| LovelandPolitics.com |
| McWhinney Proposes Tax Holiday For McWhinney Chad McWhinney Promotes Myths In Local Media |
Loveland - June 20, 2009
Last Friday the Loveland Reporter-Herald ran a guest column by Chad McWhinney on page A4 encouraging citizens to support his
company’s request that Loveland reduce CEF's (Capital Expansion Fees) for building multi-family housing projects. The proposal
created by McWhinney provides a temporary tax holiday just long enough for McWhinney to escape the full fees on a multi-family
housing project they are building.
The request coming before council is the third attempt by McWhinney this year to reduce its fees for the proposed 303 unit
apartment complex in Centerra. Loveland’s council voted down a previous request for a 25% tax holiday by McWhinney but will
now consider a much larger reduction of 61% this Tuesday. See LovelandPolitics' previous stories regarding the fee details
Background or Post Meeting Story.
The proposed 303 unit subsidized low-rent apartment project has already been planned for Centerra. Now Chad McWhinney has
set about trying to find a way to get a tax holiday from the regular fees and costs his competitors normally pay despite the fact the
project is already heavily subsidized.
Long List Of Government Money in Project
The project anticipates receiving $700,000 in HUD (Housing and Urban Development) funds, waiver of certain city taxes for
affordable housing and likely future property taxes plowed back into McWhinney’s Metro District to be used on signs and
landscaping for other projects. While McWhinney has not released any details regarding their government financing local news
stories have published conflicting information regarding the nature of the project and just what type of government assistance it will
be receiving. This is not necessarily a comment on the accuracy of either the Loveland Reporter-Herald or Loveland Connection
news stories but instead likely a reflection of the changing story McWhinney has been telling both newspapers.
Some say it is being entriely financed through low-interest HUD loans while another referred to a figure of $700,000 grant. What is
sure is the nobody in city hall has seen evidence of the "HUD deadline" McWhinney claims makes their request so urgent.
McWhinney has also failed to disclose how much they are willing to invest in the project, what Chad McWhinney expects to earn
both in cash and equity and what total percentage of their project is being financed through taxpayer's. The figure being tossed
around by McWhinney indicate their cost of the project to be around $155,000 per unit. This is 2-3 times higher than the cost of
existing multi-family properties which means the rents would need to be catagorized by Loveland's Housing Authority as
"unaffordable" for the business case to close.
An important incentive for McWhinney in building the project is the Low Income Housing Tax Credit (LIHTC) provided by the
federal government. This credit can later be sold to other investors or used for equity in the project.
McWhinney is asking the Loveland City Council to provide a short approximately 5 month tax holiday so the normal capital
improvement fees required to fund emergency services and other basic city services will be reduced by 61% for a very limited time.
McWhinney is likely proposing only a limited time for the reduction of taxes so the tax may serve as a barrier of entry to subsequent
projects proposed by competing developers and give McWhinney a Loveland City Council induced price advantage over others.
Many communities fight the introduction of low-rent government subsidized housing due to its high cost on community services in the
long run, tendency to bring crime and detrimental impact on the home values of adjacent single family residential properties. The
Loveland Connection recently published a front page story regarding a similar government subsidized housing project in Loveland
that has become a springboard for gang and other criminal activity in the community.
Below is a clarification of the misleading data published by the Loveland Reporter-Herald
in Chad McWhinney’s guest column.
Myth #1
Without Special Assistance The Project Cannot Be Built
The often used and most effective tool in Chad McWhinney’s lobbying toolbox is to threaten that if the city doesn’t act quickly to
eliminate certain fees, waive costs or otherwise subsidize his project he will build it somewhere else. At the same time, McWhinney
argues the project is “much needed” and that all comparable buildings in Loveland are full which appears to contradict his assertion
that without a subsidy of waiving fees he cannot close the business case to build the 303 unit government subsidized low-rent
apartment project.
McWhinney planned, proposed and prepared for the construction of the subsidized apartment building in Centerra with the current
city building fees and Capital Expansion Fees (CEF’s) already in place. If such fees make the project untenable and more attractive
to build in Ft. Collins or Johnstown why did he already only plan to build it in Loveland?
These threats are a common and often disingenuous tactic employed by McWhinney. Anyone with a cursory knowledge of recent
history knows the McWhinney Company employed the same tactic to absolve itself of the near-term obligation to improve the I-25
and U.S. 34 interchange less risk Agrium not moving to the community. Council stuck to its guns and denied the request while
Agrium moved to McWhinney’s Centerra development anyway without the city aided incentives being taken from the funds set-
aside to improve the I-25 and U.S. 34.
