| Minutes: | 
Joint Sunset Committee
Tuesday, November 22, 2005
JFC Hearing Room, Legislative Hall, Dover
Public Hearing – Council on Development Finance ________________________________________________________________________
JSC and Staff: Sen. Marshall, Co-Chair; Rep. Oberle, Co-Chair; Sen. Bunting; Sen. Copeland; Sen. Sokola; Rep. Mulrooney; Rep. Valihura; Debbie Puzzo, JSC Analyst; Ted Segletes, Div. of Research; and Judi Abbott, JSC Staff Assistant.
Absent: Sen. Bonini, Rep. Hudson and Rep. Viola
Public in attendance: Judy McKinney-Cherry, Director, Delaware Economic Development Office; Andy Lubin, Chair, Council on Development Finance; Sen. Nancy Cook, member, Council on Development Finance; Rep. Roger Roy, member, Council on Development Finance; John S. McDaniel, Deputy Attorney General; Karley Barnes, Delaware Economic Development Office; Christine Serio, Delaware Economic Development Office; Lee Porter, Delaware Economic Development Office; Roland Longacre ATU Local 842; Armond Walden ATU Local 842; Gerry Fulcher; and John Flaherty, Common Cause Delaware.
________________________________________________________________________
Agenda:
I. Welcome
II. Minutes Approval –
Nov. 8, 2005 - Public Hearing/Council on Housing
Nov. 8, 2005 - Public Hearing/Council on Development Finance
April 29, 2005 - Public Hearing/Criminal Justice Council
April 29, 2005 - Public Hearing/DE Health Resources Board
April 29, 2005 - Public Hearing/Div. Child Support Enforcement
May 31, 2005 - Vote on 2005 Recommendations/Public Comment
June 16, 2005 - Discussion: Agency Reviews for 2006
III. Public Hearing – Council on Development Finance
a. Council on Development Finance presentation
b. Points of Consideration
c. Executive Session
d. Public Session
IV. Public Comment
V. Any Other Business
VI. Adjournment
I. Welcome
Sen. Marshall called the public hearing to order at 6:00 pm. The Senator provided an overview of the review process and referenced the agenda for the public hearing.
II. Minutes Approval
Sen. Marshall referenced following meeting minutes:
Nov. 8, 2005 - Public Hearing/Council on Housing
Nov. 8, 2005 - Public Hearing/Council on Development Finance
April 29, 2005 - Public Hearing/Criminal Justice Council
April 29, 2005 - Public Hearing/DE Health Resources Board
April 29, 2005 - Public Hearing/Div. Child Support Enforcement
May 31, 2005 - Vote on 2005 Recommendations/Public Comment DSWA
June 16, 2005 - Discussion: Agency Reviews for 2006
A motion was made and seconded to approve all referenced minutes. Vote – Yes: all. The minutes referenced were approved. Rep. Oberle mentioned that the minutes would be available on the JSC website.
III. Public Hearing – Council on Development Finance
a. Council on Development Finance presentation
Andrew Lubin stated that he was elected Chair of the Council on Development Finance (Council) at the Council’s November 21, 2005 meeting. Mr. Lubin stated that the Draft Report enumerated responsibilities and obligations of the Council as it relates to the Delaware Economic Development Office (DEDO). Mr. Lubin introduced Judy McKinney-Cherry, the Director of DEDO.
Director Cherry provided a Powerpoint presentation with regard to DEDO and the Council. The presentation is attached to the minutes.
Director Cherry stated that DEDO’s mission is “To be responsible for attracting new investors and businesses to the State, promoting the expansion of existing industry, assisting small and minority-owned businesses, promoting and developing tourism and creating new and improved employment opportunities for all citizens of the State.”
The Director added that “The Council on Development Finance is delegated the authority and responsibility for conducting a public hearing following reasonable public notice prior to the issuance by the Authority of any bond or the provision by the Authority of any other form of financing support. The Council on Development Finance shall adopt such rules and procedures as it determines to be necessary or desirable in fulfilling its responsibilities.”
