Impact fee proposal supporting schools gaining interest in Sussex

Like their Kent and New Castle County counterparts, school districts in Sussex County would reap financial benefit of development through an impact fee proposal that is generating interest and support.

Milton resident Jeffrey Seemans at the Oct. 20 Sussex County Council meeting presented this proposal, which he said would enhance districts’ capital finances for major construction/renovation projects.

“Builders in New Castle and Kent counties have been paying the school impact fee for years and no one has said that such a fee killed residential development in either of those two counties,” said Mr. Seemans, during his public commentary presentation. “It is really a fee on people who do not even live here yet. Why shouldn’t these people help share the cost of future school construction?”

Several school districts are on board.

“New Castle and Kent county each have a separate system to support the impact of development and growth on schools,” said Sara Croce, Milford School District Chief Financial Officer. “Given the influx of development in Sussex County and the effect this has on school facilities and space required to meet student needs, we support the movement to develop and implement an impact fee program similar to that of Kent County. We feel it is a way to lessen the burden on taxpayers within our district but still provide much needed funding to keep our school facilities adequate. We would be happy to assist with the implementation of such a program in Sussex County.”

Oliver Gumbs, Cape Henlopen School District Director of Business, says the Cape Henlopen district “supports and is willing and able to contribute to the development of an impact fee related to growth and development in our district.”

“Currently, the district is in the middle a multiple major capital improvement projects due to the population growth in our area. These projects include, but are not limited to, the expansion of our middle and high schools, building new elementary schools and adding a third middles school. These projects will cost our taxpayers almost $275 million,” said Mr. Gumbs.

The impact fee proposal was discussed briefly during the Indian River School District’s Oct. 26 board of education meeting.

“New Castle County and Kent County currently collect it,” said Tammy Smith, IRSD’s Director of business. “It is a fee on residential building permits.”

Ms. Smith further informed the board this initiative is in the infancy stage. “We’re not even starting with the amount of the fee,” she said. “It’s just the collection, or the authorization of that, which at least in part would filter down to the local district to help support the infrastructure for the increase of building within the local school district.”

“During the last referendum that was a fairly common question: ‘Why aren’t the real estate people contributing towards this?’” said IRSD school board member Dr. Donald Hattier. “As chairman of the finance committee I’d be looking for input; you all have my email. Please drop me an email with what your thoughts are on it.”

“We’re not going to vote on it (tonight) but I think it’s fine for us to openly discuss impact fees,” said IRSD school board president Rodney Layfield. “It’s constantly a topic of discussion with representatives when our feet are held to the fire.”

Ms. Smith pointed out the imposed impact fee would remain local, with funding going to the school district in which the development occurs. She said for example if the development was in Millsboro “the fees would come to us.”

Mr. Seemans said New Castle County has had school impact fee legislation since 1999; Kent County, since 2006.

“But Sussex County, that is currently witnessing unprecedented residential development, especially in coastal Sussex, remains without this fee,” said Mr. Seemans.

According to Kent County’s website, all applications for building permits are subject to a surcharge of 1.16 percent of the proposed construction valuation for the local school district and 0.09 percent for Polytech School District as the construction valuation shall be determined by the Department of Planning Services. The purpose of the surcharge is to establish financial assistance to individual school districts, disbursements limited to capital improvements.

According to the Appoquinimink School District website, the county collects a one-time impact fee — currently $5,738, up from $4,348 five years ago — on behalf of the district every time a new home is built. Developer impact fees accounted for $8 million of an overall $268 million project in a 2016 referendum. Since Appoquinimink’s 2016 referendum, the fee has generated approximately $7.6 million earmarked to offset costs associated with 2019’s proposed $74.8 million construction.

“As of March, this district and fast growing area just like Sussex County, has collected $7.6 million for this school impact fee,” Mr. Seemans said.

Citing Sussex County’s comprehensive plan, Mr. Seemans said, “9,543 housing units were issued building permits from June 2013 to June 2018. Round it to 9,000 and multiply by, say, even $5,000 per permit. That’s $45 million.”

“But you can multiply 9,000 housing units by any number and then swallow hard when you realize that not one dollar has been collected ever to help build new schools,” Mr. Seemans said. “Therefore, the simple math combined with unprecedented residential growth make it an obvious choice for Sussex County to proceed with this legislation.”

“The impact fee concept is not new to Delaware; however, its application to funding the growth of school district operations is an idea worthy of exploration. Sussex County is experiencing significant population growth and the pressure on our district to keep pace is immense,” said Mr. Gumbs, addressing Mr. Seemans’ proposal. “We understand that the intent of your effort will be to shift the growth cost burden to developers of new residential construction through levies upon new residential building permits. We further understand that these fees would be collected by Sussex County for distribution among its public-school districts based upon each district’s growth.

The additional fee would “help lower the tax burden for existing residents in the district. We support this concept and would like to be a participant in the creation, review and development of the appropriate legislation/ordinances to make this happen,” said Mr. Gumbs.

Mr. Seemans anticipates plenty of support for this fee proposal

“Will you have the support of thousands of seniors? I predict yes. Will you have the support of eight public school districts and the parents of thousands of students? Yes, you will. Will you get pushback from the special interest group of builders and real estate people? Most certainly,” said Mr. Seemans. “But remember that most new single family homes – at least in coastal Sussex, once again as per your plan – cost $300,000 or more. A $5,000 impact fee would be less than two percent of the cost of these homes.”

Seaford School District spokesman Jason Cameron said the school district is still collecting information.

“We’re still in the early stages of gathering information, working with the City of Seaford, and we have no opinion either way at this point,” said Mr. Cameron, Director of Human Resources/Public Information for the Seaford district.

Seaford City Manager Charles Anderson said there have been past discussions about an impact fee for new development to fund schools, but city has not been part of any discussion regarding this recent pitch.

“There have been discussions in the past at high levels about this type of funding mechanism being implemented,” said Seaford City Manager Charles Anderson. “The City has not had any conversations regarding this in the recent past. We have not had any contact from them. We have not looked at the mechanism, the details or anything like that. There are those mechanisms; other counties have something similar in concept. But we don’t have any details related to that at this time.”

Mr. Anderson pointed out a flipside; the impact on affordable housing in Sussex County.

“Specifically, in our area in Western Sussex, we would want to be cognizant that we do not discourage types of housing that are desperately needed in Seaford, Laurel, Bridgeville,” said Mr. Anderson. “So, those are some of the unintended consequences if you are not careful. And schools are important. I can’t stress that they do need money to operate and it’s expensive to build schools, maintain schools. What the right balance is, I don’t know.”

Indian River plans to further discuss the pitch.

“Personally, I would be in favor of some kind of an impact fee, even if it’s a small amount because out here we keep adding thousands and thousands of new homes which is going to impact us and cost more and more schools at some point,” said Dr. Hattier. “I would like to see a presentation by this gentleman himself, if possible, to see what kind of numbers he is talking about. Is it one percent, three percent? I think this is something we probably ought to explore.”

“Good conversation to have,” said Mr. Layfield. “We have more lightbulbs coming on than we have pole beans growing,”