The Delaware Prosperity Partnership (DPP) held its first board meeting on October 20, 2017, at the new CSC® global headquarters in Wilmington. A 501c3 partnership created by legislation and signed into law by Governor Carney this past summer, the DPP combines the resources of the private sector and government to further economic growth in The First State. The board is co-chaired by Governor Carney and Rod Ward, CEO of CSC. John Riley was elected by the board as Interim CEO of the DPP, and a temporary office has been set up at One Commerce Center in Wilmington. John will focus on launching the initiative and recruiting a permanent CEO through a national search process. As the state’s primary resource for recruiting new business to Delaware, John will also work with the Delaware Office of Small Business, Development and Tourism under Cerron Cade’s direction to ensure a smooth transition of current projects and new opportunities.

As plans were being made to launch the DPP, the Amazon HQ2 project was announced. While the state government took the lead in responding to the proposal, it presented the opportunity to bring in people and resources from the private sector to support the project, and to closely examine Delaware’s location and workforce advantages, not just for Amazon, but for other prospects going forward. One of the exciting digital marketing tools that came out of the project was the “Options in Delaware” video. As you can see, while it was developed as part of the Amazon response, it is a great representation of Delaware, and suitable for use in other ways, including recruiting talent to the state.

In addition to setting up an office, the DPP has launched an initial website, deprosperitypartnership.com, that includes basic information about the partnership and Delaware. In the coming weeks the site will be populated with additional information and ultimately become a resource for current Delaware businesses, as well as for those outside the state looking for a great place to expand or relocate.

by James DeChene

This week DEFAC met, and forecast an additional $64 million in revenue for FY19, if the budget were to remain the same. While positive news, the forecast did not consider the contract negotiations with Department of Corrections on salary increases, nor did it factor in student enrollment numbers and new Medicaid rates, which won’t be released until later this fall.  You may recall from last year that the student enrollment and Medicaid increases resulted in an additional $150 million the state budget writers needed to factor in, and represented about 40% of last year’s budget gap. Those numbers will be available for consideration at the upcoming December 18th meeting, which will also be the forecast Governor Carney will use when crafting his recommended budget.
 
Also this week, the board of the Prosperity Partnership, the P3 created to replace DEDO, met for the first time. The organization is officially up and running, and now comes the work of getting itself operational. The coming months will flesh out how the entity will operate.  We will continue to update our members as more information is available.

This past spring, Governor John Carney and the Delaware legislature put in place two key foundations for economic development: Modernizing the Coastal Zone Act and the Delaware Prosperity Partnership, the new public/private nonprofit responsible for recruiting new employers to the state. In addition, the City of Wilmington is undergoing the creation of a master plan to help revitalize Delaware’s corporate hub. An example of such a transformation lies just 20 miles to its north.

On Monday, September 11, The Delaware State Chamber hosted a trip to the Philadelphia Navy Yard. The Urban Land Institute has hailed the venture as one of the “most successful” redevelopment projects in U.S. history. The Navy Yard is a 1,200-acre urban development, offering the Philadelphia region a mixed use and centrally-located waterfront business campus. The Navy Yard is home to more than 13,000 employees and 152 companies representing industrial, manufacturing, office and research, and development sectors. To date, the Navy Yard has developed 7.5 million square feet of real estate in a mix of historic buildings and new high-performance and LEED® certified construction. Since 2000, more than $1 billion has been invested to transform the site into a world class location for corporations like GlaxoSmithKline, Urban Outfitters and Tasty Baking Company.

The PIDC (formally known as the Philadelphia Industrial Development Corporation) is Philadelphia’s public-private non-profit economic development corporation founded jointly by the City of Philadelphia and the Greater Philadelphia Chamber of Commerce in 1958. The PIDC serves as master developer, and oversees all aspects of the Navy Yard’s management and development, including master planning, leasing, property management, infrastructure development, utility operation, and the structuring of development transactions. Reed Lyons, Vice President Navy Yard Development, led our tour and pointed out that the Navy Yard had no public infrastructure when the U.S. Navy handed the site to Philadelphia. The Navy Yard transformation started with little but a vision, and 20 years later that vision has become a success story.   
 
Mike Vanderslice, Environmental Alliance, Inc. and Chairman of the DSCC Economic Development Committee, says, “From an economic development perspective, I appreciated what our friends at the Navy Yard had to offer for what's 'working' and lessons they've learned as they continue to develop the historic waterfront area. Being in the environmental consulting field, it was impressive to see how far they have taken this former heavy industrial, blighted area, and turned it around into a vibrant campus for businesses.”
 
Link to Urban Land Institute’s article on the Navy Yard:
https://urbanland.uli.org/development-business/historic-rehab-philadelphias-navy-yard/

Link to the Navy Yard:
www.navyyard.org

by James DeChene

A mostly quiet August is upon us so far, and this week, the excitement came at the beginning when Gov. Carney signed HB 226, establishing a Public Private Partnership focusing on economic development and bringing/retaining jobs in Delaware. As many of you know, this was a top priority for the State Chamber, and we are pleased to have the bill become law, but now the real work begins.

