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UD and DOJ present budget requests in unusual year

From Delaware State News

DOVER — While most of the country is caught up in the outcome of the presidential election, state government continues to function.
The Office of Management and Budget has begun its preliminary budget hearings for various state agencies and related entities, part of the annual process of crafting a budget proposal.
Working with his financial team, Gov. John Carney will unveil recommendations for a spending plan in January. That outline will look quite different from the one proposed at the beginning of this year, with COVID-19 causing revenues to dip, while creating new expenses.
Over the next week-and-a-half, various departments and related entities that rely on state funding, such as higher education institutions, will make their formal presentations to financial officials. These are being held remotely, a reminder of the ongoing pandemic.
The University of Delaware, which presented its request to budget officials Tuesday, projects a deficit of $228 million to $288 million for the fiscal year ending June 30. The institution has reduced discretionary spending, offered retirement packages to staff, cut salaries for some employees, reduced positions and pulled about $100 million from its approximately $1.64 billion endowment.
“The hard reality is that the financial difficulties facing UD — and all higher education institutions — are not a one-year event, and the road to recovery will extend over the next several years,” President Dr. Dennis Assanis said in prepared remarks. “We are already looking toward the challenges for (fiscal year 2022), including a reduced ability to recruit new students, a continuing need to increase student financial aid and the uncertainties of the economy and its effects on our students and their families.
“As you can see, to reduce our deficit we’ve tightened our belts, leaned on our endowment and even eliminated some of our core workforce. The university has very few cost-cutting options left to help us deal with the unprecedented challenges thrust upon us this year.”

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Documents show settlement is near for plan to finally reassess Delaware properties after decades

From Delaware Online

Officials from Delaware’s three counties are negotiating a lawsuit settlement that would see a multiyear process for reassessing the values used to tax individual properties up and down the state – a process that is likely to render widespread changes to residents’ and businesses’ tax bills in coming years.

Attorneys have told a judge they are working to settle, by the end of the year, a lawsuit that found the property valuations currently used by Delaware’s three counties to calculate tax bills to be unconstitutional, according to recent court transcripts and correspondence.

Newly revealed court documents shed light on the time frame and goals being contemplated by county leaders and the education activists who sued them over the local tax systems.

Each county has submitted reassessment planning proposals that outline a four-year process beginning in January for reassessing properties, according to court documents.

“Our goal is to have this done and have the reassessment baked into the bills by 2024,” New Castle County attorney Nicholas Brannick told a Chancery Court judge in a recent hearing.

Under each of the counties’ planning proposals – which are not final and subject to change – new tax bills would not be mailed before 2024. Residents, however, would be notified of new property values in 2023 and be allowed to appeal.

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University of Delaware confirms 122 employee workforce reduction

From Delaware Business Now

The University of Delaware has laid off 122 employees as it deals with a potential quarter of a billion-dollar shortfall.

University spokesperson Andrea Boyle Tippett confirmed that the university went through a reduction in force this week.

Tippett said job reductions were concentrated in areas“where operations have slowed because of the pandemic, including facilities maintenance, construction project management, and conference services.”

Tippett noted that President Dennis Assanis had announced that the reductions would be coming along with small salary cuts for top administrators and other actions aimed at dealing with the shortfall.

UD also tapped into its estimated $1.5 billion endowment to deal with the budget gap.

The layoffs are believed to have come from the ranks of nonunion employees.

Negotiations are underway with professors and others with union representation regarding early retirements and other options.

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New Castle County reportedly makes high bid for Sheraton South hotel property

From Delaware Business Now

New Castle County was the reported high bidder in an auction for the Sheraton South hotel in the New Castle area.

WDEL and sources within the real estate industry reported the county’s bid was $19.5 million. Bidding had started at $5 million but rose rapidly in the final hours of the online auction.

A New Castle County spokesman did not immediately respond to a request for comment.

The bid will still have to go through an escrow process and perhaps other due diligence.

County Executive Matt Meyer had earlier confirmed that the governmental unit would make a bid for the property for use as a center for the homeless.

The conversion has earned scattered criticism, due to the relative isolation of the property, which sits in a marshy area off Interstate 95.

Meyer told WDEL the center would provide access to services for what is expected to be a growing homeless population as the Covid-19 continues to hammer the economy.

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Sussex County to build $11.4 million emergency operations center

From Delaware Online

Sussex County officials announced earlier this month plans to build a 20,000 square-foot public safety building that will house the county’s emergency operations center, EMS/paramedics and a 911 center.

Construction for the new facility, estimated to cost nearly $11.4 million, is slated to begin July 2021 and is an expansion of the county’s current Emergency Operations Center in the Delaware Coastal Business Park just off Airport Road in Georgetown.

