Small Town News

Former mayor speaks out against Bayard Ave. loan

---

DNREC says Dewey Beach will receive loan

A glitch in Dewey Beach's town charter has incited some residents to insist a loan of nearly $1 million should go to referendum. Some residents say flood-reduction measures on Bayard Avenue, for which the loan was sought, should never have been undertaken.

The town remains eligible for a loan from Delaware Department of Natural Resources and Environmental Control, promised to the town in December 2010, even though drainage repairs on Bayard Avenue are near-ing completion. DNREC entered into a binding commitment with the town, according to DNREC Financial Assistance Branch Administrator Terry Deputy. Once the town code is amended, Deputy said, the town could close the loan and receive reimbursement money for the project, up to $927,000.

Dewey Beach Town Charter offers no process for borrowing money. At a March 12 town coun-cil meeting, Town Attorney Glenn Mandalas said Saul Ewing, DNREC's Wilmington-based law firm, told council it must add an official process for borrowing money in the town charter before DNREC will issue a loan to Dewey Beach.

A bill that would amend the town's charter to include a process for commissioners to borrow money solely for the Bayard Avenue project has been approved in Delaware's House of Representatives and sits in the

Senate. In September's election, residents would vote on a permanent borrowing process and a cap on the amount of money commissioners could borrow, by referendum.

Rep. Gerald Hocker, R-Ocean View and Sen. George Bunting, D-Bethany Beach, are sponsoring House Bill 82. "The work on Bayard Ave. is well underway. The contractor has to be paid," Hocker wrote in an email. "As long as it is the wishes of your elected council, I do my best to have it passed in the House. The Dewey council has the ability to bring it up for referendum."

Dewey Beach resident Anna Legates argues the town fast-tracked HB 82 to the General Assembly after canceling an April 15 public hearing to discuss the bill.

"How would the public even know to contact Hocker and Bunting with concerns? One assumes the town would send the charter amendment to legislators after the April 15 public hearing rather than before," Legates wrote in an email. "The right to vote is very precious in our 22-street town. We property owners are the stakeholders."

Former Mayor Dell Tush agrees the charter change should go to referendum. "I am actively fighting this in the Senate because it absolutely should go to referendum to decide how money is borrowed in our town," Tush wrote in an email. "They had no way to pay it back, no loan agreement, no commitment letter, but voted to go forward with the project with no money. The whole idea is ludicrous."

Tush and her administration refused a grant from DNREC to repair Bayard Avenue drainage problems in 2009. Tush said a federal grant combined with

funds from the roads and maintenance and infrastructure accounts would have been enough to fix Bayard without borrowing money.

She said commissioners voted instead to move a chunk of money from the infrastructure account into the town's legal account, leaving Bayard funds short.

"The big problem I have today is the fact that they disregarded the Duffield proposal," Tush wrote. Duffield Associates of Wilmington was the original construction company assigned to the Bayard project. Tush said the town spent an additional $48,000 to hire ECI for the job, whose proposal for construction was $238,000 more than Duffield's proposal.

According to infrastructure committee Chairman Rick Judge, Duffield's estimate did not include engineering costs, the cost of a pump station or the cost to repave roads on Bayard. Judge said seven contractors bid on the project design, and ECI was the lowest bidder. Duffield did not bid, he said.

Judge said Duffield's report focused its attention on the history of the problem; ECI focused on how to fix the problem.

ECI declared bankruptcy in November 2010, shortly before construction on Bayard began. Mike Cotten, ECI's chief engineer for the project, took over as principal of Cotten Engineering. According to Cotten, the project is on budget and running ahead of schedule.

$1.5 million cap

Former Mayor Jim Lavelle said when the beach and dunes washed away in 1991, council amended the charter in order to

borrow $1.5 million to establish a beach replenishment fund. By referendum, residents voted to pay a one-time tax to pay the loan back. Before 1991, Lavelle said council could only borrow about $35,000.

Lavelle said the tax was a onetime shot and was reserved for beach replenishment, main-tanace and repairs. He said he does not know why the charter was not changed back to limit borrowing to $35,000. "I don't think anybody paid attention to it," he said.

Hanson said when Lavelle was mayor he signed an agreement making Dewey Beach responsible for its own drainage maintenance.

"No, I don't remember that at all," Lavelle said. He said he has owned property in Dewey Beach for more than 40 years and the bayside roads have always flooded.

No grants

At a May 8,2010 town council meeting infrastructure commit tee Secretary David King said grant funding would be applied for to reduce the size of the loan. "They led the public to believe that the project would be done with grant money but no grants were even applied for," Tush wrote.

Neither the infrastructure committee or the town manager found grants to pay for the project. Judge said the only available funding was the low-interest DNREC loan. "There were no grants available," he said.

Tush also said drainage repairs on private property should be paid for by the residents who own the land. "Bayard Avenue is a state-owned street, and part of

this project is being done on private property. We should not be spending municipal money on private land," Tush wrote.

Mayor Diane Hanson argued aside from Cajun Cove, which is private property, 55 additional acres in Dewey Beach are affected by the flooding. "It was a public safety issue. The town is liable," Hanson said. "Sometimes, you've just got to bite the bullet and do what needs to be done."

How to pay back the loan

Legates argues Dewey Beach

has no payment plan set up to pay back the loan if it goes to settlement. Commissioner Rick Solloway is chairman of the long term revenue ad hoc committee, which was established to find new streams of revenue for the town.

Construction costs will remain the same, but Solloway said he plans to introduce a resolution to reduce the loan amount from $927,000 to about $450,000 at the town council meeting Saturday, May 14. Solloway said the committee has identified some new revenue sources to pay back the loan. "Over the last 12 months, we've increased the rate of return on assets by $60,000," he said. Solloway said the increase is enough to pay for the first year of payments on the loan.





© 2011 Cape Gazette Lewes, Delaware. All Rights Reserved. This content, including derivations, may not be stored or distributed in any manner, disseminated, published, broadcast, rewritten or reproduced without express, written consent from DAS.

More from Cape Gazette