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WEDC OKs Foxconn contract, which includes CEO's personal guarantee

MADISON — The Wisconsin Economic Development Corp. board on Wednesday approved a $3 billion contract with Taiwanese manufacturer Foxconn Technology Group, a deal the company’s CEO is personally backing should it fall apart.

The company plans to invest billions of dollars to build a massive facility in the Village of Mount Pleasant and hopes to employ as many as 13,000 workers when the facility is fully constructed.

The Taiwanese company’s chosen area, where acquisition specialists have been negotiating purchase agreements with property owners, is on 1,198 acres between Interstate 94 and Highway H and between Highway KR and Braun Road.

A second, 1,073-acre area directly north of that will be acquired for Foxconn expansion. A third, 622-acre area east of the manufacturing campus will be acquired for construction staging during the building of that campus, and in the future for other development.

Already the Village of Mount Pleasant and Racine County have approved transferring jurisdiction of road construction, in areas related to the Foxconn site, to the Wisconsin Department of Transportation.

Racine County Executive Jonathan Delagrave said the agreement is “one more step toward ensuring that Foxconn locates in Racine County. We continue to work on the local level to bring the project to fruition.”

Contract details

Under the terms of the contract, released publicly for the first time Wednesday, the company will be able to collect up to $1.35 billion in construction-related tax credits if it creates a gradually increasing number of manufacturing jobs, up to 8,450 through 2025.

It will also be able to collect up to $1.5 billion in tax credits if it creates up to 13,000 manufacturing jobs by 2022 and maintains that number through 2032.

Though Gov. Walker and Foxconn CEO Terry Gou agreed earlier this year on a $10 billion investment by the company, the contract only requires the company to invest $9 billion in the state to be eligible for tax credits.

The jobs must pay at least $30,000 per year and average $53,875 annually. The job credits pay out 17 percent of the first $100,000 of salary, which is higher than 7 percent for the state’s typical enterprise zone job credits. The construction credits equal 15 percent of capital investment, up from 10 percent in a typical enterprise zone.

The company will be eligible to receive the first $10 million in job credits starting next year if it creates 1,040 jobs in the state. To receive any credits next year, the company must create at least 260 jobs. But if the company doesn’t earn the credits in a given year, they can be carried forward into subsequent years.

Foxconn’s ‘personal guarantee’

Within five years, the state can reclaim any credits it pays out if the company provides false information, leaves the state or ceases operations and doesn’t restart within a year. After that, if the company employs fewer than 6,500 workers the state can reclaim a sliding scale ranging from $965 million in 2023 to $386 million in 2032.

Compliance with the terms will be audited by an independent accountant based on a sample of the company’s workforce at the end of each year.

Gou is pledging to personally back 25 percent of the amount that would be refunded to the state should the company default. Publicly traded parent company Hon Hai Precision Products, the 27th largest company in the world, would back the rest.

After 2032 the deal ends and the state would have no recourse should the company reduce its Wisconsin workforce. The nonpartisan Legislative Fiscal Bureau anticipates the state will recover the $3 billion in lost tax revenue by 2042.

Wisconsin Technology Council President Tom Still said Gou’s personal guarantee, and connecting the construction tax credits to the company’s manufacturing workforce in the state during construction, are unusual for deals of this magnitude.

“It sounds like a pretty good belt and suspenders,” Still said.

Tax exemption similar to Bucks arena

The $2.85 billion in tax credits will mostly be paid from the state’s existing tax collections because Foxconn also will benefit from a state tax credit that almost eliminates state corporate taxes for manufacturers. The amount of that benefit to the company is unknown.

Foxconn is also receiving a sales tax exemption estimated to be worth $150 million, similar to the Milwaukee Bucks arena deal. And it is eligible to receive a $100 million incentive as part of a $764 million tax incremental financing district for infrastructure improvements offered by local officials in Racine County.

The WEDC board vote is the final layer of public oversight before the contract can be signed and construction can begin, likely some time next year.

The company is planning to manufacture liquid-crystal display (LCD) screens at the 20 million-square-foot Mount Pleasant campus starting in 2020.

The WEDC board received a copy of the contract Monday ahead of the vote, breaking with the agency’s past practice of only providing a staff report summarizing the deal.

