Ruling opens way for Foxconn payments
High court finds no violation of state law
MADISON - The state Supreme Court last week ruled Eau Claire could make cash payments to the developer of an arts project, backing a practice used by municipalities around Wisconsin.
The case was closely watched because a ruling against the cash payments could have disrupted the Confluence Arts Center in Eau Claire and other projects, including Foxconn Technology Group’s planned $10 billion campus in Mount Pleasant.
In its 5-2 ruling, the high court concluded those challenging the Confluence center had not shown the payments were in effect a tax rebate that would violate the state constitution’s requirement that property taxes be levied uniformly.
But the justices sent the case back to Eau Claire Circuit Court to determine whether city officials had properly determined the area was blighted when they created tax incremental financing districts to fund the project.
That gives Confluence’s opponents a limited chance to continue to challenge it in court.
A citizens group called Voters with Facts sued in 2015 over the funding of the $85 million project at the juncture of the Chippewa and Eau Claire rivers.
An Eau Claire judge and the appeals court ruled in the city’s favor and the group asked the Supreme Court to review the decision.
Wednesday’s decision brought conservative and liberal justices together in favor of the city.
Justice Annette Ziegler wrote the opinion and was joined by two fellow conservatives — Chief Justice Patience Roggensack and Justice Michael Gableman — and the court’s two liberals, Justices Shirley Abrahamson and Ann Walsh Bradley. Conservative Justice Rebecca Bradley and Daniel Kelly dissented. The Bradleys are not related.
“The decision does mean the municipalities have relatively broad power to give taxpayer money to private developers by calling an area blighted or saying that a development wouldn’t happen but for the (tax incremental financing district),” said Rick Esenberg, the president of the Wisconsin Institute for Law & Liberty, who represented the group that brought the lawsuit.
“Taxpayers are still not powerless, but these local units of government still have too much power to play favorites. The Legislature really needs to look at this and protect taxpayers.”
Jay Winzenz, the finance director of Eau Claire, said city officials were pleased with the decision.
“Even the dissenters confirmed that cash grants are not a violation of the uniformity clause in the state constitution,” he said.
Tax incremental financing districts, including one created for the Foxconn project, often provide grants to private development firms while also providing funds to build roads, sewers and other infrastructure.
The funds for both developer grants and public improvements come from property taxes generated by new development.
Once a community’s debt is paid off, those new property taxes go toward the general budgets of school districts and other local governments.
The Mount Pleasant Village Board and Racine County Board in December approved $764 million in local financing for Foxconn to build a flat-screen manufacturing plant that could employ up to 13,000 people.
Foxconn is also getting up to $3 billion from the state as part of an incentive package.
Erin Richards of the Journal Sentinel staff contributed to this report from Milwaukee.
“Taxpayers are still not powerless, but these local units of government still have too much power to play favorites. The Legislature really needs to look at this and protect taxpayers.” Rick Esenberg, president of the Wisconsin Institute for Law & Liberty, who represented the group that brought the lawsuit