| LovelandPolitics.com |
| McWhinney's Centerra Fights Promenade Partner Poag & McEwen In Court Local Media Missed Story Behind Property Foreclosure and Value Dispute |
Loveland - March 17, 2010
The delayed foreclosure auction of the Promenade Shops at Centerra until mid-April has sparked rumors that
McWhinney (a current owner) gathered a group of investors to buy the property out of foreclosure for an amount
less than the current loan of $112,861,606. However, the impact a transfer of the Promenade shops to another
owner (through foreclosure or short sale) creates other problems for McWhinney's Centerra Metro District not yet
explored or reported on in the local media.
This is due to the fact that a significantly reduced value of the property would plummet property tax revenue required
to payback the $112 million in municipal public bond debt separate from the loan now in foreclosure.
The Centerra Metro District relies on two primary revenue sources to repay the public bonds used to subsidize much
of Centerra:
1. Property tax collections
a) 98.8% Urban Renewal kickback of property taxes paid each year
b) The Centerra Metro District #2 Mill Levy
2. Sales Taxes (called fees but collected just like a sales tax)
a) 40% rebate of Loveland sales tax - called a PIF and charged at 1.25% on retail sales
b) 1% extra McWhinney tax collected at point of sale
Click here for details on Centerra sales taxes
A dip in the values of Centerra properties in general caused by either the Promenade foreclosure action or a
successful abatement and refund of previous year's property taxes could spell trouble for the already lean Centerra
Metro District. Reducing property tax revenue to the District means it will be harder for Centerra to satisfy its
growing bond debt payment obligations. The annual cost of the debt will increase to $7 million by 2012 and exceed
$8 million in another 7 years. Therefore, Centerra needs increasing revenue sources to repay the public bond debt..
Centerra Sues McWhinney Business Partner Over Promenade Property Tax Appeal
Poag & McEwen, the managing partner of the Promenade Shops at Centerra, has learned that sometimes a dispute
with your business partner can be the same as fighting city hall when your partner is McWhinney. This is because
McWhinney has the ability to direct public resources from the Centerra Metro District to their benefit..
Poag & McEwen protested the 2008 Larimer County appraised value for parcel number 8510113001 of $81
million which includes most of the Promenade Shops and movie theater but not Macey’s or Dick’s Sporting Goods
buildings. In addition, Poag & McEwen initiated an abatement for taxes paid in 2007 based on value calculations of
the same property which is a type of appeal against taxes already paid and settled.
Poag & McEwen, like any good business operator, likely wanted to reduce their overhead costs at the Promenade
Shops at Centerra by reducing the amount in property taxes they were required to pay. They protested the
estimated property values by the Larimer County Assessor's appraisal of the commercial property. What they didn't
count on was that their partner in the Promenade Shops, McWhinney, had their own pecuniary interests to protect
and instead of assisting the protest actually opposed it.
That is because most of the property taxes collected in Centerra are diverted to McWhinney’s quasi-government
local Centerra Metro District through the Loveland Urban Renewal Authority. Larimer County is obligated to
kickback 98.8% of the property taxes collected from Promenade Shops at Centerra on behalf of schools and local
governments to the Urban Renewal Authority which in-turn supplies most of the funds to Centerra. (refer to insert
box on right for details).
The Centerra Metro District, which is operated largely by McWhinney, filed a motion to dismiss Poag & McEwen's
2007 and 2008 property tax appeal by summary judgement in district court. Having the quasi-governmental entity
file the motion means McWhinney could litigate the matter against their partner in Promenade Shops, Poag &
McEwen, by using public tax dollars and the public entity as their club.
According to sources close to McWhinney, Centerra is claiming Poag & McEwen cannot protest the property taxes
for two reasons. One is that Poag & McEwen doesn’t have standing to appeal the county's tax assessment unless
McWhinney, the other owner/partner, agrees to the protest -- which they don’t. This argument is especially ironic
given that, in statements to the press, in which they distanced themselves from the Promenade Shops at Centerra
foreclosure, McWhinney stated that they were merely "a silent partner in the development deal" and that
"Poag & McEwen is responsible for overseeing financial issues." See story on foreclosure
Centerra's second argument raised during the appeal process at the county level and likely being used in the litigation
is the claim that Poag & McEwen agreed not to appeal property tax valuations. Poag & McEwen have argued this
is not correct.
Larimer County denied the protests and appeals by the Promenade Shops regarding their 2008 property taxes and
abatement of their 2007 property taxes. After numerous hearings at the county level regarding the protest, Poag &
McEwen exercised their right to appeal beyond the county authorities and seek relief from the State of Colorado.
Poag & McEwen’s property tax appeal is now before the State’s Board of Assessment and Appeals (BAA).
