Fenwick Dairy Queen renovations (copy)

The former Dairy Queen in Fenwick Island is currently in a state of half-demolition, after the renovation project ran into issues with the recently-adopted commercial parking regulations in the town. Owner Joseph Balsamo filed a lawsuit against the Town in October over approval processes. That suit has now been dismissed.

Last week, a Delaware Superior Court judge has dismissed a lawsuit filed against the Town of Fenwick Island by the owner of the former Dairy Queen property.

Balsamo Real Estate LLC had filed a petition for writ of mandamus and a motion for summary judgment against the Town following a dispute over the company’s efforts to renovate the former Dairy Queen site, adding a second floor, for a larger restaurant.

The decision by Superior Court Judge Mark H. Conner, filed on March 7, granted a motion to dismiss originally filed by the Town on Sept. 27, 2022.

In the months between those two actions, the Town has been embroiled in a drawn-out fight over the town council’s efforts to pass stricter parking regulations for businesses inside town limits. The new regulations, passed last month, double the number of parking spaces required for new businesses or those undergoing substantial changes.

Joseph Balsamo Jr. said this week that his family is moving forward with plans to bring a Surf Bagel restaurant to the former Dairy Queen site.

“We have an architect designing the building to [Surf Bagel’s] specs,” Balsamo said.

He said the plans call for a smaller building than the initial ones the family had submitted for a Grab and Go Taco shop and blamed the downsizing on the new parking regulations.

He also said he and his family stand by their initial interactions with the Town regarding the property and believe they were done in good faith, but he said town officials were less than transparent in their responses to the family’s submissions for the property.

Balsamo called the new parking regulations “agenda-driven” and criticized the council’s approval of the new parking regulations without completing a parking study to look at all angles of the town’s parking issues.

A week before the council approved the new commercial parking regulations, which double the amount of parking required for new businesses and businesses that undergo substantial changes, Balsamo and a group of Fenwick Island business owners submitted an “alternative plan” to town officials.

Their suggestions included:

• Changes in the town’s “business-helping-business” plan, allowing for financial compensation for shared parking;

• Having the town manager or town council approve agreements between businesses;

• Amending the parking requirements by keeping the parking at one space per 100 square feet of patron area, with an increasing number of employee parking spots, depending on the patron area, ranging from four additional spots for a business with 1,501 to 1,800 square feet to 16 additional spots for businesses with 3,200 to 4,000 square feet of patron area;

• Requiring that all patron parking and 50 percent of employee parking must be on-site, unless approved by the Town, with additional parking through the “business-helping-business” program, also approved by the Town.

In the introduction to their suggestions, the businesses stated that the one-space-per-50-square-feet requirement “will affect the commercial district negatively in many ways. Property values will be reduced,” the statement said, because “value of a commercial property is not only based on location of property, but it is also based on value of a lease that can be obtained.”

“Members of the Town Council have stated several times in Council, Ad-Hoc Parking and [Charter & Ordinance Committee] meetings that the old Ropewalk [now Matt’s Fish Camp] restaurant is why the proposed changes were submitted.

“We believe the [business community’s] proposed changes … will allow the Town and business community to work together so another Ropewalk issue never arises in the Town of Fenwick Island,” the statement said.

The suggested changes from the business community members were submitted to the Town on Feb. 17, Balsamo said — one week before the council’s final vote on the parking changes. The suggestions were ultimately rejected, as the council passed the regulations as previously written.

The then-proposed parking regulations served as the backdrop for the Balsamo complaint, in that the company has said they are preventing them from developing the property in the manner they would like to. The Balsamo family had submitted plans in August 2022 for a 1,500-square-foot addition to the existing building.

According to the facts presented in the March 7 Superior Court decision, the Balsamos claim they were told by Town Manager and former building official Patricia Schuchman that the plans could not be reviewed until the pending parking ordinance decision was made.

The Balsamos then threatened to take legal action if the Town did not review the plans by Aug. 30, 2022. The Town responded that it could not review the plans because “the appropriate permit application was not filed,” Conner’s decision said.

Conner’s decision notes that the Balsamos and the Town disagree on some of the facts in the initial complaint. The Town contended the Balsamos and their attorney, Richard Abbott, had used the wrong part of the town code on which to base their attempts to seek approval for their project. The Balsamos had predicated their efforts on Chapter 142, titled “Subdivision of Land,” while the Town contends it is Chapter 61, titled “Building and Utility Construction,” that actually lays out the proper process for approval of building projects.

Abbott said on Friday, March 10, that he believes Chapter 142 covers what the Balsamos are trying to accomplish with the former DQ site, since it says no land “may be subdivided or developed” without approval by the Town Council. Chapter 142 lays out the application process for such actions, which includes a letter of application, a copy of the latest Sussex County property deed, a public hearing and a town council vote.

Chapter 61 lays out a more laborious process for acquiring building permits — including submission of detailed plans for the property, the estimated cost of the project and the proposed use for the building.

That chapter of the town code also includes the process by which the town administration reviews the applications and what is required before an occupancy permit is issued.

Abbott said he believes “the Court got it wrong.” He said, “The central issue is the meaning of the word ‘development’” and its use in the town code.

Fenwick Island Mayor Natalie Magdeburger issued a statement last week in which she lauded the Court’s decision.

“The Town is very pleased,” she said, with Connor’s order dismissing Balsamo Real Estate’s lawsuit.

“From the inception of the litigation, we could not understand why it was filed,” she said.

Magdeburger’s statement also noted that, “In the way of background, a building permit had been issued by the Town in January 2022 to allow for a new roof and interior demolition when Balsamo Real Estate was partnering with Grab and Go Taco to renovate the old Dairy Queen site.

“The entire town was supportive of the project, as the site had been vacant for some time,” Magdeburger said. “However, it appears Grab and Go Taco and Balsamo Real Estate parted ways, and since last spring the permit to replace the roof and do interior demolition has been completely abandoned by Balsamo Real Estate.

“Late last summer, Balsamo Real Estate approached the Town to approve a site survey plan under the town’s subdivision code, and the Town advised Balsamo Real Estate that the proper course of action to gain approval was to file for a new building permit, which would require engineering plans and approvals from Sussex County and other various agencies,” Magdeburger said, adding that Balsamo Real Estate declined to do so and instead filed a lawsuit.

“A great deal of legal expense was incurred by both parties, which is unfortunate, particularly since the Town, whose residents have supported Balsamo Real Estate’s past and current ventures, was a party,” Magdeburger said.

“This ruling clarifies that the Town’s position throughout the litigation has been the legally correct one, and the Town is now hopeful that Balsamo Real Estate will proceed by filing for a building permit, as required by our code and as they were advised to do,” she said.

Staff Reporter

Kerin majored in journalism at Ohio University and has worked as an editor and reporter for monthly, daily and weekly publications in Ohio, Pennsylvania and Delaware since 1983. A native of Baltimore, Md., she has lived in Ocean View since 1996.