In March of 2008 the Loveland City Council approved a cash subsidy for Bill Beierwaltes’ privately owned limited liability company (LLC) called vNET in Loveland.
The agreement Beierwaltes signed with the City of Loveland in exchange for the nearly $1 million of “business incentive” was to increase the number of employees working at his company in Loveland from 90 to 250 by December of 2012. The Loveland Reporter-Herald skewed then Councilman Gutierrez and Councilman Kent Solt in an editorial after the meeting in 2008 for questioning the agreement that was certain to bring jobs to Loveland.
Instead, the agreement serves as an example of why local city officials should not be trying to play venture capitalist with other people’s money. Within 8 months after receiving the subsidy, Beierwaltes laid-off about 1/3 of his 90 employees and eventually closed the business by September of 2009. Two months later he sold the business but has kept the Limited Liability Company actively registered with the Colorado Secretary of State. see story on LovlendPolitics
The problem is the city’s agreement is with the LLC Beierwaltes and his wife own that has no assets. Instead, the new company vNet Corp. is enjoying the benefits of the city paid improvements but has no legal obligation to pay any money to the city because it is a separate legal entity.
The good news is that Beiewaltes did provide a personal guarantee to the city at the insistence of those “anti-jobs” councilmen Gutierrez and Solt that the Reporter Herald vilified for trying to be responsible with taxpayer funds. Despite public statements to repay what he owes the city, Beierwaltes hasn’t returned even one thin dime. This by a man whose reported net worth is in order of magnitude greater than the paltry $500,000 the agreement requires he pay back if he couldn’t bring the 250 jobs to Loveland.
Perhaps vNet will be like the decision on the Mayor Pro Tem – on hold until the 9th councilor is elected. Donna Rice stated at the recent candidate forum that she wants to continue the city’s successful model of providing business incentives to bring jobs to this community.
Really?
It’s funny but I remember watching that Council meeting, when Solt argued for more of a “clawback”, and he & Gutierrez voted against the risky “incentive” for V-Net. The trouble was, it was them against 7 others, among whom were friends of Beierwaltes.
And I also remember well the Reporter Herald editorial, when they attacked Solt and Gutierrez for voting against the V-Net subsidy, and for seeking to “make the City whole” by getting the entire amount back if V-Net failed to deliver. The R-H editorial staff might be walking around with eggy faces now; though that would only be the case if they had some degree of conscience or integrity.
All I can say is thank goodness those 2 men were at least able to make it enough of an issue to get SOME protection for the taxpayers through the “personal guarantee”. Hopefully, Council will now act to get back whatever they legally can; and they should hire outside counsel if the City Attorney is incapable of so doing (as I suspect).
Article XI, Section 2 of the State Constitution reads “Neither the state, nor any county, city, town, township, or school district shall make any donation or grant to, or in aid of, or become a subscriber to, or shareholder in any corporation or company or a joint owner with any person, company, or corporation, public or private, in or out of the state . . .” Mr. John Duval argues that this section of the State Constitution doesn’t apply to the City of Loveland when it gives money away in situations like this because of some ‘exception’ that has morphed over time in the court system. Looks like the writers of the State Constitution might have had our best interest in mind. . .
What is the big deal? Tim is trying to do what others don’t have the balls to do. Get that kid out of the race so he doesn’t take any votes from serious candidates.
Money Magazine did have an interesting article about how high-tech
companies choose where to locate. #1 was where the CEO wants to live
and #2 was local tax rates but mostly utilities and property taxes
depending on the type of company. Many manufacturing companies
consume lots of utilities like water or even electricity for air conditioning.
Incentives are a gimmick that often are provided AFTER the company
knows they want to locate in an area and they just want maximum
return for their dollars.
A smart community growth plan that focuses on quality (like enforcing
minimum setbacks from the street and controlling the ascetics of a town
through sign ordinances) makes it a quality place where sophisticated
people want to live.
We need to raise the level of discussion and get away from the name
calling I see even here about anyone who questions whether an
incentive is right or not. The newspaper has red bated the only two
councilors willing to provide the due diligence necessary before these
incentives are paid out.
Time to raise the level of discussion and focus on the issue and stop all
the name calling. The RH editor should set the example instead of red
bating anyone who asks good questions.
The editor of The Reporter-Herald should be fired. The City of Loveland should clean house and so should The Reporter-Herald.
Speaking of Lehman Communications Corp – what’s the story behind three of their newspapers going out of business?
I know this isn’t the topic but I just read the McWhinney yacht story on the bottom of page 1. Anyway I was wondering about that fundraiser for Chris Cox the guy who ran the SEC when all the scandals went undetected on Wall Street.
As a Loveland taxpayer who helped pay for Chad and Troy McWhinney’s massive personal yacht through so many tax subsidies — can we also get a ride?
Better yet, that invitation gives rank to wealthy contributors based on their contribution list for some political fundraiser. I demand that i be at least a Captain and be allowed to board with the other paying guests.
By the way do you know what Chiron stands for?
C – City’s
H – High-roller
I – Investment
R – Ride for
O – Outrageous
N – Nincompoops
Hey, unless you have a picture of Donna Rice in a bikini on that boat you are off the topic.
Mar. 3: I see that Beierwaltes is now saying he doesn’t have to repay a penny, now that he’s taken all that money and washed his hands of the enterprise. If that’s true, then residents ought to call for the firing of responsible staff. And we ought to recall the Council members who gave it the ok.