SHELBIE HARRIS sharris@journalnet.com
POCATELLO — The Gate City hasn't seen the last of Gus Schultz or his AI data center proposal for the former Hoku plant site.
That much was made clear Monday after Pocatello's Hearing Examiner denied Lex Developments' conditional use permit application for the proposed Pocatello AI Data Center — overruling city planning staff, who had recommended approval.
Schultz, however, all but promised a second act during an exclusive interview with the Idaho State Journal.
"There is an enormous amount of people who have reached out to me," Schultz said. "There are people in the community who want this. We will be back in front of the people again at some point."
Hearing Examiner Kathleen Lewis issued her decision Monday around 5 p.m., finding that Lex Developments' application does not meet the standards for approval under Chapter 17.02.130 D of the Pocatello Municipal Code — a seven-part criteria by which the city evaluates conditional use permit applications.
The code requires a hearing examiner to find, among other things, that a proposed use can be adequately served by public facilities, would not adversely affect the environment and would not be detrimental to the public health, safety or welfare of the city.
The denial came despite the fact that Assistant Planner Jennifer Flynn's staff report had concluded the application was compliant with all seven criteria under that same section of code and recommended approval subject to four conditions, including a requirement that Idaho Power's power impact analysis be shared with the city once complete.
Lewis had told the packed room at the May 14 public hearing that she would not be making a decision that night, citing the 92 written comments submitted ahead of the hearing and more than four hours of public testimony still to be absorbed into the record.
Schultz said Monday he had not yet had a chance to fully review the denial. He said he needs to study the specific findings and the relevant code sections before deciding whether to appeal the decision or file a new conditional use permit application once the project has more concrete specifics in place — chief among them the results of an Idaho Power study that will determine how much electricity the facility can draw and, consequently, how large it can be built.
If Schultz opts against an appeal and instead pursues a new application, Pocatello municipal code prohibits resubmitting a conditional use permit application in the same or substantially the same form for one year from the date of final action, unless specifically authorized by the granting body.
Under city code, affected parties have 14 days from the recorded decision to file a written appeal to Planning and Development Services at planning@pocatello.gov. An appeal would push the matter to the Pocatello City Council, though no additional public comment would be accepted at that stage. Idaho Power's Matt Stucki, who testified at the May 14 hearing, confirmed that ratepayers would not bear the cost of any power study — the applicant requesting the megawatts is responsible for funding it upfront. Stucki also said that under Idaho Power's growth-pays-for-growth framework, which he credited with keeping Idaho rates 20 to 30 percent below the national average, Lex Developments would be responsible for all costs associated with any necessary substation, transmission or generation upgrades — none of which would be passed on to existing ratepayers.
Schultz's path to Monday's denial included a significant financial commitment. He closed on the River Park Complex property on May 13 — the day before the public hearing — paying approximately double what Portneuf Capital paid when it purchased the site from the Pocatello Development Authority in December 2019 for $1.25 million.
Much of the opposition at the May 14 hearing centered on the project's lack of specificity — the very issue that likely proved fatal to the application under the city's code. When Lewis pressed Schultz on fundamental questions about water usage and building design, he acknowledged that final answers depended on the Idaho Power study.
Critics, including Pocatello small business owner Jacob Bauer, argued that level of uncertainty was incompatible with the conditional use permit process itself.
"In order to establish a conditional use permit, you have to understand the conditions that the land will be used under," Bauer said at the hearing. "He was unable to provide any concrete answers to the conditions of use."
The shadow of Hoku loomed over the entire proceeding, with speaker after speaker invoking the failed polysilicon plant's legacy as a cautionary tale. The site has sat largely idle since Hoku went bankrupt in 2013 with roughly $1 billion in debts, cycling through multiple owners and proposals — including a massive air-dome sports complex — that never materialized.
Supporters argued the data center represented a generational opportunity the city could not afford to dismiss, pointing to a projected $2.26 billion construction investment, 150 to 300 permanent local jobs and an estimated $5.3 million combined annual increase in tax revenue for Pocatello and Bannock County.
Whether the project gets a second chance before the city — through an appeal to the council or a new application — Schultz left little doubt about his intentions.
"Nothing good ever came easy," he said.
The full decision is available at pocatello.gov under the Hearing Examiner dropdown menu. For additional information, contact Assistant Planner Jen Flynn at jflynn@pocatello.gov or 208-234-6500.