By Eddie Phillipps, Cape Gazette Staff Writer
Instead of dishing out candy on Halloween, developers now known as Dewey Beach Enterprises doled out millions of dollars.
If that name doesn’t sound familiar, it’s because the developer that had a contract on the land, Harvey, Hanna and Associates, teamed up with businessmen Jim Baeurle and David Sills to make a stock purchase of Dewey Beach Enterprises.
That’s the company that owns Ruddertowne. Harvey Hanna president Thom Harvey, Baeurle and Sills are now the principal owners of Dewey Beach Enterprises, which was previously an asset of Highway One.
Owners pay $12.5 million
The new owners of Dewey Beach Enterprises paid a total of $12.5 million, according to Baeurle and Highway One chief partner Alex Pires.
A sum of $9,360,000 went toward the property and buildings. The rest, which totaled $3,140,000, was for licenses, furniture, stage equipment and the other fixtures located in the shops that include Crabbers Cove, the Lighthouse Restaurant and Raw Bar, Booksandcoffee, Sunnyside Up and the Baycenter. The sale was completed Wednesday, Oct. 31.
The Town of Dewey Beach gets $140,000 from the transfer tax, while the county and state get $70,000 apiece.
The payment of the taxes will be split between the buyer and seller. Pires said the purchase should not have required payment of the tax because the business, not the real estate, changed hands. But both sides agreed to pay it anyway.
“We voluntarily did it,” Pires said. “There’s an argument that when you sell it in stock that you don’t have to pay real estate transfer tax.
“It can really upset people and they feel like it’s lawyers playing with lawyers. So both sides agreed to have the bank do an appraisal and we did the transfer tax on that.”
Dewey Beach Enterprises attorney Shawn Tucker agreed that the transfer tax was not necessary, but his clients and Pires wanted to show they were willing to work with the town.
The transfer tax will not be deducted from the $3 million Dewey Beach Enterprises spent on the licenses, fixtures and sound equipment. The money will come from the $9 million spent on the property and buildings.
It cost Highway One nearly the same amount to purchase Ruddertowne and the parcel across Dickinson Street that includes the Rusty Rudder from Jay Prettyman in 2000. The Rudder closed for the winter for the first time in 27 years on Oct. 27.
“The Rusty Rudder is the part we are most interested in,” Pires said.
Orignal plans dashed
Harvey Hanna originally planned a 68-foot luxury complex, nearly twice the town’s height limit of 35 feet. The developer then knocked that height down to 48 feet, a height that has not been approved by town officials.
Another tough task faced by developers is an ordinance in Dewey that stipulates that no new hotels can be built. While the developer is negotiating with the town, the Ruddertowne businesses will stay the same.
“No matter what happens, and we’ve said this throughout the negotiations, the facility there is going to be there for a couple of years,” said Baeurle.
Negotiations on the larger project will continue, he said.
Contract would expire
Harvey Hanna had a contract on the property since this summer that would have expired Thursday, Nov. 1. Baeurle said the deal went smoothly, since it had been in the works for months.
“Quite frankly it was pretty seamless,” Baeurle said.
With the transfer of property also comes the ability to build townhouses if the new owners of Ruddertowne so desire. Highway One had the authority to build 48 townhouses and that contract is still viable.
Representatives for the developer have consistently stated that tactic is a last resort.
Contact Eddie Phillipps at eddiep@capegazette.com