Bethany considers fee exemption for churches, non-profits

By M. Patricia Titus
With its history firmly rooted in the presence of church groups in the resort town, modern-day Bethany Beach is now having to consider how much of a break it wants to give to religious groups when it comes to town fees.

Bethany Beach Town Council members on Monday discussed creating a formal policy on exemptions from town license fees — specifically building permit fees — for non-profit groups, including churches. The issue has come to the fore as preparation is under way for a major expansion and renovation of St. Martha’s Episcopal Church in downtown Bethany. The building permit fee alone for the project could total $21,000 if it is assessed at the full rate of 3 percent of project cost.

Town Manager Cliff Graviet noted at a council workshop on Monday that exemptions from fees had been made in the past for major projects at Bethany Beach Christian Church (Disciples of Christ) and St. Ann’s Catholic Church, as well as for prior work at St. Martha’s.

“What’s been done for the last 15 to 20 years has been done consistently,” he told the council on March 11.

But, he said, for some repair projects done on the churches in the last 10 to 12 years, sometimes the churches were not exempted from permit fees.

Council members on Monday said the wished to only discuss building permit fees at this time, as a slate of other fees — including the significant cost of water connection and re-connection charges — assessed on religious and other non-profit groups could come into play if the exemptions issue was expanded for discussion.

Some council members said they felt the Christian Church had particularly earned a break on fees.

“They have been such a good neighbor,” said Councilman Joseph Healy. “They cooperate with use for the parking for the Fourth of July parade,” as well as offering some church property for municipal parking under an agreement with the Town. “We couldn’t have a better or more cooperative neighbor,” he said. “This is an appropriate recompense.”

Graviet said such an arrangement could be directly tied to the church’s agreement permitting the Town’s playground to remain on church property off Garfield Parkway, with the waiving of fees directly reflected in the contract the Town has for its low-cost lease of the park property.

Councilman Jerry Dorfman remarked on the “special relationship” the town has had with the Christian Church.

“You’re right that, if it weren’t for that church, we probably wouldn’t have a town here,” acknowledged Mayor Tony McClenny. “But that was years ago. We are paying for the parking. It is not free. We’re paying $28,000 a year for that privilege. There are compensations made for the playground. We can address whether that’s adequate at a future meeting.”

Councilwoman Carol Olmstead said she was concerned about equity in the fee waivers.

“St. Ann’s built a whole new church and apparently didn’t have to pay any permit fees,” she noted. “The Christian Church benefits our town and has over the years. But that means St. Martha’s would be the only church in town we would be making pay the entire amount. My sense of fairness says that we should give them a bye on this and then we should have a policy in place.”

McClenny, notably, is himself a member of the Christian Church, but he said he didn’t necessarily feel that his church, or others, should be entirely exempted from the fees.

“I don’t feel that our church, which is getting ready to build a large dormitory, should be exempt from paying fees or building permit fees,” he said. “Whatever are the appropriate fees should be paid to the Town. We have made amendments to the fee structure over years,” he noted of the Town. “We’re not trying to make a profit, but we are trying to recover our costs.”

Several council members said they would favor waiving the fees, aside from actual town costs, while others said they would favor a reduced rate that would at least cover the Town’s costs.

“I have no difficulty with the engineering fees, but I don’t think we should charge permit fees,” said Olmstead.

“I don’t know that it should be waived, but minimal costs to the Town should be recovered,” said Dorfman. “We’ve tried to address that over and over,” he said of prior work on the Town’s schedule of fees.

“Any expenses that the Town incurs, [the applicant] should pay,” said Councilwoman Margaret Young, who noted she thought there should be some kind of cap on building fees, “before we get to $100,000.”

Council members were divided on the larger issue of which groups, and which projects, should get reduced fees or have them waived.

McClenny said that even projects within a church property might be something the Town wouldn’t want to waive fees on, such as a dining and administrative building versus a church structure.

