At over $100 million in debt, Centerra has more public bond debt now than most cities of Colorado but doesn’t have
an office, telephone or even one employee.
Ever since Centerra was constituted as a local government (on paper), it has been described as a “private partnership” with the City of Loveland by its creators but is little understood by most residents of Loveland.
The Centerra Board of Directors fell silent when our young reporter entered their “public” meeting August 19, which according to state law should have been as open and transparent as any city council meeting. Instead, the only outside witness to the meeting was told that he couldn’t record any portion of the meeting unless the board approved the recording.
Why would Centerra’s board act as if someone walked in on an illegal poker game? Why would they feel any recordings need to be approved in advance?
Any comments?
Sounds to me like these guys know how to turn a buck and you can’t stand it. Who cares if there are no employees at Centerra? One contract executive at McWhinney can do more in an hour than 10 city of Loveland yard birds could do in a week. Do you think the people in Loveland are served by all the zombies roaming city hall with coffee mugs in one hand and a memo announcing another meeting in the other? I have spent hours in city hall waiting for some stupid biddy to get off the phone and hand me a stupid piece of paper. it could be online but they are protecting worthless city bureaucrats jobs.
Maybe McWhinney’s staff decided to read because they don’t need some busy body NOT A REPORTER pestering them at the meeting. i would do the same thing if you walked into my meeting. Pick-up a book and read until you leave. How do you think they get things done? Not bickering like a bunch of spoiled children on the city council.
The next time I see Doug and Jay I will give them a high-five! Giving you the cold shoulder is the most awesome thing they have done in a longtime!!!!!! Lol! LOL! LOL!
Admin, are metropolitan districts unique to McWhinney or are they commonly used in Colorado? If my understanding is correct there lots of them in Northern Colorado and Colorado in general. Do these other districts have employees? This would be helpful information.
Yes, Metro Districts as large and complex as Centerra in Colorado do indeed employ people.
Castle Pines North Metro District recently recognized their outstanding employees. see the link.
What is up with the City of Loveland. My employer is moving me to the area (Ft. Collins) and I am looking to purchase a house in either the Loveland or Ft. Collins area. I have been considering Loveland but after ready NUMEROUS blogs and editorials about the questionable ethics of the city council in Loveland, I’ve pretty much made up my mind to steer clear of Loveland. The politics sounds horrendous and corrupt.
Red,
Given the poor grammar (sound not sounds), fake email address you submitted named after a rock band and silly premise we will have to guess this may be more work from the esteemed young McWhinney employee who also pretended to be a person in Southern California turned-off to Loveland because of what he read on this website.
You get an A+ for creativity but F for ethics.
The notion people must suspend their 1st amendment rights in fear of dissuading a prospective homebuyer is absurd. Instead of practicing Chad McWhinney’s mantra to try and “get in front of the inevitable” why don’t you and your colleagues try getting behind the truth for a change.
There are many BLOGs covering Ft. Collins politics as you know which are quite frankly more interesting than Loveland. If you are indeed the young Mr. Hill I would say you already made your choice to buy a large home in Windsor sometime ago.
Thanks Admin. So is not having any employees on payroll but rather consultants that get paid only when work is needed a bad thing? I am trying to understand if you think it would be good for them to hire a few people. A lot of companies and organizations are embracing the consultant model so they can better manage their workflow and watch expenses.
I’ve researched and written about metro district quite extensively. They are indeed prolific in Colorado; and I would say most of them don’t have employees. It depends on what the district does. For example, some metropolitan districts are water and sanitation district, and therefore, they have employees to operate those systems.
However, metro district set up by developers to finance roads on their projects typically do not have employees. They are simply a mechanism to bond and place taxes on the land that essentially help finance utilities for the development. The boards are made up of the landowners, and before the development is sold, the landowners are typcially the developer or its investors. When the project is sold, other people can get on the board. Sometimes these districts form into an HOA for the development.
