Mount Pleasant Deal With Microsoft Has No Public Subsidies

Cars are parked near a globe at the Foxconn campus Wednesday, Oct. 6, 2021, in Mount Pleasant, Wis. Angela Major/WPR

Plans by Microsoft to purchase more than 1,000 acres in Mount Pleasant originally intended for Foxconn will come with no public financial incentives for the company and no new infrastructure from the village or Racine County.

The deal would also help the village close a tax incremental district created for Foxconn earlier than anticipated, according to local officials.

“No additional borrowing will be required of either the village or the county,” said Alan Marcuvitz, an attorney representing Mount Pleasant on the deal. “No new infrastructure will be required of either the village or the county. And finally, no additional financial incentives for Microsoft will be required by either the village or the county.”

Last week, Gov. Tony Evers and local officials announced Microsoft was expanding its plans for Mount Pleasant, intending to develop additional data centers on the property and to invest “billions of dollars” in the community over the next decade.

Microsoft originally announced in March that it planned to invest $1 billion to build a data center on 315 acres once set aside for Foxconn. The company broke ground in September.

Under the new agreement, Microsoft is expecting to build at least four buildings at the site, and is guaranteeing a minimum assessed value of $1.4 billion by Jan. 1, 2028. That’s in addition to the $1.4 billion minimum valuation guarantee obligation from Foxconn.

AJ Steinbrecher, the land acquisition director for Microsoft, said the data centers will house thousands of computer servers. Microsoft operates over 300 data centers in 34 countries.

“We expect this work will create both construction jobs and full-time positions in the future, as well as generate billions of dollars in capital investment in related tax revenue,” Steinbrecher said during a Village of Mount Pleasant Committee of the Whole meeting Monday.

“These buildings are similar in size and appearance to a distribution warehouse,” Steinbrecher said.

Mount Pleasant created Tax Incremental District 5 for Foxconn in 2017. At the time, Foxconn said it planned to invest $9 billion at the site and employ 13,000, but the company’s investment in the village dwindled to a fraction of that original plan.

The district was scheduled to close in 2047. Todd Taves, a senior municipal advisor for Ehlers Public Finance Advisors, said with Microsoft’s investment the village may now be able to close it, or retire its debt obligations, seven to 14 years earlier than anticipated.

“The provisions collectively within these various agreements, put us in a much better financial position,” Taves said

Microsoft plans to purchase more than 1,000 acres within Area 2 and Area 3 of TID 5 for $100 million. Marcuvitz said with the purchases, the company will own 1,346 acres in TID 5.

Marcuvitz said Foxconn is also releasing all of its rights in Area 2 and Area 3 as part of the deal.

Microsoft must build a minimum of four buildings on the property under the agreement.

“A failure to do so will activate repurchase rights on the part of the village,” Marcuvitz said during the meeting.

It’s unclear exactly how many jobs could be created and when construction could begin. Officials from Microsoft were not available after the Monday meeting.

“I’m just speculating .. but I think that there’s going to be active construction on this site for the next 10 years,” Marcuvitz said. “I think it’ll be constant throughout that period of time, and I wouldn’t be at all surprised if we’re going to see the full realization of this program within that period of time.”

The Mount Pleasant Village Board will vote on the agreements needed for the project on Nov. 27.

Mount Pleasant deal with Microsoft will include no public financial incentives, under agreement was originally published by Wisconsin Public Radio.