County to ask for development district power

Despite no actual plans yet to employ the power, Sussex County Council members on Jan. 8 voted 3-2 to ask the state’s General Assembly to pass legislation that would enable the county to create special development districts (SDDs) to help pay for infrastructure associated with development.

County Solicitor Jim Griffin told council members Tuesday that if such legislation is passed, the county could then work to establish parameters for SDDs, such as: (1) limiting the amount of associated bonds to paying for on- or off-site infrastructure improvements necessitated by development; (2) limiting the bonds to paying for only off-site improvements directly related to development; or (3) dealing with developments on a case-by-case basis and then deciding what such bonds should cover.

With SDDs, property owners in a given district – a new development, in most cases – would share a special tax burden for such bonds, which would be sold to fund specific capital improvements related to that specific development or a surrounding area. A new community, for instance, might see an annual assessment on all properties — in addition to property taxes — to cover the extension of central sewer to the community or the improvement of roads through that area.

Outgoing Council President Dale Dukes (D-1st) noted the council’s previous discussion about limiting the bonds to off-site improvements only, saying that any on-site improvements should be part of the cost of the project for a developer.

“When state agencies require additional off-site improvements, that’s when we should allow them to sell bonds in order to pay for those improvements — improvements everybody in the county has access to,” he said.

Dukes said he favored moving ahead now with asking for the enabling legislation, which does not require the county to actually create any such districts, instead simply giving it the authority to do so.

“If we’re going to do this thing, we ought to get something done on it,” he said. “We need to bring it to a head one way or the other.”

Complicated legislation draws opposition

The issue brought opposition from Councilman George Cole R-4th), at least partially over the complexity and size of the draft legislation.

“It’s very difficult for the layman to go through this and figure out what it means,” Cole said, describing the legislation as a mechanism lawyers could use to generate money for themselves. Further, Cole said, “There’s not enough development now for this to generate much money. We have a lot that’s been approved but not constructed.”

Dukes agreed on the latter point, but said that was, in fact, a part of the problem. “These off-site requirements are pushing the developers to pull out,” he said. “They can’t afford the millions of dollars in off-site improvements unless we can give them some sort of bond or TIF (tax increment financing.”

But Cole said he favors impact fees to fund needed infrastructure. “It’s so simple,” he said, contrasting the mechanism with the SDD draft. “This is the thickest legislation in our packet,” he noted of the SDD enabling legislation. “Every time we get one of these, we want to throw it out. Attorneys are going to make a killing off this.”

“When attorneys who benefit the most write the legislation, you’re going down the wrong path again,” he later added, noting that Dukes was asking bond attorney Hal Salmons, who drafted the legislation, to consult on its refinements.

Councilman Lynn Rogers (D-3rd) agreed that the legislation is too complex. “This packet is thick,” he said. “It’s nothing but confusing. I’d like to see it in black-and-white.”

Rogers said he also favors impact fees to help fund infrastructure needs. “With impact fees, the money is still in the kitty,” he emphasized, in cases in which a developer might pull out before or during construction.

“Development seems to have done very well in this county,” Cole added. “I don’t think I want to be a part of a county government that brags about our low taxes and then adds taxes on these special people who bring things that all of the people in the county will enjoy. I don’t see why we need this in Sussex County at this point.”

Council narrowly favors legislation

Councilman Vance Phillips (R-5th) did see a need, however.

“I don’t think we should be putting the burden created by newcomers on long-time Sussex County residents,” he said. “It seems this would put the cost on those who are creating the burden. Impact fees not good because the county has to front the money,” he noted. “This program puts the burden on dev and ultimately the residents of those communities, who are putting the burden on this county.”

“I support the concept of putting the burden on the folks who are creating a burden. This gives the county the flexibility of creating a process that would do that in the future,” Phillips added.

Moreover, Phillips emphasized that the legislation won’t automatically push the county to create SDDs unless it decides to in the future. “This is simply enabling legislation that allows us to consider this in the future. I don’t have a problem with that,” he said, with Dukes concurring.

Phillips took issue with Cole’s and Rogers’ opposition to asking for the enabling legislation. “You’re putting a negative spin on it, and we don’t even have one in front of us,” he said.

Assured by county officials that the county would not be financially responsible for bonds sold under the SDD concept, new Council President Finley Jones (D-2nd) said he would also support asking for the General Assembly to grant the power to the county, making for a 3-2 vote in favor of that move.

The bonds issued under a SDD are a revenue-type bond, not a general obligation bond. County officials would manage collection of the funds, including collecting fees if individual property owners don’t pay them. But the county is not responsible for the repayment of the bond if it goes into general default.

On a side topic with SDDs, Griffin said he didn’t believe that the county should immediately pursue the idea of tax increment financing, in which infrastructure would be paid for by bonds that would be repaid by county via county taxes.

“It’s probably not practical at this time, because taxes are low and not high enough in most cases to repay the bonds,” he said.