Director Cherry provided some examples of what other states are doing with regard to economic development incentives.
The Director discussed Strategic Fund Awards. Director Cherry stated that SBIR grants are available to all Delaware businesses that meet the requirements – it is not about job creation.
Brownsfield grants have very specific requirements but the number of jobs is not the performance measurement.
The Director discussed the Personal Income Tax Calculator, the Finance Database and the Gross State Product using IMPLAN. She said that DEDO plans to implement the Gross Receipt Tax Calculator and the Corporate Income Tax Calculator.
There was discussion regarding incentives and using tax dollars collected from Delaware businesses as incentives to lure possible competitors. Rep. Oberle asked if DEDO takes other items into account, such as whether they pay medical benefits, when trying to attract an industry to Delaware. He is concerned about employers being attracted to Delaware that do not pay benefits to their employees. Director Cherry said “absolutely.”
Director Cherry stated that a sustainable wage supports a single parent. one toddler, and one school age child. This wage was established using a study out of Washington, D.C. The Wilmington Urban League uses this study. The sustainable wage is different for each county, for the City of Wilmington, and perhaps Newark. The sustainable wage for New Castle County is $37,000 – 38,000 a year. The Director offered to get a copy of the report for the Committee.
Discussion about retention activities with regard to job loss at MBNA. Discussion about Bank of America. Director Cherry stated that the Council approved a retention grant for Bank of America several years ago. This grant had to do with the expansion of Bank of America’s operation in Dover.Mr. Lubin stated that there is a specific task force charged with working with the Bank of America to 1) understand Bank of America’s plans and 2) retain employees at all levels.
Director Cherry stated that notice of each Council meeting is placed in the upstate and downstate newspapers. She commented that by law, they are only required to place the notice for the federal hearings in the newspaper.
Sen. Marshall asked about the public turnout at Council meetings. Mr. Lubin replied that historically the press occasionally attends, but primarily the meetings are attended by DEDO staff, Council members and the applicant(s). Sen. Marshall commented that there is a need to increase the Council’s visibility, and in doing so its accountability to the taxpayers.
Director Cherry said that as required by SB 131, notice of the Council meetings will be posted on DEDO’s website as of Jan 1, 2006.
The Director presented samples of DEDO’s marketing tools.
Sen. Bunting stated that Delaware has some of the finest financial institutions, particularly in the banking industry. He prefers that the Council act in a similar manner as a bank’s Board of Directors, rather than in its current advisory capacity.
Sen. Bunting asked why an industry would want to locate in Delaware. Director Cherry said that the main reasons businesses come to Delaware are airports; taxes; schools, and labor force availability. Mr. Lubin added the political strength and availability of government officials is also a selling point for Delaware.
Rep. Oberle agreed with Sen. Bunting that the process should be “flipped 180 degrees” with the Council making at least the first determination of what applications to accept rather than the Delaware Economic Development Authority (DEDA) or DEDO making that determination. He stated that the members of the Council possess a wealth of professional experience.
Mr. Lubin stated that while he appreciates the legislators’ perspective, he believes that “flipping the process” would not work. The concept has real value however, the DEDO staff really must work with the businesses, get the information together, negotiate the most effective deal they can to attract to retain an industry and then bring it to the Council. Mr. Lubin doesn’t believe it would work if it were “flipped.”
Rep. Oberle asked Mr. Lubin if he can see a model where the Council would be more actively engaged in the process. Mr. Lubin replied that he does, and to a limited degree it happens now. He pointed out that if there is a point in time where a company is considering – do I want to stay in Pennsylvania, do I want to go to New Jersey, or do I want to go to Delaware and those are really the three options they have narrowed it down to - at that point, the Council and other key executives in the State of Delaware, who help sell Delaware, should come together and meet with the decision makers of that company. This should happen prior to the approval process, and prior to defining terms, because if the chairman and the chairman's wife want to come here, then it is a matter of working out the terms to make it happen. That is where the expertise of the Council and other very credible professionals of the State are effective.
