Rehoboth parking revenue expected to be down $2 million

Convention center, hotel tax also coming up short; transfer tax possible budget bright spot
August 17, 2020

Story Location:
Rehoboth Beach City Hall
229 Rehoboth Avenue
Rehoboth Beach, DE 19971
United States

One-third of the way through its fiscal year, Rehoboth Beach officials are projecting a $2 million shortfall in parking revenue because of COVID-19.

The city’s fiscal year began April 1 and commissioners approved a $25.9 million budget March 20. During a commissioner workshop Aug. 10, Burt Dukes, Rehoboth’s chief financial officer, said as of July 31, the city has collected approximately $1.5 million in parking revenue. At this rate, he said, the projected revenue for the current year will be about $4.3 million, which will result in a shortfall of roughly $2.2 million for the full year.

City Manager Sharon Lynn said it had been a dismal summer season for the city and businesses. City hall was closed three days after the budget was passed, she said.

Recognizing the parking shortfall, Mayor Paul Kuhns tried to remain positive, saying parking revenue has increased the first couple of weekends of August and real estate sales may bring in more transfer tax revenue than expected. Kuhns said he expects rental and accommodation taxes to be down by as much as $500,000.

Two other revenue sources expected to take hits this year are the convention center and the hotel accommodations tax. The convention center, budgeted to bring in approximately $120,000, has been shut down the whole fiscal year.

Lynn said the accommodations tax has brought in approximately $87,000, which is considerably less than predicted. The city budgeted $800,000.

Not discussed during the workshop, but included as revenue in the approved budget, is the sale of city-owned property at 84 Kent St., which was expected to bring in over $800,000.

In an email Aug. 11, Krys Johnson, city spokesperson, said the sale of the property is on hold until the city’s new administration is able to decide how or if to move forward.

Gross floor area, floor-to-area ratio discussion delayed

For the second consecutive meeting, Rehoboth commissioners delayed discussion on an ordinance related to changes in how the city calculates gross floor area and floor-to-area ratio.

During a commission meeting in July, commissioners postponed a public hearing and possible vote on an ordinance that would change how gross floor area and floor-to-area ratio are calculated in city code. 

A discussion on subsurface parking was scheduled for the Aug. 10 workshop. Kuhns suggested the second postponement because of the results from the city’s election Aug. 8. Mayor-elect Stan Mills defeated Kuhns; Commissioners-elect Jay Lagree and Patrick Gossett also won. All three will be sworn in Friday, Sept. 18.

Kuhns said it would be better for the new regime to handle the subject. All the commissioners agreed.

Vote expected on Phase II of Lake Avenue project

Commissioners are expected to vote on awarding a contract for Phase II of Lake Avenue street improvements during a meeting Friday, Aug. 21.

During the workshop, Public Works Director Kevin Williams said there were four bidders on the project. Newark-based Grassbusters Landscaping Co. was the low bidder at approximately $1.22 million.

When commissioners passed the budget in March, two-thirds of a $3 million general fund capital improvement budget was deferred until fall.

Williams said it’s important that the city move forward on this project because of federal funding which may not be available in the future. The federal government has put roughly $850,000 toward the project. The city has budgeted $400,000.

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