Why Should Delaware Care?
Delaware lawmakers have frequently listed building more affordable housing as a top priority in the state. But the recent property reassessment has saddled many existing affordable housing with higher taxes, which some believe could discourage future developments.
While testifying to a legislative panel last December, an executive from a company that owns income-restricted apartments in Wilmington pleaded with lawmakers to lower property taxes on affordable housing.
Debra Burgos, chief operating officer at the Evergreen Apartment Group, said those taxes had tripled in 2025 on the River Commons Apartments, following New Castle County’s once-in-a-generation property reassessment.
Burgos explained to state lawmakers that her company could not do much to offset the additional cost. It could not raise rents beyond a certain threshold because those apartments received low-income housing tax credits to fund their construction.
Burgos later told Spotlight Delaware that her company could absorb some of the expense by delaying upgrades or nonessential repairs to the apartments. But, she warned, other smaller landlords may not be so lucky.
“For other operators, they may not even be able to replace a roof,” Burgos said.
Evergreen Apartment Group is not alone. Three other affordable housing developers told Spotlight Delaware they are struggling under higher tax burdens after last year’s property tax reassessment.
Lawmakers broadly agree that something needs to be done to ease the tax burden on affordable housing – the availability of which they have made a top legislative priority in Delaware.
But, in interviews with Spotlight Delaware, they have also described how they must balance competing interests, including fully funding schools, encouraging businesses to grow, and ensuring rents stay affordable.
They also need to keep the property tax burden on homeowners front of mind.
Last year, the property reassessment resulted in steep spikes in residential tax bills in New Castle County, which caused the biggest political firestorm of the year. The residential increases occurred in part because of lower assessed valuations on commercial offices in downtown Wilmington, which had experienced a COVID-era downturn during the year of the assessment.
Now Senate Majority Leader Bryan Townsend (D-Newark/Glasgow) said that if lawmakers lower taxes for one group, others will have to pay more.
“The question really is, ‘How do you divide the pie?’” Townsend said.
Businesses push back
The impact on apartments of last year’s property tax reshuffling was exacerbated last summer by Delaware lawmakers’ decision to ease the new tax burden that had been imposed on residences.
In August, the state legislature passed House Bill 242, which allows school districts in New Castle County to charge higher property tax rates on commercially owned land in order to subsequently lower the rates on residential properties.
But during the subsequent hearing in December, when Burgos made her plea, leaders of other types of businesses shared their concerns about the consequences of HB 242.
Speaking for the Delaware Restaurant Association, President and CEO Carrie Leishman said the industry faces “razor-thin profit margins,” and the unexpected spike in property bills only strained restaurant owners’ tight budgets.
“The death of small business is the lack of predictability,” she said.
Sydnie Grossnickle, a program and policy coordinator at the Delaware Farm Bureau, also told lawmakers that farmers are struggling more than other industries because of their thin margins.
She recommended the legislature pass a bill requiring property tax “circuit breakers” that would prevent taxes from going above a certain threshold.
“Yes, we’re asking for ‘special treatment,’ but we want to continue to feed you all,” Grossnickle said.
Other apartment developers that do not have rent restrictions also spoke out against the law.
Kevin Wolfgang, a representative of the Delaware Apartment Association, said the current law essentially treats renters as second-class citizens. He asserted that landlords will have to raise rents to pay for the higher taxes that benefit homeowners.
The owners of some apartment complexes in New Castle County also argued in a lawsuit filed last year, which claimed HB 242 is unconstitutional, that the new higher assessments could lead to difficulties paying their mortgages, and potentially even foreclosure.
In November, the Delaware Supreme Court ruled that the law is constitutional.
Special exceptions for affordable housing?
Sean Kelly, partner and vice president at affordable housing developer LNWA, argued that companies like his are truly in a unique position because they are contractually not allowed to raise rents — their only source of revenue — beyond a determined threshold.
When there are unforeseen increases in operating expenses, he said, affordable housing developers may have to draw from their reserves.
“It’s not necessarily something that happens overnight, but the fundamentals of the financing of the property start to erode over a longer period of time,” Kelly said.
David Holden, Development Principal at Wilmington-based housing developer Ingerman said it does not make sense for the state government to help fund affordable housing, then raise taxes on it.
“Why encourage affordable housing and then penalize it on the back end? It’s kind of like you’re shooting yourself in the foot,” he said.
Townsend said there appears to be “broad support” in the legislature for making all housing classified as residential, therefore lowering their taxes. He hopes to get a bill passed in May or June.
State Sen. Russ Huxtable (D-Lewes Rehoboth) wants to go even further. Last session, he introduced Senate Bill 149, which would allow income-restricted housing complexes to pay 5% of their annual income in place of their standard property tax bill.
But, if either proposal becomes law, the tax burden would have to be shifted elsewhere.
One solution to the issue could be changing the assessment of properties that have been underassessed and now pay less in taxes than their fair share, Townsend said.
The state legislature recently passed a bill that would allow New Castle County to investigate suspected underassessments. Gov. Matt Meyer allowed the bill to become law without signing it, according to a spokesperson from his administration.
A New Castle County representative told Spotlight Delaware that the county would take advantage of the law. County officials are currently deciding the scope of properties to review and the timeline that it would happen.
In all, Townsend said the fallout from the property tax reassessment is far from over. He said he understands that residents and business owners are frustrated with how long the process has gone on.
“But we have to get it right, even if it means new rounds of conversations and new rounds of legislation. We have to get it right,” Townsend said.
