LovelandPolitics.com Blog

It was bound to happen. California is laying-off teachers and closing schools while cities are cutting back emergency services like police and fire rescue while the state faces the largest financial crises in its history. (see the LovelandPolitics article)

The Governor of California has pointed his finger at their version of Urban Renewal Authorities, Redevelopment Agencies, as the culprit for diverting much needed $5.5 billion of property taxes annually into poorly accounted for Redevelopment Agencies (we call Urban Renewal Authorities or URA’s) to reward politically connected developers. As one economist reported, “The redevelopment process is easily abused, has little accountability and diverts badly needed tax money away from necessary public services slowly impoverishing a community while the development becomes functionally obsolete and all that remains is the enormous public debt 15 years on.”

As if speaking about Loveland’s own City Council and McWhinney’s Centerra project, the Conservative Orange County Register reported this on the partisan vote by California’s Legislature to eliminate redevelopment agencies in California, (click here to read the entire editorial)

“Yet, even though any serious conservative should agree with McClintock and be eager to kill redevelopment agencies, which epitomize crony capitalism and central planning, Republicans were the biggest obstacle to their elimination. They found various reasons to support them, ranging from the desire not to give Brown any sort of budget victory to the oft-stated claim that redevelopment at least keeps the money in the hands of cities rather than in Sacramento. In reality, many Republican legislators are more interested in being pro-business than pro-freedom, and they have become addicted to the redevelopment cash and the political support from developers who benefit from the process.”

California is taking the tough medicine Loveland will face to balance future budgets as our local tax inequality grows commensurate with Centerra’s growth. McWhinney has placed the City of Loveland on a similarly risky path as cities in California with their “play now-pay later” approach to public subsidies via tax diversions of new development.

Loveland citizens asked their City Council last year to consider recapturing some of the lost property and sales tax revenues to Centerra’s Metro Districts for city services through better tax equity but were ignored and instead fees raised and services cut to residents already paying their fair share of local property and sales taxes. McWhinney’s Metro District receives 98% of the property tax back from properties declared previously “blighted” and 40% of sales taxes through a “fee” that operates like a sales tax. These rebates continue for 25 years and are used, in part, to repay the over $100 million in public bond debt created by Centerra.

Now McWhinney has their hands full trying to save their jeopardized projects in Garden Grove also subsidized by more unwise public debt the people of California can ill afford to repay. During elections every local candidate claims to be a “fiscal conservative” regardless of party affiliation. Too bad our current Loveland City Council’s lack of action on Centerra and Loveland’s growing budget deficit speak so loudly we can’t hear their words.

The City of Loveland accepted our appeal of their decision not to release the underlying document used to brief the City Council March 1, 2011 regarding a proposed amendment to the MFA (Master Financing Agreement) between the city and McWhinney.

We have posted the story along with the document for your review. What it doesn’t reveal is what other uses the funds are being requested as for the current MFA already allows Centerra proceeds to be used on vaguely defined “public improvements.” McWhinney has a history of abusing that definition to fund private type uses and even trying to amend the agreement in the past to include a trolley for shoppers. The council did agree to allow $80 million of Centerra proceeds for a private parking garage that was never built when they failed to launch Grand Station as planned.

If you can help complete the puzzle by trying to fill-in the missing data please go right ahead. We would love the help!

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.

see story

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?

For years people critical of this website have attempted to discredit this news source by making personal attacks upon the publisher and his motives instead of disputing the facts uncovered through investigative reporting. Sometimes, people drunk on their own bath water can’t resist lashing out.

Mike Hill, Loveland real estate broker and Director of McWhinney’s Multi-Family Housing may just be such a person. Emails sent to Admin@LovelandPolitics.com were insulting and barely literate so we assumed they couldn’t possibly be from Mike Hill until we bought an email trace online of the offending email address pbwaverider@Yahoo.com. The information indicated the emails were emanating from a Yahoo account owned by Mike Hill of Loveland and registered to both his home and business addresses.

When we sent our findings to Chad and Troy McWhinney along with their COO, Doug Hill (Mike’s Father we are told) via email, Mike Hill responded with the following explanation;

“Please be aware that I have friends in California that use my home computer while in town visiting me (that obvisouly have opinions on the politics and events in this area) and have access to this e-mail account both while in and out of state.”

