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Crest Planning Board to Take up Revised Mahalo Proposal in February

Michael Heenan/File Photo
Shown is Rosemary Road in Wildwood Crest, looking east toward the ocean. On the right of the street, in the foreground, is the Compass Family Resort. Behind it is the former Ocean Holiday Motor Inn, which was purchased by ICONA Resorts Chairman Eustace Mita, who had hoped to open a Mahalo Hotel there. However, the site has remained untouched, in its dilapidated state for years, as the prominent hotelier continues to struggle to gain necessary construction approvals.

By Shay Roddy

WILDWOOD CREST – The former Ocean Holiday Motor Inn will remain frozen for at least a few more months in the ramshackle state it’s been in for four years, after the Planning Board adjourned a development application at its Dec. 6 meeting from a well-known hotelier who purchased the oceanfront motel in 2019.

The proposal by ICONA Resorts Chairman Eustace Mita to extensively renovate the motel, located at Rosemary Road and the beach, and add a tower of rooms has appeared before the Planning Board so often that some who have closely followed it are beginning to feel as if they are living in the film “Groundhog Day.” The latest iteration will return for a hearing in February.

Mita would like to open a Mahalo Resort, the select-service complement to his full-service ICONA brand. However, the application has been met with fierce opposition and other delay-causing complications. Mita said it’s been the most difficult planning application process he’s faced in his career.

ICONA Resorts Chairman Eustace Mita at a Wildwood Crest Planning Board Meeting in June. Photo Credit: Shay Roddy/ File Photo

“I’m speechless,” he told the Herald after the Dec. 6 meeting. “I’ve been here since my birth. We haven’t had a new hotel in Wildwood Crest in over three decades. Three decades. All this would do is help.”

Neighbors and other local hotel and motel owners addressed the board during prior public hearings and said approving Mita’s plan and requested variances would be an overreach by the Planning Board. One neighbor, the Compass Family Resort, directly west across Ocean Avenue, has vehemently objected to the proposal.

Déjà Vu All Over Again

The Compass, represented by attorney Nicholas F. Talvacchia, argued that the new application was so similar to the second Mahalo application that the board voted down in June that the developer should be barred from presenting it under the legal doctrine of res judicata. Res judicata prevents parties from getting a second bite at the apple, so to speak, when the matter has already been adjudicated.

Talvacchia argued at the meeting Dec. 6 that the latest application from Mahalo offers no substantive changes. He conceded that traffic circulation was changed in the parking plan, but spots were taken away to do so, which he argued is not an improvement.

Nicholas F. Talvacchia, at the podium, an attorney for the Compass Family Resort, argued the board should not hear the latest application. Photo Credit: Shay Roddy

He also acknowledged that the latest proposal took the new tower back 5 feet off Ocean Avenue, but that that wasn’t really addressing the more objectionable setback off Rosemary Road, which remained the same.

“It’s repackaged. It’s the same application,” Talvacchia told the board.

But Mahalo lawyer Frank Corrado said that the newly submitted application is substantially different from the one that was denied in June. For example, he said, the board’s principal issue with the first application was the parking arrangement, and the newly submitted application introduces two new parking plans for the board to consider.

“The doctrine of res judicata requires that the new application be substantially different. It doesn’t say substantially different in a better way. It just says substantially different. So, to the extent that [Talvacchia] argued that there are aspects of this application that are not as ‘good’ – if that’s the correct word – as the previous application, that is irrelevant to whether the doctrine of res judicata applies,” Corrado argued.

He said the Compass argument that the board should not be able to hear his client’s updated application is further troubled by the fact the opposition seems to misapply the legal doctrine in arguing that, because there are more things on the application that remain the same than have been changed, it constitutes a second bite at the apple.

“This is not a quantitative determination that the board makes. It is a qualitative determination. You have to look at this application and determine whether it is substantially different or makes a substantial change to the application that was previously before you. And there is no question that this application makes a substantial change,” Corrado said.

Frank Corrado, at the podium, an attorney for Mahalo Hotels LLC, argued the latest application has substantial changes. Photo Credit: Shay Roddy

Planning Board Solicitor Robert T. Belasco, who advises the volunteer board members on legal issues raised during hearings, said he agreed with Corrado’s assessment that the test is qualitative, not quantitative, and offered a further interpretation on when the doctrine is appropriately applied.

“It prevents individuals from constantly re-presenting the same application. Hey, it was denied. Let’s wait six months, let’s go back. Hey, it was denied. Oh, there’s new board members, let’s go back. So, it ensures a level of finality to these types of decisions,” Belasco said.

He said the doctrine most often comes up in the courts, but that it can also be applied to administrative agency decisions, like planning board determinations. Case law has created the “substantially similar” standard that the new planning application must overcome, he added.

“You need to weigh what was decided previously when this application was ultimately heard and denied in June, view what has been modified, and determine whether that’s a substantial modification to overcome that preclusion,” Belasco told the board members.

After considering the arguments, the board voted unanimously that the changes were substantial and that it should hear the new application. In brief on-the-record deliberations that preceded the vote, board members said they felt the reworked parking proposals and the setback change off Ocean Avenue met the burden of substantial modifications.

In an interview after the hearing, Compass owner George Pawlowski Jr. said he will not pursue that legal question further.

“Our legal team felt it was a close call with res judicata, so we agreed to try it. We don’t disagree with the board for wanting to hear [the application] out,” he told the Herald.

Onto the Hearing, or Not…

With Mahalo listed third on the Planning Board’s December agenda, by the time the other two applications were adjudicated and the issue of res judicata settled, it was more than three hours and 15 minutes into the meeting. The Planning Board cuts meetings off after four and a half hours. The last time Mahalo made a presentation the hearing was split between two meetings and lasted seven and a half hours.

