Dewey places moratorium on conversions

Loss of commercial use also a concern in Fenwick

By Molly Albertson
Cape Gazette

As concerns grow in Fenwick Island over the increasing pressure on the town’s commercial property owners to convert to residential use, officials in nearby Dewey Beach are faced with the real prospect of losing a big chunk of the town’s vital business district — and they’re taking action.

Ammunition flew during a back-and-forth battle for the future of Dewey Beach, as business owners demanded protection of their property rights, while Dewey Beach Town Council threatened to halt changes they say threaten Dewey’s economy.

While the council says it’s fighting to maintain a business district for town residents and visitors, the business owners themselves insist on their existing right to transform their properties from the bars and restaurants — for which Dewey is famous - into townhouses.

Commissioners favor a one-year moratorium on converting commercial property to residences. In the end, they unanimously passed a moratorium that will end Oct. 15, and they charged a comprehensive plan group with the task of defining what and where a business district would be.

Ruddertowne plan causes a stir

The debate began at last month’s town meeting when Highway One Ltd. announced plans to convert Ruddertowne and Venus on the Half Shell into townhouses, in reaction to an unexpected agenda item calling for an ordinance banning changes to commercial properties.

In a surprise statement, Mayor Courtney Riordan called the agenda item an error.

“It was a misprint on the agenda. I wanted to bring forth the discussion at the meeting, not pass a law,” Mayor Courtney Riordan said, “I apologize for that mistake.”

But residents called for both sides to end their battle and move forward with a compromise.

“I perceive there is a distinct animosity between council and businesses. Nobody wants to see a war between Highway One and the town. Why in God’s name didn’t everyone sit down and discuss this instead of posturing?” asked resident Graham Smith.

Other business owners also spoke out against the moratorium. “I feel like the rug is being pulled out from under us. You said you preferred single-family homes instead of condos,” Bob Sipple said. He and other Wilmington business partners bought the Sand Palace Motel with intentions of building townhouses after operating the motel for a few years.

“I purchased the property knowing what the zoning laws are today and our purchase was based in the value of the land and the ability to convert,” he said.

Highway One Ltd. offered to withdraw its plans for town houses in what officials called the spirit of compromise, if town council withdrew the moratorium all together.

“Let’s just table this for 30 days to determine what a business district might be,” said Highway One partner Jim Baeurle.

Riordan and other commissioners agreed to the compromise. “We’ll back off if you withdraw your application and tell your lawyers not to sue us,” Riordan said.

But Commissioner Dell Tush and town attorney Rob Witsil objected, reminding the council that businesses other than Highway One could still submit plans to convert their properties to townhouses.

But when the town imposed the moratorium, Highway One Ltd. Decided not to withdraw its plans, Baeurle said.

There are eight phases in the plan that could take up to five years to complete. Eventually 48 townhouses would replace Ruddertowne, and eight homes would take the place of Venus on the Half Shell, Highway One Ltd. representative Jim Baeurle said.

Economic impact would be huge

The economic affect of tearing down the Rudder would be huge, local experts said.

“The loss would be felt by many people,” said Rehoboth Beach-Dewey Beach Chamber of Commerce President and CEO Carol Everhart.

Tourists come to Dewey Beach because of the beach, the bay and the nightlife, Everhart said. “If any of those three are touched, it will change the face of Dewey.”

Everhart said The Rusty Rudder is “a destination-driver business” and removing it would affect the economy.

“It touches rentals, restaurants, shops, hotels, everything,” she said.

Other businesses that rely on tourists may be drastically affected because, without the strong nightlife that Ruddertowne provides, there may not be visitors, Everhart said.

Local business owners also predict a big impact if The Rusty Rudder gets torn down.

The Starboard’s owner, Steve “Monty” Montgomery, said his restaurant would not get more business if there were fewer nightclubs in town.

“I hope it doesn’t happen,” Montgomery said. “If you don’t have places to go, people won’t come to Dewey.”

But if the night scene gets taken down a notch, Montgomery said, he does not plan to follow suit and build townhouses. Dewey Beach can at least count on that spot to stay. “I’m there forever, and I’m not knocking anything down,” Montgomery said.

While he said eliminating the Rudder would be bad for Dewey business, he concedes the point of property rights. “I agree with the principle to protect the ability to use your property to its best use,” Montgomery said.

