POCATELLO, Idaho (KIFI) – The Pocatello City Council voted tonight on the Lex Developments appeal for the proposed AI data center and decided in a 4-1 decision to affirm the Hearing Examiner’s decision from May to deny the applicant a conditional use permit.
Background
After Lex Developments was denied a Conditional Use Permit (CUP) in May of this year, the company filed for appeal. Through the city process, the developer drafted an appeal document, set to be reviewed by the mayor and city council on July 16. As part of a regular city council meeting, the appellate hearing for Lex Developments was last on the agenda.
The council is considering the appeal, represented by Parsons, Behle and Latimer attorneys out of Idaho Falls. Based on the appeal document, there are three main reasons the company believes they deserve a CUP and ask the Hearing Examiner’s decision to be reversed.
Firstly, the applicant is arguing the City didn’t follow proper procedures for the use of the land at 1800 River Park Way, the site of the former Hoku plant. Under city code, they believe the proposed AI data center falls under “Unlisted Use; Authorization of Similar Use,” rather than the requirement of a CUP due to the similarities in facilities.
The developer has also previously stated the data center would use less power, water and resources than the former Hoku plant, making it inconsistent by city code to require a permit for the land. They state the Hoku plant has previously been approved for “heavy industrial use at a scale and intensity that encompasses the proposed data center.”
Secondly, the appeal argues the Hearing Examiner’s decision was not made in fair conscience. The language used in the document includes that the denial was “artbitrary and capricious” and “not in line with the City’s planning staff review.” This section of the appeal document concludes the developer is not satisfied with the Hearing Examiner’s statements of denial, saying they were “nothing more than conclusory statements.”
Thirdly, Lex Developments goes on to claim the denial was “fundamentally unjust,” stating the Conditional Use Permit process is not intended to include the details the City is requiring. Statistics like full costs of engineering and design, total environmental analysis, and construction studies were required of the developer to gain the CUP, before they were given preliminary land use authorization.
In conclusion, they argue its unjust to allow other companies (like Hoku) to develop similarly impactful facilities on land in Pocatello without providing such detailed statistics prior to any authorization. According to Lex Developments, much of that information is impossible to gain before any preliminary authorization by the City for condtional land use.
Appellate Hearing
Following other scheduled agenda items, Mayor Dahlquist explained the appeal process and conditional use permit process. The council could either affirm, modify, or reverse the Hearing Examiner’s decision from May 19, 2026 where she denied the applicant a conditional use permit. They also could not consider any new evidence at the time of the appellate hearing, sticking only to the information in the appeal and original public hearing on May 14.
Each council member also had to reveal their “ex parte” communication before consideration of the appeal. This includes any conversations or information exchange outside of the appeal process, which council members were to refrain from during the last two months.
“This disclosure ensures that all parties are aware of any communication, and allows the council to determine whether any additional action is necessary to ensure a fair and impartial review,” Mayor Dahlquist explained.
Many of the council members expressed they had received phone calls or emails regarding the AI data center they had been exposed to during the appeal process time period, however none expressed these opinions would cause bias in their vote.
Jennifer Flynn, Assistant Planner for the City of Pocatello Planning Department, spoke to the council to give an overview of the events that led to the appellate hearing, including details about the Hearing Examiner’s decision.
Following Flynn’s explanations, council members began a 2-hour deliberation period. This involved questioning Flynn as well as Pocatello Development Authority representative Brent McLean. Many concerns were addressed including water and power usage.
Concerned citizens were not allowed to voice their opinion at this meeting, however the “boo’s” and cheers had to be quieted by Mayor Dahlquist throughout the meeting as attendees waved their posterboard signs.
McLean as well as council members Paulson and Mangum shared concerns over the lack of information available from Lex Developments, citing there was little data about the environmental impacts. Gus Shutlz, the representative present for Lex Developments, was specifically asked about the water usage for the center’s closed loop cooling system.
“It’s 250,000 to 300,000 gallons to fill the closed loop system,” Shultz clarified. He later clarified again this would be a one-time usage.
Public Works Director Tom Kirkman added that some of the larger and commercial users in Pocatello range anywhere from 150,000 to 300,000 gallons per day. “These numbers are pretty common,” Kirkman said. “The bigger users are doing that daily.”
Council members continued to express their decision would be made solely on the facts of the appeal and the record of the public hearing.
