An agreement between Lehi and Micron Technology to provide infrastructure for its semiconductor plant was never signed before the company decided to ice its sprawling complex this week.
While the Lehi Redevelopment Agency and Micron agreed on a $125.2 million economic development package last October, neither inked the contract that enforces the plan. Under the terms, Micron was to front Lehi $70.7 million for new roads, sewer and water lines and utilities."Technically, there is no contract between the Lehi RDA and Micron, so they're under no obligation," said Utah County Commissioner David Gardner, who served on the committee that worked out the incentive package.
Had the two signed the agreement, he said, "it would have locked them in."
Micron announced Monday that it will only complete the exterior of its $2.5 billion semiconductor plant at the base of Traverse Ridge. The Boise-based company doesn't know when the plant will open.
Micron spokesman Kipp Bedard confirmed that the contract remains under negotiation.
"It actually means they have no obligation to pay us back. We've said all along we're the ones taking the risk," he said.
The company has spent about $18 million on infrastructure in Lehi. Micron said it is working with city, county and state officials to revise the timing of the projects.
"We don't even have a promise to get paid back," Bedard said.
Former Lehi City Council member Knollin Haws, who helped work out the deal, concurred. "The agreement is Micron is not paid back until the money comes in from the taxes," he said.
Micron is loaning money to the RDA, which would be paid back using the company's taxes over a 12-year period beginning in 1998. The RDA adopted the budget and economic development plan in a public meeting last October.
Lehi Mayor Bill Gibbs said there are parts of the contract where agreement wasn't reached. "There were some points that were discussed on that that I wouldn't want to discuss without the attorneys," he said.
Gibbs said the city will meet with Micron in the next week or so to discuss what to do with such things as an unfinished sewer main and torn-up U-92. He doesn't think Micron will leave the city hanging. "I feel that the city is in a pretty good position," he said.
Gardner, who met with Micron officials, including CEO Steve Appleton, as late as last week, said the company changed its mind about when it wanted to trigger the RDA's tax-increment financing plan.
Changing the economic development plan would have reopened the entire process, including public hearings. Gardner said Micron didn't want that.
Gardner said the county didn't really mind starting over because it "ended up getting knifed in the gut" with the original plan. It didn't include money for impacts Micron and its potential 3,500-person work force might have on the county, which Gardner estimated at about $600,000 annually.
The agreement did include $10.4 million for Alpine School District, $11.5 million for Lehi roads and $2.5 million for expanding the Timpanogos Special Service District sewer plant. That money is now on hold.
Gardner said had the plan started from ground zero, the school district and the sewer district would have demanded more money to keep pace with inflating construction costs.
Jack McKelvy, Alpine District finance director, said the initial sum didn't seem reasonable in the face of rising prices. "If construction costs don't or didn't go up, it wouldn't be an issue," he said.
One member of the RDA committee, Larry Newton, a State Office of Education administrator, was pleased to hear Lehi and Micron had not signed the agreement.
"I thought it was up in the night from the very beginning. There were too many questions without answers," he said.
Newton, on behalf of the State Board of Education, voted against the plan, saying it would rob the school system of $75 million.