Please take a moment to read our story about the Promenade Shops at Centerra.
Contrary to what has been reported, McWhinney and their managing partner for the Promenade Shops at Centerra have not been on the same page regarding the development since 2007. Poag & McEwen (see video clip in the story) expressed concern that the project was overbuilt for the market and described it as “vulnerable.” Poag & McEwen told Loveland’s City Council that the Promenade Shops at Centerra were still 10 years away from being able to withstand competition from adjacent developments. McWhinney has tried to buy out Poag & McEwen but failed to reach agreeable terms with the developer that created the name “Lifestyle Centers” to describe the type of commercial and retail centers they develop.
McWhinney is telling another community that the economic slow-down will not impact their ability to finance a huge commercial project in Garden Grove, California. Loveland is being told the inability of the Promenade Shops LLC to obtain financing is due mostly to the economic downturn.
The truth is the reasons are likely a combination of factors including McWhinney’s credit rating, the confidence level the lender has in the commercial development based on sales history and lease agreements and the economy which effects all of the above.
Financing a major shopping center on a note that is due and payable in only 5 years does beg the obvious question of “what were they thinking?” Many commercial developers have taken 15 to 20 year notes out in that time-frame and many with adjustable interest rates which is still less risky. In the case of McWhinney, they took a big gamble on the availability of funds to renegotiate the debt and lost. In the meantime, the loan would have typically cost them less during that period than other financing given the short turn-around required for the money they borrowed.
Of course, the taxpayer funded Metro District is vulnerable as well should they fail to end the foreclosure process and cause a disruption in the revenue stream now required from all the Centerra developments to payback the $112 million public bond debt they also incurred. We believe people in the private sector have every right to take whatever risk they want to finance a new development since they are the ones at risk. Unfortunately, this project is heavily subsidized so taking such risks was inappropriate and demonstrates again the clear need for greater financial oversight by city officials when subsidizing projects with taxpayer money.
McWhinney’s gamble may become the city’s loss but we certainly hope not. Maybe McWhinney should hold-back on ambitious new projects in California long enough to put this project on a more sound financial footing.
Any comments?
Great reporting. Great commentary.
Loveland’s much-hyped financial engine — the Promenade Shops at Centerra — is in distress. That the bank pulled out by refusing to renegotiate the loan package is the central issue.
That the Poag & McEwen/McWhinney partnership allowed the commercial development to go into foreclosure is exactly what you called it. A gamble gone south. Or at least in trouble.
City taxpayers, as you also pointed out, may be on the hook somewhere down the road.
That’s the problem with these public-private ventures. Not only do they fly in the face of the free-market concept (with a Republican controlled government forever, who would of thought?), it puts the public at risk. Without any real accountability.
If it were a true partnership, the situation would have been known months ago. And openly discussed.
It wasn’t.
Instead, the incoming and outgoing mayors were apparently called and told this was what was coming down a few hours before it became known.
Some partner.
Thanks to a series of flawed decisions by a council majority that cozied up to and embraced special interests and the development crowd, the foreclosure is not just a concern for a private enterprise.
Couldn’t agree more hoping that the McWhinney gamble doesn’t become the city’s loss. That, however, appears to be the potential jeopardy.
Thank you for the enterprising reporting. You whacked the local newspaper (which isn’t all that difficult) and the Denver Post by providing context.
Tony Benjamin,
Loveland
Thanks. We had some technical challenges and ended up posting the story a bit late along with the news for the meeting last Tuesday.
After deleting a string of emails and postings threatening legal action against us or randomly accusing specific people of serious crimes (in a vain attempt to post something libelous) to get the website taken down it was refreshing to receive your thoughtful post. The cyber attacks appear to be increasing lately.
There is lots of interesting related info. in this story -http://lovelandpolitics.com/aspenknollsmcwhinney.html where McWhinney reps are saying the economy hasn’t impacted their ability to finance public private partnerships.
Tony -
If you indeed live in Hunters Run as we have been told, when can we do a story about you running for the open council seat in Ward 1? Have you considered running or is this rumor among the many emails we need to delete?
Thanks
So what is going to happen with all my artwork? Your photo there with the foreclosure sign pasted into it was public artwork I (as a Loveland taxpayer) paid for right? Can I gather some friends to pull up that sign or the motorplex sign and put in my front yard yet?
Joking aside, I think those who read this site and have been talking about our McFear for some time are now just all saying “hey didn’t we tell you this was going to happen…”
You bring up an interesting point!
