Newark wants to collect taxes on University of Delaware students in the city

The city of Newark is looking to tax students.

Of course, it cannot just decide to do that on its own — but the City Council is set to consider a resolution next week to support the collection of a "per student tax" from the University of Delaware. Then, it will appeal to state legislature to pass a charter amendment actually allowing for the new collection.

The city is aiming for "up to $50 per semester, per full- or part-time undergraduate or postgraduate student, at any college or university" attending in-person within municipal borders, according to the draft resolution, with the fee adjusting with inflation. That's UD facing the levy, then likely charging thousands of students.

And apparently, the city hopes to move quickly.

"If we hope to implement either tax early enough for it to be budget relevant for the 2025 budget year, we will need the state legislature to pass a charter amendment this legislative session," wrote Tom Coleman, city manager, to the mayor and council Monday. "Based on the remaining legislative calendar, that means we must act fast."

The council will also discuss a new tax on lease revenues. The city hopes to collect a tax of "no more than 5% on the gross rents or lease payments" from owners of any residential and commercial rental properties, including properties owned by UD. The tax would not be applicable to on-campus dorms, subsidized rental properties or those already facing such a lodging tax, according to the draft resolution.

The council will consider these resolutions during its 6:30 p.m. meeting on Monday, Feb. 12.

It can likely expect a boost in attendance.

Rising costs: Hiring frozen. Projects paused. Travel curbed. UD reacts to spiking state health care cost

How did we get here?

Newark says some 42% of real estate within the city is tax-exempt.

That's because the University of Delaware, like all nonprofits under state law, doesn't pay property taxes. It does pay millions in other operating costs to the city, like water and electricity, as well as certain fixed payments in lieu of taxes — but council says such "PILOT" payments haven't been adjusted in nearly 60 years.

Still, "students that attend the University of Delaware rely on the city to provide services that are financially supported by property tax revenue like police services and road maintenance," reads the draft legislation. It contends that additional revenue sources are "imperative" to continuing to provide city services.

This isn't a new issue, either. Council discussed the concept of such a student fee back in 2019, after a 13% increase in property taxes spurred a common complaint for residents. Discussions renewed in pitch as city residents will see their property taxes go up for a third-straight year.

"The city strongly believes that in light of the expansion of the university, both in terms of physical footprint and enrollment, it is only fair that the university pay their fair share," said Jayme Gravell, Newark's chief of community engagement, in an email.

Gravell also clarified that it's up to the university to pass this charge onto its students, as the city's per-student tax wouldn't necessarily require it.

The University of Delaware has yet to respond to requests for comment. Online reaction, though, has already started.

"The town of Newark should be thankful for the students and not punish them," reads one comment on a Barstool Delaware post warning of a possible proposal. "We pump so much money into the local economy. Newark would not be the same place it is if it weren’t for us."

"I don't think you should tax students for getting an education," reads the next. "What’s the point of blaming students?" poses another. The post encouraged students to head to the council meeting to make their positions clear.

And petition has already been circling to do the same. Student government leaders launched the document, with more than 1,700 signatures already.

"This imposition not only raises concerns about the financial burden placed on students but also presents the potential for future fee increases without adequate safeguards," writes the SGA Executive Cabinet. "College-aged young adults are among the most financially vulnerable populations, and it's disheartening to see the City of Newark attempting to take advantage of this."

Got a story? Contact Kelly Powers at kepowers@gannett.com, and follow her on Twitter @kpowers01.

This article originally appeared on Delaware News Journal: Newark hopes to collect taxes on University of Delaware students