Bethany Beach approves payment plan for hotel project

Date Published: 
August 1, 2014

Following up on a request from developer Jack Burbage and his Bethany Beach Boardwalk Group, the Bethany Beach Town Council recently approved a payment agreement with the developers of the Bethany Beach Ocean Suites hotel that would allow them to pay about $790,000 in building permit fees, transfer taxes and water fees in four payments over the course of three years.

Town Manager Cliff Graviet said at the council’s July 18 meeting that after the council had reacted favorably to the idea at a prior meeting, the town solicitor and Burbage’s legal counsel had worked to create an agreement that would allow the payment plan. He noted that the plan had been developed based on the notion that “the amounts involved are extraordinary and not what most ordinary home owners would ever see.”

Despite the council’s overall support for the idea, Councilwoman Margaret Young took exception to the proposal on July 18, saying, “I consider it very unfair to property owners who have had work done … who have had remodeling done or are considering doing some. … If it’s fair for one person to have a sliding scale, it’s fair for others to have a sliding scale.”

However, Graviet was quick to correct Young’s reference to a sliding scale. While Burbage had also urged the council to consider such an accommodation, “The council resoundingly said no,” he emphasized. “The fees listed here are a one-time payment of fees that any property owner would pay.

“I’m not sure, given the amount of dialogue on this issue,” he added, where the idea of the agreement using a sliding scale had entered the discussion of the proposed agreement. “The only thing we have done, because of the extraordinary amount, is allow paying it over time. That’s not to say,” Graviet added, that if there were other property owners with a large project “the council wouldn’t consider that.”

Councilman Lew Killmer said he, too, objected to the idea that the accommodation was unfair.

“I don’t agree this is in any way a negative impact on anybody,” he said. “This is the most unique project, the largest project that has ever been done in this town. These fees are meant to cover the costs of providing these services. It’s all well within our charter,” Killmer added, noting that the developer is being charged the same rate of fees, at 3 percent of construction cost, as well as the same water fee, in proportion to the size of the project, and the same real estate transfer tax rate of 1.5 percent.

“We’re trying to say this is a lot of money for any individual or organization to try to pay all at once,” he emphasized. “There would be no loss of revenue. It’s being a good neighbor.”

Councilman Joseph Healy Jr. also objected to the notion that the payment plan was unfair.

“We have an opportunity here to have a project that’s going to be around for 50 years,” he said. It’s going to be a nice project. It’s going to add something nice to our town. Mr. Burbage has built some very fine properties in our town, which we have seen, and I trust that this would be the same. To say that there’s been some accommodation for him is far from the case,” Healy added. “I’m flabbergasted to hear this.”

Councilwoman Rosemary Hardiman pointed out that the agreement offers benefits for the Town, too.

“This revised agreement does protect the Town” and ensure payment would be made,” she emphasized, noting the payment agreement involves four payments made over three years and a day, not spread over four years, as may not have been clear to some. “We don’t want to start rumors,” she said.

Former mayor Jack Walsh said he didn’t see the justification for the payment plan being extended by the Town.

“The way I see this is that Mr. Burbage, who is a very successful businessman, who I respect, knew up front that these fees were going to be part of the package,” Walsh said, noting that his son had recently built a house in the town “and didn’t get any concession that he could pay the building fees over time. This is unique in that it is a lot of money, but Jack Burbage knew up front about these fees, and they should have been part of his whole planning package. There shouldn’t be these kinds of concessions made.”

Current Mayor Jack Gordon said he didn’t view the agreement in that way.

“I don’t see this as a big concession when someone is going to pay you $790,000,” he said. “I don’t see this as being any kind of unusual deal, given amount of money being given for services to get this project off the ground and going. I don’t see it as anything but good for the Town to be able to wrap into one package” the various fees, he concluded.

Graviet also pointed out recent concerns statewide about fees charged by municipalities, including a Delaware House of Representatives bill that dealt directly with the issue in the wake of controversy over fees in Dewey Beach. The proposed payment plan, he said, dealt with such issues up front.

“This agreement guarantees payment of fees and waives any legal action by Mr. Burbage against the Town on the issue of fees charged,” Graviet explained. “It protects the Town.”

The council voted 6-1 on July 18 to approve the payment agreement, with Young opposed.