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In The News

Chancery judge: Counties ‘manufacturing excuses’ over property tax fix

From Delaware Online

The judge overseeing a landmark property tax lawsuit said on Friday that he felt officials from the state’s three counties were “manufacturing excuses” in delaying a resolution to the litigation.

The parties all agree that resolution will be the reassessment of property values used to calculate property taxes statewide, values that Chancery Court Vice Chancellor J. Travis Laster ruled were unconstitutional earlier this year.

But the education activist plaintiffs that brought the suit and Laster disagree with the counties in the form and timing of how that reassessment occurs, according to testimony Friday during a status hearing regarding debate on how to fix the system.

The plaintiffs want the counties to end the litigation by agreeing to a four-year plan for reassessing property values, plans that each of the counties commissioned from experts and submitted to the court recently.

But attorneys for the counties on Friday asked the judge not to bind them to those plans and instead to put court proceedings on hold while they explore different ways to do a reassessment. That could include asking the General Assembly to approve laws to govern statewide reassessments in the future.

In response, Laster accused the counties of holding up a plan to fix the problem.

“My perception is that there’s been backsliding going on on the county side,” Laster said.

The disagreement means he will order another trial proceeding over how the court will require the counties fix the tax system, and a final plan for the reassessment may not be sorted out before March or April.

“I am disappointed in where we stand,” Laster said. “I don’t feel like things are going swimmingly.”

In May, he ruled that the lack of a reassessment coupled with the counties’ current methods of assessing property values creates a system unfair to the point it violates provisions in the state’s Constitution that require property owners to be taxed equally. He then put the litigation on hold for several months as the COVID-19 pandemic grew.

In October, each of the counties told Laster they were optimistic about reaching a settlement to finalize a plan for reassessment based on proposals created by reassessment experts that would ultimately yield changes to property tax bills in 2024.

It is unclear from the hearing testimony on Friday why the three counties’ position has changed since October.

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UD and DOJ present budget requests in unusual year

From Delaware State News

DOVER — While most of the country is caught up in the outcome of the presidential election, state government continues to function.
The Office of Management and Budget has begun its preliminary budget hearings for various state agencies and related entities, part of the annual process of crafting a budget proposal.
Working with his financial team, Gov. John Carney will unveil recommendations for a spending plan in January. That outline will look quite different from the one proposed at the beginning of this year, with COVID-19 causing revenues to dip, while creating new expenses.
Over the next week-and-a-half, various departments and related entities that rely on state funding, such as higher education institutions, will make their formal presentations to financial officials. These are being held remotely, a reminder of the ongoing pandemic.
The University of Delaware, which presented its request to budget officials Tuesday, projects a deficit of $228 million to $288 million for the fiscal year ending June 30. The institution has reduced discretionary spending, offered retirement packages to staff, cut salaries for some employees, reduced positions and pulled about $100 million from its approximately $1.64 billion endowment.
“The hard reality is that the financial difficulties facing UD — and all higher education institutions — are not a one-year event, and the road to recovery will extend over the next several years,” President Dr. Dennis Assanis said in prepared remarks. “We are already looking toward the challenges for (fiscal year 2022), including a reduced ability to recruit new students, a continuing need to increase student financial aid and the uncertainties of the economy and its effects on our students and their families.
“As you can see, to reduce our deficit we’ve tightened our belts, leaned on our endowment and even eliminated some of our core workforce. The university has very few cost-cutting options left to help us deal with the unprecedented challenges thrust upon us this year.”

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Documents show settlement is near for plan to finally reassess Delaware properties after decades

From Delaware Online

Officials from Delaware’s three counties are negotiating a lawsuit settlement that would see a multiyear process for reassessing the values used to tax individual properties up and down the state – a process that is likely to render widespread changes to residents’ and businesses’ tax bills in coming years.

