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How the county determines what Chobani will pay in taxes

How the county determines what Chobani will pay in taxes


A view of where Chobani pasteurizes milk in August 2017 in Twin Falls.

TWIN FALLS — Fairly assessing the Chobani yogurt plant is a challenge for the Twin Falls County assessor, and he admits it.

“Chobani is in a class by itself,” Assessor Bradford Wills said. “They’ve spent over $700 million investing in it (the plant), and nobody else has come close to that investment. ... With Chobani it gets kind of complicated.”

The assessor’s office recently reduced the plant’s valuation from $393 million to $249 million for 2017, a drop of $144 million after Chobani appealed the valuation and argued the plant was actually worth $176 million.

“This adjusted valuation will allow us to continue to invest in the local Twin Falls community; grow and expand our business in Idaho for many years to come,” Chobani said in a statement to the Times-News. “We’re very proud to be in Idaho and we’re grateful for the willingness of Twin Falls officials to work collaboratively and bring this to a conclusion.”

The new figure is a more accurate representation of the facility’s value, Wills said.

Twin Falls County Commissioner Jack Johnson said that the county has to trust its assessor’s office, but he worries how the change could affect revenues in the future.

“I’ve lost sleep over this thing,” he said.

Tricky valuation

The assessor’s office faced a number of difficulties in valuing the Chobani plant. For one, the plant’s huge, and far more expensive than other facilities in the county.

The short construction time for the plant was also unusual. Chobani got the plant built in under a year, even flying in parts from Europe and bringing in specialized installers.

“By building it that quick, they just had to kind of not worry about cost,” Wills said, adding that the quick construction time increased costs by about 20%.

The assessor’s office evaluates the true value of the actual facility, so it was important to make sure the new valuation took the rapid construction time into account, Wills explained. Building the facility quickly meant that construction costs were misleadingly high.

Equipment inside the plant was also tricky to value correctly. Wills said re-assessing equipment led to the biggest difference in valuation. With large industrial facilities, equipment is often worth more than the building itself. In this case, the actual plant is worth about $90 million.

About a third of the plant is vacant, Wills explained, which also played a role in the valuation reduction. There’s room for expansion, but until that space starts seeing use, its value is low.

Remodeling had to be considered, too. It’s more expensive to tack on to a building than include everything in initial construction, so remodeling costs don’t necessarily reflect the value of the final building.

Twin Falls County Treasurer Becky Petersen said that the change in valuation will help the county come up with more accurate values in the future.

“We want to be fair,” she said.

In a class by itself

Chobani is taxed unlike any other Twin Falls business, with property taxes on the plant going exclusively to the Twin Falls School District and Urban Renewal Agency. The taxes that would typically go to the city and county are funneled to the URA.

Local governments deemed the unique arrangement necessary because the plant required massive amounts of infrastructure construction before it could start churning out yogurt. Chobani paid for those infrastructure costs up front, and the city and county, through the URA, are gradually reimbursing the company for that infrastructure work.

“Over a 20-year period what we’re able to give back to Chobani is roughly $34 million for all the roads and water lines that they put in, which benefit the city,” URA Executive Director Nathan Murray said.

The process is circular. Chobani pays its taxes to the school district and the URA. Taxes paid to the URA are then sent back to Chobani until the URA pays off the $34 million.

The company, through its own taxes, is gradually paying itself back for infrastructure costs.

Because Chobani paid its taxes in full while it contested its original valuation, the school district and URA have to return the excess taxes to the company. For the school district that comes out to $803,000 over two years. The URA will send Chobani $2.45 million over four years.

Johnson emphasized that the valuation change doesn’t have much of an impact for short-term revenues, it only lengthens the reimbursement timeline.

“The decisions that were made on this situation, they don’t impact us today,” he said. “They impact us a few years from now.”

Murray said Chobani will continue to have a major impact on the local economy regardless of the plant’s value.

“We still expect growth from them,” he said. “This shouldn’t be a signal that they’re pulling back or that they’re not investing in our community.”


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