Rehoboth Beach granted clean title to City Hall property

The city of Rehoboth Beach was granted a clean title to the remaining property beneath its new City Hall Friday, clearing the way to federal financing of the project.

The federal government was withholding the final $2.2 million payment of an $18 million construction loan until the city can prove unequivocally that it, alone, owns the land.

On Friday, with no one disputing the city’s ownership, it was granted to Rehoboth Beach by Delaware's Chancery Court.

“This clears the way for the final payments from USDA to our loans,” Rehoboth Beach Mayor Paul Kuhns said. “It was mostly a housekeeping situation from a title perspective.”

Kuhns said it was blown “way out of proportion.”

“It was something our legal team filed for when USDA noticed there wasn’t a legal deed on file,” he said. “Our solicitor went to the Court of Chancery to get a ruling, and today the court made the ruling that we are the owners of the property.”

BACKGROUND: Rehoboth's $21 million City Hall built on land without a deed

BACKGROUND: Rehoboth Beach City Hall meets wrecking ball

The lack of a clear title had been another hurdle for a project that has been discussed for a decade and is now projected to be nearly $3 million over budget.

The U.S. Department of Agriculture had said it needed assurances there was nothing that would "jeopardize" the intended use of the building before giving the city its final payment, said Kathy E. Beisner, acting director of USDA Rural Development in Delaware and Maryland.

The Chancery Court petition filed by the city in August said federal officials notified city leaders there was a problem in February.

But then-Mayor Sam Cooper said the USDA was aware the city could not prove ownership when it began sending money to Rehoboth.

"You can't go to Georgetown (Sussex County Recorder of Deeds office) and say here is a deed for that property," Cooper told The News Journal, who until August was mayor for nearly 27 years. "It doesn't exist."

Yet, given the city’s long history of occupying part of the property, he said he had no doubts the issue would be resolved by Chancery Court.

The News Journal's Xerxes Wilson contributed to this report.