Mr. Lubin also stated he believes the State has to include the universities, because if we are selling education, and we are selling graduate students who may also become employees of these companies, we need to have the Dr. Roselle's or whomever they may be, sitting down at the table with this potential company and saying, “here is why we'd like you to be here.” That must occur before it ever gets to the Council. That is one very, very important aspect of the Council that is currently not aggressively being engaged.
Mr. Lubin stated that the Council needs to be more geographically balanced. He stated that the Council has recently learned that its long standing member from Sussex County (Donald Lynch) has resigned.
Sen. Marshall stated that Mr. Lubin brings a unique perspective to the Council and was initially appointed by Governor Castle. Sen. Marshall suggested that Mr. Lubin provide the JSC with recommendations for improving the Council with regard to its policies and practices.
Sen. Sokola cited studies that concluded that there is no statistical evidence that financial incentives are effective with regard to economic development. Sen. Sokola stated that he is troubled by the fact that much of the information contained in the applications is secret – so we are using public dollars to make decisions where, not only the public, but also the competitors, can’t see the basis for the decision.
Rep. Valihura commended Mr. Lubin for his length of service to Delaware stating that Mr. Lubin is one of only a handful of individuals that has stayed involved with a board/commission/council for this length of time and has done it through different administrations.
Rep. Valihura is somewhat in agreement with Sen. Bunting and Rep. Oberle in terms of reversing the process. He commented that one of the themes for this evening is independence so that we can look at these things and bring a different eye to the whole process. Where he differs from his colleagues is that he thinks the Council should have an opportunity to see what (in terms of applications) is or is not coming in the door. This would allow for a balance.
Rep. Valihura stated that the second theme is advocacy. Despite all that had been said in the meeting tonight, he has the distinct impression, that despite what is being said tonight, this is not well know in the business community and the view is that you've got to be invited to make an application. More has to be done to reach out to Sussex County to let them know that DEDO and the Council are there to help, want to help, and want them to apply.
Sen. Marshall stated that DEDO is highly visible and the Chambers of Commerce, towns, counties and businesses all know about DEDO. The Senator commented that if the Council is expanded into a more full time statutory role, it would need staff. He doubts that members could remain volunteers as the Council would move to the level of the Industrial Accident Board or the Public Service Commission regarding the review and evaluation of applications. He commented that this is one of the policy issues that the JSC will discuss when the fact finding is complete.
Sen. Copeland expressed his concern with taking large sums of money and negotiating against ourselves when the State doesn’t even know if it needs to spend the money at all.
Mr. Lubin replied that there may be some truth to that, however, you never know when you need to take the shot, you never know when you are going to land it and that is a very important issue. For Delaware, the crumbs of other states are significant in terms of economic dollars.
Rep. Oberle stated that the decisions seem to be very PIT weighted in terms of either retaining or attracting business. Rep. Oberle asked Director Cherry to provide the JSC with more information regarding the matrix, in terms of looking at items beyond the PIT and wages, such as medical benefits.
Rep. Oberle said through the years it seems that it has become a numbers game. He stated it is more than just a numbers game, and he wants to make sure that all the factors in the equation are considered when making the decision
Rep. Oberle expressed the view, that he also has expressed during bond bill hearings - that there is a lack of clinical training for nurses, a lack of facilities and a lack of personnel to provide the clinical training. He said that beyond just retaining jobs, using the Strategic Fund to bolster the state’s teaching facilities, particularly for the clinical aspects of teaching for the nursing community, would be an appropriate use of this Fund. Rep. Oberle stated that the State will be 400 nurses short when the Veterans’ Hospital opens in 2006.
Sen. Marshall pointed out for the record that in Delaware there are more licensed registered nurses and licensed practical nurses to meet the state’s nursing shortage. One of the major issues facing nursing professionals is the issue of being overworked and underpaid for the vital health care services they provide.
Rep. Oberle stated the appropriate use for Strategic Fund dollars would be to assist in the training of nurses, because they are living wage jobs. This is different then attracting an entity - you've already got the entity in place that is just crying for the workers. Delaware needs to get a process in place that helps produce the workers where the jobs are already available.
