A $1 billion Microsoft data center announced for Foxconn site, one week before key local election
Corrinne HessMOUNT PLEASANT -- A week before a pivotal local election that could determine the future of the sprawling Foxconn site, local and state leaders said Monday that Microsoft is poised to develop a $1 billion, 315-acre parcel of the mostly vacant land.
Plans for the agreement were announced Monday by the Village of Mount Pleasant, Racine County, Racine County Economic Development Corporation, Wisconsin Economic Development Corporationand Milwaukee 7, following a closed session meeting.
One year ago, Claude Lois, Foxconn's project manager hired by Mount Pleasant, told village residents he was hoping to attract a national or international company to the site. Mount Pleasant has spent five years and $1.4 billion investing in 2,500 acres of property since Foxconn first announced its international development in 2017.
“Our first commitment is always to local taxpayers,” Lois said in a statement. “That will be the case as we move forward with Microsoft.”
The development will happen in Area III - land owned by the Village of Mount Pleasant. Officials did not say how many jobs would be created.
The village board will vote on the proposal Thursday and the Racine County Board will vote on it April 11 and 18.
Racine County Executive Jonathan Delagrave and Village President David DeGroot called the plan a tremendous opportunity.
“Microsoft was attracted to this location because it is primed for development,” DeGroot said. “Through local investments, we have transformed this area of Mount Pleasant and equipped it with the infrastructure necessary to support a major investment by Microsoft.”
Microsoft development will financially benefit Foxconn
If Racine County and Mount Pleasant approve the development agreement, construction on phase one of the Microsoft data center would begin no later than July 2026. Phase two would begin no later than July 2033.
Microsoft would purchase approximately 315 acres for $50 million by July 31, 2023. Foxconn will receive the proceeds from the Microsoft land sale as a partial reimbursement of money Foxconn paid in 2017 to acquire land.
Foxconn's existing facilities, including the recognizable globe, are located in Area I, which is south of Braun Road, north of Highway KR, west of County Highway H and east of Interstate 94.
Under the proposed agreement, Microsoft would be eligible to "earn back" some of its investment as it builds and could recoup 42% of the annual incremental property taxes it pays on the improvements it builds, not to exceed $5 million per year for the duration of the agreement and the district.
“Today’s announcement is just the start of our mutual collaboration and Microsoft’s long-term commitment to the local community,” Paul Englis, Microsoft's director of community engagement said in a statement.
Mount Pleasant and Racine County have the option to repurchase the land being sold to Microsoft, if Microsoft fails to meet its construction deadlines.
This deal does not change Foxconn's obligation to the village and county.
Foxconn plans scaled back
Foxconn's plans have greatly been scaled back since its initial announcement that was heralded by former President Donald Trump and then-Gov. Scott Walker who said it would transform Wisconsin's economy.
The Generation 10 factory became unattainable, as were the jobs promised. In April 2021, the state revised its $2.85 billion contract with Foxconn to create more realistic goals including the creation of 1,454 jobs — 11% of the original plan — by 2024.
Foxconn has promised many things - coffee kiosks, $100 million to UW-Madison, Ginseng capital of the world and innovation centers. So Monday's announcement had some skeptical.
In a statement, Foxconn Technology Group said the collaboration with Microsoft and local government demonstrates the company's partnership with others.
"As a result of Foxconn’s presence, Mount Pleasant has undergone a transformation of infrastructure that continues to support potential business cases for additional Foxconn production," the statement says.
"In Wisconsin, Foxconn has invested over $1 billion, manufactures data servers for tier-1 customers, remains committed to driving its ongoing business operations and committed to finding new opportunities in response to market demand.”
Data centers growing in demand
America’s largest technology companies, including Microsoft, Amazon and Google are building data centers and the industry has doubled in size since the end of 2015, according to the Synergy Research Group,
Still, despite the growth, the industry is not creating the number of jobs expected, according to the New York Times.
E.W. Gregory, the head of the local International Brotherhood of Electrical Workers union, told the Times that when Microsoft opened a data center in Boydton, Virginia, the community thought it would create hundreds of jobs but that was not the case.
Instead, they brought in outside technicians to do most of the work, Gregory said. About 25 local residents got jobs, primarily as administrative assistants or janitorial staff, Gregory said.
“It helps the community to a point, because restaurants, gas stations, and hotels are getting more business,” Gregory said. “The people are nice and hard working, but there is no industry for them to work in.”
Election pits critics against current village trustees
The announcement comes as a heated race for the Mount Pleasant village board is entering its final week. The race has pitted the current village board leaders against critics of their handling of the Foxconn development.
In January, Kelly Gallaher, a long-time critic of the Village of Mount Pleasant, announced she was running to replace DeGroot in the spring election and put together a team to oust the current village board. On Monday she said if the Microsoft deal is happening, her team can handle it.
Gallaher is running for office with Kim Mahoney, who fought for years with the village board to keep her home, located within the Foxconn redevelopment site, Travis Yanke and Eric Martinez. They are challenging incumbents DeGroot, John Hewitt, Nancy Washburn and Ram Bhatia.
"Our position is if there is someone out there interested, they might want to have talks with us," Gallaher said.
"Dave DeGroot has had five years, we're the ones that are going to make this happen. They've lost plenty of opportunities. Any opportunity that comes our way will get done. We're the the team to pursue and do it."