Now more than one year into the Foxconn project in the Village of Mount Pleasant in Racine County, Wisconsin, local leaders have stayed true to their commitment to transparency and information sharing with the release of updated project cost estimates and local investments to-date.
“In 2018, the Foxconn project moved forward and took great strides,” said Racine County Executive Jonathan Delagrave. “All the while, we have remained true to our promise of ensuring the full project investment will be funded by Foxconn through TIF-related payments and special assessments that have not, and will not, impact local taxpayers.”
To-date, the total project investment has been approximately $190 million, and the updated TID estimated investment is $912 million. The total increase in investment will be offset by the increase in the special assessment payments to be made by Foxconn, payments from the Village of Caledonia towards sewer improvements, and application of tax increments.
The majority of the increased costs are related to land acquisition costs – which will be offset completely by Foxconn special assessments.
“To ensure all property owners were treated fairly and equitably, the Village Board agreed to offer all impacted property owners 140% of the fair market value of their homes and $50,000 / acre for excess land,” said Village of Mount Pleasant President David DeGroot. “This generous offer amount wasn’t included in original project estimates, but Village leaders agreed it was the right thing to do.”
Additional increases include sewer / water related expenses. Water and sewer utility projects are being done carefully and with the future in mind. The scope of sewer improvements was adjusted to accommodate the growing needs of the Village of Caledonia. Total sewer related expenses have increased by $12 million, but Caledonia will be paying approximately $30 million of the sewer debt principal and associated interest. Total water related expenses have also increased by $12 million. Total interest expenses have also increased due to the increased land acquisition and sewer / water investment, Increased interest rates and capitalized interest. All local investments, including these projected increases, are offset by the increase in Foxconn’s special assessments, tax increments, and payments from the Village of Caledonia towards sewer improvements.
The project is designed to ensure that the TID is fully funded solely through Foxconn’s payments in Area I. Foxconn’s $10 billion private investment in Area I will generate about $30 million/year in new tax revenue that will more than pay for all public improvements and development costs. Foxconn is providing financial guarantees to support a minimum valuation for the project in Area I of $1.4 billion from 2023 – 2047. Should the valuation fall under that valuation, Foxconn is contractually obligated to pay the difference, in addition to an estimated $202 million in Special Assessments.
Additionally, funding estimates do not rely on the additional development within the district that is likely to occur. The development of Areas II, III, and the North Area over the course of 20 years could yield an additional $22 million in annual tax increment collections, which would lead to a surplus of $119 million in the TID fund by 2043.
“From day one, the local project team set out to craft a responsible and conservative investment plan,” said Jenny Trick, Executive Director of the Racine County Economic Development Corporation (RCEDC). “That’s exactly what we did and we’re seeing that carried out today as the entire project continues to be funded from Foxconn’s $10 billion investment in our community.”