Mount Pleasant Charged For Foxconn Water Shortfall

Back in 2018, when Foxconn was still promising to invest up to $10 billion on a massive Gen 10.5 fabrication plant for LCD screens that could employ up to 13,000 people, the company made clear it would need 7,000,000 gallons of water a day for this manufacturing process. And so government officials in the administration of then Gov. Scott Walker went to work, with the Wisconsin DNR finding a way around restrictions in the Great Lakes Compact rules. And local officials in Mount Pleasant and Racine worked to upgrade their water infrastructure to accommodate this unusual request.

Four years later, long after Foxconn dropped the Gen 10.5 plan, and has yet to manufacture anything, some of the costs of that water upgrade must be borne by the taxpayers of the tiny Village of Mount Pleasant. The village has long purchased its water from the Racine Water Utility, but the provision of seven million additional gallons of water a day was far beyond what the utility could supply. And so, to accommodate the promised Foxconn project, the utility undertook one of the largest water projects in state history. In response it asked for some guarantees from Mount Pleasant. Believing the cost would easily be paid through water sales to the technology company, the village signed a contract in 2018 agreeing to “pay any annual shortfall in water sales revenue necessary to provide the revenue required to pay such debt service.”

The schedule of estimated payments shows the total required incremental revenue by 2039 is $50.5 million in order to fully pay off the cost of the utility project and all debt service. But according to Mount Pleasant Village Administrator Maureen Murphy, that estimate was based on a higher amount borrowed and higher interest rates than were required, which has lowered the total needed incremental revenue to $38.06 million. And the village will only pay if the revenue from annual water sales is below the amount needed to pay off the required incremental revenue each year. According to Claude Lois, the private consultant who serves as Foxconn Project Director for the village, Mount Pleasant has made two shortfall payments to the Water Utility: $591,043 for the 2019 year and $442,952 for 2020, for a total of $1,033,996. At that rate the village could end up paying $10.8 million in shortfall costs by 2039.

However, village officials say there will be no shortfall in 2021 and no payments required, based on a preliminary number which shows a more than $3 million — or 14% increase — in water revenue for that year. Based on that revenue continuing or increasing in years to come, Murphy projects that the village will face, at the worst, a total cost of $2.7 million for water shortfalls by 2041, and even that she called unlikely. “The plan is working exactly as intended,” she said.

But Kelly Gallaher of the activist group, A Better Mt. Pleasant, took issue with that prediction. “The only water Foxconn is using is for bathroom sinks and flushing toilets, which leaves the village on the hook to pay for the lost water revenue,” she said. “Local officials have maintained that Foxconn has met all their financial obligations to the village – they have not – and it’s only going to get worse.”

The original schedule of payments showed the incremental revenue from water sales would increase from $1.4 million in 2023 to $6 million in 2039, driven by Foxconn’s need for up to 7 million gallons of water per day. But four-and-a-half years after it first signed a contract with the state, the company has yet to produce anything, much less a massive LDC fabrication plant that would have required such a prodigious amount of water.

Murphy, however, says those projections are out of date and that, in any event, you must take into account “all growth occurring in the Racine Water Utility service area.” In 2022, she said, Mount Pleasant expects to add “a new hospital, multiple hotels, in addition to substantial residential and commercial development.”

Correction: the original version of this story misinterpreted the 2018 contract between the village and the Racine Water Utility and wrongly concluded the village could pay up to $35 million for water shortfall payments. We apologize for the error.