Myth #2
By Reducing the Fees The Project Will Create Needed Jobs In Loveland
Chad McWhinney argued in his guest column, “If the City Council adjusts development fees…..and construction
commences on the Centerra apartments, the project is expected to generate 250 construction jobs – a welcome relief
for the 800 construction workers currently unemployed in our area.”
This argument relies on myth #1 being true that McWhinney planned the project in full knowledge of the current city fee structure
but will not proceed unless given a 61% discount for their project by way of a short 5 month tax holiday.
Nothing in the proposed fee reduction by Loveland’s City Council for this Tuesday night that Chad McWhinney is advocating for
requires McWhinney to hire Loveland contractors to complete the project. McWhinney’s clear preference is to have the ability to
award the job to the lowest bidder regardless of where the company is located so the argument his project is creating local jobs for
unemployed construction workers in Loveland is disingenuous.
The low-bidder on the I-25 and Crossroads Blvd. Improvements which was widely touted as providing local jobs is Jalisco
International Inc. of Commerce City Colorado. The company is owned and operated by the Ledezma family and provided a
low bid of $4,886,511 to complete the Crossroads project. Because McWhinney’s contribution to the project was the “last money
in” means the stimulus money ($3 million) and MPO grant ($1.2 million) will pay for a majority of the project.
In addition, bringing more renters to Loveland who depend on federal government Section 8 housing vouchers to pay their rent is
unlikely to help people already in the community looking for jobs.
Myth #3
Loveland Isn’t Building Enough New Multi-Family Housing Projects
Chad McWhinney argued, “Over the past 10 years the majority of apartments built in Northern Colorado are outside
Loveland.” He offered this as evidence that Loveland’s Capital Expansion Fees are too high so people building apartments do not
consider Loveland to build thus creating a shortage of “workforce” housing.
In fact, the contrary is true. A disproportionate number of apartment units have been built in Loveland compared with the rest of
Northern Colorado over the past 10 years. Since 1999 the communities of Ft. Collins, Greeley, Windsor and Loveland have
granted 10,187 permits for multi-family housing construction. Of those, nearly 2,000 were in Loveland. That means 20% of all
multi-family housing permits in Northern Colorado were in Loveland alone since 1999.
Loveland’s population comprises only some 10% of the 528,500 population of all Northern Colorado yet granted 20% of all multi-
family housing permits. McWhinney’s argument that “the majority” of apartments built in Northern Colorado in the last 10 years
were built outside Loveland is true but his conclusion demonstrate specious reasoning.
Loveland doesn’t cover half the land mass of Northern Colorado and is home to only a small fraction of the total population.
(Reference: The Group Inc. website)
In 2006, Loveland issued more multi-family permits (429) than any other community in Northern Colorado including Ft. Collins.
Last year Greeley issued only three and Windsor zero while Loveland issued 97 permits. Chad McWhinney’s argument that we
lack new multi-family housing projects in Loveland due to CEF's is not consistent with the facts.
Myth #4
Low-Income Subsidized Apartment Buildings Are Good For Loveland and Cost the City Less in Government Services
The day after Chad McWhinney’s article appeared claiming low-income apartments are cheaper for a community to service than
single family residential the Loveland Connection published a front page story demonstrating the opposite.
The Loveland Connection story reported on a government subsidized low-income apartment complex in Loveland called Creekside
Garden apartments. The article reported law-abiding residents are struggling to deal with the influx of crime, gang activities and all
night parties that turn into fights at dawn at the subsidized "affordable" housing project.
Creekside Garden Apartments has generated over 50 calls to the police and injured two Loveland officers responding to the
affordable housing development. The costs associated with these policing efforts alone diminish any potential benefit one could
argue is creating by the “affordable” housing project. Chad McWhinney, on the other hand, argued that such housing projects
actually cost the city less to support with local services.
Policing these low-rent subsidized apartments is difficult as compromised landlords accepting Section 8 housing vouchers cannot
easily evict unruly tenants. Affordable housing is often a euphemism for people unwilling to call the project what it is – government
subsidized housing. Loveland has an abundance of hundreds of available apartment units at the prices at or below those that qualify
for McWhinney’s proposed “affordable housing.”
