Foxconn Bill Set to Spur Economic Development in Southeast Wisconsin for More Than Just Foxconn
An announcement was made in July of 2017 that Foxconn Technology Group (“Foxconn”), the major manufacturer of Apple’s flagship product, the iPhone, will be establishing manufacturing facilities in southeastern Wisconsin. Since then, the Wisconsin legislature has been busy writing legislation to accommodate the technology behemoth’s establishment in the area. On Monday, September 18, 2017, Governor Scott Walker signed into law what some in the media have dubbed the “Foxconn Bill.”
Most notably, the Foxconn Bill authorizes the Wisconsin Economic Development Corporation (“WEDC”) to create a single electronics and information technology manufacturing zone (“EITM Zone”) in the state of Wisconsin. The Foxconn Bill establishes certain considerations for the determination of the location of the EITM Zone including economic need, household income, rate of business development, and existing resources available in the area, and others. However, there is little doubt the EITM Zone will be established in Racine County, the now uncontested destination for the Foxconn manufacturing facilities.
The creation and geographic placement of the EITM Zone is significant, as many other provisions in the Foxconn Bill stem from the creation of this EITM Zone. Some of the major effects of the creation of the EITM Zone include the following:
- Authorization for the department of administration to administer grants to a “local government unit” located within the EITM Zone for costs associated with development occurring within such EITM Zone, including costs related to infrastructure and public safety.
- Appropriation of $20 million for the facilitation of worker training and employment, the recipients of which are to include universities and colleges.
- Agencies of the state will not be required to submit reports as to the environmental impact, adverse environmental effects, and commitment of environmental resources with respect to the establishment of new manufacturing facilities located in the EITM Zone.
- Individuals and businesses normally required to attain a permit for the construction, operation, or maintenance of manufacturing facilities located on or affecting Wisconsin’s navigable waterways will be exempted from this requirement, so long as such facilities are situated within the EITM Zone.
- The WEDC may certify businesses that begin operations in the EITM Zone for certain tax benefits and credits, including a 17% payroll tax credit, as well as a 15% capital expenditure tax credit.
- Sales taxes attributable to the sale of building materials, supplies, and equipment used solely in the construction of facilities located in the EITM Zone shall be exempt.
Notably, while it’s clear the Foxconn Bill is intended to entice Foxconn to set up shop in Wisconsin, small businesses located within the EITM Zone will also benefit from the regulations set forth therein. For instance, the Foxconn Bill increases the state budget appropriation to the WEDC by $110,000 for the purpose of funding the creation of an electronics manufacturing small business development director position. Likewise, small businesses will also be eligible for the tax credits described above, which, in the case of a partnership, LLC, or tax-option corporation, will be passed through directly to the partners, members, or shareholders of such entities. As a result, Racine County is likely to see a boon in small business development in the forthcoming years.
Note that this article is not intended to be an exhaustive analysis of the Foxconn Bill. Rather, it’s intended to highlight some of the major provisions which should spur economic growth in Racine County. For more information about how the Foxconn Bill and the EITM Zone may affect you or your business, contact Axley.