Carney proposes to ‘reform’ economic development office

John Carney

DOVER — Gov. John Carney on Wednesday announced his intentions to reform the Delaware Economic Development Office into a public-private partnership, the culmination of a monthslong review of the agency.

DEDO will be replaced with the Delaware Prosperity Partnership, a support organization overseen by executives from the private sector.

The Strategic Fund, the source of money given as incentives to companies to settle in Delaware, will continue to exist but will be moved to the Department of State.

The new partnership, which will not be a cabinet agency, will offer support to startups and entrepreneurs and help develop the state’s workforce.
It will be “aggressive” in recruiting businesses to the state, Gov. Carney said.

The group will make recommendations as to what companies should receive monetary incentives but will not award the grants.

“First and foremost, this is about the fact we have a way different economy in Delaware than we’ve had historically,” Gov. Carney said.

With major employers like DuPont and Chrysler either no longer in the state or operating at a reduced level compared to 30 years ago, Gov. Carney has advocated reforming the economic development model, placing greater emphasis on startups.

The Delaware Prosperity Partnership will receive $2 million annually from the state and $1 million from businesses to cover administrative costs.

A 15-member board and a full-time CEO will run the partnership. How they will be selected has not yet been determined, but Gov. Carney said he believes the membership should consist of individuals from different sectors.

He did admit concern about potential conflicts of interest with large corporations essentially helping decide how taxpayer dollars will be doled out but said such worries can be alleviated with strong bylaws.

Fourteen individuals with DEDO will lose their jobs as a result of the process, although they can apply to work at the new partnership or receive assistance from the Office of Management and Budget in finding employment with the state or in the private sector.

The Delaware Tourism Office and the small-business development unit will move to the Department of State.

A working group studying reforming DEDO recommended last month instituting a public-private partnership but keeping the Strategic Fund and other responsibilities under the agency.

The reorganization stems from Executive Order 1, a measure to study revamping DEDO that was signed by the governor in January on his first day in office.

The Delaware Business Roundtable in July recommended the state adopt “a new approach to economic development” based on a public-private partnership. According to the group, Florida, Arizona and North Carolina are among the states that have found success by working with businesses.

“We think the benefit here is that you have both the public and private sectors working together puling on the oars in the same direction,” Bob Perkins, executive director of the Delaware Business Roundtable, said.

The change will likely take place through epilogue language in the budget bill, according to the governor’s office, and Gov. Carney hopes to have the new partnership in place by the beginning of 2018.

DEDO has been criticized at times for handing out money to corporations when the expected jobs did not manifest.

As of Aug. 31, there were 109 active grants from the office’s Strategic Fund, totaling nearly $147 million. Those grants created 32,819 full-time jobs, more than anticipated, according to officials.

However, efforts to attract Fisker and Bloom Energy cost taxpayers millions and failed to deliver the sought-after number of jobs.

Rep. John Kowalko, D-Newark, has been one of the harshest critics of the agency, and he does not support the public-private partnership idea.

“I sort of feel this way, and whether it’s justified or not, that it’s sort of like letting the fox into the hen house,” he said.

Despite his worries, the venture has bipartisan support.

“There were two specific things I was looking for in considering this public-private partnership: One was there be a high level of transparency with the intermingling of public and private funds,” said Sen. Brian Pettyjohn, R-Georgetown, a member of the Economic Development Working Group.

““I was concerned that it be as transparent as possible so the public would have every confidence that things were being done above board.

“The second was to be sure this was not a New Castle County only solution for business development and that both Kent and Sussex Counties also had opportunities to reap the benefits of this new structure, proven to work very well in other states. I am satisfied both those conditions will be met.”

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