Hanson/Legates Dewey CRT letter response

August 26, 2013

The great thing about America and Dewey Beach is that people can differ over policy issues and yet still work together on other issues. Commissioners Anna Legates and Diane Hanson are now candidates for re-election. We have agreed and worked together on a number of issues.

But we don’t agree with their blocking adoption in July of the proposed gross receipts tax (after a year- long effort by the budget and finance committee) and we are shocked at their voting against even giving the voters the opportunity in a non-binding referendum to indicate if they want the council to adopt a gross receipts tax on Dewey businesses (who now pay only $60,000 a year toward the town’s $2.5 million budget).

This issue is far and away the most important vote the commissioners cast in this council. The town suffers from a lack of stable sources of income to pay for basic operations and protect against business lawsuits and no ability to tackle significant infrastructure and town management needs such as telecommunications and lack of space. Anna Legates and Diane Hanson have been criticized for stopping the gross receipts tax and have sent out a memo justifying their position. Because they did not tell the whole story, we have added some commentary to clarify why we are so disappointed with their vote.

Hanson/Legates feel “there's been some confusion on the GRT and some of the information distributed has been incomplete or outdated. Our answer: CPD has not distributed any confusing or outdated information on the GRT. Three commissioners - Hanson, Legates and Mauler - gave way to the business lobbying to block the GRT. When Commissioner Courtney Riordan, chair of the budget and finance committee, at the July 19 meeting realized he could not win a vote on the GRT ordinance, he instead urged the council to merely support a non-binding referendum “polling the people” on whether the council should adopt a GRT. The same three commissioners voted the referendum down and the businesses rejoiced. Only commissioners Riordan and Joy Howell supported establishing a GRT and also giving the public the right to vote on it.

While Hanson and Legates agree that the businesses need to contribute more, however they largely based their decision to reject both the GRT and a simple non-binding, benign referendum of the people because they felt the business community lawsuit filed against the town and that decision might impact on the GRT.

We believe the lawsuit is not a fatal flaw in the GRT. It is a preemptive lawsuit designed to bully the council and now serves as an excuse to avoid voting on the GRT tax before the September election. The committee was fully aware of the Highway One lawsuit challenging the town’s right to tax. That is why the GRT ordinance was written to not take effect until after the court rules on Dewey’s authority to tax business interests. It would in no way interfere with the court action. Also, the committee proposal was crafted with the town lawfirm’s research and advice (Noel Primos of Schmittinger and Rodriguez) assuring the town it has taxing authority. But again, commissioners Hanson and Legates even voted against a non-binding referendum on the GRT. They voted to deny the people’s right to be heard in a referendum.

Hanson and Legates say all five commissioners received advice from the attorneys which applies to a non-binding or binding referendum. Three voted no, consistent with the legal advice.

We feel that obviously the legal advice could not have been that compelling, or all five commissioners would have voted identically. And what was voted down was a non-binding referendum, which several attorneys we consulted said no rational judge in the country would use against a town in deciding how to apply the law. So what is the real reason these commissioners voted against a non-binding referendum? And what legal basis did the attorneys use to support advice that a non-binding referendum would negatively affect the outcome of the Highway One lawsuit? The commissioners say they are not allowed to reveal legal advice.

Legate/Hanson cite fact that Rep. Pete Schwartzkopf, speaker of the Delaware House of Representatives, attended the July town meeting and put the town on notice based on his legislative attorney’s research, that the town did not have the authority to do this tax and it would be challenged.

We argue that town lawfirms, with four attorneys, are on record saying that they believe the town has the authority to tax and to tax businesses. Noel Primos from one of the two town lawfirms and Commissioner Riordan, who is also an attorney, spent months researching whether the town had to go to the legislature for additional approval on a tax and concluded that we do not. Minor point: Schwartzkopf is the majority leader, not the speaker (and also not a lawyer). And, he didn’t speak against a non-binding referendum, which was ultimately the issue that was voted down 3-2.

Legates/Hanson content that the town's financial picture had changed dramatically compared to the data compiled by the budget committee. The town currently has a $200,000 surplus for fiscal year 2012-13. We are not in a financial emergency. We can delay action that might impact our court case negatively.

We confirmed that there has not been any change in the budget numbers since the committee made its recommendation. Also, a $200,000 surplus from higher transfer taxes, which we can’t control or predict, is hardly comforting. Moreover, the projected surplus of about $67,000 for the current year is an even less adequate cushion. One bad storm and the town is in trouble. We need to stop living hand to mouth. We need a fair, sustainable revenue structure.

Legates/Hanson say it would be irresponsible to hold a referendum without sufficient time to inform the public and are concerned about a possible FOIA violation.

It is a fact that the state requires only 20 days notice of ballot issues; we would have had almost a month before the Sept. 21 election. Also, the GRT has been debated publicly for a year, at seven public meetings and hearings held by the committee, the town council discussed it at two meetings in July, and a non-binding referendum would have been discussed and voted on again at a third council meeting suggested by Commissioner Howell Aug. 9 to be held Aug. 23 or Aug. 24 to cure any notice/FOIA issues. This would have left plenty of time before the ballots had to be printed. But this opportunity was rejected by Hanson and Legates. What is the real reason Hanson and Legates refused to vote for a non-binding referendum?

Legate/Hanson applaud the Dewey Business Partnership which agreed to come to the table with alternatives and prefer to act in a spirit of cooperation and community.

We say, “A bird in the hand is worth two in the bush.” Every time a business tax is about to be adopted, the business groups say they want more input, offer to cooperate, stop the momentum for a final decision, and then later will only support a property tax that has been rejected by the property owners in the past and that taxes homeowners far more than the business entities. Property owners who rent their properties already pay a three percent accommodations tax that brings the town close to $400,000 in revenue. But none of these arguments explains why a non-binding referendum of the property owners is a problem? Why not give them a voice, and a seat at the table so to speak? Otherwise, it is just businessmen - with businessman and Town Manager Marc Appelbaum and the big bar business owners huddling in the back room deciding on a tax, if any, with no public input.


Hanson and LeGates supported the private back room negotiations over seven publicly noticed meetings on GRT over the past year; one of those public hearings was held specifically for the business community and the business community was encouraged to participate in all the meetings; now we are giving them a complete do over. 

We all agree that businesses need to contribute more. But every time the issue arises, there are excuses about why it is not timely. And nothing happens. We think Hanson and Legates need to be straight with the property owners and not hide behind unjustified claims about a court’s reaction to a mere non-binding referendum.

Hanson and Legates want to wait until after the election to decision on an equitable tax structure. We say, why wait until after the election? Town councils have been working on fair share taxes since at least 2002. The current town commissioners have publicly supported increasing business taxes, but when the opportunity came to adopt a simple gross receipts tax, or even just a non-binding public referendum, they did not live up to their promises and responsibilities. Any future proposal will also be vulnerable to yet another Alex Pires (Highway One) lawsuit, further legal appeals, and yet more excuses. This outcome is very disappointing after the year-long volunteer effort that developed a very fair and reasonable GRT proposal.

However, we have not lost hope. There is much more good work that needs to be done on behalf of the Dewey Beach property owners. We expect that Diane Hanson and Anna Legates, if re-elected, will tackle other difficult issues to move Dewey forward with resolve, determination, fairness and transparency. We are particularly concerned about Ruddertowne issues in terms of compliance with the DBE/Town MAR agreement and the Phase Two building. And of course we await next March 1 to see an effective GRT adopted.

Citizens to Preserve Dewey Steering Committee

Joan Claybrook

Marcia Schieck

Karen Jacoby

Amy Levy

Elissa Feldman

Dave Davis

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