RACINE COUNTY — As negotiations among Racine County, the Village of Mount Pleasant and the Foxconn Technology Group progress, the county is preparing to help pay for the land.
The County Board on Tuesday approved bonding up to $80 million to help with interim financing to purchase land in Area One of the proposed project. That area lies between Interstate 94 and Highway H, and Highway KR and Braun Road.
The money also will help with financing for other project expenses. Of the $80 million total, $70 million will go to purchase land in area one, $5 million for financing other project expenses, $3.5 million to pay for the capitalized interest on the bonds during 2018 and 2019, and $700,000 for professional services.
Brian Della, senior managing consultant for PFM Financial Advisors, said the debt will eventually be paid for by the Foxconn project.
“This debt is, essentially, being paid for with the special assessments (against Foxconn), or some of the other debt will be paid for by the Foxconn tax increment revenue,” Della said.
“We’re going to borrow for the project and we’re going to borrow for the next two years of interest,” Della said, “so therefore it’s not going to go on the tax levy.”
Likely to affect
To speed up the process, Della said it is important for the county to get the money before it starts buying property.
“We thought it would be most prudent to have the money in hand before you start exercising $70 million worth of (land purchase) options,” Della said. “Because, say this deal doesn’t go through, it would be tough to find $70 million laying around in sofa seats.”
The borrowing is going to have a negative impact on the county’s credit rating with Moody’s, which is scheduled to release a new rating for the county on Tuesday.
“Since the county currently has less than $80 million of debt outstanding, this clearly would impact your credit rating,” Della told supervisors. “It cannot positively impact your credit rating … and you do have a high credit rating, AA1. If there was some (rating) pressure downward, it’s still an excellent credit rating.”
Della said the anticipated Foxconn development would have a positive impact on the credit rating in the long term.
County Corporation Counsel Michael Lanzdorf told supervisors they will be able to see the Foxconn development agreement among the company, county and Village of Mount Pleasant before the bonds are sold.
“Before the county would move forward with the bond sale on Dec. 5, which is something that we can hold back a portion of, you will have the full benefit of having reviewed and gone through and asked every question imaginable of the development agreement,” Lanzdorf said.