This time of year is all about thankfulness, and this year Racine County has a lot to be thankful for. A lot of that is for Foxconn, which plans to invest billions of dollars to build a massive manufacturing campus in Mount Pleasant that could employ as many as 13,000 workers when fully constructed.
Going into a project this big, especially one with tax dollars supporting it, there are always going to be concerns.
And the Wisconsin Economic Development Corp. board was no exception. Before the Nov. 8 vote to approve a $3 billion contract with the Taiwanese manufacturer, there were concerns. For instance, Sen. Tim Carpenter, D-Milwaukee, who sits on the board, was concerned that taxpayer funds could be exposed if Foxconn doesn’t fulfill its part of the deal, calling the issue a “nuclear bomb.”
That issue was later rectified in the final contract.
It’s the job of board members to bring up concerns to ensure that the public is protected, and the WEDC did a good job of that.
Under the terms of the contract:
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 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.
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.
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.
The company’s CEO, Terry 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.
That is a lot of protection. Now that the state contract is signed, one of the next steps is to sign the local development agreement, which will include the local tax incentives.
We know that locally, Racine County and Mount Pleasant have an outstanding team in place working on finalizing this deal — the deal of a lifetime.
Just as state board members did, we expect that local officials are asking the tough questions to ensure local taxpayers are protected just as state taxpayers are.
We look forward to having this deal signed, seeing shovels in the ground and officially welcoming Foxconn to Racine County.
Correction: An initial version of the article incorrectly stated Sen. Tim Carpenter's vote on the Foxconn deal. Carpenter did not support the final contract and was one of two members who voted against the contract summary.