State lease fee raises eyebrows in Rehoboth
Rehoboth Beach is negotiating a new lease with the state for use of Deauville Beach, and if agreed to as proposed, the cost is about to get considerably more expensive.
Commissioners discussed the lease during a commissioner workshop Dec. 4. Interim City Manager Evan Miller said the existing 10-year lease with the Delaware Department of Natural Resources and Environmental Control expired at the end of June and that he has been in negotiations with them since March. It’s gotten to a point where he doesn’t feel comfortable going any further, he said, presenting commissioners with the proposed new lease.
According to the lease’s preamble, the city has been leasing Deauville Beach, about 10 acres, from DNREC since 1975.
The most significant change to the agreement is the amount of money the city would pay to lease the area. The previous contract called for a $2,500 administrative fee due at the beginning of the lease, with an annual fee of $1.
Under the current proposal, the annual lease fee will be 10% of all daily parking and annual pass revenue sold at Deauville Beach. Miller estimated that would be $10,000 to $12,000 annually.
Mayor Stan Mills said that’s quite a big difference. He asked if DNREC has a rationale for the exorbitant increase, because it looks rather greedy.
Miller said the monetary amount is actually less than first proposed. Originally, he said, the state wanted 15% of revenue from concessions, parking and tennis court rentals, but he was able to negotiate to the proposed amount.
Mills said there is also extraneous wording that’s not needed, and the new lease adds work for the city because it will have to do background checks on employees who might work there.
The city would also have to provide an audited report of annual gross receipts, submit an annual capital improvement plan for the upcoming year and submit a report for the previous calendar year detailing improvements and investment amounts.
The new contract is proposed for three years, beginning April 1, 2024 and terminating March 31, 2027. The lease may be renewed for one three-year period.
The city’s ocean outfall runs directly under the Deauville Beach parking lot. Commissioner Patrick Gossett asked if the map associated with the contract shows the pipe. Miller said he would look into it.
Moving forward, City Solicitor Alex Burns said there are a few things he doesn’t like in the lease, and he will work with Miller on those issues.
When asked why DNREC thought it is appropriate to amend the lease with significant monetary changes, DNREC spokesman Michael Globetti didn’t provide a reason. Instead, in an email Dec. 7, he said the expiration of the contract allowed for “the opportunity to evaluate the recreational and parking services being provided by the city, revenue being generated from those services, and to update the contract accordingly.”
Globetti said DNREC has a variety of different partnerships related to recreation in many forms. For example, there’s a contract with Fenwick Island to provide lifeguard services for the town’s unincorporated area, which cost $60,000 in 2023. DNREC also manages the Delaware Outdoor Recreation, Parks and Trails Program that provides grant funding to local towns and municipalities.
“The ORPT grant program has touched just about every park and town in Sussex County, including projects such as Laurel’s Riverwalk, Blades Park, pickleball courts in Millville, a rail trail in Milton, and the Seaford sports complex,” said Globetti.
Globetti said it’s unknown how much it would cost the state to maintain and provide lifeguards for Deauville Beach because determining that cost would require a review of the existing services provided by Rehoboth to evaluate existing staffing levels, salaries, equipment, etc.
