Mount Pleasant could be cash-rich after deal with Microsoft

From the article:

A 631-acre land sale to Microsoft Corp. that is on course to happen this year is expected to leave Mount Pleasant and Racine County with around $36 million of unspent cash on hand.

That money will be set aside for about a decade just in case it’s needed to pay off the existing debt those two governments have after preparing thousands of acres for industrial development along Interstate 94.

But if Microsoft comes through on its promise to generate at least $1.4 billion in new land value by building data centers in Mount Pleasant, that trove will still be around in the mid 2030s, and ready for village and Racine County elected officials to spend, within certain limits, on police and fire services.

“That money will not be spent without the village and the county agreeing how it should be spent,” said Alan Marcuvitz, attorney who has represented the village of Mount Pleasant in its agreements with Microsoft.

While there are limits to how the $36 million could be used a decade from now, it represents a potentially huge and unusual cash windfall for local governments in a time when many are struggling to pay for public services under the state revenue limits. Mount Pleasant’s total expected revenue budgeted for 2024 is $25.5 million. About $20 million is budgeted for public safety operations, which is one of the ways the $36 million in reserves could eventually be spent, under state law.

That savings is another way the village of Mount Pleasant has emerged in a unique situation after its 2017 agreements with Foxconn Technology Group did not generate the expected levels of development by the Taiwanese company.

The 2017 Foxconn deals included a state law change that let Mount Pleasant create a tax incremental financing, or TIF, district that is larger than usually allowed. That district was used to finance the village’s acquisition of land along I-94, and construction of infrastructure to prepare it for new industrial development.

“This is going to put us in a very cash-rich position,” Village President Dave DeGroot said Monday of the pending agreements under review with Microsoft.

When Foxconn downsized its plans, the village was left with ample land to pitch to other businesses. Microsoft is now poised to take over about two square miles, or 1,346 acres, total.

The Mount Pleasant Village Board during a Monday meeting received an update on the current negotiations with Microsoft. The company is to develop most of that land with data centers. AJ Steinbrecher, director of land acquisition for North America for Microsoft’s cloud operations, on Monday told the Village Board that it represents billions of dollars of investment.

“Microsoft is committed to driving inclusive economic opportunity in southeastern Wisconsin in supporting these aspirations in becoming a technology and innovation hub,” he said. “Wisconsin’s unique quality, significant infrastructure and the recent state designation as a U.S. regional technology hub make it an ideal place for us to develop data centers and cloud technologies.”

Construction of a first data center is underway on a portion of 315 acres Microsoft bought from the village earlier this year. Its next pending land purchase includes 1,030 acres of village and privately owned land.

“We are still evolving on a fair number of our plans in terms of what master planning would look like and what our buildout would be,” Steinbrecher said.

Microsoft guarantees it will create a minimum land value of $1.4 billion by the start of 2028. The property taxes from that new value would cover all of the debt the village and Racine County accumulated from acquiring and preparing that land east of I-94 for future industrial development, Marcuvitz said.

If that area generates the expected $2 billion in new property value between Foxconn and Microsoft, that debt would be paid off by 2037.

Until that happens, the unspent $36 million from this year’s land sales to Microsoft will be held as security. During that time, it could be invested or generate interest so that the dollar amount increases while it waits to be spent.

“That money will not be touched for any other purpose until we know it is not needed,” Marcuvitz said.

The state law change that let Mount Pleasant create at TIF district for Foxconn also dictates how the unspent millions could be used. Limits within that state law say the money could be used anywhere in the county, including for police and fire equipment, or general government operations relating to police and fire protection.