The Sussex County Council reluctantly agreed to settle a long-running lawsuit over real estate assessments used by Delaware’s counties to calculate annual tax bills.
Sussex was the last of the state’s three counties to agree to the settlement in a case filed by the NAACP and other groups.
The agreement will lead to a new valuation of all properties by mid-2024, according to a release.
Reassessment is not designed to raise revenues but to reduce changes of disparities in property valuations instead. Many localities reassess properties every few years.
Litigants argued that the lack of property reassessments was unconstitutional and deprived poorer school districts of funding.
County Council, at its weekly meeting, voted to enter into a settlement agreement with plaintiffs in the education funding lawsuit brought against Sussex, as well as the State and its other counties in the Court of Chancery in 2018.
The suit alleged an inadequate and outdated model for valuing property shortchanges Delaware students and public schools.
All counties challenged the allegations, but Chancery ruled in favor of the plaintiffs last year and ordered all parties to work toward a remedy.
The agreement lays the groundwork for the county to move forward on a general reassessment of all properties, to be completed in time for tax bills to be issued in the latter half of 2024.
“This is not a decision today that we take lightly, nor is it one that we frankly welcome. This will have real implications for every property owner in Sussex County and across the state,” County Council President Michael H. Vincent stated in a release. “Unfortunately, the court did not rule in our favor, and while we may disagree with the outcome that now ties our collective hands, the reality is our options moving forward were limited. We believe settling this case today will avoid any further costly legal battles and that this step is ultimately in the best interest of the taxpayers we serve.”
The settlement will be finalized with litigants and filed with the court, in the coming days, according to County Administrator Todd F. Lawson. Once complete, the county will begin evaluating vendors to perform its first general reassessment since 1974. County officials expect to select a vendor later this spring from proposals submitted last month.
Under terms of the settlement, the process – expected to cost an estimated $9 million, with funding coming from county reserves – will begin later this year and conclude by mid-2024.
Whether undeveloped or with improvements, all properties will be evaluated and re-calculated 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.
Assessments, combined with a governing jurisdiction’s property tax rate, are part of the formula used to determine individual tax bills that property owners receive each year. Bills include taxes for both County and local independent school districts.
Delaware law requires Sussex County to bill property owners for school taxes on behalf of the local districts, with those funds then turned over to the state. Approximately 10 percent of the typical residential tax bill in Sussex County is for County property taxes; the remaining 90 percent is for local schools.
Sussex County has among the nation’s lowest property taxes. That has contributed to rapid population growth as New Jersey residents and other higher-property tax states retire to the county.
The taxes paid for luxury properties rank among the lowest in the nation. Owners of one luxury home on the Coastal Sussex sales market paid property taxes of $7,632 a year. The home is listed with a sales price of $9.2 million.
Information will be posted via the County’s website at www.sussexcountyde.gov/assessment.
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