I’m not sure I agree with the initial move to legalize these districts, as some subdivisions, for example, have higher property taxes, because they are essentially paying off the roads already built in front of their house. Homebuyers are typically clueless how much their taxes could be. However, local governments do support and allow these districts to form, usually with the argument of makin growth pay its own way. It therefore create a financial advantage to the developer – and therefore changes the marketplace for development. It would be hard to support large development in your city without supporting the creation of these tax districts.
Here’s an example: The Weld County Commissioners a few years ago declared that the cost of extending county services to southwest Weld County (considered the fasting growing area in the country at the time) was too great and the county couldn’t keep up with the development. The commissioners then declared that metro districts would help solve those problems – possibly even helping pay for deputies to patrol the area. There are dozens of metro districts in the Mead, Frederick, Firestone and Dacono areas, in and outside of municipalities.
Though I haven’t looked at the numbers, I’m sure there’s a bunch of metro districts in Loveland, as well. I don’t think you can blame McWhinney for doing anything underhanded by forming metro districts – in reality, Centerra has numerous metro district within it, all approved by the City. It’s a common tool.
The unique aspect of Centerra is that one metro district controls the collection of taxes allocated through its Urban Renewal Authority, as set up through the Master Finance Agreement with the City — an agreement that this web site has obviously voiced an opinion against. I’m a little fuzzy on the details, but I believe the city allowed this formation to shield its liability with the bonds formed connected to those tax collections.
1. Obviously my email address isn’t fake, since you emailed me and asked me to confirm my comment & I replied back. A little research and it would be easy for you to confirm that my email address has been in use for over 10 years! It’s the email address I use on a daily basis and there is NO rock band that I’ve ever heard of that has the same name as my email address, which I created using my own imagination, based on my employment at the time of creation.
I was being serious in my comments. The McWinney characters and all the other developer issues I’ve heard about are the reason I don’t want to live in Loveland. I was actually writing the previous comment as a Thank You for warning me about Loveland, but I can see you prefer drama. I’m actually a female that works for a non-profit and I currently live in WY. I have no affiliation with anyone in Loveland or anyone who does business in Loveland, but by all means, if it’s more fun for you to let your imagination run wild, continue…..
On a side note, I never eluded to “The notion people must suspend their 1st amendment rights in fear of dissuading a prospective homebuyer”. On the contrary, maybe the best way to enact change is to let the city leaders see that the current trend is Loveland is turning some people AWAY.
Red, I owe you an apology and must eat humble pie for jumping to false conclusions. Thank you for setting the record straight.
After sorting through so many phony emails (same IP Addresses with different names) yours sounded so similar to the others we assumed it was the same source using a different IP address. I was wrong and hope you accept my apology. We want to allow people to be anonymous but not allow other people to pretend to be someone they are not just to prove a point.
We also owe the McWhinney employee we said may have sent them an apology as he has apparently kept to his word in not continuing the harassing emails.
So your question was valid and you deserve a thoughtful answer. We have never promoted boycotting any business in Loveland and recommend you still consider Loveland as your home. As the previous emails point out, Metro District are now common so you need to be very careful in selecting where to buy regardless of what city.
We get emails all the time from stranded homeowners who bought in an area with a metro district where the developer couldn’t finish the development so the few people who purchased homes are expected to repay the bond debt and their property taxes literally exceed the house payment – they are stuck and normally foreclose even though their home is fine and they did nothing wrong. Most homes outside Centerra in Loveland are not located in Metro Districts so it will not be a problem.
One project in Windsor experienced a Metro District crisis recently but we didn’t cover the story since this is not WindsorPolitics.com. In a nutshell, the Pinnacle Group, the same company contracting for McWhinney Metro Districts, had problems collecting property taxes to repay the bond debt because not enough people purchased in the neighborhood and the owner of the empty lots – the developer – went under so values crashed on the empty lots and the few homeowners left are expected now to pay the tax assessments that were intended to be shared by hundreds of homeowners living in expensive homes (thus more assessment revenue to repay the bond debt).
