Foxconn to fight WEDC for tax credit
Company, agency have 30 days to resolve issue
Foxconn Technology Group will challenge the decision by the Wisconsin Economic Development Corp. not to issue the company tax credits, Foxconn said Friday.
Robert Berry, attorney with Foxconn, sent a letter to Jennifer Campbell, chief legal officer for WEDC, saying the company objects to the decision specifically “regarding terms and timelines.”
The letter sent Friday states Foxconn’s obligations to the state are “job creation and capital investment.” WEDC’s decision not to award tax credits to the company “not only deviates from that understanding, but also deviates from contractual timelines,” the company said.
“Despite frustrations and disappointment with WEDC’s decision and the method chosen by the WEDC to inform the (company) of its determination, it is the (company’s) intention to continue to work with the WEDC in good faith to resolve this disagreement within the next 30 days in a manner that benefits interested parties, including Racine County and the village of Mount Pleasant,” the letter reads.
Missy Hughes, secretary and CEO of WEDC said in a statement her department has “not received the basis for Foxconn’s objection to WEDC’s determination that the company is ineligible for state tax incentives.”
“Once Foxconn is able to detail the scope and nature of its evolved project, WEDC stands ready to work on crafting a new agreement that balances the company’s needs with the interests of Wisconsin taxpayers,” Hughes said.
The Foxconn project has been touted by President Donald Trump, who says he played matchmaker between Foxconn and Wisconsin, but the project has been downsized, hiring has languished and there are doubts it will ever meet its ballyhooed goal of transforming the state’s economy.
Foxconn was to build a Generation 10.5 facility that would manufacture large LCD screens. The project was to be an investment of up to $10 billion that would deliver up to 13,000 jobs.
In return, the GOP-controlled Legislature approved up to $2.85 billion in subsidies if Foxconn met various benchmarks for hiring and capital investment. The company also received a $150 million break in sales taxes, bringing the total state package to $3 billion.
According to the agreement signed by Foxconn and the WEDC in Nov. 2017, Foxconn had 14 business days to challenge the decision.
Foxconn and WEDC now have 30 days to resolve the issue, and WEDC “reserves the right to adjust subsequent tax credits or demand repayment.”
On Oct. 12, WEDC decided not to issue tax credits to Foxconn for capital investments and hiring in 2019. The state agency determined Foxconn only hired 281 full-time employees eligible for tax credits and only made $300 million in capital expenditures.
Days before that decision, state officials sent a memo to Joel Brennan, secretary of administration, saying the facility in Mount Pleasant “may be better suited for demonstration purposes rather than as a viable commercial glass fabrication facility.”
The memo says the Foxconn facility “if operational, would be the smallest Generation 6 (factory) operating anywhere in the world. It is less than onetwentieth the size of the promised Generation 10.5 project and would employ, if it ever became fully operational, only a small fraction of the local residents who WEDC expected to be employed.”
Since that decision, Foxconn has maintained that it hired more then 520 eligible full-time workers, the minimum for tax credits, and the company has claimed it invested $750 million.
Terry Gou, founder of Foxconn, recently stated Foxconn is committed to its project in Mount Pleasant.
Foxconn and WEDC officials have met several times to renegotiate the terms of the agreement, but talks have so far been unsuccessful.
WEDC board member and Assembly
Minority Leader Gordon Hintz, D-Oshkosh, said in an email that the decision to “reject the credits was because Foxconn is out of compliance with the contract.”
“It was made clear that as long as the project no longer resembled anything remotely similar to what was outlined in the contract, Foxconn would be ineligible for any credits going forward, even if job creation goals were met,” Hintz said.
“So the WEDC decision did not impact just 2019, but made clear that Foxconn won’t receive any credits in future years unless they move forward with the project outlined in the contract, or they renegotiate the contract.”