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Lewes BPW open to lower impact fees on Schell project

Debate to resume at Sept. 25 meeting
September 16, 2019

Lewes Board of Public Works is considering a plan to defer impact fees on some units of the proposed Dutchman’s Harvest workforce housing project, reducing upfront costs for the developer.

The board will discuss a more formal plan at its next meeting, Wednesday, Sept. 25, but the board has proposed allowing for upfront impact fees to be deferred on 42 units that are to be sold by developer Preston Schell to Dover-based nonprofit Diamond State Community Land Trust. Schell plan to build 140 units at Dutchman’s Harvest.

General Manager Darrin Gordon said the new development will necessitate the building of new sewer infrastructure. He said when those new homes come on, they will impact the current system. Thus, the city charges an fee to compensate for the impact of new lines on the rest of the system.

At the board’s Aug. 28 meeting,  Schell sought to waive or greatly reduce the full impact fee - which stood to be $1.34 million for all 140 units, or $9,549 per unit - to keep the units more affordable. Schell plans to build 14 multifamily buildings with 10 units in each building.

The board held a special meeting Sept. 10 to discuss and clarify Schell’s request. Gordon said the first issue was to determine whether to reduce or waive the fee for all of the units or only the 42 units to be sold to Diamond State. 

But, Gordon said, the developer should be responsible for a portion of the sewer infrastructure needed to serve the development.

“Those that are benefiting should pay for that, not our existing customers,” he said. 

Board member Preston Lee added, “It’s always been the policy of the BPW to not have our existing ratepayers pay for expansion of the system. As the system expands, the contractor or developer or developers pay the total bill on that.” 

The board discussed giving a special benefit to a for-profit development, setting a precedent that could be requested by other developers. They also discussed encouraging rank-and-file employees of places such as Beebe Healthcare, Cape Henlopen High School and the city of Lewes to own a home in town who would otherwise not be able to afford one.

Gordon proposed a plan allowing for a $9,000 per unit impact fee and allowing the original homeowner to pay the fee after the house is sold. He reasoned that by that point, there would be equity built into the home and the homeowner would be in a better position to pay the fee, either altogether or through a payment plan. Gordon said the proposal would apply to the first homeowner, not Diamond State.

“To reduce the impact of the impact fee to Preston Schell and his development group, help people get into that home on the first time, we take that impact fee, we postpone that question from the first transfer of deed to the second. At that point in time, they have equity in that home. They have the choice to pay that off then or we can give them a time frame to pay that off over time,” Gordon said.

He said the proposal is still in its preliminary stage and details still need to be worked out. Gordon said it would be up to the board to decide whether to extend that option to only the 42 workforce housing units or all 140 units, but the consensus appeared to be to apply the deferral only to the 42 units. Gordon said when the $9,000 comes due, it would be adjusted for inflation in order to make the town whole.

The board was open to Gordon’s proposal in concept, but unanswered questions remained, such as how open-ended deferral of the fees would be and whether appreciation of the fees over time would be tied to the consumer price index or a flat rate. Board member Robert Kennedy said the board and Schell can discuss a compromise. 

The board wanted to gather further information before developing a plan and making a decision.

 

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