"Money Fairies" and the Mystery of Rollback Taxes in the Delaware Code
The following is an exact copy of the first rollback tax communication to the Southern New Castle County Alliance in January 2008. The questions were submitted by the SNCCA and appear in bold italic text below. The responses are from James C. Smith, Assistant General Manager of the New Castle County Department of Land Use.
TO: Charles Baker, G.M.
CC: Emma Prinski, Acting Property Services Mgr.
FROM: James C. Smith, Jr., Assistant G.M.
DATE: January 3, 2008
RE: Civic Umbrella Questions (First Supplemental Response)
Question #1 (Rollbacks )
Can you tell me a little more about what we actually do in the case of a rollback situation? For instance, how long after they start site work or the first permit do we re-assess and then how long does it take to process the rollback? When would it appear on the tax roles?The Assessment Division becomes aware of changes in use of parcels in the roll-back program through various means (e.g. calls from property owners or attorneys, permits/COs obtained, annual County inspection, etc.) After the Assessment Division becomes aware that a property is no longer being used for agricultural purposes consistent with Chapter 83 of Title 9 of the Delaware Code, a county assessor calculates the difference in tax for each of the prior ten years between what would have been the tax in each year had the property not been in the roll-back program versus what was actually taxed in each of those years. The resulting figure is forwarded to the County Finance Department in a Treasury Letter for processing.
Timing: It may take several weeks for Land Use to create a Treasury Letter and potentially a few more weeks for Finance to process the request depending on the time of year. Routinely, Land Use will send these letters to Finance in batches and Finance will process the requests within a few days to a maximum of a few weeks.
A tax bill is then mailed with a due date. If that bill is not paid - delinquent bills are sent every quarter.
Thus began dialogue with New Castle County government officials about the taxation of parcels from farmland to approved acreage for development. On January 15, 2007 the subject again arose after a presentation by Michael Strine , New Castle County's Chief Financial Officer . The response that evening coincided with the written reply from Mr. Smith, as stated above, that the County was guided by State Law and could not begin the tax rollback until certificates of occupancy (CO’s) had been issued. On January 16, 2007 the Delaware State website yielded the following wording regarding rollback taxes, as appearing in 9 Delaware Code, Chapter 83, section 8335:
(d) (3) "Rollback taxes as provided herein shall become payable when the land is applied to a use other than agricultural...for purposes of this subsection shall include any of the following. (c) The approval of a site plan or issuance of a certificate of occupancy..."
Contact with the Delaware Department of Agriculture was initiated, with first confirmation that the site plan approval appeared to be a rollback trigger but that "the counties control the collection".
Review of various parcels in the New Castle County website revealed that all the (1) acre parcels in a subdivision on Boyds Corner Road in Middletown were all assessed at $15,200 per residential acre. Review of other parcels in the area revealed an assessment of $15,000 per acre for (5) separate parcels. Using $15,000 per residential acre as a multiplier, calculation for some 1222 acres in the Bayberry plan along Boyds Corner Road was totaled as an example of probable lost revenue.
Widespread news publications repeat the ongoing financial woes of the County government, with the January 15th comments from Mr.Strine reinforcing this dilemma. Even with the 2006 tax increase of 5% and the 2007 increase of 17.5%, more funds are needed or services will have to be curtailed.
And in the political arena a published September 24, 2007 story about tax issues was punctuated with the following comment:
"There are no money fairies out there"- Councilman George S Smiley who advocates reducing exemptions for the disabled and senior citizens. Smiley was also present for Mr. Strine’s presentation.
Is New Castle County doing everything possible to collect available revenue, given repeated comments about traveling to Dover with a wish list that included new taxes?
Again the Delaware Code and Mr. Smith's reply was consulted and calculation on the Bayberry acreage was done. New Castle County's website showed that the 1222 acres was listed - in 1983 dollars - at $2,563,500, yet was not taxed for that assessment even though it was approved for residential subdivision by County Council in July 2007, under sponsorship by Councilman Bill Bell. Seeking to bring this issue to the forefront, and allow for additional revenue for the financially strapped New Castle County, commentary was posted to this website on February 4, 2007. We calculated that the County was losing substantially, but the school district was losing over $300,000 yearly, plus the rollback taxes for a (10) year period.
On February 5, 2007, in response to our website posting, Emma Prinski, as listed in the January 3, 2008 communication to the SNCCA authored by James Smith, NCCDLU, wrote to Charles Baker, also as listed in the first section above, that our calculations were in error, that what was approved by Council vote was " not a site plan"- even though Bayberry's (13) 2x4 foot pages of elevations, nearly (2000) housing sizes and lots, riparian and wetlands, roadways, and various other details, this given to us by Mr.Baker after council's July vote , "did not meet the Unified Development Code's definition of a site plan". Furthermore, a new wrinkle was now revealed, that in June 1999 Senate Bill 34 deleted the reference to "the approval of a site plan" in 9 Delaware 8335."
Why this "small print" was not revealed in the January 3rd explanation is troublesome. That it was copied to the Assessment Department and not corrected until SNCCA persisted is equally unsettling. But for the property tax payers in New Castle County, would it be beneficial for their County government officials to add (1) thing to their list, the repeal of SB 34 and have the original intent of the rollback law enforced. And of course section 33.300.3650 of the Unified Development Code would also need to be changed, which does not require a trip to Dover.
And who could benefit? For starters, all the taxpayers in the County, and all the students, teachers and employees of the Appoquinimink School District.
We don't think that is too much to ask. Then New Castle County could resume, as Ms Prinski wrote, "Between 1992 and 199 the assessment Division removed parcels from the farmland assessment program and issued rollback tax bills when farmland parcels were subdivided. This practice ceased in 1999 with the passage of SB 34. "
We are requesting a hard copy of SB 34 and will review (and post) the "fiscal note" and determine who sponsored this bill, but it is currently costing us all too much to keep this matter a secret any longer. We must consider who benefits, and who pays as a result of the change in the Delaware Code.
And for those "Money Fairies ", Senate Bill 34 appears to have been a "money fairy" of a sort, but not one that benefits the citizen taxpayers of Delaware.
One more necessary point , in agreeing with a official County official , it would be greatly helpful to all Delaware residents for the State website to contain current, accurate, verbatim citations of the law, especially laws that were "amended" nearly (9) years ago but are known only to a very, very few. As this commentary is posted , 9 Delaware Code , Section 8335 reads exactly as we posted in our first citation.
Chuck Mulholland
, President , Southern New Castle County Alliance3rd Vice President, Civic League of New Castle County
Past president.Appoquinimink Board of Education(95-97)
taxpayer in New Castle County and Appoquinimnk School District
Leann H. Ferguson , Executive Vice President Southern New Castle County Alliance Past president, Drawyers Creek maintenance corporation taxpayer in New Castle County and Appoquinimnk School District