Delaware Policy Choices Caused the Property Tax Problem
Center for Economic & Fiscal Policy
September 24, 2025
The recent property tax reassessment in New Castle County (NCC) has stirred public debate, with homeowners facing higher tax bills while many commercial properties saw their assessments fall. On the surface, this might seem like a quirk of appraisal methodology. However, a deeper examination reveals a more fundamental truth: Delaware and NCC's economic and fiscal policies, including restrictive land-use frameworks, have influenced the relative fortunes of residential and commercial property, thereby shaping the distribution of the tax burden.
The reassessment result was a direct consequence of deliberate policy choices made at the State and County levels.
Reassessment Findings: A Shift to Households
The reassessment, conducted in 2025, updated property values for the first time since the early 1980s. The results were stark:
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Residential properties: Average assessed values rose by 433% according to the Brandywine School District's reassessment FAQ. Published reports indicate that reassessment shifted roughly 10 percentage-points of the tax base from commercial to residential properties.
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Commercial properties: Many prominent commercial properties - including office towers and R&D campuses - actually saw declines in their tax bills, even as homeowners shouldered a larger share.
The outcome was predictable public anger, but this was not simply a flaw in the appraisal process. It reflected deeper economic currents.
Policy Choices Created New Castle County's Stagnant Economy
From 2001 to 2023, New Castle County's real gross domestic product grew at a compound annual rate of just 0.34%. In practical terms, the economy was stagnant. In contrast, the U.S. grew at 2.03% during the same period, over seven times faster. NCC experienced a relative economic decline, falling far behind regional peers.
One important, often overlooked factor contributing to this stagnation is the Unified Development Code (UDC), adopted on Dec. 31, 1997. Aimed at reducing sprawl, conserving open space, and "rationalizing" development, the UDC resulted in:
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Lengthened approvals: Large-scale projects faced protracted permitting processes requiring environmental and traffic studies, discouraging timely investment.
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Reduced flexibility: By codifying detailed design standards and limiting variances, the UDC substituted bureaucratic discretion for market responsiveness.
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Barrier to entry: Smaller developers, unable to shoulder years of regulatory delay, were effectively sidelined.
While well-intentioned, the UDC created structural friction in the development process. Projects that might have added to NCC's tax base either took years to realize or were abandoned altogether. While not the only factor, the UDC reinforced a set of broader policy choices:
1.) Outdated tax and assessment practices allowed distortions to accumulate until the 2025 reassessment exposed them.
2.) Delaware's reliance on incorporations, with a heavy reliance on "easy" franchise fees and escheat revenues, weakened incentives to develop a robust local business ecosystem.
3.) Slow permitting and rigid codes, epitomized by the UDC, directly deterred investment.
4.) Economic concentration in the credit card industry left NCC vulnerable to structural decline.
Together, these policies tilted the playing field in favor of residential housing becoming the primary repository of value, while commercial assets struggled.
Conclusion
The key takeaway is that the property tax burden shift was not accidental-it was the predictable result of economic and regulatory choices. For Delaware's policymakers and business community, several lessons emerge:
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Regular reassessments are critical to prevent distortions from compounding.
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Permitting reform must go beyond initiatives like Delaware's "Ready in 6." While aiming at cutting approval times to six months, it has not offset the decades-long drag created by UDC.
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Commercial competitiveness requires a regulatory framework that empowers, not constrains, entrepreneurial discovery.
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Diversification and growth are essential. Without a dynamic business base, homeowners will continue to bear the tax burden.
Growth and diversification require freer markets, faster approvals, and policies that reward rather than deter investment. Otherwise, homeowners will continue to bear the rising tax burden of a county whose commercial economy has lost its footing.