October 9, 2021
In an opinion piece by Pocatello for Accountable Government Entities (P.A.G.E.) Cofounder Heather Disselkoen posted on the Pocatello-Chubbuck Observer news site on September 10, questions were raised about the continuing viability of the Frigitek project based on documents uncovered concerning a lawsuit involving Frigitek. The Pocatello-Chubbuck Observer reached out to Pocatello Planning & Development Services Director, Brent McLane, about the issues raised. Here is his response:
“The Frigitek project is still moving forward. They are working to secure tenants prior to finalizing the design of their building. There have been some setbacks through COVID with securing tenant contracts, but the PDA has no jurisdiction with that side of the development. There is a legal case pending between Frigitek and Idaho Materials and Construction (“IMC”) related to payments not received by IMC. The dispute is between two private entities who are engaged in a contractual agreement. The PDA is not part of that contract. The PDA has not taken any legal action against Frigitek. One of the important roles that the PDA does have though is to protect the public’s interest as it relates to tax funds it receives to bolster economic development in the area. The PDA monitor’s its agreements to the extent of its participatory obligations and utilizes legal counsel as any responsible entity would.
I think it is important to understand how the PDA receives funds, how private entities can obtain funds from the PDA, and what those funds are allowed to be used for.
The PDA receives it spending authority from the State and is a separate and distinct entity from the City or County. When a TIF district is created a baseline property value is created and frozen for said district. The city and/or county will continue to receive this tax base throughout the term of the TIF district. Increment occurs as properties within the TIF district develops or redevelops. With the development or redevelopment of properties comes an increase in property value. As this increase is assessed and taxed that then becomes the increment to be used by the PDA.
How the PDA uses that increment is determined by the TIF plan and an owners participation agreement (“OPA”). One extremely important thing to remember is that with the Frigitek OPA payments are only to be made as reimbursement for work performed. Also, eligible costs are only for those items that fall within the public benefit realm. So for instance the money that has been reimbursed to Frigitek to date has only been for things associated with infrastructure located within the public interest. It has covered some of the costs for improvements to sewer, water, and roadways, the remainder of those costs have been paid by the developer. Those cost may be eligible for reimbursement as increment is generated by the Frigitek project. I know that there were questions raised about hypothetical scenarios of if Frigitek pulled out what would the taxpayer be left with. At this point the success of the Airport TIF district is that significant and substantial infrastructure improvements have been made to that area of the district that are versatile and would allow for extensive future development opportunities if required.
I appreciate you allowing me the opportunity to clarify a few things.”