IN THIS ISSUE

• OPINION & ANALYSIS: Will Controversial Affordable Housing Bill Actually Achieve its Goals?
• ZOMBIES IN THE HALL: Bill to Make Schools Significantly More Expensive Likely to Return

OPINION & ANALYSIS

Will Controversial Affordable Housing Bill Actually Achieve its Goals?

Earlier this week, Governor Matt Meyer ceremonially signed Senate Substitute 2 for Senate Bill 23, disputed legislation that passed both chambers of the General Assembly on a contested vote. The event was staged to highlight the measure, which had been signed into law nearly three months earlier.

Also known as the Housing for Every Delawarean Act, the new law, sponsored by Sen. Russ Huxtable (D-Milton, Dewey Beach) and Rep. Kendra Johnson (D-Bear, New Castle), aims to increase the availability of affordable housing. However, the bill's methods for achieving its goals are hotly disputed.

The new law requires counties and municipalities with more than 2,000 residents to incorporate affordable housing plans into their comprehensive plans, aiming to make 20% of homes affordable.*

One of the statute’s most controversial aspects is that it establishes a “by-right” review for residential projects that comply with local zoning requirements. Projects meeting this standard can bypass the public hearing process and don't require waivers, special permits, or other discretionary approvals. County and municipal governments must allow it to move forward.

This situation played out recently in Kent County. In early July, the county’s Regional Planning Commission voted 5–1 to deny the proposed Harmony Hills II housing development over several concerns, including the project's single entrance and exit. However, the developers appealed, and the Kent County Levy Court approved the Camden-area project last month, noting that SS 2 for SB 23 compelled their decision.

“My opinion is Huxtable’s Senate Bill 23 tries to fool the people by suggesting it provides affordable housing whereas its purpose is not affordable housing at all,” said former Democratic Sussex County Council member Joan Deaver in a recent social media post. “Its purpose seems to deny the rights of local citizens who used to have public hearings for their testimony on all development applications.”

In a press release issued this week, Sen. Huxtable described his legislation as collaboration “with our local governments to drive outcomes that ensure the workers who serve our communities have the chance to live in them. The Housing for Every Delawarean Act does just that by giving local governments the tools to plan for balanced communities and boost our stock of diverse, affordable housing."

While local governments have some limited latitude under the law, it also imposes broad mandates. For instance, zoning reforms and land use plans must allow increased residential density and authorize a broader range of housing types without requiring conditional-use permits or special exceptions.

Additionally, local jurisdictions must adopt at least five strategies from a list of 11 options, including density bonuses, reduced fees, expedited permitting, and conversion of commercial properties.

Many residents and elected officials in areas already struggling with rapid-development pressures, such as lower New Castle County and eastern Sussex County, have viewed a law that is likely to increase those challenges with skepticism.

The Delaware League of Local Governments, a nonpartisan, nonprofit organization of local government leaders, lobbied against the legislation, noting that its mandates largely usurp local discretion without any assurances that it makes housing more affordable.

SS 2 for SB 23 relies heavily on the idea that making it easier to build more homes faster will improve housing affordability. Critics of the bill concede that removing development restrictions and requiring more housing density should increase availability, but they say availability and affordability are not synonymous.

Housing demand plays a major role in the law's potential to achieve its goals.

Compared with surrounding states, Delaware’s low local property tax rates have incentivized migration into the state. Based on 2024 data, the Tax Foundation reports that Delaware has a significantly lower median effective property tax rate (the annual tax bill as a percentage of a property's value) than New Jersey, Maryland, or Pennsylvania. For instance, the Garden State's effective median property tax rate is three-and-a-half times higher, and Pennsylvania’s rate is more than double Delaware’s.

There is no indication this housing-sales driver will not continue well into the future.

Additionally, a study by the Delaware State Housing Authority found that the state has an existing shortage of nearly 20,000 affordable rental units for low-income households. The new statute does not guarantee that market prices will fall or that homes already out of reach of modest-income families will become any more obtainable. That concern is all the more worrisome considering the average rate for a 30-year fixed mortgage currently tops 7.4%.

Despite the enthusiastic optimism expressed by the bill’s supporters less than four weeks before the general election, the outcome of enacting SS2 for SB 23 will not be fully known for years. The key question in evaluating this law is not just whether more homes are built in the First State, but whether enough homes are built in the right places at price points that meaningfully improve affordability for the people the law is purportedly intended to help.

-- * Affordability is defined in the bill in terms of the Area Median Income (AMI), which varies by area, the number of people in the household, and whether citizens are renting or purchasing. The law sets two income thresholds: one for rental housing (households earning up to 80% of the AMI) and another for homeownership (households earning up to 120% of the AMI). Although it's not in the law, standard budgeting models suggest that no more than a third of gross income should go toward housing, including rent or mortgage payments, taxes, and insurance.

