Sussex County officials are moving forward with the first property reassessment in the county's history. The initial assessment, which is still used as the basis for tax bills today, occurred in 1974.
Currently, Sussex County property owners pay 50 percent of the 1974 appraised value based on a formula established by the H.L. Yoh Co.
County property tax is 10 percent of the annual bill; 90 percent is school taxes. On average, single-family homeowners pay $118 a year in county property taxes; manufactured home owners pay an average of $46 a year.
All three Delaware counties must conduct a reassessment following settlement of a lawsuit. Sussex County Council voted 5-0 April 13 to settle with plaintiffs who filed a lawsuit in an effort to secure more money and better teachers for struggling school districts. In 2018, the National Association for the Advancement of Colored People-DE and Delawareans for Educational Opportunity, which represent about 20 parents and community leaders, filed a lawsuit stating outdated property values penalize students in low-income areas because students receive less educational funding and fewer opportunities than students who live in wealthier school districts.
“We made the argument in the court case that there is nothing inequitable about the current process,” said Sussex County Administrator Todd Lawson. “Ultimately, we realized it was a foregone conclusion. I'm not sure this will help reach the goal of the lawsuit for additional educational funding. This is not designed to create windfalls for municipalities doing reassessment.”
Why has it taken 47 years for a reassessment in Sussex County?
“There has been no need and no urgency to engage in the exercise,” Lawson said. “Reassessment is something no politician wants to face.”
Transfer funds might be used
The reassessment will cost the county from $9 million to $10 million. Lawson said House Speaker Rep. Pete Schwartzkopf, D-Rehoboth, and Sen. Ernie Lopez, R-Lewes, have introduced legislation to allow all three counties to use realty transfer tax money to help fund the process, which is not allowed under current state law. The county will use reserve funds if transfer tax money can't be used.
Sussex officials issued a request for proposals in January to hire a contractor to conduct the reassessment. County council members are expected to award a contract at the Tuesday, June 8 meeting.
During the process, assessors will do site visits to some 181,600 properties in the county, including more than 134,000 single-family homes, over 4,000 commercial properties and more than 25,000 manufactured homes.
According to Sussex County Finance Director Gina Jennings, the contractor will use the appraised value of a property to determine the county's assessed value.
A market evaluation will be determined for each property using comparables of up to five other properties.
New tax bills in 2024
New tax bills will not be in the mail anytime soon. Under terms of the settlement, the process will begin later this year and conclude by mid-2024. All properties, whether undeveloped or with improvements, will be evaluated and recalculated based on current industry-accepted methodologies to produce new assessments that will reflect their true value in money, a requirement under Delaware law cited by the court in its decision.
Taxpayers will be notified of their reassessment via mail.
County, schools will set new tax rates
Currently, the county collects $16 million in annual property taxes. To make the process close to revenue neutral, the final amount, once all properties are reassessed, can't be higher than 15 percent over the $16 million.
For that to occur, the current county tax rate of 44.5 cents per $100 of assessed value will have to be significantly reduced, Lawson said.
During a typical reassessment, about one-third of taxpayers will see a decrease in their bill, one-third an increase and one-third will remain the same.
Lawson said most taxpayers don't understand that school districts are a critical part of the process – 90 percent of a resident's annual tax bill is for school taxes.
He said all school boards will also have to set a new tax rate to result in a cap of 10 percent over what districts typically collect.
The county issues tax bills, collects the money and then turns over school tax money to districts.
Impact on Sussex staff
Lawson said the county is also looking at how reassessment will impact county staff, particularly in the assessment office.
An appeal process is part of reassessment. Currently, a five-member appeals board of volunteers appointed by county council is in place. Lawson said there is no way the current board will be able to handle the anticipated influx of appeals. “There will likely be thousands of appeals, and we need to be able to handle that demand. The whole appeal process is being evaluated,” he said.
The contractor must provide training to staff involved with the process. The county will provide office space for the contractor.
The county administrator said once an assessment company is hired, officials will start disseminating more information to the public. “This is a crucial step. Communication to the public will be critical,” Lawson said.
A statewide plan in 1995
Lost to many is the story of a possible statewide reassessment proposed in 1995. Just as it appeared the three counties’ governing bodies had worked out the details and were prepared to approve the plan, Kent County Levy Court voted it down.
Last assessments in the state
Kent County, 1987; New Castle County, 1983; Sussex County, 1974
State law requires that tax assessments be based on the actual value of property and charges the counties with inspecting property to adjust valuation (Delaware Code Title 9, Chapter 83), but there is no state policy in Delaware establishing how often reassessments must take place.
What it includes
The reassessment will include more than 181,600 properties defined as residential, farm, commercial, manufactured homes, apartments and utility facilities.
Residential – 134,471
Manufactured homes – 25,034
Exempt – 9,242*
Farm – 8,298
Commercial – 4,084
Utilities – 299
Industrial – 119
Apartments – 78
*Exempt properties include churches, government, community-owned land and some nonprofit-owned land.
New tax rates will be set for county and school districts.
Site visits will occur at every Sussex property.
The appraised value of a property will be used to determine the county's assessed value.
Under law, reassessment must be revenue neutral to county and schools.
One-third will see a tax increase, one-third a decrease and one-third will remain the same.
Appeals are available.
Taxpayers will be notified by mail of their new assessment.
Read the county's request for proposals: https://sussexcountyde.gov/sites/default/files/bids/Property%20Assessment%20RFP.pdf