Alan Marcuvitz, attorney working with the village on matters related to Foxconn, said funding for the upgrades will be paid for by the tax incremental district (TID) set up in the Foxconn area.Uhhh…is that a good thing? That sounds like all of the costs are being dumped on the few taxpayers left in Mount Pleasant, and given that these costs are now being added to the $764 million TID, does that make it an $864 million TID that’ll take even longer to close, since another $100 million is designated for this project? Sure sounds like it (if I'm wrong, feel free to correct me).
“That’s going to cost approximately $100 million of funds that are being borrowed by the village in order to (pay for the project),” Marcuvitz said. “It’s going to be funded through the TID … it will be recouped through the collection of revenues flowing from the future as a result of development that occurs in the TID area.”
If approved by the city, Marcuvitz said this deal would be completely unique compared to what has been done in the past.
“Normally what has happened in the past is the Racine Water Utility has fronted the money and has recouped the money through REC (residential equivalent connection) fees,” Marcuvitz said. “But in this case, all of the new infrastructure, whether it’s mains or tanks or booster stations or pumper stations, anything to do with this at all is being paid for by the village.”
Here’s another way it sounds like Mount Pleasant taxpayers are going to be put on the hook. The difference between REC fees and the cost to pay the debt to build the new water infrastructure is going to cost $26.8 million, and Marcuvitz says Mount Pleasant will pay THAT as well.
“The Racine Water Utility is going to go out and finance that $26.8 million, the village is covering any shortage that does not pay for the debt service based on (water) consumption,” Marcuvitz said. “Let’s say two years from now there’s a payment that needs to be made on the debt service and (the city) is short because the revenue is not sufficient to cover it, the village will cover that shortage for that year. (The village) will cover any shortage for any succeeding year.”As if this isn’t enough of a potential budget-buster, it also looks like any developer of new property in Mount Pleasant is going to get the equivalent of a tax break in the form of lower REC fees.
Currently if a single home needs to connect to the water and sewer lines, it would cost $3,623. If, for example, a business or apartment complex needed 10 connections to those lines, then the fee would be $36,230...And that lowered fee will stay in place until that $100 million in upgrades is paid off in Mount Pleasant. Not a bad gig if you’re a scummy speculator who bought up land around Foxconn, but it also means the gap that Mount Pleasant has to make up is much larger than it otherwise would be.
When the agreement is final, the REC fees plan to be $500 to connect to the [Racine] water and sewer lines.
And why would you need to cut the fee to build in and around Mount Pleasant in the first place? What happened to “if you build [Foxconn], they will come”?
This water and sewer deal reeks, and the 26,000 people that live[d] in Mount Pleasant and have to pay a large amount of these costs in the next few years, while Foxconn and the new developments will pay next to nothing. With the reality setting in that this Fox-con will lead to far fewer jobs than promised, why would anyone sign away their community’s present and future to take on further risk with this project?
And if you think, "well, that's Mount Pleasant's problem, and won't affect me" - WRONG! Remember that's there a "moral obligation pledge" written into the Foxconn bill to help Mount Pleasant sell all of this debt, and it means state taxpayers have to make up to 40% of the difference in interest and principal if the local communities can't pay back debts related to the Fox-con. As I noted back in January, the LFB estimated that the state could be on the hook for $64 million for a $100 million financing, such as we're seeing with this water deal. So yes, we all should care, beyond the fact that this is a horrible case study of how local communities can get screwed over by these deals.
The rest of the state already recognizes the Fox-con as an absurd, crooked boondoggle. But I’m starting to think there will be recall petitions flying in western Racine County once people start to see the new property tax and water bills that they’re going to have to pay for in order to build up all of the new infrastructure and local tax breaks that are included in this scam.