The board had been scheduled to vote on the contract on Oct. 17, but the vote was delayed for unspecified reasons. After public pressure mounted on the agency to release the contract, the WEDC Board announced Friday the contract would be provided to board members.


Sharing his wisdom
Chuck Tyler aims to inspire youth with new book

RACINE — Chuck Tyler retired from his position as director of Racine’s Parks, Recreation and Cultural Services Department back in 1999. But the longtime youth mentor and community activist certainly hasn’t been idle since then.

Tyler, who turned 80 in January, recently published a book titled “Youth in the Center of My Heart,” a book he said has been 18 years in the making.

It is the story of Tyler’s journey from his own youth, growing up in Cairo, Ill., to his many years working with Racine’s youth — while also leading struggles for progress, equality and justice in our community.

And its purpose, the author says, is to serve as a compass for today’s youth as they make their way through what, at times, can seem like “hell on Earth.”

A shared vision

Tyler said he wants to share his struggles, and all that he learned from them, with young people today with the hope that they will be inspired.

“I want them to be able to have a vision like I had growing up,” said the father of four who lives with his wife, Juanita, in Racine.

Tyler said he experienced plenty of discrimination, segregation and poverty in his hometown. But he said he wouldn’t let what was happening around him “steal his joy.” He had a vision that was fueled by the faith, hope and love given to him by his family, church, school and mentors at his local community center. That vision allowed him to discover his God-given talent of playing basketball, which kept him out of trouble and opened up opportunities for education, travel and more.

Without such a strong, spiritual vision, he wouldn’t have made it through life’s challenges, Tyler said. “I want young people to understand they can’t make it by themselves.”

Finding inspiration

On Friday, Tyler will be honored by the NAACP Racine Branch for his many accomplishments here, including his influence on the building of two new community centers and integrating programs at such centers.

And in his book he writes about the many people throughout his life who have inspired him to face such challenges, including his great-grandfather, John Tyler.

Born into slavery and taken away from his family at age 15, John Tyler was finally freed after 46 years. Once free, he joined the U.S. Navy and went on to serve as the first black juror in Cairo and a police officer.

Tyler said he’d like young people to not only reflect on how his great-grandfather survived, but how he served.

“He accomplished so much in those 14 years when he was out of slavery,” he said.

Leading with love

There are others, too, whom Tyler says he’s learned important lessons from, including his father, Thomas Tyler; Mr. Booker, the owner of The Grill Cafe which served as Cairo’s community center; and his mother-in-law.

Tyler carried those lessons with him, into his work with Racine’s youth — a job he said he was called to do. He remembered how his father taught him to envision the consequences of his actions, rather than punishing him for making a bad choice. And he believed in the power of such education over discipline.

“I went in with love, and love led to discipline,” Tyler said. “Once someone feels they can trust in you, they open up and allow you to guide them.”

Tyler said he is also grateful for all of the support and many collaborations with other organizations he had while working with area youth.

“There’s no way I could have done this by myself,” he said. “I’ve been blessed to be surrounded by good people who helped me carry out my vision. You’ve got to have the spirit to meet with people to make progress.”

Looking within

Tyler also said he thinks now is the right time for his book, because of what is going on in the world. People need to use the spirit within themselves to live in a world that seems out of control, he said. And he hopes that today’s youth will make time for solitude and reflection, because he feels they are key elements in being able to sort things out.

“This book really makes you look inside for answers, and you’ve got to have a relationship with God to do that,” Tyler said. “The book is not about me — it’s about people.”

Even if he doesn’t sell a single copy, Tyler said he’s glad to have written the 300-plus-page book because, with it done, he feels “free at last.” Like many things in his life, he said, “It’s been a blessing.”

Copies of “Youth at the Center of My Heart” will be available for sale at a book-signing event Tyler has scheduled from 6 to 9 p.m. Dec. 1 at Photographic Design studio, 411 Sixth St. See the accompanying box for details.



Sturtevant hears four library options

STURTEVANT — This village has several options to consider if it wants to expand library services beyond four hours of bookmobile visits each week.