Indeed, an actual foreclosure sign for Promenade Shops at Centerra could not be posted on any of the Centerra “monument” signs because they belong to the public’s local government for Centerra’s Metro District controlled by McWhinney. (sorry KeyBank not yours to touch!)
Taxpayers paid for those signs instead of McWhinney or Poag & McEwen and also pay to maintain the landscaping around them.
The 2008 audit of the Centerra Metro Districts states “debts exceed assets by $48,000,000″. However, if you read further the “assets” of the Metro District ARE THOSE MONUMENT SIGNS! If I recall correctly one was valued at around $7,000,000. I believe it is one with the faux stone towers next to it on either side that says “Centerra.”
It is a strange “asset” because it really could never be liquidated and doesn’t generate any revenue. The real assets of the Metro District are the retail establishments that generate the tax revenue through sales taxes that payback the plus $100,000,000 debt payments that stretch until 2029 that helped pay for the signs among other things. If those Promenade Shops suffer too badly the Metro District will be in default of its bond payments especially if increasing interest rates raise the debt payments.
Chad McWhinney used funny financing for that public debt as well. The interest rate is adjustable just like an ARM (adjustable rate mortgage). This means a rise in interest rates could easily turn the fragile Metro District financing upside down. McWhinney then bought an agreement called a “synthetically fixed” interest rate to claim the rate is fixed.
Chad told Larimer County public officials it is a fixed rate debt (which it is not). In essence, they use RBS (derivatives trader) to in essence take a wager on the future interest rates. If interest rates go up RBS is supposed to cover the difference in theory but if they go down RBS profits by keeping the difference. If RBS cannot fund a bad gamble they made taxpayers inherit a bankrupted Metro District.
Sorry for the long post but you raise an interesting point. Our public debt was acquired using exotic financing methods as well that could put taxpayers at risk. Too bad most of the council “old guard” never understood even what they were voting to approve! As Councilman Klassen told us, “McWhinney is beyond reproach.”
The bond is repaid via fees collected at Centerra in lieu of sales tax, unlike other city bonds which are repaid via property tax. So this bond is more voluntary or conceptual that other government debt. With this being said, does the master finance agreement stipulate what happens in case of default? How will the taxpayers be on the hook? It appears McWhiney will be responsible first. It is not even clear to me the taxpayers will suffer anything in the case of default? I am sure LP will have no problem digging the actual default rules out of the master finance agreement.
This is assuming the bond ever does go into actual default.
Consensual rather than conceptual, sorry for the typo.
Mr. Administrator, do you think there is an overlap in any of the property being foreclosed on and ‘public improvements’ ‘paid’ for by the Metro District? It seems like a pretty fuzzy line and I know you have a pretty good handle on it. Wouldn’t it be something if they were still getting thier PIF’s and TIF’s for certain ‘public improvements’ that they will never have to pay for?
I know “McWhinney is scrutinized more than any other developer in this town” by City staff (because we were told that by City Council during the Bridge discussion), too bad the financer didn’t do the same thing. . .
Neil, if public funds are used to improve private properties what does it matter to the public if those properties go into foreclosure? The assets really didn’t provide any direct benefit to the public anyway. The overlap already occurred – right?
In addition, a number of public improvements (like roads and sewers) funded by the Metro District did get transferred to the city and are genuinely public improvements. These are not at risk in a foreclosure because they are owned by the city.
Other “public improvements” like the autoplex sign and Centerra monument signs are owned by the Metro District so they cannot transfer title either if the private property surrounding them is foreclosed.
Do “Public” Funds Improve Private Property At Centerra?
A little known later amendment to the Master Financing Agreement (MFA) a few years ago was the removal of a requirement that the Metro District maintain different contractors for public and private portions of the same project. This means the same contractor building the “private” and “public” improvements to a particular project can now co-mingle resources and workers thus making it very difficult to know whether “public” funds are being used to also make some of the private improvements.
Also remember Centerra’s Metro Districts exist in name only. McWhinney charges the Metro District money when they decide their employees (or a contractor’s employees) are doing Metro District work. It is not an “arms-length” transaction supervised by any independent party. Therefore, the line between “public” and “private” uses of the monies is not as clear as some people make it sound.
Rich Shannon alos has spent many hours as a McWhinney lobbyist supporting the failed 1% regional sales tax through his efforts at the RTA. If he was charging the Metro District during that time you have taxpayer funds supporting a political purpose. How is this any different than Robert Mugabe’s Zimbabwe where public resources are used to enhance the Dictator’s private fortune?
