Proposed rental tax impacting UD, area landlords 'tabled indefinitely' in Newark
Yes, Newark is still talking about taxes.
Particularly, it has been on the search for revenue generators that tap on its neighbor, the University of Delaware. Since the beginning of the year, its governing council has passed two resolutions seeking to amend Newark's charter, giving the municipality authority to execute a "per-student tax" on universities, as well as taxes on lease revenue in the city.
Both passed. Then, Newark stepped back.
The city backpedaled on its proposal to tax rental revenues in late March, amid talk of potential litigation, postponing reconsideration until its next meeting April 22. Then, as Monday evening came, council decided to abandon it all together for now.
The measure was "tabled indefinitely" at a 4-3 vote. The move came amid discussion of possible strategies to recover processing fees incurred when large payments — such as electric and other utilities to the city — are made by credit cards. That could be more than $1 million per-year, according to council, though the body expects more information soon.
That could, council hopes, join additional revenue from a per-student levy on UD. But movement there is on the clock.
Awaiting clear update from Legislative Hall
Newark has been waiting for state lawmakers to approve the power to execute a new tax.
Such legislation has yet to be filed, as reported in an update from the city's lobbyist Monday night. The city plans to lobby for the student tax once expected legislative priorities are set.
"We're still waiting for trigger on the per-student fee from the University of Delaware," said James Dechene, indicating he will continue to monitor support he does expect.
Council also hopes to see the city included in PILOT-formula rewrites — as mentioned in the report with a similar 2021 bill that did not advance — but support for the move has yet to be seen. So far, Gov. John Carney and other state lawmakers have cited concerns of a tight budget year, according to Dechene.
The city needs state approval on any potential charter amendments to then come back to the table on creating a new tax in Newark.
Per-student tax in Newark: City moves forward on new UD student tax, looks to state for support
Wait, what have I missed at UD?
Newark says about 42% of real estate within the city is tax-exempt.
That's because the University of Delaware, like all nonprofits under state law, doesn't pay property taxes. If it did, the city estimates they would total around $6 million. It does pay operating costs to the city, like water and electricity, as well as certain fixed payments in lieu of taxes — but the council says such "PILOT" payments haven't been adjusted in nearly 60 years, despite the school's quadrupling in enrollment.
Overall, the city contends that additional revenue sources are "imperative" to continuing to provide city services, as leaders eye a looming deficit ahead.
The council said yes to a per-student tax, unanimously, on Feb. 12.
That sought "up to $50 per semester, per full- or part-time undergraduate or postgraduate student, at any college or university" attending in person, with that fee adjusting with inflation. The next proposed a tax of up to 1% on gross rental receipts on residential properties, including any owned by the University of Delaware or area landlords.
But paired proposals, once looking to apply the rental tax on both residential and commercial properties — like retail, dining, office spaces — have been stalled. Together, City Manager Tom Coleman had put the rental taxes' fiscal impact at around $3 million per year. He noted several beach towns already have such a tax.
Just the student tax has left council floor so far.
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This article originally appeared on Delaware News Journal: Proposed tax impacting UD, landlords 'tabled indefinitely' in Newark