Loveland’s current City Council majority are not the same people who once rubber stamped everything McWhinney requested. So the current issue is the longterm viability of Centerra given previous agreements that were in place when most of our current city council were elected.
Also, the huge tax rebate for Centerra’s phony urban blight is 98.8%. Because Larimer County depends heavily on property taxes, that impact isn’t just Loveland but instead all of Larimer County. So the inability of the county to expand their jail, cuts to the drug prevention programs and other general cuts are the direct result of so much development (like Centerra) being in essence off the tax roles for the next 25 years.
Ft. Collins is also in Larimer County .
In the meantime, hundreds of thousands of tax dollars are being spent each year by Centerra to populate and landscape the drainage area behind Promenade Shops at Centerra with large African carved boulders weighing thousands of pounds while essential county services are being cut. County employees, for example, just lost their longterm longevity bonuses forever.
Now, whether you think Chad McWhinney’s affinity for such art really constitutes a “public use” of the Centerra taxpayer funds probably depends on where they drew the line. If, for example, McWhinney’s trips to Africa were covered by Centerra dollars it will be tough to find that receipt since only people controlled by him authorize the payments and keep the books.
Thanks for posting and since you didn’t respond to our email we assumed too soon the posting wasn’t authentic. Our mistake, we will be more careful in the future.
Doug, thanks for the informative post.
Our problem is not Metro Districts but instead the double standard. Some on the previous council were philosophically opposed to Metro Districts unless the applicant was McWhinney who contributed heavily to their campaigns.
As a result, we have probably less Metro Districts in Loveland than some other cities. Here is a story we did years ago comparing those votes and reasons for denying non-McWhinney Metro Districts in Loveland.
It only means those who were not allowed to form a metro district were forced to reflect the cost of building the roads and sewers into the price they were asking for the homes. The developers who were able to issue public debt to pay for the same improvements could lower their prices and get a market advantage. The homebuyers thought they were getting a deal because they didn’t realize the house was cheaper but their taxes higher to pay for the streets and sewers or other improvements.
You are right Centerra is complicated as they have commercial, utility, residential and other Metro Districts in Centerra but role all the money mostly into Centerra Metro District-1one for expediency.
The following link is a good site that explains some of the problems with residential metro districts in case you haven’t already seen it
Lastly, here is a news article excerpt about a City of Spokane bond deal where (like Centerra) the city failed to provide oversight because the attorneys told the council the city could not be made liable in the case of a default. That law firm is no longer in the picture and the city was forced to pay the bond holders who argued in court the city gave “moral support” for the bonds even though they thought they were technically not liable in case of default.
Hopefully, this is not a glimpse into our future. But the only way to know is for the council to hire an independent assessment of McWhinney’s use of the Centerra funds.
“In the letter, IRS tax-exempt bond officials said the developers — the Lincoln Investment Co. and the Citizens Realty Co. — used bond proceeds as collateral for private loans for the construction of the garage and a department store, violating the private-use test.
The developers also “profited unfairly to the tune of almost $10 million,” making a $400,000 payment to cover the first year of shortfall in revenue and causing the bonds to fail the private-payment test, according to the TEB office.
Enforcement officials additionally determined that the foundation was not qualified to issue the bonds on behalf of Spokane because it had not engaged in activities “essentially public in nature.”
OK, sorry Steve, now answering your question:
“I am trying to understand if you think it would be good for them to hire a few people. A lot of companies and organizations are embracing the consultant model so they can better manage their workflow and watch expense”
Former McWhinney employees refer to the Centerra PUBLIC funds as McWhinney’s slush fund.
Yes, it is a bad thing when the cash flow being managed is not Centerra’s but instead McWhinney’s private expenses. In other words, we were told by former insiders that Centerra funds are used to carry McWhinney staff when they come off a project and need to be paid.
