Small Town News

Dewey residents call for referendum on charter change

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Acquiring a state loan for a capital improvement project in Dewey Beach is proving more difficult than town council anticipated. How Dewey Beach will fund the $900,000 construction project on Bayard Avenue remains unclear.

Council voted 4-1 to seek a charter amendment that provides a process for council to accept a low-interest loan from De-prtment of Natural Resources nd Environmental Control contingent on a public hearing. Commissioner Jim Laird cast the sole dissenting vote March 26. The amendment would apply only to the Bayard Avenue project. A referendum would be scheduled during the September election to allow residents to replace the amendment with a permanent process for borrowing money.

Town Manager Diana Smith said she received a Dec. 15 letter of commitment from DNREC to award a $900,000 loan to Dewey Beach. The loan would have been used to fund drainage repairs on Bayard Avenue. Construction on the repairs began Jan. 10. Project Engineer Mike Cotten estimates repairs will be completed prior to Memorial Day, but the DNREC loan still has not gone to settlement.

The charter specifies the town can borrow up to $1.5 million, but it does not specify a process, such as requiring a public hearing or referendum. "There is no 'how to.' That's what has given DNREC attorneys some pause," said Town Attorney Glenn Man-dalas.

Saul Ewing, DNREC's Wilmington-based law firm, told Man-dalas council must add an official process for borrowing money in the town charter before DNREC will issue funds to Dewey Beach.

Prior to the March 26 meeting, Mandalas mapped out suggestions to council for both permanent and temporary charter changes. Mandalas suggested the town immediately add an amendment specific to the Bayard Avenue project. In September, he suggested, the town should hold a referendum to replace the amendment with a permanent process for borrowing funds.

Almost all residents who spoke at the meeting agreed a permanent charter change should go to referendum in September. Many residents said even a temporary charter change should be made by referendum.

Budget and Finance Committee Chairman David King said the town should pay invoices for the project from its general fund until June, when the town could hold a special election before the June 30 deadline. "It's not a housekeeping issue, it's a referendum issue," King said.

Resident Anna Legates said council should have waited for the loan to close before granting approval to begin the repairs. "My strong point in all this is that the people be included," Legates said.

Former Mayor Dell Tush said DNREC followed normal procedure, but the town rushed through the loan process to begin construction. "This was a capital improvement project. It should have gone to referendum," Tush said. "Don't expect the people to roll over and allow you to continue with this bad behavior."

Resident Bill Zolper urged council to go forward without a referendum so the town does not risk losing the low-interest loan. Zolper said the lack of a property tax in Dewey Beach is the root of the problem.

According to Smith, DNREC has agreed to extend the deadline for accepting the loan from May 21 to June 30. Even with the extension, Commissioner Marty Seitz said it is unlikely the town could hold a referendum in time to accept the loan. Seitz suggested paying for some of the project using available funds from the budget in order to lower the amount the town would be indebted to DNREC.

Any charter amendment must be approved by the General Assembly. Laird said he was worried a referendum could not be conducted in time to get the amendment passed through the Legislature before the end of session. "It's a timing issue more than anything," Laird said.

Laird suggested paying for the entire Bayard Avenue project using funds from the town budget. "There's a way to get there right now with what we have on the books," Laird said.

Commissioner Rick Solloway, a financial adviser for Edward Jones in Bethany Beach, said the town's operating budget is $2.4 million, but the town's annual revenue is $1.9 million. "We can't even meet our operating budget with the revenues we generate," Solloway said. "We haven't run a surplus in three years." Solloway said the town could not take more than $400,000 out of the budget without jeopardizing its ability to pay bills and fund pay-, roll for town employees.

One resident said the funds probably would not be available after June 30 because the state would transfer them back to the general fund. Mayor Diane Hanson agreed. "We're taking a risk if we don't take it now," Hanson said.

Dewey Beach Town Council will hold a public hearing at 6 p.m., Friday, April 16, to discuss amending the town charter to accept DNREC's loan. For more information, visit townofdewey-beach.com





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