Attracting people dependent upon welfare or other government hand-outs into a community turns a handsome profit for the
developer who is awarded federal tax credits but creates long-term financial strains on the municipality. It also increases the number
of low-income earners in the community who are now competing with current residents looking for jobs.
Myth #5
McWhinney Family In Loveland 6 Generations And Just Trying To Help Their Hometown
Chad McWhinney, while supporting a project in 2007, made similar arguments before another city council regarding his ties to the
community and commitment to the region. However, the city was not in Colorado but instead in Southern California. As reported
by The Orange County Register on September 12, 2007,
“According to the Council members’ choice was Chad McWhinney, a developer who built the first cluster of hotels and
restaurants in Garden Grove’s side of Harbor Boulevard – the city-designated resort area. McWhinney, who grew up
in Huntington Beach, is excited about the opportunity, said Jack Wolfe, the company’s president of Community and
Mixed Use Development.”
In his guest column in the Loveland Reporter-Herald Chad McWhinney claims “The McWhinney family – which has been a
part of the Loveland community for more than six generations…” Ironically, the Loveland Reporter-Herald ran an editorial
alongside his column blasting “citizen journalists” who use the Internet to distribute news. The editorial claimed only newspapers
can “protect against potential corruption” and not reprint company news releases or other propaganda that are not entirely
accurate.
While there is no disputing the long heritage of the McWhinney family in Loveland, Chad McWhinney must soon decide where his
generation of McWhinneys grew-up -- in Loveland or Huntington Beach, California?
Last Friday the Loveland Reporter-Herald ran a guest column by Chad McWhinney on page A4 encouraging citizens to support his
company’s request that Loveland reduce CEF's (Capital Expansion Fees) for building multi-family housing projects. The proposal
created by McWhinney provides a temporary tax holiday just long enough for McWhinney to escape the full fees on a multi-family
housing project they are building.
The request coming before council is the third attempt by McWhinney this year to reduce its fees for the proposed 303 unit
apartment complex in Centerra. Loveland’s council voted down a previous request for a 25% tax holiday by McWhinney but will
now consider a much larger reduction of 61% this Tuesday. See LovelandPolitics' previous stories regarding the fee details
Background or Post Meeting Story.
The proposed 303 unit subsidized low-rent apartment project has already been planned for Centerra. Now Chad McWhinney has
set about trying to find a way to get a tax holiday from the regular fees and costs his competitors normally pay despite the fact the
project is already heavily subsidized.
Long List Of Government Money in Project
The project anticipates receiving $700,000 in HUD (Housing and Urban Development) funds, waiver of certain city taxes for
affordable housing and likely future property taxes plowed back into McWhinney’s Metro District to be used on signs and
landscaping for other projects. While McWhinney has not released any details regarding their government financing local news
stories have published conflicting information regarding the nature of the project and just what type of government assistance it will
be receiving. This is not necessarily a comment on the accuracy of either the Loveland Reporter-Herald or Loveland Connection
news stories but instead likely a reflection of the changing story McWhinney has been telling both newspapers.
Some say it is being entriely financed through low-interest HUD loans while another referred to a figure of $700,000 grant. What is
sure is the nobody in city hall has seen evidence of the "HUD deadline" McWhinney claims makes their request so urgent.
McWhinney has also failed to disclose how much they are willing to invest in the project, what Chad McWhinney expects to earn
both in cash and equity and what total percentage of their project is being financed through taxpayer's. The figure being tossed
around by McWhinney indicate their cost of the project to be around $155,000 per unit. This is 2-3 times higher than the cost of
existing multi-family properties which means the rents would need to be catagorized by Loveland's Housing Authority as
"unaffordable" for the business case to close.
An important incentive for McWhinney in building the project is the Low Income Housing Tax Credit (LIHTC) provided by the
federal government. This credit can later be sold to other investors or used for equity in the project.
McWhinney is asking the Loveland City Council to provide a short approximately 5 month tax holiday so the normal capital
improvement fees required to fund emergency services and other basic city services will be reduced by 61% for a very limited time.
McWhinney is likely proposing only a limited time for the reduction of taxes so the tax may serve as a barrier of entry to subsequent
projects proposed by competing developers and give McWhinney a Loveland City Council induced price advantage over others.
Many communities fight the introduction of low-rent government subsidized housing due to its high cost on community services in the
long run, tendency to bring crime and detrimental impact on the home values of adjacent single family residential properties. The
Loveland Connection recently published a front page story regarding a similar government subsidized housing project in Loveland
that has become a springboard for gang and other criminal activity in the community.
