More than two years after the initial request, the Rehoboth Beach Planning Commission has voted against recommending to city commissioners the rezoning of the residential portion of 330 Rehoboth Ave.

The city gateway property is split-zoned, with roughly 23,000 square feet of C-1 commercial along Rehoboth Avenue and about 19,500 square feet of R-1 residential along State Road.

In August 2019, Lockwood Design and Construction owner Don Lockwood, who had a long-term lease on the property, came before the commission, but the request was delayed until after a lawsuit with J.J. Stein III Inc., the property owner at the time, was settled. In the end, Bette Gallo, founder and president of Gallo Realty, and Lockwood purchased the property for $4.2 million in January.

Under the name 330 Hospitality Group LLC, Lockwood and Gallo brought the request back to the planning commission in May, but concerns were raised about the future use of the property if it were all commercial. The group suggested they might be more amenable to the request if Lockwood and Gallo came back to them with a self-imposed restrictive covenant on what could be built on the property. That was done in October, but the planning commission didn’t feel as though the proposed restrictions were enough.

More recently, at the Dec. 10 meeting, attorney David Hutt, representing Lockwood and Gallo, presented a second set of restrictive covenants. The primary changes to the document included saying what could be built on the property instead of what couldn’t, and the addition of a vertical construction limitation.

Again, most planning commissioners were not satisfied that the results were restrictive enough. It was a 5-3 vote, with Chair Mike Bryan and Commissioners Jim Ellison, Julie Davis, Mike Strange and Nan Hunter voting against. Commissioners Barry Covington, Steve Kauffman and Rachel Macha voted for. Commissioner John Dewey recused himself from the discussion and vote.

Davis said she had concerns about the enforcement provisions, which said only the neighbors listed within the covenant would have the ability to bring legal action. The development of this property concerns all city residents, and this provision would allow the developers to outlast the neighbors with protracted and expensive litigation, she said.

Multiple members also raised concerns about a section of the covenant that had a 10-day window between future site-plan approval and when the covenant’s restrictions would officially be recorded.

It’s an issue, said Bryan.

Strange said he had concerns related to the property as a whole, not to the specific request. Things change, and currently it’s a sort-of design, but nothing concrete, he said.

Hunter said the 30-year limit proposed on the restrictions in the covenant was not adequate. There’s plenty of land available for commercial redevelopment, and the proposed downzoning hasn’t been justified, she said. 

As he’s said many times during the meetings, Kauffman reiterated that it’s not good practice for the city to keep properties split-zoned. Variance requests are not the way the city should be conducting business, he said, adding that the city needs to have zones with flexibility.

Kauffman also cited a recent change to the definition of floor-to-area ratio. This means every aspect of the property design will be considered, he said.

Macha said the rezoning was something that should have been done decades ago. This group has done exactly what it was asked to do, she said.

In an email Dec. 11, Gallo said she wasn’t sure what the next step will be.

Joint meeting with commission to discuss 2020 CDP

Following the 330 Rehoboth Ave. decision, planning commission members continued to plug away at revisions to the draft 2020 Comprehensive Development Plan. Facing a hard deadline of mid-2022, the group has conducted a number of hours-long special meetings over the past few weeks.

The city began working on the plan in December 2018, but there have been delays and commission turnover since the very beginning – there had been community workshops slated for early 2020, but COVID forced the cancellation of those; the commission is on its fourth chair; only one member of the nine-member group remains from 2018; and KCI, the consultant originally hired by the city, left in September without completing a draft.

The city has a second consultant, Wallace Montgomery, a Maryland-based engineering consulting firm with locations in Newark and Dover, to help get through the remainder of the plan completion process.

The group is slated to have a joint meeting with city commissioners at 10 a.m., Wednesday, Dec. 15.