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The Delaware Court of Chancery threw out a lawsuit regarding recent New Castle County property reassessments, clearing the way for updated tax bills to go out in November.
The original post-assessment property tax bills were sent out in July. State lawmakers, reacting to massive backlash from homeowners facing high tax bills, approved a statute in an August special session that allowed county school districts to issue higher rates for commercial properties for the 2025-2026 tax year, similar to what the county and city of Wilmington had already implemented.
New Castle County school districts then promptly issued new tax warrants, with the tax rates for nonresidential properties climbing from 35% to 80%, while lowering rates for residential properties.
Apartment trade organizations and mobile home operators challenged the new law in September, calling it unconstitutional. Chancery Court Vice Chancellor Lori Will heard arguments in the case on Oct. 20.
The plaintiffs had six arguments, including that the statute violated the state constitution’s uniformity clause, that it was “regressive” and that it unlawfully shifted the tax burden from homeowners onto lower-income renters and residents of manufactured homes. They also argued school districts illegally benefited from increased tax revenue without first holding a referendum.
Will rejected those arguments, saying the General Assembly has the authority to create and change classes of property.
Will said lawmakers’ concerns that homeowners would be less likely to be able to afford tax hikes than commercial properties was reasonable.
“Our constitution does not demand perfection from a tax system,” she wrote in her opinion. “To be unconstitutional, the system’s flaws must be pervasive and systemic, meaning that they are widespread and built into the system itself.”
Will also dismissed plaintiffs’ surprise revelation in early October that New Castle County was moving to reclassify more than 1,400 properties, shifting more than $1 billion in assessed value from residential to commercial.
“The isolated examples of misclassification are correctable administrative errors, not evidence of a system deliberately designed to be non-uniform,” she wrote.
