COUNCIL COMMITTEES
The Council Committees Meeting was held on November 10, 1997, at 6:00 p.m., with Council President Christiansen presiding. Members of Council present were Mr. Lambert, Mr. Leary, Mr. Pitts, Mrs. Malone, Mr. Salters, Mr. Weller, Mr. Truitt and Mayor Hutchison.
AGENDA ADDITIONS/DELETIONS
Mr. Pitts moved for approval of the agenda, seconded by Mr. Weller and unanimously carried.
LEGISLATIVE AND FINANCE COMMITTEE
The Legislative and Finance Committee met with Chairman Salters presiding. Members present were Councilman Leary, Councilwoman Malone and Mr. Merritt. In the absence of Mr. Schaefer, Mr. Salters deputized Mr. Pitts to serve as a temporary member.
Proposed Ordinance - Tax Credits for Historic Property Improvements
On behalf of The Friends of Old Dover, Mr. Jack Richter gave a presentation on historic preservation tax incentives to members of the Downtown Dover Development Corporation (DDDC) and provided an ordinance from the City of Newark, which provides tax benefits for historic property owners. Mr. Richter was advocating a similar ordinance for the City of Dover. This concept was endorsed by the DDDC during their April 9, 1997 meeting, as well as by the Historic District Commission which would provide a 50% tax credit to owners of historic properties when they make exterior architectural facade improvements.
Based on the DDDC’s endorsement, Mr. DePrima drafted an ordinance and guidelines which were presented at a public hearing held by the Planning Commission in which all potential property owners were invited to attend. The ordinance was also reviewed by the City Assessor and other members of staff. Under the proposed ordinance, owners of historic properties located in the Dover Historic District Zone, or properties listed on the National Register of Historic Places would be entitled to tax credits if qualifying improvements are made to the property. Mr. DePrima indicated that there are three or four properties in the City of Dover that are listed on the National Register of Historic Places, but are not in the Historic District Zone. To qualify, the owners must perform a minimum of $1,200 of preservation, restoration, or rehabilitation work to the exterior architectural facades of their buildings. The tax credits would equal 50% of the total cost of the approved preservation, restoration, and/or rehabilitation work up to a maximum credit of $10,000. The tax credit would be spread over a 10 year period; however, the credit would not transfer to new property owners. If the property is sold, the new owner would reap the benefits of any improvements; therefore, any tax incentives to the new owner would cease.
Mr. DePrima indicated that the original proposal offered a maximum tax credit of $10,000, which was based on the average tax of the Historic District Zone. However, the City Assessor recommended that the maximum tax credit be reduced to $6,000. The Historic District Commission and the Downtown Dover Development Corporation endorsed the ordinance and recommended the maximum tax credit of $10,000.
Under the proposed ordinance, the Historic District Commission would review the project to first determine that the property is a contributing historic property within the Historic District Zone or on the National Register of Historic Places. They would then determine whether the project qualifies as an exterior preservation, restoration, or rehabilitation project in accordance with the City’s Historic District guidelines. If these requirements are met, the Historic District Commission would approve the credit. A property is considered “contributing” if it is associated with an important person or event, or if it has distinguishing characteristics of an architectural style, or if it is the notable work of a master builder, designer, architect, or artist.
For example, a $10,000 credit as a result of $20,000 of approved preservation, restoration, and/or rehabilitation work would be applied in $1,000 increments for 10 years toward a property owner’s City real estate tax. If the credit is less than the annual tax due on a property, the owner shall pay the difference to the City through the real estate billing process. If the credit is more than the annual tax due on a property, the owner’s credit shall be deemed to be equivalent to the annual tax due.
To request tax credits, the property owner(s) would submit an Historic Tax Credit application to the Historic District Commission, along with building plans and specifications, color photographs of the property showing the present condition, and an itemized cost estimate. Once the job is complete, there would be a final inspection and a written expense report verifying costs.
Mr. DePrima stated that some concern was expressed with the language in the proposed ordinance regarding the qualifications for preservation. He stated that the intent is not to allow yard work, maintenance, tree planting or landscaping to qualify for tax credits and stated that the section of the ordinance dealing with vegetation would be amended. Mr. DePrima stated that it was suggested to him that the City monitor the program to see how often tax incentives are being applied for and what the impact would be on the City’s tax base. It was also suggested that a sunset provision be included in the ordinance. A sunset provision would require that Council review the ordinance at the designated time to determine if it should be continued. Another alternative to ensure that Council is kept abreast of the possible financial impact of the ordinance is to require that an annual report be presented to Council depicting property owners receiving tax credits and the amount of tax abatement granted for each year.