In 2005 the BAA granted a similar appeal to the Colorado Mills shopping Mall thus adjusting downward the
assessed value from approximately $150,000,000 to $126,000,000. Larimer County sources tell LovelandPolitics
that the claimed commercial value of the Promenade Shops by Poag & McEwen "are a joke it is so low." If Poag &
McEwen were to succeed or a subsequent owner in achieving a sharp decrease in valuation for assessment than the
Metro District would likely be in trouble.
In the meantime, the foreclosure on the outstanding private loan balance of $112,861,606.23 for Promenade Shops
has caused the property tax appeal to be referred to the Denver law firm handling the foreclosure. Acting as the
receiver of the property; the law firm of Markus,Williams, Young & Zimmermann has not cancelled the appeal.
Instead, sources told Lovelandpolitics.com the law firm has suspended the current appeal to the BAA until a new
owner is identified after foreclosure or until August 31, whichever comes first. In other words, both Poag &
McEwen and their formerly silent partner, McWhinney, on the Promenade Shops have no standing if they will soon
be losing the property to foreclosure as any rebate in taxes only goes to current and not past owners.
Millions In Diverted Revenue
Under urban renewal, developers are allowed to use Tax Increment Financing (TIF), which means they get to keep
the property tax increment - the difference between taxes on the pre-existing value of land and the that of the
"improved" property. Thus, any improvement in the value of the Centerra properties results in significant revenues -
98.8% of the property taxes collected - to the Centerra Metro District each year. (refer to chart on inset to the right).
Larimer County's December 2009 assessment of the Centerra properties inside the Urban Renewal area resulted in
an assessed valuation of $98,889,441.
The Promenade Shops at Centerra account for a significant portion of the value of property from Centerra in the
renewal area. If the dramatic reduction in actual property value is granted by BAA, as sought by Poag & McEwen,
or any subsequent owner resulting from foreclosure, the Centerra Metro District could lose enough revenue to
become delinquent on their bond debt payments.
Excluding the Centerra Metro District Mill Levy, other local governments would normally receive around $7 million
annually on the commercial assessed valuation of Centerra properties in Loveland's Urban Renewal area. Instead,
98.8% of the money collected on the nearly $99 million assessment is rebated at year’s end by the Larimer County
Treasurer to Loveland's Urban Renewal Authority which rebates most of it to McWhinney’s Centerra Metro District.
As an example, the estimated $3.8 million in property taxes collected annually by the county on behalf of the
Thompson RJ-2 school district's Mill Levy of 41.295 is diverted to McWhinney's Metro District. After the county
provides the Centerra kickback, Thompson RJ-2 receives only $46,286 of the $3.8 million collected by the county
on the education Mill Levy from Promenade Shops at Centerra and the Market Place at Centerra retail and
commercial properties. However, some money does flow to the school district from the Centerra Metro District per
agreements made with the school district. In 2004 the city projected the school district would lose approximately
$88 million when expanding the Urban Renewal plan to Centerra in future taxes as a result of the tax diversion. In
exchange for receiving the school district's projected $88 million in future Mill Levy payments for 25 years, Centerra
agreed to refund some $12 million under certain circumstances to the district by way of property for a charter school
and other considerations.
Medical Center of The Rockies - Centerra Metro District Owes $60,000
The Medical Center of the Rockies received an exemption from the State of Colorado for 97% of their property
taxes a few years ago thus dropping the assessed valuation from approximately $85 million to $6 million.
Than the hospital requested an abatement of the 2008 property taxes they paid which was granted by the Larimer
County Assessor. This means the county must now collect the overpaid taxes back from the various taxing
authorities. Thompson RJ-2 and Centerra Metro District #2 must now provide the Medical Center a refund from
the 2008 taxes they received.
The delayed foreclosure auction of the Promenade Shops at Centerra until mid-April has sparked rumors that
McWhinney (a current owner) gathered a group of investors to buy the property out of foreclosure for an amount
less than the current loan of $112,861,606. However, the impact a transfer of the Promenade shops to another
owner (through foreclosure or short sale) creates other problems for McWhinney's Centerra Metro District not yet
explored or reported on in the local media.
This is due to the fact that a significantly reduced value of the property would plummet property tax revenue required
to payback the $112 million in municipal public bond debt separate from the loan now in foreclosure.