Below is a clarification of the misleading data published by the Loveland Reporter-Herald
in Chad McWhinney’s guest column.
Myth #1
Without Special Assistance The Project Cannot Be Built
The often used and most effective tool in Chad McWhinney’s lobbying toolbox is to threaten that if the city doesn’t act quickly to
eliminate certain fees, waive costs or otherwise subsidize his project he will build it somewhere else. At the same time, McWhinney
argues the project is “much needed” and that all comparable buildings in Loveland are full which appears to contradict his assertion
that without a subsidy of waiving fees he cannot close the business case to build the 303 unit government subsidized low-rent
apartment project.
McWhinney planned, proposed and prepared for the construction of the subsidized apartment building in Centerra with the current
city building fees and Capital Expansion Fees (CEF’s) already in place. If such fees make the project untenable and more attractive
to build in Ft. Collins or Johnstown why did he already only plan to build it in Loveland?
These threats are a common and often disingenuous tactic employed by McWhinney. Anyone with a cursory knowledge of recent
history knows the McWhinney Company employed the same tactic to absolve itself of the near-term obligation to improve the I-25
and U.S. 34 interchange less risk Agrium not moving to the community. Council stuck to its guns and denied the request while
Agrium moved to McWhinney’s Centerra development anyway without the city aided incentives being taken from the funds set-
aside to improve the I-25 and U.S. 34.
Myth #2
By Reducing the Fees The Project Will Create Needed Jobs In Loveland
Chad McWhinney argued in his guest column, “If the City Council adjusts development fees…..and construction
commences on the Centerra apartments, the project is expected to generate 250 construction jobs – a welcome relief
for the 800 construction workers currently unemployed in our area.”
This argument relies on myth #1 being true that McWhinney planned the project in full knowledge of the current city fee structure
but will not proceed unless given a 61% discount for their project by way of a short 5 month tax holiday.
Nothing in the proposed fee reduction by Loveland’s City Council for this Tuesday night that Chad McWhinney is advocating for
requires McWhinney to hire Loveland contractors to complete the project. McWhinney’s clear preference is to have the ability to
award the job to the lowest bidder regardless of where the company is located so the argument his project is creating local jobs for
unemployed construction workers in Loveland is disingenuous.
The low-bidder on the I-25 and Crossroads Blvd. Improvements which was widely touted as providing local jobs is Jalisco
International Inc. of Commerce City Colorado. The company is owned and operated by the Ledezma family and provided a
low bid of $4,886,511 to complete the Crossroads project. Because McWhinney’s contribution to the project was the “last money
in” means the stimulus money ($3 million) and MPO grant ($1.2 million) will pay for a majority of the project.
In addition, bringing more renters to Loveland who depend on federal government Section 8 housing vouchers to pay their rent is
unlikely to help people already in the community looking for jobs.
Myth #3
Loveland Isn’t Building Enough New Multi-Family Housing Projects
Chad McWhinney argued, “Over the past 10 years the majority of apartments built in Northern Colorado are outside
Loveland.” He offered this as evidence that Loveland’s Capital Expansion Fees are too high so people building apartments do not
consider Loveland to build thus creating a shortage of “workforce” housing.
In fact, the contrary is true. A disproportionate number of apartment units have been built in Loveland compared with the rest of
Northern Colorado over the past 10 years. Since 1999 the communities of Ft. Collins, Greeley, Windsor and Loveland have
granted 10,187 permits for multi-family housing construction. Of those, nearly 2,000 were in Loveland. That means 20% of all
multi-family housing permits in Northern Colorado were in Loveland alone since 1999.
Loveland’s population comprises only some 10% of the 528,500 population of all Northern Colorado yet granted 20% of all multi-
family housing permits. McWhinney’s argument that “the majority” of apartments built in Northern Colorado in the last 10 years
were built outside Loveland is true but his conclusion demonstrate specious reasoning.
Loveland doesn’t cover half the land mass of Northern Colorado and is home to only a small fraction of the total population.
(Reference: The Group Inc. website)
In 2006, Loveland issued more multi-family permits (429) than any other community in Northern Colorado including Ft. Collins.
Last year Greeley issued only three and Windsor zero while Loveland issued 97 permits. Chad McWhinney’s argument that we
lack new multi-family housing projects in Loveland due to CEF's is not consistent with the facts.