Mr. Lubin stated that the Council has not discussed using strategic funds for an educational, or a focused educational perspective. He is not sure if the Strategic Fund is the right vehicle or not
Director Cherry questioned how the State would measure the return on its investment if the Strategic Fund was used for educational purposes. She stated that there could be a provision to require that if a nurse was trained under this program they would be required to work in Delaware.
III. Public Hearing – Council on Development Finance
b. Points for Consideration
The Points for Consideration are listed below in bold type, the Council’s comments are indicated in italic type and comments made during the Nov. 22 meeting are indicated in normal type.
· The enabling statute references past dates and a previous defunct Council.
The provision referred to is 29 Del. C. §5007(h). This is a typical “savings” provision to ensure continuity of function when a governmental unit is reorganized. This provision could be eliminated from the statute. The change should be effective upon enactment so that the prior provision stayed in force until the amendment.
· The Council has indicated that it is not clear how the expansion of the total Council membership from 7 to 9 members is to be harmonized with the balance provision, which seems to assume a membership of no more than 7. (Background)
The new language of 29 Del. C. § 5007(c) states that “The Council on Development Finance
shall be composed of 9 members, 7 of which shall be appointed by the Governor and serve for a
term of 3 years; 1 member appointed by the President Pro Tempore of the ‘Senate; and 1
member appointed by the Speaker of the House.
The language of 29 Del.C. § 5007(d) still states that “. . . at least 3, but no more than 4, members
of the Council shall be affiliated with 1 of the major political parties and at least 2, but no more than 3, of the members shall be affiliated with the other major political party; provided, however, that there shall be not more than bare majority representation of 1 major political party over the other major political party . . .” This language implicitly assumes that the entire Council consists of only 7 members, as it did prior to the amendment of subsection (c) to expand the total membership to 9 members.
If it is the intent of the legislature that the Council is one body, including the two additional members, and that political balance should exist, counting the members appointed by the President Pro Tempore of the Senate and the Speaker of the House, perhaps this language should be amended to reflect a new balance number. Alternatively, if the legislature intends that the members appointed by the President Pro Tempore of the Senate and the Speaker of the House not be subject to a political balance provision, the existing language of subsection (d) could be amended so that it applied only to those members of the Council whom the Governor appoints. If the latter choice were made, the existing numerical requirements in subsection (d) would not need to be changed.
· “[t]he Council has been instrumental in recommending approval/disapproval of all of the financial assistance projects of DEDO such as Astra Zeneca, AIG, and other noteworthy transactions.” Information submitted does not indicate the Council disapproved any project. (Accomplishments)
Since the report provided to the JSC indicates only those projects that have been approved by the Council it implies no disapprovals have occurred. The DEDO staff screens projects using the criteria provided in 29 Del. C. §5029. Therefore ample due diligence is made before projects are brought before the Council for consideration. However, since its inception, the Council has disapproved projects. The most recent one was Creedon Controls (which was in FY 06). This action of the Council is reflected in the July 25, 2005 minutes, a copy of which was emailed to Ms. Puzzo. The Council has also deferred action on projects until additional information could be obtained and reviewed. An example of such deferral was the Invista retention project.
There was discussion regarding Creedon Controls.
Rep. Valihura stated that after a review of the Council’s minutes, he did not see any reference to any follow up, even though the Council sometimes required certain things for approval. Mr. Lubin stated that some individuals do provide some follow-up. Rep. Valihura commented that there needs to be better follow-up by the Council.
· The composition of the Board is weighted heavily with members from New Castle County. (Membership)
The Council has very limited influence on the appointment of Council members. Two members are appointed by the President Pro Tempore of the Senate (one) and the Speaker of the House (one). The remainder of the Council membership are appointed by the Governor. The legislature could amend §5007(d) to require a specific geographic distribution of members.
The Council recently learned that its long standing member from Sussex County (Donald Lynch) has resigned.
