New Foxconn Deal Cuts Incentives By $2.77 Billion
State will provide company up to $80 million under drastically down-scaled deal.
Current Wisconn Valley Science and Technology Photo courtesy of the Foxconn Technology Group.
The new agreement between the Wisconsin Economic Development Corporation and Foxconn cuts the potential tax credit award from $2.85 billion to $80 million.
In exchange Foxconn’s hiring and investment targets are cut from 13,000 employees and $10 billion invested to 1,454 workers and $672 million invested. The per-job wage credit falls from 17% to 7% as part of the renegotiated deal, with a minimum salary of $53,875 per qualified job. The credits remain refundable, effectively a cash payment award to the company.
The deal is now shorter, running through 2025 instead of 2032.
The new agreement also strikes the requirement that Foxconn build a Generation 10.5 LCD manufacturing facility. Foxconn aborted the plan to build that facility, initially announced to a 20-million-square-foot complex, shortly after the original deal was announced by then-Governor Scott Walker.
Evers, who defeated Walker in 2018, has refused to award any of the credits to date as the company has missed some hiring targets and failed to live up to key parts of the contract, including building the promised LCD facility.
“When I ran to be governor, I made a promise to work with Foxconn to cut a better deal for our state—the last deal didn’t work for Wisconsin, and that doesn’t work for me,” said Evers in a statement. “Today I’m delivering on that promise with an agreement that treats Foxconn like any other business and will save taxpayers $2.77 billion, protect the hundreds of millions of dollars in infrastructure investments the state and local communities have already made, and ensure there’s accountability for creating the jobs promised.”
Foxconn praised the new deal in a press release and said it has invested $900 million in Wisconsin already.
President Donald Trump touted the Foxconn deal as “the eighth wonder of the world” at the June 2018 groundbreaking, but the deal is now similar to many of the incentive agreements the state makes.
But there is one key exception. The agreement does not change the terms of the $791 million tax incremental financing district.
The state remains on the hook for at least 40% of the local infrastructure costs if Foxconn walks away from an agreement with local governments to pay property taxes based on the original estimated value of its Mount Pleasant manufacturing campus. That agreement would allow Racine County and the Village of Mount Pleasant to recoup costs associated with the tax incremental financing district used to build local roads, sewer and water infrastructure. Foxconn is scheduled to start paying at least $31 million annually in property taxes in 2023, regardless of its actual property assessment.
Utility ratepayers are also committed to paying back $117 million in infrastructure costs, plus interest, on a substation and high-voltage power lines.
Foxconn has constructed buildings on the site, but none for LCD manufacturing. The company has repeatedly announced new initiatives, including coffee kiosks and ventilators, that have been quietly canceled.
The new agreement adds a new entity to the list that is eligible for the credits – Fii USA, Inc. Foxconn Industrial Internet is the most visible tenant at the Racine County campus through its globe-shaped data center. A “smart manufacturing center” was also constructed for Fii as part of a six-building campus plan.
More about the Foxconn Facility
- Mount Pleasant, Racine in Legal Battle Over Water After Foxconn Failure - Evan Casey - Sep 18th, 2024
- Biden Hails ‘Transformative’ Microsoft Project in Mount Pleasant - Sophie Bolich - May 8th, 2024
- Microsoft’s Wisconsin Data Center Now A $3.3 Billion Project - Jeramey Jannene - May 8th, 2024
- We Energies Will Spend $335 Million on Microsoft Development - Evan Casey - Mar 6th, 2024
- Foxconn Will Get State Subsidy For 2022 - Joe Schulz - Dec 11th, 2023
- Mount Pleasant Approves Microsoft Deal on Foxconn Land - Evan Casey - Nov 28th, 2023
- Mount Pleasant Deal With Microsoft Has No Public Subsidies - Evan Casey - Nov 14th, 2023
- Microsoft, State Announce Massive Data Center Expansion, Land Purchase - Joe Schulz - Nov 11th, 2023
- Gov. Evers Announces Microsoft Makes Major Investment in Wisconsin - Gov. Tony Evers - Nov 10th, 2023
- State Can’t Regulate We Energies $100 Million Project for Microsoft - Joe Schulz - Sep 20th, 2023
Read more about Foxconn Facility here
Thanks for the continued update/reporting on the Foxconn deal. Trying to make sense of the numbers can be head scratching.
I would appreciate (and I’m sure your other readers, too) would like a straight forward explanation of what’s gone out of pocket on both sides (to the best of anyone’s ability to tell).
Foxconn: Claims $900 mil – what makes up this number?
State/Municipalities: A simple list of what the governement has paid for acquiring land, infrastructure, etc…
Nice job Scott W., Scott F., Vos
Thanks for looking out of us
And nice job Tony Evers! You’ve managed to downsize an ill-begotten Republican boondoggle intended to boost Walker’s reelection prospects, into what can now be clearly seen as “Walker’s Folly.”
Wow, what another gut punch for those Mount Pleasant residents whose homes were classified as ‘blighted’ by the corrupt city council, so that the city could acquire the land and demolish the houses.
And now it turns out they were torn down for no reason?
What an absolutely epic failure all around. Polish it all you want, but this turd of a deal will never be shiny.
Everyone knew this was a bigass grift by Frump and Wanker, aided abetted by all the other rpubCons in fed, state and local office… they are full of shtink.
When she runs for gov in 2022, Becky Kleefisch will have the taint because she carried the bag. Somehow she needs to get that flushed out…
I assume Paul Nannies was being sarcastic.
It would be something if Foxconn and Henrik Fisher join forces. THAT could be a win for the site and the state.
I certainly agree with mkuharske. The State reporting seems very limited.
Based on the data available, it appears FOXCONN could receive $53,020 per job established, apparently in increments over 6 years–if that’s the case, $9,170/year. That is about 6 times the expected annual state income tax to be expected from an annual wage of about $54,000.
As a practical matter, if FOXCONN “permanent” jobs do materialize, it’s likely many of them could come from other Racine and Kenosha manufacturers, generating at least a temporary negative impact on their output and/or productivity. To the extent employes come from Illinois, it’s difficul
t to project much benefit for the State finances. In any event, it doesn’t ring true to me that the State is treating FOXCONN “like any other business”.
So, I suppose we have progressed from a rotten deal to one that at least can be manageable for State government.
I think the local governments will remain in tougher fiscal straits due to the immense oversizing of infrastructure it has apparently undertaken with borrowed funds. A plain language explanation of how TIF value and tax increments factor into the equation would aid transparency and understanding of the subsidies that are being provided. .