Corrado, the Mahalo attorney, asked the board if it wanted to get started or if it would be wise to begin the hearing at the beginning of the next meeting.

With some concerns raised over whether all board members present for the Dec. 6 hearing would be present for the next meeting, where the unfinished hearing would be continued, it was decided not to begin taking testimony at the late hour.

A scheduling conflict with the board’s January hearing date for one of the professionals the Compass planned to have testify in opposition forced the matter to be pushed off to February. In the gallery, Mita was visibly frustrated with the further delay, tapping his lawyer on the shoulder and leaning into his ear, saying, “Five years, five years!”

The former Ocean Holiday Motor Inn, pictured earlier this month, has been in a ramshackle state after closing following the 2019 summer season. Photo Credit: Shay Roddy

A Not So Brief History

The Compass has argued that to allow the hotel to be built as planned would obliterate the so-called view corridor the Crest has carefully planned and protected and create a dangerous and congested parking situation that is not in the best interest of the resort town. View corridors refer to the layout in the hotel and motel zone where the structure is farthest from the roads that run east-west, the pool is in front of the rooms, and the parking in front of the pool, creating wide-open spaces and allowing views from properties farther back from the beach.

In 2020, the Crest Planning Board approved a version of Mita’s Mahalo application. But the Compass sued in Superior Court, claiming among other things that the hearing, which was adjourned four times, was delayed until the objecting crowd was weeded out of attendance and the new hearing dates were not properly noticed. A judge dismissed that suit but the Compass appealed, and while the case was pending, the state Department of Environmental Protection determined the project needed a Coastal Area Facility Review Act permit prior to construction.

In an effort to get the CAFRA permit, the developer scaled the project back, taking a proposed setback off Rosemary Road from the zero feet approved by the Planning Board to 11 feet. Thirty feet is the ordinance requirement. Even though the new project asked for less than the relief the Planning Board had already granted, the Compass successfully argued that it was now a new application that would therefore have to come back to the Planning Board.

This time, the Compass was ready. During two hearings that totaled 7.5 hours of testimony, the Compass’ lawyer presented expert testimony from a professional planner and traffic engineer.

The cat was also out of the bag in the community this time, and instead of being presented to a near-empty room, the Mahalo application was heard in a room packed wall-to-wall by a crowd that overflowed into the hallway. Many of those in attendance took to the podium during public comment, with the majority not in favor of the application.

Almost the same number returned for the second half of the hearing, in June, and at the end of that hearing the board denied the application. Several board members reversed the vote they cast three years prior on the first Mahalo application.

Tensions Rise

In an interview after the Dec. 6 hearing, Mita pointed the blame at his neighbor behind him, the Compass. He said the delay, which has been more than four years, has cost him $3 million including legal fees, professional fees and carried interest. He said he bought the property for $5 million.

“We’re in it for another three months,” Mita told the Herald. “Now we’re $8 million into the project. If you were to come along today, you’d say those numbers don’t work. Thank God we have eight other hotels or there’d be no way for us to carry this. But no matter how you look at it, it’s an incredible loss to our company. We are one of the largest employers in Cape May County. We have, in the summer, over 1,200 team members. It’s sad.”

Mita said he feels the opposition comes from a small but vocal minority.

“The sad part is you have a handful of people – literally a handful, five or 10 people – who fight it. The tail continues to wag the dog here,” he said.

Pawlowski, the Compass owner, said that assertion is ridiculous, and that the huge turnouts to the board meetings in the spring prove it.

“The room was filled wall to wall to wall with people spilling into the hallway on a Wednesday night in April. There is significant opposition and, most notably, everyone on Rosemary Road, all the way to NJ Avenue, is against it,” Pawlowski told the Herald.

In April, members of the Wildwood Crest community packed a Planning Board meeting for a presentation on the controversial Mahalo Hotels project. Photo Credit: Shay Roddy/File Photo

But Mita said he feels the town supports him and his vision.

“I know that Wildwood Crest as a community and municipality is behind it,” he told the Herald.

Pressed by a reporter on how he knows that, he backed off the statement.

“Well, not behind me personally,” he said. “I don’t know that Wildwood Crest is behind this project. Maybe they are, maybe they aren’t. I’m saying Wildwood Crest is, when I say they’re behind it, they’re behind beautifying Wildwood. I mean you come to any of these meetings, everything they do is to beautify it.”

Mita said he doesn’t know what the Compass wants and blames the delay on the “continual obstruction from the neighbor behind us.”

“I don’t know what they want. I literally don’t know what they want,” he added.

Pawlowski said he’s been clear from the beginning that obstructing the view corridor is the main objection. He said that he has tried to communicate and perhaps reach a resolution, but that the Mahalo group was not interested in feedback or negotiation.

“Our attorney attempted to contact [Mita’s] well before the last application was heard and rejected. They did not reply, as they were not interested in what we want,” Pawloski said when asked for a response to Mita’s comment. “Adding rooms on top of the existing building, as the master plan suggests, would not trigger opposition from us.”

The project is scheduled to be reviewed by the Planning Board at a hearing Feb. 13.

Contact the author, Shay Roddy, at sroddy@cmcherald.com or 609-886-8600, ext. 142.

A rendering of the proposed Mahalo Resort. A modified application will be heard by the Planning Board in February.

Reporter

Shay Roddy is a Delaware County, Pennsylvania native who has always spent as much of his summers as he could at the Jersey Shore. He went to Friends’ Central and is a graduate of the Walter Cronkite School of Journalism at Arizona State University.

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