Rehoboth Beach commissioners raise property taxes; more fee increases likely

Parking fees aren't the only costs going up in Rehoboth Beach this year after city commissioners spent $800,000 to attract a new city manager, on top of his salary.

The commissioners adopted a $38 million budget in March with the intention of raising numerous fees to cover a $4.4 million shortfall. After increases to parking rates , the rental tax rate and wastewater fees were approved earlier this year, the Board of Commissioners in June voted to raise property taxes and discussed plans to raise mercantile fees.

While the parking fee increase has led many a keyboard warrior to share their ire on social media, it doesn't appear to be driving people away from Rehoboth. City Manager Taylour Tedder said parking revenue for April and May trended above what was anticipated.

Tedder's contract, however, is part of the reason Rehoboth is facing a budget shortfall.

When he started as city manager May 15, he became Delaware's highest-paid municipal or county employee, according to data tracked by Delaware Online/The News Journal. His contract includes a $250,000 base salary, a $50,000 allowance for moving expenses and a forgivable $750,000 housing loan.

Tedder's 'groundbreaking' deal and the aftermath

Tedder's contract put Rehoboth in the spotlight nationwide and was discussed on Joseph Turner's podcast, "City Manager Unfiltered," in an episode called "Deconstructing Taylour Tedder's Groundbreaking Contract."

“Literally my jaw hit the floor when I read it,” Turner said, “Because I’ve never seen anything like it.”

News of the contract terms drew the anger of residents, too, in the form of op-eds and comments at commissioners' meetings. At an April meeting, one person held up a sign that said, "What were you thinking!!"

Suzanne Goode, a Rehoboth resident and a candidate in the August Board of Commissioners election, said at the June 21 commissioners' meeting she was "struck by" the amount of money the property tax increase will raise: about $592,000.

"That's almost the amount of the check which had to be cut by the city (in May) ... for Mr. Tedder's house," she said. "Essentially, our property tax hike ... is gonna cover that."

On June 26, Deputy Attorney General Dorey Cole issued an opinion finding the Rehoboth Beach commissioners violated the Freedom of Information Act in discussing the terms of Tedder's contract in private sessions, among other things.

In response, the commissioners will hold a special meeting at 2 p.m. on Monday, July 8, to consider ratification of the contract and allow for public comment.

"To be clear, the City of Rehoboth Beach Board of Commissioners always believed that it was following Freedom of Information Act requirements and that discussion of the city manager’s employment agreement in executive session was permissible. We are disappointed with the attorney general’s determination," Rehoboth Beach Mayor Stan Mills said in a statement.

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"That said, the Board of Commissioners supports the attorney general’s commitment to openness and transparency in government. Transparency in government is important, and the state’s Freedom of Information Act is our guide. To have been found in violation of FOIA laws signals a failure in the city’s transparency and is an injustice to our citizens. We are committed to adhering to FOIA principles. We can and will do better."

Tedder's employment agreement has been posted in the July 8 meeting agenda.

The real estate tax rate increase

The commissioners voted at a June 21 meeting to raise the real estate tax rate for fiscal year 2025 from 6 cents to $0.0775 per $100 of assessed value, an increase of $0.0175.

While Goode and her husband made comments at the meeting opposing the increase, the one email comment received by the commissioners was in favor of it and Commissioner Patrick Gossett said he had many people approach him in support of it.

Resident Richard Perry also spoke in support of the property tax increase at the meeting.

"One of my properties is valued at over $3.5 million and I'm paying something like $800 a year," Perry said. "That's absurd. I think the property owners in town need to recognize that expenses are constantly going up."

Property tax rates vary greatly across municipalities in Delaware. Lewes's property tax rate is 57 cents per $100 of 50% of the assessed value; Georgetown's is $3.49 per $100 of assessed value; Dewey Beach has no property tax; Dover's is $0.455 per $100.00 of assessed fair market value; and Wilmington's property tax rate is $2.145 per $100 of assessed value.

Proposed mercantile fee increases

At a June 10 Board of Commissioners meeting, City Community Development Director Mary Ellen Gray presented a revised fee schedule for the board's consideration.

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She said she and staff considered when a fee was last increased, the consumer price index and the rates of other jurisdictions when making the changes, but several commissioners expressed that the fees seemed arbitrary.

Not all fees were increased, and the ones that were increased didn't always have data to support the decision. Some fees seemed altogether unnecessary, the commissioners said. In addition, the fees are scattered throughout the code; there is no "fee schedule."

"This is the time to do some housecleaning here," Commissioner Patrick Gossett said. "I appreciate pulling this all together but I think it's a deeper dive and maybe a very large consolidation ... and the cleaning up of the code."

The discussion was "the first of many" related to raising mercantile fees, Assistant City Manager Evan Miller said.

Shannon Marvel McNaught reports on southern Delaware and beyond. Reach her at smcnaught@gannett.com or on Twitter @MarvelMcNaught.

This article originally appeared on Delaware News Journal: Rehoboth Beach commissioners raise property taxes; more fee increases likely