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WEDC Board Approves $3B Foxconn Contract

15-Year Contract Approved On 8-2 Vote

Foxconn sign
Kin Cheung/AP Photo

The state’s economic development agency has given the final stamp of approval to Wisconsin’s $3 billion deal with tech giant Foxconn.

The Wisconsin Economic Development Corp. board voted 8-2 Wednesday afternoon to approve the 15-year contract.

“Foxconn wants to do business with the state of Wisconsin,” said Mark Hogan, CEO of WEDC. “I’m proud of the fact that we were able to get this to this point — I think it’s a significant achievement on the part of the state.”

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Hogan said the company will not earn the full $2.85 billion in job creation tax credits unless it creates and maintains 13,000 jobs and invests $9 billion in constructing its facility.

The contract includes annual job creation thresholds the company must meet to get state money for job creation. Foxconn will have to create 260 jobs in 2018, then 520 jobs in 2019, and 1,820 in 2020, increasing incrementally to 10,400 jobs in 2032.

The company will only earn tax incentives for jobs that pay between $30,000 and $100,000 annually, and must have an average salary of $53,875 to qualify for tax credits.

The contract also sets minimum job creation numbers for construction-related tax credits, so the company can’t get money for building facilities without hiring employees.

Rep. Dana Wachs, D-Eau Claire, and Sen. Tim Carpenter, D-Milwaukee, voted against the contract.

Three billion dollars spent on one company within one industry is a risk that I think is too much for our taxpayers,” Wachs said. “I had hoped this could be a deal I could support, but it’s just too much money.”

In addition to the nearly $3 billion in tax incentives, the deal would also allow Foxconn to bypass some state environmental regulations. The company could reverse the course of streams, fill in wetlands and build on lake beds without applying for a permit from the state.

Wachs said the waivers for some environmental protections in the deal go too far.

Some have criticized Wachs’ opposition to the deal, saying it’s motivated by his bid for the governor’s office. Wachs is one of several Democrats facing off to challenge Gov. Scott Walker for the job in 2018.

Opponents to the contract had also voiced concerns about the state’s ability to accurately track Foxconn’s job creation numbers and claw back money if it doesn’t meet certain thresholds.

Under the contract, Foxconn will also be required to hire an independent accountant annually to attest to the job creation and construction costs the company reports to WEDC. This contract stipulation comes on the heels of WEDC being under fire from some legislators in recent years for its failure to verify job creation numbers reported to it by businesses that have received state money.

The contract also requires the company to release annual reports on how much money it has spent buying supplies for its operations from Wisconsin businesses.

If Foxconn fails to maintain job creation and construction spending requirements, the state will be able to take back previously paid tax incentives.

Those clawbacks could begin in 2023. If Foxconn doesn’t create 5,850 jobs by 2023, it would have to pay back up to $500 million. Job creation minimum thresholds increase to 6,500 from 2024 through 2032, with the amount the state can claw back ranging from $250 million to $500 million.

The contract also empowers the state to take back money if Foxconn supplies false or misleading information in its reports, relocates, or stops operations and fails to resume within 12 months.

The full state Legislature voted to approve the Foxconn deal in September.

Hogan said he expects the contract to be signed Friday.

Editor’s Note: This story was last updated at 4:30 p.m. Wednesday, Nov. 8, 2017.