The Centerra Metro District relies on two primary revenue sources to repay the public bonds used to subsidize much
of Centerra:
1. Property tax collections
a) 98.8% Urban Renewal kickback of property taxes paid each year
b) The Centerra Metro District #2 Mill Levy
2. Sales Taxes (called fees but collected just like a sales tax)
a) 40% rebate of Loveland sales tax - called a PIF and charged at 1.25% on retail sales
b) 1% extra McWhinney tax collected at point of sale
Click here for details on Centerra sales taxes
A dip in the values of Centerra properties in general caused by either the Promenade foreclosure action or a
successful abatement and refund of previous year's property taxes could spell trouble for the already lean Centerra
Metro District. Reducing property tax revenue to the District means it will be harder for Centerra to satisfy its
growing bond debt payment obligations. The annual cost of the debt will increase to $7 million by 2012 and exceed
$8 million in another 7 years. Therefore, Centerra needs increasing revenue sources to repay the public bond debt..
Centerra Sues McWhinney Business Partner Over Promenade Property Tax Appeal
Poag & McEwen, the managing partner of the Promenade Shops at Centerra, has learned that sometimes a dispute
with your business partner can be the same as fighting city hall when your partner is McWhinney. This is because
McWhinney has the ability to direct public resources from the Centerra Metro District to their benefit..
Poag & McEwen protested the 2008 Larimer County appraised value for parcel number 8510113001 of $81
million which includes most of the Promenade Shops and movie theater but not Macey’s or Dick’s Sporting Goods
buildings. In addition, Poag & McEwen initiated an abatement for taxes paid in 2007 based on value calculations of
the same property which is a type of appeal against taxes already paid and settled.
Poag & McEwen, like any good business operator, likely wanted to reduce their overhead costs at the Promenade
Shops at Centerra by reducing the amount in property taxes they were required to pay. They protested the
estimated property values by the Larimer County Assessor's appraisal of the commercial property. What they didn't
count on was that their partner in the Promenade Shops, McWhinney, had their own pecuniary interests to protect
and instead of assisting the protest actually opposed it.
That is because most of the property taxes collected in Centerra are diverted to McWhinney’s quasi-government
local Centerra Metro District through the Loveland Urban Renewal Authority. Larimer County is obligated to
kickback 98.8% of the property taxes collected from Promenade Shops at Centerra on behalf of schools and local
governments to the Urban Renewal Authority which in-turn supplies most of the funds to Centerra. (refer to insert
box on right for details).
The Centerra Metro District, which is operated largely by McWhinney, filed a motion to dismiss Poag & McEwen's
2007 and 2008 property tax appeal by summary judgement in district court. Having the quasi-governmental entity
file the motion means McWhinney could litigate the matter against their partner in Promenade Shops, Poag &
McEwen, by using public tax dollars and the public entity as their club.
According to sources close to McWhinney, Centerra is claiming Poag & McEwen cannot protest the property taxes
for two reasons. One is that Poag & McEwen doesn’t have standing to appeal the county's tax assessment unless
McWhinney, the other owner/partner, agrees to the protest -- which they don’t. This argument is especially ironic
given that, in statements to the press, in which they distanced themselves from the Promenade Shops at Centerra
foreclosure, McWhinney stated that they were merely "a silent partner in the development deal" and that
"Poag & McEwen is responsible for overseeing financial issues." See story on foreclosure
Centerra's second argument raised during the appeal process at the county level and likely being used in the litigation
is the claim that Poag & McEwen agreed not to appeal property tax valuations. Poag & McEwen have argued this
is not correct.
Larimer County denied the protests and appeals by the Promenade Shops regarding their 2008 property taxes and
abatement of their 2007 property taxes. After numerous hearings at the county level regarding the protest, Poag &
McEwen exercised their right to appeal beyond the county authorities and seek relief from the State of Colorado.
Poag & McEwen’s property tax appeal is now before the State’s Board of Assessment and Appeals (BAA).
In 2005 the BAA granted a similar appeal to the Colorado Mills shopping Mall thus adjusting downward the
assessed value from approximately $150,000,000 to $126,000,000. Larimer County sources tell LovelandPolitics
that the claimed commercial value of the Promenade Shops by Poag & McEwen "are a joke it is so low." If Poag &
McEwen were to succeed or a subsequent owner in achieving a sharp decrease in valuation for assessment than the
Metro District would likely be in trouble.
In the meantime, the foreclosure on the outstanding private loan balance of $112,861,606.23 for Promenade Shops
has caused the property tax appeal to be referred to the Denver law firm handling the foreclosure. Acting as the
receiver of the property; the law firm of Markus,Williams, Young & Zimmermann has not cancelled the appeal.
Instead, sources told Lovelandpolitics.com the law firm has suspended the current appeal to the BAA until a new
owner is identified after foreclosure or until August 31, whichever comes first. In other words, both Poag &
McEwen and their formerly silent partner, McWhinney, on the Promenade Shops have no standing if they will soon
be losing the property to foreclosure as any rebate in taxes only goes to current and not past owners.
