Another Riverfront hotel? Supreme Court dispute could determine answer

EDITOR'S NOTE: A previous version of this story misstated Charles Oberly's status with the Onix Group legal team. The story has been updated to show that he left the team and returned to the Delaware Department of Justice in January, 2019.  

A Delaware Supreme Court judge is preparing to rule on a potentially precedent-setting heavyweight legal fight over a flurry of hotel construction that is filling the last few empty parcels of developable land along the Wilmington Riverfront.

On one side of the dispute are city officials, the Buccini/Pollin Group and the Riverfront Development Corporation – entities that have been the public, private force behind two decades of Riverfront construction supported by more than $400 million in taxpayer spending.

On the other are the owners of the Riverfront's Big Fish Grill and the Pennsylvania development company, Onix Group.

Boosting their legal team last year was Charles Oberly, a former U.S. attorney and Delaware attorney general. Oberly took a position as senior advisor to the Delaware Attorney General in January, after previously departing from Onix team.  

As the case has wound through Delaware's courts over the last year, BPG and Onix each have been racing to construct competing Riverfront hotels. Both sit on land that lies between the Christina River and Wilmington's convention space, the Chase Center.

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The Supreme Court decision, which is likely to come in late February, could reinforce shifting zoning precedents that ultimately would allow still another hotel to sprout up between the two under construction.

The legal fight is over a 2017 decision by the Wilmington Zoning Board of Adjustment that would allow BPG to construct a 120-room hotel and parking garage on subdivided parcels of land that city code determines to be too small for such projects. 

BPG, Wilmington's largest landowner, claimed it needed to squeeze the buildings onto the smaller footprints so there would be leftover space for another hotel to be built in the future.

Such a plan was necessary for the whole hotel project to be "economically feasible," BPG Vice President Michael Hare told the Board of Adjustment in 2017.

"This may be the L.A., the Las Vegas Strip of hotels, shortly," he said at the time.

It also was a vision that was necessary for the success of the Chase Center as a regional convention space, city officials have claimed, as more hotels are needed to attract big conferences.

The facility is owned by the taxpayer-funded Riverfront Development Corporation.

Through a land swap deal, the RDC transferred parcels of land to BPG for construction of the hotels. 

Also sitting adjacent to the Chase Center is the 180-room Westin Wilmington. In 2014, it became the first hotel to open in the city in 30 years.   

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But an additional hotel in the area also would surely increase competitive pressure in Wilmington's lodging industry, including for the partnering group of Onix and Big Fish.

Their 122-room hotel and banquet hall, which is to be attached to the Big Fish Grill, should open later this year. 

At the Board of Adjustment meeting, William Rhodunda, an attorney for Onix and Big Fish, argued that BPG needed a zoning variance simply because the company had created its own "hardship," after it had successfully subdivided its property into three small parcels, instead of two.

Rhodunda argued that BPG wasn't being direct and clear to the board about its plans for a future hotel on the leftover piece of land.

The board sided with BPG, granting two variances to build a hotel on a 50-percent smaller parcel that is required and to avoid temporarily the landscaping requirements for parking.

Rhodunda appealed the decision to the Delaware Superior Court arguing the city allowed the variances without any "testimony or evidence" needed to prove an economic hardship. 

If the board's decision stands, Rhodunda argued in court documents, it would create precedent that would allow Delaware developers to win variances "for little to no reason."

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The lower court sided with the city and BPG. ruling, in part, that the zoning variance does not go against the interests of the public. 

So Rhodunda appealed to the Supreme Court. That is when he added Oberly, the former attorney general, to his team. 

In their Supreme Court filing, the attorneys doubled down on previous arguments, stating that BPG never proved that the zoning rules posed the legally-required "exceptional practical difficulty."  

"The only alleged hardship was self-created," they said. 

Countering them, city attorneys said the Onix/Big Fish group, "competitor entities," did not provide factual arguments against the variance during the 2017 hearing.

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An ally in Hockessin

Onix's legal arguments gained an ally last fall when the Greater Hockessin Area Development Association filed an amicus brief, stating that if the zoning variance stands, it would create precedent that overrides "standing principles and practices of several decades." 

Association President Mark Blake argued that BPG's request "breezed through the board of adjustment, in part because the company is the "900 pound gorilla" in Wilmington.

He said BPG is following a strategy frequently attempted by developers in the hills of Hockessin and Pike Creek.

"We'll see people purchase a parcel of land and then subdivide it so that they can maximize what they want to do, then ask for (zoning) relief from their own ills," said Blake, who was the Republican candidate for New Castle County Executive in 2016.

Coincidentally, Onix also has been at the center of a separate development controversy in Pike Creek over plans to build 224 residences on the 180-acre Three Little Bakers Country Club, one of the largest pieces of private open space in northern Delaware. 

Ultimately, BPG didn't use its zoning variance when it broke ground on its Homewood Suites hotel that is currently is under construction and expected to open later this year. 

Though, if it wins the Supreme Court case, it could go back to the zoning board with the weight of the legal victory to ask for another variance for the next hotel. 

Whether it ultimately will do that is unclear as company officials declined to comment for this story. 

Attorneys for Onix and Big Fish also declined to comment.   

Contact Karl Baker at kbaker@delawareonline.com or (302) 324-2329. Follow him on Twitter @kbaker6.