The new public safety building will “produce significant efficiencies” by combining the 911 call center and paramedics department under one roof, county administrator Todd Lawson said during an Oct. 6 council meeting.

The facility includes a new commercial kitchen, renovated lobby, a training center that can accommodate 50 people, simulation rooms, an EMS warehouse for supply storage and bunk rooms for long-term emergencies.

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New Castle County wants to buy Sheraton hotel, convert it to emergency homeless shelter

From Delaware Online

The New Castle County Council plans to discuss and vote on a plan to purchase the Sheraton hotel on Airport Road and convert it into an emergency homeless shelter.

The Sheraton Wilmington South, located just off Exit 5A on I-95, is up for auction beginning Monday, according to a web listing. Bidding starts at $5.5 million. The auction ends Wednesday.

The county wants to use funding from the more than $190 million it has in “reserve allocation” from the more than $322 million it received from the CARES Act during the coronavirus pandemic.

The county, according to an agenda posted for an upcoming meeting Tuesday night, plans to purchase the hotel and operate it as “emergency shelter and temporary housing for our most vulnerable residents, and others as deemed necessary by the Department of Community Services, during and in response to the COVID-19 pandemic.”

The hotel, which just underwent a $6.4 million renovation, has 192 rooms and the property is more than 6 acres. It has a long history in Delaware despite being in operation for less than 10 years. The hotel was originally built for $25 million by principle developer Joseph L. Capano Sr. as a Radisson Hotel in 2000, but it sat empty for years after it was found to have been built, in a floodplain, one-third larger than specified in its permits.

A court battle ensued, and the owners filed for bankruptcy in 2001.

Pennsylvania-based Hersha Hospitality Management purchased the building for $15 million and converted it to a Sheraton. It opened in 2011.

It was announced in September that the hotel was going to auction.

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Regulations: too many to be all good

The original intentions behind regulations were to address market failure, promote economic and social welfare, or advance other goals of policymakers, but even regulations with the best intentions have raised concerns for their unintended consequences. Additionally, many federal and state mandates have been reactive in nature, instead of forming or contributing to a coherent government strategy.

The reach the impact of regulatory bodies has had is immense. Small businesses feel the weight of the regulatory burden at the local, state, and federal levels, massive corporations base location and expansion based on regulations, and the sum total of regulation has led to slowed growth and competitiveness of many countries. Regulations impact a lot.

Take the occupational licensing regs of today. These requirements serve as a barrier to entry into the market, just as they were intended to decades ago as a response to racial or ethnic prejudices. are the legacy of earlier efforts to protect profits by limiting entry to the market. Modern occupational licensing is branded as necessary for quality control, but still works to protect the earning power of established providers. This is harmful to small businesses and entrepreneurs, and has recently been an issue with hair braiding at home.

Remember the EpiPen price scandal? The ridiculous price increase that left many in danger of serious complications from allergic reactions was possible because of regulations. There were few substitutes for EpiPen, which shielded it’s supplier from competition and allowed for a drastic price increase to around $600.

Some regulations and regulatory bodies are good and necessary. But when the Code of Federal Regulations has grown to 175,000 pages, and the small state of Delaware’s regulatory body alone includes 104,562 restrictions and would take 9 weeks to read in its entirety.

In normal times, state and federal government should examine their regulatory body and ask businesses for their perspective. Businesses are beholden to a high standard anyways if they want to keep customers, and too many regulations make it near impossible to make clear their margins, hire workers, or even get started in the first place.

Now, as we recover from the impact COVID-19 has had on our businesses, workers, and economy, our legislators must seriously consider the impact their policy decisions will have on rebuilding what was lost in 2020. In many cases, reducing and eliminating  current regulations that are job killers could help some small businesses endure the crisis. The recovery of small businesses and jobs will spawn economic growth and a healthy job market.

Below is a list of some examples of just the regulatory bodies that have an impact on this massive regulatory burden on businesses. Keep in mind that this is not a comprehensive list, and that every entity on the list issues and enforces their own regulations. Each one is another weight on the shoulders of entrepreneurs and business owners, and not all are necessary to ensure a safe and productive market. This does not include county and city regulations that are enacted in addition to those put forth by these entities.

