Work on a multi-million dollar Dover Mall road project is moving from proposal to reality.

Gov. John Carney signed five bills May 30, all to pave the way for a $31.2 million ramp that would bring traffic off Del. Route 1 directly to the mall in north Dover. The existing Route 1 southbound entrance at Scarborough road would be modified slightly to fit into the new scheme. A northbound entrance would be constructed on the east side of Route 1 and use the Dover-Leipsic Road bridge to access the mall.

The legislation provides a framework for a public/private partnership that does not require taxpayer money, Dover attorney John Paradee said. A bond sale would finance the project, with repayment primarily from tolls levied on drivers coming off Route 1.

Paradee said additional funding will be provided through property taxes paid by the mall and new businesses situated in a planned “Power Center” on 83 acres between existing mall parking and Route 1.

While the toll roads are seen as the major source of funding for the bonds, the bills enable Dover and Kent County to use two funding mechanisms, tax increment financing and special development district financing, he said. These options previously were available to Wilmington and New Castle County alone.

“Conceptually, the legislation is pretty straightforward,” Paradee said last week. “Without the support from the General Assembly, neither the city nor the county could use these economic development tools.”

Paradee represents Simon Properties and Western Development Corporation and has been shepherding the road project from its beginnings.

Lost business

The idea for a direct entrance to the mall was considered but ultimately rejected during construction planning for Route 1 during the 1970s. A similar idea again got some consideration after a 2007 DelDOT traffic study.

Now its time has come, said Herbert S. Miller, chairman and CEO of Western Development Corp., a Washington D.C.-based firm. Miller’s track record includes the Potomac Mills shopping center in Woodbridge, Va., the Washington Harbour shopping and residential district in Georgetown, and the Gallery Place in Washington.

He said he’s seen himself how traffic on Route 13, at the only entrance to the mall, can approach gridlock over the weekend. This only discourages out of state drivers in search of tax-free shopping.

That’s a lot of business to lose, Miller said.

“Plus, if people going to and from the beaches, people coming from Pennsylvania, New Jersey, and Maryland over the weekends would shop there, that would mean a lot of increased sales for Dover,” he said.

Tax increment financing would provide cash by taxing improvements made to existing mall properties, Paradee said. The tax would be based on the difference between a property’s assessed value before improvements are made and after the alterations are completed.

The special development district legislation would bring in cash based on ad valorem taxes levied on new construction, he said.

“It simply allows a local government to assess a special tax against a particular property in a development district,” Paradee said.

In this case, it would apply to the new stores constructed in the Power Center. That’s estimated to be about 657,000 square feet of new shopping opportunities.

Road design and construction would be accomplished by a private company under DelDOT supervision. Once complete, the state would own and maintain it.

‘If you don’t invest …’

To cover all costs, Paradee estimates a bond sale between $35 million and $40 million would be needed.

“What will happen is that there are a whole series of lawyers and finance experts putting together the bond sale,” he said. “They’ll estimate pretty closely how much will be generated by the tolls.”

In the event the 50-cent toll doesn’t cover the cost by the time the bonds mature -- probably 25 years -- Paradee said funds from the TIF and SDD would provide the remainder.

“It’s our belief the toll revenue ought to be sufficient to pay the bonds back,” he said. If not, then funds generated by the TIF will be used. If even that is not enough, “the owners of the mall are comfortable with and prepared to pay special development district taxes to make up the difference,” he said.

Any surplus could be banked for future improvements, he added.

Paradee said the timing has slipped since initial estimates that the bond package could be ready by July 1. He’s targeting January. Design work would take about a year, with construction beginning in 2019.