| LovelandPolitics.com |
| Grand Station: Dead or Delayed? |
Lovleand, January 2007
The proposed mixed-use development east of I-25 called “Grand Station” that raised so much controversy in Loveland last year (the
developer proposed using future tax revenue to fund an old fashion trolley system and parking structure) may have never been
properly on the tracks in the beginning.
The development is called “mixed-use” because it combines retail and commercial office space with residences. Grand Station was
first announced by the developers (McWhinney Enterprises) who later stated the City of Loveland would need to contribute future
sales tax revenues for the business case to close. The previous City Council allowed $80 million parking garage subsidy but declined
to allow funding of the trolley using future taxes through the redevelopment agency.
According to sources close to Chad McWhinney and one official in Loveland, the project never attracted enough investor interest for
the McWhinneys to raise the funds necessary to build the project. Instead of announcing they had failed to meet these goals,
McWhinney Enterprises is instead announcing a delay in ground breaking in an article printed in the January 31, 2008 edition of the
Loveland Reporter-Herald.
Grand Station was opposed by McWhinney’s managing partner in Centerra (the existing development east of I-25 and north of
Highway 34). McWhinney launched a lengthy but unsuccessful negotiation to buy-out that partner, Poag & McEwen, following an
unfriendly confrontation between the two firms at a Loveland City Council meeting last year.
Does Grand Station Compete With Centerra?
The office space, hotel (Valencia) and proposed high density apartment living inside Grand Station would not compete with Centerra’s
life style retail experience. However, the proposed retail shopping also planned for Grand Station is targeted at the same tenants
Centerra is marketing to fill excess capacity. This would pit a dozen hardened industry expert leasing agents against McWhinney's
organization when trying to woo some high end retailers.
Poag & McEwen is still struggling to lease out 800,000 sq. ft. in the Centerra development and believe Grand Station’s retail
component will detrimentally impact Centerra by cannibalizing the limited number of shoppers available in Northern Colorado. They
testified last year to Loveland’s City Council that Centerra was overbuilt intentionally so the market could “grow into” the
development over a period of years. An analyst from Poag & McEwen testified to Loveland’s City Council last year that Northern
Colorado wasn’t ready yet for another “life style” center given the population base is still only 500,000 and income levels still middle
class.
At issue is the question of whether or not Northern Colorado's market could absorb another “lifestyle center” so close to the existing
one (Centerra) without loosing existing customers thus failing to raise any additional revenue for Loveland City coffers. Investors have
not been convinced that McWhinney will be able to capture the new tenants necessary to make Grand Station a success.
Is McWhinney Using Bad Numbers To Sell Grand Station to Investors?
The firm Gregory Stoffel & Associates from Irvine California was hired by McWhinney to provide the market analysis and research
for Grand Station. The same firm was also hired by Colorado Springs to study a similar center that draws from an area of
approximately 350,000 shoppers where the average income is today over $73,000 per year.
Northern Colorado has a slightly larger “primary trade area” according to the Stoffel report that could draw from a population base of
over 500,000 residents. However, these residents have a smaller average household income plus a “life style” center is already
available in the Centerra project. While Stoffel is a recognized expert in these types of analysis, they cannot make accurate market
projections if the data provided to them is faulty.
Stoffel & Associates’s analysis regarding the proposed Grand Station is Chad McWhinneys selling document to both the City of
Loveland and potential investors why he thinks Grand Station can be a success. It isn’t clear the City of Loveland has staff qualified
to provide the proper due diligence on such a study nor on Chad McWhinney's claims about what it proves. According to one
source, Chad McWhinney failed to disclose the true annual gross receipts for Centerra by representing six months of gross receipts as
an annual number thus intentionally understating the volume of sales occurring at Centerra.
This is significant since Stoffel projected that only about 6% of the total Northern Colorado market share can be drawn to these more
expensive retail and lifestyle centers given the limited number of higher income earners in the demographics. The assumption of the
study is that Centerra is only capturing around 2.5% of the 6% available thus Grand Station would compete for the remaining 3.5%
that otherwise may be drawn to areas where Loveland would not gain sales taxes. If indeed the real number of annual sales at
Centerra is really around 5.5%(a full year of sales), this leaves only .5% for Grand Station which isn’t nearly enough to pay back the
investors in the project.
Given these figures, McWhinney would need to convince school teachers and fireman to shop at higher cost retail stores like Chico or
Nordstrums to bring the combined market share to 12% which isn’t realistic given current spending habits, trends and salaries in
Northern Colorado. The sporadic markets, sub-prime debacle and negative economic indicators have all contributed to a growing
sense that even if Grand Station had a business plan that could close the changing economy would make the project impossible.
The bright spot for McWhinney’s current developments is Target west of I-25 that has been looking to expand into the adjoining retail
spaces to create a Super Target. Rumor has it that Troy McWhinney (Chad’s brother and business partner who lives in Ft. Collins)
supports locating a new Super Target with grocery shopping as well in the area now approved for Grand Station - this is still a rumor
that we have been unable to confirm. Chad McWhinney may still intend to build Grand Station in small increments thus creating
tension within the company as he slowly drains resources towards a questionable project.
In the meantime, spokesperson Jack Wolfe has been paraded out to the press (instead of Chad McWhinney) to say rumors about
Grand Station's demise are false and great happenings are just around the corner. This may provide an entirely new definition to the
saying a boy who cried Wolfe.
