The 292-unit Tower Hill development planned for the Groome Church property on New Road is expected to be annexed into Lewes after the project is complete and occupied.

In a close 3-2 vote Dec. 9, mayor and city council approved a pre-annexation agreement and city services agreement with developer New Road Ventures LLC.

The developer has been working with the Lewes Board of Public Works to obtain water and sewer, and wants to add city services such as trash, recycling and snow removal. Under the agreement, Tower Hill would not become part of the city until the land is contiguous with city boundaries, the development is fully built, and a certificate of occupancy has been issued for all lots and common areas.

Tower Hill residents would pay a higher rate for utilities until the community is annexed. They would also pay for city services as part of their monthly homeowners’ association fees. Once annexed, the HOA fees and utility fees would go down, but residents would pay city taxes. Mayor Ted Becker said the streets would be privately maintained for 15 years after annexation. All information about future annexation would be disclosed to buyers at time of settlement, said City Solicitor Glenn Mandalas.

Tower Hill was approved by Sussex County Planning & Zoning Commission in December 2018. Developer Dan McGreevy said he plans to break ground as soon as the spring.

Councilman Rob Morgan and Councilwoman Bonnie Osler voted against the proposal. Morgan said the negatives far outweigh the positives. He said the city won’t get the initial transfer taxes, and won’t have any influence on land use, and the project sets a precedent for future developers to follow a similar path to annexation.

“I just regard this as antithetical to everything we’ve tried to do with our land-use regulations,” he said. “I don’t think we want development like this on these terms.”

Osler said the purpose of annexation in Lewes is to exert some control over development that occurs at the city’s borders. By annexing Tower Hill after it’s built, she said, it defeats the purpose.

“This would be a development that is built completely to Sussex County standards,” she said. “I understand why the developer wants to do it in the county – laxer rules, cheaper – but at the end of the day, what do we want the city to look like?”

By annexing a county development, she said, the city would be creating major problems for future residents because all homes would be nonconforming, meaning any additions would have to go to the board of adjustment for approval.

Josh Mastrangelo, senior vice president of development for Carl M. Freeman Companies, said it is not about pulling a fast one on Lewes. He said the property is not contiguous with existing city boundaries, so the only option was for the land to be developed under Sussex County standards.

“This is midstream,” he said. “The zoning is in place. It was preliminarily approved prior to reaching this point. For us to say we want to annex into the city now would be stepping backward and starting over. It takes all the certainty out of the project, out of the investment that’s been made in the project and for the church, who is the seller of the property.”

Mandalas told council this may be the city’s only opportunity to annex the development. He said the developer could opt to get its utilities elsewhere and hire a third-party vendor for services.

“So we would end up with a property on New Road that’s basically in the city that could potentially never be annexed,” he said. “This gives us assurance that at some future date and time we will annex the property.”

Deputy Mayor Fred Beaufait made the motion, saying the development would benefit the city in the long run.

“I think we have to deal with reality,” he said. “This property is not contiguous and cannot be annexed right now, and there is no way we can impose our ordinances. But sometime down the road it will be beneficial because we can get taxes and whatnot when they do become contiguous. We need to look at the future as much as the present.”

Becker cast the deciding vote in favor. Although he said it was a tough call, it’s in the city’s best interest in the future to annex the property.

“I think this development presents a challenge to this community, but I also think the opportunity to annex this land and the land next to it offers some benefit in the long run. There’s a considerable amount of land … that could benefit from city services.”