As a result of Shannon’s lobbying, Loveland’s previous council designated our RTA proceeds (had the tax been sent to voters and approved) to supplant McWhinney’s regional transportation obligations instead of improving other roads in Loveland. Shannon now speaks before our city council as the “Metro District Manager” but who are they kidding?
Who Is Liable In A Default? McWhinney or the City?
McWhinney and all other officers etc..of the Metro District are exempt from any personal liability so they are not at risk. However, the public is at risk in the sense that tax proceeds must FIRST be used to satisfy the Bond debt before going to the city.
Technically, the fees collected from unsuspecting shoppers are not really taxes but instead “fees” collected to repay the Metro District debt.
TheJoker – you would be correct if the “voluntary” tax or fees charged shoppers were in addition to regular sales taxes so people could choose whether to pay an extra fee when shopping at Centerra. Instead, the City of Loveland has reduced the city sales tax rate just for Centerra so the “voluntary” fee is less visible to the public.
You are in error when you say the bonds are not being paid back with property taxes. The URA (Urban Renewal Authority) does exactly that. Larimer County writes a check each year to the Metro District returning property taxes collected in Centerra for any values above the farm land value (called a TIF). Which properties you ask? Loveland’s council abdicated the authority to determine which properties are in or out of this special status directly to McWhinney’s Metro District. It is driving our County Assessor’s professional staff crazy because McWhinney can change the designation on a whim to maximize return.
If even half of the property taxes being rebated each year to McWhinney’s Centerra Metro District stayed with the county – the county’s budget crisis would disappear. In other words, if McWhinney’s Centerra properties simply paid only half of the property tax assessments everyone else does on their property each year — our county’s budget crisis would disapear.
LIABILITY -
The taxes collected in the Centerra Metro Districts MUST go first to the $112 million bond debt until 2029 before the city benefits. Police and fire protection along with many other local services cost the city money. Businesses and residents outside the Metro District are paying disproportionately higher taxes to support these services.
If Centerra collapsed tomorrow (not likely) the city must still cover all the costs of local government services whether or not the taxes collected could cover them. Even commercial buildings when empty require a level of emergency service on stand-by in case they catch fire or are vandalized. Providing these services costs Loveland money everyday.
The bond debt holders have first right to the taxes collected instead of the city – how is that NOT a liability for the city?
It is like wage garnishment but not to an individual but against the municipality. Think of the sales and property tax collections in any area like the city’s wages needed to cover the cost of services.
If you had a loan payment or alimony that was fixed into the future for 25 years and your wages were garnished each month to pay it first regardless of how much you earned — would you really say that is not a liability to you?
Below is the section from the MFA TheJoker asked about;
15.5 Impairment of Debt. Notwithstanding any other term, covenant, condition or provision of this Agreement, no action may be taken by any Party in the event of default by any other Party if such action would impair or otherwise materially adversely effect any District Debt issued or URA Obligation incurred prior to the date of default.
Centerra Master Financing Agreement – page 67
January 20, 2004
I am curious to know how this illiterate effort, which engages in criminal activity, and violates its Terms of Service, can make the claim it it is a “premiere” web site.
By the way, the threats posted to this site have been reported to your ISP and law enforcement.
You will soon be broke and in jail for what you are doing.
That would really put a damper on our family’s holiday plans! Merry Christmas to you too.
Let me extinguish your curiosity with 45 words contained in the 1st Amendment of the U.S. Constitution.
“Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances”
Contrary to what our city council tried to argue awhile back — it is nothing like the amendments to McWhinney’s Master Financing Agreement they voted to approve. Nothing.
15.5 Impairment of Debt. Notwithstanding any other term, covenant, condition or provision of this Agreement, no action may be taken by any Party in the event of default by any other Party if such action would impair or otherwise materially adversely effect any District Debt issued or URA Obligation incurred prior to the date of default.
Centerra Master Financing Agreement – page 67
January 20, 2004
This does not explain what happens to the bond repayment IF default were to occur.
You original article insinuates that the taxpayer will somehow be on the hook for bond repayment. Will they or will they not?
PERA is a true hook. Teachers are guaranteed a defined benefit. So if the stock market tanks, taxes are automatically increased to any amount required to pay the teachers their defined benefit.
Will the taxpayer have to repay the bond IF McWhinney were to default on said bond repayment?
Regards to the First amendment:
The first is awesome and sets America apart from other Countries. It allows Americans the the right to freely think and express ones self. It also allows one to tear into their government. Trust me, I do it all the time.