Attorneys have told a judge they are working to settle, by the end of the year, a lawsuit that found the property valuations currently used by Delaware’s three counties to calculate tax bills to be unconstitutional, according to recent court transcripts and correspondence.

Newly revealed court documents shed light on the time frame and goals being contemplated by county leaders and the education activists who sued them over the local tax systems.

Each county has submitted reassessment planning proposals that outline a four-year process beginning in January for reassessing properties, according to court documents.

“Our goal is to have this done and have the reassessment baked into the bills by 2024,” New Castle County attorney Nicholas Brannick told a Chancery Court judge in a recent hearing.

Under each of the counties’ planning proposals – which are not final and subject to change – new tax bills would not be mailed before 2024. Residents, however, would be notified of new property values in 2023 and be allowed to appeal.

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University of Delaware confirms 122 employee workforce reduction

From Delaware Business Now

The University of Delaware has laid off 122 employees as it deals with a potential quarter of a billion-dollar shortfall.

University spokesperson Andrea Boyle Tippett confirmed that the university went through a reduction in force this week.

Tippett said job reductions were concentrated in areas“where operations have slowed because of the pandemic, including facilities maintenance, construction project management, and conference services.”

Tippett noted that President Dennis Assanis had announced that the reductions would be coming along with small salary cuts for top administrators and other actions aimed at dealing with the shortfall.

UD also tapped into its estimated $1.5 billion endowment to deal with the budget gap.

The layoffs are believed to have come from the ranks of nonunion employees.

Negotiations are underway with professors and others with union representation regarding early retirements and other options.

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New Castle County reportedly makes high bid for Sheraton South hotel property

From Delaware Business Now

New Castle County was the reported high bidder in an auction for the Sheraton South hotel in the New Castle area.

WDEL and sources within the real estate industry reported the county’s bid was $19.5 million. Bidding had started at $5 million but rose rapidly in the final hours of the online auction.

A New Castle County spokesman did not immediately respond to a request for comment.

The bid will still have to go through an escrow process and perhaps other due diligence.

County Executive Matt Meyer had earlier confirmed that the governmental unit would make a bid for the property for use as a center for the homeless.

The conversion has earned scattered criticism, due to the relative isolation of the property, which sits in a marshy area off Interstate 95.

Meyer told WDEL the center would provide access to services for what is expected to be a growing homeless population as the Covid-19 continues to hammer the economy.

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Sussex County to build $11.4 million emergency operations center

From Delaware Online

Sussex County officials announced earlier this month plans to build a 20,000 square-foot public safety building that will house the county’s emergency operations center, EMS/paramedics and a 911 center.

Construction for the new facility, estimated to cost nearly $11.4 million, is slated to begin July 2021 and is an expansion of the county’s current Emergency Operations Center in the Delaware Coastal Business Park just off Airport Road in Georgetown.

The new public safety building will “produce significant efficiencies” by combining the 911 call center and paramedics department under one roof, county administrator Todd Lawson said during an Oct. 6 council meeting.

The facility includes a new commercial kitchen, renovated lobby, a training center that can accommodate 50 people, simulation rooms, an EMS warehouse for supply storage and bunk rooms for long-term emergencies.

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New Castle County wants to buy Sheraton hotel, convert it to emergency homeless shelter

From Delaware Online

The New Castle County Council plans to discuss and vote on a plan to purchase the Sheraton hotel on Airport Road and convert it into an emergency homeless shelter.

The Sheraton Wilmington South, located just off Exit 5A on I-95, is up for auction beginning Monday, according to a web listing. Bidding starts at $5.5 million. The auction ends Wednesday.

The county wants to use funding from the more than $190 million it has in “reserve allocation” from the more than $322 million it received from the CARES Act during the coronavirus pandemic.

The county, according to an agenda posted for an upcoming meeting Tuesday night, plans to purchase the hotel and operate it as “emergency shelter and temporary housing for our most vulnerable residents, and others as deemed necessary by the Department of Community Services, during and in response to the COVID-19 pandemic.”

