Pocatello City Council upholds decision to deny AI data center

POCATELLO – Pocatello’s governing body has upheld the denial of an applicant that wants to bring an artificial intelligence data center to the Portneuf Valley.

Somewhere around a hundred citizens gathered in the Pocatello City Council Chambers Thursday evening to find out how council members would vote on the appeal made by Lex Developments. After around an hour and a half of discussion, the council ultimately decided the decision made previously by Hearing Examiner Kathleen Lewis was valid.

At the end of the night, Council member Brent Nichols made a motion to uphold Lewis’ decision. The vote came down to four saying yes, and Council member Dakota Bates voting no. Council member Ann Swanson wasn’t present for the meeting, with Mayor Mark Dahlquist explaining that she unfortunately had prior commitments that night.

At the beginning of the discussion, Dahlquist offered an explanation of what the council’s role in making its determination would be, explaining that it’s similar to a judge, where they have to apply city code and state law to decide whether the initial denial was appropriate. He also clarified that they wouldn’t be taking new testimony or information, and had to go off of the existing record.

Members of the public were given the opportunity to comment at the May 14 hearing examiner meeting, which was attended by hundreds of people. More than 90 people spoke on the record, with around 60 speaking against, 20 taking an uncommitted stance and only three speaking in favor.

In its appeal, Lex Developments made three core arguments for why the decision should be overturned:

• Lex Developments asserted that it never should have had to file an application for a CUP, because data centers are not listed in city code, and should be subject to the code governing unlisted uses.
• It argued that the denial was driven by external political pressure from the public pushback to the project. It also argued that Lewis disregarded the city staff, which it asserts recommended approval of the application.

  EastIdahoNews.com previously reported that while staff found the proposal compliant with city code, it did not recommend that the application be approved or denied, as stated by Planning Director Brent McLane.

• Finally, Lex Developments argued that denying the CUP application imposed a prohibitive financial penalty. With a denied application, Lex Developments can’t reapply for a full year, and would have to spend thousands of dollars on technical studies with no assurance of an eventual approval.

Bates offered an explanation for why he decided to vote against the motion, saying that he felt that while the information in Lex Developments’ CUP application is vague, the criteria that applicants are required to meet are also vague. He expressed frustration with the criteria the council was required by law to follow in making a determination.

“This process sucks. I really hate that this is even the way we’re having to consider this determination because the code and the process, the conditions that we have to look at, I think by design are to lead to finding a way to say yes for a developer,” Bates said.

Ultimately, Bates said that he felt Lex Developments met the requirements of the CUP, and worried that upholding the decision would lead to it being overturned by a judge.

At one point in the meeting, Dahlquist questioned Gus Shultz, who spoke on behalf of Lex Developments, asking if he had any companies lined up to use an AI data center if one were built.

“I have multiple,” Shultz replied.

“Why aren’t any of them here?” Dahlquist asked. He was met with applause from the audience.

Dahlquist pressed Shultz to clarify, asking if he had a signed letter of intent, to which Shultz replied, “Yeah.”

Shultz would not comment further on this for EastIdahoNews.com.

During the meeting, the council members discussed how the city’s planning department has begun working on modernizing the city code to more properly address data centers. There was some discussion about potentially waiving the year requirement to re-apply for the applicant, but the council ultimately decided that the time period was necessary for city staff to work on the code, as a granted CUP application would be governed by the code in place at the time of its approval.

At the end of the meeting, EastIdahoNews.com asked Shultz if he would be appealing the council’s decision.

“Absolutely,” Shultz replied.