Regina Aamacha, who owns a store in the Ruddertowne shopping center, said she could foresee a big change, but she’s not concerned about her business.

“People are so used to this being the Rudder, where you go for a good time. Removing it would be really weird,” she said.

“I like being here, but if it does change I don’t think it will hurt me,” Aamacha said. She also said that all the business ventures she has seen Highway One Ltd. embark upon have been successful.

“Highway One Ltd. are not incompetent, fly-by-the-seat-of-the-pants people. They know what they’re doing,” she said.

Aside from affecting tourism, the loss of Ruddertowne will also affect Dewey’s job market.

The BayCenter, Rusty Rudder and Lighthouse employ about 100 year-round positions and 350 seasonal staff, administrator Julie Mills said. Those numbers do not include Venus on the Half Shell, Bottle & Cork, or northbeach. If the restaurants are torn down, more than 500 people could be out of work.

Highway One Ltd. representatives say building townhouses would be a business decision and nothing more. Baeurle said he would prefer to keep the businesses as they are. But if town council passes a law to freeze commercial properties, Highway One Ltd. will be forced to convert, he said. Highway One’s Alex Pires declined to comment.

An all-or-nothing proposition

The first phase of the conversion plan includes building townhouses on property that is now the Ruddertowne parking lot, Town Manager Gordon Elliott said.

“Once they start losing parking they don’t conform to zoning laws,” he said. Dewey Beach law mandates at least 10 parking spaces per 2,500-feet of restaurant and one space per 100-feet beyond that. Building homes on that land would eliminate required parking.

Townhouses popping up along Route 1 and Vandyke Street might not be the only change for Ruddertowne.

Other problems could arise with Dewey noise laws. The Rusty Rudder was founded before the town was incorporated, so it is grandfathered in; it is not subject to the noise law and other measures the town has passed, Elliott said.

“Once you start changing to residential, the rest of the Rudder is no longer grandfathered. The town could pull the music off the back deck,” Elliott said. “It’s not going to go smoothly at all.”

“The council can start making stipulations with how they need to conform,” Elliott said.

Elliott said he has doubts that the plan would pass because of the parking issues and potential runoff problems.

Highway One’s plans, for more than 50 townhouses at two locations, were originally slated to be sent to planning and zoning committee. However, attorney Steve Spence said that’s not necessary.

“I’ve gone through the code and no where does it state that we need our plans reviewed by any committee,” he said. Plans are reviewed by the town building inspector, he said.

Another complication arises because the terms of five of the seven planning and zoning commissioners expired Monday, May 15, and the commissioners failed to reappoint them or appoint new people.

New commissioners could be appointed at the next town meeting, at 6 p.m., Friday, June 9, at the Lifesaving Station.

Commissioner Dale Cooke said the comprehensive plan working group comprises the planning and zoning board as well as town council, so it can go forward with defining a possible business district even in the absence of a quorum, Town Manager Gordon Elliott said.

A familiar concern in Fenwick Island

Meanwhile, Fenwick Island officials have expressed concern over the future of the town’s commercial district, which is of similar size, if not scope. Commercial Liaison Committee Chairman and Council Member Chris Clark — himself an owner of a business in the unincorporated area outside the town — has been particularly vocal on the issue, seeking ways to encourage businesses to stay in the town, including helping them organize to bring more customers that will, he hopes, keep the business district viable.

In the wake of the Dewey Beach brouhaha, Bethany-Fenwick Area Chamber of Commerce Executive Director Karen McGrath this week said she thought the move by Highway One Ltd. served primarily to protect the owners’ property rights, in a town with no property taxes, where the town relies heavily on its businesses.

More generally, McGrath also emphasized the importance of commercial districts in the beach towns, for everyone’s sake.

“It’s important that Fenwick keeps the commercial on Route 1,” she said. “I realize that for property owners, turning a commercial property into a string of townhomes is a quick way to gain the potential of a longtime investment. But it’s important to realize that urban development models show that commercial property being close by the residential is a huge part of it.

“Having stores and restaurants, and a place to get newspaper, within walking distance, or a short car ride, increases property values,” McGrath noted. “It’s important to keep it there for visitors and residents. And some real research shows it’s a very important part of the mix for quality of life.”

— Coastal Point staff reporter M. Patricia Titus contributed to this story.