Why Should Delaware Care?
A lawsuit filed by landlords across New Castle County is adding more turmoil to a long-running controversy over Delaware’s once-in-a-generation property reassessment that initially shifted the northern Delaware tax burden from homes to businesses.
New Castle County’s goal of mailing out its long-delayed property tax bills by November may be at risk after a year-long drama over tax reassessments just got more complicated with claims of arbitrary taxation and a demand to depose county leaders.
In September, a coalition of commercial landlords and hotel owners sued New Castle County and area school districts, claiming a new property tax system lawmakers approved in August is unfair because it treats business and residential properties differently.
A Delaware judge later fast-tracked the lawsuit with a goal of resolving it by the end of October.
It was a schedule that would give New Castle County just enough time to send tax bills to property owners and receive payments by the end of November, a lawyer for the county said last month.
But, on Monday, lawyers for the coalition of commercial property owners asked the judge to change the fast-tracked schedule, in part to allow them to depose New Castle County Executive Marcus Henry, and others.
The plaintiffs also asked the judge to allow them to file an amended lawsuit, with new allegations that New Castle County – which collects property taxes for itself, schools and municipalities – has arbitrarily deemed certain properties as commercial, and others residential.
They said the county recently “dropped a bombshell,” by “admitting that thousands of properties” are misclassified in such a way.
To buttress the new claims, the plaintiffs highlighted in court documents a string of seemingly similar properties, including two high-rise apartments in downtown Wilmington.
One – called The Standard – is a residential property under county rules, the attorneys said, while a brand new building around the corner – The Press – is non-residential. Both apartments are managed by the Buccini/Pollin Group.
“The county defendants have confessed that there are thousands of arbitrary discrepancies in how they have classified properties as residential or non-residential,” the attorneys said in their amended complaint, which they are asking the judge to accept as the new lawsuit in the Delaware Chancery Court case.
New Castle County has not yet filed a response to the claims in court. A spokesperson for the county declined to comment for this story.
As of Wednesday, the judge, Vice Chancellor Lori Will, had not yet replied to the plaintiffs requests, and so it remains unclear whether she would allow the case’s tightly scheduled proceedings to be altered.
The deposition of Henry alone, which the plaintiffs want to do next Monday, would happen three days after the two sides are scheduled to file their opening briefs in the case.
What Will did stress several times during a hearing in the case last month is that she did not want to see New Castle County send out property tax bills before she rules on the case.
“Because I think that could create some complications,” the judge said.
Who has ‘clean hands’?
As part of their deposition of Henry, the attorneys for the commercial properties owners want to probe what they say is the county’s ongoing process of reclassifying nearly 1,000 properties from a residential category to the higher-taxed, non-residential one.
In their request to the judge, the plaintiffs also noted that Henry had testified to state lawmakers just last week that his county executive predecessor – now-Gov. Matt Meyer – had last year held up a first-in-a-generation property reassessment by delaying the release of property valuations until after the 2024 election.
Meyer is also a defendant in the property owners’ lawsuit.
The attorneys for the property owners said New Castle County can’t reasonably object to any delays caused by their requests, claiming that the county, under Meyer, had already delayed the reassessment process by many months.
As a result, they said county officials “lack clean hands” – which is legal parlance meaning a party in a lawsuit can not make claims of unfairness if they participated in it.
Last week, Meyer’s office defended the governor by sending Spotlight Delaware several documents showing that the county’s decision to release property valuations in November 2024 dates back to at least 2021.
