The Wisconsin Economic Development Corp. delayed a vote on a nearly $3 billion incentive package for Taiwanese manufacturer Foxconn until November after an unspecified problem was discovered with the deal board members were set to vote on Tuesday.
Sen. Tim Carpenter, D-Milwaukee, declined to describe the problem but characterized it as a “nuclear bomb” that, had it not been addressed, would have resulted in a contract that “would not have protected taxpayers whatsoever.”
WEDC board chairwoman Lisa Mauer confirmed the vote was pushed back because of a particular concern but also declined to provide specifics. She said it was detected late in the negotiating process.
“We want to get this right,” Mauer said. “When something goes awry, you step back and you address that specific issue, and that is what’s going to happen.”
Foxconn has pledged to invest $10 billion and create up to 13,000 jobs at a new LCD manufacturing facility in Mount Pleasant in Racine County. In return the state plans to give the company $2.85 billion in refundable tax credits for jobs and for the construction of the campus. The company would be exempt from another $150 million in sales taxes, be eligible for lower utility rates and be exempt from some environmental regulations. The state won’t break even on the investment until 2043.
Foxconn also stands to receive a $100 million incentive as part of a $764 million tax incremental financing district for infrastructure improvements offered by local officials in Racine County.
WEDC CEO Mark Hogan declined to discuss details of where the negotiation stands. He noted the final vote won’t happen in the next two weeks because he will be on a trade mission to Israel with Gov. Scott Walker from Oct. 27 to Nov. 2.
“We’re going to take whatever time is required to get it right,” Hogan said. “It’s very complex.”
Hogan said the delay in voting on a contract is not an indication the company is having second thoughts about locating in the state.
“I think you’ve seen that Foxconn has been very visible in the community in recent weeks and I think that they’re committed to it,” Hogan said. “They’re moving forward as if this transaction is going to take place.”
The WEDC board met in closed session to discuss the contract negotiations related to the Foxconn deal, the broad strokes of which Walker and the Legislature have already approved. Carpenter cast the lone vote opposing the board’s move into closed session.
The WEDC board unanimously approved the agency’s new policy for an Electronics and Information Technology Manufacturing Zone, which the Legislature created specifically for the Foxconn project.
Unlike an Enterprise Zone, which until recently was the agency’s most potent economic development tool, the new zone requires that Foxconn select a third-party accountant approved by WEDC to verify the total investment and job creation at the facility, which could break ground as soon as next spring.
A contract has not been finalized between WEDC and Foxconn. Before voting, the board will review a staff underwriting report that details the terms of the agreement and allows WEDC staff to go forward with finalizing the contract, WEDC spokesman Mark Maley said.
The board won’t review or vote on the actual contract, Maley added.
In an interview with the Wisconsin State Journal, Carpenter, who voted against the Foxconn bill, expressed frustration that the board wouldn’t be able to review the contract details.
He said he received the first draft of the underwriting document Friday, and then received two revisions on Monday.
“There’s no way I could swear on a Bible and say I knew exactly what was in that staff report,” Carpenter said.
He said he raised several questions about language in the report. One issue he raised was the language didn’t appear to compel WEDC to rescind tax credits if the company wasn’t complying with the terms of the contract.
He said he asked for the vote to be delayed, but he didn’t learn it would be delayed until Tuesday morning after a separate issue that he had not raised was discovered by WEDC officials.
“If WEDC has been secretive in the past with protecting taxpayers, they’re continuing that to the Nth degree,” Carpenter said.