Delaware gives $1.6 million to chemical firm FMC, lets Tower Hill issue $6.9 million bond

The News Journal | by Karl Baker

Delaware on Monday approved a $1.6 million taxpayer grant for FMC, an $11 billion agricultural chemical company that plans to build a greenhouse at its Newark-based research headquarters and hire 13 new employees.

While state officials argue that such incentives encourage investment in Delaware, FMC officials declined to say whether they would build the greenhouse even without the taxpayer cash.

Also at Monday’s meeting of the Delaware Council on Development Finance, the state approved a $50,000 grant to a Newark chemical startup that makes renewable oils. And, it agreed to lend, as a pass-through entity, $6.9 million to Wilmington’s Tower Hill School – proceeds from a tax-exempt municipal bond purchased by TD Bank. Tower Hill is on the hook for bond payments back to the bank.

In 2017, FMC took over the 515-acre Newark agricultural research facility, called the Stine portion of the Stine-Haskell Research Center, in a multibillion-dollar asset swap with DuPont.

Years earlier, DuPont had been building a greenhouse at the center, but in 2016 nixed the project, mid construction, following a move by company’s agricultural division to Iowa and amid a cost-cutting mandate from then-CEO Ed Breen.

FMC now says it will spend $50 million to finish the building, using existing revenue from the sales of pesticides, herbicides and fungicides. It will not raise money through new debt or equity, an official said.

After taking over Stine two years ago, FMC announced that Newark would become home to its global headquarters for research and development of crop protection products.

As part of the reorganization, it closed a Ewing, New Jersey research facility and consolidated those operations into Stine. Today, FMC employs over 500 people in Newark, a number that includes facilities contractors.

Asked why the state was transferring the cash to FMC despite the company’s apparent commitment to Delaware, state Small Business Director Damian DeStefano said other states continuously attempt to lure successful companies out of Delaware.

Bringing most incentive deals to the state today is the new Delaware Prosperity Partnership, a privately run organization that recommends grant recipients to DeStefano’s office in a process that all but guarantees a deal. The partnership’s CEO Kurt Foreman attended Monday’s meeting.

Yet, how the Delaware Prosperity Partnership — which is staffed by a who’s who of influential business and government leaders in the state — negotiates deals is kept out of the public eye.

Specific details about the FMC deal also are largely unavailable to the public today. An agenda item lists only that the money from the Delaware Strategic Fund is “for expansion of (FMC) operations in Newark, Delaware.”

The News Journal has requested under the state open records law additional documents that show how much Delaware investment FMC is promising for the money.

Tower Hill

More information was disclosed about Tower Hill’s deal with the state.

The issuance of the qualified bond for nonprofit companies like Tower Hill means they get to use lower rates than they would in a private commercial loan.

If Tower Hill should default on the loan, it could hurt Delaware’s reputation, Destefano said. Yet, other state officials insisted the state’s credit rating is not on the line if that happens.

Tower Hill says the money will pay for design and construction of a new dining hall, the purchase and installation of an artificial athletic field, a new floor for the gymnasium, design of other capital projects and deferred maintenance.

The private school, located near Wilmington’s Highlands neighborhood, took in nearly $22 million in revenue and had $66 million in net assets in 2017, according to its tax filing that year.

The final company the state decided to finance Monday is RiKarbon Inc. It received a $50,000 Small Business Technology Transfer grant.

The Newark company, which produces lubricants from plants and natural oils, also won a $150,000 grant from the U.S. Department of Energy in 2018.

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