TWIN FALLS — The 1 million square-foot building could accommodate 20 football fields. The 7,000 direct and indirect jobs it created helped reduce the region’s unemployment by 53 percent from 2012 to 2016. And on any given day, a receiving area may take in 2.5 million pounds of raw milk — all sourced from Idaho.
It’s been nearly five years since Chobani opened the world’s largest yogurt factory here in Twin Falls. The Urban Renewal Agency, city, state and Business Plus have collectively spent more than $47 million for public infrastructure improvements at the Chobani site.
What has Twin Falls gotten in return? Chobani has spent $750 million on its plant and pays millions of dollars every year in taxes, payroll and community contributions.
It’s a return on investment that’s exceeded the city’s and the URA’s expectations. But it’s about more than just dollars and cents.
“They help within the community,” URA chairman Dan Brizee said. “Their people help within the community. And those are really important things.”
Consider Chobani’s contributions toward the downtown commons, the Fourth of July fireworks and the Special Olympics, for example. This community spirit was a trait the city and URA considered highly important while they made those agreements that made it possible for Chobani to build here.
And as Chobani’s property tax revenues far exceed bond payments, city and URA officials may consider paying those bonds off early.
How the URA and city invested
Chobani arrived on scene at just the right time.
“We as a city were in the middle of the Great Recession,” City Manager Travis Rothweiler said.
In 2011, unemployment was high — and climbing. Businesses were closing. The city’s taxable value was declining. And Twin Falls needed a community partner that would stabilize the economy, he said.
Chobani had the potential to do just that, and more.
The $47 million spent by local and state entities paid for infrastructure that benefits more than just Chobani. These projects included improvements to Kimberly Road, Chobani’s land, pretreatment facilities and utility upgrades such as sewer, water and natural gas.
“These are all critical infrastructure improvements for that area,” URA Executive Director Nathan Murray said.
An example of the lasting impact: The bonds allowed the city to install a sewer line that would have taken 20 years to incrementally install, Rothweiler said. The new line opened up sewer service to 700 acres of property in the area, he said.
That and other improvements made it possible for Clif Bar to build its bakery nearby, which created even more jobs.
Chobani is part of a tax increment financing area, so all the property taxes that would be collected by the city must instead go to benefit that area. The company still pays taxes to other entities, such as the school district.
Altogether, the URA has used the company’s property taxes to pay about $6.5 million in bond principal and $6.1 million in interest. It still owes $28 million in principal and $11 million in interest, Murray said.
“Right now, Chobani is producing about $4 million more than what’s needed to cover the bond payment,” Rothweiler said.
In 2016, the URA received $6.4 million from Chobani’s property taxes, Murray said. About $2.5 million went to pay off the URA’s bonds and the remaining $3.9 million was stashed away in an ongoing credit fund for public improvements to the site, he said. Some of this goes to reimbursements to the company for work it’s done.
Depending on Chobani’s growth plans, not all that additional tax money may be needed for site improvements. Which means the URA could pay off its bonds as early as 2023, Rothweiler said. That’s significantly earlier than the 2032 deadline.
The tax increment financing area can be removed after the bonds are paid, but not before. When it expires, the city will begin receiving the property tax money.
Chobani’s economic impact
Motion-activated, LED lighting illuminated a machine as it moved containers of Chobani Flip through the packaging area Tuesday. This was new equipment, brought in after the company announced a $100 million expansion last year.
And it’s this product in particular for which Twin Falls owes much of the plant’s success.
“Hamdi (Ulukaya) really built this plant to make Flip,” Chobani’s Senior Vice President of Corporate Affairs Michael Gonda said. “That was a huge gamble, because we had never sold Flip.
“… It paid off. I don’t think anyone would have predicted the growth it had.”
The company expanded its production capabilities for the Flip and Drink Chobani products.
And Chobani’s growth has been Twin Falls’ growth. The plant now employs about 1,000 people with an average full-time hourly wage of $15. For every direct job Chobani creates, seven to 10 jobs are indirectly created — such as farm labor, veterinary services and transportation, Gonda said.
Besides Clif Bar, Chobani’s arrival in the Magic Valley also attracted Fabri-Kal to Burley. The company supplies all of Chobani’s plastic cups.
The Idaho Department of Commerce reported that Chobani’s Twin Falls facility contributes $339.6 million in labor income and $728.1 million in GDP annually.
Plans for growth
The local plant’s footprint hasn’t changed significantly with the expansion, but don’t let that fool you.
“Even within a million square-foot facility, there is still room for growth,” Gonda said.
The company anticipates that growth will be needed — but when it happens will depend on customer demand.
In the meantime, Chobani is ramping up to break ground this year on an office structure that could cost around $25 million. Many of its staff now, such as its research and development team, are in trailers on-site.
The company plans to keep the city and other partners in the loop with regards to future expansions and its needs for more infrastructure.
“We’ve been really fortunate we have a pretty close relationship with the city,” Gonda said. “What’s been a huge attraction for us is the real spirit of partnership.”
And it epitomizes how urban renewal agencies are supposed to work, said URA board member Gary Garnand, who chaired the URA in 2011 when discussions about Chobani started.
“We really are the poster child of how it’s supposed to be done,” he said.
Would the city and URA consider more projects of this scope further down the road?
“We will always look for opportunities for growing our economy,” Rothweiler said. “So long as they make sense.”