Galveston ZBA upholds staff ruling that Denny's rebuild constitutes new construction after 2023 fire; appeal denied

The Galveston Zoning Board of Adjustment on June 9 affirmed a staff determination that the Denny's restaurant at 1410 Seawall is no longer a legal nonconforming structure, concluding that removal of the foundation slab meant reconstruction would be treated as new construction and must comply with current Land Development Regulations.

Tim Tejens, director of Development Services, told the board that Denny's was nonconforming because the building was set back from the front property line under older development patterns. After a fire in October 2023, the applicant initially sought and received a staff determination that the rebuild could proceed under the nonconforming-structure rules because submitted information showed repairs would be under the 50% substantial-improvement threshold. During permitting and early reconstruction the existing slab was found to lack reinforcement and was removed; Tejens said removal of the slab left no remaining vertical building components and that the city's second determination concluded reconstruction would exceed 50% of replacement cost.

Scott Clinton, counsel for the applicant, told the board the applicant's updated cost compilation shows reconstruction at the existing location would remain below the 50% threshold even when foundation repair is included. Clinton provided figures the applicant submitted to the city: an estimated replacement cost of $2,200,000, building repair items totaling $965,000, and foundation repair of about $110,000; together those numbers produce $1,075,000 or 48.9% of the stated $2.2 million replacement cost. Clinton argued the utilities at the site remain functional for reconnection and the city's April 30 letter erred by assuming utilities would need full replacement. He asked the commission to reverse the second determination and allow reconstruction in the same location under the nonconforming rules.

Commissioners questioned whether the applicable test for "substantial improvement" is based on reconstruction cost or the market/appraised value of the structure at the time of the incident. One commissioner emphasized that the Land Development Regulations reference the market value (appraised value) as the comparison and asked for the structure's appraised improvement value; counsel referenced appraisal district records showing improvement value around $378,900 and land value about $1,421,100. Commissioners also questioned the source of the cost estimates and whether reuse of utilities was a reasonable assumption.

After public comment from a nearby homeowner who said moving the building closer to the street could affect view and parking, a commissioner moved to affirm staff's second determination, stating the structure "no longer exists, including the foundation," and that rebuilding constitutes new construction subject to current codes. The motion was seconded and passed; the transcript shows the chair announced the motion passed but no roll-call tally was recorded.

The board's decision means the property owner will need to redesign any replacement structure to comply with the commercial height-and-density requirements (HDDZ 3) and the city's front-property-line build-to standards, unless the owner pursues and obtains a separate variance or other relief. Staff said it will provide a formal written notice of the Commission's action within 10 days.