Millville charter change lingers in Dover

While state legislators rushed to the finish line, working through the night on June 30 to pass legislation prior to the end of the current legislative session, they left at least one bill important to local officials sitting on their agenda for future action: House Bill 211, which would allow the Millville Town Council to create special tax districts.

HB 211 was passed unanimously by the state House of Representatives on June 21 and was assigned to the Senate’s Community/County Affairs Committee on June 26. That committee sent the bill to the Senate floor on June 27, on its merits, with four committee members voting to take it to a full Senate vote.

However, as the flurry of late-session legislation went through the Senate prior to the end of the session on July 1, HB 211 was not taken up for a vote and appears set to languish over the legislators’ break, until at least January of 2008, when it could be taken up again.

State Sen. George Howard Bunting (D-20th) said Millville’s charter change was not alone in the special development district (SDD) power-granting legislation that was held up at the end of the term.

“There were one or two more that were held until January,” Bunting told the Coastal Point this week. “With several of these coming through, there were some concerns about the uniformity of the legislation.”

“There were also some other issues raised, such as people knowing they were in the district and who was the responsible party if the entity putting in the infrastructure fails — would that be the bond holder or the lot owners?” Bunting said.

Some of the issues, Bunting said, had been raised as the result of the power being granted to Bridgeville, which was the first municipality in the state to gain the power and employ it.

Bridgeville Mayor Joseph Conaway had acknowledged some problems out of the starting gate in his town when recommending that Millville Town Council members ask for the power in their town. He said those issues had since been resolved and praised the ability of SDD’s to help raise funds for infrastructure, public safety and a new library in Bridgeville.

Despite the legislation affecting Millville having been put on hold until January of 2008, Bunting said its eventual passage was all but guaranteed.

“It’s gonna pass,” he said, noting the previous precedents established by other towns granted the power in 2006 and earlier in 2007. Already, Seaford, Millsboro and Georgetown have the ability to create special tax districts, in addition to the City of Wilmington, which first was granted the power. Laurel recently had its own charter change signed into law.

Milford is among those now pursuing the power, along with Millville.

Bunting said he expected that the Senate would resolve the concerns over uniformity and other areas in discussions that would resume in January, and that they would go on to grant the SDD power to those who had asked for it during the legislative session that ended on July 1, 2007.

Millville By the Sea could be Millville’s first SDD

Special development districts allow for the assessment of a special tax on properties within districts designated by those towns.

The concept is to finance infrastructure and other related costs not through direct municipal expenditures (via borrowing or dipping into savings) or out of the pockets of developers, but instead to ask property owners in the development district (usually a new development) to take on an additional annual burden so that money can be borrowed from investors to perform needed infrastructure upgrades at the start.

The Millville Group, developers of Millville By the Sea, has encouraged the town to pursue the special power — preferably in the just-ended legislative session, in time for sales in the nearly 4,000-unit community to be completed with a special tax district in place.

That may be cut close now that HB 211 is tabled until at least January of 2008. Builders were expected to complete work on some initial models in August or September of this year, with the first settlements in the community anticipated in February of 2008, according to the Millville Group’s Andy Timmons.

Timmons, however, noted that he had purchased his own home during a time when legislators had been considering granting SDD power state-wide and had accordingly been asked to sign paperwork that explained the SDD concept, as well as pointing out to home buyers that they could be inside an SDD by the time they settled or shortly thereafter.

Such blanket warnings could be issued to prospective Millville By the Sea buyers, smoothing the way for the eventual formation of a SDD there in 2008, as the first settlements are taking place.

Developers see the benefit of SDD’s in that they do not have to lay out, up front, the entire cash cost of improvements such as roads, sewer or water, or, alternatively, to spread such improvements out over many years, as cash becomes available.

In the town’s favor, the creation of a SDD allows the town to borrow money for improvements to the district — or to townwide services impacted or newly required because of the new development — without the town itself being responsible for repaying the money. Instead, the property owners in the designated district have an added tax on their regular annual tax bill, through which the investors fronting the money for improvements are repaid.

Buyers in the development may pay the cost of the financing from investors, but they can also likely expect to see a more advanced level of infrastructure at settlement or when they move in, as well as some public services they might not ever have gotten otherwise.

Their purchase prices on their homes will likely also be less than they would have been had the developer been asked to pay for infrastructure costs up front and passed along that cost to the buyers. That could enable them to buy a larger home, or make the entire prospect potentially affordable for those on the cusp of being able to buy in the area.

Thus, the concept of the SDD has been presented as a win-win situation for everyone involved, including the large-scale investors who typically front the money.

Millville seeks power, no districts yet planned

Millville council members have not yet committed to creating any districts, and indeed, not all of the other area municipalities that have obtained the power through a charter change have yet used it. Bridgeville stands out in that regard.

Millville Mayor Donald Minyon said that was one of the reasons he and other Millville officials weren’t upset about the delay in the legislature dealing with the issue in the 2007 legislative session.

“We’re concerned, but we also understand we were late in getting it to Rep. (Gerald) Hocker and Sen. Bunting, and we’re very appreciative of them trying to get it through anyway,” Minyon noted. “If it’s reintroduced in January, the House has already OK’d it. We don’t anticipate much of a problem in the Senate. It’s just that we have to wait.”

“The charter amendment only adds the possibility of creating a special development district,” he emphasized. “So, if Millville By the Sea comes to us about this after it was approved, we would start doing more homework then. We just wanted to get it in place so we’d have it if we needed it. It didn’t happen, so we’ll do it in early 2008.”

Already, council members have been scoping out example in which they might observe the SDD’s in action. “Millsboro just got theirs,” Minyon said, “so we’ll look at how they did it, if we’re approached, and at Bridgeville as well.”