LEGISLATIVE, FINANCE AND ADMINISTRATION COMMITTEE
The Legislative, Finance, and Administration Committee meeting was held on February 26, 2007, at 6:30 p.m. with Chairman Salters presiding. Members present were Mr. Hogan, Mr. Shevock, and Mrs. Jones. Mr. Slavin was absent. Members of Council present were Mr. Carey, Mrs. Russell (arrived at 6:39 p.m.), Mr. McGiffin (arrive at 6:35 p.m.), and Mr. Ruane (arrived at 6:35 p.m.). Mayor Speed was also present.
AGENDA ADDITIONS/DELETIONS
Mr. Hogan moved for approval of the agenda, seconded by Mr. Shevock and unanimously carried.
Request of Capital School District - New Construction Surcharge
Members reviewed a letter received from Dr. Michael Thomas, Superintendent of Schools for the Capital School District, requesting members to consider the adoption of a surcharge on new home construction, similar to the ordinance enacted last year by Kent County Levy Court. The ordinance would provide financial support for the school district in funding future capital projects. Dr. Thomas indicated that at least one municipality in Kent County (Town of Smyrna) has enacted such a surcharge and that other municipalities are in the process.
Mrs. Mitchell, Treasurer/Finance Director, provided members with copies of the ordinances adopted by Kent County and the Town of Smyrna, and a compilation of sample charges. She also provided and reviewed a recap of each ordinance.
Responding to Mr. Salters, Mrs. Mitchell stated that the monies would be dispersed between either Capital or Caesar Rodney School District, based on which district the property is located. She stated that it was her understanding that the County is only collecting a surcharge for those properties that are located in the unincorporated areas of Kent County. For further clarification, Mr. DePrima advised members that Kent County does not issue building permits for properties located in a municipality.
Mr. Shevock questioned if the schools would be permitted to use the money collected by the City for major capital improvements that are outside of the city limits. Responding, Mrs. Mitchell stated that the City could include stipulations in the ordinance that would provide certain requirements for use of the money. Mr. Shevock also questioned if the monies collected could be used to pay on the debt service of the district in order to lower the tax for the taxpayers if there was no major capital program for the school district. Again, Mrs. Mitchell confirmed that the ordinance could be written to allow for the monies to be applied towards capital projects or debt service.
Responding to Mr. Ruane, Mrs. Mitchell stated that the City Solicitor has not been requested to review the request to determine if there is any restriction in the City Charter that would prohibit the City from adopting such an ordinance.
Mayor Speed suggested that staff also determine if there is legislation that would require the State to grant the City authorization to institute such a surcharge, noting that the County had to obtain such permission.
Dr. Thomas introduced the Board Members of the Capital School District, Mr. Keitel, Mr. Scott, Mr. Martino (President), Mr. VanSant, and Mr. Sockoloski, Business Manager. Mr. Martino advised members that during the last 1½ years, the Capital School District has compiled a facilities master plan for all buildings. There are 12 buildings, one of which is not located in the city limits. Through this process, it was discovered that all buildings need to be replaced over the next ten (10) to 15 years. He indicated that all the buildings are old. The District will be going to referendum for the first phase on March 7, 2007 and are exploring all avenues to help pay for this process.
Concurring with Mr. Hogan, Mr. Martino stated that although there will not be a substantial amount of money collected, there is a perception issue to the taxpayer regarding fairness. He explained that although the County has instituted the impact fee for new construction outside of City limits, there are no monies collected for new construction within the City limits. Therefore, the Capital School District is requesting consideration for instituting an impact fee for new construction within the City limits, which is where most of the buildings for the Capital School District are located. In addition, there is the perception from those residents that have lived in Dover for several years that they are being required to pay for building and updating schools that are necessary because of the many new residences which have impacted the School District. These long-time residents feel that new residents should be required to pay their share for these additional costs.
Mr. Keitel stated that based on the projected growth, it is his opinion that there will be substantial monies collected, noting that 1¼% to 1½ % collected for each $300,000 to $400,000 home will add up. He explained that the key is that the money is being collected as a surcharge because these homes will most probably have children that will ultimately result in the need for more facilities. Once the schools are built, the school district will continue to collect property tax from all taxpayers in order to maintain the new buildings and renovate them when necessary. Mr. Keitel stressed that the importance of the surcharge is due to the need for more buildings because there are more people moving into the district. He stated that there currently are enough schools for the people that live here now; however, if the population is increased by 20%, it will be necessary to have one (1) or two (2) more schools.
In response to Mr. Hogan, Dr. Thomas stated that the ordinance could be written to provide some type of exclusion for housing constructed for senior citizens.
In terms of population growth, Mrs. Townshend, City Planner, estimated that there has been growth of approximately 1½% per year, which may begin to decline. However, she stated that the City has been receiving a large number of commercial development projects and there is no indication that this will be changing.
Noting that population forecasts for school aged children is expected to decline by the year 2015-2016, Council President Williams requested that Dr. Thomas provide information to confirm or deny the forecast. In addition, regardless of the income projections, she stated that when the Levy Court passed their ordinance, everyone knew it was pennies on the dollar compared with the actual amount needed to build new schools. She questioned if the school district or the State could provide information on other strategies to meet this need, such as the consolidation of school districts, resources, administration, etc. to meet the demand.
Mrs. Mitchell provided members with the following estimates: for the months of January - May, and October 2006, 11.5% of the permits issued were in excess of $30,000; the total permit value averaged $5.2M; and the average monthly surcharge would be $50,000 equating to $660,000 - $720,000 annually.
Mr. Hogan moved to recommend continued study of this concept and requested staff’s review for a report at a later date, seconded by Mrs. Jones and unanimously carried.
Mr. Hogan moved for adjournment, seconded by Mr. Shevock and unanimously carried.
Meeting Adjourned at 7:11 P.M.
Respectfully submitted,
Reuben Salters
Chairman
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