November 27, 2017; Milwaukee Journal-Sentinel
Earlier this year, NPQ wrote about corporate megadeals, including a $3 billion incentive package in Wisconsin that, in the best-case scenario, involves the state providing incentives to the Taiwanese electronics manufacturer Foxconn of over $230,000 per job. Compared, however, to the national megadeal average of $658,000 per job, as calculated by Good Jobs First, perhaps Foxconn felt shortchanged.
Fortunately for Foxconn, the village of Mount Pleasant (with an annual budget of roughly $20 million) and Racine County (budget a tad above $151 million) have signed on to a multi-year “agreement that provides Foxconn with some $764 million in local incentives,” report Rick Romell and Jason Stein for the Milwaukee Journal-Sentinel.
This week, Mount Pleasant Village Council made it official. “The 6-0 vote by trustees,” Romell and Stein write, “came within hours of the public release of a final contract between Mount Pleasant and Racine County, on one hand, and three corporate entities related to Foxconn.” Racine County’s board also approved the deal with an 18-0 vote.
Last month, Romell reported on some of the key aspects of the deal as outlined in a Memorandum of Understanding that preceded the final contract:
- Foxconn is expected to begin building the factory by October 1, 2018, and complete construction over the following six years. The company has said it plans a $10 billion complex covering up to 20 million square feet and employing as many as 13,000 people.
- In addition to $100 million in development incentives over 10 years, Foxconn ultimately stands to receive up to 2,271 acres of land for free.
- The company will provide an estimated $60 million for another 1,073 acres, to which the village and county will hold title. Foxconn will be repaid out of tax increment financing (TIF) revenue. Through January 1, 2028, the company can use that land, which is immediately north of the factory site, for expansion. After that, the village and county can sell remaining property to third parties, splitting any profits equally with Foxconn.
- The village and county will finance purchase of a third bloc of land—622 acres east of the factory site. Foxconn will pay the interest on the loan. The company can buy property in that area at cost.
Other aspects of the deal that Romell and Stein highlight:
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The local governments also will give Foxconn $100 million—in annual payments of $10 million beginning in 2024—as part of the local incentive package.
Other major estimated expenses of the village and county include $143 million for land acquisition, $205 million for utilities and other infrastructure, and nearly $90 million in added police and fire protection costs.
In exchange, Foxconn pledges “to build a 25-million-square-foot manufacturing complex on about 1,200 acres” that will employ, as noted above, up to 13,000 people and build flat-screen television panels. The contract does include strong provisions to ensure that the revenue generated will be sufficient to cover “infrastructure improvements and other costs connected to the Foxconn project,” so at least the city and county are guaranteed to be made whole for the $764 million, although of course this doesn’t necessarily mean there will be enough tax dollars to cover other costs associated with that growth, such as public schools and social services.
Final approval by a Joint Review Board that includes both village and county officials is expected. But, Romell and Stein note, “A number of important hurdles remain…including a review by the US Army Corps of Engineers on the project’s potential impact on wetlands.”
Still, Wisconsin elected officials are enthusiastic. “It’s a very historic moment indeed,” said Village President Dave DeGroot. What history will say about this deal remains to be seen.—Steve Dubb