When Grand Station wasn’t getting off the ground, McWhinney employees needing to be paid all of a sudden found themselves being paid from Centerra funds – we were told.
Asking Centerra whether its true would be like asking the Fox to tell us how many eggs are in the hen’s house because we were told he took one. Do you understand the point?
Thank you for the apology. I was taken aback after I replied to confirm my comment and then signed in and saw what was posted. I understand now why my comment got the reaction it did and I accept your apology. I have a lot of research to do into this matter because I definitely don’t want to be caught up in all this mess when I buy a house.
Red,
You shouldn’t let anything on this Web site detour you from moving to Loveland. I grew up here and returned to raise a family here. The Administrator would probably disagree, but McWhinney has probably not been bad for the city and many people will point out quite the opposite. I don’t want to get in a huge debate about this – in Loveland, arguing about McWhinney is like arguing about religion and politics, particularly on this Web site – but the fact that Centerra exists is likely good for the city. Could have it been better? Sure. You can argue about ethics and tax dollars and rights and wrongs, but these types of municipal issues exist in some form or another in every city, big or small.
Thank you for the response Doug. I suppose every city has their good points and bad and their share of municipal issues.
Admin, yes I understand your point. It appears you are assuming the information that was supplied to you by a formal (maybe disgruntle) employee as being factual. I am not sure if you do, but if you want to gain a little more credibility, you may want to report both sides of the story. I know people who work at McWhinney and who were let go and I never hear them talk about a “slush fund”. Is there a chance the people you spoke to were dishonest and held a grudge when McWhinney let them go?
It appears you assume everything the McWhinney’s do is evil and I for one am glad to see them in Loveland. I enjoy living and shopping in Loveland and am thankful that the quality of their developments.
Steve, the conclusion that without huge taxpayer subsidies flowing to McWhinney for 25 years nobody would have developed shopping centers near the I-25 in Loveland is absent simple reasoning.
Look right across the street at 2534 in Johnstown. Bone Fish Grill, Starbucks and Ethan Allen were all attracted there without a single dollar of property taxes being diverted through phony claims of urban blight. Those landlords and their tenants are funding our county services through their tax dollars while Centerra’s fake Urban Renewal areas are getting 98.8% of their property taxes returned for 25 years.
You almost make Loveland sound like an abused wife when you defend McWhinney. I know he hits me but who else would want me since I don’t deserve better? Loveland is a more marketable address than Johnstown so we don’t need to take it in the ribs everytime the McWhinneys want to build another project.
I apparently have a higher opinion of Loveland than you do because we could have had quality development in that area without giving away 25 years of future sales and property taxes not to mention waiving so many fees everyone else is expected to pay.
The Promenade Shops are today worth only a fraction of the combined public and private monies invested in building them. If you know anything about commercial real estate you would not admire the feat of genius that resulted in lenders and taxpayers pouring literally tens of millions of public and private dollars into a project that is now valued at a fraction of the money invested.
The McWhinneys are not evil just greedy. Once Centerra had its subsidies, instead of focusing on bringing new businesses to Loveland, as promised, they cannibalized existing businesses like the auto dealerships. Do you remember their attempt to lure the Embassy Suites hotel in Centerra after the developer already agreed to build in Loveland? How could moving them to Centerra away from paying full taxes possibly be good for the community?
Maybe if McWhinney had not denied LovelandPolitics stories about Grand Station being canceled, their attempts to abandon funding the I-25 improvements, the economic problems of Promenade Shops before it foreclosed and on and on they would have more credibility.
The record speaks for itself. We have told the community the truth why McWhinney has not.
Admin, you said “the promenade shops are worth a fraction of the combined public and private monies invested in building them.”…and that of course includes the public subsidies. If that is true, then how does Loveland get a center like Centerra that without public subsidies? If you cant make it work with subsidies then it sure cant work without one.
