Tax to fund DelTech maintenance loses steam

DOVER — Dilapidated buildings and antiquated systems have Delaware Technical Community College administrators seeking support from legislators. With Democratic Sen. Harris McDowell’s sponsorship behind them, Delaware Tech leaders were hoping to pass Senate Bill 50 this year.

The measure would create a Community College Infrastructure Fund to help finance mounting maintenance concerns at each of the four campuses in the state through a statewide property tax.

Supporters say it would effectively save the college from a “$100 million deferred maintenance crisis,” according to Delaware Tech President Dr. Mark Brainard.

Mixed reactions and the withdrawal of support Wednesday morning by one of the bill’s co-sponsors, Rep. Stephen Smyk, R-Milton/Lewes, led Dr. Brainard to send legislators a memo Thursday evening requesting SB 50 be stricken completely.

The memo read, in part, “After meeting this week with a few of our most ardent supporters in the General Assembly, I have decided to ask Senator McDowell and Representative Osienski not to seek passage of Senate Bill 50 at this time.”

Their fight isn’t over yet, though, as Rep. Kevin Hensley, R-Middletown/Townsend, announced another bill now in circulation at Legislative Hall, with a different solution in mind.

A news release from Rep. Hensley on Thursday stated that he “has drafted legislation that would serve to provide Delaware Technical Community College with the ability to fund capital improvements without requiring Delaware residents to shoulder the costs of these projects.

Mark Brainard

Rep. Hensley will introduce legislation that gives DelTech the authority to issue bonds to finance the cost of major and minor capital improvements, deferred maintenance, and the acquisition of related equipment and educational technology.

The bill establishes the Community College Infrastructure Fund to pay the principal and interest on such bonds. The legislation also provides a mechanism, but not an obligation, for the state to provide matching funds for minor capital improvement projects consistent with existing matching provisions for public education.”

Rep. Smyk is sponsoring the bill along with Rep. Hensley and Rep. Mike Ramone, according to the press release.

“It’s my job to represent the people in my district,” Rep. Smyk said in a newsletter to his constituents. “Since this bill [SB 50] was first introduced about a month ago, many of my constituents have shared their concerns with me. After listening to them, I realize that I made a well-intentioned mistake when I initially supported this measure. I believe in DelTech and its mission to make life-changing education available to Delawareans at an affordable cost. Thousands of our citizens have improved their lives because of the opportunities the DelTech provides. I remain committed to supporting that work.”

Many supporters cheered the decision on social media in the hours after their announcements.

“It’s a multi-million dollar whack-a-mole game where you’re trying to protect the health, quality and safety of the students and faculty. Eventually, you get to a point where there’s no catching up,” Dr. Brainard told the Delaware State News earlier in February.

The cost of deferred maintenance and campus improvements topped off at around $38.5 million back in 2006. By April 2015, it skyrocketed to $87 million, he added. The costs are projected to increase to more than $100 million by 2020.

Photos provided by the institution show off major issues such as parking lots that flood easily, cracks in brick walls, poor drainage, broken HVAC units and leaky roofs among other mechanical and structural concerns.

Created in 1966 by the Delaware General Assembly, some of the oldest buildings owned by Delaware Tech date back to the 1940s and need substantial repairs.

Steve Smyk

Along with donations, the college receives funding from the state of Delaware’s yearly budget and bond bills. In fiscal year 2019, Delaware Tech received just over $81 million for its operating budget and another $10 million from the bond bill for deferred maintenance and other capital projects — $6,500,000 of which come from capital fund bond authorizations and $3,500,000 from general funds.

But college officials said those allocations do not address the nearly $100 million needed for deferred maintenance and no mechanism currently exists for Delaware Tech to generate those funds like other public institutions.

Delaware State University and the University of Delaware both receive money from the state of Delaware each year, like Delaware Tech.

Delaware State University received more than $35 million in the budget from fiscal year 2019, while the University of Delaware received more than $120 million. Like Delaware Tech, they each also received $10 million in the bond bill.

“The governor and legislators were very generous in the bond bill,” Dr. Brainard said, but added that more is still needed to start impacting the growing amount of deferred maintenance at the college campuses.

Taxes raised through the Community College Infrastructure Fund would have made the funds needed from each county for maintenance problems in those respective counties available to college leaders. According to SB 50, the tax was capped at 6.5 cents.

The proposal, as it has in the past, was greated with mixed reactions from the public and legislators.

“You’ll find no bigger advocate for Delaware Tech than me,” Rep. Ruth Briggs King, R-Milford, said in early February.