Murmurings over next year’s budget, and an almost certain shortfall, are making their way through the state.  Expected increases in school enrollments and Medicaid expenses (combined last year to be $150 million) are driving what could be another $300 million budget gap. How this hole will be filled is unclear as of now, but the hope is to have discussions prior to the start of legislative session to work out possible solutions.

The Adult Use Cannabis Taskforce meets for the first time on September 6. I’m interested in any feedback from the business community on what legalizing recreational marijuana would mean for your business operations. Feel free to email me at: jdechene@dscc.com

by James DeChene

Two articles were printed highlighting two sides of the same coin on Delaware’s budget and economy. The first states that while Delaware’s unemployment rate is holding steady at 4.7%, we are struggling compared to the rest of the nation. Not only that, but our job creation pace slowing, with a sluggish growth rate of less than .1%.

The other story was of the purchase of the Hercules building in Wilmington for a third of its mortgage note, at $22.3 million (the note was $65 million). That was for a building with a roughly 50% occupancy level. This adds to the growing pool of available, and unused, office space in Wilmington. This paints a fairly bleak picture of Delaware’s overall recovery and what the budget will look like next year.
 
Work on the public private partnership (P3), also known as the Delaware Prosperity Partnership (DPP), to reorganize DEDO continues, with next steps including the Governor naming board members. The hope is to have the organization up and running by the end of the year.
 
The first Ecological Extinction Taskforce met this week. Attendees heard a presentation from UD professor Dr. Doug Tallamy on the reduction of a number of Delaware species. The next meeting is August 7.

by James DeChene

This week saw the passage of two Chamber legislative priorities in the House—modernizing the Coastal Zone Act and enabling language to create a public-private partnership to replace DEDO’s current structure. Both measures now move to the Senate for consideration, and votes, next week. Many thanks to those of you who wrote letters supporting HB190 (Coastal Zone). If you haven’t yet written to your Senator, you can do so here: www.dscc.com/takeaction.
 
Also this week, a series of tax bills were released from the House Revenue and Finance Committee. These bills raise the Personal Income Tax levels; remove itemized deductions (replaced with a higher standard deduction); gradually raise the age someone has to reach before they are eligible for the $12,500 exclusion of income for pensions and other retirement income; raise the excise tax on beer, wine and spirits; increase the tax on tobacco products; and increase the LLC tax. These bills will become part of the discussion on how to balance a roughly $350 million budget shortfall, and discussions continue on what expenditure offsets will be made to balance a 50-50 split to cover the gap.
 
Next week is the last week of session for 2017. Hope remains that a budget deal can be reached prior to June 30th to stave off coming up with a plan to continue budget negotiations into July.

by James DeChene

Wrapping up the week, with seven legislative days left, the General Assembly still has much to do if they plan to adjourn on June 30th. The most important of those tasks remains hammering out a budget deal that can pass. Negotiations continue, but each side remains committed to issues difficult for the other to support. These items include removing prevailing wage from state contracted construction works projects for a period of three years, and raising the Personal Income Tax Rate, which would also include a new top rate of 6.96% for those with incomes above $150,000. Leadership meetings continue, and JFC still has a lot of work ahead of it.
 
The final DEFAC numbers for this budget session come out on Monday June 20th. Barring significant increases to the Corporate Income or Corporate Franchise taxes, or a surprise escheat settlement, or some other unexpected windfall, revenues are expected to remain flat, meaning our budget gap will remain somewhere in the neighborhood of between $350-400 million.
 
HB190, the bill to modernize the Coastal Zone Act is expected to see a House vote on Tuesday, and our hope is HB226, the bill to reorganize DEDO into a P3 will also see a House vote next week. SB10, the bill to increase Delaware’s minimum wage was taken off the Senate agenda and not voted on this week. SS1 for SB76 was heard in the Senate Labor Committee, which would require recognized apprenticeship training programs for companies performing state construction work.
 
Much more to come next week.  Stay tuned.

by James DeChene

Governor Carney has released the report from the Delaware Economic Development Working Group. This is the group that was formed to consider a public-private partnership to restructure the Delaware Economic Development Office (DEDO).

In short, the report recommends taking four key functions of DEDO out of the agency and placing responsibility for them in a new 501(c)3, which will be co-chaired by the Governor and a leading business executive.

The four functions are:

• Business Marketing and Attraction
• Entrepreneurship and Innovation
• Talent
• Market Intelligence

The estimated budget for the new organization would be $2.5M, consisting of $1.5M from the State and $1M from the private sector annually.

Next steps include drafting legislation for consideration in 2Q 2017, fundraising, appointing a board, hiring a CEO and developing a strategic plan. Please read the report for more details on the timing of these guidelines.
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The co-chairs of this committee are Rod Ward (DPPI Board of Trustees) and Mark Brainard (DSCC Board of Governors). Also serving on this committee are Nick Lambrow and Richelle Vible of the DSCC Board of Directors, and Terry Murphy of the DSCC Board of Governors. Thanks to each of you for your time and commitment in getting this accomplished.