As predicted, there is much more cost to the Fox-con than the billions the state will be paying out in incentives to the corporation. We got an idea how much more when the Village of Mount Pleasant and Racine County announced on Wednesday that they will shell out AN ADDITIONAL $764 million toward the project.
Both the county and Mount Pleasant will borrow money, by issuing bonds, to pay for their upfront costs. All told, the long-term debt financing by the county and village will total just under $285 million.That makes no sense. If it’s a TIF district, then Foxconn isn’t paying taxes while the facility gets built and opens up. They only pay once the facility is worth enough to pay off the TIF district and go on the tax rolls. And the Fox-con package signed into law allows up to 30 years for that property to be untaxed if it’s not worth enough.
Other costs would be covered by the property taxes Foxconn pays as it builds out its complex. An investment by the company of $1.4 billion — significantly less than the $10 billion the firm has said it plans — would generate more than $31 million a year in new taxes and represent enough to pay for public improvement and development costs, officials said during a background briefing.
In addition, the amount of the INVESTMENT in the Foxconn facility (in machines and such) is a whole lot different than the value of the PROPERTY. The throw in the fact that the recently-signed state budget removes the value of “machinery, tools, and patterns, not including such items considered manufacturing property under current law” from a business’s assessment, and it’s likely much of what goes into the Foxconn plant won’t be counted at all.
The Journal-Sentinel’s Rick Romell also discussed other local costs that will go into the Foxconn campus.
The local money would go toward multiple purposes, including $168 million for land acquisition, $160 million for water and wastewater infrastructure, $175 million for financing expenses and $116 million to cover additional public safety costs as the village adds police officers and likely builds a new fire station.Forgivable loans related to job creation? That’s better known as the “Bill Minahan Maserati Special”, which WEDC has excelled in. Its where you give money to a corporation/donor, and the agency decides when and if they ever want to perform any oversight to get back those tax dollars.
Also included: a $100 million “development incentive” for Foxconn in the form of a forgivable loan. Officials said that was necessary to put the deal together and pointed to the far larger investment Foxconn will be making.
The rubes actually think they'll be better off? SUCKERS!
There’s also $50 million in land purchases that Racine County will borrow for the first Foxconn plant (if there ever is one), but the Journal-Sentinel article claims that there will be $74 million in special assessments put onto Foxconn for the extra services they will require. What’s not mentioned in the article is when that assessment will be levied, and over how many years.
And of course, this is merely the Racine County and local government side of the story. Foxconn hasn’t signed anything with anybody as of this time, and could always back out or threaten to do so to get more favorable terms to their side. Meanwhile, the local taxpayers are likely going to be paying more in property taxes and debt costs to pay for Foxconn-related improvements in the short-term.
Well, if there are local taxpayers around to pay for things. Another side effect of the Fox-con is land speculation at taxpayers’ expense, as Channel 6 in Milwaukee reported that local officials are offering some farms up to $50,000 an acre for their land, However, other single-family homeowners have heard nothing, and being forced off the land is a looming possibility (insert video?).
There's three separate land situations and there's three separate purchasing strategies for all those," said Dave DeGroot, Mount Pleasant village president.Look, I get it. Sometimes eminent domain and reuse is the “price of progress.” But let’s check back in a few months and see what happens to local families in that area, and if the speculative prices become an excuse to send their property assessments (and taxes) through the roof.
When it comes to securing that land, officials said everything is on the table.
"Anything is a possibility because this is such an astronomical scale," DeGroot replied when asked is eminent domain was a possibility.
Quick side note- it's interesting to read about the Village of Mount Pleasant doing these negotiations at a time when they are looking for a new Village Administrator and new Finance Director, according to the League of Wisconsin Municipalities. Seems like an odd and coincidental time to be going through a change in leadership, isn't it?
But as you can see, the Fox-con is going well beyond the $3 billion that Wisconsinites may pay in tax incentives. The total price tag of tax handouts, loans and gifts is going well beyond that when you figure in the local government costs. And if the Foxconn plant fails and/or closes up before that massive TIF district is paid back, don’t forget about this section in the Fox-con package passed by the WisGOPs (taken from the newly updated Fiscal Bureau rundown of the signed bill).
The Act specifies that, recognizing its moral obligation to do so, the Legislature expresses its expectation and aspiration that, if ever called upon to do so, it would make an appropriation to pay no more than 40% of the principal and interest of a local governmental unit's municipal obligations, if all of the following apply: (a) the local governmental unit's municipal obligation is issued to finance costs related to development occurring in or for the benefit of an EITM zone; and (b) the DOA Secretary designates the moral obligation pledge for the local governmental unit's municipal obligation before the municipal obligation is issued, based on a plan that the local governmental unit submitted to DOA. The Act also permits the DOA Secretary to contract with a local governmental unit to implement the moral obligation pledge.Of course, any additional bailout of local governments wouldn’t be paid until several years in the future, after Scott Walker and the local yokels who signed these agreements with Foxconn are long gone. Which is the intelligence of WisGOP's and Racine County's design- take all the credit and photo ops for short-term “new jobs” at Foxconn (if there are any), and then dash out the door when the check comes that pays the ridiculous price for those jobs.
And the ones that are left in the state will end up being the ones who have to pay that bill.