MOUNT PLEASANT — The local development agreement with Foxconn Technology Group was made public Monday and shows a couple of distinct improvements from previously signed deals between the company, Racine County and Village of Mount Pleasant; and between the State of Wisconsin and Foxconn.
The local development agreement, with the county and village acting as partners, outlines the responsibilities of Foxconn, Racine County and Mount Pleasant, along with guarantees and protections for taxpayers.
The deal’s improvements pertain to local job creation and $60 million in up-front money from Foxconn for land acquisition.
The Mount Pleasant Community Development Authority and Village Board Monday both voted to approve the 33-page development agreement that became public at 6 p.m., with the CDA recommending it on a 5-1 vote and the board voting unanimously.
The next steps will follow quickly. The Racine County Board will consider approval of the development agreement Tuesday evening, Nov. 28, and the Joint Board of Review is scheduled to sign off on it Wednesday. Local officials expect a public, three-way signing of the document on Friday, which would make the pending deal official.
Taiwanese-based Foxconn, a designer and manufacturer of liquid crystal display, or LCD, panels and finished products, plans to build a $10 billion manufacturing campus of 32 million square feet in the southwestern corner of Mount Pleasant, with construction starting next year. The campus is expected to employ up to 13,000 people — excluding an estimated 10,000 construction jobs and many thousands more indirect jobs.
The agreement contains a provision that the state’s agreement with Foxconn — which was signed Nov. 10 — does not. The state agreement ties $2.85 billion in tax credits for the company to create both construction and manufacturing jobs. To earn up to $1.5 billion in tax credits for creating and maintaining up to 13,000 manufacturing jobs, they must all be in Wisconsin.
The local deal goes a step further, requiring more than half of those jobs to physically be in Racine County.
Racine County Executive Jonathan Delagrave cited that as one important way that the local agreement betters the state’s deal with Foxconn.
“The county has to quickly and efficiently devise a local and national workforce solutions plan, so we’re already taking the steps to do that,” Delagrave said. “I feel like we have a really good plan in place, not only nationally, but locally to employ as many people as we can, and that includes those that have significant barriers to them.”
And some of those people may lack the means to get to those future Foxconn jobs.
“We need to address the transportation piece and develop a system as efficiently as we can,” Delagrave said. “That’s to be determined as to what that framework looks like. All I can tell you is it’s something that needs to be looked at and addressed in the near future.”
The local development agreement also provides a brand-new provision that goes beyond what had been set down and signed in the memorandum of understanding between Foxconn and the village-county partnership. The company has agreed to deposit $60 million in the bank for Mount Pleasant to draw from for the acquisition of land in areas II and III. (Area II is for future Foxconn development and Area III is for construction staging and later, future development).
Originally, Racine County and the Village of Mount Pleasant were going to borrow roughly $35 million for land acquisition in Area III.
“Foxconn is not coming into this no money down,” Village President Dave DeGroot said Monday. “That’s money that’ll be in our bank, in our county, in our name, and the land will stay titled in our name first until they’re ready for their partial releases.”
DeGroot said Foxconn’s $60 million, which is expected to be provided by Dec. 15, gives him a good feeling about the project moving forward.
“It tells us that we’re sitting in a really good position, that we are keeping our promise to the taxpayers that the taxpayers will not be on the hook for this,” DeGroot said.
Backing initial investment
The $764 million local financing deal with Foxconn will be done mostly through a new tax incremental district, along with some borrowing. The plan hinges on Foxconn’s plan to create $1.4 billion in additional property taxes, which would then close the TID.
But the two municipalities must invest about $195 million initially for all the necessary infrastructure. The development agreement contains these protections against that investment:
Foxconn’s $60 million cash investment.
SIO International, a company of Foxconn founder, Chairman and CEO Terry Gou, agrees to cover any remaining gap, beginning with a $135 million guarantee at the time of the initial bond issuance.
Foxconn will give Mount Pleasant and Racine County a first-lien mortgage even as the company takes possession of additional land. It will eventually own the land for free, but Foxconn gets paid last.
DeGroot said the deal “puts some teeth” in the previously signed MOU.
Racine County plans to do a bond issue on Dec. 5 to raise up to $80 million; about $70 million of that is for land acquisition in Area I, where Foxconn plans its initial manufacturing campus. That area lies between Interstate 94 and Highway H, and Highway KR and Braun Road.
The state plans to provide the county with workforce development funding; the 2018 county budget also includes $750,000 for that purpose.
“A lot of that (programming) is going to directly benefit not just Foxconn, but some of the existing businesses or businesses coming in,” Racine County Corporation Counsel Michael Lanzdorf said.
“Those programs will be developed in collaboration with Foxconn, but they’re not going to be targeted solely for Foxconn.”
All of the Foxconn-related documents are available to the public at www.foxconnracinecounty.com.