Rehoboth, after pushback, to table LLC voting

Citizens question purpose, consequences of measure
December 5, 2017

Rehoboth Beach residents pushed back against a proposal from Mayor Paul Kuhns that would allow people who own property in a limited liability company to have voting rights, saying the proposed measure would shift voting power in the city from residents to out-of-town property owners. 

The message from the Dec. 2 town hall was received.

The commissioners plan to vote Friday, Dec. 15 to table the item allowing LLCs voting rights. Once an item is tabled, a majority vote is required to take it off the table. 

At their Dec. 4 workshop, Kuhns suggested to postpone action on LLC voting rights while continuing discussion on three other measures within the proposed charter change at the commissioners’ January workshop. Kuhns said the January discussion should include additional charter measures, such as the process to fill vacancies on the board of commissioners, term limits for commissioners and rules for voting in referendums, which are different than general elections.

Commissioner Stan Mills said LLC voting rights should be taken off the table. He questioned talk from other commissioners and Kuhns that members of the public wanted to expand voting rights to LLCs, saying in 10 years he has never heard any one ask for this.

Commissioner Toni Sharp said she not only couldn’t support the change, but that she was embarrassed to have taken part in what she called “a charade.” Sharp also questioned whether a piecemeal approach to passing the change was the best way to go.

“We need clarity on what we’re solving, and why we need to solve it,” she said.

Commissioner Kathy McGuiness said the city did the right thing by holding the town hall, but that more data is needed moving forward. Commissioner Lisa Schlosser also said LLC voting rights should be set aside until further data could be gathered. She supported looking at referendum voting, where artificial entities are allowed to vote.

The proposed charter change that states that if 100 percent of a property is owned by an LLC, a person who owns at least 50 percent of that LLC would have the right to vote. The proposed change states that voting will be done according to the principle of “one person, one vote.” There is no proxy voting in the change, and if a person owns property in an LLC and is a resident voter, that person can only vote once. 

The change also eliminates voter purging if a voter has not voted in two consecutive municipal elections, and reduces the time frame for being able to vote from six months to 30 days for residents and nonresidents alike, the latter of which matches up with state law. Kuhns wished to vote on these measures at the commissioners’ Friday, Dec. 15 regular meeting. 

Commissioner Patrick Gossett said while he supported the measures related to voter purging and residency requirements because they bring the city in line with state law, he could not support LLC voting. He said the citizens were loud and clear that they did not want LLC voting. Gossett said the proposed change is based on hearsay, and there is no explanation on what problem the measure is trying to fix. 

Citizens speak out in opposition 

More than 80 people filed into the Rehoboth Beach fire hall Dec. 2 for the town hall, and the vast majority of those who took the mic to speak opposed the measure.

Joel Wagman, 118 Hickman St., said the change was a politically motivated effort to shift power from residents to commercial investors.

“Once the genie is out, you can’t put it back in,” Wagman said.

Gary Glass, who lives on Country Club Drive, said the ordinance could be destructive for residents of the town who live in Rehoboth full time.

“This is their town,” he said. “This is wrong.”

It was a lively crowd, as those opposed carried signs saying “People Should Vote,” and clapped for speakers who shared their viewpoint, despite being admonished by Kuhns and City Solicitor Glenn Mandalas not to do so. Although written letters were not read out loud, the numbers of letters were eight in support of the change and 46 opposed. Gossett said the city received letters from the Delaware Coalition for Open Government and the American Civil Liberties Union opposing the change. 

Rehoboth residents Richard Kirchhoff and Jennifer Duncan urged the commissioners to pause and further explore why they are considering the change.

Former Commissioner Lorraine Zellers said people who put their property in an LLC make the choice to do so with the knowledge that they give up their right to vote, in exchange for the benefits provided by an LLC. She asked how the city benefits from LLC voting and how will any abuses be stopped.

Planning Commissioner Bunky Markert said, “You’re opening a can of worms.”

Mark Saunders, 255 Country Club Dr., said LLC owners are absentee landlords who should not have the same rights as residents. Guy Martin, 87 Henlopen Ave., said LLCs are an entity meant to protect investors. He said LLC voting will dilute the votes of residents with those of investors motivated by profit. Martin asked why the urgency to vote on the measure and who benefits from the change.

Several speakers said the change is constitutionally questionable, is ripe for fraud and could cost the city money in legal fees trying to defend it. Others questioned why the commissioners were undertaking the measure at all. 

Lori Bloxom, 9 Country Club Dr., supported the change because it would put LLCs on the same level as revocable trusts, which are artificial entities with the right to vote. To those who say the ordinance is being rushed through, Bloxom said the charter change allowing revocable trusts to vote was put through inside of a month back in early 2007. She said people who own property in LLCs will not be anonymous because they have to sign an affidavit, and provide a deed and corporate documents to be able to vote.

Richard Perry, 46 Pennsylvania Ave., also supported the ordinance, saying it would provide fairness to everyone who has an interest in the city. 

Frank Cooper, 87 East Lake Dr., summed up the attitude in the room when he said, “Why are we wasting time on something nobody in this town wants?”