Bill Text: DE SB294 | 2009-2010 | 145th General Assembly | Draft

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Bill Title: An Act To Amend Titles 29 And 30 Of The Delaware Code Relating To Economic Development Incentives.

Spectrum: Moderate Partisan Bill (Democrat 10-2)

Status: (Introduced - Dead) 2010-06-10 - Assigned to Finance Committee in Senate [SB294 Detail]

Download: Delaware-2009-SB294-Draft.html

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SPONSOR:	Sen. Marshall & Sen. Connor & Rep. Plant & Rep. B. Short
	Sens. Bunting, Bushweller, Henry, McDowell & McBride, Reps. Q. Johnson, Keeley & Lavelle

DELAWARE STATE SENATE

145th GENERAL ASSEMBLY

SENATE BILL NO. 294

AN ACT TO AMEND TITLES 29 AND 30 OF THE DELAWARE CODE RELATING TO ECONOMIC DEVELOPMENT INCENTIVES.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE:

Section 1. Amend Chapter 50, Title 29 of the Delaware Code by adding a new Subchapter IX to read as follows:

"Subchapter IX. Jobs Incentive Fund

§5099A. Findings and purpose; creation of the Job Incentive Fund.

(a) The General Assembly finds that Delaware's economic development incentives are a valuable State resource.Furthermore, the General Assembly finds that, because these incentives are a limited resource, it is critical that the State adopt policies and administrative practices that maximize their flexibility and effectiveness. It is the General Assembly's intent to achieve such a result through the implementation of the Job Incentive Fund, which is designed to increase the presence in Delaware of industries with markets that extend beyond Delaware's borders, promote the development of local supplier networks, attract new resources and consequently, have the highest multiplier effects on the State's economy.

(b) A special fund to be known as the "Job Incentive Fund" ("Fund") shall be created.

(1) The Fund shall be authorized to the Delaware Economic Development Office on behalf of the Delaware Economic Development Authority.Funds appropriated pursuant to this or subsequent acts are to be used for Fund activities as defined in the following paragraphs.

(2) The Fund shall be invested by the State Treasurer in securities consistent with the policies established by the Cash Management Policy Board. All moneys generated by the Fund shall be deposited in the Fund.

§5099B.Definitions.

As used in this subchapter:

(1) "Approved Project" means a business expansion or relocation project for which the Council has approved a Job Incentive Fund grant.

(2) "Clean Energy Economy" means companies in (a) "energy efficiency and renewable energy industries" as set forth in the Federal Workforce Investment Act, §171(e)(1)(B)(ii) [29 U.S.C. §916(e)(1)(B)(ii)], as amended, which includes energy-efficient building construction and retrofit industries, renewable electric power industry, energy efficient and advanced drive train vehicle industry, biofuels industry, deconstruction and materials reuse industries, energy efficiency assessment industry serving residential, commercial, or industrial sectors, and manufacturers that produce sustainable products using environmentally sustainable processes and materials, and (b)technologies that provide a significant benefit to water quality, air quality, soil remediation, or greenhouse gas reductions.

(3) "Authority" means The Delaware Economic Development Authority

(4) "Compensation" means that part of the sum reported on Form W-2, or equivalent form of the United States Department of Treasury, Internal Revenue Service as "Medicare wages and tips" that is attributable to Delaware sources.

(5) "Council" means the Council on Development Finance.

(6) "Director" means the Director of the Delaware Economic Development Office.

(7) "Office" means the Delaware Economic Development Office.

(8) "Qualified capital investment" means the amounts of at least $500,000 actually expended by the grantee in connection with an approved project within three years from the date of the grant's approval for (i) the construction of a new building associated with the approved project, (ii) the purchase and installation of new equipment associated with the approved project, (iii) the cost of building and infrastructure improvements associated with the approved project (including amounts paid for engineering and architectural services provided by persons unaffiliated with the grantee and for building contractors unaffiliated with the grantee performing work in connection with the approved project); provided, however, that qualified capital investment shall not include any fees, taxes, charges or assessments paid to any governmental body, wages and associated employee labor costs associated with the approved project, employee training costs, or grantee research and development costs.

(9) "Qualified employee" means any single position added in connection with an approved project held by a common-law employee in this State for which the compensation equals or exceeds $20,000. More than 1 consecutive employee may perform an eligible job during a single calendar year so long as the total compensation of all consecutive employees performing such eligible jobs during such calendar year equals or exceeds $20,000.

(10) "Qualified employment" means the total of all qualified employees added in connection with an approved project.

(11) "Transformative industry" means any industry the future development of which possesses a significant potential to produce a fundamental economic change by employing emerging technologies, environmentally responsible products and processes, or entrepreneurial innovation to create new markets, products, services or production processes.

§5099C.Administration.

(a) Job Incentive Fund grants shall be awarded by the Authority after a hearing before, and approval by the Council.

(b) The Director shall, in consultation with the Council, develop and implement a grant application, evaluation and project approval process that is consistent with the requirements of this subchapter on or before November 1, 2010.

