Credit to: Coastal Point, Susan Canfora
After hearing opposition from several residents during a public hearing, the Sussex County Council, 3-2, voted not to impose a 3 percent lodging tax on short-term rentals in unincorporated areas of the county.
Proceeds from the county’s lodging tax are earmarked for beach renourishment, dredging and related projects.
Councilman Mark Schaeffer moved to defer action on the issue at the Tuesday, Dec. 10, council meeting. His motion was not seconded.
Council President Mike Vincent moved to pass the tax, which would have been in addition to a 4.5-percent state lodging tax, but the motion failed, with Schaeffer, Councilwoman Cynthia Green — who said it would have a detrimental impact on the county — and Councilman John Reiley opposed.
Vincent and Councilman Doug Hudson voted in favor.
“I am voting no for two reasons,” Reiley said. “We already charge tax on property, which I have always felt, there must be better way to raise funds for government. And now we’re going to propose taxing how you use your property. The second reason is the State seems to have begun a process of pushing the responsibility for maintenance of inland waterways and dredging, as we talk about beach replenishment going back to towns, which is not in any town’s budget to undertake.
“These areas, in my opinion, fall under the State’s responsibility. They raise money from the transfer tax intended to be used for infrastructure, so I think we are instituting something that sets a precedent. … We’re going to put the camel’s nose under the tent,” Rieley said.
During the public hearing, County Attorney J. Everett Moore Jr. read a letter from Adriane Gallagher, director of the Delaware Association of Realtors, who asked the council not to pass the additional tax, writing that it would infringe on private property rights and make it more difficult to rent short-term rentals.
Short-term rentals have surged in popularity, Gallagher wrote, adding that local governments are regulating them to enforce property maintenance and zoning codes.
She and fellow Realtors, she said, “believe such fees impact property owners’ ability to rent out their properties on short term and will be detrimental on our service industry and have a negative effect on Sussex County’s economy.” She added that an additional 3-percent tax will “impair the industry and the economy further.”
Myrna Abbott of Georgetown, attending the meeting with her husband, said they have a seasonal rental and were told by renters who used to rent in Ocean City, Md., that they were drawn to Delaware because there was no additional tax.
“We will now have to inform our tenants we are no longer tax-free,” she said of the potential situation if the tax had been adopted. “Please consider the concerns of those who own only one rental … servicing single families,” she said.
Realtor Joe Sterner told the council that he is also a business owner, running a bed-and-breakfast. He said, “Five-, six-, eight -bedroom mansions used for short-term rentals have an unfair advantage of not having to pay that 3 percent tax,” referencing rental patterns of weekly or longer that have long existed in the county’s beach towns.
He asked the council to adopt the additional tax.
Carl Frampton of Lewes, a Realtor who manages his family’s rental properties and has a small rental property business, said that adding a 3-percent tax “may adversely affect people coming to our area.”
“You need to think about all the other small businesses. … It’s not just the rental people, but it’s also all the other small businesses. The restaurants, the bars, going down on the boardwalk for an ice cream or buying a T-shirt. When these taxes start adding up, these people are going to leave, and they aren’t coming back. I would like to ask you to please vote no,” he said.
John Yost of Milton said his family has a three-bedroom house on the bay and knows returning renters who save all year for a vacation. During the past year to 18 months, he said, he has seen a decrease in rentals because of the economy
“They are looking at other areas where they can go, a lot less expensive, possibly not paying surcharges. … I would ask the council to vote no,” he said.
A woman who commented by phone during the public hearing said she rents properties during the summer. She asked the council to consider the impact the increased tax would have on renters.
“If we add an additional 3 percent .... this is going to hinder the revenue the county is going to receive overall. I think it’s important that an evaluation is done. Now, people are going to look for an area where they don’t impose a tax,” she said.
Posted by Leslie Kopp on
Leave A Comment