· The statute does not specifically designate the term of office for the members appointed the President Pro Tempore of the Senate and the Speaker of the House. (Membership)
This language should be amended to reflect that all members serve for a three year term.
· Currently, the Council chooses a Chairperson at each meeting. This practice is contrary to what is prescribed by statute. Statute requires that the members of the Council chose a Chairperson from among its membership. It also requires that the Chairperson serve in that capacity for a 1 year term. (Council Membership)
This will be brought to the attention of the Council members at the next Council meeting and it will be suggested that a Chairman be elected by the members for a one year term.
Mr. Lubin was elected Chair of the Council at the November 21, 2005 Council meeting.
· The statute is silent as to whether members are eligible for reappointment. (Council Membership)
We believe that this should be left to the discretion of the Governor.
· The statute is silent as to whether members that are appointed to serve out the term of a vacant position are eligible for reappointment. (Council Membership)
We believe that this should be left to the discretion of the Governor.
· The Council stated that the biggest challenge it faces is a vacancy(ies) on the Council. (Council Membership) Perhaps the statute can be amended to include a provision such as “serves at the pleasure of the Governor” or “upon request from the Board, the Governor may declare a vacancy for any member who is absent from four consecutive meetings.”
Ensuring a quorum is of greatest importance. After the expansion of the Council’s membership, a quorum consists of five of the nine members, and these five members must be physically present at a meeting in order to count toward a quorum. All members serve without compensation and have busy careers; thus, not all members are able to attend every meeting. Therefore, it is very important that Council members attend the meetings and there be no vacancies to maximize the probability of obtaining a quorum. The statute could be amended to include such a provision as ‘serves at the pleasure of the Governor’ or “upon request from the Board, the Governor may declare a vacancy for any member who is absent from four consecutive meetings”.
· The performance measures submitted do not appear to indicate how well or if the Council is achieving its goals and objectives. (Performance Measures)
As evidenced by the minutes, it is clear that the Council is meeting the responsibilities outlined in statute. The Council is holding public hearings, reviewing projects, ascertaining the merits of the projects by providing advice, and making recommendations, as required by 29 Del. C. §§5007, 5028, 5029, 5037 and 5055. Specifically, the Council must weigh the following when considering a project to be funded using Strategic Funds: monies appropriated may be loaned, granted or used in other financing mechanisms …for the following purposes:
1. Retention and Expansion of existing firms
2. Recruitment of new firms
3. Formation of new businesses
4.Environmental assessment and remediation of certified brownfields;
For purposes other than stated above, the Co-Chairs of the Joint Legislative Committee-Capital Improvement Program, Budget Director and Controller General must be informed prior to any action by the DEDO.
§5028 Strategic Fund Monies may be used for the following activities:
1. Working Capital
2. Renovation, construction or any type of improvements to roads, utilities and related infrastructure and public facilities
3. Assistance for equipment, machinery, land and building acquisition and development
4. Assistance with relocation expenses
5. Loans or Loan guarantees
6. Assistance for the development of start-up strategies such as seed capital and incubator programs
7. Assistance for the development of re-use strategies and implementation plans for sites located in the State and targeted for development by the office
8. Assistance for the development and implementation of modernization strategies for existing manufacturing firms to strengthen their competitive position in regional, national and international markets; and
9. To develop and implement strategies to maintain or enhance important economic sectors in the State.
Rep. Oberle asked if there was a summary report gauging the Council’s performance in terms of its recommendation. Mr. Lubin replied that there is not. He stated there is some real value to that.
Sen. Marshall asked whether there should be a penalty or a repayment of part of the grant if a company fails to perform as agreed upon. Mr. Lubin agreed that if a company failed to meet agreed upon terms then there should be a penalty with regard to certain aspects of the agreement. Mr. Lubin stated this should apply only to future agreements. The agreements should contain language referencing a penalty associated with reporting.
