Legal Challenge to
House Bill 242
Case DecidedCourt Case No. 2025-1031-LWW | Delaware Court of Chancery
The Delaware Court of Chancery ruled in favor of all defendants, upholding House Bill 242 as constitutional. All six challenges were rejected.
Read the Full Court RulingCase Number
Filing Date
September 12, 2025
Court
Delaware Court of Chancery
Vice Chancellor
Lori Will
Plaintiffs (Property Owners)
Newark Property Association
Representing property owners in Newark
Delaware Apartment Association
Multi-family housing owners and managers
First State Manufactured Housing Association
Manufactured housing market representatives
Delaware Hotel & Lodging Association
45 member hotels in Delaware
Defendants (Government Entities)
State of Delaware
Governor Matt Meyer
New Castle County
Executive Marcus Henry, CFO David Del Grande
School District Boards
All New Castle County school districts
1. Uniformity Clause Violation
Plaintiffs argue that House Bill 242 violates Delaware Constitution Article VIII § 1, the uniformity clause.
"All taxes shall be uniform upon the same class of subjects within the territorial limits of the authority levying the tax, except as otherwise permitted herein, and shall be levied and collected under general laws."
— Delaware Constitution, Article VIII, Section 1
The dual rate system allegedly treats residential and non-residential properties differently without constitutional justification, violating the requirement that taxes be uniform upon the same class of subjects.
2. Retroactive Tax Increase Prohibition
Delaware Constitution Article VIII § 9 prohibits retroactive tax increases.
"Any law which shall have the effect of increasing the rates of taxation on personal income for any year or part thereof prior to the date of the enactment thereof... shall be void."
— Delaware Constitution, Article VIII, Section 9
Since HB 242 was enacted August 12, 2025, but applies to the school year beginning July 1, 2025, plaintiffs claim it violates this constitutional prohibition by increasing tax rates retroactively for the period before enactment.
3. Referendum Requirement
State law requires voter approval for school tax rate increases through referendum elections.
Plaintiffs argue the school boards cannot increase non-residential rates without following statutory referendum procedures.
4. Fair Market Value Assessment
The retroactive tax increase allegedly invalidates property assessments that were based on uniform tax rate assumptions.
Non-residential properties were assessed using income approach methods that didn't account for differential tax rates.
The Garrison
501 W Seventh St, New Castle • Colonial School District
2024 Total Tax
$88,972
2025 Total Tax
$239,668
+169% from 2024
Estimated with HB 242
$312,071
+251% from 2024
Spring Crossing Apartments
1 Bldg Winterhaven Dr, Newark • Christina School District
2024 Total Tax
$276,779
2025 Total Tax
$328,133
+18.5% from 2024
Estimated with HB 242
$457,684
+65% from 2024
River Commons
200 N Poplar St, Wilmington • Christina School District
2024 Total Tax
$36,594
2025 Total Tax
$79,182
+116% from 2024
Estimated with HB 242
$116,519
+218% from 2024
Combined Impact Summary:
These three properties house approximately 599 rental units. If HB 242 is implemented and the lawsuit fails, residents across these complexes could face combined rent increases totaling approximately $40,500 per month ($486,929 annually) to offset the additional tax burden. This represents rent increases ranging from 2.0% to 9.1% depending on the property.
Date Filed: September 24, 2025
Order Type: Stipulated Initial Scheduling Order
Status: GRANTED by Vice Chancellor Lori Will
Case Number: 2025-1031-LWW
Key Court Orders
October 20 Hearing Scheduled: Court will hold a one-day merits hearing or trial on October 20, 2025, to enable a ruling by October 30, 2025.
Case Management Schedule Required: Parties must meet, confer, and promptly propose a case management schedule to the Court for approval.
Tax Bill Delay Confirmed: The County will not issue supplemental school property tax bills until the earlier of the Court's adjudication on the merits or October 31, 2025. County may issue separate County property tax bills at any time.Update: The case was decided October 30, 2025, and Senate Bill 206 extended the payment deadline to December 31, 2025.
TRO Motion Waived: Parties agreed that the Court need not rule on Plaintiffs' Motion for a Temporary Restraining Order at this time.
What This Meant (Historical)
For Property Owners: No supplemental school tax bills will be issued until after the October 20 court hearing or October 31, 2025, whichever comes first.
Timeline: The court has established an expedited schedule to resolve the constitutional challenge before the traditional tax bill issuance deadline.
Limited Scope: The delay only applies to supplemental school tax bills. Regular county property tax bills may still be issued.
Final Outcome
Court Decision: The case was decided on October 30, 2025, with the Court upholding House Bill 242 as constitutional.
Bills Released: New Castle County released the 2025 tax bills on November 17, 2025.
Payment Deadline: Senate Bill 206 extended the payment deadline from November 30, 2025 to December 31, 2025 to give taxpayers adequate time to review and pay their bills.
✅ Case Decided
Defendants won on all counts
Decision Date: October 30, 2025
Result: HB-242 upheld as constitutional
Opinion: 58 pages by Vice Chancellor Lori Will
This lawsuit challenges the fundamental structure of House Bill 242, potentially affecting all New Castle County property owners.
Could invalidate dual rate system
May delay or prevent supplemental tax bills
Tests constitutional limits on property taxation