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Chobani's impact

Chobani’s flip cup product zooms across an assembly line during a tour of the plant Aug. 8, 2017, east of Twin Falls.

TWIN FALLS — Chobani and Twin Falls County have a disagreement. The yogurt company says the assessed value of its Twin Falls plant is higher than it should be — $216 million higher.

Last year, the company appealed its assessment before the Twin Falls County Commission. The county assessor’s office had initially valued the property at more than $495 million. The assessment was lowered upon appeal to $424 million, court records say.

But Chobani argued the total value of its real and personal property was just $176 million.

The Idaho Board of Tax Appeals disagreed with the company’s assessment, but in April modified the value to nearly $393 million.

Now, the yogurt manufacturer has taken its case to district court — the next step in the appeal process.

“As we began this process to review our tax assessment, it became clear to us that the current valuation for our property taxes does not reflect the actual market-value of our property,” Michael Gonda, Chobani’s senior vice president of corporate affairs, said in a statement. “As many individuals, households or companies have done, we raised this issue with the relevant parties and have petitioned for a revised assessment of our facility through an appeal of our County property valuation. This is similar to a homeowner who would expect their tax assessment to be different from the purchase price of their home.

“Through this process, we’ve concluded that we’re spending more on taxes than the fair cost, partly due to our approach to build a plant for the future which is not at full utilization,” Gonda said.

It’s tax money Chobani could instead be using for growth initiatives it believes would further benefit the community, he said.

“Every action we make is informed by the perspective that our growth can and must drive our local economy forward,” Gonda said.

Twin Falls County and Chobani could still potentially settle outside of court, or the issue may come before a jury in a trial scheduled for June 2019.

“The assessor has been working diligently with Chobani,” County Commissioner Don Hall said. “These are fairly complex properties to appraise and evaluate.”

Twin Falls County Assessor Brad Wills declined to comment.

Despite the filing in district court, Commissioner Terry Kramer said there isn’t a lot of tension, and the situation has been amicable.

“This is more of a friendly suit,” he said. “It’s trying to create a value that’s fair and equitable.”

The $176 million value being proposed by Chobani, however, is based on limiting factors, he said. For example, according to court documents, “the current water delivery system is limited to providing roughly one-third (1/3) of the water needed for the plant to operate at full design capacity.”

Chobani has been planning for the factory’s eventual growth since its construction in 2012. But in its appraisal, the company indicated the Greek yogurt market segment has not grown as it had prior to the plant’s construction.

The company’s appraiser indicated that even if the factory was operating at full capacity, Chobani would have a hard time selling all the yogurt produced.

Chobani’s appraisal also called for a lower valuation due to the inflated construction costs when the plant was built. Chobani paid more for construction to get the plant completed in less than a year.

“The court will have to decide how restricting those limiting factors are,” Kramer said.

The Twin Falls County Assessor’s Office has typically contracted with an appraiser to evaluate large commercial properties in the area, Kramer said. That’s because county personnel don’t have experience with those types of appraisals.

Even the commissioners themselves, he said, rely largely on expert opinion while conducting their appeal hearings.

“There’s just no way we know what it’s worth,” Kramer said.

Chobani’s 2017 assessment was calculated by Scott Erwin, who died last summer. The Twin Falls County Commissioners recently approved a contract with Brent Eyre Appraisal Services, which will help the assessor’s office work through the appeal, Commissioner Jack Johnson said.

“We certainly don’t want to overcharge Chobani,” Kramer said. “It just needs to be fairly valued in the market.”

The value set by the Idaho Board of Tax Appeals is locked in for a couple of years, so Chobani’s assessed value for 2018 was set at $392 million. The company has also appealed that before the commissioners, who sided with the assessor’s office.

“Though both parties relied on the cost approach, the respective value conclusions were widely divergent,” the Idaho Board of Tax Appeals wrote in its final order. “The primary source of this divergence was in the total depreciation adjustments.

“… The amount of total adjustments in the fee appraisal offered by Appellant was too fervid in the Board’s judgement.”

Chobani also failed to prove there was error in the county assessor’s method, the board said.

The yogurt factory property is a revenue allocation area for the Twin Falls Urban Renewal Agency. That means the property taxes on the improvements the company made to the land go to the URA for a certain number of years. That money can be used for public infrastructure improvements on that land that benefit other users.

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