OPINION

-- ZOMBIES IN THE HALL --

A CONTINUING FEATURE ON BILLS THAT DIED

IN THE 153RD GENERAL ASSEMBLY...BUT MAY RISE AGAIN.

Bill Making Schools Significantly More Expensive to Build and Renovate Likely to Return

On the last night of this year's legislative session, Delawareans were close to getting saddled with significantly higher costs for school construction, renovations, and repairs.

Senate Bill 272 would have required "project labor agreements" (PLAs), a type of collective bargaining agreement, for any school construction or renovation project exceeding $5 million.

The bill was approved by the Senate in May in a party-line vote with every Democratic senator supporting it. 

State Rep. Edward S. Osienski (D-Newark), the prime House sponsor of the bill and a member of the House leadership, said in a House Labor Committee hearing in June that “PLA projects give a level of stability and structure that is difficult to replicate in an all non-union workplace” and claimed that the proposal would not result in higher costs for taxpayers.

However, that contention was challenged by multiple people who testified at the hearing, including Brian Maxwell, the Director of the Delaware Office of Management and Budget. He said the state has not approved any new state-funded school construction projects in nearly three years because of a lack of available resources and that SB 272 would exacerbate the situation. “Mandating a PLA introduces additional preconditions that may discourage otherwise qualified contractors and subcontractors from participating,” he said.

Mr. Maxwell also indicated that adding requirements to the state procurement process would significantly increase project costs. “Based on the research that I’ve seen, economic analyses have found the cost per square foot for school construction projects is approximately 30% higher for PLA projects.”

A 2020 study by the Beacon Hill Institute, a free-market economic think tank based in Massachusetts, examined public school construction projects in Connecticut and found that mandating PLAs increased costs by nearly 20%.

The bill’s sponsors maintain that since Delaware requires “prevailing wage,” a minimum wage scale based on occupation that is applied to all state-funded projects, there should not be any meaningful difference in labor costs between unionized and non-union contractors.

However, other witnesses before the House Labor Committee, which was chaired by Rep. Osienski, noted that unionized contractors in Delaware account for only about 10% of all construction companies.

Sussex Technical School District Superintendent Dr. Kevin Carson, who is currently involved in the state’s most expensive school construction project, told the committee that the PLA bill would significantly reduce the pool of available contractors, not only limiting competition but potentially forcing school districts to seek out-of-state companies—all factors that could drive labor costs higher than Delaware’s prevailing wage rates.

Carmen Robledo, a Latina contractor based in Sussex County, said PLAs will exclude many non-union Delaware workers and create more barriers for small businesses.

The Associated Builders and Contractors of Delaware, minority business groups, and the Delaware State Chamber of Commerce also opposed the measure, arguing it discriminated against the state’s non-union contractors, would raise project costs, and shift construction jobs to out-of-state union contractors.

A fiscal note on the bill prepared by the Office of the Controller General concluded the cost of implementing the legislation was “indeterminable,” citing numerous unknown factors that could not be established well enough to provide a projection. That finding allowed the measure to bypass the House Appropriations Committee, which usually evaluates any bill expected to cost taxpayers more than $100,000 to implement.

The Labor Committee released the PLA bill on June 10 on the strength of Democratic votes, so on the last night of the legislative session three weeks later, it sat on the House Ready List, eligible for a House vote and one step short of being sent to the governor.

Despite expectations, the bill never reached the floor for a vote.

One factor may have been the looming general election and the tumultuous property reassessment process in New Castle County, which significantly hiked taxes for many homeowners. Most House Democrats represent New Castle County districts, and a bill that would likely raise property taxes further may have been hard to explain to already aggravated constituents.

Union members, many of whom were at Legislative Hall on the last night of the session to make a final push to get the PLA bill passed, were disappointed with how events played out.

The financial secretary of Local 542 of the International Union of Operating Engineers was so unhappy the bill didn't clear the House that he reportedly wrote a letter to House Democratic leadership asking for a refund of a $5,000 contribution. House Democrats publicly denied ever having received any such contribution.

Versions of this bill have been introduced in previous legislative sessions, but this is the closest the proposal has come to winning legislative approval. The prime sponsors of SB 272 included members of the House and Senate Democratic leadership. Another 12 Democratic state lawmakers also signed on as sponsors or co-sponsors.

Because 2027 is a non-election year and the PLA bill drew strong support from majority Democrats this session, its sponsors will likely reintroduce it and pursue it aggressively in the upcoming 154th General Assembly.