ACTION ITEM: REQUEST FOR TAX REFUND – CSDCPC 920 FRENCH, LLC

ITEM NUMBER:

1. Request: CSDCPC 920 French LLC, has requested the refund of school taxes for the
2014 – 2017 Tax years. The property is located at 920 French Street. The amount
requested is $184,088.45. (The total amount of the request would not be the
responsibility of the Christina School District).

2. Background/Analysis: The applicant purchased the property, from the State of

Delaware on November 14, 2014. Documentation submitted by McCarter & English
(law firm representing the applicant), indicates the LLC was formed for the purpose of
providing facilities to charter school tenants. (attached)

The LLC applied for a property tax exemption shortly after purchasing the property
(December 14, 2014). During the period of time between purchasing the property and
the determination of the request by New Castle County, the owner did not pay property
taxes. New Castle County denied the request April 28, 2017. An appeal of the decision
was submitted on May 28, 2017. The property owners paid outstanding taxes on May
30, 2017.

On October 2, 2017, New Castle County reached an agreement with the property
owners and granted a charitable tax exemption from November 14, 2014 (date of
acquisition) through June 30, 2021. In the transmittal letter from McCarter & English, it
is stated “on account of the ultimate granting of Exemption Application, Applicant was
not obligated to pay taxes on the Property from the date of acquisition through June 30,
2017 and it is entitled to a refund of its good faith payment.”

Taxes associated with the requested refund include the Tuition, Debt Service, Match
Taxes, and Operating Taxes. Operating taxes include those taxes raised through
operating referendum and the tax rate established by the New Castle County School
District (Tax Pool 46.8₵ per $100 of assessed value). This Tax Pool is charged
against the assessed value of the Property, and is allocated to the Brandywine,
Christina, Colonial and Red Clay Consolidated School Districts. In order for there to be
a refund of school taxes of this tax component, all four of the Boards of Education for
the above Districts would have to agree to the refund. The Tax Pool Portion is
determined to be $38,818.31.
  

BOARD OF EDUCATION
 Allocations ‐ 
frozen  FY 
2012 
Brandywine 0.2073980398 $      8,050.84
Red Clay 0.2908631046 $    11,290.81
Christina 0.3129939930 $    12,149.90
Colonial 0.1887448625 $      7,326.76
    $    38,818.31  

The Balance $ 145,230.14 is a Christina SD refund request

Operating 
(excluding  Debt 
tax pool) Service  Match Tuition
$  90,025.64 $ 9,722.67 $ 4,976.71 $ 40,505.12
 

The District establishes its spending plans (budgets) based on the assessed property
values, as established by New Castle County. This information is provided on an
annual basis, typically in March. The school district levied school taxes in good faith,
spent the proceeds of taxes collected by the levies in good faith, and had no role or
voice in the assessment of the Property, or any appeal seeking modification of the
assessed value of the Property. Delaware Code 14 Del. C. § 1921 addresses the
refund of school taxes. Section 1921 Refund of county taxes paid in error states “Local
county school taxes paid through error or by mistake may be refunded by the school district to
which the taxes were paid as follows:”

The use of the word may, in “may be refunded” gives the Board the discretion.

3. Fiscal Impact: $157,380.04

4. Prepared By: Robert A. Silber, CFO

5. Board Meeting Date: December 12, 2017

BOARD OF EDUCATION