New Castle County (NCC) Council upholds former County Executive Matt Meyer’s veto of an ordinance that would have increased impact fees.
Current NCC Code requires the county to periodically evaluate and update developer impact fees to help fund infrastructure projects and county services like parks, libraries, EMS and law enforcement.
Yet those fees have not been increased since 1999, and with booming development around Middletown and Odessa, Councilwoman Dee Durham says the current fees do not come close to covering the need for new services in those communities.
“The impact fees that we're collecting from all that new development is not really even putting a dent in the increased cost needed for all these increased services," Durham said. "So we're paying for that. If you own a home up in Brandywine Hundred, you're paying for that need down south of the canal."
That’s why Durham introduced an ordinance to gradually increase those fees, which passed in December 7-2 with three members not voting, but Meyer vetoed it just two weeks later.
In a statement, Meyer cited concerns the increases would exacerbate the state’s affordable housing crisis, which rang true with some council members Tuesday night as an attempt to override the veto failed 6-6 — it needed a 10 vote supermajority to be overturned.
At Spotlight Delaware's Legislative Summit, Meyer elaborated on his veto, saying he doesn't feel the length of time since the last increase justifies implementing another increase.
"There are areas that need additional investment, but raising impact fees like that across the board just doesn't make sense," Meyer said. "I talked to Marcus, and I just said 'Listen, you can do this if you want.' On my watch, my belief is if you're going to raise fees, you can raise fees... but I don't believe in just raising fees on people just for the sake of raising fees, and that's particularly true when I can count 20 families right now I know that are looking for homes and finding difficulty either affording the rent or finding a mortgage."
Meyer is referring to Marcus Henry, New Castle County's newly elected County Executive.
But Durham contends the majority of new home buyers in NCC are buying homes that are "not even close to being in the definition of affordable," and in the meantime, the need to fund increased services are being borne by "those who can least afford it."
She explains her ordinance provides several exceptions for affordable housing units and sets impact fees based on Engineering News-Record (ENR) cost indexes, which measure the cost of construction in the U.S.
"We're not inventing the wheel here, we're using a standard. It's well recognized across the country, so all that the bill does is say 'You've kicked this can down the road long enough, here's a deadline to get the fees up to speed, and and then after we get them back up to speed, then you have to keep them up to speed annually," Durham said.
Additionally, Durham says there could be cause for concern of higher tax rates without these increased impact fees.
“In theory, if we don't get these impact fees up to speed, it does impact everyone. And if the impact fees are brought up to speed, it could help make the general tax increase a little bit less.”
Durham says the county is waiting for the dust to settle on the reassessment process before making any conclusions on tax increases, but the decision is looming.
Councilman Kevin Caneco, a co-sponsor and strong supporter of the ordinance, said at Tuesday night's meeting that a 10% county-wide tax increase could be "the low end" of what Council would have to pass to keep up with increasing costs.
Caneco argues wealthy out-of-state homebuyers are "very capable" of paying the fees and that raising the fees is a more suitable revenue solution than taxing everyone in the county more.
While the developers are the ones who cover the cost of the fees upfront, they generally pass that cost onto the homebuyer by including them in the price of the sale, but Caneco says with the current real estate bidding wars, buyers will likely want to pay that fee.
But several members of council still raised concerns about locking out low-income families from buying houses in the southern part of the county, and many, including Council President Monique Williams-Johns, believe Henry's administration should be allowed to provide their input on the matter.
Durham says she’s been in talks with Henry already and plans to reintroduce the ordinance with some minor changes with a hopeful effective date of September.
