since the $500 fine exists, Persinger said, the town could institute a fine for not submitting the gross rental receipts and use them to calculate the penalty.

Mayor Bill Stevens said software authorized for purchase last month will estimate the amount of revenue per property. He said the town could fine property owners $500 for not submitting the amount due to the town plus a 1.5 percent estimate of revenues, allowing property owners to submit actual revenues collected.

Townsend said some property owners will pull their permits, or claim no rental occurred, and report no income; then they may try the same thing the next year. These property owners could be required to certify their revenues.

Persinger suggested maintaining the $500 fine for no license, requiring a certified gross rental receipt report, and if they don't provide it, impose a fine again and a 1.5 percent charge per month on the original amount of accommodations tax due for every month not paid.

Stevens said it was a good suggestion to amend the current ordinance and apply an administrative fee. Part of the intent of the ordinance is to make the public understand the ramifications of not being licensed and not reporting rental revenues, he said.

A vote on the proposed ordinance was tabled for a future meeting.

Beach commercialization 

Town Manager Bill Zolper said he has been receiving many requests for businesses on the beach, including volleyball and skim lessons, yoga and picnics. Beach concessionaire Lynam pays a large fee to operate on the beach, Zolper said, and he requested feedback on how to proceed with requests.

“It’s a business license of $109, and some of these folks down there are making well over $10,000 on the beach using our public beach for this,” Zolper said.

Commissioner David Jasinski said some people view businesses on the beach as a service while others see it as commercialization. Equity is needed, Jasinski said, but he was not sure how to navigate the requests.

“To your point, Lynam does pay $70,000 a year and I think they technically have the right of first refusal for any type of business as part of paying that fee,” Jasinski said.

In the future, Townsend said, commissioners should comprehensively review and authorize requests rather than on an ad hoc analysis. Perceived commercialization was a problem years ago, Townsend said, which led to a dialing back of authorizations. 

Persinger said the topic should be opened to the public for input. Commissioner Paul Bauer said times could be blocked out after lifeguard hours for events commissioners could define, and leave approvals to the discretion of the town manager.  

Zolper said some businesses run all summer under the one-time fee of $109. He said he could develop a fee structure, because some people are making significant money on the public beach.

Stevens said he didn’t want to look at the topic as an income tax, but as usage of public space. He asked commissioners to research the topic, which will be put on the next agenda to discuss. 

Verizon update

Assistant Town Manager Jim Dedes said Verizon sent required annual plans April 5 and 7 that were maps depicting where its poles are currently. Dedes said he thought Verizon would submit a written plan, but wireless consultant CTC said the submission was typical.

Annual plans show the five locations on the ocean where 5G poles are located on Cullen, St. Louis, Clayton, Rodney and Collins streets, Dedes said. The plan also shows Verizon’s proposed relocations, which the town has no obligation to accept, Dedes said. 

When the town receives relocation applications from Verizon, they will be discussed with CTC and they must go through ordinance requirements, he said. 

Jasinski said industry journals had reported that Verizon might be doing away with millimeter wave 5G, which was the type of technology Verizon said needed to be close to the beach. He said he would like Verizon to include in its annual plan what type of 5G technology will be on poles.

Dedes said Verizon had not specified what type of technology was being used. Verizon spokesperson Chris Serico did not respond to an April 13 request for comment on what type of 5G technology will be used on the relocated poles and when Verizon plans to submit applications to move the poles.

In other news, commissioners voted unanimously to approve an ordinance allowing the towing of vehicles parked in a designated lifeguard parking spot.


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