“It is unfortunate to me that there’s so much public discussion and the public pressure that has been placed on the mayor and the council that has been driven by policy preferences that are not permissible reasons,” said council member Bates. “This appeal process or concern potential effects are not always supported by the facts in the record.”
Bates went on to say that as a taxpayer he was disappointed by the “clumsy” and “casual” manner with which Shultz approached the request for the Conditional Use Permit. He also said there were obvious deficiences with the findings presented by the Hearing Examiner. Bates ended up being the only council member to vote “no” on the motion to affirm the Hearing Examiner’s decision.
Mayor Dahlquist also took a turn asking Shultz questions and commented on the speculative nature of the proposal, leading to his personal concerns.
“I think the speculative nature here is what I’m having a problem with, your exact numbers and calculations and it just feels very speculative,” Mayor Dahlquist said. “We don’t have an exact company that is committed [to build the data cetner] so I’m having a problem with that.”
The Mayor also commented that he could “feel the fuzziness” of the proposal during the hearing and cited missing conditional agreements, letters of intent, or any other documents from building companies that Lex should be able to show.
City Attorney Jared Johnson argued the city council shoudn’t expect the company to get into exact details about the development as the Conditional Use Permit is the first stage of the project.
Bates agreed, stating, “In my estimation, the Hearing Examiner just frankly ignored the fact that the applicant gave a site specific usage estimate. So I don’t know how you can ask for more when he gives an estimate.”
Bates called for the council to look at the decision as a matter of land use, not a building code where they would ask for final design and engineering. “This is simply asking if this use fits within our code,” he said. “Which, most of the city staff has essentially said yes, it fits. There’s just some extra questions with the CUP we have to answer.”
When the company filed the appeal in June, it was notable that a representing attorney had drafted the appeal document, not the applicant. When Local News 8 asked the city if they were concerned about a potential lawsuit because the use of legal council was already obvious, they made no comment. At the appellate hearing, Bates expressed his concerns over this situation becoming a larger legal issue, should the decision be affirmed.
“I’m very concerned about affirming the decision, which leads us down the path to Mr. Shultz, exhausting appeals, taking the city to court, and dragging this out further and costing taxpayers money,” Bates said.
Councilwoman Satterfield had refrained from comment throughout the deliberation, but stated that Bates’ comment about this escalating into a legal case gave her pause when affirming the decision.
The first motion after the hours of deliberation came from Council member Mangum, who moved to affirm the decision with stipulations.
“I move to affirm the Hearing Examiner’s decision, with the stipulations of receiving environmental studies concerning water use, air quality and consumption, noise and other liquid water impact studies,” Mangum said. “And I would give it that 12 month time period.”
The city attorney objected, offering the suggestion that adding conditions to an affirming decision would be adding conditions to the denial, which is not contemplated in city code. He advised flat out affirming or moving to modify.
Mangum moved to modify the decision, but after several people in attendance yelled “no,” he retracted the motion.
Councilman Nichols was the second to offer a motion. He stated his motion was to affirm the Hearing Examiner’s denial decision from May, sticking to the 12 month ordinance period.
During the vote on Nichol’s motion, each council member voted “yes” except Bates.
“I want to thank the council, this has been a really rough process,” Mayor Dahlquist stated once the decision had been made. “There’s lots of passion throughout the community both ways. I know there was lots of study, lots of tumultuous things to go through. Thank you for your participation and your efforts.”
What now?
The fight for an AI data center in Pocatello is not over following the City Council’s decision to uphold the denial of a Conditional Use Permit for Lex Developments. The former Hoku site remains an attractive area for developers and Lex Developments can choose to continue the fight for it.
The applicant is allowed to appeal the City Council’s July 16 decision. According to Pocatello City Code 5.12.060, “Any applicant denied a license, transfer, or renewal may appeal the clerk’s decision in writing to the city council within thirty (30) days of the date of the denial. The city council shall hold a hearing on the appeal within thirty (30) days of the receipt of the written appeal. The council’s decision shall be final.”
If the applicant is denied again, there is the option of a lawsuit like Councilman Bates mentioned, “taking the City to court.” With attorneys already in the mix with Lex Developments, the city seems to be aware of this possibility.
Local News 8 will continue following this development should the applicant decide to appeal again or file suit against the City of Pocatello.
