NEW CASTLE — The New Castle County Council is considering an increase in fees paid by developers on new construction to help support the added cost of county services, five months after such a proposal was vetoed.
Impact fees are a one-time charge on new development to help the county pay for new infrastructure and emergency services, as well as parks and libraries. New Castle County has not raised impact fees since 1999.
Ordinance No. 25-045, which was proposed in late April, would raise impact fees based on the consumer price index and would vary based on the type of development. Residential, commercial and most industrial and distribution uses would see a 33% increase, while manufacturing would see a 42% increase.
Detached single family homes would see an increase of $579 in fees, meaning home builders would have to pay $1,736 per home built in a subdivision. The proposed fee would be roughly $22 per square foot – compared to the existing $6 per square foot.
Ordinance No. 25-045 would also grant the council the authority to adjust impact fees every five years, although it would be adjusted based on the inflation index for construction costs. This review would start in 2027.
Councilman Kevin Canceo, who was elected last November and serves old New Castle south to Odessa, said that the ordinance was one of the most important measures to raise revenue for the growing community. Middletown, the largest town near Canceo’s district, has grown by 33% in the last 30 years.
“Part of the reason I’m on council right now is this issue. Lots of people are concerned about sprawl and there not being enough services south of the C&D Canal,” Canceo told the Delaware Business Times. “We have the ability to raise revenue for essential services for cops, firefighters and paramedics through this fee and considering the amount of new construction, especially south of the canal, there’s a need for new infrastructure.”
“If we’re going to have growth, then we have to have that equity and services to meet that growth– and developers to pay a fair share into that,” he added.
In December, Matt Meyer vetoed the proposal in one of his last acts as New Castle County Executive. At the time, he wrote a letter to council members about how the impact fee hike would cause homebuilders to pass the cost down to buyers, potentially compounding the affordable housing crisis.
Meyer has since made affordable housing one of his top priorities as Delaware’s governor.
To answer that criticism, the ordinance exempts workforce housing, low-income housing based on area median income, Brownfields redevelopment, among others.
During a Planning Board public hearing on May 6, Councilman David Carter pushed back on the previous county executive’s argument, maintaining that the ordinance was to support much needed services in southern New Castle.
Carter represents Middletown and parts of Townsend, and pointed to plans to build a new public services building right at the Pole Bridge Road exit from Delaware Route 1 as tangible proof of the stress on county services.
“This bill has become a whipping child, a disingenuous tool by some communities. We’re going to bond appropriation of $19 million, and that building is needed only because of the growth,” Carter said during the meeting. “I think we have to be fair so that some of the development has to pay for a little bit of this at a low cost.”
Still, the Home Builders Association of Delaware (HBADE) is against the proposal. The organization, which represents 6,000 developers and construction workers, believes that impact fees could impact the housing prices as developers are likely to cause housing prices to rise again.
The median cost for a Delaware home in March was $380,333 with homes in New Castle County sold at $351,000.
“Even lumping impact fees into a 30-year mortgage will make a house less affordable because for every $1,000 increase, nearly 400 Delaware families become unqualified for a mortgage on that home,” HBADE Executive Director Katie Gillis wrote in an email.
If the council passes the ordinance, the HBADE would lobby to re-evaluate zoning laws and regulations to find ways to cut costs, she added.
In the meantime, the measure has been referred to the Department of Land Use for review, and it remains to be seen if the council votes this time around. One thing that has recently changed is who now sits in the county executive’s chair – Marcus Henry.
Henry is in support of the ordinance, according to a spokesman for the county executive.