Mr. Bill Hudson, President of the Friends of Old Dover, addressed Council and stated that he is vitally interested in enhancing Historic Dover. He stated that the Historic Zone is an asset to Dover and too often people do not recognize this asset. Mr. Hudson complimented Mr. Jack Richter for initiating this project and stated that Mr. Richter would like to see this made into a statewide project for Preservation Delaware. Mr. Hudson stated that many of the properties located in the Historic District need improvements. He stated that any financial incentive that can be instituted for the purpose of improving the district would certainly be an advantage, not just to the property owners, but also to the City of Dover. It was Mr. Hudson’s opinion that the proposed incentives would not become a burden to the City’s tax base, stating that maintaining a beautiful historic district in Dover would be an asset to the entire community. He relayed that the Friends of Old Dover are supportive of the proposed ordinance and would very much like to see Council move forward with this project. He stated that he hopes that this ordinance will instill in people some purpose for improving their property, enhancing their property value.
Responding to Mr. Leary, Mr. DePrima stated that owners of historic properties located in the Dover Historic District Zone, or properties listed on the National Register of Historic Places, would only be entitled to tax credits if qualifying improvements are made to the property. Mr. DePrima stated that the Victorian District, which is not located in the Historic District Zone, would not qualify for tax credits, unless listed on the National Register.
Mr. Hudson commented that he, along with the Friends of Old Dover, would like to see the Historic District Zone expanded. He stated that if the Historic District is expanded, additional properties may qualify for the tax credits. Mr. DePrima indicated that most of the buildings in the current historic district are already tax exempt.
Mr. Leary questioned whether a cap would be placed on the number of improvements that a property owner can make, whether the cap would be a rolling cap or if the cap is for $10,000 over a period of 10 years. Responding, Mr. DePrima stated that improvements can be made to the property each year, as long as the improvements are made over a ten year period. Mr. Leary suggested that this section be more clearly defined.
Mr. Salters voiced concern with a property owner being exempt from payment of property taxes over a thirty year period. Mr. DePrima suggested that the ordinance be regulated so that if a property owner receives the tax credits, they become ineligible to receive the credits for a specific number of years.
Mr. Salters stated that he realizes the importance of a historic district; however, he voiced concern with eroding the City’s tax base. Mr. Lucas stated that he reviewed the property tax records for properties located in the Historic District, relaying that most of the property owners in the historic district pay $600 to $900 per year in taxes.
Mr. Salters asked how many property owners are expected to participate in the program. Mr. DePrima stated that it is impossible to anticipate how many property owners would participate. Although he could review past records to determine how many properties would have qualified, he felt it would be extremely difficult since most improvements did not require a permit. Mr. DePrima suggested that the property owner be required to file a report in order to monitor the improvements being made to a property. He indicated that the ordinance was written in such a way as to inspire property owners to perform the highest standards of maintenance.
Mr. Hudson questioned whether exterior painting would qualify for tax credits. Responding, Mr. DePrima stated that the Historic District Commission has indicated that such repairs should qualify for tax credits. Mr. DePrima felt that application of exterior paint job on a house can sometimes be the least expensive, but the most important type of maintenance in keeping the structure moisture free. He stated that the proposed ordinance also encourages painting rather than siding.
Mr. Salters stated that with on-going inspections and code violations, property owners are required to paint their house to keep their property up to code standards. He asked why property owners should be given a tax credit for this type of maintenance. Mr. DePrima stated that by the time the structure has become in violation of the Code, the property is generally beyond repair and in very poor condition. He stated that only in the worst cases are property owners required to paint their house.
If the Historic District Zone is expanded, Mr. Salters asked what would be the estimated number of additional historic property owners. Mr. DePrima stated that if expanded, the Historic District would include an additional 75 to 100 properties. However, he noted that the expanded area would have less tax exempt properties than in the current boundaries. Mr. DePrima indicated that in the current Historic District, 50% of the properties are State owned buildings or churches, which are tax exempt.
Mr. Salters asked for the anticipated loss of revenue in taxes if the Historic District is expanded. Mr. DePrima stated that it would depend on the success of the program and on how many individuals apply for tax credits. Mr. Lucas stated that it is impossible to determine how many individuals will take advantage of the program.
