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NCC preps $150K tax break deal for Dot Foods

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BEAR – The New Castle County Council is preparing to consider a five-year tax incentive deal worth up to $150,000 for Dot Foods, which is building a $36 million, 188,000-square-foot distribution center in Bear that is set to open early next year.

Ordinance 19-115 would provide a property tax exemption for a period of five years or a maximum benefit of $150,000, whichever occurs first, if Dot Foods, the largest food industry redistributor in North America, creates 201 new full-time positions at the facility.

Dot Foods’ new $36 million distribution center, its 12th in the nation, is set to open in Bear early in 2020. PHOTO COURTESY OF DOT FOODS

As a redistributor, Dot Foods buys full truckloads from more than 900 manufacturers nationwide and consolidates their products in distribution centers across the United States. It then resells these products in more manageable quantities to distributors.

The 13-member council, which is set to consider the deal at its Nov. 26 meeting, signaled its support by approving an ordinance in September 2018 publicly stating that it would consider such an offer. That ordinance came shortly after Dot Foods acquired the roughly 36-acre site off Wrangle Hill Road from D M Peoples Investment Corp., operated by Dorothy Peoples, for a nominal $10 fee, according to state records. A few weeks after the 2018 ordinance passed, Dot Foods broke ground at the site near the interchange of Route 1 and Route 72.

Under the proposed county plan, Dot Foods would be exempt from any increase in assessed property valuation following the construction of its facility. That exemption would start July 1, 2020, and run five years, or until a total $150,000 was exempted. In order to be eligible for the tax break, however, Dot Foods must create 201 new jobs at the facility by May 30, 2025 – or else it would be required to repay the exempted funds.

After fulfilling the terms of the exemption, Dot Foods would be taxed at its higher valuation. Dot Foods also must pay normal sewer service charges, ditch taxes, and school district taxes.

When reached by the Delaware Business Times, County Council President Karen Hartley-Nagle declined to comment on the proposal, adding that she did have some questions on the deal that she expected to raise in council’s committee meetings.

In a statement, Dot Foods Delaware General Manager Joe Little told DBT that his company was “very pleased” that the council was considering the measure, and they hoped for its passage. He added that the prospect of the incentive helped Delaware secured the distribution center.

“It was one of the factors that made us choose New Castle County over other locations in Maryland and Pennsylvania,” Little said.

Dot Foods is set to receive more than $1 million in state grants and possibly $150,000 more in county tax exemptions. PHOTO COURTESY OF DOT FOODS

The ordinance set to come before council also revealed that the Delaware Economic Development Authority signed its own grant agreement with Dot Foods in January, providing the company with more than $1.1 million in funds tied to the project and projected employment. Specifically, Dot Foods is set to receive up to $352,000 for grant funds tied to job growth at the distribution center, as well as up to $750,000 for capital expenditure in constructing and equipping the facility.

The capital funds have a reimbursement submission deadline of March 15, 2020, meaning the facility is likely to open in the first weeks of next year. All grant-eligible jobs must be created by Dec. 31, 2022.

In the Delaware Strategic Fund Grant Agreement signed by the state, the tiers of employees at the facility include 106 positions at an annual salary range of $30,000 to $59,999, 70 positions at $60,000 to $79,999, and 25 positions at $80,000 or more. Each tier comes with an associate grant award: $1,150, $2,360 and $2,596 for each employee of the lowest to highest tier. Suggested hiring figures are subject to change, but the maximum grant award of $352,000 is not.

The Bear facility will include offices; dry, refrigerated and frozen warehouse space; and a truck yard and garage to service Dot’s fleet. The Illinois-based company already has a temporary transportation operations terminal in New Castle that serves a fleet of about 25 drivers.

In August, Dot Foods began hiring more than 100 people in 30 roles. Dot Foods Delaware General Manager Joe Little told the Delaware Business Times at that time that the company expected to open in 2020 with about 45 trucks, increasing to 75 by the end of the year.

“We’re dealing right now with a nationwide driver shortage and will hire as many drivers as we can,” Little said, noting Dot Foods’ salaries for drivers are guaranteed in writing, and experienced drivers who handle freight will earn $75,000 in their first year.

By Jacob Owens


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