Really? Where is Chris Hansen from Dateline NBC when we need to confront someone over who was sending emails from their account?

Please take a minute to read our story about how we tracked the source and see what things were being said in the emails along with Mike Hill’s complete email in response to our inquiry to McWhinney.

Do you believe his friends from Southern California were angry with LovelandPolitics and felt the need to attack us or did it really come from a senior McWhinney associate?

The personal attacks, intimidation and nastiness often displayed by those who support McWhinney against anyone who questions their public subsidies is unsettling. Contrary to what the offensive emails argue, rich doesn’t make right and measuring the value of one’s argument only by the size of their bank account is an argument absent any reason.

Remember, it is LovelandPolitics that is supposed to not be credible. People who claim out of town friends are taking over their personal email accounts to argue Loveland politics; are apparently the credible people you should be trusting with millions of dollars of your future sales and property taxes.

Are you kidding?

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?

In 2004 the McWhinney organization agreed to fund $12.5 million of the tax dollars their Centerra Metro Districts would receive to make certain upgrades to the I-25/US 34 interchange by 2010 and 14 years later fund the “final” larger improvement for over $20 million.

The City of Loveland kept its part of the bargain and McWhinney received governmental taxing authority for their special districts for 25 years of future property taxes (TIF) and sales taxes at a projected value of nearly $700 million. Using this authority, McWhinney’s entity borrowed $112 million through floating interest rate municipal bonds that now need to be repaid.

City staff, in apparent collaboration with McWhinney, are now urging the council to only award the lower cost “safety only” improvements for interchange of $ 8 million to free the remaining funds for other uses by the Centerra Metro Districts. On the chopping block is the upgrade to the bridge and landscaping improvements that were part of the Inter Governmental Agreement.

“Michael” and others have blasted this website for tagging some candidates as “McWhinneycrats” capable of agreeing to just about any whim or fancy McWhinney requests.

Now is their chance to prove us right or wrong. Hardly one month ago EVERY member of Loveland’s council voted to move $490,000 out of the I-25/US 34 improvement monies because the estimate, according to staff, were coming lower than expected and the money would not be required. Had council stuck to their guns and preserved the original $12.5 million promised there wouldn’t be an issue in completing the project as agreed.

Today the project cannot go forward because that money is gone and it has only some $11 million and change. Incredibly, McWhinney is lobbying council to allow them to strip away any landscape or bridge improvements and just provide the pavement essentially for safety due to the shortfall.

In an effort to distort the record, previous attempts by council to question the high cost of landscaping maintenance on the project is being used to argue the city didn’t want the landscaping anyway. In fact, the city argued only about a proposal to share the cost of landscaping with the Centerra Metro District.

McWhinney is looking to spend the least amount possible to complete the “Regional Transportation” requirement in their agreement with the City of Loveland thus allowing their Metro District to borrow even more money at the public’s expense. Arguments by staff that the changing economic situation necessitates the change in scope on the project are specious at best. In 2008 after the economy was already “bad” McWhinney borrowed another $60 million (now $ 112 all together) for the stated purpose of funding just this improvement.

If the regional transportation improvements were being funded entirely from current revenues the argument that the economy’s woes creates an impediment would hold water as funds for the improvement would not be available due to lower tax revenues. Instead, those monies were put aside from the debt for the purpose of funding not only the safety improvements but the landscaping and bridge improvements as well as reflected in the Inter-Governmental Agreement between the City of Loveland and McWhinney’s Centerra Metro District.

The point is McWhinney proposes spending the debt dollars whether or not the improvements are realized thus creating an equal burden to the Metro District’s obligation to collect taxes and repay the debt. Nothing in the “safety” only improvements proposal mitigates the potential impact of the ailing economy on the Metro District. What likely will change is McWhinney’s profit and ability to continue using the public monies of the Metro District as a kind of “slush fund” for their special projects instead of the promised regional transportation improvements agreed to with the city.

see LovelandPolitics.com story along with the legal documents and contradictory staff memos to council.

The vote this evening will be an excellent opportunity to sort out who on council is acting on behalf of the city’s interest by enforcing signed agreements and who is simply sitting on the dais on McWhinney’s behalf.