The state General Assembly passed a bill in June authorizing Sussex County to enact a building permit fee of up to 1.25% to help fund school construction projects that alleviate overcrowding.

The exception would be building permits for construction costs of $30,000 or less for projects after the issuance of the original certificate of occupancy. This is intended to avoid a fee for small home improvement projects such as fences, county officials said.

In May, Sussex County Council voted 4-1 to ask staff to draft proposed legislation. The state’s approval came June 30, on the last day of the legislative session.

The revenue would be used to fund the local share of any school capital construction program that has received a Certificate of Necessity from the state secretary of education.

Chip Guy, public information director for the county, said in a July 8 email that it is early in the process of drafting a local ordinance, which would establish the specifics of a building permit fee proposal. That includes whether the fee would apply only in unincorporated areas or across all of the county, and to which types of construction it would apply.

County Councilman John Rieley said July 7 that public hearings would be held as part of the process, but he did not yet know how the ordinance would be written. 

Rieley cast the only vote in opposition May 13. He has maintained his position that a fee would be unfair to homeowners and shift some burden for school funding to the county. Rieley and others made the same points in early 2024 when the council declined to consider a proposal for a Voluntary School Assessment fee on residential building permits to fund school projects to address overcrowding.

Support for creating a fee to help schools has been gathering steam in recent months.

Jason Hale, director of operations for Cape Henlopen School District, has been urging the county to stop approving new large housing developments until a fee is established.

In recommending approval July 2 of the proposed Cool Spring Crossing project – with its plans for 1,922 homes and nearly 500,000 square feet of commercial space – the county planning & zoning commission noted the school district’s concerns.

The commission suggested county council approve a school impact fee that would be assessed upon the completion of each residential unit in the development.

Sen. Russ Huxtable, D-Lewes, introduced legislation for the state to authorize the county to enact a building permit fee. It passed the Senate 18-1 with two members absent June 12, and it passed 38-2 with two absent in the House June 30. The bill goes to Gov. Matt Meyer for his signature.

Hale was glad to hear the General Assembly had authorized a fee to fund school construction to ease school overcrowding, noting all district schools, except H.O. Brittingham Elementary School, are considered overcapacity by the state.

“Sen. Huxtable worked hard to get that legislation in,” Hale said. “The county is doing its work with the time frame and how it will be implemented and everything. We are super excited. This is something we’ve been trying to get for years. This is a victory for Sussex County and the taxpayers.”

A fee would reduce the amount that must be raised through local school property taxes to fund school building projects necessitated by new homes, he said.

While a VSA failed more than a year ago, the latest proposal arrives during a changing political climate in Sussex County. Rieley, who is vice president of council, and council President Doug Hudson are the only council members remaining from the group that did not act on the VSA proposal.

Three county new council members calling for curbs on development won election in November, defeating incumbents to win the only seats up for election on the five-member council.   

The latest fee proposal differs from the one on the table early last year.

Under a VSA, residential developers would have paid a fee per unit built to the Department of Education on behalf of an impacted school district when the district lacks the capacity to serve additional students that result from new developments. VSA funds are released to districts to help pay for construction projects that increase capacity, for minor capital improvements and to lessen the debt service. 

A VSA does not apply to low-income housing or 55-plus communities, and is voluntary because developers have the option of donating to the district a piece of land at fair market value. It would have applied to new construction and not been assessed to existing homeowners. 

Estimated VSA figures provided by Cape Henlopen School District showed the fee per unit would have varied by district, from as low as $7,828 in Delmar and Laurel to as high as $15,655 in Cape Henlopen and Indian River. The Department of Education noted a VSA cannot exceed 5% of the cost of a residential unit, so a $200,000 home could only have a maximum VSA of $10,000.

In addition to a potential fee on new construction for school overcrowding, homebuyers are required to pay 4% transfer tax, which is the highest in the nation. 

In addition to school overcrowding, booming housing development in recent years in Sussex County has overburdened roads, healthcare providers, emergency services and the environment. Local officials and organizations have struggled to respond.

The county, in its 2026 budget approved last month, doubled to $2 million its allocation for open-space preservation. It also created the land-use reform working group to study and recommend changes to rules governing development.

Leaders of healthcare institutions have been trying to figure out how to fill a shortage of physicians in the county. Creation of a medical school is among the suggested solutions.

The Delaware Department of Transportation has been improving roads to accommodate development.

A recently completed state-mandated study illustrated the increasing financial burdens that fire departments in Sussex County have in serving a fast-growing population. It suggested the county create a fee to generate more funding for fire departments.