Update: Judge rejects Rehoboth’s motion in BeachWalk case

A Delaware Superior Court judge has denied the city of Rehoboth Beach’s motion to dismiss in the case of the proposed BeachWalk development and has instead remanded the matter back to the city for further review.

Commissioner Stan Mills, who has been chairing meetings on BeachWalk because Mayor Paul Kuhns recused himself, said in a statement, “The commissioners anticipate receiving guidance from our attorney on possible paths forward in the near future.  Upon receiving such guidance, the commissioners will make a decision regarding how to proceed.”

Kuhns recused himself because of a previous relationship with BeachWalk’s attorney Dennis Schrader, who represented the development during the city review portion of the project.

BeachWalk’s attorney during the court process, Richard Forsten, said he did not wish to comment until he has had a chance to review the decision with his client.

BeachWalk, a proposed 63-unit housing development to be built on the site of Rehoboth Beach Plaza shopping center, was submitted to the city in the summer of 2015 as a condominium project, 63 units on one parcel of land. The planning commission and city commissioners both ruled that BeachWalk, doing business as Ocean Bay Mart, constituted a subdivision, since 58 of the 63 units were single-family homes.

BeachWalk disagreed, citing a board of adjustment ruling that overturned Building Inspector Dam Molina’s decision that no more than one structure can be built on a lot. The board ruled that the section of code Molina relied on for his ruling, a footnote in the R-1(S) zoning code, was ambiguous.

“The practical effect of the board’s decision was to allow Ocean Bay Mart to put more than one building on its property,” Judge E. Scott Bradley wrote in his March 12 decision. “The board’s decision was consistent with the city’s past practice of not requiring a condominium plan to be reviewed as a subdivision plan and instead allowing condominium plans to be reviewed and approved under the site-plan process.”

When the project got to the planning commission for initial site-plan review in August 2016, the commission questioned whether BeachWalk was a subdivision and asked for legal briefs on whether it was bound by the board’s decision.

BeachWalk attorneys have argued that that the board of adjustment decision was binding, and the development should be allowed to be reviewed under the site-plan review process. That ordinance is different from the subdivision ordinance in that a subdivision must meet requirements for street size and setbacks. The standard for site-plan review is that the plan must be compatible with nearby properties, must protect natural resources and must not adversely impact public health, safety and welfare.

The commission based its decision on the state’s Uniform Common Interest Act, which defines a condominium as a common-interest community in which portions of the real estate are designated for separate ownership and the rest is designated as common ownership. Plans for BeachWalk, for example, include common areas for all residents, such as a swimming pool.

The portion of the law the city relied on in its rulings against BeachWalk states that if a unit is owned by someone other than the overall owner of the property, then each unit created constitutes a separate parcel of real estate. In other words, the city argues that by creating 63 condominium units, developer Keith Monigle was in effect creating 63 parcels of real estate, which would require subdivision approval. Both the commission and city commissioners said the board did not consider the state law in its rulings.

In his ruling, Bradley said the city misapplied this law. He said the section of the law the city used does not apply to the division of land, but to ownership and taxation of units.

“While the language ‘constitutes for all purposes a separate parcel of real estate’ sounds enticing, I must consider it in the context in which it was made,” Bradley said.

After the city commissioners ruled BeachWalk was a subdivision in January 2018, Monigle took the matter to court; the city filed a motion to dismiss on the basis that BeachWalk did not comply with an ordinance, passed in November 2016, that codified that only one building could be built on a lot. BeachWalk argued that the ordinance did not apply because the application was filed before the ordinance was passed.

In his ruling, Bradley declined to address the November 2016 ordinance, remanding the matter back to the city to determine how the ordinance would apply to BeachWalk. Bradley remanded the entire matter back to the city for further proceedings.