Saturday, January 18, 2020

Now even the locals are planning for the Fox-con to come up short...and to get bailed out

Good work by Patrick Marley of the Milwaukee Journal-Sentinel to get actual emails and documents that show the local yokels who have given hundreds of millions of dollars to Foxconn are looking at their escape plan if/when this thing fizzles out.

The numbers and details come from a meeting a few months ago between the Village of Mount Pleasant and officials from the Wisconsin Department of Administration, and looked at the increasing reality that the Fox-con won't be all that we were told it was going to be.
The team, which included consultant Ehlers Inc., estimated Foxconn’s project and other developments in a Mount Pleasant tax incremental financing district would soon be worth $522 million. That’s about 37% of the $1.4 billion value the district is supposed to achieve by 2023.

The team's views on the project were included in a four-page outline released Friday by Racine County under the state’s open records law. The outline was produced for a September meeting on the project involving officials from the county, Mount Pleasant and the state Department of Administration.
$522 million doesn't come close to the $913 million that Mount Pleasant has borrowed for the Foxconn Tax Incremental District, money that they are borrowing and paying back today, in the hope that Foxconn will be paying it back in taxes later due to higher land values.


In addition, Marley notes a part of Mount Pleasant's plan that figures one of the ways out of this mess is to over-assess the value of whatever Foxconn builds (assuming they do build it).
Most of the estimated value in the tax incremental district — $400 million — would come from a huge plant Foxconn plans to build. The remaining $122 million in value would come from a server building, data center, substation and other developments....

The outline did not describe how the team reached that conclusion. The facility is expected to have a footprint of 1 million square feet, and an assessment of $400 million would give it a value of $400 per square foot.

It's possible the plant will ultimately have more than 1 million square feet because of mezzanines and office space that could be built, which would bring the value per square foot down. Still, the value appears to be far above that of other manufacturing facilities in Wisconsin, which are valued at well below $40 per square foot in most cases, according to people familiar with manufacturing assessments.
Oh, I'm sure the execs at Foxconn will just shrug and accept that inflated assessment.

WRONG. They'll avoid paying any taxes at all, and pay lawyers to challenge the assessment in court, tying up Mount Pleasant for years and forcing them to take on extra costs to argue the case. This is a common practice among many large corporations in Wisconsin, and we've seen the grifters at Foxconn are even seamier than that crowd.

Which means the Village of Mount Pleasant will have even LESS money coming in than expected, in a time when it is already facing financial difficulty from the extra debt it has to take on to build up (unneeded) infrastructure for this scam.

Remember, Mount Pleasant is already taking on another $112 million in debt this year in order to pay off another $143 million in debt and infrastructure.


And in 2019, Mount Pleasant only got $8.4 million in taxes back from Foxconn to pay for all of these tax-funded gifts, meaning the homeowners left in the Village have to pay much more on their property taxes to make up the difference.

But don't worry, Marley notes that if the Foxconn development fizzles out, they'll just ask the rest of us in Wisconsin to bail them out.
In such a situation, there would not be enough money available to pay for operating costs and some debt, according to the outline. The local governments would face a shortfall even if they deferred sewer projects and abandoned plans to build a new fire station.

If the project were to hit bumps in the road, state taxpayers could have to cover up to $120 million in debt for local governments, according to an agreement with the state.
That seems to be light, as the "moral obligation clause" in the Fox-con package covers up to 40% of the debts that the local yokels have to take on. I assume they are figuring that their higher land value assessments will mean that Mount Pleasant is "only" $300 million in the hole. But what if the Village doesn't get that amount? Then I'd assume the price tag to the state would rise higher (if we choose to pay it).


This story and other recent developments seem to show the groundwork being laid for an escape hatch. The people on the inside know the Fox-con isn't going to be anything resembling what was sold, and now they're trying to figure out how to sell the failure to the public.

Time for the Evers Administration to play hardball with both this grifting company, and the GOP crooks at the local and state level, and let neither of them off the hook for the lies and costs that the rest of us will have to take on due to this scam that had a lot more to do with Scott Walker's 2018 election campaign than it had to do with any kind of economic development.

4 comments:

  1. There truly is no deflection, no amount of lies and spin, that Vos and the GOP legislative majority can field to disguise their responsibility for this monumental idiocy.
    It is no small irony that the face of this debacle, the high-visibility puppet who helped engender this abortion, Scott Walker, now hides his hide in Milwaukee, the city he routinely abused and neglected as County Exec and later as governor.
    No pestilence of pundits, no abhorrence of attorneys, no tantrum of Talk Radio Twits can diminish the Republicans' culpability for squandering taxpayer money as if it were the GOP's alone to squander. Sane Wisconsinites have watched Vos smirk, duck, wriggle and squeak while the GOP shovels taxpayer money, with apocalyptic abandon, hell, with front end loaders(!) into the bunkers of undeserving one-percenters.
    You know Vos' handlers are even now focus-grouping their talking points, concocting an alternate "history" of the FoxCon "deal," and honing the details of an exit strategy.
    Already assumed in all this planning by Vos' handlers is that Wisconsin taxpayers will provide Socialism for the one-percenters, in the form of public assumption of all debt repayment.
    So much one-percent winning...

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    Replies
    1. I have little doubt Vos has already planned how to blame Evers when this scam officially goes under, and claim that "this all would have fallen into place if Walker won."

      BULLSHIT. The Fox-con was never anything but a PR stunt by Walker to try to save his 2018 re-election, and a way for Foxconn to convince Trump to lift tariffs against their products. Oh, and a nice way to waiver environmental standards and send massive amounts of pork to Vos's district.

      Amazon has constructed more warehouses and added more jobs in southern Wisconsin than Foxconn for a fraction of the taxpayer costs. Let's ask why, and make those who signed off on the Fox-con get the boot ASAP.

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  2. All good analysis -- Walker's BFF, the propaganda shills that catapulted him to successively higher office despite objectively demonstrable incompetence and failure that includes killing a boy going to Summerfest, are more-than happy to begin telling the lies that will stick the rest of the state with Mount Prairies foolish debt.

    Protecting Vos and the republican cabal that includes the impeached tRump is what U.S.A. today and Gannett (now owner of the propaganda rag) is now job 1. Gannett is now owned by a NY investment group, so we know they will not become a legitimate news source anytime soon.

    Evers was mealy-mouthed on this during the campaign, so only time will tell if he really holds Foxconn to the contract -- it is a good sign that officials are now telling the truth: Foxconn has not qualified for any of the incentives in this sham deal.

    Personally, I hope homeowners and that community suffer severe financial consequences for being behind Walker and tRump and electing a weasle like Vos.

    They cheer when other workers are attacked -- now I am ready to jump for joy and cheer when they find out that Walker & tRump played them for fools.

    And don't even get me started on the moron dairy farmers who mistakenly thought they were the backbone of Wisconsin's economy.

    Sure -- not all these people voted Walker/tRump, but the vast majority did. Let them reap the fruits of their own hatred and racism.

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  3. Here's all you need to know about Gannett: They never do any meaningful investigative reporting on Trump. When someone else does, they may carry their own version.

    Gannett is the nations largest newspaper chain. No one has more money do do meaningful investigative work.

    And Gannett chooses to pander to the likes of Trump and Walker. No one should buy their garbage reporting, nor subscribe to any of their garbage newspaper sites.

    ReplyDelete