Of the $764 million in expenditures to be covered in the Foxconn TIF District, the Village of Mount Pleasant or Racine County will finance $285 million for land acquisition, sanitary sewer and water projects, and utility work.
A TIF district — short for tax incremental finance district — is a development tool municipalities can use to attract business.
The way it works is that a financing district is created and a base value of that district is established by the taxing jurisdictions. The increased value of the property is still charged at the base rate, but the district uses the increased tax revenue to pay for the infrastructure projects.
The extra tax revenue created from the Foxconn TIF is then used to pay off those costs outlined in the TIF 5 project plan.
“It’s complicated, but some of it will be paid for with bonding and some will be paid for over time,” said Laura Million, business development manager for the Racine County Economic Development Corporation.
Foxconn is also expected to contribute $60 million of the project cost, which includes some special assessments. In return, the LCD screen manufacturer will build a $10 billion facility and $858 million in tax revenue generated from TIF 5 is expected to cover all of the project costs.
The land is expected to be acquired by the village for public infrastructure and by the Community Development Authority for redevelopment or urban renewal projects. The TIF will experience an $8.2 million loss because part of the land being acquired would become tax-exempt between the time the village acquires the property and the time it is sold to Foxconn.
“The plan assumes that a sufficient amount of the acquired land (approximately 65 acres) would be sold or transferred prior to January 1, 2022, to negate this decremental value,” according to the project plan. “Additional transfers or sale of land will increase the incremental value of the District, but are not assumed for purposes of the projections.”
During that 30-year timeframe, the property tax would be frozen at the valuations made in 2016, which means the property owners would continue to pay a total of $1.7 million annually to Racine County, Gateway Technical College, the Village of Mount Pleasant and the Racine Unified School District.