Xerxes Wilson

The News Journal

New Castle County officials approved a $7.5 million contribution to the DuPont Co., formalizing a new role for local tax dollars in economic development.

DuPont Co. is in the middle of a $130 billion merger with Dow Chemical Co., and the county tax money is being paired with a $9.6 million state government contribution to keep employees in Delaware following the merger.

It's the first time the county has taken such a direct role in economic development, something that may happen more in the future. The New Castle County money for DuPont is from a newly created economic development fund that officials say will see other, smaller businesses receive help.

The County Council approved moving the $7.5 million earmarked for DuPont from tax reserves to the new economic development fund earlier this year. The contribution is to be paid in annual installments over five years, and there is no expectation of repayment from the chemical giant.

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In return, Dow and DuPont have agreed two of the three companies created by the merger will be based in New Castle County. Council members and New Castle County Executive Thomas P. Gordon have said the commitment to retain jobs is worth the expenditure.

Added together, the company paid a total of $1.8 million in property taxes to the county and $5.3 million to school districts in 2015. Last year, DuPont announced 1,700 job cuts to its Delaware workforce, which has topped 6,000 people in recent years. Local officials fear further cuts during the merger.

The contract between the companies and the county give local officials some power to cut off payments and take back money if employment goals are not met. It is unclear exactly how many jobs the company must retain in New Castle County.

Councilman George Smiley said the contribution is necessary to retain an important employer. He said the new economic development fund will focus on awarding grants or loans to small businesses in the future.

"The purpose is not to give large chunks of money but to use the fund to give smaller grants," said Councilwoman Janet Kilpatrick, who sponsored legislation creating the fund.

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Companies that apply for assistance from the county will be evaluated by a review committee. That group is comprised of three County Council members and four officials from the executive branch. The committee will pass its evaluation to the council, which will have to approve each contribution. The county executive will then have to approve the allocation passed by the County Council.

The fund will be used to award both grants and loans. The committee will also be empowered to provide companies relief from property tax or other government fees and have power to set rules to take back money if the applicant doesn’t meet employment goals.

Real estate ventures, restaurants, office buildings and businesses outside the county are specifically ineligible for assistance. Companies that demonstrate a need for aid and that they will retain or attract jobs will be given priority.

Smiley said the money can also be paired with state money to help smaller businesses.

"Our intent is to help small businesses that get overlooked," Smiley said. "Our intent is not to grow it into a (Delaware Economic Development Office), but to be a place where a small company can come to and be evaluated, and hopefully we can help them out."

The county's economic development fund has only one renewing source of revenue. The first yearly interest payment due from a county loan to an upstart stock exchange company has put $180,000 in the fund.

"At this point, we want to work with what we have and see what the interest is from businesses," Kilpatrick said.

Contact Xerxes Wilson at (302) 324-2787 or xwilson@delawareonline.com. Follow @Ber_Xerxes on Twitter.