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Delmarva Corrugated receives 10-year city tax abatement

Katie Tabeling

Delmarva Corrugated is nearing completion and is hiring staff. | PHOTO COURTESY OF CENTRAL DELAWARE CHAMBER OF COMMERCE

DOVER — Amid Delmarva Corrugated Packaging’s work toward a “soft startup” of operations, Dover city officials awarded the manufacturer a 10-year property tax abatement on top of similar incentives from Kent County.

Under city code, Delmarva Corrugated will receive a full tax break on the 497,000-square-foot building on Route 15 in the first full year after construction. In each following year for the next decade, the abatement drops 10% per year until it hits the floor at 10% in the ninth year. The Dover City Council unanimously approved the abatement Sept. 27.

Dover officials estimate that in 2022, the corrugated box manufacturer will pay $16,331.50 in property taxes and will have abated $64,592 in taxes. By the end of the decade, the company will pay an estimated $80,927.49 in property taxes.

“I was delighted to see this particular effort for an important concept,” Dover City Councilman David Anderson (Fourth District) said during the council meeting on Sept. 27. “We lose nothing on taxes, because if it’s an empty lot it’s still paid. But we gain on the improvements, even if it’s abated for 10% less each year. It’s a win for the city, a win for the community and a win for the company.”

This incentive is reserved for companies which invest a minimum of $3 million in a new or expanded facility within manufacturing zones and hire at least 15 employees. Delmarva Corrugated raised the land value to $3.93 million and the building is valued at $15.5 million, according to Dover officials.

Fulfilling the other requirement of the abatement, Delmarva Corrugated has hired or made offers of employment to 53 people, as of Sept. 27. Of that total, 22 have been hired, 15 employees are coming from sister companies, and 16 offers were still pending. 

“I do want to thank the team from Dover, Kent County and the state of Delaware who worked with us very closely and professionally on this project,” Andreas Akaras, an attorney who represents Delmarva Corrugated, told the Dover City Council. “If you drive past this building, it’s beautiful and purposely built for the light industrial manufacturing work that will happen there, and bringing good jobs. We look forward to being part of the community.”

Delmarva Corrugated plans on hiring 145 employees in total, including 90 hourly employees. This week, the company rolled out a soft startup of operations, as much of the work inside the building is complete and equipment installation was moving smoothly.

The Dover real estate tax abatement is the last in a series of incentives Delmarva Corrugated and its parent company U.S. Corrugated received for building the $91 million plant in the heart of the First State. From day one, the company would have also seen gains as the 40-acre parcel sits in an Opportunity Zone, a designation that entice investors to infuse money into funds for long periods of time to see tax breaks. Staying in an Opportunity Zone fund for at least five years could see 10% of the gain excluded from taxes, while 10 years results in tax-free gains.

The state Council of Development Finance later awarded the project $3.1 million in incentives, which includes a $2.73 million capital expenditure grant and a $450,000 job creation grant. Kent County Levy Court awarded a similar 10-year property tax abatement as well as a $75,000 grant from its lesser-known Strategic Fund. The company also received a $600,000 grant from the Delaware Transportation Infrastructure Investment Fund.

While hiring efforts continue in earnest, there has been some struggle in meeting one of the U.S. Corrugated’s founder and board chairman Dennis Mehiel’s prime initiatives for the Dover “super plant”: hiring veterans. Mehiel’s father served in the U.S. Army Air Corps during World War II and is a veteran himself, and the facility’s close proximity to the Dover Air Force Base created a new opportunity to open jobs to those leaving the service. Delmarva Corrugated is currently working with Polytech Adult Education to continue recruitment efforts, Akaras said.

“Some positions will be entry-level, I believe, more to do with warehousing, trucking, and stocking. But there will be some positions that will require a higher degree of training for the specialty equipment that’s being utilized,” he said. “The corrugator alone is a $10 million piece of equipment someone will have to be monitoring eight computer screens in one room to understand it. This plant is fully automated and reliant on system information and engineering processes.” 

Delmarva Corrugated plans on having two shifts in full production by December.

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