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Delaware enacts Downtown Development Districts Act to aid redevelopment

Previewed in the Governor’s State of the State speech and proposed on April 2, 2014, the Delaware Legislature enacted the Downtown Development Districts Act of 2014 in June 2014, modeled in part upon Virginia legislation.

Purposes of the Act

Noting that vibrant and healthy downtowns as critical to the state’s quality of life and economic wellbeing, the Legislature listed four purposes of the Act:

  • To stimulate private investment in central business districts and the surrounding neighborhoods.
  • To encourage job growth and economic strength of CBDs and the surrounding neighborhoods.
  • To encourage the growth of a long-term, diverse residential community in the CBD, representative of all backgrounds and incomes; to increase rates of home ownerships; to build a diverse group of successful businesses; and to reduce vacant housing.
  • To strengthen neighborhoods and create healthy CBDs that attract young talent, small innovative business, and residents from all life’s stages.

Highlights of the Act

To accomplish these goals, applications are submitted to the Office of State Planning Coordination. The applications are evaluated by the Governor’s office, with an eye toward which has the greatest potential of achieving the goals of the Act.

A maximum of 15 districts is authorized at any one time, with only one district per county for the first three districts.

Districts are authorized for an initial 10 years, with a possible of two five-year renewal periods.

Local incentives, such as reductions in taxes or fees, or regulatory flexibility-including zoning incentives-are to be submitted along with the application. Such incentives are binding upon the locality to the extent consistent with the Delaware and United States Constitution.

Subject to limitations, an investor is entitled up to a 20 percent grant in excess of a “minimum qualified investment threshold,” defined initially as $25,000 regarding a single residential or mixed-use building or a facility. This figure may be amended no more than once a year.

Grant funds are administered by the Delaware State Housing Authority.

Hopes for the Act

Senator Henry, the Act’s lead sponsor, noted that recent successes in Wilmington’s development had been spotty. The Riverfront and Queen’s Theater had been very successful, however, a few blocks away there was been a noticeable drop off of development, and his hope was that the Act would serve to redress that imbalance. In Dover, Senator Bushweller stated that private development had served to re-energize the downtown but had apparently reached a limit; his wish is that the Act would bring both public and private moneys together to develop a new approach for downtown development.

If you as a commercial or residential real estate developer wish to participate in this public/private cooperative venture to revitalize central business districts, it would be beneficial to contact an attorney who specializes in real estate to discuss the new Downtown Development Districts Act and how you may be involved in this new undertaking between the state and private enterprise.