However the First does not protect slander and libel. Not saying that anything said here at LP is slander or libel I am just clarifying that the First does not grant permission to lie about others or lie about your government.
n law, defamation—also called calumny, libel, slander (for spoken words), and vilification (for written or otherwise published words)—is the communication of a statement that makes a claim, expressly stated or implied to be factual, that may give an individual, business, product, group, government or nation a negative image. It is usually, but not always,[1] a requirement that this claim be false and that the publication is communicated to someone other than the person defamed (the claimant).
In common law jurisdictions, slander refers to a malicious, false and defamatory spoken statement or report, while libel refers to any other form of communication such as written words or images. Most jurisdictions allow legal actions, civil and/or criminal, to deter various kinds of defamation and retaliate against groundless criticism. Related to defamation is public disclosure of private facts, which arises where one person reveals information that is not of public concern, and the release of which would offend a reasonable person. “Unlike [with] libel, truth is not a defense for invasion of privacy.”[2]
False light laws are “intended primarily to protect the plaintiff’s mental or emotional well-being.”[3] If a publication of information is false, then a tort of defamation might have occurred. If that communication is not technically false but is still misleading, then a tort of false light might have occurred.[3] Wiki
Admin wrote:”The taxes collected in the Centerra Metro Districts MUST go first to the $112 million bond debt until 2029 before the city benefits. Police and fire protection along with many other local services cost the city money. Businesses and residents outside the Metro District are paying disproportionately higher taxes to support these services.”
The fire department located across the street from Kids harbor/sunshine house is mot likely fully supported by the immediate surrounding property’s. Just as is the high-school.
Mr. Administrator: God bless you and your website. Thanks for standing up to the goons and their sociopathic attempts to silence your journalism. We know who they are and what their motives are. They are the ones who need to be worrying about law enforcement, and they obviously know it. They are desperate to prevent us, the public, from knowing the truth about what has been going on with our hundreds of millions of tax dollars.
Let me help alleviate some confusion. In the year 2004 Loveland City Government, legally voted to allow McWhinney an infrastructure bond. These legally elected officials, followed the Loveland Charter, County Charter and Colorado Constitution in their decision making process. You scream, wait just one second, the bond never went to a vote of the public as article x, section 20 of the Colorado Constitution specifies.
Now what? Elected official make bad decisions so therefore we refer tax increase and debt increase to a vote of the people. A second check and balance if you may. So here we are with our first check and second check failing to limit government. A third check is the court system. I would suggest you refer this case to a judge however the liberal Colorado bench has proven time and time again that they will not defend Tabor. Where does this leave us???
There is a grassroots citizen initiative that will help to restore this check and balance process. These folks want to clarify the existing law so that there is no ambiguity when it comes to government debt to the vote. These people want to define debt and stipulate that State inquire no debt of any type for any reason. They to clarify that all debt at the local level go to the voter. They also want to abolish backdoor debt such as, cop’s, leases etc.
Check out this site as I think these folks have the solution to the grievance expressed here at Loveland politics. http://www.limitcodebt.com/
Now if this bond was to have went to the vote of the people back in 2004, and passed, yet you still have a grievance, I am not quite sure what to suggest. Maybe you should begin promoting total privatization or anarchy?
“Will the taxpayer have to repay the bond IF McWhinney were to default on said bond repayment?” Is the question I was asked above.
Let me answer with a question. Did Chad McWhinney jump in front of the cash register and pay the McWhinney sales tax (really fee) when you were shopping last at Centerra? If your answer is no than taxpayers like you are already responsible for repaying the bond debt not the McWhinneys.
Now, if your question is whether or not the general fund money from the City of Loveland will be at risk to repay the $112,000,000 in public debt bonds borrowed on behalf of the Metro Districts should they default — the answer is no.
The reason for this is simple – they don’t need it. McWhinney’s Centerra Metro Districts have first dibs on both sales tax revenue (called fees) and TIF (property tax) generated by the development. If I wanted to collect money from you I would prefer to garnish your future wages instead of getting whatever is in your checking account.
The argument that Centerra taxes are “voluntary” because you can shop elsewhere doesn’t hold water either. If Greeley passed a 10% sales tax increase on everything in the city it would not be called a “voluntary” tax just because one could shop outside Greeley.
I have been reading this talk with vast interest and want to commend all on his civil tone and respecting arguments. As historian I also want to bring context to what the developer here calls his “Partnership” between government and himself. Loveland departed from traditional American political or economic practice when you began rewarding Mchinney Company with government powers of taxation, governance and power to decide what he wants as private and what is public (If Administrator says is truth). I even saw word “innovative” by one who defends this Mhinney man.
