Why Should Delaware Care?
Each gubernatorial administration chooses a particular focus when it comes to economic development, and that focus will ultimately inform how public funds are invested and what for-profit businesses receive them.
More than a thousand business leaders listened closely last week as Gov. Matt Meyer refined his economic development ideology, signaling that his administration will focus on permitting reform and the growth of an “innovation economy.”
A sitting governor has long addressed the state’s business leaders at the Delaware State Chamber of Commerce’s annual dinner in early January, and typically with little fanfare, but Meyer’s first speech last year caused some waves among business executives.
He warned that Delaware would not focus on chasing major projects under his watch as had been the norm under his predecessor, Gov. John Carney, but would instead focus on raising the quality of life in the state and growing small businesses as job creators.
“For years, Delaware, the majority of states, have conducted economic development through the use of taxpayer funds to entice companies to set up shop here. This is a myopic view,” he said last year.
But in this year’s address, Meyer tempered that stance. That notably comes after a year that saw his administration sign off on one of the largest taxpayer-backed incentives in state history: a $30 million grant to biopharmaceutical giant Merck to build a $1 billion campus near Wilmington.
“We’re sharpening the focus of the Delaware Prosperity Partnership to do more than recruit and retain big business. Recruiting and retaining big businesses are still important, but to help promising startups become truly investment-ready, we want good ideas to create jobs and to scale faster than anywhere else in the country,” Meyer said on Jan. 12 of the state’s public-private economic development organization.
The governor also announced that this year his administration would unveil a new focus on deregulation, including reducing the amount of paperwork needed to build projects in Delaware and launching a digital interface to make permitting simpler across multiple agencies – goals long sought by business leaders.
“If a permit takes too long, we should know exactly why, and the state government should own fixing it,” Meyer said. “And if you’re using a pen to fill out a form and then faxing it somewhere, you’re going to have a governor who’s asking, ‘Where’s the app for that?’”
Those comments were met with applause from the crowd, and support from business leaders in the days after his speech.
DPP changes under Meyer
Fresh off of several bungled job creation prospects in the early 2010s, one of the first major acts of Meyer’s predecessor Carney was to dissolve the state’s Economic Development Office and replace it with the Delaware Prosperity Partnership.
The DPP was the brainchild of the Delaware Business Roundtable, a consortium of some of the state’s top CEOs and executives, who argued that by making private industry an equal partner in the state’s economic development work, they could make a more persuasive argument to new business targets.
It hired Kurt Foreman, a leader in a similar organization in Oklahoma City, to oversee the state’s plans in attracting and growing employers.
In the more than seven years that the DPP has been active, it has largely been successful in its efforts, landing more than $2 billion in investment from 75 projects that have added or retained about 10,000 jobs in Delaware.
Its work wasn’t free from criticism though, as progressives decried its role in helping mega corporations like Amazon secure millions of dollars in taxpayer-funded grants to build projects here. Because it is a nonprofit organization and not a state agency, the DPP is also not subject to Delaware’s Freedom of Information Act, cloaking much of its work in secrecy until grant proposals are nearly at the finish line.
On the campaign trail, Meyer also criticized economic development strategies that focused on landing external projects rather than fostering an ecosystem that would grow them here.
After winning the governorship, he moved to implement that vision for the DPP.
In August, Meyer appointed Rob Herrera, the serial entrepreneur who founded The Mill, the state’s first successful co-work space, as his designee as a co-chair of the DPP. Previously, Gov. Carney had served himself as a co-chair.
Meyer also moved to add 13 seats to the board of directors, with more than half of them going directly to entrepreneurs and small business owners.
“Delaware’s economy is strongest when we turn new ideas into successful businesses that create jobs and opportunities right here at home,” the governor said in a statement after the moves. “By making innovation and entrepreneurship a core part of DPP’s mission, we are positioning Delaware to compete nationally as a hub for startups and cutting-edge industries.”
Those changes ultimately culminated in Foreman choosing to leave DPP in November to take a job as president of Ithaca (N.Y.) Area Economic Development. A national search is underway to find his replacement – and he or she will be responsible for executing the new vision.
Business leaders like what they hear
“I think that it was reassuring for the business community to hear the depth and breadth of [the governor’s] thoughtfulness [on economic development strategy],” Brian DiSabatino, CEO of Wilmington construction firm EDiS Company and the chair of the Delaware Business Roundtable, told Spotlight Delaware. “I think my view reflects many others where we look forward to seeing that in action.”
In particular, DiSabatino has been thankful that the Meyer administration has been receptive to the Roundtable’s “Ready in Six” initiative, which looks to deregulate toward a goal of making a selected site available for building in Delaware within six months. Currently, zoning and permitting can routinely take a year or more, which can put Delaware at a disadvantage to other states.
A focus on cutting red tape and pushing more of the state government’s bureaucracy to digital portals can help businesses move faster, he added.
“I think I’m very optimistic of where we’re going to be in the next 18 to 24 months on that topic,” DiSabatino said.
For Michael Fleming, the president of the Delaware BioScience Association, which represents the interests of biotech and pharmaceutical companies, the governor’s focus on an “innovation economy” was particularly well-received. The majority of the association’s members are small biotech companies with five or fewer employees, and many would like to grow in Delaware.
“Our membership is very supportive of the efforts by the governor and his administration and DPP to strengthen capabilities around the early-stage science and technology ecosystem,” he said.
Fleming noted that the governor’s commitment to cutting red tape for existing businesses and investing in their expansions was welcome news. The renewed commitment to incubating startups of the future in Delaware could also mean big things for the state’s growing biotech industry.
One of the biggest challenges facing start-ups today, however, is early-stage investment, especially as the stock market has softened on pre-revenue biotech firms.
To that end, the DPP has reportedly been exploring a program similar to the Ben Franklin Technology Partners, a Pennsylvania program that invests early-stage venture capital funding into promising start-up companies.
The program is funded through annual appropriations by the state government, but funding is also recycled as recipients repay loans or equity is returned after sales. Since its founding more than 40 years ago, it’s generated more than $30 billion in economic output and created more than 150,000 direct or indirect jobs.
No decision had been made as to whether Delaware would create such a program, which would come with new risks and longer timelines to returns, but could also kickstart outside investment in high-paying jobs.
For now, Meyer said his administration’s focus would be simple.
“Make Delaware state government faster, clearer and more accountable. That means we don’t just celebrate that Delaware is a great place to incorporate a business. It means Delaware is a great place to do business,” he told the chamber members.
