New Foxconn Deal Cuts Incentives By $2.77 Billion
State will provide company up to $80 million under drastically down-scaled deal.
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.
- Foxconn Deal Doesn’t Reduce Local Government Risk - Corri Hess - May 3rd, 2021
- Murphy’s Law: The True Costs of New Foxconn Deal - Bruce Murphy - Apr 28th, 2021
- The State of Politics: All Sides Won On New Foxconn Deal - Steven Walters - Apr 26th, 2021
- New Foxconn Deal Cuts Incentives By $2.77 Billion - Jeramey Jannene - Apr 20th, 2021
- Rep Hintz: Statement on Approval of Revised Foxconn Contract - State Rep. Gordon Hintz - Apr 20th, 2021
- New Foxconn and WEDC Agreement Provides Flexibility and Clarity for Renewed Tech Investments in Science and Technology Park - Foxconn Technology Group - Apr 20th, 2021
- Gov. Evers Announces Renegotiated Foxconn Contract to Save Taxpayers $2.77 Billion - Gov. Tony Evers - Apr 20th, 2021
- Rep. Hintz: Statement on Foxconn Announcement - State Rep. Gordon Hintz - Apr 19th, 2021
- Evers Announces New, Smaller Foxconn Deal - Jeramey Jannene - Apr 19th, 2021
- Gov. Evers, Foxconn Reach New Agreement - Gov. Tony Evers - Apr 19th, 2021
Read more about Foxconn Facility here