Guests photograph a model of the projected completed Foxconn campus at Foxconn’s facility in Mount Pleasant, Thursday, June 28, 2018, after a ceremonial groundbreaking that day. ( (c) Mark Hertzberg | reprinted by permission of www.racinecountyeye.com)
Area 1 of the project — while still a substantive investment for the area — is slightly more than one-third of the projected valuation of the property for what Foxconn initially proposed in 2017.
With the Village of Mount Pleasant financing more than $700 million in infrastructure and land acquisition costs, Foxconn agreed that the tax revenue from the company’s portion of that building project would pay for those investments. This rested on the village’s ability to collect property taxes on $1.4 billion in property valuation to pay for the bond it took out.
Instead, the multinational corporation remains the only corporation that has built on the site. There are also two spec buildings and a warehouse. Now, rather than watching the growth of a bustling, high-tech manufacturing hub, the Village of Mount Pleasant finds itself actively marketing an industrial park, hoping to lure larger manufacturers.
Foxconn is still on the hook to make up the difference between the taxes it would have paid under the company’s original plan and what it would pay on its current footprint, according to Claude Lois, Mount Pleasant’s project director for the Foxconn site’s special tax-financed district.
“We know they’re not at that required value,” Lois said at a Racine County Board informational meeting on the Foxconn project last week. “So there will be a shortfall, meaning there will be an actual payment of property taxes plus a supplemental bill so that the property taxes received by the village are equal to $1.4 billion in value.”
Officials from Foxconn were not present at the meeting, nor did they respond to questions about the project.
Foxconn, a Taiwan-based contract manufacturer best known for making Apple iPhones, originally agreed in 2017 to invest $10 billion in a flat-screen panel manufacturing complex in Mount Pleasant. The deal included $2.85 billion in tax credits in return for creating 13,000 jobs and generating $1.4 billion in property improvements.
So far, the company has hired 579 people and generated $520 million in property improvements — 37% of its original projection.
After the company repeatedly changed its plans for the site, the Wisconsin Economic Development Corp. under the administration of Gov. Tony Evers renegotiated the deal in 2021. In place of the original state tax credit package, the amended contract provides up to $80 million in tax credits.
At last week’s information session, economic development officials defended the project.
Lois told the County Board that Foxconn’s smaller footprint, though much less than originally anticipated, was more than what many communities have.
“To put things in perspective…in the Wisconsin Dells, their assessed value is $505 million,” he said.
Foxconn has also met all of its financial obligations to the Village to date, Lois said, including an up-front cash contribution of $60 million, property tax payments totaling more than $11 million, and annual special assessment payments totaling more than approximately $22 million.
Mount Pleasant is counting on the Foxconn tax revenue to pay bondholders who lent money for the improvements to the site. If the company fails to make up the revenue shortfall, Lois said, that could fall to state taxpayers.
Lois offered that as an assurance to County Board members.
“If for any reason there is not sufficient tax increment available to pay bondholders, the state has committed to bringing to the legislature a request for annual appropriation in order to pay that debt,” he said. “So, in other words, the state is standing behind those two revenue bonds, which again provides additional security not only to the village and the county but also to the taxpayers of both.”
Foxconn’s change of plans
Foxconn’s first change of plans was from a $5.570 billion Generation 10.5 plant that produces large flat-screen electronic panels to a Generation 6 plant that makes smaller thin-film transistor liquid crystal display screens for cellphones and other devices.
Over the years, the company also announced several different initiatives for the Mount Pleasant facility, including automated coffee dispensers, ventilator components, face masks, and, most recently, electric vehicles.
Ultimately, Foxconn built four buildings: a 120,000 square foot multi-purpose building, a 1 million square feet manufacturing building, the high-performance data center globe and a 260,000 square foot “smart manufacturing center.”
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Despite Lois’ statements to the County Board last week that the company remains obligated to pay back the state, the county and the village for the $700 million in public infrastructure and land acquisition costs, some Mount Pleasant neighbors remain skeptical of that promise, and the project.
The Village still owns a considerable amount of land, which Foxconn officials had previously said they were considering using for an electric vehicle manufacturing site. Intel also considered developing on the site. Both companies chose to go to Ohio instead.
“Why are we still paying Claude Lois?” asked Mount Pleasant resident Kelly Gallaher, a long-time critic of Foxconn and of Lois, in an interview after the meeting. “You know, $350,000 a year. Foxconn is a failure. Intel passed [on the site]. He makes roughly double what the governor of Wisconsin makes and almost three times what Missy Hughes [CEO of] the Wisconsin Economic Development Corporation is paid. How is this possible when nothing is going on?”
Regional economic officials say they’re hopeful about the site’s future, however.
Jim Paetsch, senior vice president and executive director of the Milwaukee 7 Regional Economic Development Partnership, told board members Wisconn Valley can still attract manufacturers..
“The Racine area features a really deep manufacturing pedigree and a corresponding talent pool known for that, a really strong Midwestern work ethic, and development-ready sites with excellent transportation access,” he said.
Paetsch touted the county’s economic development team. “Perhaps most importantly, Racine County is a business-friendly community that is welcoming to development,” he added. “I think sometimes it’s misunderstood and not fully appreciated.”
Mount Pleasant Special Counsel Alan Marcuvitz, who oversaw the acquisition of the property, also expressed optimism for the site.
“When you look at where this property sits – between two major airports along with an improved major interstate system that has zoning in place, that has sewer, water and power – we believe it’s only a matter of time,” Marcuvitz told the board. “I’m hoping that the next time we make a report, we’ll be singing Hosannas instead of just giving you a news report.”
Updated 3/28/2022, 9:30 p.m. The cost for infrastructure and land acquisition borne by Mount Pleasant has been corrected, to $700 million, rather than $1.4 billion. The portion of the site that was identified previously as “the first phase” of the project has been changed to correctly identify it as Area 1.
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