Federal:

  • Federal Trade Commission (FTC)
  • Environmental Protection Agency (EPA)
  • Occupational Safety and Health Administration (OSHA)
  • National Institute for Occupational Safety and Health (NIOSH)
  • Internal Revenue Service
  • Social Security Administration
  • Defense Department
  • Centers for Medicare and Medicaid Services
  • Federal Energy Regulatory Commission
  • Consumer Product Safety Commission (CPSC)
  • Equal Employment Opportunity Commission (EEOC)
  • Federal Aviation Administration (FAA)
  • Federal Communications Commission (FCC)
  • Federal Deposit Insurance Corporation (FDIC)
  • Federal Reserve System (the FED)
  • Food and Drug Administration (FDA)
  • Interstate Commerce Commission (ICC)
  • National Labor Relations Board (NLRB)
  • Nuclear Regulatory Commission (NRC)
  • Securities and Exchange Commission (SEC)
  • Fair Labor Standards Act (FLSA)
  • The Employee Retirement Income Security Act (ERISA)

Delaware:

  • State Insurance Commissioner
  • State Bank Commissioner
  • Public Service Commission
  • Department of Labor (DOL)
  • Department of Natural Resources and Environmental Control (DNREC)
  • Safety and Homeland Security
    • Alcohol Beverage Control Commission
    • Office of Highway Safety
  • Merit Employee Relations Board
  • Public Employment Relations Board
  • Agricultural Lands Preservation Foundation
  • Food Product Inspection
  • Forest Service
  • Harness Racing Commission
  • Thoroughbred Racing Commission
  • Cash Management Policy Board
  • Delaware Health Care Commission
  • Delaware Manufactured Home Relocation Authority
  • Board of Manufactured Homes Installation
  • Delaware River Basin Commission
  • Delaware Solid Waste Authority
  • Professional Standards Board
  • Delaware Economic Development Authority
  • Division of Public Health
  • Fraud and Consumer Protection Division
  • Board of Cosmetology and Barbering
  • Human Relations Commission
  • State Fire Prevention Commission
  • Division of Motor Vehicles
  • Various professional boards

Bayhealth proposes $19 million project that would add beds at Sussex Campus

From Delaware Business Now

Bayhealth, the state’s second-largest hospital system, recently presented a Certificate of Public Review to the Delaware Health Resources Board requesting approval to add additional inpatient beds, as well as a C-section suite at Bayhealth Hospital, Sussex Campus.

The estimate for the expansion is $19 million. The Sussex Campus had a price tag estimated at between $275 million to $300 million.

“After our move to the Sussex Campus in early 2019, we saw significant growth in admissions, observation cases, and the number of babies born,” said Bayhealth CEO Terry Murphy. “Sussex County is undergoing significant population growth, which we anticipate will further increase the need for services and we want to be prepared to meet that need.”

The proposal calls for additional medical/surgical beds to be located in 17,300 square feet of available space on the fifth floor of the building. Existing space will be converted into 24 acuity adaptable private patient beds. Acuity adaptable refers to the patient being able to stay in the unit between admission and discharge, an approach that can save money and improve care.

Five women’s services beds will be added to the third floor, which will require renovating existing administrative office space into private patient rooms. The C-section suite will be constructed nearby in 1,500 square feet of shelled space.

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2021 State Business Tax Climate Index

From the Tax Foundation

Delaware’s overall rank in the 2021 State Business Tax Climate Index was 13th nationally, but 50th for corporate taxes and 42nd for individual taxes.

The Tax Foundation’s State Business Tax Climate Index enables business leaders, government policymakers, and taxpayers to gauge how their states’ tax systems compare. While there are many ways to show how much is collected in taxes by state governments, the Index is designed to show how well states structure their tax systems and provides a road map for improvement.

Read the report

Decade-old land deal prompts political backlash, legal fight

From Delaware Online

In late 2008, with the real estate market in free fall, a land-hungry Delaware Department of Transportation purchased two parcels of rural flatland next to Route 1 south of Dover for nearly $2.8 million.

Ten years later, it sold the parcels for $270,000 to influential lawyer and developer John Paradee. It was a price the state says reflected a DelDOT decree that the land would never gain a direct commercial turn-on or turnoff from the adjacent highway – Delaware’s primary north-south artery.

Today, those deals and their multimillion-dollar price discrepancies are attracting controversy, manifested as political assaults on Delaware’s Democratic Party establishment just weeks before the November election.

The land sale also sits at the center of an ongoing lawsuit in Delaware’s business court over DelDOT’s potential granting of accesses from Route 1 to new commercial real estate projects in the Milford-to-Frederica corridor.

The suit is among the latest jockeying between developers seeking to win a race to riches in an area planned as the state’s next exurban hotbed, one whose growth may hinge on the success of the nearby taxpayer-subsidized youth sports complex, DE Turf.

At the center of it all is Paradee, who proclaims to be “widely recognized for his ability to secure approval for difficult or controversial projects.” In December 2018, he purchased the roughly 11 acres of DelDOT land with a team of investors. At 44%, Paradee’s stake is the largest in the partnership.

Combined with adjacent parcels, the land was intended to form the platform on which to build Asbury Square, a hotel, restaurant and retail development. It is one of three ambitiously proposed projects designed to capitalize on government’s push to encourage development in the corridor.

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