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Ocean Bay Mart, Inc. v. City of Rehoboth Beach

Superior Court of Delaware

March 12, 2019

Ocean Bay Mart, Inc.
v.
The City of Rehoboth Beach

          Richard A. Forsten, Esquire.

          Max B. Walton, Esquire.

          E. SCOTT BRADLEY JUDGE.

         Dear Counsel:

         This is my decision on Petitioner Ocean Bay Mart, Inc's Petition for a Writ of Certiorari and the Motion to Dismiss that petition filed by Respondents the City of Rehoboth Beach, Delaware, and the Commissioners of the City of Rehoboth Beach in this case involving a proposal by Ocean Bay Mart to build a 63-unit condominium development to be known as "Beach Walk" on a 7.83 acre parcel of land that it owns at 20673 Coastal Highway, Rehoboth Beach, Delaware. "Beach Walk" consists largely of single-family detached condominium units, making it look like a residential subdivision.

         There are two issues in this case. The first issue is whether "Beach Walk" is subject to the City's subdivision requirements even though it is a condominium development. The City Building Inspector thought so. The City Board of Adjustment did not think so. The City Planning Commission and City Commissioners both thought so, reasoning that 25 Del. C. §8l-105(b)(1)'s statement that a condominium unit, together with its interest in the common elements, constitutes for all purposes a separate parcel of real estate and, as such, mandated compliance with the City's subdivision requirements. Section 81 -105 deals with the titling and taxation of condominium units and common elements. Ocean Bay Mart disagrees with the Commissioners' reasoning, arguing that §81-105(b) has no application to the City's subdivision requirements. Ocean Bay Mart is seeking certiorari review of the Commissioners' decision.

         The second issue is whether City Ordinance 1116-01 is applicable to "Beach Walk." Ordinance 1116-01 provides that "no more than one single-family detached dwelling with its customary non-habitable accessory buildings may occupy or be constructed upon any lot." Ordinance 1116-01 was introduced by the Commissioners after Ocean Bay Mart filed its application for site plan review with the Building Inspector and adopted by the Commissioners before, but not relied upon by, the Commissioners when they denied Ocean Bay Mart's appeal of the Planning Commission's decision. If Ordinance l 116-01 applies to "Beach Walk," then "Beach Walk" would be subject to the City's subdivision requirements. The Commissioners argue that it does, making Ocean Bay Mart's request for certiorari review moot. Ocean Bay Mart argues that it has no application to "Beach Walk."

         I have decided that I cannot now determine whether Ordinance 1116-01 applies to "Beach Walk," reasoning that this issue should, in the first instance, be presented to and decided by the appropriate City officials. I have concluded that the Commissioners' reliance on 25 Del. C. §81-105(b)(1) was an error of law because §81-105(b)(1) deals with the titling and taxation of condominium units and common elements and not subdivisions.

         STATEMENT OF FACTS

         Ocean Bay Mart is the owner of a retail shopping center located on the east side of Route 1 in Rehoboth Beach known as "Ocean Bay Plaza" (the "Property"). Ocean Bay Mart proposes to redevelop the Property by eliminating the shopping center and replacing it with 63 residential condominium units on the 7.83-acre Property to be called "Beach Walk." "Beach Walk" would consist of 58 single-family detached units and five single-family attached units. On June 18, 2015, Ocean Bay Mart filed its site plan application (the "Plan") for review and approval by the City of Rehoboth Beach, Delaware.

         The City Building Inspector placed the application on the Planning Commission's November 2015 agenda for review and a public hearing. Shortly thereafter, the Building Inspector removed the application from the agenda, claiming that Ocean Bay Mart's Plan needed to be resubmitted as a "subdivision" plan instead of a site plan. Ocean Bay Mart then appealed the Building Inspector's decision to the Board of Adjustment.

         The Board of Adjustment Decision

         The specific issue before the Board of Adjustment was the meaning of Footnote 1 of Attachment 1 to the Table of Use Regulations to Chapter 270 of the City Code. Footnote 1 provides "that no more than one main building may be erected on a single lot." The Building Inspector had concluded that Footnote 1 limited Ocean Bay Mart to one building on its 7.83-acre Property. Thus, to get more buildings, Ocean Bay Mart would have to go through the subdivision process. The Board concluded that Footnote 1 was ambiguous and reversed the Building Inspector's decision. The practical effect of the Board's decision was to allow Ocean Bay Mart to put more than one building on its Property. The Board's decision was consistent with the City's past practice of not requiring a condominium plan to be reviewed as a subdivision plan and instead allowing condominium plans to be reviewed and approved under the site plan process. No one appealed the Board's decision.

         The Planning Commission Decision

         Following the Board's decision, the matter was placed on the Planning Commission's August 12, 2016, agenda so that the site plan review could be completed. However, instead of reviewing the Plan, the Commission asked for briefing on whether it was bound by the Board's decision. The Briefing was done and the Commission met on January 13, 2017. There were three issues before the Commission. One, whether the Commission was bound by the Board's decision. Two, whether "Beach Walk" was subject to subdivision review. Three, whether "Beach Walk" was required to be zoning compliant. The Commission members discussed 25 Del. C. §81 -105(b)(l), the condominium form of ownership, a proposed ordinance that would become Ordinance 1116-01, and the City's subdivision requirements. Ultimately, the Commission refused to consider Ocean Bay Mart's Plan and concluded that "Beach Walk" would have to go through subdivision review with one commissioner stating, "that if it looks like a subdivision, and it smells like a subdivision, then it is a subdivision." In making this determination, the Commission relied upon 25 Del. C. §8l-105(b)(1), which states:

(b) In a condominium or planned community:
(1) If there is any unit owner other than a declarant, each unit that has been created, together with its interest in the common elements, constitutes for all purposes a separate parcel of real estate.

         The Commission told Ocean Bay Mart that unless it submitted a full "subdivision" plan for review within 60 days, it would consider the Plan rejected. Ocean Bay Mart refused to submit a subdivision plan and instead appealed the Commission's decision to the City Commissioners.

         The City Commissioners"' Decision

         The City Commissioners retained independent counsel to advise them in this matter because the City Solicitor, who usually advises them, was representing the Planning Commission in the appeal. Following extensive briefing on the matter, on January 26, 2018, the City Commissioners voted 4-2 to uphold the Planning Commission's decision, stating:

[t]his decision [is] based on the fact that the Planning Commission made the proper decision in applying 25 Del. C. ยง81-105(b) to conclude that the creation of63 condominium units from one acre of land is the legal equivalent of creating 63 ...

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