Mrs. Malone stated that the City always verbally supports the Historic District. She stated that approving the proposed ordinance would provide an opportunity for the City to stand behind its verbal commitments. She stated her feeling that the proposed tax credits would provide an incentive for property owners to maintain and preserve their historic properties. Mrs. Malone reminded members that the historical areas in Dover are a very important focal point to our citizens and to our visitors.
Mr. Salters stated that other properties throughout the City of Dover need the same motivation to maintain their properties; however, these property owners are not being offered the same incentives. He stated that the remaining City taxpayers will bear the financial burden for the historic district property owners.
Mr. Christiansen stated that he concurs with the comments made by Mrs. Malone and Mr. Salters, relaying his support for the concept. However, he felt that there was insufficient information on this matter to make an intelligent decision. He stated that Council certainly supports historic preservation, not only in Dover, but throughout the country, but felt that is was important to know the net gain and loss effect it would have on the City’s tax base.
Mr. DePrima suggested that his department review building permits issued during the past two years for historic properties. He stated that at the time the permit was issued, the work may not have been work that qualified, but the property owner may have performed the work in such a way as to qualify for tax credits had this type of ordinance been in affect at that time. Although such research may not clearly depict the possible impact of the program, it may offer some ideas on the number of property owners that may have qualified if such a program were available at the time. He suggested that a time period be placed on this program for test purposes or a requirement that a report be presented to Council as to how the program is progressing.
Mr. Christiansen stated that at the end of the abatement period, the assessment on the property may increase due to the improvements to the property. He suggested that some type of projection be presented to Council as to what the City may stand to gain as well as possible losses of revenue.
Mr. Leary stated that he fully supports the concept and felt that this type of program would promote economic development and encourage growth in the City.
Mr. Pitts stated that he supports the concept and would like to see the program move forward; however, felt that it would be advisable to delay this matter for further research.
Noting that the City of Newark has a similar tax credit program, Mr. Weller suggested that Mr. DePrima check with the City of Newark to determine the amount of money the homeowners are putting into repair and restoration of their historic properties.
Mr. Lambert stated that there are advantages and disadvantages to living in a historic district zone. It is believed that property values increase in the historic district. However, owners of historic properties typically incur additional maintenance costs for repair and restoration of their properties. He stated that the purpose of the program is to provide an incentive to the property owner to encourage them to perform restoration, maintenance or rehabilitation work to their property, which they might not have otherwise done without this type of program. Mr. Lambert stated that the community, as a whole, will benefit from this program over time. He stated that he agrees that some type of sunset provision, for possibly two years, should be placed on the ordinance so that Council can reevaluate the impact to the City taxpayers.
Mr. Richter addressed Council in support of the concept and stated that Council should look at this concept in the long term, rather than in the short term. He stated his opinion that this type of program would not become a burden to the City’s tax base and would in fact inspire property owners, that would otherwise be financially unable, to make improvements to their properties. He stated his belief that more is accomplished with incentives than with regulations.
Mr. Charles Johnson of 419 S. State Street addressed Council, relaying that some years ago he purchased 60' of authentic wrought iron fence. Mr. Johnson stated that it would cost him approximately $5,000 to repair some of the broken pieces of the fence, stating that he would be more prone to repair and erect the fence if this type of improvement qualified for tax credits.
Mr. Leary moved to recommend that this matter be tabled until the next Committee Meeting to provide Mr. DePrima an opportunity to amend portions of the ordinance for clarification purposes and to gather any available information relative to the financial impact of the ordinance. The motion was seconded by Mrs. Malone and unanimously carried.
Proposed Ordinance - Code of Conduct/Ethics Commission
Mrs. Debrah J. Boaman, City Clerk, submitted a proposed ordinance relating to Code of Conduct regulations and establishment of an Ethics Commission. The State of Delaware requires that the City of Dover (1) have their own ordinances, or (2) fall under the jurisdiction of the State’s legislation. Council President Christiansen requested preparation of an ordinance that would be specific to the City of Dover.
Mr. Christiansen stated that the State of Delaware recently adopted the Code of Conduct and Ethics Commission ordinance for elected officials. The proposed ordinance, Chapter 2, Article I, Division 4 - Code of Conduct, item #1, states “that in our democratic form of government, the conduct of officials and employees of the City must hold the respect and confidence of the people. They must, therefore, avoid conduct which is in violation of their public trust or which creates a justifiable impression among the public that such trust if being violated”.
