September 10, 2021
Are Pocatello Taxpayers to be Left in the Cold by Frigitek Project?
By: P.A.G.E. Cofounder Heather Disselkoen
Here we go again . . . just as we’ve being told how great things await us. They waltzed right in the door . . . Just like it’s been done before, and wrapped their arms ‘round our taxpayer money . . . Here they go again . . . just when we began to trust we’ve turned a corner. They promised forty jobs, but left us feeling robbed . . .And pretty soon, I’m wonderin’ how we came to trust you.
These adapted Dolly Parton lyrics could be our theme song. There’s no easy way to say this . . . so I’ll just be blunt. Once again, there are strong indications another “Big Win” TIF project is tanking. We have all really tried to be positive and have hope about such projects, but it’s hard not to be skeptical when there’s a pattern of oversold promises that keep going bust.
I do not know absolutely that the Frigitek project is defunct because once again the public has been left out in the cold when it comes to being informed about important issues in our community and getting straight answers just doesn’t happen. All indications are it’s circling the drain.
At the 05/19/21 Pocatello Development Authority’s (PDA) meeting, the vice-chair made a brief mention of a phone call/discussion that had occurred the day prior between himself, city staff, and their PDA attorney related to Frigitek concerning some requirements on performance, a deadline not met and something about wanting to assure a hometown company was taken care of. It was a brief, obscure mention. Nothing has been mentioned in the 3+ months of PDA meetings since May, 2021.
Subsequent PDA agenda packet legal invoices included statements like “review and analyze Frigitek OPA terms,” “review email on the conflict over payment to contractor concerning constructed improvements and OPA to Frigitek” and “follow up on issues concerning Frigitek failure to pay subcontractors for infrastructure work.” (Note the plural “subcontractors.”) Other invoices referenced “revising the draft letter to Frigitek in response to the IMC demand letter” and “provide comments for formal response letter from counsel concerning claims by Frigitek.”
In August, I obtained a copy of Case #CV03-21-02126 filed on 06/29/21 in which the plaintiff, Staker & Parson Companies, a Utah Corporation doing business as Idaho Materials & Construction filed a complaint against Frigitek Industrial Parks, Inc. seeking two judgments against them totaling $622,948 in unpaid work and/or materials provided. The largest payment of $560,172 was due 03/30/2021. A second invoice consisting of three change orders totaling $62,776.00 was submitted to Frigitek on 06/17/21 and was unpaid as of the filing.
Through an Owner Participation Agreement (OPA) authorized by the Pocatello Development Authority (PDA) on 09/18/19 and approved on 04/15/20, the PDA committed $500,000 to Frigitek in initial funding reimbursement and up to $4,578,117 as funds are available and sufficient increment is generated.
We (the taxpayers) through the Airport TIF invested heavily in the success of this project. Based on PDA records, the Frigitek project was reimbursed $904,197.44 between May 2020 and February 2021 representing nearly 20% of the total approved in the OPA.
The costs summarized in the OPA eligible for reimbursement primarily are for the engineering of the site, grading, utilities, sewer, and other infrastructure work, but also included are costs like management consultation, electric bills, etc. With the February 2021 reimbursement payment, the PDA expended nearly all their available Airport TIF fund balance. New increment has since been received. Based on the FY22 PDA budget, the Airport Fund is anticipated to have a balance of $52,047 on 10/01/21 and receive approximately $88,790 in increment and interest revenue/income in FY22, resulting in $140,837 in available appropriations through 09/30/22.
The TIF funds paid for engineering costs and infrastructure projects, so presumably any completed infrastructure could be used to support other future projects. However, everything was engineered for a very specific cold storage project which will need to be taken into consideration. With the Airport Fund essentially drained, it’ll take time to build up a significant balance for any future projects.
All of this leads to a number of questions. Who is responsible for vetting the companies that the PDA enters into agreements with? What is their expertise level and do they have a record of proven results? How closely are the finances of these companies examined? What are the criteria/standards in place? Is it time to evaluate the vetting process? Is it wise to pay out reimbursements without some assurances? Is there a better way to ensure and protect the taxpayers’ investment in these types of projects?
These all seem valid questions in light of Hoku, Positron, grants given with no measurable outcomes, the near-miss with Solargise, and now Frigitek.