Myth #4
Low-Income Subsidized Apartment Buildings Are Good For Loveland and Cost the City Less in Government Services
The day after Chad McWhinney’s article appeared claiming low-income apartments are cheaper for a community to service than
single family residential the Loveland Connection published a front page story demonstrating the opposite.
The Loveland Connection story reported on a government subsidized low-income apartment complex in Loveland called Creekside
Garden apartments. The article reported law-abiding residents are struggling to deal with the influx of crime, gang activities and all
night parties that turn into fights at dawn at the subsidized "affordable" housing project.
Creekside Garden Apartments has generated over 50 calls to the police and injured two Loveland officers responding to the
affordable housing development. The costs associated with these policing efforts alone diminish any potential benefit one could
argue is creating by the “affordable” housing project. Chad McWhinney, on the other hand, argued that such housing projects
actually cost the city less to support with local services.
Policing these low-rent subsidized apartments is difficult as compromised landlords accepting Section 8 housing vouchers cannot
easily evict unruly tenants. Affordable housing is often a euphemism for people unwilling to call the project what it is – government
subsidized housing. Loveland has an abundance of hundreds of available apartment units at the prices at or below those that qualify
for McWhinney’s proposed “affordable housing.”
Attracting people dependent upon welfare or other government hand-outs into a community turns a handsome profit for the
developer who is awarded federal tax credits but creates long-term financial strains on the municipality. It also increases the number
of low-income earners in the community who are now competing with current residents looking for jobs.
Myth #5
McWhinney Family In Loveland 6 Generations And Just Trying To Help Their Hometown
Chad McWhinney, while supporting a project in 2007, made similar arguments before another city council regarding his ties to the
community and commitment to the region. However, the city was not in Colorado but instead in Southern California. As reported
by The Orange County Register on September 12, 2007,
“According to the Council members’ choice was Chad McWhinney, a developer who built the first cluster of hotels and
restaurants in Garden Grove’s side of Harbor Boulevard – the city-designated resort area. McWhinney, who grew up
in Huntington Beach, is excited about the opportunity, said Jack Wolfe, the company’s president of Community and
Mixed Use Development.”
In his guest column in the Loveland Reporter-Herald Chad McWhinney claims “The McWhinney family – which has been a
part of the Loveland community for more than six generations…” Ironically, the Loveland Reporter-Herald ran an editorial
alongside his column blasting “citizen journalists” who use the Internet to distribute news. The editorial claimed only newspapers
can “protect against potential corruption” and not reprint company news releases or other propaganda that are not entirely
accurate.
While there is no disputing the long heritage of the McWhinney family in Loveland, Chad McWhinney must soon decide where his
generation of McWhinneys grew-up -- in Loveland or Huntington Beach, California?
| Barriers To Entry A key component of McWhinney's tax holiday request strategy is to ensure no other developer can also benefit from the proposed tax holiday from the CEF's (Capital Expansion Fees). According to sources inside city hall, McWhinney has been negotiating through Mayor Gene Pielin who directed City Manager Don Williams to shorten the period to only 30-45 days for the upcoming proposal. City Attorney John Duval is worried about the legal ramifications of doing this and asked for a longer tax holiday window to help obfuscate the fact it is being done only for McWhinney. Under the 14th Amendment of the U.S. Constitution all persons have a right to equal treatment under the law. Changing the law temporarily to benefit only one company could be challenged as a violation of the rights of other developers who must pay the fee. McWhinney has lobbied the city to keep the period as short as possible to close the door on any competition. The compromise between McWhinney and the city attorney is only 5 months -- from Tuesday night until December 31, 2009. City Attorney John Duval also directed staff to be sure and remind the media that "all companies" are eligible so that it appears the measure is for the general welfare of the community and not to favor only one company. Given the time required to file for a multi-family housing project it is unlikely any competitor to McWhinney will have time to get in under the new deadline. While illegal, the Loveland City Council appears to be changing the law temporarily to benefit just one company and provide McWhinney favorable tax treatment not available to other developers. |
| The proposed resolution will reduce nine CEF's (Capital Expansion Fees) for the following; 1. Fire Protection 61% 2. Law Enforcement 61% 3. General Government 61% 4. Library 61% 5. Museum 61% 6. Parks 61% 7. Recreation 61% 8. Trails 61% 9. Open 61% By reducing these fees the additional impact to these services will need to be paid by Loveland's current residents or the services reduced as the CEF's are a calculation of the cost to services of adding additional residents to the community. |