LEWES — In two years’ time, Kings Highway in Lewes may have an answer for the issue of finding affordable housing for the working families and people in Delaware’s resorts.
The venture on Route 9 headed by Ocean Atlantic Companies Chairman and CEO Preston Schell is literally breaking new ground by partnering with Milford Housing Development Corporation to specifically build and sell condominiums for those who can’t afford the high-end housing options flooding the beach community market.
“We want to sell these condominiums to Mr. and Mrs. Smith who work for Cape Henlopen School District. We want to sell five to some businesses like Grotto so they can have a place for their summer workforce,” Schell told the Delaware Business Times. “No one is really focused on this issue, and it’s causing people to rent or buy in Western Sussex and drive a half hour to work every day.”
The Dutchman’s Harvest, featuring 140 units split between 14 two-story buildings, will hit the market with one-bedroom apartments under $200,000 and hitting the high $200,000 range for three-bedroom units.
Schell said the hope is to start selling condominiums come 2023, nearly four years after the project was first proposed.
Back in 2019, Beebee Healthcare agreed to sell 16 acres of land on Kings Highway to Ocean Atlantic Companies. Schell envisioned a senior living community and a medical office. Through the joint venture agreement with Vantage Point, half of the land will become the 175-unit Lodge at Historic Lewes.
As for the medical office, Schell said that Lewes officials and surrounding neighbors were not keen on that proposal. Instead, they challenged Schell to do something rarely done in the beach towns: create affordable condominiums for workers. Beebe Healthcare, which owned the land specifically for the Dutchman’s Harvest, finalized the sale with Ocean Atlantic Companies for roughly $1.4 million on July 1, according to Sussex County land records.
Under the tentative agreement with Ocean Atlantic, Milford Housing Development Corporation — previously Diamond State Community Land Trust, but was bought out this year — will buy up to 42 units and then resell the units to qualified buyers who make 60% to 100% of the median income for Sussex County. According to census figures, the median household income in the county is $63,162.
Milford Housing Development Corp.’s condominiums will be under stipulations, including that buyers work between Cave Neck Road to Route 24 to the coast. It is proposed that resales in the first 20 years are limited to other qualified tenants and to the highest bid not less than 95% of the appraised value, according to documents filed with Lewes officials.
Ocean Atlantic will sell the rest of the units directly to the workforce community, with no income limit required. The condominium must be the homebuyer’s primary residence and they must earn their living from a business operating in and serving Sussex County.
Ocean Atlantic, Milford Housing Development Corp. and Lewes officials are discussing ideas to ensure that the buyers of the market-rate condos intend to live in them for the foreseeable future and to deter speculators to buy a unit at a discounted price and resell it at a higher price in the short term.
“We want to make sure we don’t have people gaming this system,” Schell said.
But since Dutchman’s Harvest was first proposed in 2019, the project has hit several speedbumps. The Lewes Mayor and Council revised its code to raise the total number of units in an attached dwelling from eight to 10.
Another battle was over impact fees, which are designed to offset the burden on wastewater treatment. The Lewes Board of Public Works reportedly were looking at $1.34 million in fees, but ultimately the Mayor and City Council agreed to slash that to roughly $965,000.
Come 2020, Dutchman’s Harvest needed to be redesigned from its proposed big-house style when soil tests showed a need for more stormwater management on the site.
Two years ago, the projected pricing for the Big House style units were close to prevailing market prices. But with the redesign of the buildings to make the units more affordable — and a dramatic rise in real estate values — the condominium units are projected to be priced at a discount of $50,000 to $100,000 to comparable properties in the area.
“Lewes might not be the easiest place to obtain development approval, and some items in the code were contrary to the elements that you see in affordable housing. But I will say the city worked with us nearly every step of the way to make this project as successful as possible,” Schell said.