While this recent turn of events appears to be a matter between Frigitek Industrial Parks, Inc. and their contractor, the public needs some assurance the PDA has no liability. I don’t know of any reasons why they would, but it would be good to hear it directly from them. Assuming they don’t have liability, why the complete silence for four months? Obviously, there are details the public is not privy to. However, the standard “official response” we hear so often from our local government of “no comment” doesn’t fly if the PDA desires to rebuild and maintain public trust. The nearly six-month overdue payment to IMC may very well indicate Frigitek lacks the available cash flow to pay their contractors and complete the project. And, based on the word “subcontractors” there may be other contractors in the same boat. The public deserves transparency.
The PDA established by City Resolution in 1988 is legally separate and distinct from the City of Pocatello, however it has strong ties to the City and Mayor. The Board members include the Mayor, the Council President, a representative of the County (currently a commissioner) and six other appointees, all appointed by the Mayor. City employees serve as officers of the PDA including as Executive Director, Treasurer, and Secretary. Although separate, the PDA is heavily reliant upon the City for day-to-day operations and for their guidance. For example, the city maintains all historic and current records and communications between the PDA and their counsel are facilitated by the City. In July, 2019, the PDA approved reimbursing the city for their employees’ time expended on PDA activities beginning in FY2020 which was a new practice. And, I learned it was only in January 2018, that the PDA approved obtaining their own legal representation (general counsel) when the then new City Attorney expressed there were potential conflicts for him to provide counsel to both parties. I also learned shortly after beginning to attend meetings in the Fall of 2019, no formalized, expert training was provided to Board members. This, in part, led to some unfortunate practices to be detailed in a forthcoming editorial. To their credit, after my attempts to communicate concerns with some of their practices, the PDA did arrange for their legal counsel to provide a training last October and the board of their own accord, finally dealt with some attendance issues (one member was absent for a full year before it was addressed).
Four months is ample time to have voluntarily been transparent with the community on these recent Frigitek events. Yes, some level of transparency exists in that the legal invoices were in the agenda packets, but genuine transparency and good communication practices extend beyond the minimum required by law to bring about accountability and build trust with taxpayers.
Speaking of trust, after a 2020 and 2021 attempt requesting they change their practice and (audio) record their meetings, I still have had no success with getting the PDA to even put this on their agenda for discussion. This lack of response was despite the fact I also cc’d the three elected officials on the Board (Mayor Blad, Council President Adamson and Commissioner Tovey) in the email to the Executive Director. What’s the harm in discussing the request and allowing the full board to make the decision? These meetings are held at 11:00 a.m. on a weekday when most people cannot attend the meetings. There’s certainly no legal requirement to audio record them, but the gesture and transparency would go a long way. To date, I haven’t received one written response from the PDA’s Board.
I cannot end without pointing out that Board membership and leadership within the PDA has changed a bit in 2021, and I am cautiously encouraged by what I’ve been hearing recently. There seems to be a growing awareness a shift is needed and that better communication will be beneficial to the PDA and its relationship with the community. Also, there still remains some possibility for good outcomes from the older North Portneuf and Naval Ordnance TIFs – these TIFs shouldn’t be conflated with these recent events.
Additionally, I don’t want to in anyway overlook the new leadership this year at Bannock Development whose drive and efforts are producing promising results and slowly beginning to turn the ship. The Frigitek project was in the works long before that changeover.
Pocatello has a lot of community cheerleaders who maintain a positive message about Pocatello. However, when it comes to economic development and making the best decisions with taxpayer money, the cheerleaders need to take a backrow seat because all the cheerful positivity in the world does not erase reality. We need PDA members willing to take a long, hard look at the newer TIFs’ progress and outcomes to date and compare the differences in approach, etc. to the TIFs that are/were successful like the North Yellowstone TIF formed in approximately 2004 and retired a decade early.
They must be willing to identify and acknowledge what works and does not work, study best practices and identify what keeps us stuck in a pattern leading to a disappointing record. I am confident we have community members, including current PDA members, able to make this happen. It takes guts and courage. The question is whether there is willingness and fortitude to honestly examine and identify past missteps, and make the corrections to change course. If they do, I’ll chime in with the cheerleaders.