Rehoboth business groups oppose possible fee increases

In response to city commissioners eyeing increases to business licenses and fees, representatives from two Rehoboth Beach business organizations have voiced their opposition to those hikes.

Rehoboth is in the middle of its budget process for Fiscal Year 2027, which begins April 1. As part of the discussion, commissioners are reviewing annual fees and permits, and have said they want to make sure businesses in general, but more specifically restaurants, are paying their fare share to cover all the services the city provides.

Staff has already recommended an across-the-board increase of about 20% to all business licenses. Specific to liquor licenses, the original proposal was to increase the fee from $650 to $750. During a budget meeting Feb. 20, that fee was increased further to $1,000.

Staff also presented a tiered system for permit-of-compliance applications based on the total square footage of a restaurant’s seated dining, bar, dining patio and public dining areas. Depending on the number of square feet, the fee would range from $1,250 to $3,000.

There was also discussion about doing away with the free transferable parking pass that comes with a business license. Staff said the city hands out roughly 11,000 free permits total between property owners, residents and businesses, and that about 1,500 of those are the free one that comes with a business license. As proposed, a business license would allow the holder to purchase a parking permit at a 20% discount.

Rehoboth Beach-Dewey Beach Chamber of Commerce President Kate VanVorst and Rehoboth Beach Main Street Executive Director Dan Slagle attended the Feb. 20 budget meeting.

Increasing operating costs present a constant struggle for the business community, and continuing to place an undue burden forces business owners to make hard choices, said VanVorst. The majority of downtown restaurants with liquor licenses are small, with tight margins, she said. 

“At a time when long-standing dining establishments have already begun a migration toward the Route 1 corridor due to increasing rents and parking constraints, it doesn’t seem prudent that the City of Rehoboth Beach would add another factor to tip the scale when owners are deciding where to locate their establishments,” said VanVorst.

Slagle said he’s hearing from potential business owners that they don’t want to open downtown because of all the hoops they have to jump through. Let’s make this city more attractive for the new business owners who do want to come downtown, he said.

Commissioners aren’t just looking at business-related permits and fees. They’re also taking a look at convention center fees, specifically the implementation of a setup fee to be charged when an event needs time for setup the day before the event begins. As proposed, it would be tiered, based on the number of hours it would take to set up and the event’s day of the week. Up to four hours would be considered a partial day, while anything over that would be a full day. Similar to other convention center rates, setup rates are lower Monday through Thursday than they are Friday through Sunday.

As proposed, the convention center rates for the day of the event would increase, but it’s really a consolidation of use and labor rates. The city currently charges extra for an electric drop, IT help and trash, but staff has recommended an increase in the use rate that incorporates those extra charges.

Commissioners are also looking at creating a fee schedule for building permit extensions after the first year of construction has passed. Currently, there is no cost for requesting an extension.

Staff presented commissioners with 180-day extension options for residential and commercial.

For residential, the first request would be 25% of the original permit fee; 50% for the second; 75% for the third; and 100% for the fourth, with a reapplication.

For commercial use, the extension would be tiered based on the project’s square footage. For example, a commercial project less than 5,000 square feet would follow the residential cycle, while a project greater than 75,000 square feet would pay a flat $2,000 for the first extension request, $4,000 for the second, $6,000 for the third and then have to undergo an administrative review for a fourth. There’s also a schedule proposed for projects that are 5,000 to 25,000 square feet, and 25,001 to 75,000 square feet. 

Commissioners will resume budget discussions during a meeting at 2 p.m., Monday, March 9. The primary purpose of that meeting will be for commissioners to evaluate grant applications from a half-dozen of the city’s community organizations.

In the current budget, commissioners awarded $435,000 worth of support to several community organizations – $250,000 for Rehoboth Beach Volunteer Fire Company, $75,000 for Rehoboth Beach Public Library, $60,000 for Rehoboth Beach Main Street and $50,000 for the Rehoboth Beach Historical Society and Museum.

For FY27, there’s been about a $150,000 increase in grant requests, and that includes two new applicants – CAMP Rehoboth and Clear Space Theatre Company.

Requests include $300,000 from the fire company, $75,000 from the library, $60,000 from Main Street, $52,000 from the historical society and museum, $75,000 from CAMP Rehoboth and $20,000 from Clear Space.