Belhaven Hotel variance request approved by Rehoboth BoA

There’s still a lot to be done before any dirt is moved, but the new Belhaven Hotel in Rehoboth Beach took a big step forward when the Rehoboth Beach Board of Adjustment voted in favor of a variance request allowing the project’s floor-to-area ratio to go from 2 to 3. Board members voted 3-1 in favor of granting the variance during a Nov. 22 hearing.

Since the proposed Belhaven Hotel was first introduced in April 2019, father-and-son property owners John and Alex Papajohn, who have a family connection to the property dating back 100 years, have said they are not interested in building a generic-looking box hotel. Instead, they’ve said, and reiterated during the recent hearing, that they want to build a hotel the city and their family will be proud of for decades to come.

During the board of adjustment hearing, the Papajohns argued the city’s 2010 Comprehensive Development Plan encourages, and calls for, the revitalization of downtown Rehoboth Beach, especially the areas of Baltimore and Wilmington avenues. However, they said, in the 12 years since the CDP was passed, city officials have done little to adjust the city’s zoning code so property owners can redevelop their properties in the manner described by the CDP. This contradiction, the team argued, fell under the ‘exceptional practical difficulties’ portion of their area variance request.

To bring home the point, the Papajohns brought in hotel industry expert Chris Cylke of Washington, D.C.-based REVPAR International, to explain the financials.

According to the Cylke, city code currently allows, at a cost of about $65 million, a 160-room hotel on the property with limited amenities, ground-level parking and less retail. However, the Papajohns are proposing a 116-room hotel that has balconies, a pool, a large meeting room, underground parking, ground-level retail and restaurants. The cost to build this version, said Cylke, is approximately $80 million.

It’s the difference between the type of hotel a person might find on Route 1 versus the type of hotel a person would expect to find along Rehoboth Avenue and the Boardwalk, said Cylke. It’s a 2- to 3-star hotel versus a 4-star-plus hotel, but in today’s hotel industry, travelers are expecting those types of amenities, he said.

Cylke said the expected return on investment for the 160-room hotel would be about 25 percent, while the number for the 116-room hotel would be less than 15 percent. The money is in the number of rooms a hotel has, he said.

Alex said the family wants to build an aesthetically pleasing, first-class development. He said he didn’t think granting the variance would be precedent setting, because their property is unique in the city. However, he continued, not all precedents are bad, explaining that he and his father want to set an example of how future hotels and redevelopment projects should be approached.

The family will move forward with the property redevelopment, said Alex. The question will be if the city gets a lower-quality product that serves as a catalyst for future mediocre products, he said.

Public comment included a mix of people for and against granting the variance.

Dr. Michael Trahos, a cousin to the Papajohn family and the property owner of the parcels surrounded to the north and west by the proposed hotel, said he has never been against redevelopment of the property. However, he said, he still has fire- and safety-related concerns about access to the middle of the Papajohn property in case of an emergency.

As for the future redevelopment of his property, Trahos acknowledged the floors above the ground floor could only occupy 50 percent of the lot, but a new structure could have the north and west boundaries of his building up against the property line of the proposed Belhaven – which would essentially block the view of south- and east-facing rooms of the hotel.

Rehoboth Beach-Dewey Beach Chamber of Commerce President Carol Everhart said the chamber doesn’t have too much of an opinion on the project, so long as there is ground-level retail and the character is in line with Rehoboth’s.

Mark Saunders, president of the Rehoboth Beach Homeowners’ Association, was adamantly against granting the variance. How many people wouldn’t want larger houses or porches for their houses, but they’ve all had to build within city code and so should the hotel, said Saunders. This will set a horrible precedent, he said.

Ultimately, a majority of the board members agreed with the Papajohns’ argument – Chair Jerry Capone, and members Walt Cassel and Randy Mason voted in favor. As part of the approval, the Papajohns agreed to two conditions – there would be underground parking and the number of rooms would not exceed 116. There was some discussion among board members about concerns raised by state agencies during the Preliminary Land Use Service review, but they came to the conclusion that the concerns would be the same for a hotel with a FAR of either 2 or 3.

Board member Barry Brandt was the no vote. Board member Jan Konesy recused herself from the hearing because she sent a letter to the board of adjustment in advance of another Belhaven hearing in August 2019. In that letter, she questioned the variance requests at the time. In an email Nov. 23, Konesy, who was not a board of adjustment member at the time, said she stands by her earlier letter, but also felt it was best to recuse herself.

Following the meeting, Alex said he and his family are very happy with the decision.

“The vote to approve our variance request is a victory for our entire community and we believe will be a catalyst for other property owners to build aesthetically pleasing, beautiful developments. Our hope is that the Belhaven Hotel will be one of many new projects which will lead to a renewal of downtown Rehoboth Beach,” said Alex in an email Nov. 23.

Approval of the variance request is the second big box the Belhaven development team has been able to check off in the past few months. In August, the team learned that a request to change the flood map from VE to AO for their Rehoboth Avenue and Boardwalk property had been approved. The change paves the way for an underground parking garage at the hotel.

Approval of the variance does not mean the proposed Belhaven Hotel is going to be built as described during the board of adjustment hearing. There’s still a long planning commission approval process. It is unknown when the Papajohns will bring their project back before the planning commission.