Sign-up for the Urban Milwaukee daily email
|
Village of Mount Pleasant |
Foxconn’s Wisconsin plant would be the “eighth wonder of the world,” President
Donald Trump declared, a “transformational, once in a lifetime opportunity,” Gov.
Scott Walker
gushed. And so, buoyed by such promises, and prodded by state
officials, the tiny rural Village of Mount Pleasant bet the house on a
Taiwanese company with a history of walking out on deals.
Mount Pleasant’s annual budget is just over $15 million, yet in late
2017 the village and Racine County (whose budget was $151.6 million that
year) jointly approved a figure 50 times higher than the village’s
budget — $764 million in spending — for land acquisition, road
construction and new sewer and water lines, all for the Foxconn project.
“The Foxconn site currently has one traffic stop; when it’s finally finished, it will have 12,” the Guardian
reported. “Approximately 42 miles… of water pipes are being added, alongside 26 miles of gas pipes and 28 miles of telecom wires.”
Yes, the village and county were spending and building big
because Foxconn would need all this for its promised $10 billion plant
employing 13,000 employees on a campus that would be four square miles
in size.
So the village had to buy up land from owners— thousands of acres — needed by Foxconn to create the eighth wonder of the world.
But some homeowners resisted or balked at the price being offered and
the village felt pressured to move quickly so as not to lose the
Foxconn project. So its leader decided to pay “for the assessed value of
homes plus an additional 40 percent and $50,000 per additional acre of
property,” as the Racine Journal Times
reported.
“The village also pays for any relocation costs, and reimburses the
property owner if they obtained their own assessment during the
negotiation process.”
That raised the costs of the project.
So did Foxconn’s delays and changes in plans. Originally, the village
and county took short-term loans to pay for the development “in
expectation that Foxconn would begin to develop those areas within the
next five years. But plans for the project changed, and those short-term
loans were refinanced into long-term loans, a major factor in the
increase in interest payments,” the newspaper reported.
The amount of borrowing led Moody’s Investors Service to lower Mount
Pleasant’s credit rating last September and in January Moody’s added
another cautionary note, as the Journal Sentinel
reported.
The village expects to recoup the entire cost of the project through a
Tax Incremental Financing (TIF) district it has created. Its financial
consultant has estimated the Foxconn TIF will generate $30 million of
revenue a year, based on Foxconn being assessed for $1.4 billion in
taxable improvements by January 1, 2023. And if the company doesn’t meet
this target by then, which seems increasingly likely, it will still be
taxed based on $1.4 billion in improvements under the contract.
But what if the company refuses to pay? What if it folds up its tent
and leaves town? Then the village would have to go to court to try and
enforce the contract. By contrast, most of the state subsidy for Foxconn
is incentive-based: the money comes as the company meets goals in
hiring and capital investment. Racine County and Mount Pleasant are
spending nearly all the money upfront, which is far more risky.
Meanwhile the village has huge swaths of land that have yet to be
developed by Foxconn and probably never will. In early April, Village
trustees “voted to allow the leasing of portions of the Foxconn
development area to local farmers,” the Journal Times
reported. The village is leasing 1,066 acres for $180 per acre to two farmers. One of them,
Tom Fliess, Jr., is leasing land he sold to the village for $1.675 million in August 2018.
Village Trustee
Gary Feest
wasn’t crazy about the deal, the story noted: “I’m a little
uncomfortable that the village is becoming a land broker here,” he said.
“It’s just we buy all of this land, remove the people from it and now
we’re making money from it.”
Assembly Speaker
Robin Vos
(R-Rochester) represents much of Racine County and portions of Mount
Pleasant, and he promised that Foxconn would deliver “a $10 billion
development project, 13,000 careers and new opportunities throughout
Wisconsin. The Foxconn project is a worthwhile investment that will
transform our state and help build a strong, healthy economy.”
So when taxpayers look for who to blame when their massive
investment is not repaid, they might look first to their local state
representative. Which might explain why Vos is desperately trying to
blame Gov.
Tony Evers for Foxconn’s reduction in the size of the project.
Evers has announced he wants to renegotiate the contract given
Foxconn’s many changes in its promised deal. In June 2018, Foxconn
confirmed it would no longer build the Gen 10.5 plant it was
contractually required to do and would instead build a Gen 6 plant,
which would require an investment of only $5 billion or less. Since last
fall it has stopped promising to invest $10 billion. As for those
13,000 jobs, the company said in August 2018
that the vast majority of those promised manufacturing jobs —- if a manufacturing plant is ever built —
would actually go to robots. But all signs suggest it isn’t even building that and is instead
creating a small assembly plant.
The massive shrinkage in the promised investment, size of the plant
and number of manufacturing jobs all came before Evers was elected, but
Vos is trying to blame this on Evers. “It is beyond my level of
understanding to think that a Governor of Wisconsin is rooting for the
failure of the largest economic development project in our state’s
history!” he told talk radio host
Jay Weber. Evers is “doing harm” by seeking to renegotiate the contract, Vos declared.
You can expect to hear much more of this from Vos, as voters in his
district begin to realize that the “$10 billion development” and “13,000
careers” he promised will never materialize and that their massive tax
investment was a sucker’s bet. It may just occur to some of them that
their state representative failed to protect their interests.
If you think stories like this are important, become a member of
Urban Milwaukee and help support real independent journalism. Plus you
get some cool added benefits, all detailed here.
From:
https://urbanmilwaukee.com/2019/04/19/murphys-law-mount-pleasant-biggest-foxconn-loser/?fbclid=IwAR1dsjkYLzrkN5m9n8hEe-TF61A2Xf173tYG1peO9slOH4sil_o9ZQ_Vt5A