Why Should Delaware Care?
Matt Meyer will soon become governor as Delaware reckons with its land use policy and exploding growth. While some elections across the state were referendums on land use, new leadership at the top has the opportunity to set the tone in housing affordability for years to come.
With three weeks until Governor-elect Matt Meyer takes office, he will assume the role at a time when housing in Delaware is more expensive and harder to build than in recent decades.
New housing growth has exploded in Delaware after the pandemic, but most are priced at $400,000 or more, well above affordability for the median household, and increasingly targeting a growing number of new arrivals and retirees.
Meanwhile, the overall state housing market has also risen in cost, reaching a median sale price of about $388,000 in November – about 5% higher than a year ago and almost 50% higher than five years ago.
The booming price of real estate has subsequently led to workforce shortages, especially in Sussex County where the effects are more acute.
That’s led lawmakers around the state to begin trying to tackle the issue, and this summer the General Assembly passed multiple bills in an effort to lower housing prices and ease availability.
Meyer has also proposed his own plans to accommodate the needs of a rapidly expanding state and emphasize consistent regulations across all three of Delaware’s counties.
The plan to address affordability and housing is broad and covers issues from preventing homelessness to supplementing affordability. His full housing affordability plan can be accessed here.
Yet one theme is consistent in the plan: it starts before projects break ground.
Zoning reform needed
At the top of Meyer’s plan are zoning reform proposals that would allow for more density in development codes and create a more diverse housing stock. He would also push for more accessory dwelling units (ADUs), which are smaller housing options already built on an established lot, and higher-density options.
In a seven-bill package put forward last session by State Sen. Russell Huxtable (D-Lewes), one bill would have allowed property owners to build one ADU on their properties without going through local government approvals. It would have also compelled those governments to enact laws that allow ADUs under 1,000 square feet to be built.
The bill was the only one of the seven bills to not see a vote before the end of the legislative session.
Meyer’s plan doesn’t expand on how he’d achieve this other than saying he’d direct the Office of State Planning Coordination (OSPC) to work with local governments to encourage zoning reform.
For those unfamiliar with the planning process in Delaware, OSPC is usually one of the first hurdles developers overcome. Developers will take their proposals before the Preliminary Land Use Service, better known as PLUS, which is run by OSPC.
In those meetings, multiple state agency leaders outline code or environmental roadblocks in projects before they go to the county for more intense scrutiny.
While its recommendations to the developers are only advisory, OSPC plays a key part in targeting growth across the state. But in similar fashion to its recommendations on projects, its targeted growth areas are also recommendations.
Mike Riemann, the president of the Delaware Home Builders Association, explained that zoning density is low in the state, meaning it’s harder to build more homes on specific lots depending on its zoning district.
Riemann pointed to a recent ordinance adopted by New Castle County that would allow “pocket neighborhoods,” or dense neighborhoods of single-family lots, in areas targeted for growth, but situated on difficult-to-build parcels.
But Riemann said incentivizing growth is difficult when the regulations for developing in a rural area and an urban area are similar like they are now.
Lowering construction costs
Next in his plan, Meyer would try to bring down the cost of building a home in Delaware. According to the plan, he’d “relax regulations” for affordable housing developments, create a faster approval process for those projects, and waive certain fees and taxes.
One piece of that plan is to create a new state program called the “New Housing Production Fund,” which would subsidize projects in a similar fashion to current federal tax credit programs that affordable housing developers rely on.
Rich Przywara, the CEO of the Todmorden Foundation, an offshoot of the Woodlawn Trustees that develops affordable housing, praised this idea, saying it makes building much easier.
A new state fund would allow developers to have access to low-financed construction loans, meaning less money spent on interest, he said.
The waiver of fees and different taxes is also an idea he’d want to see move forward. Currently, Przywara said outgoing Wilmington Mayor Mike Purzycki waived many different permitting fees on affordable housing projects across the city.
“You still have to apply for the permit, you still have to post your permit, but [Purzycki] waived the fee,” Przywara said. “That’s one less thing I have to pay for upfront and borrow money for.”
While much of Meyer’s plan is targeted at creating more incentives for affordable housing, it’s impossible to ignore an increased growth of single-family homes downstate.
Estimates from the Delaware Home Builders Association say it can cost up to $474,000 to build a single new, 2,400-square-foot home in Sussex County. A third of those costs, according to Riemann, simply boils down to time.
The cost of land, the interest on owning that land, as well as carrying costs on a single plot of land begins to add up the longer it takes to get a home built.
Two ways that Riemann said the state could get homebuilding costs lower across the state is reducing the time needed for approvals and allowing for higher lot densities.
Lowering that approval time at the state level could mean streamlining state agency reviews from the Departments of Transportation and Natural Resources and Environmental Control – two of the biggest hurdles for developers – to make them more predictable for builders to save time, without compromising the integrity of a project.
“You don’t have to sacrifice the integrity of the regulatory requirement because it’s efficient,” Riemann said. “And that is a mindset that I think we need to have as a state.”
In the final weeks of his time as a county executive, Meyer vetoed a New Castle County Council ordinance that would have increased a fee on new construction projects to go toward services like fire departments and emergency medical services.
His reasoning boiled down to trying to keep housing costs in the county low at a time when the market is becoming harder to break into.
“Now is not the time to increase the cost of housing in New Castle County,” Meyer wrote. “This county is facing an unprecedented housing crisis, not only for the most vulnerable among us, but also for so many working families across our community.”
Yet multiple county council members saw the veto as an acquiescence to developers’ desires.
Existing housing, rent matters too
When it comes to the Meyer plan on affordable housing, it includes a wide-sweeping analysis of areas to be improved upon.
Jim Purcell, a director with the Milford Housing Development Corporation (MHDC), said one part of affordable housing that’s overlooked is thinking it needs to be all about building new units. In his eyes, there should be equal attention paid to repairing the current housing stock, and therefore preventing the unnecessary loss of available units.
“We’ve got a tremendous amount of substandard housing, which simply needs a little TLC, but there are a lot of costs that go along with that,” Purcell said.
The MHDC specializes in affordable housing development and emergency home repair. It also owns multiple rental communities across the state.
Purcell said he believed support of alternative housing like ADUs or tiny home villages allows people to find housing options that don’t exceed 30% of their income. But he said in Delaware, it’s more common to see people spending above that monthly benchmark, especially in urban and rural areas.
For all his proposals, there are some who like the governor-elect to take a more progressive stance on housing.
Shyanne Miller, a Wilmington affordable housing advocate with the H.O.M.E.S. Campaign, said she would have liked to see Meyer’s plan include rent stabilization, which would limit how much a landlord could increase their rent each year.
She added that Delaware needs one, unified state housing agency that can focus on all of the state’s housing issues in the governor’s Cabinet. Currently, there are five public housing authorities operating across the state, with Wilmington, Dover and Newark operating their own.
The Delaware State Housing Authority (DSHA) is often in a tricky position to make decisions regulating rent since they are also landlords for Kent and Sussex counties, Miller said.
“I’m hoping that he’ll consider taking the advice of people to just be ready to start a housing agency [on] day one,” she said.
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