BEAR – The Council on Development Finance (CDF), the state’s economic development investment board, approved a new grant program aimed at supporting Delaware sites facing potential job losses.
The CDF unanimously approved a new $5 million Facility Modernization Investment Support Initiative (MISI) carveout within the taxpayer-backed Strategic Fund. It had been considering the measure after initially tabling it in June.
The special fund would be available for companies to upgrade existing manufacturing facilities within Delaware that might otherwise fall behind competitive sister facilities in other states or countries, putting them at risk of closure or job reductions. Unlike Strategic Fund grants that target production or job expansion – including recent recipients like Amazon, WuXi STA Pharmaceutical, DuPont, and Agile Cold Storage – the MISI grants would allow companies to acquire more modern technology to keep sites competitive without necessarily expanding either.
“It’s another tool we can use in the Strategic Fund to offer help to existing employers, where additional job growth is not considered,” explained Regina Mitchell, director of the Delaware Division of Small Business (DSB), which oversees the Strategic Fund.
MISI was developed following conversations between the DSB, governor’s office and the Delaware Prosperity Partnership (DPP), the public-private organization that leads economic development efforts in the state.
The grant would fund up to 20% of a proposed project cost through reimbursable funds, capped at $1 million. Therefore, the pilot fund for the remainder of the fiscal year could leverage private investment of upward of $25 million, if not more, and at least five projects.
Recipients would have two years to complete the project and draw on approved funds. They would also be required to keep the supported site operational for at least five years afterward or be forced to repay the grant.
Companies that face competition within the state of Delaware likely would not be eligible for the funding, Becky Harrington, vice president of business development at DPP, told the CDF at their Aug. 28 meeting. State Rep. Ed Osienski, who serves on the CDF, had expressed concern that allowing such a recipient would give an unfair advantage to particular companies.
To ensure that recipients are truly using the funds to save a Delaware operation that might otherwise be at-risk, the DSB will require MISI applicants to submit five years of annual capital expenditures to ensure that the proposed spending is above and beyond routine investment, officials said.
The DSB and DPP leaders say the new program isn’t aimed to benefit an applicant waiting in the wings, but that some companies considering the future of their sites in the state in recent years could have benefited from such a program.
The MISI also would not be treated as a stopgap to saving faltering companies, potentially putting taxpayer-backed funds at risk of being lost altogether.
“The DSB looks at the funding sources and they also look at the health of the company, making sure that the outlook is good. This isn’t like a last-minute move to try to save the company,” Harrington said.