“We have an ongoing relationship with the fire company,” he noted. “We have a partnership with them because they serve the entire community. Should we stop at that point or carry it to any 501(c)(3)?”

“I think everybody should pay them,” said Councilman Jack Gordon. “If we give it to a religious organization, it helps out a certain number of people who live here. With the fire company and the library — everybody goes there, but not everybody attends the same church.”

Dorfman said providing the exemption or reduced fees to religious organizations across the board might resolve that issue.

“I understand we don’t have a Muslim mosque here, or a Jewish synagogue here now, but in 20 years, who knows what we’ll have here? This could be something that benefits everyone,” he said.

Dorfman also noted that the Town donates money to certain organizations every year, which he said put them in a different category from some other non-profits. McClenny said he agreed that those were in a separate category.

“If we go to 501(c)(3)s, you’re going to have quite a few,” he pointed out. Already, Bethany Beach is home to Justin’s Beach House, which had its fees waived. There is a “community house” next door to St. Ann’s rectory, while there is also a group home located in Bethany West. “It could just mushroom,” he added.

Healy noted that the designation of 501(c)(3) organizations for such a benefit could be problematic, because the different 501 non-profit designations indicate different statuses for the organizations that have qualified for them. He said the council should consider just waiving the fees for St. Martha’s.

“I was hoping for a standard moving forward,” Graviet clarified, noting the instances in which repair projects for the churches had involved a fee. “I’m looking for direction across the board.”

He said he felt that whatever the council decided to do, it should be secular in nature, pulling in the library and fire company. “It wouldn’t be treating religious organizations differently from others. It will create some issues if it is. It needs to be consistent.”

Councilman Lew Killmer said the Town should treat all of the organizations “exactly the same, whether they’re religious or not. I don’t think we should waive the fees. We should give them a discount, across the board.”

McClenny posited a situation in which any property owner could establish a 501(c)3 organization based at their Bethany Beach property.

“If I wanted to have a 501(c)(3) on my property, I could then get a reduced fee when I build there?” he asked, to council consensus that that would be the case.

“A lesser fee would at least make up for the time and effort of town staff,” Olmstead said.

Graviet said there was no effective way to calculate what the Town’s costs would be on an average project, but he said he would recommend that they make sure that any fee that comes to the Town from an outside entity be paid by the applicant and that a percentage of the project cost could also be assessed.

Killmer noted that the International Building Code, which the Town has largely adopted, uses a standard of 3 percent of project costs for building permit fees.

“If we start quoting what our true costs are, we’re doing ourselves a disservice,” he said. “We’re not in it to make money, but we’re not in it to lose it either. Any time there is money the Town has to put out, I don’t think we should waive that.”

Killmer referenced the Town’s $750 cost for water meters. “I’m all for a goodwill gesture, but they still have to pay for those things.”

Graviet noted a potential concern over how clear the Town’s intent might be.

“The Town makes a significant donation to the fire company and library every year,” he pointed out. “Now we’re going to assess a fee that we normally would have waived and then give you a donation. What is our intent?”

“If we have to treat everybody the same, we have to charge it to everyone,” replied Dorfman. “They provide a public services to the community, so they’re in a different category. They’re not a religious order and not a charity. They perform duties and services for the community. I don’t see a problem,” he said of charging a fee and giving a donation to the same organization.

Gordon said he didn’t see a problem with separating the library and fire company from other organizations, as they provide services to the whole community, rather than niche services to the community. Graviet said he, too, thought the Town would be on solid ground with treating the library and fire company differently from other groups.

Council members reiterated a desire to keep other fees as a separate issue for now, but with water connection fees running around $7,500 on some projects, McClenny noted that applicants can’t get a building permit without paying the water fees, suggesting the issues may be somewhat intertwined.

Graviet also pointed out that the council was under something of a time crunch on the issue, as they were due to approve the 2014-fiscal-year budget on Friday, March 15, and St. Martha’s was expected to be moving ahead with construction in the near future.

