Governor has plans to revive downtowns

Date Published: 
April 18, 2014

Lawmakers are considering a new way to wake up downtown districts. To get the lights on and people moving, Gov. Jack Markell has proposed “Downtown Development Districts” (DDDs) — districts within cities or towns that would benefit from development, with State incentives offered to those who move to fulfill that need.

“Not only does our economic future depend on it, but when neighborhoods are cleared of vacant houses and more people live and work in our cities, they are safer for everyone,” he said in the weekly address announcing the proposal. “With cities across the country experiencing a surge of growth, we must take this opportunity to renovate abandoned property, attract new residents and businesses, and reinvigorate our downtowns.”

DDD grants would be available to almost any kind of project: for-profit builders and investors, nonprofit organizations, businesses and homeowners. The incentive would apply to residential, mixed-use, commercial and industrial projects.

“It’s much better for us to let the market decide what’s valuable,” Markell told the Coastal Point. “For us to dictate that’s ‘It’s only for this kind of investment’ — that may be squandering an opportunity” for other growth.

Investors could earn grants of up to 20 percent of their real estate improvement “hard costs” (such as exterior, interior and structural improvements). Virginia has a similar incentive that has been “very successful in leveraging significant amounts of private investment in under-served areas,” according to Markell’s staff.

They noted that the grants would kick in after investors do $25,000 worth of work. After that, they can begin earning 20 percent back on additional costs. The Delaware State Housing Authority (DSHA) would manage investment minimums and caps, as well as the eligibility requirements.

Because historic areas often form a framework for flourishing downtowns, a percentage of the State’s existing Historic Preservation Tax Credits will be dedicated to qualified projects in DDDs. (Unused DDD credits will be returned to the regular pool of applications, so others can use them.)

The Delaware Department of Transportation would prioritize projects in the districts. DSHA will offer additional incentives for people to acquire and rehabilitate abandoned houses, and other State incentives are to be announced soon.

“We’re really trying to get this to cut across state agencies,” Markell said.

The state planning office would have lead responsibility for the application process. DDD applications would need to demonstrate a need and provide a high-quality strategic plan for the proposed district.

“Municipalities must have some skin in the game,” Markell added.

That means local governments must also offer incentives to encourage development, such as regulatory flexibility, which could include expedited permitting).

The Cabinet Committee on State Planning Issues would consider the unemployment rate, median income, rate of homeownership and prevalence of vacant and abandoned houses in the municipality.

After the first round of applications, the governor would designate one initial Development District per county. Eventually, that could grow to 15 districts that could be designated at any one time.

Markell discussed his vision in Bridgeville, with century-old mansions on its main street. Municipalities and unincorporated zones, through the county government, have potential statewide, he said.

“I’m excited by a lot of the work going on in Milford, going on around the arts, clean-up along the Mispillion [River],” he said, also noting the revival of the Queen Theater in Wilmington and improvements in his hometown of Newark.

Outside of Delaware, Markell looked to examples in Petersburg, Va., and Philadelphia or Bethlehem, Pa.

DDD differs from but is complementary to the Main Street program, which also improves economic development but focuses on historical preservation and is usually volunteer-driven. Meanwhile, the DDD is competitive and offers a 20 percent rebate, Markell explained.

The governor’s Recommended Capital Budget for the 2015 fiscal year includes $7 million for Downtown Development District grants. The funding would be repeated in 2016 and 2017, according to the bill’s fiscal notes.

“We have the opportunity to generate a surge of cultural, real estate and business activity that could jumpstart underdeveloped areas of our cities,” Markell wrote. “These individuals just need a little help to make their visions for our downtowns a reality. And we know how states can provide effective assistance. It’s time to act.”

Questions are welcome, and the bill may change form while in the General Assembly. Introduced as Senate Bill 191 on April 3, so far it’s only been assigned to a committee.

“We are quite hopeful” that it will pass by the June 30 end of the current legislative session, Markell said.

The bill is being sponsored by state Sens. Margaret Rose Henry (D-Wilmington), Brian Bushweller (D-Dover) and Robert Marshall (D-Wilmington West), as well as state Reps. Stephanie Bolden (D-Wilmington), Helene Keeley (D-Wilmington South) and Darryl Scott (D-Dover). State Reps. Michael Ramone (R-21st) and Jeffrey Spiegelman (R-11th) are co-sponsors, making the bill a bipartisan one.