Director Cherry stated that generally speaking most of the negotiations happen after the approval has been done and this is where most of the time is spent. With regard to recapture provisions, the Director said there have been instances in her tenure where companies were not performing. She stated that DEDO is not a bank and is not about getting the money back directly – DEDO’s job is to keep these companies healthy and get them growing. From a confidence level it is very important that there are recapture provisions when it can be done, and when a company will agree to them. Historically DEDO has relied on self reporting of companies to report whether they have met their obligation. The Director said she would welcome the opportunity to have a more robust review of performance.
Rep. Oberle asked Director Cherry to provide the JSC staff with recommendations or comments with regard to reporting.
· Meeting locations should be centrally located or geographically balanced in number. (Meetings and Minutes)
The Council now holds every fourth meeting in Dover. The remainder of the meetings at Buena Vista near Wilmington.
· From the information provided, it was not possible to determine what methods of marketing, advertising or notification were used by DEDO to inform the public or the business community about the various sources of funding available and as such identify prospective companies. More specifically, it was not possible to determine whether the methods employed by DEDO were expended in a limited or broad based nature, done on a continual and consistent basis, competitive, statewide or effective. (Business Community and Public Notification of Programs and Funding)
In announcing new funding programs, DEDO has sent out press releases and has held public meetings to introduce the programs. DEDO has also utilized other business support organizations to promote the funding programs. Some of these programs include DEMEP, SBDC, Delaware State Chamber of Commerce, BIO events, Bio-Life Tech event, Early Stage East venture fund event, and regional economic development conferences. Presentations have also been made regularly at various locations throughout the State and have included Chambers of Commerce, banks, other businesses, etc. Often when companies receive financial assistance, there is a press event announcement and then a follow-up groundbreaking ceremony where the financial assistance is also described. E-mails of financial assistance provided are also sent to legislators so that they are aware of available programs.
Rep. Oberle asked if the marketing is as aggressive as it could be. Mr. Lubin responded that presentations are constantly being made. He also indicated that the programs receive a substantial word of mouth.
Sen. Bunting inquired about more activity in Sussex County. Mr. Lubin stated that DEDO can provide a report by County.
· The only brochure submitted by Council appeared to be a Citizens Bank marketing brochure. (Business Community and Public Notification of Programs and Funding)
Please see attached copies of press releases, announcements, public notification of meetings, and other brochures, etc. They demonstrate that the entire State is targeted and great effort is put into getting the word out about all funding sources.
· In the application process outlined by the Council, the cornerstone of the application process, as well as the success of the funding programs to the economic development of the State, is identifying the companies that become “candidate companies.” As previously noted, it was not possible to determine how DEDO notified the business community and the general public about the availability and existence of funding sources. (Application Review Process)
Through press releases, DEDO’s website, arranged publicity events, state and national publications and also through the office’s networking efforts, the business community and the general public are made aware of DEDO’s financial assistance programs. The Office staff will meet with companies, assess the situation, the value to the local economy, the state economy, the strategic importance of the company to Delaware’s overall business climate, and identify if there is a need to provide assistance. The staff works in a conservative manner in recommending funding for projects to ensure there is a demonstrable value to the State of Delaware.
Rep. Oberle asked what the procedure was if a Council member had an interest in a loan/grant. Mr. Lubin stated that in the past, on the rare occasion that this situation occurred, the member recused himself from the discussion and did not participate in the vote.
· Statute provides that the Council shall serve in an advisory capacity to the Director. This capacity may appear to be somewhat compromised by the degree of involvement by DEDO staff in the application process. This may be supported by the fact that of the 63 applications submitted, 63 were recommended for approval. (Application Review Process)
§5055 of Title 29 requires that the application be made to DEDA and an advisory hearing held by the Council. Thus, the Council is not the entity making the assistance grant, loan or bond issuance. Because DEDO staff serves as the DEDA staff, and because the Council has no staff of its own, DEDO staff are necessarily involved in the application process. The Council does recommend against projects occasionally. It also at times, recommends alternative terms for the assistance and it sometimes requires additional information. DEDO staff, on behalf of DEDA, have a due diligence process to select only the most worthy projects; thus, it is rare that the Council recommends against a project. Additionally, certain financing programs are grant programs for which all Delaware firms have equal access to - provided they meet the requirements outlined in statute. These include the Brownfield Assistance, Small Business Innnovation Research and Technology Transfer Grants. Staff involvement is necessary even though there is minor due diligence needed.
