WEDC approves $3 billion Foxconn incentives contract, clears way for signing

WEDC approves $3 billion Foxconn incentives contract, clears way for signing”

The board of the Wisconsin Economic Development Corporation approved a contract that would provide a $3 billion incentive package to the Taiwanese firm if it invests $10 billion to create a 20-million square foot campus in Racine County that could ultimately employ up to 13,000 workers.

The contract itself is largely being guaranteed personally by Foxconn Chairman and CEO Terry Gou, which WEDC officials say is uncommon but they believe shows his personal commitment to creating the major facility in Wisconsin.

Walker and Foxconn officials are expected to sign the contract as early as Friday.

If the company hires only the minimum number of employees in the contract, it would receive about $500 million less than the maximum amount it could.

There are also provisions in the contract that would require Foxconn to pay the state back if it failed to meet certain conditions.

WEDC officials noted the contract is complete in 2032, which means they could not clawback any of the state's investment in the company if it chooses to move to automation in 2033 or later. The company has said the facility could employ between 3,000 and 13,000 people. The nonpartisan Legislative Fiscal Bureau anticipates the state will recover the $3 billion in lost tax revenue by 2042.

Details now disclosed about the deal show that Foxconn will be eligible for tax credits for both capital investment and job creation totaling $2.85 billion until 2032. It also allows the company to build on wetlands and waterways.

The package bothered some Democrats, who feared Walker was giving away too much to a foreign company without sufficient guarantees that the jobs would materialize or that the credits could be recouped if Foxconn didn't perform.

The board had been scheduled to vote on the contract on October 17, but the vote was delayed for unspecified reasons.

Vos commented on the Foxconn deal Tuesday, a day after the contract was distributed to members of the Wisconsin Economic Development Corp. If the company doesn't meet the job creation benchmarks, the annual tax credits would be reduced according to how far short the company falls.

The jobs must pay at least $30,000 pear year and average $53,875 annually.

Under the terms of the 29-page contract, released publicly for the first time Wednesday, the company will be able to collect up to $1.35 billion in construction-related tax credits if it creates a gradually increasing number of manufacturing jobs up to 8,450 through 2025. Gou and a privately held company that he controls would be responsible for the other 25 percent.

Wisconsin Technology Council president Tom Still, who has supported the deal throughout the process, said Gou's personal guarantee and connecting the construction tax credits to the company's manufacturing workforce in the state during construction are unusual for deals of this magnitude.

The Wisconsin Economic Development Corporation's board is set to vote during a closed session late Wednesday afternoon.

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