Sussex County Delaware

Fenwick Passes 3%
Commercial Tax
Fenwick Island News

Downgrades Proposal
for 7.5 Percent Tax

SC Online Content Editor

Fenwick Island Town Council passed a compromise commercial rental tax at its regular meeting on Friday, Dec. 13, 2002, but the compromise was not enough to mollify business owners and residents.

By a 4-1 vote, council passed a new 3 percent rental tax on commercial properties -- down from the 7.5 percent tax originally proposed during passage of the town budget in July.

The new tax will be assessed on the rental of commercial properties. It will be added to the ordinance that authorizes the assessment of a 3 percent rental tax on motel rooms and a 7.5 percent rental tax on the renting of residential properties.

Vicki Carmean was the only council member to vote against the tax. Council president Peg Baunchalk and council member Peter Frederick did not attend the meeting due to family obligations.

Despite the reduced percentage, business owners and residents at the council meeting pleaded with council to table the tax until the town's financial audits for the past three years are complete.

"There is nothing that we have seen to base this tax on," said Ginny Borodulia, one of about eight people who formed Fenwick Island Concerned Citizens in response to the town's recent difficulties with its finances and its police department.

Tim Collins, owner of the Ocean Avenue and Southern Exposure stores in the town, said, "It is not a healthy tax. Believe me, it is not healthy for the whole town."

Collins said the tax, assessed against landlords of commercial properties, would drive small businesses out of town.

"It's a fragile business community as it is," Collins said. He added that Fenwick's business community "is stagnant. There's nothing happening. There have been no major commercial efforts in Fenwick Island in the past 25 or 30 years."

He predicted that the additional tax burden would result in the conversion of commercial properties to residential properties in the coming years.

"We need to push this commercial sector forward, not backward," Collins said.

Bobbie Blake, an owner of Sunshine Plaza shopping center, responded to a letter from council member Frederick that asserted that the tax and the ongoing audits of the town's finances are not related. "Nothing could be further from the truth," Blake said. "The business community is willing to pay its due share provided you prove its need," she said.

Carmean drew boisterous applause when she voiced her objections to the tax. "It is not a good tax. The council has no idea how much (money) it will bring. There has been no fiscal accountability," Carmean said. "I will never, ever vote for any tax increase under these circumstances," she said.

Council member Theo Brans made the motion for the 3 percent tax as a compromise. Brans' proposal countered the one that was to be voted on, calling for the tax on commercial rentals to be phased in over three years -- 3 percent the first year, 5 percent in 2004 and 7.5 percent in 2005.

At the start of the meeting, Brans spoke about the town's recent difficulties and the toll they have taken. "We are a very small community. We bump into each other every day at the Royal Farms store," Brans said. "We have to go forward. We made mistakes -- we've probably made many mistakes -- but we are correcting those mistakes."

But his proposal was not met with open arms by many in the audience. Even after the council passed it, audience members urged them to rescind the vote.

The FICC organizers were particularly incensed that the council had not considered more than 100 responses to a letter the group sent out Dec. 1.

The letter sought input on the tax, and cited the audits, the lack of public input in the town budget, and the lack of information on how much the town has spent on legal fees in the face of a lawsuit by Police Chief George Dickerson and an investigation by the federal Department of Justice regarding possible misuse of COPS grants.

Council vice president Harry Haon said he had not seen any of the responses and had only glanced at the letter sent out by the FICC. Collins called it "outrageous" that the responses -- mostly in opposition to the tax, according to FICC organizer Chris Clark -- have not been acknowledged.

A motion by Brans to rescind the vote died for lack of a second. Carmean consulted with town attorney Tempe Steen during the meeting regarding making such a motion, and Steen told her that only a council member who voted in favor of a motion could move to rescind it.

Meanwhile, resident Lynn Andrews blasted the FICC's tactics. Andrews said she and her husband had not received a letter and called the group "elitist" because the letters had not gone to every property owner. Realtor® John Kleinstuber said the group used a list of tax parcels he had access to for the letter's mailing list.

Business owner Bill Golden urged the council to rescind the vote and to review the responses. "Is there a reason not to go back and do this right?" Golden asked. "I don't think you can seriously say the council considered the input of the people."

Carol Hughes, co-owner of Blue Heron Gifts in the Village of Fenwick, said she was particularly disappointed in the vote because she felt a meeting between business owners and council members -- held since the last regular council meeting -- had led to a new understanding by the council of the businesspeople's concerns.

Carol Patterson, the other owner of Blue Heron Gifts, said the experience reminded her of her teaching days, of "students sitting with hands crossed and arms folded and they never heard a word."

Council member Edward "Buzz" Henifin cautioned before the vote that if the tax was not enacted, the town would have to draw from the revenues it gets from transfer taxes, which Henifin said give the town an emergency fund. "You're losing a good pocket of money for the emergency that's going to come," Henifin said.

After the vote, resident Jim Simpson drew applause and shouts of "Yeah!" from the audience when he commended Carmean "for her stand here today", and said, "Come August, we need to clean this house!"

The council also voted to enact an ordinance requiring all property owners who rent their properties to pay a business license fee of $132 per year.

In other business, the council approved a request from the South Schultz Wetland Association Inc., a group of six families that purchased the lot at the end of their street, to have the permit fee waived for riprap work they want to complete.

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