Why Should Delaware Care?
High rents have been a consistent problem in Sussex County. A working group in the county wants to reform a program meant to encourage developers to build more affordable housing, but their proposed reforms may make that housing more expensive.
The Sussex County Rental Program, which encourages developers to include affordable housing units in their projects, may soon start allowing higher rents.
The program incentivizes developers to build affordable housing through density bonuses and a quicker review process, but its efforts to date have largely been unsuccessful.
Only two projects are listed on the program’s website, and one of them is being built by an affordable housing developer, which would have kept the rents for its projects low regardless of the county’s incentives.
The Sussex County Land Reform Working Group, tasked by County Council with recommending countywide development reforms, is addressing the program’s lack of use with its draft recommendations, which were finalized on Thursday, Aug. 21.
Whether or not County Council ultimately implements the working group’s recommendations remains to be seen.
“We’re in an imminent crisis, and creating a program where you are essentially dumb if you don’t use it is the ideal outcome,” said Jon Horner, a working group member and homebuilder with Schell Brothers.
One of the working group’s recommendations is to raise the rent cap for a housing development to qualify for the program. Another is to lower the required amount of affordable units for a project to qualify from 25% of the total number of units to 15%, with some group members arguing it should be as low as 10%.
Sussex County has a projected need of 2,643 affordable rental units by 2030, according to the Delaware State Housing Authority’s 2023 Housing Needs Assessment.
“New development is not adequately addressing the rental housing needs of the County’s low- and moderate-income residents and workforce,” the Sussex County Rental Program website states.
Higher rents and fewer units required
Currently, in order for a housing development project to qualify for the Sussex County Rental Program, 25% of its housing units need to have a maximum rent of $765 for a one-bedroom, $915 for a two-bedroom and $1,060 for a three-bedroom.
In return, the county allows those projects to go through an expedited review process and have higher density than what would normally be allowed.
If County Council were to implement the working group’s recommendations, those rent caps would increase to $1,220 for a one-bedroom, $1,465 for a two-bedroom and $1,695 for a three-bedroom, according to Sussex County Director of Community Development Brandy Nauman.
Nauman didn’t comment on the recommendations but said she is glad the working group agrees building more affordable housing is a priority.
“I’m excited that there will be new affordable housing developments [in the county] one way or another,” she said.
If the recommendations are adopted, housing developments also would only have to set aside 15% percent of their units at those prices to qualify, as opposed to the current 25% requirement.
Affordable housing developer and working group member Matthew Padron said this change would make it easier for market-rate housing developers to join the Sussex County Rental Program when they otherwise wouldn’t have, resulting in more affordable housing overall.
Horner, one of the homebuilders of the working group, said the county already had a 15% limit for the rental program in the past, and it wasn’t economically viable for housing developers to join.
“At 15%, it’s risky,” Horner said. “I’m not going to do it. To me, that 10% number is where you’re going to guarantee every single multifamily prospect that comes to the county will use this program. The total units that will come online at 10% is going to be higher.”
Working group facilitator Andrew Bing said county councilmembers will be able to decide what those final numbers will be.
What’s next?
Working Group members will meet for a final time at 10 a.m. Thursday, Sept. 11, to vote on the merits of each recommendation before sending them all to County Council for approval.
Members will use a 5-point scale to show how much they agree or disagree with each recommendation, Bing said.
But several working group members said they don’t want to see the council approve only some of the recommendations.
“I think so much of this stands on the collective,” said Christophe Tulou, director of the Center for Inland Bays. “We’ve all had to make concessions as we’ve gone through this process. We’ve all got things we feel so passionately about we could barely sleep at night.”
Sussex County Council President Douglas Hudson said he has not reviewed the draft recommendations, and the council has not yet scheduled any hearings to consider them.
