JOHN L. MITCHELL, JR
STATE REPRESENTATIVE Thirteenth District
March 10, 2020
HOUSE OF REPRESENTATIVES
STATE OF DELAWARE
LEGISLATIVE HALL
DOVER, DELAWARE 19901
DOVER, DELAWARE 19901
COMMITTEES
House Rules
House Administration
Ethics Judiciary
Gaming and Pari-Mutuels
RE: Amazon LLC Boxwood Road
Dear Neighbor:
Dear Neighbor:
I am reaching out to address questions some of you have expressed regarding Amazon LLC
occupying the former General Motors plant located on Boxwood Road, and concerns some have
raised about the recent approval of state funds for the company’s development project at the site.
This letter will explain the process by which Amazon received the funds and why.
On February 24, the State Council on Development Finance met to review applications requesting financial assistance from the Delaware Strategic Fund.
The Council on Development Finance (CDF) is a panel of nine members that advises the director of the Delaware Division of Small Business. The council hears, evaluates, and recommends approval or disapproval of projects brought to it by the Division and the Delaware Prosperity Partnership. These projects range from companies seeking to establish new facilities in the state, current businesses looking to expand, new companies wishing to grow and the revision of contracts already held with the state. After the review, the council makes a recommendation to the division director.
The Delaware Strategic Fund provides customized financial assistance to businesses considering locating or expanding in the state of Delaware. Financial assistance may be provided in the form of grants or low-interest loans to support the attraction and expansion of businesses. Through the Strategic Fund, DSB supports initiatives such as the Brownfield Assistance Program, Delaware Technical Innovation Program, Delaware Capital Access Program, and the Delaware Rural Irrigation Program. The Strategic Fund also provides loans and grants not affiliated with these specific programs.
In the past year, each dollar from the Strategic Fund spent on grants has been matched by more than $14 in private funding. The projects contributed more than $225 million to Delaware’s GDP. Funding is allocated in the annual capital budget, last year the fund received $12.5 million.
Newport developer Harvey and Hanna sold the old General Motors site at Boxwood Road to Nevada-based Dermody Properties. Dermody Properties entered into an agreement to lease the property to Amazon to build a 3.7-million square-foot next-generation fulfillment center.
On February 24, the State Council on Development Finance met to review applications requesting financial assistance from the Delaware Strategic Fund.
The Council on Development Finance (CDF) is a panel of nine members that advises the director of the Delaware Division of Small Business. The council hears, evaluates, and recommends approval or disapproval of projects brought to it by the Division and the Delaware Prosperity Partnership. These projects range from companies seeking to establish new facilities in the state, current businesses looking to expand, new companies wishing to grow and the revision of contracts already held with the state. After the review, the council makes a recommendation to the division director.
The Delaware Strategic Fund provides customized financial assistance to businesses considering locating or expanding in the state of Delaware. Financial assistance may be provided in the form of grants or low-interest loans to support the attraction and expansion of businesses. Through the Strategic Fund, DSB supports initiatives such as the Brownfield Assistance Program, Delaware Technical Innovation Program, Delaware Capital Access Program, and the Delaware Rural Irrigation Program. The Strategic Fund also provides loans and grants not affiliated with these specific programs.
In the past year, each dollar from the Strategic Fund spent on grants has been matched by more than $14 in private funding. The projects contributed more than $225 million to Delaware’s GDP. Funding is allocated in the annual capital budget, last year the fund received $12.5 million.
Newport developer Harvey and Hanna sold the old General Motors site at Boxwood Road to Nevada-based Dermody Properties. Dermody Properties entered into an agreement to lease the property to Amazon to build a 3.7-million square-foot next-generation fulfillment center.
At that February 24 meeting, the State Council on Development Finance approved a $4.5 million
strategic fund grant to Amazon. Dermody would invest $200 million to $300 million to build the
site.
The breakdown of the $4.5 million is as follows: $3 million for job creations (approximately 1,000 jobs – 800-plus jobs at $15 an hour or $33,000 a year, and 200-plus salary jobs at $60,000 a year). Amazon will invest $50 million in the build-out of the facility, which qualifies them for the additional $1.5 million in reimbursements from a capital expenditure grant.
The council held a public hearing to review this grant proposal and ultimately recommended it for funding.
The grant calls for 1,000 new full-time jobs to be created during the next three years and maintained for an additional four years. There is no written agreement to hire locally, but it is always easier to hire local residents. The site could be launched by 2021-22.
The Division of Small Business estimates that this project could add up to $445 million to the Delaware GDP annually.
Additionally, Amazon will not receive any tax breaks from the government, which will infuse taxes to the state of Delaware and the Red Clay School District from a property that has sat vacant for more than a decade.
I hope this information has proved useful in explaining the process behind this application and decision.
If you have any additional questions or if I can be of service in any other way, please do not hesitate to contact my Legislative Aide Juliann Emory at 577-8473 or Juliann.Emory@delaware.gov
Sincerely,
J. Larry Mitchell House Majority Whip 13th District
The breakdown of the $4.5 million is as follows: $3 million for job creations (approximately 1,000 jobs – 800-plus jobs at $15 an hour or $33,000 a year, and 200-plus salary jobs at $60,000 a year). Amazon will invest $50 million in the build-out of the facility, which qualifies them for the additional $1.5 million in reimbursements from a capital expenditure grant.
The council held a public hearing to review this grant proposal and ultimately recommended it for funding.
The grant calls for 1,000 new full-time jobs to be created during the next three years and maintained for an additional four years. There is no written agreement to hire locally, but it is always easier to hire local residents. The site could be launched by 2021-22.
The Division of Small Business estimates that this project could add up to $445 million to the Delaware GDP annually.
Additionally, Amazon will not receive any tax breaks from the government, which will infuse taxes to the state of Delaware and the Red Clay School District from a property that has sat vacant for more than a decade.
I hope this information has proved useful in explaining the process behind this application and decision.
If you have any additional questions or if I can be of service in any other way, please do not hesitate to contact my Legislative Aide Juliann Emory at 577-8473 or Juliann.Emory@delaware.gov
Sincerely,
J. Larry Mitchell House Majority Whip 13th District
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