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New Castle County in violation of state constitution related to property assessments

County and City properties have not been reassessed by the County since 1983; Mayor Purzycki says the Court ruling will correct the County’s current unlawful process, which harms City and County property owners

Wilmington (DE): Wilmington Mayor Mike Purzycki today commended a Chancery Court Judge for ruling that New Castle County is in violation of the Delaware Constitution for maintaining a property assessment system that does not reflect the fair market value of properties throughout the City and County.

The Court’s decision will likely lead to the first county-wide property reassessment in nearly 40 years. The City of Wilmington was permitted by the court last year to join a lawsuit filed in 2018 by the Community Legal Aid Society, Inc. (CLASI) and the American Civil Liberties Union of Delaware (ACLU) against the New Castle County Government.

Wilmington supported the Plaintiffs’ claims against the County and the request of the court that it order the County government to conduct a county-wide property reassessment. In the City’s filing, Mayor Purzycki said the County had ignored its obligations for four decades, harming City and County taxpayers. The Mayor was a member of New Castle County Council in 1983 when the County last re-assessed properties.

“I could not be any more pleased with Vice-Chancellor J. Travis Laster’s decision,” said Mayor Purzycki. “I have argued unsuccessfully for years that New Castle County government should meet its obligation to conduct timely reassessments of real property. Sadly, it became clear that there was no political will to make the hard decision even after 37 years. As Mayor, I found unacceptable disparities in the way our tax burden was being distributed throughout the City, with some residents paying two and three times their fair tax amount. The City joined the lawsuit to secure fundamental tax fairness for our citizens with the confidence that our courts would right this wrong.”

Vice-Chancellor Laster’s decision reads in part:

“In this case, the plaintiffs proved that the counties are using indefinite-base-year methods that do not generate anything approaching acceptable levels of uniformity. The counties have used the same assessed values for so long that taxpayers of the same general class and within the territorial limits of the authority are not treated the same. Instead, taxpayers experience quite different effective rates of taxation. The fact that property owners pay the same nominal rates creates a mirage of uniformity. The underlying assessed values diverge from present fair market value to such a degree that the reality is a profound lack of uniformity. [T]he evidence on this point was one-sided and overwhelming.”

In joining the lawsuit against the County in 2019, the City made the following points, most of which were upheld in the Court’s decision:

• Property taxes, which are determined by assessed property values, are a major source of revenue from which the City and County provide services to the public;

• The County’s failure to perform a general reassessment has had an irreparable and ongoing detrimental effect on the City’s ability to raise revenue to fund City programs and services;

• The County has a constitutional duty to uniformly assess all real property within its boundaries;

• The County has a tainted history of an indefensible administration of its property tax system and acknowledges that its property tax system is inequitable;

• The County’s failure to perform a general reassessment has caused other problems such as a backlog of property tax assessment appeals awaiting a hearing before the County Board of Assessment Review.

In 2018, the CLASI and the ACLU sued the State and County for failing to adequately fund educational opportunities for disadvantaged students. The Plaintiffs said, in part, that the failure to properly fund such programs was related to the County’s continual failure to produce updated property tax assessment rolls.

Wilmington sought declaratory and injunctive relief against the County government when it joined the lawsuit, with the City’s claims to the Court reading in part:

• This action is filed out of necessity to ensure that the City’s residents and property owners are protected from unconstitutional and unlawful taxation, and to preserve and protect the stability of the City’s tax revenue from the County’s unconstitutional and unlawful conduct.

• The State of Delaware is the only state whose legislature or courts have not required the periodic and systematic reassessment of the current fair-market value of properties in its counties. The County has failed to perform a general reassessment for over 35 years, which has caused assessed property values in the County—and by extension, the City—to become so unrelated to properties’ current fair-market values, and the property taxes paid thereon, to become so unbalanced and disproportionate as to violate the Delaware Constitution of 1897, as amended (the “Delaware Constitution”). This failure contravenes the fundamental constitutional principles of fairness and uniformity in taxation, imposes an unfair tax on the City’s property owners, and directly harms the City’s ability to, among other things, effectively and fairly administer its own property tax system.

• The County’s reliance on the outdated, unreliable, and inaccurate assessed values of properties as of 1983 has created numerous self-inflicted difficulties in the County’s administration of its property tax system. Included among these difficulties is an increasing number of unresolved taxpayer appeals that the County is no longer able to resolve in a manner which maintains uniformity in taxation – even with its attempts to relate current property values back to 1983.

• Because the Wilmington City Code, as authorized by specific enabling legislation in the Delaware Code, requires the City to utilize the County’s property tax assessment list, the County’s failure to uniformly assess properties has destabilized the City’s property tax revenue. For example, in recent years, the assessment appeals of just a few commercial properties have resulted in the elimination of over $64 million of tax assessable value in the City and the loss of over $1.28 million of the City’s annual property tax revenue. These amounts will increase if the County’s ongoing unlawful conduct of failing to uniformly assess properties is permitted to continue.

Mayor Purzycki said he hopes that today’s ruling will lead to a property re-assessment without further delay.

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