Lewes considers changes to accessory dwelling ordinance

Homeowners who operate accessory dwelling units say the residency requirement in Lewes’ new ADU ordinance is impacting their rental income and property values.

The Lewes ordinance defines an ADU as an attached or detached unit such as a garage or guesthouse on the same lot as the principal structure. The residency provision requires property owners to live on site, either in the main house or in the ADU.

Mayor and city council passed the ordinance in October 2024 in an effort to legalize ADUs and to create more affordable housing.

Councilman Tim Ritzert, who serves as a Lewes Planning Commission ex officio member, said the former city planner estimated the number of illegal ADUs operating to be “in the multiples of 10.”

Some homeowners and Realtors have been lobbying for those existing ADUs to be grandfathered and the residency requirement scrapped.

The Lewes Planning Commission discussed possible changes to the ordinance at its Dec. 17 meeting.

Commissioners voted 6-2 to keep the residency requirement, but the panel recommended that mayor and city council reconsider the ordinance in its entirety. 

Some commissioners said the ordinance has not had time to be tested. 

“I don’t know why anybody would volunteer to be on a subcommittee, spend weeks and months trying to work through an issue, only to see us come back because somebody raises an issue when the ordinance has barely been in effect,” said Commissioner Alan Roth.

Others were concerned that removing the residency requirement would open the door to absentee investors who buy properties and operate both dwellings as short-term rentals.

Lee Ann Wilkinson, a leading area Realtor, has been pushing for removal of the residency provision and the entire ordinance to be reconsidered. She said investors are not the biggest concern.

“People are not going to apply for ADUs; it’s too restrictive,” she said. “So, the city is not going to get any more; nobody’s going to build them. People who had them before are getting penalized. No real investor is buying in Lewes or Rehoboth. You don’t make enough money for what you have to pay for the property. They’re all people who want to use the house and get some rental income.”

Mayor and city council capped the number of ADU applications at 40 in the first year to prevent city staff from being overwhelmed. But that hasn’t happened.

“Property owners have not come in and registered – there’s a resistance there – but it doesn’t mean this is a bad ordinance,” Ritzert said.

At an Oct. 15 public hearing, Bob Heffernan, who chaired the LPC subcommittee that drafted the ordinance, said the residency provision was copied from another jurisdiction. He said it is designed to protect renters.

“We were very concerned about slumlords, people getting taken advantage of. Somebody taking their garage, putting a toilet in it, putting a hot plate in it, calling it an ADU and the city not having anything to say about it,” Heffernan said.

Heffernan said the ordinance also includes requirements for occupancy permits and city inspections between tenants.

Martha Good lives in Lewes six months a year. She bought a property earlier this year that included an ADU that had been rented for decades.

Good said the uncertainty is already impacting the property value.

“We negotiated a lower price because we were unsure if we can rent the property. I’m not sure what I’ll do if I have to live here full time, probably sell and take a loss,” Good said.