Last updated on July 2nd, 2019 at 09:12 pm
Foxconn Technology Group’s decision to build its $10 billion LCD panel campus in Mount Pleasant will prompt a $764 million investment from the village and Racine County, but local officials say taxpayers are protected and the costs will be recouped in 25 years.
Mount Pleasant plans to create a tax increment financing (TIF) district to fund the $764 million investment that would include land acquisition, infrastructure upgrades, financing expenses and contingencies, according to a project plan released Wednesday.
The local incentive package would come on top of the $3 billion incentive package for Foxconn approved by the state Legislature and signed into law by Gov. Scott Walker. Foxconn plans to build a $10 billion, 20 million-square-foot facility that will initially employ 3,000 and eventually could have up to 13,000 employees.
As part of the TIF plan, Foxconn would be eligible for up to $100 million in development incentives that would be tied to job creation and capital investment targets that mirror what the Wisconsin Economic Development Corp. negotiated as part of a yet to be signed contract.
Local officials say the project would not lead to increased property taxes and a county sales tax will not be needed either.
“We wanted to make sure the taxpayers were protected,” said Racine County Executive Jonathon Delagrave. “We were able to craft a deal without raising property taxes, without instituting a sales tax so we’re really excited about that.”
Instead, the TIF district will use the estimated $31 million in additional property tax revenue generated by Foxconn’s initial 20-million-square-foot campus to fund the improvements. That campus will be built on a roughly 1,200-acre area in the southwest portion of the district to the north of Highway KR, south of Braun Road, east of Interstate 94 and west of Highway H.
That area covers only a portion of the nearly 4,000 acres included in the district, but the development of the Foxconn plant is the only incremental value considered as projected revenue to cover the investment costs.
“The concentrated level of development and resulting tax value in just a quarter of the size of the district is going to pay for the public improvements to open up 3,000 additional acres for business development,” said Jenny Trick, Racine County Economic Development Corp. executive director.
Those improvements would include the expansion of Highway 11, Braun Road and Highway KR to six lanes from the interstate to Highway H. KR would also be made six lanes east of Highway H while Braun Road would be made four lanes. International Drive would be extended from where it currently ends to the south to meet with Highway 11.
Road expansions only account for about $12 million of the investment. Roughly $160 million would go towards water and wastewater infrastructure improvements, including water mains stretching from Racine to the project site. Another $116 million would be dedicated to public safety upgrades that would include a new fire station and expanded police force.
Any development in the nearly 1,800 acres planned for future Foxconn expansion or supplier locations would help speed up the time it takes to repay the investment costs, as would development in a more than 900 acre area north of Highway 11 that is included in the district.
The main taxpayer protection, however, is an increment guarantee that will be included in the development agreement. The provision would require Foxconn to pay Mount Pleasant for any shortfall in property taxes if the incremental value is less than $1.4 billion in any year starting Jan. 1, 2022.
“We fully expect this thing to be net-neutral because, number one, I don’t know that I’d have the support on my own village board to pass this otherwise,” said Dave DeGroot, Mount Pleasant president. “We have very real concerns that we didn’t want to have our taxpayers on the hook.”
Other protections for the municipality include a provision in the Foxconn incentive bill signed by Walker that requires the state to cover 40 percent of public debt costs if the deal goes south, potentially putting the state on the hook for $113.2 million.
The company would also pay a special assessment, estimated at $73.5 million, to cover the costs of public improvements related to the initial campus development.
Foxconn would also contribute $60 million in cash for the acquisition of a 1,175-acre area to the north of Braun Road and south of Highway 11. The village would own that land and the company would have until 2028 to use it for future expansion. If the company does not expand in the area by then, the village could sell it to other developers.
“There’s some significant belt and suspenders associated with this,” Trick said.
The company could get money back under certain circumstances, including the TID having funding for at least three years of debt service.
Even including those payments, the village projects the TIF district would close after 25 years. The special session legislation would allow the district to stay open for 30 years. A traditional industrial TIF district is limited to 20 years.