The Ocean View Town Council is looking to raise property taxes by 50 percent in its next fiscal budget and maintain that rate for two fiscal years.
The council had originally discussed possibly raising property taxes by 100 percent to fund planned capital projects, which, in total, are estimated to cost $4.6 million. Council members stated this week that the increase in tax rate would allow for the Town to pay for the projects as it weans itself off transfer taxes — a revenue source known to be unreliable.
“Why were the drainage projects postponed for years? Keep in mind that, to my knowledge, no one on previous councils nor anyone on this current council ever said, ‘Let’s ignore the problem for 10 years and see what happens,’” said Mayor Walter Curran.
“Every year, the issues that came before the council were piecemeal, nibbling at the edges of the problem. Each year, it was easier and cheaper to postpone the projects than fight the necessary battles with the citizens on getting the easements required. Eminent-domain proceedings take time and money.”
Curran said the Town has had issues with attaining easements for years — and not solely easements for drainage and road work.
“The Town has been offered free sidewalks by [the Delaware Department of Transportation], extending from Route 26 up Central to the town line at the bridge over the canal. It was a ‘feel-good’ project. We couldn’t complete that project because a few of the residents on Central would not agree to easements. When the Town offered to go for eminent domain, DelDOT refused, saying they didn’t want to force anyone into accepting ‘free sidewalks.’
“The irony of this is that many of those same people that are refusing to grant easements for the drainage projects are the loudest and most consistent complainers when it rains and parts of their property are underwater.”
The proposed 100 percent tax increase would have ensured the Town would have enough revenue generated in the next five years to cover operating expenses and all known capital projects.
Curran said that, in thinking more about the proposed increase, it became evident that finishing all known and necessary capital improvement projects would be difficult to do in a five-year period.
“With 100 percent increase, we are building a large surplus in the first two years, anticipating that everything goes on-schedule. I have found that, wherever a large surplus of money is found, politicians try to find ways to spend it, often ignoring the original intended purpose.”
With that in mind, Curran proposed that the council return to the proposed 50 percent increase they had discussed at previous budget workshops.
“That will give us the necessary cash to accomplish our purpose through 2021 without building up an excess cash surplus. At that time, whoever is on the council can assess the situation and determine how much of a tax increase is needed at that time to complete the capital projects over the next three years,” he said.
“Please keep in mind that another tax increase will be necessary in 2022 in order to complete the capital projects, but a more accurate assessment can be made in 2012 for what those costs will be.”
With a 50 percent increase, based on the Town of Ocean View’s assessed property values and property tax rate for the 2018 fiscal year, homes assessed at $200,000, $300,000, $400,000 and $500,000 would see an annual increase of $165.40, $248.10, $330.80 and $413.50, respectively.
Curran said the Town has already started the condemnation process for 13 properties with its solicitor in order to get easements to complete the Woodland Avenue and Woodland Park projects. A rough estimate of the cost for that work is $40,000.
The budget, he said, is balanced in terms of operating expenses; however, the Town cannot afford to pay for necessary capital improvements, focusing on drainage and road repairs.
“They’re stacked up like cord wood,” he said. “We have prioritized them… We are pushing them as fast as we can.”
Curran defends Town’s communication
Curran also addressed recent complaints that the Town does not do enough to keep its citizens informed.
“This is not the first time this topic has arisen. The Town of Ocean View has excellent communications. We have the website, which lists everything that is going on in town. We post every notice that is required by the town charter and state government, pertaining to every meeting, whether it is the town council meeting or one of the committees.
“It was stated on more than one occasion last night that there needs to be more input from the public on every issue. Sounds perfectly rational,” said Curran of comments at the Candidates’ Night preceding this year’s council election. “But what everyone here needs to understand is that this is a town, not an HOA or a neighborhood gathering. We have a charter and rules that we must follow.
“If you are interested in knowing what is going on in the Town, then read the newspapers for the notices, or go on the Town website and find out when and where the various meetings are being held. That is your obligation as a citizen.”
Curran said that if citizens are still not satisfied, they must consider how they found out about the Town’s Candidates’ Night and the budget workshop.
“Look at how many of you were here last night and tonight. The notification process was exactly the same as it is for every meeting. If you really want to know what is happening — and I hope that you do — then take the time and effort to find out when the meetings occur, and show up and voice your opinion. You are always welcome to the meetings.
“Many, many, many years ago, in college,” he continued, “I learned two important lessons from my Naval Science instructor: Communications is a two-way street. The end of the street that is listening is the better communicator.”
“I realize we do have avenues of information, but I, along with the rest of this council, apologize to the citizens of Ocean View for not keeping you informed of our intentions to wean off of our transfer taxes,” added Councilman Frank Twardzik. “This is not the first year we’ve done this. This is the fourth year.”
Councilman Tom Maly said the council is looking to pass an ordinance that would hold parties responsible when they attribute to drainage issues within the town and make them financially responsible for paying for improvements.
Curran said that ordinance would prevent future issues from getting to where some projects are currently, but that it does not fix the projects that need to be done now.
Councilwoman Carol Bodine asked Town Solicitor Dennis Schrader if a sunset clause could be created to go along with a tax increase.
