Building Foxconn infrastructure is a complex, multimillion-dollar effort

Work to expand I-94 in Racine County is expected to be fully complete by 2021. Credit: Curtis Waltz,

Last updated on July 2nd, 2019 at 09:11 pm

If there’s one project related to the planned Foxconn Technology Group campus in Mount Pleasant that most area residents have been exposed to, it is likely the expansion of I-94 in Racine County.

But beyond the orange barrels lining the interstate, which was part of the Wisconsin Department of Transportation’s long-term expansion plans for the freeway, with or without Foxconn, millions of dollars are being spent on infrastructure projects in and around the Foxconn site.

Among roadwork, gas, electric, water, sewer and fiber optic, there is plenty going on in the southwestern corner of Mount Pleasant. Claude Lois, project director for Mount Pleasant, said stakeholders have been holding weekly coordination meetings to make sure everyone is on the same page.

Work to expand I-94 in Racine County is expected to be fully complete by 2021.

“There are a lot of people working in sometimes a very similar area,” he said.

The original tax increment financing district Mount Pleasant approved for the Foxconn project called for $764 million worth of investments to make the development possible. According to the latest estimates from municipal advisory firm Ehlers Inc., the village’s financial advisor, the investment will now be about $912 million.

Local officials emphasize that the TIF district is set up so the value of Foxconn’s development alone will pay for it. The company has guaranteed its main campus area, referred to as area I, will have an assessed value of $1.4 billion by 2022 to generate enough property tax revenue to cover the TIF costs.

“Everything we’re doing out there is being totally funded through this development,” Lois said. “It’s not being funded by the locals; it’s not going to be put on your sewer bill or anything like that. There should be no (tax) increase to any of the residents.”

The higher total includes an almost $38 million increase in spending on land acquisition and relocation costs, now projected to reach $206 million. Another $12.7 million increase comes from water infrastructure and a $12.3 million increase in spending on sewer infrastructure.

Mount Pleasant has been paying property owners 140 percent of fair market value, plus $50,000 per acre for excess land, to acquire land in the project area. The increased sewer and water costs come from expanding the investment to allow the Village of Caledonia to connect to the systems. Caledonia will make roughly $30 million in payments to Mount Pleasant to help cover the increased costs.

The increased land acquisition, sewer and water costs led to higher interest costs over the long term. Interest on debt is now projected to be around $248.6 million, an $82 million increase over the original plan. The increased debt service payments prompted local officials to project the TIF district will remain open for a full 30 years, five years longer than originally anticipated.

The longer period adds operating costs to the district, but it also opens up the possibility of funding investments in fire and police protection through the district.

The costs are covered by Caledonia’s payment, a $128 million increase in special assessments to be paid by Foxconn and an estimated $650 million in tax increment-related payments from Foxconn’s development.

One element of the local investment that remains the same is the projected $11.5 million in spending on roads. The state took over jurisdiction of local roads for $134 million in projects while also overseeing the expansion of I-94.

The I-94 North-South project was originally scheduled to be complete by 2016 but was delayed in favor of other projects, particularly the Zoo Interchange reconstruction. When the possibility of Foxconn arrived, the I-94 North-South project rocketed back up the priority list. The legislation authorizing Foxconn’s incentive package also authorized more than $250 million in bonding to help fund the freeway expansion project, provided Wisconsin also got federal money for the project.

The state requested more than $246 million from a federal Department of Transportation grant program. Work on the project started before the state heard about the result of the grant application. The program received 234 applications for the 2018 funding round and the I-94 expansion was one of 26 to receive funding. However, the state received $160 million, not its full request.

Still, then-Gov. Scott Walker said all lanes of I-94 would be open by Memorial Day 2020 and the project would be fully complete by 2021. His DOT said excess bonding revenue would allow the state to make up the shortfall from the grant project without delaying other projects.

The three main bid packages for the project have already been awarded. Chicago-based Walsh Construction was named the prime contractor for the northern segment with a $161.6 million bid. Brownsville-based Michels Corp. was named the prime contractor for the central and southern segments with $80 million and $168.9 million bids.

Across the three segments, 60 companies have been named as subcontractors, including 50 from Wisconsin.

A number of other projects along I-94 have also been awarded, including the frontage roads from Highway KR to Highway 20 and interchanges at Highway K and at Ryan Road. The major project left on the state DOT’s master contract schedule is the Highway 20 interchange, with bids scheduled to open in early 2020.

The 16.5 miles of work the department is doing on local roads also has a long way to go, including the construction of Wisconn Valley Way, a new road that will run along the western end of the planned Foxconn campus from Highway KR to Highway 11. There are also major projects planned on Braun Road, Highway 11, International Drive, Highway H and Highway KR.

Perhaps less visible than all of the ongoing roadwork are the sewer and water systems being extended to the Foxconn project area. Lois emphasized that the project will serve more than the Foxconn campus.

“It’s feeding the whole area, not just Foxconn,” he said. “The system has been designed to accommodate all of the holes that Racine water has in some of their areas of coverage, as well as, obviously, sewer.”

Lois said the first two phases of sewer work, along Highway H and along Highway KR, would be wrapping up in March. A third phase running from Highway H east toward the Pike River will likely be released for bidding this spring and start later this year. A fourth phase would likely also go out for bids at some point this year.

The initial sewer projects have been particularly deep – around 50 feet – so Lois said the field of potential bidders has been somewhat limited. The future projects do not require going to those depths, so he expects bidding interest to pick up.

Water projects have seen more interest, with six or seven bidders on each contract, Lois said. The projects extend water service to the Foxconn campus and surrounding area. The campus itself straddles the divide between the Lake Michigan and Mississippi River basins, and the Wisconsin Department of Natural Resources approved a 7 million gallon-per-day diversion of Lake Michigan water under the 2008 Great Lakes Compact.

But how much water Foxconn will actually need is unclear. For starters, the company said it plans to invest $30 million in a zero liquid discharge system that would dramatically reduce its water needs. Foxconn has also changed the kind of LCD manufacturing facility it will build from one focused on larger panels to a smaller one that will not require a glass plant on site.

“We’re still working with them to verify the total amount of water that they might need,” Lois said.

Sign up for BizTimes Daily Alerts

Stay up-to-date on the people, companies and issues that impact business in Milwaukee and Southeast Wisconsin

Arthur covers banking and finance and the economy at BizTimes while also leading special projects as an associate editor. He also spent five years covering manufacturing at BizTimes. He previously was managing editor at The Waukesha Freeman. He is a graduate of Carroll University and did graduate coursework at Marquette. A native of southeastern Wisconsin, he is also a nationally certified gymnastics judge and enjoys golf on the weekends.

No posts to display