Rehoboth could remove hard cap on property tax collection

As part of a number of proposed changes to the city’s charter, Rehoboth Beach officials are considering a shake up of how it collects property taxes. As proposed, a hard cap of $3 million would be replaced with a method to collect 0.15% of the fully assessed value of real estate located within the city. If that change is made, the city would collect a little more than $5.3 million.

City officials began the discussion about possible changes months ago to identify which, if any, charter sections city officials should invest time on so it is well spent and not wasted.

City staff came back with recommendations during a commissioner meeting Jan. 16. The change in how to collect property taxes garnered the most discussion.

Commissioner Craig Thier said he’s against the proposal because as development occurs, it would allow the amount collected to naturally increase. However, he questioned the amount proposed.

Thier said if the city’s property taxes were based on a percentage rate today, to collect the same amount of property taxes – about $2.7 million – the rate would be 0.000839%. He said he could support an increase that was as minimal as possible, maybe to 0.009%, which would increase the amount collected by $500,000.

City Manager Taylour Tedder said 0.15% was a percentage level staff found that other communities did as best practices. 

Commissioner Patrick Gossett said he’s in favor of a percentage-based method for collecting property taxes, but he’d also like to see wording calling for reassessments every five, eight or 10 years. It would be necessary to keep up the tax base and it’s good practice, he said.

Commissioner Chris Galanty said it makes a lot of sense to fix the amount of property taxes collected to a specific percentage. Otherwise, it’s handicapping the city’s ability to collect taxes, he said.

Resident Carolyn Diefenderfer said she’s in favor of the change. It’s not a mandate to increase taxes, it just gives the city the ability to do so, she said.

Another change related to property taxes would give the city the option to adopt county assessments for municipal tax purposes.

Thier said he’s against this suggestion and would really only be in favor of using the city’s independent auditor, especially if the city moves to a percentage-based method of collecting property taxes. If the city uses the county assessment, the total assessed value would double, he said.

Tedder said even if the city doesn’t use the county’s assessment, there would have to be an assessment completed at some point soon because the city’s assessments are old.

Other charter changes

There’s a proposal to change the deadline for preparing the city budget from May to March, and to change the deadline for levying annual taxes from June to March because the city’s fiscal year begins April 1.

One of the proposed changes is related to commissioner salaries. Right now, city code allows increases, but not to sitting commissioners, and increases can only be set during the organizational meeting. Approved increases are staggered and realized by the commissioners who win the elections over the course of the subsequent years. As proposed, commissioners could make changes to salaries through an ordinance at any point, but the increase wouldn’t take effect until six months after the ordinance was passed.

Another change would increase the maximum fine allowed in the city from $500 to $2,500.

There’s also a proposal to update the auditors of accounts section to clarify that the auditors are independent, and to eliminate the requirement that auditors be substantial freeholders in Rehoboth.

Moving forward, commissioners and city staff are expected to continue discussing charter changes at the commissioner meeting Monday, Feb. 9, with an expectation that changes would be formally voted on at the commissioner meeting Friday, Feb. 20.

If that happens, the changes wouldn’t yet be official. All municipalities in Delaware are required to get approval from the General Assembly to make charter changes. A piece of legislation would have to be introduced and passed through both the Senate and House. The legislative session runs through the end of June.