Sen. Marshall asked whether it would be beneficial to the Council if there was specific staff assigned to the Council for gathering applications for funding and conducting performance audits based on the conditions of the grant/loan. Mr. Lubin commented that there is value to feedback. Quarterly reporting may be too quick but semi annual or annual reporting could be required of the applicant.
There was discussion about the approximately 32 Technology Seed Fund applicants. Mr. Lubin stated that there is an advisory committee of 11 members who reviewed all 32 and went through a very careful analysis. This advisory committee recommended that 11 applicants met the criteria. The applicants were then submitted to the Council as a courtesy as it is not a requirement for the Council to review them.
Rep. Valihura asked if there was a reason the Director took these applications to the Council.
Karley Barnes from DEDO responded that the Technology Seed Fund was developed by DEDO’s former Director for Capital Resources. Ms. Barnes stated the intent was to bring together individuals with industry-specific knowledge and expertise to create and advisory board. This advisory board was established and attended a meeting at Buena Vista on September 12th. Each applicant went through a presentation, and a Q&A session with the advisory board. Ms. Barnes stated that she can provide the names of the members of the advisory board. Ms. Barnes said that the Technology Seed Fund Advisory Board then made recommendations on each of the applications.
Rep. Oberle asked about the language in the 2005 Bond Bill that directed DEDO to establish guidelines.
Mr. McDaniel responded that there is a requirement, notwithstanding 29 Del. Code, Chapter 101, which deals with the promulgation of regulations. Mr. McDaniel read from the Code. He stated that although the language of the Code is a little awkward, the Council is intended in some manner to be involved after this advisory board reviewed the applications, so there was almost a double level of review of these projects. Mr. McDaniel stated that John Dascher, the former Director of Capital Resources thought the best way to present these applicants to the Council was to narrow down the number and ultimately present them as a group to the Council.
Rep. Oberle referred to a DEDO Memo provided to staff. Ms. Puzzo stated that she received a copy of a Memo from Director Cherry, dated March 1, 2005. (Appendix Exhibit G) The Memo explains how DEDO will execute and manage the $1.5 million DE Technology Seed Fund. When Ms. Puzzo received the copy of the Memo there was a notation that the then current Director of Capital Resources, John Dascher, said these guidelines were not current.
Mr. McDaniel stated that he saw that Memo for the first time at a Council meeting. He was not involved in the preparation of it and therefore does not know in what respect it might not be current.
Sen. Marshall asked if the guidelines are not current, was DEDO willing to update them. Director Cherry replied she was.
Rep. Oberle asked Mr. McDaniel to submit specific language with regard to the statute and with regard to the status of the guidelines listed in the March 1, 2005 Memo.
Rep. Valihura stated that it comes down to what level of review the Committee wants the Council to have with regard to the Technology Seed Fund. Mr. McDaniel stated that from what he was told, there is an advisory group consisting of a number of individuals that then divide into even smaller groups that focus on specific industries.
Rep. Valihura referred to the statutory language. He would like to give DEDO some direction so they can have a clear policy.
Rep. Oberle said that much of this policy was put together in the 11th hour in epilogue language in the Bond Bill. He stated that DEDO knew what the intent behind the language was. Mr. McDaniel stated that he can put the language together. Rep. Oberle stated that historically this type of language is usually crafted by the Controller General’s staff.