“Those fees are in the budget,” he said of the permit fees for St. Martha’s project. “We can change the fees in the future. I believe the fire company and library can continue to be exempt. If you’re going to expand it to churches and other groups, we have to put them all together for that purpose.”

Olmstead and Healy said they would both support charging a 1 percent building permit fee to exempted organizations. Graviet said that might best be put into place as a 1 percent fee, plus any other costs incurred by the Town. He also suggested the council look at creating two categories for the reduced fees or exemptions.

Council members rejected the idea of taking action on the issue at this month’s council meeting. Their consensus was to get this year’s budget process completed first and then make adjustments later, if needed.

Council looks at update to building code

Also on March 11, the council discussed updates to the town’s building code, updating its basis from the 2003 edition of the International Building Code to the 2012 version. Building Inspector Susan Frederick said the 2003 code was too old for the Town to remain in compliance with the Community Rating System regulations that allow property owners to get a 10 percent discount on their insurance.

Frederick noted that Sussex County is also currently using the 2003 code but is also in the process of updating to the 2012 code. She said the council might want to opt out of some elements of the code, as it has done in the past.

Notably, she said, the new code would take the town out of a high-wind district designation where top winds expected might reach more than 110 mph and where wind-proofing elements, such as strapping, continual load paths and impact glazing, are required. Instead, at 90 to 100 mph, the top wind designation would not require those types of elements. Frederick said she would recommend the council keep their high-wind designation, at 110 mph top speeds.

Additionally, she noted changes to “freeboard” regulations involving the permitted elevation for construction. She said that, under new flood-zone maps being implemented, the amount of the town in the flood plain was increasing from 50 percent to 80 percent, with changes mostly on the west side of town. Taken with the freeboard changes, that might require some adaptation to the code to ensure that all buildings constructed in the town are insurable, she said.

Finally, Frederick said the council would most likely want to omit the requirement for residential fire suppression systems, which is now standard under the IBC. Council members described the requirement as “ridiculous,” with McClenny noting that he now pays several hundred dollars per year as an additional fee to the water company at a rental property he owns, just because a fire suppression system is installed there.

With primarily one- and two-unit dwellings in the town, Frederick said she thought the Town could opt out of that requirement.

Killmer said he felt the update would otherwise be of “benefit to everybody in town. It’s keeping what we have, not dropping regulations ‘because we can,’” he said.

Council members supported taking the changes to their April council meeting for introduction. Two readings and a vote would be required for adoption.

Council prepares for public hearing Friday

Finally, council members reviewed the agenda for their March 15 council meeting and for the public hearing scheduled for 4 p.m. that day on proposed changes to town code regarding requirements for commercial lodging properties in general and, specifically, the proposed redevelopment of the Bethany Arms Motel.

McClenny said his plan for the public hearing was to take each one of the seven items one item at a time and allow adequate time for discussion before moving on to the next item.

Gordon said he was concerned that “People think this is just about the Burbage project.”

Graviet said Frederick could open the hearing with a presentation expanding on the information recently sent out by the Town, reviewing the issues in plainer language as to what the proposed changes actually mean.

“We can get people on the same page and have a better understanding of what we’re discussing,” Graviet said.

Killmer also noted recent requests from some citizens to provide additional information on agenda items.

“I think it could eliminate a lot of misconceptions,” he said. “Once I explain just a little bit about what the issue is or isn’t, they write back, ‘Thank you. That’s all I needed to know.’”

Council members noted that the council’s entire briefing book is available to the public on the Town’s Web site (under the Government section) and as a print-out placed outside the upstairs offices at town hall.

“All the information that we have is online for the public,” emphasized McClenny.

“Some of the things can’t be explained in a paragraph or two,” added Graviet.

“For the person who wants to look and know everything, it’s right on the Web site. They can click and read, click and print,” said McClenny.