“Annually, you have the opportunity to reset the tax burden based upon the amount of money you expend,” said Schrader. “If you were to — if I understood your hypothetical — keep the tax level as proposed for a couple years and then, at the third year, there would be a reduction of expenditures, and therefore you would like to reduce the tax rate, that opportunity is present every year you do a budget, based on what you choose to spend money for.
“You could have a sunset clause,” he concluded. “The question I have about that would be whether or not there would be any contingencies, emergencies between now and two or three years from now that would change your thinking on the cap that you’ll have set.”
Taxpayers ask for expense cuts
Many individuals attended the council’s budget workshop March 27 to voice their concerns about the proposed 100 percent property tax increase and give suggestions on how to save.
Property owner John Merryman asked why monies were budgeted for projects and never used.
Town Finance Director Sandra Peck clarified that the Town did not have the funding for the projects.
“The original adopted budget for Fiscal Year ’18 had Town reserves being used of $1.3 million. It did not balance last year. The adopted budget, when you accounted for the operating, balanced. But once you factored in the capital projects, which included Woodland Avenue Extended, there was a deficit of $1.3 million… It’s not smoke and mirrors. It wasn’t spent.”
Daisy Avenue resident Anne Powell, a local Realtor, said the council’s concerns related to dwindling transfer tax were unwarranted. She said new-construction homes in the town are created by demand — a demand she said will not go away once all the land in town is developed.
“This is not going to stop because we don’t have new construction,” she said. “I don’t believe your transfer taxes are going to be cut in half.”
Berton Reynolds, a resident of Fairway Village who is running against Bodine for the District 4 council seat, asked if the Town has looked at hiring a full-time engineer.
“Just for Woodland Avenue was over $676,000 in engineering.”
“That is being actively looked at,” said Curran.
John Reddington of Bear Trap asked if the Town was doing everything it could to collect gross rental receipts tax, including from those who rent their properties online.
“The Town is doing everything it can,” said Curran. “Everything rented through a Realtor or agent gets reported to the Town. There’s a whole bunch of people who rent for themselves and cheat the system… It’s extremely difficult, unless someone rats them out.”
Katie Rehrig said the council needed to take a closer look as to what budget cuts could be made prior to proposing a tax increase.
“You can’t tax us and not look more closely to your budget,” she said.
“This council has said at this point in time we’re not making any cuts,” responded Curran.
Easements key in project costs, delays
Rehrig also asked about a specific timeline for the projects.
“It’s very vague, I think, without having a clear schedule and timeline.”
“Last year, we went out to communities and said, ‘If you, as neighborhoods, want to get together and talk… whoever gets easements first, that project goes to the top of the list,” said Curran. “Woodland Avenue and Woodland Park are at top of the list for the next two years That’s as close as we have for a listed time schedule.”
Property owner Jim Reichert asked if the council had considered forming a tax ditch corporation.
Curran said he did not believe it would be approved by the State.
“I’m not sure it answers the question of saving money,” said Schrader. “I’m not sure it would be a financial benefit.”
“I think it would be a much more difficult project to create a brand-new ditch somewhere out there to be able to drain more water effectively. You will be fighting the exact same projects but maybe on a much larger scale,” added Curran, noting that he would research the idea more.
Rachel Quillen said she had attended the meeting to represent the young families who live in town and who cannot afford the increase.
“I want you to consider that not everyone in Ocean View is retired and rich,” she said. “There are families that you will affect.”
Briarcliffe resident Dan Verona called attention to California’s Proposition 13, to reform taxes and rollback property tax assessments.
“This was highly successful,” said Verona.
He added that if the tax increase was to be approved, property owners would be looking for solutions, such as unincorporating from the town.
“Maybe our police force is a luxury that we cannot afford,” he added.
Cindy Hall of The Cottages suggested the Town look into doing something with the old town hall.
“What are we doing with this? We’re paying heat, we’re paying insurance, we’re paying cooling. It’s just sitting here. It used to house offices… It doesn’t anymore. Rent it out, collect income.”
Currently, the Town does rent out the space to the Osher Lifelong Learning Institute.
“What will you do of people don’t pay this tax increase?” she added. “Then what are you going to do?”
Hall noted that Bethany Beach, which raised its property taxes by 100 percent in 2008, now has a tax base of 17.5 cents per $100 of assessed value.
Peck said the Town’s current tax rate in Ocean View is 16.52 cents per $100 of assessed value.
“You have our attention now,” said property owner Tricia Supik. “If we weren’t listening before, we’re listening now.”
Property owner Bob Thornton said he is not in favor of tax increases, noting that last year he paid approximately $80,000 in taxes and fees for his projects in the town.
Thornton asked if the council would consider allowing property owners to pay four quarterly payments, rather than require one lump sum.
As an example, Thornton said that his property south of Bear Trap is 6 feet away from an easement that would take half of the Town’s water and convey it to Miller’s Creek.
“We fought and could not get a 6-foot easement, so therefore I built a 5-acre lake,” he said. “Something to look into. I’ll charge the Town, let’s say, a dollar or two a year, and give direct conveyance through my project.”
The council will hold another budget workshop on April 3 at 6 p.m., and plans to vote on the 2019-fiscal-year budget on April 10. Copies of the draft budget may be acquired by visiting the administration offices at the Wallace A. Melson Municipal Building at 201 Central Avenue.