Dot Foods approved for $150K NCC tax break

BEAR – The New Castle County Council approved a five-year tax incentive deal worth up to $150,000 for Dot Foods, which is building a $36 million distribution center in Bear that is set to open early next year.

Ordinance 19-115, sponsored by councilmen Bill Bell and George Smiley, provides a property tax exemption for a period of five years or a maximum benefit of $150,000, whichever occurs first, if Dot Foods, the largest food industry redistributor in North America, creates 201 new full-time positions at the facility.

Dot Foods is set to receive more than $1 million in state grants and possibly $150,000 more in county tax exemptions. PHOTO COURTESY OF DOT FOODS

As a redistributor, Dot Foods buys full truckloads from more than 900 manufacturers nationwide and consolidates their products in distribution centers across the United States. It then resells these products in more manageable quantities to distributors.

The council unanimously voted Tuesday, Dec. 10, to approve the incentive, with Councilwoman Dee Durham abstaining.

Smiley emphasized that the tax break applied only to Dot Foods and was not transferable to any other unaffiliated entity.

“Years ago, this council enacted a process by which we require that any tax relief goes to the company, not the property,” he said. “By virtue of this, it avoids the shell games of companies coming in, purchasing property, making promises, getting tax incentives for the property and then putting it on the market using that tax break to sell it.”

“If they go to 2025 and they haven’t (hit their hiring goals), then retroactively the county recoups its money, just as we did with the GM site,” Smiley added.

The 13-member council had previously signaled its support of the deal by approving an ordinance in September 2018 publicly stating that it would consider such an offer. That ordinance came shortly after Dot Foods acquired the roughly 36-acre site off Wrangle Hill Road from D M Peoples Investment Corp., operated by Dorothy Peoples, for a nominal $10 fee, according to state records. A few weeks after the 2018 ordinance passed, Dot Foods broke ground of the 188,000-square-foot facility located near the interchange of Del. 1 and Del. 72.

Under the county plan, Dot Foods is exempt from any increase in assessed property valuation following the construction of its facility. That exemption would start July 1, 2020, and run five years, or until a total $150,000 was exempted. In order to be eligible for the tax break, however, Dot Foods must create 201 new jobs at the facility by May 30, 2025 – or else it would be required to repay the exempted funds.

After fulfilling the terms of the exemption, Dot Foods would be taxed at its higher valuation. Dot Foods also must pay normal sewer service charges, ditch taxes, and school district taxes

The county’s tax break is coupled with a Delaware Economic Development Authority grant agreement signed in January, providing the company with more than $1.1 million in funds tied to the project and projected employment. Specifically, Dot Foods is set to receive up to $352,000 for grant funds tied to job growth at the distribution center, as well as up to $750,000 for capital expenditure in constructing and equipping the facility.

The Bear facility will include offices; dry, refrigerated and frozen warehouse space; and a truck yard and garage to service Dot’s fleet. The Illinois-based company already has a temporary transportation operations terminal in New Castle that serves a fleet of about 25 drivers.

In August, Dot Foods began hiring more than 100 people in 30 roles. Dot Foods Delaware General Manager Joe Little told the Delaware Business Times at that time that the company expected to open in 2020 with about 45 trucks, increasing to 75 by the end of the year.

By Jacob Owens

[email protected]sinesstimes.com

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