Leftism it gives towards socialism then communism and wants to take control from the private towards government (collective) while the Right it gives towards private control of the economy, land etc beginning with privatization driven by libertarian ideals and ending in anarchy where the government is weak. Loveland’s policies strangely tend in neither direction exactly but alternatively deputize a certain industrialist to act on behalf of the city government while remaining still a private person. Read the words below and see if not like words spoken by Mr. Mchinney describing his private empire that acts in name of city Loveland or as the posts say Centera.
“I want everyone to keep what he has earned subject to the principle that the good of the community takes priority over that of the individual. But the State should retain control; every owner should feel himself to be an agent [partner] with the State……I absolutely insist on protecting private property… we must encourage private initiative”.
You called it “government picking winners and losers” but those who lived a long and terrible history know it gives these words are of Adolf Hitler in 1942 describing National Socialism referred to as Nazism by most of you native born Americans. Please don’t misunderstand me. Nazism used race and religion as mostly criteria when separating winners from losers in the economy and that is how the evil began.
I don’t know all the criteria Loveland uses to select the “partner” in industry to have powers of government. But allowing owner to collect and keep taxes is unmistakably a Nazi practice. Why should one industrialist of Loveland have all his land declared more important to the good of the state than another? Who makes these stupid decisions and who can defend them? It reminds me of a terrible past. Would a Jew who is not 6th generation Loveland get same? Why does Mr. Mchinney think it so important to remind people always he is 6 generation Loveland man? Is my commercial property in Loveland not equal importance because I was born in Europe? Do I have no property rights in Loveland because I am not even 1 generation? This is not American at all but sounds to me Third Reich.
A little Right or a little to the Left OK maybe you guys I don’t care. But for God’s sake stop giving Mchinney all the advantages over everyone else.
I hope the new council will do a comprehensive audit of the Metro Districts. I’ll bet that would make for interesting reading. Those crack investigative reporters at the Reporter-Herald might even have to report on it, if others print it first, of course.
Agreed. McWhinney will resist of course until after they get their stooge from Ward 1 on the council. I have suggested how about a limit on the number of freakin lawyers in our city council? Anyone agree? This Mcrea character will make 4 attorneys total out of only 8 city council ward reps. 50% lawyers will be interesting but I don’t know if Carol Johnson counts. Maybe someone needs to work in law at least one day to be one which reminds me does anybody know who died and gave carol johnson all their money? She has no visible means of suppport does she? Bribes can’t be paying the rent since most corrupting interests have a minimum standard of competency even for corrupt politicians.
How does the bankruptcy of those stores at Centerra affect Loveland in general? Obviously we may not have as many options to shop, but is that really such a big deal? Is it really such a “growth engine” for the city? Someone please explain.
Carol: Let’s see…you have Kent, Cathleen, Carol and maybe Donna as attorneys…I wonder which ones you would eliminate as being over your limit of attorneys serving on council?
Hello! Is anyone there?!
One attorney is too many. Now that we have three maybe that is enough. Carol Johnson. She is the one I would eliminate on council wouldn’t you? I never saw her say a single thing in the council meeting I saw on tv. Can you imagine being the city attorney when the people you are trying to report to are also attorneys? Give me a break!
FYI…..174 members of the US Congress are attorneys or about 40%. Not sure how current this data is but should be close to the numbers today.
Of course lawyers run for office.
They administer/apply/work with/push/pull (etc) the law, and like to create it too. Most of them are smart. Some are real duds. So?
The real question is whether an elected official (lawyer or not) is working for the public good, acts fairly and makes reasonable decisions. Is willing to listen to facts and even change position if the arguments persuade; an open mind.
You could have a governing body chock-full of developers who acted (as our founders put it so well) dispassionately. Without fear or favor. Or they could act like a bunch of developers.
Same goes for lawyers, educators, farmers, merchants, soldiers, the list goes on — all which have held elected office, including the presidency.
My point: Let’s look for folks who put the greater good first. No matter how they earn or have earned a living.
Tony Benjamin,
Loveland
Colorado developer of the year…………foreclosure on the shops………defaulting on all the public improvements that were promised…….begging for subsidies on apartments…….Colorado developer of the year…….Colorado is in big trouble…………..reminds me of Obama saying “the stimulus is working the stimulus is working”. Why do they think they can cover stink with ink??????????