Five locales to share $8 million in development funds

Developer David Perlmutter and Seaford Mayor David Genshaw stand at the Residences at River Place, an upscale apartment complex being constructed along the Nanticoke River//Photos by Maria DeForrest.

By Kim Hoey
Special to Delaware Business Times

For 20 years, groups in Milford formed, came up with ideas to re-invigorate the 170 acres that is downtown Milford, and then seemed to disappear. While there were pocket areas that took off for a while, the going was slow and spotty. With the city being named a Downtown Development District, Mayor Bryan Shupe hopes that cycle is about to change.

On Aug. 10, Gov. Jack Markell designated Smyrna, Harrington, Milford, Georgetown and Laurel as Downtown Development Districts (DDD). Investors in those districts will be able to share in nearly $8 million in funding for projects both large (those over $250,000), and small. They join the cities of Seaford, Wilmington and Dover that were chosen for the program when it was first developed by the state in 2015.

“We are extremely excited about our selection as a Delaware Development District partner with the State of Delaware,” said Shupe. “We’ve looked at what it could be like, what our assets and needs are and we can really focus on specific needs we can target.”

The DDD program, administered by the Delaware State Housing Authority, was created by legislation passed unanimously in May 2014 by the General Assembly.  The expansion of the program this year was to spread the success of the programs in the first districts to more areas of the state.

In Milford, the application process was a great beginning, said Shupe. More than 200 people answered the call for suggestions on what Milford needed. Those thoughts were incorporated into a downtown master plan that includes development of the downtown riverfront area, plans for office and retail space as well as renovation of residential and commercial property.

“Determining an overall economic development strategy that encourages private investment from existing businesses and home owners as well as prospective investors, the City of Milford has created a series of incentives that rewards individuals and businesses that enhance the quality of living within the district,” said Shupe.  Being chosen for the DDD program provides benefits that will tip the scale toward Milford, he believes. The grants and funding structure provided through the DDD, along with the support of the city, could be the carrot that causes investors to take a chance on Milford, he said.

Through the program, large project developers can receive up to 20 percent, or up to $1 million, back from their projects once they are completed and meet certain benchmarks along the way.

“That’s not chump change. It got us started in Seaford,” said David Perlmutter, developer of The Residences at River Place, an upscale apartment complex that was chosen as a DDD large project last year and is now under construction in Seaford. The complex is on the Nanticoke River and is expected to feature boat slips, exercise facilities, covered parking and a pool, all within walking distance of downtown shopping, when completed. “It’s absolutely worthwhile.”

Perlmutter said that while the promise of money back from the state at the end of the project is a nice incentive, its main purpose is to show banks and other financing entities that the developer and project are solid and backed by the state. It makes banks take a closer look, said Perlmutter. 

The state estimates that $9.7 million in grant funding promised for specific large projects in the first round, leveraged $160 million in private investment in the first round cities.

Those projects include a 355-space public parking garage, with more than 200 apartments above it and retail space in front of it at Ninth and Shipley streets in Wilmington. That project, under construction by the Buccini/Pollin Group, could make it easier for Delawareans to drive downtown, watch a concert, or have dinner at one of Wilmington’s restaurants.

Wilmington is home to three separate projects as part of the Downtown Development District initiative, including Residences at Mid-Town Park being developed by Buccini/Pollin. Construction began this summer.

The goal is to make Wilmington a more 24-hour city, said Chris Buccini, a partner in the company.

In Dover, Central Delaware Habitat for Humanity is building homes on vacant lots on New Street and Kirkwood Street in downtown Dover. The plan there is that home ownership investments, such as made through habitat programs where owners must help build the house, will help revitalize the community.

“The Downtown Development Districts program has helped people to realize the investment opportunities we have in downtown Dover,” said Mayor Robin Christiansen. “We are currently in the early stages, but this will ultimately make a significant improvement to downtown in both business and residential neighborhoods.”

The DDD program also offers smaller grants for projects less than $250,000. These grants can be applied for at any time and can used for private residences as well as public projects. In Seaford, smaller grants were used to transform a vacant downtown building into new office space for small businesses.

“It’s created a totally different synergy and energy in the downtown,” said Trisha Newcomer, economic development and information technology director for Seaford.

Not everyone is convinced of the need of the program. Some say it will actually stall development in places not chosen. Developers will move to places where the money is and wait for acceptance to the program before making investments they might have just made on their own if the program didn’t exist, they say. Seaford Mayor David Genshaw disagrees. He already sees cities working together to help each other with best practices they are learning, he said. He also sees the new development bringing up all areas, in the DDD program or not.

There are plenty of incentives to go around.

Applicants for the DDD program this year added several local incentives on top of state funding that could further help qualifying projects.

In Laurel, for example, local incentives included property tax relief and coordinated cross-agency efforts to help investors build homes, promote homeownership and rehabilitate vacant properties. Smyrna offered business consulting services, discounted utility charges and assistance from a Revolving Loan Fund for Downtown Development District investors. Harrington also plans to use the Neighborhood Building Blocks Grant Fund while Kent County Levy Court offered matching grants for qualifying projects in DDDs in Kent County.

It has developers like Perlmutter looking to new areas, such as Milford where he plans to put in an application for a housing project similar to the one his company is building in Seaford. He sees potential for retail and restaurant space along the riverfront as well.

“We’re not just stopping in Seaford and Milford,” he said. “[The DDD program] got us started.”