Donovan Smith residents win fight to stop rent increase

Things are looking good in the Donovan Smith manufactured home community outside Lewes – both literally and figuratively.

Residents were notified in October that planned lot rent increases had been halted after a Superior Court decision upheld an earlier arbitrator’s decision. This comes on the heels of improving resident-management relations, with both groups working together to improve the community.

“It’s unbelievable what’s happening here,” said resident Clara McNichol, who stepped down as president of the homeowners association in June to become the park manager, working for landowner KDM Development Corporation.

In the months since, she’s worked with KDM to improve the park by removing abandoned and dilapidated homes, clearing nuisance trees and stumps, and beautifying the neighborhood.

More than a dozen rundown homes have been or will be removed. KDM has agreed to bring in new homes when the lots are ready.

“I have a list of people who want homes,” McNichol said. “People are so excited about coming here.”

Donovan Smith opened as a family campground in 1965, and sold to KDM in 1997.

Donovan Smith has a large seasonal population, but the number of full-time residents is increasing, said HOA Interim President Phil Young.

“We’re optimistic that with the demolition of 13 or more abandoned properties and the placement of new homes, our community will finally start to look better,” he said.

Young has been a resident of the park since 2004. An HOA was formed a few years ago when residents’ frustrations with management began to boil over.

“Rents on lots continued to increase, and citizen complaints were largely ignored,” he said. “Properties were outright abandoned by residents who were on fixed incomes who couldn’t afford rising rents or to make repairs.”

The landowner raised lot rents $30 per month in 2017. Residents fought the hike, but ultimately lost in a case in Delaware Supreme Court.

The landowner came back in 2018 with another rent increase. This time $60 per month. Residents again fought it. This time, they were successful.

In April 2018, an arbitrator said the owner had not met requirements to increase the rent. The decision was appealed by the landowner to Superior Court.

The matter was then stayed for more than a year while Judge Craig Karsnitz waited for Delaware Supreme Court to rule on two related cases, including Donovan Smith’s 2017 case.

In the 2018 case, the arbitrator found the landowner did not prove the rent increase was directly related to operating, maintaining or improving the community. He also found the landowner did not prove market rent for justification of the increase.

By waiting for the decision from Delaware Supreme Court, Karsnitz determined the arbitrator erred on whether the rent increase was directly related to community expenses. Despite that, Karsnitz found, the arbitrator correctly judged that the landowner did not prove market rent to justify the increase.

With the legal proceedings behind them, McNichol said she’s focused on adding new residents to the park while keeping the existing residents happy.

“The more people we have, the more homes we have, the less we have to worry about a big rent increase again,” she said.

A new rent structure has been introduced, she said, which keeps existing residents at the same rent while new residents pay a little more.

In the near future, Donovan Smith residents hope to connect to the Lewes Board of Public Works for water and sewer. Donovan Smith’s septic systems are failing, McNichol said, and the community is willing to be annexed into Lewes to receive the city’s services.