On Monday, April 19, Governor Tony Evers announced that the state of Wisconsin had negotiated a new economic development contract with Taiwanese technology manufacturer Foxconn, which is currently building a large facility in Racine County. The following day, Gov. Evers announced that the board of the Wisconsin Economic Development Corporation (WEDC) voted unanimously to approve the contract. WEDC is a public-private agency that provides economic development incentives to new and existing businesses in Wisconsin.
The state’s original contract with Foxconn was negotiated in 2017 by Governor Scott Walker, Gov. Evers’ predecessor. Under the terms of that deal, Foxconn could have received as much as $3 billion in refundable tax credits if it created 13,000 jobs and invested $10 billion in its Wisconsin facility over a period of 15 years. To date, Foxconn had failed to create enough jobs or invest sufficient capital to receive any government incentives under the original deal.
By comparison, the new agreement covers a term of only six years. Under the renegotiated contract, Foxconn can receive up to $80 million in refundable state tax credits if it invests $672 million and hires 1,454 workers at an average wage of at least $53,875. The new agreement provides Foxconn the same job creation and capital investment tax credit opportunities as other WEDC projects, while the original agreement allowed for more credits at higher rates than a typical WEDC contract.
A table comparing the terms of both contracts can be viewed here.
If Foxconn defaults on the new agreement by abandoning the project, ceasing operations at the site to operate the same project elsewhere, or supplying false or misleading information to WEDC, the state can recover all of the tax credits paid to the company, plus penalties, fees, interest, and court costs.
The new contract will also require Foxconn to make up the difference in property taxes between the actual and expected value of its property if the assessed value falls short of what was originally expected by the local governments that helped finance the project.
Under the new terms, Foxconn may be eligible for up to $2.2 million in job creation tax credits for 2020 if the company had at least 481 and up to 601 jobs by the end of the year. Foxconn could also receive $26.9 million in capital investment credits for 2020, representing nearly one third of the total value of the new deal, because the company has already reached the revised capital investment goal.
The original contract required Foxconn to have at least 1,820 jobs by the end of 2020 and 7,800 jobs by the end of 2024 to qualify for any job creation credits in those years. Now, the company needs at least 1,163 jobs by the end of 2024 to qualify for any job creation credits that year.