More details have been released on plans by Sallie Mae to expand its operations, with the state’s new economic development agency taking pains to justify the proposed grant to the student loan banker.
Sallie Mae earlier announced plans to create 285 new positions in northern Delaware bringing its total employment in New Castle County to more than 1,000.
The company is negotiating to lease space at the Churchman’s Corporate Center off Route 273 in New Castle.
Sallie Mae is based near Newark and its decision to come to Delaware during the 2008-2009 downturn has been credited with helping the state hold on to its key financial services sector.
HSBC announced in May it will move employees out of its office at the same location.
The Council on Development Finance Monday heard a proposal for a grant to Sallie Mae from the Delaware Strategic Fund.
The council, mainly comprised of business people, is now under the Division of Small Business, Development & Tourism of the Department of State following the demise of the cabinet level Delaware Economic Development Office.
The grant would provide an incentive for each worker hired and a small additional amount for each hired from the group affected by changes at HSBC and Barclays, which announced plans to phase out a site south of Newark
As previously reported, the total potential outlay from the Strategic Fund is $2.16 million.
According to a release, the state would see an immediate return on investment from the hiring in the form of money not spent on unemployment insurance.
The statement came as Rep. John Kowalko, D-Newark, expressed outrage over what he describes as corporate welfare to Sallie Mae and other businesses in the state.
Kowalko’s views notwithstanding, the Strategic Development Fund grants have been popular with legislators since money is usually recouped through income taxes.
A displaced worker that had made around Delaware’s average annual wage would be eligible to receive a maximum of 26 weeks of unemployment insurance totaling more than $8,000.
In 2014 Sallie Mae received a $3.7 million grant from the Strategic Fund to create more than 300 new jobs. By the end of 2016, the company had actually exceeded its original benchmark. Payments from the grant were made as new hires were created. The same would be true for the grant proposal heard on Tuesday, a release stated.
The council also heard a proposal for a $433,500 grant from the Delaware Strategic Fund to General Refrigeration Company.
The company has outgrown its current facility in Delmar and plans to expand into a new 49,000-square-foot building south of Laurel. The grant will provide up to $195,000 for 30 new, full-time positions and $238,500 for capital expenditures related to investing in and outfitting the new facility.
The council is scheduled to vote on the proposals at its August meeting.