· Of the 63 applications recommended for approval, six businesses were located in Kent County, ten were located in Sussex County, and the remainder were located in New Castle County, with 27 of the businesses located in Newark. (Application Review Process)
Of the 63 projects identified on the spreadsheet forwarded to the JSC, 9 projects were not reviewed by the Council since they are appropriated through the Operating and Bond Bill such as the Taiwan Office and the SBDC. An additional 5 projects were for Brownfield remediation reimbursement and 11 were for SBIR (Small Business Innovation Research) program projects which the DEDA provides matching funds per 29 Del. C. §5037. New Castle County business projects accounted for 23 of the projects with Sussex and Kent County accounting for 4 apiece. Moreover, the DEDO does not solicit business for one county over another. It is the demands of the client that drives this decision. The client’s demands are such as needing to be close to a major airport, rail access, business park atmosphere and various other factors. DEDO has worked with the institutions of higher education, business parks, local governments and other entities in an effort to have the resources needed provided for all counties and the City of Wilmington.
· SB 131 (signed into law on July 12, 2005) requires that all meeting notices, agendas, and minutes be posted on a designated State of Delaware website approved by the Secretary of State. The Act applies to agencies within the Executive Branch of state government that are subject to FOIA’s open meeting requirements.
Currently, all meeting notices are published in the Delaware State News and the News Journal, they are posted at DEDO’s Dover location and at the meeting site. All legislators are notified of every meeting. The DEDO will be posting the meeting notices, agendas and minutes before the end of this calendar year. Therefore, SB 131 will be complied with at that time.
III. Public Hearing – Council on Development Finance
c. Executive Session
Rep. Oberle stated that during the Executive Session, the JSC would review unredacted copies of the 4 requested applications. He said he would like an open and honest discussion with regard to quantifying what needs to be redacted and what does not. Rep. Oberle made reference to the framework set out in the state solicitor’s opinion (Michael Rich). A copy of the opinion was provided to Mr. McDaniel.
Rep. Valihura stated that he will reserve his questions relating to the Council’s meeting minutes and the 4 applications until after the Executive Session.
Rep. Oberle expressed his displeasure at only being able to review the unredacted applications during the Executive Session. Rep. Oberle stated he wants to try to establish some framework to further quantify what really has to be redacted, and what does not have to be redacted.
Due to the late hour, the public comment portion of the meeting was held prior to the executive session. Additionally, the JSC will not return to public session after the executive session as indicated on the Agenda.
IV. Public Comment
Gerry Fulcher
Mr. Fulcher attended 4 Council meetings. He stated that the reason the public does not attend is that there is a public perception that it is a “done deal” - don’t bother, and as such, the Council has very little credibility with the public.
He stated that at one of the meetings he attended, he was asked by Fred Searls, the acting Chair, why he was attending the meeting.
He commented that while at the meetings, he saw nothing of the process that Mr. Lubin and Director Cherry just explained.
He stated that after one of the meetings held in the Wilmington DEDO office, he attempted to find out how to apply for a loan/grant. He said he was told by a male DEDO employee, “you don’t apply – you need to know a Council member and have him sponsor you.”
He expressed he was surprised that there was no “call for applications.” Mr. Fulcher stated that the Council should be listed in the Guinnes Book of World Records for the most money given away in the shortest period of time.
Rep. Valihura asked Mr. Fulcher to describe the man he mentioned with regard to getting an application.
Mr. Fulcher said the individual was in his mid 30’s, had dark hair and was the individual that presided over the Council meeting.
Sen. Marshall stated that Mr. Fulcher provided valuable information. He commented that the Council has 25 years of policy and practices in need of review and possible change.
John Flaherty, lobbyist, Common Cause
Mr. Flaherty asked for a copy of the rules and procedures for the Council, as well as blank copies of the applications.
Discussion regarding the Council’s rules and procedures. The Council has not adopted any by-laws or rules/regulation with regard to procedure. The Council did adopt one rule/regulation that addressed public participation at meetings.
Rep. Oberle stated that the Council needs to adopt rules and regulations.
Sen. Marshall stated that the record will be left open and the public is welcome to submit additional comments.
VI. Adjournment
The public portion of the hearing of the Council on Development Finance adjourned at 8:40 p.m. The JSC members and staff, Director Cherry, DEDO staff, Mr. McDaniel and Mr. Lubin entered Executive Session.
Debbie Puzzo/ Dec. 1, 2005 |