(c) The grant application, evaluation, and project approval process shall operate on a rolling basis and shall consist of two steps:

(1) An initial eligibility determination during which the Council shall determine whether an applicant firm meets the Job Incentive Fund's basic eligibility criteria; and

(2) A competitive selection process during which the Council shall select the applicant firm or firms, which, according to the criteria and goals of this Act and an evaluation of the best use of available funds in support of those goals, shall receive Job Incentive Fund grants from the Authority.

(d) Once approved, grants shall be awarded by the Authority after the Council has determined that such firm or firms have demonstrated that the project's qualified employment and qualified capital investment levels reported in the grant application and selection process have been attained or can reasonably be expected to be attained within three years from the date of the grant's approval.

(e) All grants shall be awarded subject to a grant agreement between the Authority and the grantee and shall be consistent with the findings of the Council. All such grant agreements shall establish the grantee's obligation to repay all or a portion the grant in the event the grantee's approved project fails to meet the qualified employment, and economic benchmarks including, but not limited to qualified capital investment or other criteria recommended by the Council.

(f) Grant applications may be accepted beginning December 1, 2010.

(i) No grants may be awarded prior to January 1, 2011.

(j) The Director shall have the authority to establish and promulgate such rules and regulations governing the administration and operation the Job Incentive Fund as may be deemed necessary by the Director and which are not inconsistent with the laws of this State.

§5099D. Consideration for Grant – Basic Eligibility Criteria

(a)In determining eligibility for a grant, the Council shall find that an applicant meets the following criteria:

(1) Is financially viable as determined by commonly accepted measures for assessing profitability, liquidity, solvency and capital structure.

(2) Has developed a practical and complete business plan in support of the specific business expansion or relocation project for which the grant is sought; and

(3) Will produce, as a result of the combined effect of their additional qualified employment and qualified capital investment in Delaware, a net positive expansion of the State's economic base.The criteria for determining such effect shall include, but shall not be limited to, an evaluation of the applicant's relocation or expansion project using the North American Industrial Classification System and United States Department of Commerce's Regional Input-Output Modeling System, to determine the combined effect of:

(i) final demand multiplier on jobs as determined by using the qualified capital investment estimate as input and

(ii) the direct effect multiplier on jobs with the qualified employment estimate as input.

§5099E. Competitive Selection Process

(a) All applicants meeting the basic eligibility criteria established in section 5099D of this subchapter shall be evaluated and ranked by the Council according to the following criteria:

(1) The likelihood that the expansion or relocation for which a grant is sought will succeed as judged by the strength of the applicant firm's financial position and business plan;

(2) The number and quality of qualified employees added;

(3) The project's economic impact as determined by the calculations in §5099D(a)(3) of this subchapter;

(4) The level of qualified capital investment;

(5) The extent to which the relocation or expansion supports the development in Delaware of a transformative industry or diversifies the State's economy;

(6) The level of contribution to expanding the State's emerging Clean Energy Economy and commitment to preserving and enhancing the natural environment;

(7) The positive effects on the State's local supplier network; and

(8) The budgetary implications of awarding a specific grant as it relates to available fund balances and quality of competing firms' applications.

(b) The Council shall use its evaluation and rankings to recommend which applicant firms shall receive grants from the Authority.

(c) Meeting the initial eligibility criteria will provide no guarantee that an applicant firm will be selected for or will receive a grant.

§5099F. Grant Calculation – Determination and Final Award

(a) The Council may exercise discretion in recommending the amount of a Job Incentive Fund grant awarded to a firm selected under §5099E of this subchapter.

(b) In general, Job Incentive Fund grant amounts shall be guided by an approved project's ability to meet the criteria found in §5099E(a) of this subchapter, provided, however, that all grants awarded shall be:

(1)At least $1,000 but not more than $6,500 per qualified employee added as a result of an approved project, and

(2) At least three percent but not more than five percent of the amount of the applicant firm's total qualified capital investment.

(d) Job Incentive Fund grants shall be awarded in a single lump-sum.

§5099G. Reports.

(a)     On or before December 31 of each year, the Office shall report to the Governor and General Assembly on the Fund awards for the prior fiscal year. "

Section 2. Amend §6102(s), Title 29 of Delaware Code, by replacing said subsection with a new subsection (s) to read as follows:

"(s) (1) The State shall transfer each fiscal year the first $24,000,000 in receipts received under subchapter II of Chapter 11 of Title 12 that would otherwise be deposited to the General Fund to the Transportation Trust Fund maintained under Chapter 14 of Title 2.

(2) No later than December 31 of each fiscal year the State shall transfer $2,500,000 in receipts received under subchapter II of Chapter 11 of Title 12 that would otherwise be deposited to the General Fund to the Job Incentive Fund maintained under Chapter 50 of Title 29."

Section 3. Amend Title 30, Delaware Code §010 (4) and (5) by deleting the phrase ", and before June 30, 2011" as found at each location.

Section 4. Sections 1 and 3 of this Act shall be effective upon enactment. Section 2 of this Act shall be effective for fiscal years beginning after June 30, 2011.

SYNOPSIS

Section 1 of this Act establishes the Job Incentive Fund, which is designed to provide grants to firms that expand and diversify the most vital components of Delaware's economy.

Section 2 of this Act provides a multi-year funding source for the grants by earmarking Abandoned Property revenues.

Section 3 of this Act removes the sunset from the State's current employment and investment tax incentives and leaves them in effect.

Author:Senator Marshall