Rehoboth Grand property sold to hotel developer

Introduced two years ago, hurdles include rezoning portion from residential to commercial
February 19, 2021

Story Location:
Rehoboth Grand
330 Rehoboth Avenue
Rehoboth Beach, DE 19971
United States

After years of delays, the recent sale of 330 Rehoboth Ave. paves the way for the proposed Rehoboth Grand to be back on the docket for the city’s planning commission.

Under the name 330 Hospitality Group LLC, Bette Gallo, founder and president of Gallo Realty, and Don Lockwood, owner of Milton-based Lockwood Design and Construction, purchased the property from the family of J.J. Stein in January for $4.2 million.

The Rehoboth Grand was first introduced by Limitless Development, a branch of Lockwood’s Milton-based Lockwood Design and Construction, in January 2019. At the time, plans called for four stories, 90 rooms, an indoor pool, 44 ground-level parking spaces, 48 underground parking spaces, and retail and spa space. As proposed, the height would be slightly over 41 feet.

At the time, the project’s sticking point was the property being split-zoned – 23,067 square feet of C-1 commercial along Rehoboth Avenue and 19,425 square feet of R-1 residential along State Road. The State Road portion of the property, currently a parking lot, would have to be rezoned for the hotel plan to come to fruition.

Limitless was a 99-year lease holder on the property and had requested the rezoning, but the planning commission decided not to move forward on the request because the previous owner, J.J. Stein III Inc., filed a complaint against Limitless claiming breach of contract. Ultimately, 330 Hospitality Group LLC purchased the property.

That’s no longer an issue, said Lockwood, in an interview Feb. 11, regarding the lawsuit and the lease.

Lockwood Design and Construction currently has an office in the building on the property. Prior to Lockwood, the site was home to Ocean Atlantic Sotheby’s realty firm. For decades before that, it was a restaurant in many forms – Presentations, DiNardo’s and most famously, the Sea Horse Restaurant.

The time frame for when the hotel will be back before the planning commission is unknown, but Lockwood said the sooner the better, because the property’s not doing anyone any good sitting there empty. He said attorney David Hutt, who represented the project at the original planning commission hearings, is working with the city on how to move forward.

In an email Feb. 12, Matt Janis, the city’s chief building official, confirmed Hutt has reached out to the city on this project, but he said nothing has been submitted to date. There have been very limited meetings and everything that was discussed was preliminary in nature on what uses and construction types would meet the relevant codes, he said.

Hotel or not, the property is going to be redeveloped. The plans were for the hotel, but other options are being looked at too, said Gallo in a Feb. 11 interview. Something’s got to be done with the property, she said.

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