Foxconn Deal Doesn’t Reduce Local Government Risk
Mount Pleasant and Racine County face big debt burden from upfront costs.
The new contract negotiated by Foxconn and Wisconsin will have minimal financial effect on the state and local governments, according to a new report by Moody’s Investors Service.
The deal, approved last month after more than a year of negotiation, reduces Foxconn’s maximum tax breaks in the state from $2.85 billion to $80 million and significantly reduces the amount of jobs and capital investment Foxconn is required to make.
According to the report, the updated agreement does not introduce new risks to Mount Pleasant or Racine County, where Foxconn’s current facilities are located. It also doesn’t alleviate the existing risks that have contributed to declines in credit quality for both local governments.
In 2019, Moody’s lowered the credit ratings of Mount Pleasant and Racine County because Foxconn failed to meet its targeted job goals.
The separate development agreement between Foxconn, Mount Pleasant and Racine County remains unchanged, because it is not linked to the state’s incentive package and because the local incentives are not tied to job creation targets.
Moody’s points out Mount Pleasant and Racine County carry significant debt burdens associated with upfront costs. Local taxpayers have already spent over a billion dollars on land acquisition, infrastructure and road improvements for the project.
Foxconn must make these minimum tax payments regardless of the project’s completion. If they don’t, the state will cover the debt.
Favorably, over the past two years, Foxconn has paid both its property taxes and special assessments early, Moody’s found.
Report: New Foxconn Deal Does Not Add Risk To State, Local Governments was originally published by Wisconsin Public Radio.
More about the Foxconn Facility
- Microsoft Will Pay $50 Million For Mount Pleasant Data Center Site - Evan Casey - Apr 20th, 2023
- Microsoft Data Center Proposed for Foxconn Land - Evan Casey - Mar 29th, 2023
- Foxconn, We Energies Building Solar Farm at Factory Campus - Joe Schulz - Mar 10th, 2023
- Former Foxconn Employee Alleges Company Commits Wage Theft - Evan Casey - Feb 10th, 2023
- Slate of Foxconn Opponents Running for Mount Pleasant Board - Evan Casey - Jan 4th, 2023
- Foxconn Earns $8.6 Million In Wisconsin Tax Credits - Joe Schulz - Dec 23rd, 2022
- Last Home in Foxconn Site Could Be Sold - Evan Casey - Jul 27th, 2022
- UW-Madison Hires Former Foxconn Executive - Rich Kremer - Apr 5th, 2022
- Nelson Calls on Congressional Oversight Committees to Pursue Information on Botched Foxconn-Oshkosh Defense Postal Deal - Tom Nelson - Mar 30th, 2022
- Foxconn Rebuffed Oshkosh Defense Bid to Build Mail Trucks? - Rich Kremer - Mar 28th, 2022
Read more about Foxconn Facility here
One thought on “Foxconn Deal Doesn’t Reduce Local Government Risk”
Foxconn’s property in Area 1 is assessed at $273,885,500, as of January 1, 2020 ($216MM increase since 2019).
Foxconn’s property tax payment was $5.1MM in 2020 (vs $1.15MM in 2019).
Foxconn’s property tax bill on $1.4B (in 2023) would be ~4.5x higher than 2020 or nearly $25MM. Probably small change to Foxconn but we’ll see if they honor such commitment – If they don’t, the state will cover the debt.