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Aug. 1, 2017

 

Governor Walker calls special legislative session on Foxconn incentive bill

Governor Scott Walker has called a special session of the Legislature to consider the state’s $3 billion incentive package for Foxconn Technology Group. Last week, the Taiwanese electronics manufacturer announced plans to build a $10 billion plant in southeastern Wisconsin that could eventually hire up to 13,000 workers to make liquid crystal display panels for several different industries, including entertainment, education, and health care.


The Legislature appears ready to act quickly on the incentive bill, which includes numerous financial and regulatory incentives for the proposed Foxconn campus and would implement the Memorandum of Understanding recently signed by the company and the state of Wisconsin. Although lawmakers are still reviewing the proposal, a public hearing on the bill could take place as early as this week and final passage of the legislation could occur by the end of the month.


The comprehensive Foxconn incentive bill (LRB-4050) includes the following key provisions:

Tax Incentives:


- Authorizes the Wisconsin Economic Development Corporation (WEDC) to create not more than one Electronics and Information Technology Manufacturing Zone. The lifetime of the new zone would be 15 years.


- A business (i.e., Foxconn) located and operating in an Electronics and Information Technology Manufacturing Zone would be eligible for up to $2.85 billion in refundable tax credits tied to capital investment and jobs creation over the 15-year life of the Zone.


- The bill includes a tax credit clawback provision that would require repayment of tax credits if Foxconn fails to meet employment or capital investment objectives agreed upon with the state. 


- Creates a sales and use tax exemption – up to $150 million – for the sale of construction materials, equipment, and supplies to build (Foxconn) facilities located in the Electronics and Information Technology Manufacturing Zone.


Tax Incremental Financing:

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The legislation makes the following changes to state tax incremental financing (TIF) laws for tax incremental districts (TIDs) located within an Electronics and Information Technology Manufacturing Zone:

 

  • TIDs in a Electronics and Information Technology Manufacturing Zone would be exempt from the current law 12% TIF rule.
  • These TIDs could incur expenditures for project cost for any territory located in the same county as the TID, but only if the expenditures benefit the TID.
  • These TIDS would have a maximum lifespan of 30 years.
  • A TID located in an Electronics and Information Technology Zone would be required to be an industrial site or mixed-use TID.

 

Wetlands and Environment Regulations:

- Authorizes an individual, without a DNR wetland permit, to discharge fill material into a non-federal wetland located in an Electronics and Information Technology Manufacturing Zone, if the discharge is related to the construction or operation of a manufacturing plant also located in the Zone.

- Provides that no state permit is required for discharge into federal wetlands located in an Electronics and Information Technology Manufacturing Zone (although a federal permit would still be required).

- Requires all adverse impacts to wetlands located in an Electronics and Information Technology Manufacturing Zone to be counteracted with the creation of two acres of wetland for every acre that is adversely impacted. The wetlands compensation can be satisfied through several methods, including purchasing wetland mitigation credits; participation in the lieu fee subprogram; or direct wetland mitigation efforts within Wisconsin.

- Exempts manufacturing facilities constructed in an Electronics and Information Technology Manufacturing Zone from the state of Wisconsin’s environmental impact statement process.


 
Other Provisions:

- Provides $10 million in 2017-18 for grants to local governments for infrastructure and development costs in an Electronics and Information Technology Manufacturing Zone.

- Authorizes the state to issue roughly $250 million in bonding for the I-94 north-south corridor project, but only if the state receives federal funding for the project. The I-94 north-south corridor will be a critical transportation artery for the Foxconn facility, both during and after construction is completed.

- Authorizes a municipality that has an Electronics and Information Technology Manufacturing Zone within its borders to utilize the design-build bidding process for water and sewer systems and wastewater treatment facilities.

- Requires the WI Department of Administration Secretary to appoint an economic development liaison to perform economic development-related services for the state.

- Makes numerous changes to the state’s Enterprise Zone Tax Credit program, including a provision that allows WEDC to certify enterprise zone tax credits for Brookfield-based Fiserv Inc. to keep the company from moving its headquarters outside of Wisconsin.



Foxconn project and incentive legislation resources:

 

 

Proposed Foxconn Project Snapshot:

 

  • The Foxconn manufacturing campus will be located in southeastern Wisconsin, likely in Kenosha or Racine County.
  • The project will require an estimated $10 billion of capital investment, $5.7 billion of which will be for construction and equipment sourced in Wisconsin.
  • Capital investments for the facility will generate nearly $500 million in state and local tax revenues.
  • Once fully operational, the Foxconn facility could employ up to 13,000 workers in Wisconsin.
  • According to estimates, the facility will support over $180 million in state and local tax revenues each year.

 

It's estimated Foxconn will make over $4 billion in supplier purchases annually, with about a third of those purchases coming from within Wisconsin.

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