Idaho lawmakers kill Kuna’s plans for industrial park around Meta data center

The city of Kuna had big plans for its east urban renewal district.

City officials planned to have a large industrial park near the 960,000-square-foot data center being built by Meta, the technology company that owns Facebook. The industrial park would be connected to a new Meta-built water and wastewater treatment plant.

When Kuna negotiated with Meta over its $800 million data center, Meta agreed to build a water and wastewater treatment location in east Kuna to accommodate its water needs. To help spur growth in the area, Kuna developed an urban renewal district in that area to collect tax dollars from Meta, which would then be used to build more connections to the water treatment plant for other businesses in east Kuna to use.

Now, Kuna is back to the drawing board, after Gov. Brad Little signed a bill that prohibits Meta tax dollars from going to an urban renewal district and redirects that money to the Ada County tax base. The new law starves the urban renewal district of revenue and puts the industrial park in jeopardy, forcing the city to find another way to fund the water and wastewater treatment connections in east Kuna.

Proponents of the law said it will bring relief to Kuna residents, saving taxpayers nearly 5% in property taxes, according to the city’s economic development director. But opponents said without Meta’s property tax dollars, the city’s urban renewal district can’t afford to build the water and sewer lines to attract industrial businesses to the area.

A city council in Idaho can create an urban renewal district with a vote after a public hearing. The council then selects a board to oversee the urban renewal district. The districts were designed to improve “blighted” areas of a city, but cities in the Treasure Valley — including Boise, Meridian and Nampa — have often used the districts to spur growth in more rural areas.

Once a district is established, the county stops collecting property taxes for all of its existing taxing jurisdictions for 20 years. The revenue produced from any increase in property valuations over the district’s lifespan instead pays for public infrastructure like roads and pathways, sanitation services and recreation features.

Bill would ‘essentially kill’ Kuna urban renewal

“If (this bill) becomes law, it will essentially kill our urban renewal east district,” said Kuna Mayor Joe Stear, to a legislative committee in March. “This project is the kickstart to our industrial zone. (Meta is) providing the wastewater treatment facility that’s needed to begin industrial development, with no reimbursement from us.”

Brian Frost, a developer with Star Acre Property, told the same committee that he wouldn’t be able to build his planned industrial park in east Kuna without urban renewal, the Idaho Statesman previously reported.

“I’m ready to go. I’m ready to move forward, but I can’t do it without urban renewal,” Frost said.

Morgan Treasure, economic development director for Kuna, told the Statesman in a phone interview that the plan for the district was all based around Meta’s agreement to fund the treatment plant.

The bill’s sponsor, Rep. Jeff Ehlers, R-Meridian, said the goal is to provide taxpayers with property tax relief. In 2020, the Legislature passed a sales tax exemption to encourage data centers to come to Idaho. Ehlers said by adding Meta to an urban renewal district, taxpayers are not getting the sales tax relief or property tax relief from Meta.

The statement of purpose of the 2020 bill, provided to the Statesman, said “data centers significantly add to the property tax base wherever they are built.”

After the bill passed, Kuna developed the urban renewal district.

“That takes this data center and puts it into the urban renewal district instead of going to the taxpayer base,” Ehlers said.

What are the property tax savings?

Rep. John Gannon, D-Boise, co-sponsored the urban renewal bill. In a phone interview, he said the Idaho State Tax Commission estimated that the result of the law is a 1% reduction in property taxes for all Ada County taxpayers.

“It is about everybody paying their fair share,” Gannon said. “Hewlett Packard isn’t paying property tax, Micron has a cap at $400 million, the airport doesn’t pay property taxes. This is all affecting everybody’s property tax in various taxing districts. We need to have fair taxing policies.”

Treasure said the average homeowner savings for Kuna taxpayers would be less than 5% after all of the other taxing districts — including Ada County, school districts and fire districts — take their cut of tax dollars.

Meta is paying property taxes, regardless of whether it is in an urban renewal district The law changes how its tax dollars can be used.

House Speaker Mike Moyle, R-Star, spoke in favor of the bill during a hearing.

“That data center has been a good player,” he said. “They are putting in the water, they are putting in the water treatment plant, all without an urban renewal district. The urban renewal district is subsidizing somebody coming into the property later.”

Treasure doesn’t know every impact the law will have on Kuna and Meta, but she said she believes there could be unintended consequences.

She also said the city was surprised by the bill and the lack of “fact-finding” legislators did ahead of passing it. When city officials held a public hearing on the urban renewal district, they did not hear any opposition from residents, she said.

“One of the arguments we made when we were opposing this bill was the retroactive nature of it,” she said. “It will have impacts beyond just the property tax savings.”

Boise, Kuna opposed proposals for this 3,000-home community. Ada County just approved it

Excluding Meta data center from Kuna urban renewal is penny-wise, pound-foolish | Opinion