WILMINGTON — As Gov. Matt Meyer enters his second month in office, the Delaware Prosperity Partnership is still at a crossroads regarding its next steps in economic development strategy.
Representatives with the DPP told the Delaware Business Times last week that they are still waiting to have detailed conversations on economic policy with the Meyer administration. In the past weeks, Meyer has focused his attention on corporation code reform while continuing to make his top issues clear – investing in Delaware’s schools and overall quality of life issues.
DPP CEO Kurt Foreman, who was hired as the first and only leader of the public-private agency, said that his office stands ready to help assist in shaping his vision for the state.
“It’s like setting the table for the conditions and the priorities may change which leads to a change in the tool kit,” Foreman told DBT. “But we’re adaptable and we know how to sell and help with project management. If the tool kit changes, then we’ll work with it.”
The DPP first started in 2018 when then-Gov. John Carney signed it into executive order as a way to revolutionize economic development in the state. In the past eight years, it has seen tremendous wins, with the DPP touting that it helped land 75 projects that could lead to $2 billion in capital investments and reported 10,000 retrained or new jobs.
DPP also changed the game in how the state handles economic development, as it serves as both a pitchman and concierge for businesses that are considering opening for business in the First State. Foreman and others on his team often go to national and international conferences to raise visibility of the small state and to connect with the 300 site selectors.
The nonprofit also had a large hand in several key policies, including how Delaware’s strategic fund operates. After the state saw many losses like Fisker, which received more than $20 million for a plant that never manufactured a car, the state opted to make grants out of the strategic fund as reimbursements to ensure the projects are built and workers are hired before paying the money.
The strategic fund was created well before the Carney administration, but the DPP has shaped programs on what the money can be used for or, as Forman says, creating the tools in the tool kit. That includes the establishment of the graduated lab program and site readiness funds. Right now, the state is testing out its modernization grants as well.
“I like to say they’re like a special pair of pliers that we don’t use every day, but when you need it, please just ask,” Foreman said. “Other states do it in a different way, but it’s just a matter of learning the dance steps.”
Foreman has had to learn a lot of different dance steps over the years. Before arriving in Delaware, he spent 14 years running economic development efforts in the Greater Oklahoma City area and in Northern Louisiana. In fact, Oklahoma offers a 61-page guide to all its incentive and tax programs.
If economic development is a dance, Foreman believes it’s about the quality of the band and not how exclusive it was to land them.
“If a company contacts us on day 1, and first question they ask is, ‘what do you got for me,’ that’s not the right way to approach this, in my opinion,” he said. “If we don’t have the workforce or the location or the infrastructure they need, it may not be a good fit. Incentives make a good solution better, not a bad solution better.”
By the numbers
While the DPP’s role is to work with the Division of Small Business to aid smaller companies, recruit innovative employers and work to bring international businesses here, it is the Council on Development Finance (CDF)’s role to approve the taxpayer money for the grant funding. Under the Delaware Code, the CDF reviews projects and makes recommendations as well as approves economic assistance to qualified applicants.
Between 2018 and 2024, the CDF has approved more than 90 applications, offering around $136 million, according to a Delaware Business Times analysis. However, the company has to make the investment and offer documentation before the state reimburses them. If the project does not come to fruition, there are laws that make it possible for Delaware to claw the funding back.
The busiest years were 2021 when the council approved $39 million for 18 projects and 2022 when the council approved $27 million for 29 projects, according to the DBT analysis.
DPP reports that it believes the state has committed $115 million in incentives for 61 projects that it has worked on- 65% of those projects are for companies that already have a presence in the state.
These projects vary in amount, with some as little as $44,500 to as high as $19 million for the WuXi STA pharmaceutical campus in Middletown. Some programs have a flat cap, like the level 1 site readiness funds which have a ceiling of $1 million. The DPP reports that a little more than half of the grant awards are for less than $1 million.
In terms of targeting high sector jobs, the DPP reports that 40% of those who receive incentives are in the science and technology sector and 46% are in manufacturing. Foreman is also quick to point out that retained and added jobs mean there’s more income tax coming to the state, as well as property tax. There is also the potential impact of people coming into the office and buying lunch or getting drinks after work.
Pulling back the curtain
Not all of DPP’s projects received incentives, with the nonprofit reporting that 61 of the 75 projects had received an offer. But as Foreman is quick to point out, there’s a lot that happens before the state and the company sign on the dotted line.
“I often joke that our job is to turn over the rocks and see if something is there, and if there is, to work it,” he said. “We have to help project managers and site selectors learn about Delaware, understand their needs and their processes.”
Last year, the DPP went on 23 trips to conferences or expos, crossing nine countries and 10 states. International trips help cultivate relationships that may pay off down the line, or may not. Companies may also have a set timeline that does not work with what Delaware sites can offer or the workforce may just not be there to make it work.
The partnership also provides research on the state for prospects, which could range from gathering information on the site or the permitting process, as well as making introductions to key people in Delaware.
If there is a viable project, the DPP will start conversations with state officials to gauge the interest. If the state gives the approval, the state would calculate the possible incentives in accordance with the policy set and draft a term sheet, according to Foreman.
From there, the Division of Small Business does its due diligence and reviews the company’s financials, tax returns and other information before making an offer for a possible incentive package. The DPP does help ensure a project is legitimate, but it mostly focuses on ensuring that the company’s application is put together completely. In rare cases, the DPP has asked the Secretary of State and the governor’s office to weigh in on a project. Even rarer was the time the DPP walked away from prospects at the direction from the state.
Looking to the future, Foreman said that he believes the mission of the DPP is able to turn to meet Meyer agenda and its focus on education as there is a lot of overlap between workforce development and education. The governor has also shown he is interested in finding those overlaps, as his first executive order was to study barriers to youth apprenticeships. Elsewhere, other economic development agencies in other states have offered to recruit and train the workers for companies if they were to relocate.
“We have suggested that Delaware may want to consider an option like that. There has been some dialogue on it, and it’s an interesting option that our neighboring states aren’t offering,” he said.
When asked about the prospects of Delaware’s economic development with a strategy that does not rely on the strategic fund, Foreman said that there could be different levels of success.
“What we’ve done in the past, success is not automatic. We may have a different mix of companies. We’re in this to find the best opportunities for Delaware, and we work with companies of all sizes,” he said.
Editor’s note: A previous version of this article incorrectly stated that DPP vets the financials of a company’s CDF application. That responsibility falls on the Division of Small Business.
