Why Should Delaware Care?
As communities in Sussex County continue to grow, the local school districts are unable to keep up with the facilities-based needs of the population. District officials from Cape Henlopen and Milford have previously voiced support for establishing a voluntary school assessment (VSA) or impact fees but were met with strong opposition. But the three new county council members have expressed more willingness to continue the VSA and impact fee conversation, and potentially establish one of the two methods.
School officials in rapidly growing southern Delaware are hopeful that three new Sussex County council members will impose new fees on developments that would send dollars to public school districts.
In recent weeks, the new councilmembers – Jane Gruenebaum, Matt Lloyd and Steve McCarron – have indicated they would consider charging developers to pay for what education officials say is the impact of new homes and retail developments on area schools.
“Developers are bringing hundreds of people into the county, and that means a considerable increase in students in our schools, and yet they’re bearing none of the costs of that,” Gruenebaum said in an interview with Spotlight Delaware.
The openness to even consider such a policy marks a striking departure from past Sussex County Council members, many of whom had described development fees as a tax on residents.
For at least a decade, Sussex County has led Delaware’s growth as developers transformed farmland into scores of subdivisions that added thousands of new homes.
Between 2010 and 2023, the county’s population grew almost 34% to 263,506, according to the U.S. Census Bureau. The growth is likely to continue as developers in recent years have submitted plans for new subdivisions that would add another 14,000 homes.
While growth has added to Sussex County’s tax rolls, it also has sparked a backlash from residents who say it has placed too much of a burden on area roads and schools, as well as removed too many trees and wetlands. Those arguments were heard at council meetings in past months, as residents voiced support for fees on developments.
Lloyd, one of the new council members, has also floated an idea of a moratorium on all residential development in the county, causing an uproar from the development industry.
Although many residents oppose ongoing development, many developers note that a need exists for more homes in the state and point to Sussex County as a place rife with undeveloped agricultural spaces suitable for large projects.
A changing sentiment
Milford School District Chief Operating Officer Sara Hale said that school districts like hers struggle to provide enough space for classrooms because of that ongoing growth.
Schools in the neighboring Indian River School District have converted storage rooms into classrooms. In November, Spotlight Delaware toured some of those schools and witnessed several small rooms that each had about 10 desks tightly situated inside.
Despite public outcry from Hale and others working in districts, previous county council members have staunchly opposed fees on developments.
With an affordable housing shortage and booming sale prices, many council members expressed concern over adding a fee that would be passed on to homebuyers.
Last year, former Councilman Mark Schaeffer said during a meeting that he supports kids and teachers, but argued that dollars for schools should come from the state government, not the county, the Cape Gazette reported.
“It’s as clear to me today as it was 40 years ago that the way we fund schools in the state of Delaware is broken,” he said.
Schaeffer’s comments came months after State Sen. Russ Huxtable (D-Lewes) sponsored legislation enabling Sussex County to implement a fee on developers that would direct revenue to schools – called a Voluntary School Assessment, or VSA.
Schaeffer and two of his former colleagues have since left the council and their replacement have each indicated a willingness to consider a VSA.
How do VSAs and impact fees work?
District officials like Hale have pointed toward New Castle County VSAs and to similar Kent County impact fees as ways to pay for increasing costs that come with population growth.
New Castle County’s VSA is a fee paid by developers to the Delaware Department of Education on behalf of the impacted school district. The money is then made available to the district to help build or expand classrooms.
But, just because a county approves a VSA, doesn’t mean the fee will go into effect for every new construction project.
First, the Delaware Department of Education must determine if the new development will lead to overcrowding in area schools.
When assessing whether a VSA is applicable, the Department of Education must determine whether the capacity at area schools exceeds 85% of its total. If it does, then the fee is implemented. In New Castle County, that fee ranges from about $9,000 for every new home built within the Appoquinimink School District to $15,655 for new homes in Wilmington-area districts.
Kent County uses its own impact fee, which serves the same purpose of collecting money from developers, but the subsequent revenue goes to the county rather than the state’s Department of Education. The county can then distribute the money to local districts.
Jason Hale, the director of operations at the Cape Henlopen School District and Sara Hale’s husband, said Kent County’s impact fee model is preferable to a VSA because it is controlled locally “and the county is able to determine what those fees will be.”
Responding to school growth
Last year, the Cape Henlopen and Milford school districts each told state officials that they need millions of new dollars for projects, including a high school renovation, buying new land, and bus maintenance.
To make those requests, districts submit to the state a document called a certificate of necessity.
But there is no guarantee that the state will approve those requests for money. Delaware’s proposed Fiscal Year 2026 capital budget does not fulfill Cape Henlopen’s request for $47 million to help pay for a high school addition that would accommodate 600 students.
When certificate of necessity requests are rejected, districts must pay for renovations or repairs with their existing capital dollars or by passing referendums, and therefore making local residents fund the projects entirely.
Because the county has not approved a school impact fee, Sara Hale said schools are dealing with cramped classrooms. She said the growth “is exploding” to such an extent that schools may not be able to house incoming students.
“With the amount of growth in the approved building permits and things in the county, it really just makes sense to have a mechanism to support those school districts that are experiencing this exponential growth,” she said.
The Milford School District is able to receive some funds from Kent’s impact fee because the district crosses county lines. Sara Hale said the district was able to put those funds toward their Milford Middle School project.
While former Sussex County council members described impact fees as a tax, Jason Hale contends that those fees actually reduce taxes by preventing a district from holding a referendum.
“For example, we are trying to pass a referendum and ask our community for $10 million for a renovation of one of our buildings. If there is $4 million in this impact fee account, we no longer need to ask for $10 [million.] We only need to ask for [$6 million],” he said.
‘A question of equity’
Sara and Jason Hale said they’ve spoken with some of the new county council members, and believe there is more of a willingness from them to consider impact fees for the districts.
Gruenebaum, one of the new councilmembers, said schools and those fees were one of the two most popular topics residents talked to her about while she campaigned for county council.
Gruenebaum is in favor of a VSA, calling the fees “a question of equity.”
“All the costs associated with new students who are here as a consequence of the development fall on the existing residents to pay through their taxes,” Gruenebaum said.
Lloyd said he’s interested in determining whether a school funding fee would be a way to disincentivize developers from building high-end homes on farmland – which he opposes. He also said there must be an accountability system to ensure any collected money is used by the districts.
Gruenebaum and Lloyd believe there must be exceptions for low-income housing and higher-density workforce housing.
Although Jason Hale would like to see an impact fee or VSA in place by July 1, Lloyd said he doesn’t know if this will be possible because larger conversations about land use still must occur. He hopes to have those conversations before July.
Sara Hale is hopeful that such conversations at county council will help her district deal with growth.
“We really are feeling like there’s a more successful opportunity here to help not just county council members, but the community at large, understand that we are trying to push for this so that we can protect our constituents and our communities,” Sara Hale said.
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