Dagsboro enacts new revenue generators

Dagsboro Town Council may have steered the town’s finances out of the red and into the black in a single special meeting, March 20, with the installation of some significant fee increases.

Council members enacted a $1,500-per-unit impact fee to cover anticipated future needs for additional public services (more police officers, more staff at town hall, a maintenance worker), by a 4-1 vote. Only Council Member Kurt Czapp opposed the measure.

They raised building permit fees, by a 3-2 vote, settling on:

• 25 cents per square foot for local firefighters

• 25 cents per square foot for local ambulance

• 3 percent of $85-per-square-foot (this from International Building Code standards) for the general fund

Czapp and Council Member Andy Engh opposed the permit fee increases.

Council also created a new, 3-percent gross receipts/rental license fee, by another 3-2 decision, with Czapp and Engh against.

Engh had initially asked to table the matter, due to the lack of an actual document describing the new fee. However, Mayor Wayne Baker suggested their conversation on the matter should have been sufficient — Engh dropped his request to table and settled for the opposing vote.

And finally, a packet of various additional licensing and fee changes passed 4-1 (Engh opposed).

The property tax rate of 38 cents per $100 remained untouched, and visiting guest Gary Esposito (finance administrator for Fenwick Island) suggested council shouldn’t have to change that rate any time soon. But Baker did happen to mention that the town hadn’t had a reassessment since 1993.

“I think you have to look at where Dagsboro is, now, and where some of the other towns are,” he said. “We’re many steps behind them.”

Dagsboro council borrowed more than one page from Fenwick’s code book and schedule of fees. The towns shared an attorney (Tempe Steen), Baker pointed out — and he expressed confidence that both she and Fenwick council members had known what they were doing when they installed Fenwick’s revenue generators.

Many of the other beach towns have similar fees in place, he added. “That doesn’t mean we can’t change or amend things, but we need a place to start,” Baker said.

He’d explained why the town would need all this extra revenue, at the beginning of the meeting.

Baker worked with the town’s main limiting factor — its contract with neighboring Millsboro, for water. Roughly speaking, Millsboro has agreed to sell Dagsboro enough water to supply up to 1,500 homes (1,500 equivalent dwelling units, or EDUs).

As Engh noted, the county government’s ability to provide sewer service is probably another factor limiting growth. Baker agreed, but also noted the county’s ongoing efforts to increase capacity at the nearby Piney Neck Regional Wastewater Facility.

Back on fresh water, Engh asked whether 1,500 was really a firm number, and Baker again agreed the town could renegotiate for additional water EDUs.

But using 1,500 as a starting point, Baker subtracted about 300 EDUs (already spoken for, to service existing properties) and multiplied the remaining 1,200 or so by 3.5 persons per household.

He figured on more than 4,000 new residents — and judging from his 3-year timeline for getting some services in place, he evidently expected them sooner rather than later.

Referring to a wish-list, he suggested a town of 4,000 or 5,000 would need five fulltime police officers — not counting the police chief — a town manager, three municipal clerks, a fulltime code enforcement officer, a part-time financial manager and a maintenance person.

The town should have some funds in emergency reserves, he added, and eventually, a pension fund for the employees.

Baker noted a few likely capital expenditures as well, but kept the discussion primarily focused on general and operating budgets. Council mentioned revenues from real estate transfer taxes only in passing.

(Municipalities collect a 1.5-percent-of-fair-market-value transfer tax every time a property changes hands. These tax revenues are intended for use in capital construction, but secondarily can be used to support public safety and public works budgets.)

“The real estate transfer tax, we try not to put too much emphasis on that,” Baker said. Esposito agreed, noting variability in the real estate market. He said Fenwick had a banner year in 2005, but transfer tax revenues had diminished considerably in early 2006.

Leaving transfer taxes for another day, Baker said he’d estimated property tax revenues based on middle-of-the-road assessed property values of $100,000. That would mean a $380 annual property tax bill for the average homeowner.

But even multiplied by 1,500 EDUs, full implementation of Baker’s wish list would leave the town with a $225,000 deficit, every year, he said.

Esposito noted a few tertiary revenue sources (grants, cable television franchise taxes), but seconded Baker on basic principles.

“You’re not the federal government,” Esposito said. “You can’t raise the debt ceiling again, like they’re doing this week. In a small town, (the money) is just not there. You have to live within your means.”

The financial measures instituted on March 20 should go a long way toward building that kind of reserve but, as noted, council was far from united in making the change.

Czapp also objected (4-1 vote) to the manner in which council planned to collect the new public services impact fee. Council will impose the $1,500-per-unit impact fee:

• For projects still in the planning stages, $750 at preliminary site plan approval and $750 within 120 days, or at final approval, whichever comes first;

• For projects that already have final approval, $1,500 within 90 days. The clock started with council’s adoption of the impact fee, March 20.

As Planning and Zoning (P&Z) Commission Chair Marge Eckerd pointed out, developers at the imminent Chapel Crossing project already had interested homebuyers under contract. However, Baker indicated an unwillingness to exempt anything that wasn’t actually constructed and cleared for a certificate of occupancy.