Cape board approves tax plan for new construction

Referendum planned for March 20
January 20, 2018

Cape Henlopen school board approved plans for an upcoming referendum asking residents to forgo an average tax decrease of $27 a year, and allow the district to use the current tax rate to pay for new building projects. If passed, the referendum also calls for a permanent average tax increase of about $50 for operating expenses.

The referendum set for Tuesday, March 20, would raise $21 million for a new middle school and a 20-room expansion to Cape High.

With voter approval, the 600-student middle school would be built on the grounds of Shields Elementary, which will be torn down when the new Shields is expected to open in a renovated Lewes School in 2021. The district owns the Lewes property, so there would be no cost to purchase land.

At Cape High, 20 classrooms would be built along Kings Highway with two hallways connecting to the existing high school. Four of the new classrooms are planned as Sussex Consortium rooms, for which the state pays 100 percent of the costs. School officials estimate the addition would house about 400 students.

The school cafeteria also would be enlarged to accommodate more students.

The state has already agreed to pay $34 million toward the project, which would total about $55 million. The local share is $21 million, which would be covered by the debt service tax rate voters approved for elementaries in 2014 and 2016.

In 2014, residents approved a $31 million referendum to build and staff Love Creek Elementary on Route 24, agreeing to foot the $11 million local share. Two years later, voters approved a $154 million referendum for renovations and new construction for the district's four existing elementaries. The local share approved was $48 million.

Although there would be no added expense for construction, residents of Cape Henlopen School District will be asked to approve an increase in current expenses to pay for staff and operating expenses, such as heating, electricity and maintenance, associated with running a new middle school.

During a previous meeting, Superintendent Robert Fulton said a middle school has more staffing needs than an elementary school because of services, functions and related arts that occur in middle school. If approved, staffing costs could also include a constable at both the middle and high school for added security, he said.

To pay for operating expenses, the average homeowner would pay about $12 more in property taxes starting in 2019. An average district home is valued at $250,000 with an assessed value of $22,500.

Taxes would again increase about $34 for operating expenses in 2022 before the school opens, for a total of roughly $50 more for current expenses . Unlike construction costs which are eventually paid off, the current expense increase would be permanent.

Fulton said a combination of low interest rates and increased revenue from new homes and businesses has helped keep the cost of building down.

"The assessment base continues to grow," Fulton said, adding every penny increase in Cape's tax rate generates about $120,000 in revenue.

As for interest-rate savings, a rate of 6 percent has been budgeted into the last three building projects, while actual loans called for only 3 percent interest or less, according to district tax rate documents.

If residents vote no and the referendum fails, Fulton said a resident with a home assessed at average value would pay about $27 less per year in property taxes, keeping the tax rate at $3.49 per $100 of assessed value.

The district is planning four informational meetings in February to provide details on the building project.

Board President Andy Lewis suggested holding one meeting in Spanish.

"We have some resources in the community, even if it's a shortened presentation," he said.

Editor’s note: This story includes more tax increase details. Operating expenses would increase in 2021 and 2024 for an average annual increase of about $50. Constable positions at the middle and high school would also have to be approved by the school board.