The state of Wisconsin has been dealing with its own Boca Grande.
Consider how a Milwaukee attorney at a blue chip firm in 2007 promised to use his Spanish-named development company (that translated into English ironically means “Big Mouth”) to turn Ripon into a $23 million star in the firmament of Wisconsin communities.
Eleven years later, then President Trump pledged at Foxconn’s 2018 ground breaking ceremony in Mount Pleasant, Wis. that the cutting-edge liquid crystal display (LCD) panel manufacturing company — representing the largest investment in U.S. history for a new location by a foreign-based company— would be the “eighth wonder of the world.”
As with Ripon’s plans for a high-end hotel and swanky spa, new brewpub, Republican museum and more shiny objects for downtown, Foxconn, too, had ambitions that exceeded its grasp.
Gone are the Taiwan electronics manufacturer’s plans for a $10 billion capital investment for a state-of-the-art factory on a 32 million square feet or 751 acre campus (the size of 15 Lambeau Fields) that would create 13,000 blue-collar jobs.
And as these two pie-in-the-sky plans dissipated, taxpayers in each instance were left holding at least part of the bag.
In Ripon’s case, former Foley & Lardner partner and Ripon College trustee Jim Connelly spent about $4.4 million of the $6.7 million the city of Ripon borrowed to pay down loans on more than a dozen downtown buildings he had purchased. He paid another $600,000 to reimburse his own law firm for legal fees.
In return for its investment, Ripon received a massively renovated pizza restaurant, some white elephant properties and a few legal bills.
Foxconn originally had received promises of more than $4 billion in state and local tax credits, but had to tell officials last spring that it was downsizing its plan to create just 1,454 jobs and invest $672 million.
And those giant LCD screens? Not profitable to make in America, it somehow discovered during the past three years. So it switched gears to build smaller, earlier-generation screens. But that never happened either.
Here’s the good news.
The plan penned four years ago last month by then Gov. Scott Walker and administered by the Wisconsin Economic Development Corp. (WEDC) had pay-as-you-go provisions. “The contracts … require them to do what they said, because if they don’t do this, we simply don’t pay the credits,” WEDC’s regional director Jonathan Bartz recently told the Ripon Rotary Club, suggesting that the state’s dance with Foxconn was not a mistake because the music was still playing. Just not as loudly.
The state’s new Foxconn contract, signed in April by Gov. Tony Evers, still has an accountability arrangement, requiring the company to create certain amounts of jobs to receive up to $80 million in performance-based tax credits over six years if it meets employment and capital investment targets.
The WEDC last week verified that after it failed to qualify for state funds the first two years of its previous contract with the state, Foxconn created 579 eligible jobs and made a capital investment of $266 million last year, qualifying it for $2.2 million in job credits and $26.6 million in capital investment credits.
So in four years the state reduced the tax credits authorized for the project from $2.85 billion to $80 million. Yet Foxconn, which earlier this year floated the idea of making electric cars in Mount Pleasant, has yet to reveal what product line has helped it achieve its tax credits.
Bartz assured Ripon Rotarians he’s not worried about Foxconn, nor did he express any regret that the state’s big play was a poorly planned national embarrassment and a politically expedient blunder.
“If a company doesn’t do what they say they’re going to do, we do a good job protecting the state taxpayer,” he calmly reassured service club members, as if preparing them for future eighth wonders of the world to court the state.
That’s fine, unless you are the village of Mount Pleasant or Racine County taxpayers on the hook for $400 million of bonds used to force hundreds of people from their homes and pay for infrastructure expansion to a 4,000-acre industrial park built for a phantom behemoth.
Not to mention the hundreds of government officials who taxpayers have paid to negotiate, structure, implement and oversee a deal with a company that some charge never properly was vetted given its spotty record at other locations (e.g. the planned but never built $30 million, 500-worker factory in Pennsylvania and a $1 billion plant in Jakarta, Indonesia, that failed amid difficulties developing a supply chain).
Bartz’s smug taxpayers-will-be-made-whole refusal to acknowledge any regret, remorse or recalibration of a deal gone south doesn’t bode well for the next time a music man comes to town offering to sell band uniforms to turn parents’ kiddies into prodigies.
Be it Boca Grande or Foxconn, taxpayers know that to avoid broken promises, they need to require their decision makers to scrutinize potential business partners, negotiate with eyes wide open and be transparent and humble about their decision making.
City of Ripon officials seem to understand this.
We’re not so sure about those in Madison.