Why Should Delaware Care?
A group of lawmakers convened for a fourth time on Tuesday to investigate the impacts of Delaware’s first statewide property reassessment in nearly 40 years, hearing from small business and housing leaders. What exactly relief for these commercial property owners could look like is somewhat unclear, as lawmakers begin to work through legislative fixes for the next session.
State lawmakers grappled Tuesday with how best to move forward in the ongoing property reassessment saga, and particularly how it may ease the burden now shouldered by small businesses and landlords.
Tuesday’s legislative committee hearing – the fourth in a series of five meetings scheduled to investigate the impacts of Delaware’s first-in-40-year property reassessment – included testimony from eight stakeholder groups. Many of them decried lawmakers’ decision earlier this year to allow New Castle County to tax residential and commercial properties at different rates.
“This tax policy is going to put small businesses out of business,” said Phil McGinnis, speaking on behalf of the Delaware Association of Realtors.
And while representatives from the eight stakeholder groups said they need relief from the increased tax burden imposed by the statewide reassessment, what that relief could ultimately look like remains unclear.
Moving even some of the tax burden back on to homeowners would likely be a politically unpopular move after months of outrage.
Stakeholders describe wide-ranging impacts
Each of the eight groups gave a presentation Tuesday outlining their concerns.
Kevin Wolfgang, president of the Evergreen Apartment Group and a representative of the Delaware Apartment Association, said the decision to split tax rates in New Castle County through House Bill 242 is damaging the state’s rental market.
“We want to make sure that there is a healthy housing stock in Delaware, there is a healthy investment in housing in Delaware, and there’s affordability in housing in Delaware,” Wolfgang said. “And basically, this tax structure is challenging all of that.”
Under the split rate tax structure, Wolfgang said renters are essentially treated as second-class citizens, bearing an inequitable burden. He called for apartments and manufactured homes to be considered residential property for taxation purposes.
The Delaware Apartment Association was part of a coalition of landlords and hotel owners that unsuccessfully sued the state, New Castle County and its school districts earlier this fall in an attempt to overturn HB 242.
Joyce O’Neal, president of the Delaware Manufactured Home Owners Association, also said manufactured homes should be considered residential properties for taxation purposes. Manufactured homeowners face the unique burden of renting the land their home sits on, she said. This lot rent, paid on top of a homeowner’s tax bill, is often used as a method for landlords to pass down their own tax burden onto tenants.
Speaking for the Delaware Restaurant Association, President and CEO Carrie Leishman said the industry already faces “razor-thin profit margins,” and an unexpected spike in property bills only exacerbates a restaurant owner’s already tight budget.
“The death of small business is the lack of predictability,” Leishman said.
She asked for restaurant owners and members of the hospitality industry as a whole to have a seat at the table as lawmakers craft new legislation about reassessment and property taxes.
Recent property tax increases hit small, urban farmers in New Castle County especially hard, said Sydnie Grossnickle, a program and policy coordinator at the Delaware Farm Bureau. She gave the example of one farmer who received a $25,000 tax bill this summer, only to have that bill jump to $36,000 after lawmakers implemented HB 242.
Quick fixes vs. long-term solutions
After hearing from stakeholders, lawmakers spent much of the afternoon grappling with how best to address their concerns.
State Sen. Eric Buckson (R-South Dover) asked the presenters what exactly they were looking for lawmakers to do.
“Are we talking about an ask from this group to create legislation or create a cure for now, or for the next time?” he asked. “Because I’m at a loss for what to do.”
Buckson later told Spotlight Delaware he asked his question in an attempt to create urgency among his fellow lawmakers, and to give clarity to the stakeholders about what lawmakers can accomplish.
“Ideally,” Wolfgang said, “we’d like all the cures.”
But more immediate fixes or stop-gap measures are not realistic, Senate Majority Leader Bryan Townsend (D-Newark/Glasgow) told Spotlight Delaware.
“There’s deadlines involved,” Townsend said. “There’s funding of county government and schools that are involved. So there’s no more immediate moment mid tax year.”
The plan for the committee, he said, has always been to craft legislation for the upcoming 2026 session that could go into effect as soon as next July for the next tax year.
Conversations about what exactly that legislation could look like, Townsend said, are ongoing.
The legislative committee is scheduled to meet for its final hearing on Monday, Dec. 15, inside the Senate Chamber at Legislative Hall, where lawmakers will hear from school district leaders.