Mr. Christiansen commended Mrs. Boaman, City Clerk, and Mr. Rodriguez, City Solicitor, for their fine efforts in preparing the Code of Conduct/Ethics Commission ordinance.
Responding to Mr. Leary, Mrs. Boaman stated that the City falls under the jurisdiction of the State’s provisions until such time that the City adopts their own. She indicated that the proposal is quite similar to the State of Delaware’s with a few modifications that are specific to municipalities.
Responding to Mr. Lambert, Mrs. Boaman indicated that the State of Delaware also follows the provisions for post-employment restrictions.
Referring to Section 2-12 (paragraph B), Mr. Lambert asked if subparagraphs #3 and #4 should be combined. Mrs. Boaman relayed her opinion that the two subparagraphs are separated for clarification purposes. She stated that she would verify this with the City Solicitor.
Mrs. Boaman explained that Section 2-10, paragraph C (2), prohibits city employees or officials (under certain conditions) from entering into any contract with the City. The State of Delaware permits such contracts providing the contract was made or let after public notice and competitive bidding. Should Council wish to include such provisions, Section 2-10, paragraph C (2) could be amended by adding at the end of the paragraph, “...unless such contract was made or let after public notice and competitive bidding.” Mr. Lambert stated his support for the above mentioned amendment.
If approval is recommended by staff, Mrs. Boaman noted that the proposed ordinance must be submitted to the Public Integrity Commission for their approval prior to official adoption by City Council. Mrs. Boaman noted that if Council approves the Code of Conduct and Ethics Commission ordinance, Section 2-69 of the City Code should be eliminated.
Mr. Leary moved to recommend acceptance of the proposed ordinances, with an amendment to Section 2-10, paragraph C (2), as recommended by Mr. Lambert, stipulating that the proposal be referred to the State of Delaware Public Integrity Commission for review and approval prior to submission to City Council. The motion was seconded by Mrs. Malone and unanimously carried.
Meeting Adjourned at 6:45 P.M.
UTILITY COMMITTEE
The Utility Committee met with Chairman Lambert presiding. Members present were Councilmen Pitts and Weller, Mr. Carey and Mr. Kramedas.
Electric Service Handbook
The City of Dover Electric Department developed the Electric Service Handbook to be used in conjunction with any lease agreements involving City easements or rights-of-way. Mr. O’Connor noted that there is very little change from our present policy.
He stated that the handbook was designed to give instructions to anyone utilizing the City’s rights-of-way to those attaching to City utility poles. It also provides the Engineering requirements for attachments to any of the City’s facilities.
Responding to Mr. Salters, Mr. O’Connor stated that if there were to be a technology break-through in the future, the handbook would be amended as necessary. He indicated that any upgrades or amendments to the handbook would be presented to Council for their approval.
Mr. Lambert noted that the preparation of the Electric Handbook required a tremendous amount of work. He commended the Electric Department and Mr. Klink, stating that the handbook was well put together.
Mr. Carey moved to recommend approval of the revisions to the City of Dover Electric Service Handbook, seconded by Mr. Pitts and unanimously carried.
Acceptance of Dedication of Rights-of-Way and Utilities - Independence Village Subdivision Phase III
The developer of the Independence Village Subdivision - Phase III has requested that the streets and utilities be accepted for maintenance and ownership by the City of Dover. After construction was completed, City staff inspected all the public improvements and provided the developer with a list of repairs to be made to meet City of Dover Standards and Specifications for Public Works Construction. The work has been completed and a one-year maintenance agreement and bond, in addition to a release of liabilities, has been submitted by the developer. The rights-of-way considered for dedication are Hopkins Avenue (Sta. 4 + 55 to Sta. 14 + 00) and Thornton Street (Sta. 0 + 00 to Sta. 2 + 90).
Mr. O’Connor stated that curbing is being performed by the City which was not required by the developer at the time the subdivision was constructed.
City staff recommended acceptance of dedication of rights-of-way and utilities of Independence Village Subdivision - Phase III.
Mr. Weller moved to recommend acceptance of staff’s recommendation, seconded by Mr. Pitts and unanimously carried.
Meeting Adjourned at 6:54 P.M.
Respectfully submitted,
Robin R. Christiansen
Council President
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