LEWES, Del. - The Home Builders Association of Delaware has filed a lawsuit in Delaware Superior Court challenging the legality of the City of Lewes’ building permit fee structure, claiming the city is improperly using permit fees to generate revenue.
According to the association, Lewes doubled its building permit fee from 1.5 percent to 3 percent of construction costs, despite already collecting fees that exceeded the cost of operating the city’s building department. The complaint states that city budget documents show permit fees generated more than $1.6 million in cumulative surpluses before the increase was approved.
The lawsuit argues Delaware law only allows municipalities to impose taxes specifically authorized by state law or city charter. The association claims Lewes’ permit fee structure functions as an unlawful tax because it is not reasonably tied to the actual cost of issuing permits or regulating construction.
The complaint also alleges the city improperly includes land value and contractor profit when calculating construction costs, leading to excessive fees unrelated to legitimate government expenses.
Mayor of the City of Lewes, Amy Marasco, told CoastTV that she is waiting to hear from the city solicitor, but will be reviewing the association's letter and intent.
"The city's ability to use permits and the increase in our building permit fees has been discussed in open public forums last year in FY 26 budget recommendations from our finance committee and in city council public meetings as well," said Marasco.
The lawsuit asks Superior Court to block Lewes from enforcing the challenged fee policy.