Millions In Diverted Revenue
Under urban renewal, developers are allowed to use Tax Increment Financing (TIF), which means they get to keep
the property tax increment - the difference between taxes on the pre-existing value of land and the that of the
"improved" property. Thus, any improvement in the value of the Centerra properties results in significant revenues -
98.8% of the property taxes collected - to the Centerra Metro District each year. (refer to chart on inset to the right).
Larimer County's December 2009 assessment of the Centerra properties inside the Urban Renewal area resulted in
an assessed valuation of $98,889,441.
The Promenade Shops at Centerra account for a significant portion of the value of property from Centerra in the
renewal area. If the dramatic reduction in actual property value is granted by BAA, as sought by Poag & McEwen,
or any subsequent owner resulting from foreclosure, the Centerra Metro District could lose enough revenue to
become delinquent on their bond debt payments.
Excluding the Centerra Metro District Mill Levy, other local governments would normally receive around $7 million
annually on the commercial assessed valuation of Centerra properties in Loveland's Urban Renewal area. Instead,
98.8% of the money collected on the nearly $99 million assessment is rebated at year’s end by the Larimer County
Treasurer to Loveland's Urban Renewal Authority which rebates most of it to McWhinney’s Centerra Metro District.
As an example, the estimated $3.8 million in property taxes collected annually by the county on behalf of the
Thompson RJ-2 school district's Mill Levy of 41.295 is diverted to McWhinney's Metro District. After the county
provides the Centerra kickback, Thompson RJ-2 receives only $46,286 of the $3.8 million collected by the county
on the education Mill Levy from Promenade Shops at Centerra and the Market Place at Centerra retail and
commercial properties. However, some money does flow to the school district from the Centerra Metro District per
agreements made with the school district. In 2004 the city projected the school district would lose approximately
$88 million when expanding the Urban Renewal plan to Centerra in future taxes as a result of the tax diversion. In
exchange for receiving the school district's projected $88 million in future Mill Levy payments for 25 years, Centerra
agreed to refund some $12 million under certain circumstances to the district by way of property for a charter school
and other considerations.
Medical Center of The Rockies - Centerra Metro District Owes $60,000
The Medical Center of the Rockies received an exemption from the State of Colorado for 97% of their property
taxes a few years ago thus dropping the assessed valuation from approximately $85 million to $6 million.
Than the hospital requested an abatement of the 2008 property taxes they paid which was granted by the Larimer
County Assessor. This means the county must now collect the overpaid taxes back from the various taxing
authorities. Thompson RJ-2 and Centerra Metro District #2 must now provide the Medical Center a refund from
the 2008 taxes they received.
| Centerra's Property Tax Kickback On January 20, 2004 the Loveland City Council passed a resolution placing 1,300 acres of commercial property in McWhinney's 3,000 acre Centerra development area into Loveland's Urban Renewal Authority thus diverting future property taxes for 25 years back to McWhinney's Metro District. Called the US 34/Crossroads Corridor Renewal Plan it didn't receive as much media attention as the diversion of future sales taxes dollars that was also passed that night as part of the Master Financing Agreement (MFA) between Loveland and McWhinney. Click here to read LovelandPolitics story on the sales taxes. As a result, the Larimer County Treasurer now sends Centerra a kickback each year of approximately 98.8% of all property taxes collected in Centerra's "Renewal Plan area" which includes the Promenade Shops which ironically really is a distressed property now in 2010 due to McWhinney's risky financing schemes. McWhinney's Centerra Metro Districts' property tax kickback includes property taxes collected from property owners using the following Mills; Thomspon RJ-2 School District (Mill Levy of 41.295) Larimer County (Mill Levy of 22.435) City of Loveland (Mill Levy of 9.564) Thompson Valley Health Services (Mill Levy of 2.093) Larimer County Pest Control (Mill Levy of .142 N. Col. Water Conservation Dist. (Mill Levy of 1) Property tax owed is calculated by multiplying the property's assessed value* against the Mill Levy and than dividing by 1,000. (Assessed Value x Mill Levy / 1,000) By the numbers: Assessed Value of Centerra Properties Inside The Urban Renewal Authority: $93, 889,441 (100%) Maximum Assessed Value Taxes Can Be Kept On By Local Government Agencies $1,133,947 (1.2%) Result: Centerra Metro District gets an annual kickback from the Larimer County Treasurer of 98.8% of the property taxes collected from property owners inside the renewal area. * Assessed value means the amount of value taxed. In Larimer County it is 29% of the actual value for vacant land and commercial properties but 7.96% for residential. |
| Click on the image above to see how much of the property taxes collected in Centerra's Urban Renewal Authority area are sent back to the Metro District via the Urban Renewal Authority instead of funding local agencies and governments. |