The hotel, which just underwent a $6.4 million renovation, has 192 rooms and the property is more than 6 acres. It has a long history in Delaware despite being in operation for less than 10 years. The hotel was originally built for $25 million by principle developer Joseph L. Capano Sr. as a Radisson Hotel in 2000, but it sat empty for years after it was found to have been built, in a floodplain, one-third larger than specified in its permits.

A court battle ensued, and the owners filed for bankruptcy in 2001.

Pennsylvania-based Hersha Hospitality Management purchased the building for $15 million and converted it to a Sheraton. It opened in 2011.

It was announced in September that the hotel was going to auction.

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Bayhealth proposes $19 million project that would add beds at Sussex Campus

From Delaware Business Now

Bayhealth, the state’s second-largest hospital system, recently presented a Certificate of Public Review to the Delaware Health Resources Board requesting approval to add additional inpatient beds, as well as a C-section suite at Bayhealth Hospital, Sussex Campus.

The estimate for the expansion is $19 million. The Sussex Campus had a price tag estimated at between $275 million to $300 million.

“After our move to the Sussex Campus in early 2019, we saw significant growth in admissions, observation cases, and the number of babies born,” said Bayhealth CEO Terry Murphy. “Sussex County is undergoing significant population growth, which we anticipate will further increase the need for services and we want to be prepared to meet that need.”

The proposal calls for additional medical/surgical beds to be located in 17,300 square feet of available space on the fifth floor of the building. Existing space will be converted into 24 acuity adaptable private patient beds. Acuity adaptable refers to the patient being able to stay in the unit between admission and discharge, an approach that can save money and improve care.

Five women’s services beds will be added to the third floor, which will require renovating existing administrative office space into private patient rooms. The C-section suite will be constructed nearby in 1,500 square feet of shelled space.

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2021 State Business Tax Climate Index

From the Tax Foundation

Delaware’s overall rank in the 2021 State Business Tax Climate Index was 13th nationally, but 50th for corporate taxes and 42nd for individual taxes.

The Tax Foundation’s State Business Tax Climate Index enables business leaders, government policymakers, and taxpayers to gauge how their states’ tax systems compare. While there are many ways to show how much is collected in taxes by state governments, the Index is designed to show how well states structure their tax systems and provides a road map for improvement.

Read the report

Decade-old land deal prompts political backlash, legal fight

From Delaware Online

In late 2008, with the real estate market in free fall, a land-hungry Delaware Department of Transportation purchased two parcels of rural flatland next to Route 1 south of Dover for nearly $2.8 million.

Ten years later, it sold the parcels for $270,000 to influential lawyer and developer John Paradee. It was a price the state says reflected a DelDOT decree that the land would never gain a direct commercial turn-on or turnoff from the adjacent highway – Delaware’s primary north-south artery.

Today, those deals and their multimillion-dollar price discrepancies are attracting controversy, manifested as political assaults on Delaware’s Democratic Party establishment just weeks before the November election.

The land sale also sits at the center of an ongoing lawsuit in Delaware’s business court over DelDOT’s potential granting of accesses from Route 1 to new commercial real estate projects in the Milford-to-Frederica corridor.

The suit is among the latest jockeying between developers seeking to win a race to riches in an area planned as the state’s next exurban hotbed, one whose growth may hinge on the success of the nearby taxpayer-subsidized youth sports complex, DE Turf.

At the center of it all is Paradee, who proclaims to be “widely recognized for his ability to secure approval for difficult or controversial projects.” In December 2018, he purchased the roughly 11 acres of DelDOT land with a team of investors. At 44%, Paradee’s stake is the largest in the partnership.

Combined with adjacent parcels, the land was intended to form the platform on which to build Asbury Square, a hotel, restaurant and retail development. It is one of three ambitiously proposed projects designed to capitalize on government’s push to encourage development in the corridor.

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