Do you really think that Johnstown development is a big success? Before Centerra, I spent most of my disposable income in Fort Collins. Now I would say most of it stays here in Loveland and Centerra. When we have friends over, we never really go hang out in Johnstown (sorry Johnstown) as the consensus of the group is usually always Centerra.
Again, help me understand how a community can get a place like Centerra when they have to compete with Fort Collins?
You said it yourself, even with a huge public subsidy, the numbers don’t work. What do you think the numbers look like without a subsidy?
The true answer is nothing very special would be developed and I would still be going to Fort Collins and not Johnstown (Bonefish and Ethan Allen) on a nice Friday night in the summer.
Why is Centerra conducting their board meetings like a back room illegal card game? And why do the people on the front page picture (Hardy and Hill) look so ashamed to be photographed?
If you didn’t know, Hardy sold his soul to the Devil when he was working for the county to negotiate the Embassy Suites deal and than jumped the county ship for a higher salary offer from Chad and Troy McWhinney to help them take the hotel deal away from the county.
Hardy did have a good relationship with the Embassy Suites people when he worked for the county but once Hammond (the big guy) found out what he was doing by trying to use those relationships for the McWhinneys his credibility was shot.
The bigger more successful hotel developers still value ethics and know an employee who will screw his former employer for more money is just as willing to do it for the next guy kinda like marrying your mistress never works out in the long run.
We have a joke around the county offices that Jay had to buy a house in Weld County so emergency services would use more than piss to put out the fire.
These are not good people and you guys are the only ones with the courage to say it like it is. Keep up the good work!
I’m one of the many who’d disagree with Doug C.; and in the process with the primary assumption by Steve.
Doug says Centerra has been good for the City. I disagree. Boosters would say that it CREATED all this tax revenue for the city. But they don’t consider in their arguments, other facts, including the cost side of the cost-benefit analysis.
And there have been enormous costs to taxpayers, both direct (for supporting infrastructure), and as-yet uncounted ones (declining levels of service for fire response time, traffic congestion, etc.). As predicted, some businesses moved from the City to Centerra, leaving empty buildings in their wake. The movie theater and car dealers, for instance. These businesses USED TO pay their property taxes to the City, but now pay mostly to the Metro district as well as a significant part of their sales taxes, too.
So essentially, the taxpayers were forced to massively subsidize a private development that was allowed to suck away nearly $600 million in our taxes…to undercut other established businesses in the established city.
Steve’s arguments stem from the assumption that Centerra itself was a good, and therefore, we couldn’t have had that good without this public subsidy. Aside from the fundamental error in assumption (as argued above), it is absurd to say that, EVEN IF we were to agree that Centerra were overall a good thing, that we wouldn’t have had a development without the subsidy. That suggests that private development in the free market is impossible or always/usually unsuccessful. That’s obviously a falsehood and absurdity.
Assuming that the local government would have okayed a similar but privately-funded development, it would have happened…but only when market conditions made it MORE LIKELY to be successful / less of a gamble. The use of public moneys made it possible to ignore such market demand; i.e. to be far more speculative. So, it could also be argued that the public subsidy made this project even LESS likely to be successful, because there is less accountability.
Now that the McWhinney choice for City Manager has been made official, will LovelandPolitics.com report the specific facts the Reporter-Herald refuses to report? I hope so.
Steve, where to begin. Let’s start with economics and capitalism 101.
If the total investment of private loans lent to McWhinney and partner for Promenade Shops (~$114 million) plus the public monies invested together exceeds ~$150 million but the bank couldn’t get a bid at foreclosure of even $80 million — than the money wasn’t well spent.
Return on invested capital (or leveraging the parts to create a greater whole) is the essence of how wealth is created in our capitalist system. Instead of seeing a return on their investment the lenders were left with something worth less than the money they lent McWhinney and partner thus failing to provide a return on that invested capital for their depositors.
The fallacy of your reasoning is clear as day. You are assuming ANYONE given the same resources would have achieved equal outcomes. That is a grossly over simplified generalization common to central control economies that fails to understand why our country is the world’s largest economy and so wealthy.
