For decades, Grotto Pizza in Rehoboth Beach has been in the pizza-at-the-beach business. Now, it appears they’re getting into the hotel-at-the-beach business.

Under the name One Rehoboth, a new hotel is being proposed for the Rehoboth Beach Boardwalk. According to city officials, the hotel would stretch from Rehoboth Avenue to Baltimore Avenue.

The proposed hotel isn’t a complete surprise. Grotto Pizza already owned the lot on the north side of the block. The company announced in February 2021 it had purchased the rest of the oceanfront portion of the block. At the time, company representatives said other than moving the north Boardwalk location of Grotto Pizza to where Dolle’s used to be, no plans had been made for the stretch of oceanfront property.

The oceanfront block between Rehoboth and Baltimore avenues comprises two lots, and while Grotto Pizza announced its ownership, there is a difference between the two lots – the Baltimore Avenue side of the block, under the name GP North Boardwalk LLC, has a mailing address for the Grotto Pizza corporate headquarters on Route 1, while the Rehoboth Avenue portion of the block, under the name One Rehoboth LLC, has a mailing address of 150 Onix Drive in Kennett Square, Pa. That’s the same address for real estate developer Onix Group, which has a number of projects in Sussex County, including the Rehoboth Medical Arts Center on Route 24 outside Rehoboth, and the Veterans Administration Outpatient Center, Sun Behavioral Health and College Park developments in Georgetown. They also operate a number of developments in Dover.

The footprint of the proposed hotel is not exactly clear. On the Baltimore Avenue side, the western edge of the lot includes the Sirocco Hotel. On the Rehoboth Avenue side, it’s unclear how far west the proposed hotel would go. One Rehoboth LLC also owns the Kohr Bros. ice cream property.

Representatives from Grotto Pizza could not be reached for comment. However, in an email Aug. 11, Onix Group Vice President Jonathan Silver said because Grotto has not yet submitted anything to the city, it would be premature to provide specific details at this time. The development team anticipates making a formal submission to the city very soon, he said.

“Grotto looks forward to presenting this project to the city, and we are hopeful that it will be positively received as a needed redevelopment of this end of the block,” said Silver.

1 Rehoboth Ave. is likely the most iconic corner of Rehoboth Beach, said Silver. The Grotto development team is looking to update and modernize this entire corner with pedestrian-friendly first-floor retail space anchored with a new Grotto Pizza restaurant on the corner of Rehoboth Avenue and the Boardwalk, he said. 

Grotto is looking to construct a boutique hotel with underground parking, Silver said. The final design of the hotel will complement other hotels in the city, and on the north end of the Boardwalk and Baltimore Avenue.

“It will certainly be an improvement over what is currently on most of this block fronting on the Boardwalk,” said Silver.

Project discussed during commissioner workshop

While details on the new hotel are limited, it was mentioned by city officials a number of times during a commissioner workshop Aug. 8.

The first time was during a presentation on a new Rehoboth Beach Patrol headquarters at the east end of Baltimore Avenue. During a portion of the discussion related to construction timelines, Commissioner Patrick Gossett asked if the demolition and construction of the proposed hotel would interfere with the city’s timeline for building a new beach patrol headquarters.

Interim City Manager Evan Miller said he and City Building Inspector Matt Janis had recently met with people representing the hotel. He said the timeline of the beach patrol building was asked about and that working with them to coordinate both projects is something the city is open to.

Mayor Stan Mills said the timing of the two projects would be very important because after the Grotto Pizza buildings come down, the new one will have to integrate into the city’s beach patrol project. The timing could be good, he said.

Janis said the builder has not offered a timeline, but plans could be submitted in September or October.

City Solicitor Glenn Mandalas said the initial submission would probably come in the form of a variance request before the city’s board of adjustment. They’re still weighing the option of going before the planning commission or the board of adjustment first, he said.

Later in the Aug. 8 meeting, the proposed hotel was brought up during a discussion related to a possible change in city code that would require all oceanfront commercial buildings to go through the city’s site-plan review process. Commissioner Edward Chrzanowski asked if this was being discussed in relation to the proposed hotel.

Mandalas said it wasn’t. According to what the city has seen, it would already have to go through a site-plan review due to its size, he said.

Belhaven Hotel project caught up in lawsuit

If the One Rehoboth hotel project comes to fruition, the area of the Boardwalk from Baltimore Avenue south to Wilmington Avenue could look a lot different in the next decade. There’s already a new hotel proposed for the south side of Rehoboth Avenue – the Belhaven Hotel. That hotel was first introduced in April 2019. The project has an address of 2 Rehoboth Ave., but the property fronts the Boardwalk to the south property line of Grotto Pizza, encompasses all the Rehoboth Avenue commercial space west to the property line with Go Fish, and stretches south to Wilmington Avenue. The Belhaven project does not include a square-shaped piece of property that includes Gus & Gus, the five-and-dime store facing the Boardwalk, and Zogg’s Raw Bar & Grill on Wilmington Avenue.

The Belhaven project is caught up in a lawsuit right now. Back in November, the city’s board of adjustment approved a variance request allowing the project’s floor-to-area ratio to go from 2 to 3. Citizen Francis Markert appealed the variance approval to Delaware Superior Court in February. Markert is set to become a city commissioner in September because he was one of only two candidates who filed for the city’s two open commissioner seats this year.

The city has asked for the case to be dismissed. Briefs have been filed, but no hearing has been scheduled at this point.