U.S. Corrugated gets 10-year county tax break

U.S. Corrugated plans on buying about 40-acres of land south of Dover to build a corrugated box facility, bringing 159 jobs to Kent County, | PHOTO COURTESY NORTH STAR CONSTRUCTION MANAGMENT INC,

DOVER — U.S. Corrugated will receive a 10-year property abatement and additional funding from a county incentive fund on top of the millions in state incentives already announced.

Under the deal signed in April, U.S. Corrugated will receive a county tax break on the assessed value of the 497,000-square-foot building once it’s built and occupied for the next decade. The abatement starts at 90% for the first year, dropping 10% per year after that until it hits the floor at 10% in the ninth year. This program is reserved for businesses that invest at least $1 million in a new facility or expanding its footprint.

At the time, the Kent County Levy Court knew the project as “Four M Project,” a code name for the major manufacturer, according to Kent County Administrator Michael Petit De Mange. U.S. Corrugated plans on investing $80 million in a 40-acre parcel on the outskirts of Dover, relocating its New Jersey headquarters and creating 159 new jobs in Delaware.

The tax abatement builds off incentives approved from the state’s investment board, the Council on Development Finance, last month. That package includes a capital expenditure grant worth up to $2.73 million and a job performance grant of $450,000 tied to the creation of jobs.

In addition, the Kent County Levy Court also approved a $75,000 economic development incentive grant out of its Strategic Development Fund. This grant is disbursed in two payments, half upon U.S. Corrugated buying the property and the second when Dover officials issue a building permit.

Petit De Mange described the county’s Strategic Development Fund as part of a “sleeper ordinance” of incentives for developers for the past years. The fund was created in the late 1990s through then-Gov. Tom Carper allocating funds through an unexpected windfall to the state.

“The Levy Court created it as a hope to help the economic development engine and retain businesses. Eventually, the funding was used up, and it was not replenished, but about 10 years ago, it was decided to fund it through the budget process to build it back up,” Petit De Mange told Delaware Business Times.

In the Fiscal Year 2021 budget, the Kent County Levy Court approved allocating another $50,000 for the Strategic Development Fund, adding to its then $490,800 total. Kent County officials plan on investing another $200,000 over the course of the next four budgets, bringing the strategic development fund to nearly $800,000.

The fund can be used for working capital, renovation and construction to roads and related infrastructure, equipment, relocation and more. Petit De Mange noted the tax abatement program and the strategic fund were used for projects over the years, not just ones that promise hundreds of jobs.

“There were times where these incentives were used more frequently, and that includes retail and other smaller projects,” he said. “Quite possibly, the biggest project it was offered for was Dover Downs when it became more than just a racetrack. But since the recession, it hasn’t been as requested as much. But the Kent Economic Partnership [KEP] is looking to better align it with the objectives to create a stronger incentive package to promote the county.”

The Kent County Levy Court approved language updates to both the tax abatement program and the strategic development fund on Nov. 10, in part to remove outdated processes. It also clearly states that the KEP has authority to recommend projects, but the county legislative body has sole discretion to award funds.

The tax abatement program was updated to focus on sectors targeted by the KEP: warehousing and distribution, aviation, health care, business services, or corporate headquarters.

Instead of having two separate tiers for qualifications, the ordinance now requires companies to invest $1 million and bring at least 10 employees. Before, the fund was available to companies that bring $1 million in investment and 12 permanent jobs or $500,000 and four permanent jobs. 

By Katie Tabeling

ktabeling@delawarebusinesstimes.com