Commercial developments occur all over Colorado and the country where the final project is of greater value than the money invested. The difference in Promenade Shops is competence and experience of the developer. Failure to manage the risks associated with such a project (like a inevitable downturn in commercial real estate) were not reflected in the very short-term risky financing plans.
In addition, the big box style retail surrounded by low-maintenance landscaping isn’t attractive to everyone. Many decisions including removing the frontage road (making it less accessible) and forcing people to drive through the entire shopping center were judgement calls made by the developer that impacted the final project’s value and economy.
Put another way, if you gave $150 million to 10 different people in Loveland to develop a retail center in that area you would get back 10 different ideas, styles and construction concepts – each with a different return. In a capitalist system, only the most efficient, productive and capable developers can attract capital (other people’s money) to implement their ideas. In a centrally controlled economy (former USSR) such decisions are only political and not economic.
While Key Bank is licking its wounds for their loss the holder’s of Centerra’s (Loveland) public bond debt are not. They expect to be repaid for another 20 years from taxes diverted away from Loveland, the school district and other governmental entities through future tax revenues flowing to Centerra for the purpose of repaying the bond debt.
So I hope you plan on eating at Centerra with your friends a lot over the next 20 years. In fact, even until 2040 if McWhinney succeeds in again stretching out the debt obligation now that council approved their request.
Just remember, you are not helping Loveland necessarily but instead the municipal bond holders who are being paid through the diverted taxes (fees). If you want to help Loveland, eat outside Centerra so the city will get the full benefit of any sales taxes generated along with the property taxes the tenants pay.
Just to be clear, I am a raving fan of Loveland and I think the City has been moving in the right direction for a very long time. As I have said before, with the great places we now have I rarely find myself going to Fort Collins or any other city in northern Colorado. I get the point from reading you website that you think Loveland has been doing things completely wrong. You seem to never say anything good about the City of Loveland, our City Council (as a whole) or a lot of city employees. It would be nice to hear what you think is good about Loveland, if anything.
Personally, I hope this website never turns into merely a Pollyanna or “booster” site. I don’t see critical analysis as a negative, but a positive contribution to the community. I check this website frequently because I want to read what’s REALLY going on, that affects me as a tax paying resident. If I want to read smiley-face boosterism, I can consult the Chamber of Commerce, the Realtors, or the City’s public relations inserts in the utility bills. Or especially the local newspaper, which seems to be the face of all the above. In fact, as Steve seems to want more of that kind of “news”, I suggest he’d be happier sticking to those sources and not bother with this site.
But to me, ignoring what’s wrong & sweeping it all under the carpet is cynical and lazy; and frankly, that’s exactly why we have the kinds of messes we have in this country (from the economic woes to the Oil Spills and more). No, honest examination and correction are what’s needed, and the former is one thing this site seems to provide.
No one seems to be saying that everything that City Council or staff do is wrong. However I would disagree with Steve’s assertion that Loveland has been moving in the right direction, particularly if he means by the terrible (IMO) deal by which Centerra came about, or subsequent giveaways to them and to other Council croneys like Mr. Beierwaltes. I agree with the Admin. here that such “political entrepreneurism” is both contrary to healthy free market principles AND to the public interest; and it looks to me as if that was a huge transfer of wealth from the public to a single, politically-connected developer. Talk about reverse Robin-hood-ism!
I worked for a landscape company that is owned by a land developer who created a Metro District. If we wasted money maintaining parks in the District, streets, water, wastewater, whatever, the parent development company made more money through our contract. So what if it was taxpayer money or from debt paid them. We even did work for the board members at their houses, and their neighbors, using District equipment, landscaping supplies, personnel and taxpayer money.
I hope it can change. I would love to see a channel 9 or Denver Post reporter follow these crews around and get them using taxpayer money for individual use. The board memebers (all employees of the parent company) think they are Kings. There should be a grand jury.