“But this is without a referendum with a board that is not regulated. It’s taxation without representation. I live in a district they just had a referendum that didn’t pass. They couldn’t vote for that referendum for fear of a Delaware Tech tax.”

A Delaware Tech graduate herself, she said the biggest concern in her district was a raise in property taxes benefitting Sussex Tech taxpayers. A second or third increase in property taxes could be crippling to some of her constituents.

“Delaware Tech is not getting the support it needs. They can’t just go back and up their tuition, I know that. But I think this is a slippery slope. If you allow one agency to do this, who’s going to be next? Maybe we need to look at the overall tax structure in Delaware because this is opening up Pandora’s box,” she added. “A big difference, too, is that local referendums say when the tax can drop off. This bill does not have an end.”

Sen. Harris McDowell supports the concept. He sponsored Senate Bill 50 during this general assembly and once before in 2015 when it died during session.

SB 50 was voted out of the Elections, Government & Community Affairs Committee with four votes on its merits this session before Dr. Brainard sent his memo requesting legislators not pursue that bill further..

SB 50 would have allowed the college’s board of trustees, for which each member was appointed by the governor and approved by a majority of the state senate, authority to issue bonds to finance capital improvement projects, deferred maintenance and the purchase of needed equipment and educational technology. It would also establish the Community College Infrastructure Fund to pay for the principal and interest on those bonds.

An additional local property tax would have been authorized by the bill, capped at 6.5 cents per $100 of a home’s assessed value. It would take effect in 2021 and not reach its full cap for several years, according to Dr. Brainard, who added that money raised through the tax increase would need to stay within the county from where it originated.

If passed, Delaware Tech’s Vice President for Finance Jerry McNesby said the tax increase was to start at 1.7 cents per $100 dollars of a property’s assessed value.

The impact on the average homeowner in Kent County, based on an average residential assessed value of $38,731, would be about $6.58 for the first year. In Sussex County, the average homeowner, with an average residential assessed value of $20,483, would pay about $3.69 for the first year, he added.

In contrast, Rep. Hensley said his bill, which has not been released publicly yet, would allow the board to made necessary bond and financing decisions without the need for a property tax increase.

“I don’t believe that there is anyone that argues that Del Tech has significant infrastructure needs. I’ve heard from many constituents about their concerns over the statewide property tax that is included under Senate Bill 50. As a result, I felt the portion of this bill that allowed for bonding authority should be introduced as a separate measure to create a mechanism to fund these initiatives. I feel strongly that Del Tech ought to have the ability to address their capital needs without putting the burden of paying for those improvements on the backs of Delaware taxpayers.”

Dr. Brainard said Delaware Tech will “remain laser focused” on their mission and will continue working toward a solution to their maintenance needs.

“We’re not going after this legislation to go after a brand-new, high school type construction. Deferred maintenance is fixing a leaky roof, dealing with antiquated systems, air handlers constantly breaking down… This building [office of the President], we had to put a tarp overtop our servers every time we have a rain storm,” Dr. Brainard said in early February. “We have four locations [spread out over] the three counties with a value of over $400 million. So, when our facilities folks sit down every year with industry folks to talk about the industry standard for maintenance, the industry standard is between three to four percent of the value of the assets. For Delaware Tech, that’s about $12 million per year, the experts say. When, in reality, it’s about $4 million on average.

“The immediate impact is the quality of learning. If the HVAC systems are not operating correctly, air quality suffers. We have computers all over, $80,000 mannequins in the health lab. It’s pretty scary to think about water intrusion. It’s impacting the ability to keep classrooms open.”

The needs of the college also means they cannot focus on adding buildings to create new programs unless help is offered. Donors recently came together to help make a diesel mechanic program a reality.

“I would say that for the past five years, the peninsula has been having a desperate need for diesel mechanics. Our mission is workforce. They look at us and say, ‘What are you doing?’ And our response is that we’re at capacity. And local employers are going to Florida for auto technicians,” Dr. Brainard said. “The good news is that we experienced success last year in securing a grant for a world-class facility to expand options for auto technicians.”

The town of Middletown also donated a facility to the college for heavy equipment operator and diesel mechanic programs.

Without those funds and donations, the college president says those programs most certainly wouldn’t be on the horizon for Delaware Tech.

“We didn’t serve our students very well and we sure as heck didn’t serve the business community very well, but we didn’t have a choice,” he said. “That’s the real impact. We have an entire industry that needs certain types of employees. They’re continually asking us what we’re going to do about it. And we’re limping along to try to find a way to fix the roof and air handlers.”

As of press time, SB 50 was still on the Senate ready list. Rep. Hensley’s proposed legislation is not available yet.

Reach staff writer Jennifer Antonik at jantonik@newszap.com

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