The proposed mixed-use development east of I-25 called “Grand Station” that raised so much controversy in Loveland last year (the
developer proposed using future tax revenue to fund an old fashion trolley system and parking structure) may have never been
properly on the tracks in the beginning.
The development is called “mixed-use” because it combines retail and commercial office space with residences. Grand Station was
first announced by the developers (McWhinney Enterprises) who later stated the City of Loveland would need to contribute future
sales tax revenues for the business case to close. The previous City Council allowed $80 million parking garage subsidy but declined
to allow funding of the trolley using future taxes through the redevelopment agency.
According to sources close to Chad McWhinney and one official in Loveland, the project never attracted enough investor interest for
the McWhinneys to raise the funds necessary to build the project. Instead of announcing they had failed to meet these goals,
McWhinney Enterprises is instead announcing a delay in ground breaking in an article printed in the January 31, 2008 edition of the
Loveland Reporter-Herald.
Grand Station was opposed by McWhinney’s managing partner in Centerra (the existing development east of I-25 and north of
Highway 34). McWhinney launched a lengthy but unsuccessful negotiation to buy-out that partner, Poag & McEwen, following an
unfriendly confrontation between the two firms at a Loveland City Council meeting last year.
Does Grand Station Compete With Centerra?
The office space, hotel (Valencia) and proposed high density apartment living inside Grand Station would not compete with Centerra’s
life style retail experience. However, the proposed retail shopping also planned for Grand Station is targeted at the same tenants
Centerra is marketing to fill excess capacity. This would pit a dozen hardened industry expert leasing agents against McWhinney's
organization when trying to woo some high end retailers.
Poag & McEwen is still struggling to lease out 800,000 sq. ft. in the Centerra development and believe Grand Station’s retail
component will detrimentally impact Centerra by cannibalizing the limited number of shoppers available in Northern Colorado. They
testified last year to Loveland’s City Council that Centerra was overbuilt intentionally so the market could “grow into” the
development over a period of years. An analyst from Poag & McEwen testified to Loveland’s City Council last year that Northern
Colorado wasn’t ready yet for another “life style” center given the population base is still only 500,000 and income levels still middle
class.
At issue is the question of whether or not Northern Colorado's market could absorb another “lifestyle center” so close to the existing
one (Centerra) without loosing existing customers thus failing to raise any additional revenue for Loveland City coffers. Investors have
not been convinced that McWhinney will be able to capture the new tenants necessary to make Grand Station a success.
Is McWhinney Using Bad Numbers To Sell Grand Station to Investors?
The firm Gregory Stoffel & Associates from Irvine California was hired by McWhinney to provide the market analysis and research
for Grand Station. The same firm was also hired by Colorado Springs to study a similar center that draws from an area of
approximately 350,000 shoppers where the average income is today over $73,000 per year.
Northern Colorado has a slightly larger “primary trade area” according to the Stoffel report that could draw from a population base of
over 500,000 residents. However, these residents have a smaller average household income plus a “life style” center is already
available in the Centerra project. While Stoffel is a recognized expert in these types of analysis, they cannot make accurate market
projections if the data provided to them is faulty.
Stoffel & Associates’s analysis regarding the proposed Grand Station is Chad McWhinneys selling document to both the City of
Loveland and potential investors why he thinks Grand Station can be a success. It isn’t clear the City of Loveland has staff qualified
to provide the proper due diligence on such a study nor on Chad McWhinney's claims about what it proves. According to one
source, Chad McWhinney failed to disclose the true annual gross receipts for Centerra by representing six months of gross receipts as
an annual number thus intentionally understating the volume of sales occurring at Centerra.
This is significant since Stoffel projected that only about 6% of the total Northern Colorado market share can be drawn to these more
expensive retail and lifestyle centers given the limited number of higher income earners in the demographics. The assumption of the
study is that Centerra is only capturing around 2.5% of the 6% available thus Grand Station would compete for the remaining 3.5%
that otherwise may be drawn to areas where Loveland would not gain sales taxes. If indeed the real number of annual sales at
Centerra is really around 5.5%(a full year of sales), this leaves only .5% for Grand Station which isn’t nearly enough to pay back the
investors in the project.
Given these figures, McWhinney would need to convince school teachers and fireman to shop at higher cost retail stores like Chico or
Nordstrums to bring the combined market share to 12% which isn’t realistic given current spending habits, trends and salaries in
Northern Colorado. The sporadic markets, sub-prime debacle and negative economic indicators have all contributed to a growing
sense that even if Grand Station had a business plan that could close the changing economy would make the project impossible.
The bright spot for McWhinney’s current developments is Target west of I-25 that has been looking to expand into the adjoining retail
spaces to create a Super Target. Rumor has it that Troy McWhinney (Chad’s brother and business partner who lives in Ft. Collins)
supports locating a new Super Target with grocery shopping as well in the area now approved for Grand Station - this is still a rumor
that we have been unable to confirm. Chad McWhinney may still intend to build Grand Station in small increments thus creating
tension within the company as he slowly drains resources towards a questionable project.
In the meantime, spokesperson Jack Wolfe has been paraded out to the press (instead of Chad McWhinney) to say rumors about
Grand Station's demise are false and great happenings are just around the corner. This may provide an entirely new definition to the
saying a boy who cried Wolfe.