On Tuesday evening, two representatives from Library Strategies, a consulting group, made a presentation to the Sturtevant Village Board, with recommendations, following a library service market analysis focused on Sturtevant. The purpose, Racine Public Library Executive Director Jessica MacPhail said previously, is “to determine whether there is a broad enough user base to support a branch library, or whether there are other options for providing service to the area.”

With a push from Sturtevant residents Linda Bush and Rose Woodruff, the Village Board has been talking, on and off, for more than a year about the possibility of Sturtevant having its own library, in some form. The Racine Public Library Foundation commissioned the study by Library Strategies after Sturtevant trustees Carrie Harbach and Mike Rosenbaum told library officials of Sturtevant’s interest in the idea.

The study shows that 29 percent of Sturtevant’s approximately 5,000 residents — the number excludes those at Racine Correctional Institution — are considered “active” library patrons, meaning they have used a library within the past five years. That is slightly less than Mount Pleasant’s 31 percent, and Mount Pleasant’s per-capita total checkouts are also greater.

Four service model options

Karen Rose and Melissa Brechon from Library Strategies said opening a new library is at least a five- to seven-year process.

They presented four models for increasing Sturtevant’s library services:

1) A branch of the Racine Public Library with full funding and operational support provided by Racine Public Library, with continued membership in the Lakeshores Library System.

2) An independent Sturtevant library, remaining part of the Lakeshores Library System with full benefits of membership in that system (cooperative purchasing, delivery, interlibrary loans, continuing education, technology support, etc.) as an independent member library.

3) A joint Sturtevant-Racine Public Library with cooperative arrangements for funding, operations and governance. The report states, “This form of contractual arrangement exists in many library/city/county communities within the State of Wisconsin with a municipality funding the construction of the library facility and providing all maintenance of that facility, including insurance, heat, lights, snow removal, lawn care, cleaning services, and other services related to a building. The Racine Public Library would provide staff, collections, programming and technical support.”

Trustee Jason Eckman said he thought that option could be feasible.

“My concern is: If we do something halfway, no one’s going to be happy,” he said.

4) A link and/or express library, staffed by volunteers or minimal staff, with options for book delivery lockers.

Link, express libraries

The report explains that a link library “can be provided in a variety of ways, with space located in an existing storefront, a room within other public service facilities, or within a public area with a potential partner (grocery store, coffee shop, etc.). This site could be open daily or several times a week, depending on staffing, programming options and building access considerations.

“Link library sites are either managed entirely by volunteers or with limited staffing oversight.”

The report states, “An express library could include a set of lockers located in a high-traffic area such as city hall, recreation center or in an open area near transit hubs or public service buildings, which are accessible by the public 24/7 or during extended hours. Library users reserve materials online and, through arrangements with local libraries, materials are delivered and picked up either daily or two to three times a week.”

Rose and Brechon said the most appropriate library solution would be a regional one also involving, at minimum, Mount Pleasant. Eckman agreed with that, pointing out that Mount Pleasant had about 121,000 checkouts last year to Sturtevant’s 17,568.

“That really shows the need is much broader than just the Village of Sturtevant, and could justify a larger investment,” Eckman said.

The report contains eight recommendations, starting with the formation of a library/community center planning committee with representation from the Sturtevant Village Board, Racine Public Library and its foundation, Lakeshores Library System, Racine County and community members. After the presentation, Rosenbaum agreed to sit on a library planning committee.

Library director’s reaction

Tuesday’s presentation was also the first time MacPhail was hearing and seeing the report. Afterward, she said, “I think we’ve got some nice options. … I think of these options that are listed here, I’m pretty sure the Library Board will want to continue the conversation and form a library community planning committee and start discussing some of the meat that’s in this report.”

About the fact that per-capita library checkouts are considerably greater in Mount Pleasant and Caledonia than Sturtevant, MacPhail said, “There are reasons for that; Sturtevant is really far from the Downtown building.

“What are they using for library service?” MacPhail continued. “They’re paying for it. They’re not getting what they’re paying for. So that’s what interests me: How can we provide better service?”

Note: Because of an error in the report provided Tuesday night, the percentage of "active" Mount Pleasant library patrons in the original story was inaccurate. The error has been corrected.