Tuesday, August 06, 2013

The August 2013 Delmar Delaware Council Meeting

I went to the Delmar Delaware council meeting last night.  As to be expected it was short – over with by 8 PM.  The only council member missing was Robert Thompson and since he is with the Fire Department it was assumed he was still involved with the house fire over on Second and Jewell Street.

The main item on the table was a request by Jessica and Robert Smith for a Tax adjustment on their property that is on Old Stage Road.  They had made this request before (In December) when they purchased the property. 
The land in question has an interesting history as the 190 acres was part of the Jamie Rostocki  Chesapeake Bay Reserve land.  Back about 6 years ago Rostocki was going to build 478 homes on 206 acres.  The town of Delmar was wild with approval.  It looked like we were going to move from being the 23rd largest town in Delaware up to maybe 14th (move over Camden, Delmar is growing).  Besides annexing the land, zoning the land R-2  and approving the subdivision, Delmar submitted a new comprehensive plan to the state of Delaware indicating any growth that would occur would be in this area of Delmar.  They also signed an agreement with Tidewater Utilities to supply water and sewer to this section of Delmar.  Finally, they included this land in the tax base for the annual budget.  It all blew up when the developer went bankrupt, which also brought Wilmington Trust down with them as Wilmington Trust Bank had loans with the Developer.     

Sometime toward the end of 2012 Jessica and Robert Smith purchased 190 acres of the land with the intent to farm it and ignore the approved subdivision plat that went with it.  I do not know what they paid for it but I would think between 1.5 million to 3 million dollars.  In December they requested the town give them an adjustment on their taxes as they only intended to farm the land – forever.
From the minutes of the December 2012 Joint Council Meeting;

36801 Old Stage Road- Property Tax Abatement Request
Mayor Houlihan informed the Council that this property is one of the five properties that

together annexed into Town a few years ago. This is the largest parcel of those five and the previous owner was Jamie Rostocki who received an approved plan for a subdivision. The property then went into foreclosure then to a public auction where the new owners have purchased it. The attorney for the new owners has contacted the Town requesting that the property be re-assessed agricultural, since they have no plans to develop, and to be refunded the amount difference from taxes.

Town Manager Bynum-King stated that Town Attorney Waehler informed her that the Council does not have to take any action to honor this request based on the word of the new property owners that they will never develop the land. Part of the concern is that the Town went through extensive time and resources during the annexation and the State Planning review process to have the property re-zoned. It would not be feasible for the Town to extend credit to the new property owners just because the Town received a letter stating that they will not develop the land. This is already included within our Comprehensive Plan and would be more involved than just refunding the money.

Mayor Houlihan stated that it would create a substantial decrease in the Town’s revenue. There could also be other layers of approval involved from the State if the Town wanted to change the zoning on this parcel. He stated that he doesn’t feel that they should be entitled to a refund since they bought the property knowing it was zoned R-2.

The consensus of the Council is to table this for right now. This is something that the Council has never dealt with before. Right now this revenue is built into our budget. It will create a shortfall of our revenue of about $9,000.00. There is also the concern that this might be the first of many who would want to de-annex.

Mayor Houlihan stated that the new owners do have this parcel that has an approved building plan. It might not be marketable right now, but with the upswing of the economy, it would be in their favor.

The consensus of the Council was that they would take the recommendation of the Delaware Town Attorney and not change the assessment of that parcel. Town Manager Bynum-King said she would have a letter sent to the new property owners to inform them of the Council’s decison

The property in question is 190 acres (130 acres tillable the remainder wooded) .  The Smiths say they did not know the property was in the town limits until they went to settlement and did not know the taxes were about $19,000 on the property until settlement, and they thought they could get an adjustment by having it zoned agriculture land (Delmar does not have a zoning for agriculture a simple phone call would have told them that).

In addition . Austin Short, State of Delaware Deputy Secretary of Agriculture, sent a letter to the Council telling them about the Farm Land Assessment Act.  Delaware Senator Robert Venables sent a letter supporting the Smiths and making a threat to take action against Delmar if they did give the Smiths their ways.

Tonight the Mayor and council told the Smiths a very similar opinion as they stated in the December meeting.  They suggested ways the Smiths could correct this problem themselves but none were quick and would take time and until the Smiths did something the property would remained assessed as it currently is. 
Now this is Howard’s outlook on this matter.  The town was entirely too easy on the Smiths.  A farm is a business and if the Smiths can come up with the money to buy the land (between 1.5 to 3 million) they must have some degree of common sense and investigating the property you are going to buy would be called in the business world “due diligence.”  It means a person has investigated an asset they wish to purchase before signing a contract.  If the property was in the Delmar Town Limits I would think at a minimum having a talk with the town manager about having a farm in the town limits and what was the town outlook on that and could the land be rezoned and how much taxes were to be paid as R-2 or as agricultural, all of this before you went to settlement, would all fall within Due Diligence and common sense.   I am afraid the Smiths got themselves into this jam and it is their fault, not the fault of the town.

Update: I an told the property was purchased  for $600,000, if so it was a bargain, however the principle is the same do your homework before buying anything.

 

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