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Council Ponders Business Incentives in Secret
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Loveland - January 22, 2011

The Loveland City Council has been meeting privately to consider various incentives for enticing the Colorado Association for
Manufacturing and Technology (CAMT) to locate an advanced technology manufacturing cluster in Loveland after the group
signed a 5-year agreement with NASA.  The agreement contemplates CAMT establishing a technology innovation center
somewhere in Northern Colorado to assist small business in competing for NASA contracts that award companies developing
technologies that can be utilized in space related programs while also being available for
spin-off uses in the private sector.

Burned by the shenanigans of Bill Beierwaltes and the city’s lost investment in his former company
vNet, the council is treading
lightly and looking for incentives that serve dual purposes instead of a cash payment like the one made to vNet in 2008 which
resulted in the city losing both the money and the jobs it was supposed to bring
The council was happy to learn in one closed session that the owners of the former Agilent campus in Loveland (815 14th Street
SW and Taft Ave.) lowered their asking price and are cooperating with the city to create the best possible offer to CAMT.   
Below are four of the options the city staff has brought to the city council in closed sessions;

1. Buying the $1 million in water shares from the property

The old HP plant has approximately $1 million in water shares assigned to it that could be transferred to the City of Loveland
provided the intensity of the current use is not dramatically increased.  The money paid by the city for those water shares could
be used to lower the cost of acquiring the property by CAMT for the NASA focused industrial park.  One drawback of this
approach is the water shares would need to be repurchased in the future if the 115 acres of still developable land are later
developed within the campus.

2. Purchase 148 acres of natural areas connected to the former Agilent campus for public open space

Another option on the table is the city purchasing the lakes and open space that surround the former HP campus that would
expand the open space connected to Loveland’s bike trail.  This option would allow the current owner to receive a significant
return on the undeveloped parts of the land while off-loading perhaps areas previously contaminated by an underground chemical
storage tank once used by Agilent.

One city official informed LovelandPolitics that this option is less desirable due to the fact CAMT is seeking 200 acres at build-
out while the former Agilent campus has only 65 developed acres.  Using the natural areas for open space may limit some future
expansion but with an additional 115 acres available for development this is unlikely.  Another option being considered is bundling
the former Water Pik (vNet's former home) property into an offer.

3. Urban Renewal

Perhaps the less popular option would be the city declaring the property “Urban Blight” thus allowing the future property taxes
for 25 years to be rebated to a metro district controlled by CAMT and used to improve the property.   Loveland already has two
urban blight districts, one that is most of Centerra and another covering downtown Loveland.  The problem with urban renewal
schemes is they rob the community of the future benefits (property taxes ie.) from the new uses of the property.  The property is
already in a state declared “Enterprise Zone” thus making the project eligible for certain state subsidies.  However, failing to
create an urban renewal district could limit the tools available for financing future renovations especially if competing with
Centerra that already has the deceleration of Urban Blight on vacant farm lands.

4. Direct Cash Subsidy

Perhaps the least popular option staff has offered for consideration is a direct cash subsidy like that provided to the failed vNet
venture.  One city official acknowledged that any “deal” will require a combination of subsidies or incentives and this is likely to
be included but not the “headline” of the offering given sensitivity in the community.  CAMT is looking for a 200 acre campus so
some part of the existing 115 develop able acres may require new facilities but where the money will come from for the
construction is unclear today.

Understanding the CAMT/NASA Agreement

The new agreement signed in early December between CAMT and NASA has spawned a significant interest by many
communities in the front range from Louisville, Boulder, Longmont and Loveland.  Even McWhinney’s Centerra has made the list
according to one industry source familiar with CAMT but details are being held close to the vest due to the City of Loveland’s
efforts to promote the vacant former Agilent-HP property.  McWhinney has a history of trying to poach new development
opportunities from non-Centerra Loveland like the Embassy Suites Hotel.  
McWhinney attempted to wrestle away from Larimer
County the hotel deal during negotiations by using their metro district dollars as an incentive.

Centerra doesn’t have vacant office or manufacturing space to offer but has successfully argued in the past the Millennium Plan (a
separate and more modern development code for Centerra) is an advantage for new construction when attracting Agrium and
other companies that considered first the former Agilent campus.  Loveland’s development code is a hodgepodge of changes
built on top of a code first written in the 1970’s that will regulate any changes or new construction at the former Agilent campus
while a new development in Centerra can be built using the modern Millennium Plan that is preferred by developers and easier to
use.  McWhinney is likely to use these arguments if they compete for the development.

Misleading News Coverage

The Denver Post and other newspaper blogs indicate the press releases and news coverage over the NASA-CAMT 5-year
agreement has been misleading readers into believing NASA is funding 10,000 jobs at the center once it is built by CAMT in
Colorado.  In fact, NASA is promising only one “ambassador” once Colorado’s local manufacturing companies and
governments fund the center.  One senior space official commented to LovelandPolitics the amount of money available from
NASA for the center is “very little” given the current budget environment.  He also said that is why the exact amount is not being
released to the media.

CAMT’s agreement with NASA is designed to strengthen Colorado’s clean energy and aerospace manufacturing industries.  The
key word here is “designed” but not funded.

CAMT is hoping the participating companies will be able to win STTR and SBIR contracts from NASA in the future.  These are
small development contracts the federal government uses to stimulate joint technology development with industry that have been
around for over twenty years.  Small Colorado manufacturing and research and development firms now using funds from both
SBIR and STTR contracts may not feel the need to relocate to a technology cluster in Loveland or another location.

Whether those companies that agree to contribute to the clustering concept and relocate will enjoy a special advantage over those
that don’t is unclear today.  It is unlikely the FAR (Federal Acquisition Regulations) will be amended by Congress to
accommodate this new cluster of companies thus the criteria for a specific contract award to any company will still depend on the
merits of the proposal and whether or not they meet the requirements regardless of the company’s location or association with

One advantage CAMT may offer is shared clean rooms, test equipment or other assets required to bid on NASA technology
development contracts that smaller companies do not have the capital to build.  This type of shared facilities concept, while
complicated, may provide the smaller companies within the proposed cluster the leg up they will need to be successful.

In the meantime, city councils up and down the front range of Colorado are seeking taxpayer support to lure CAMT’s cluster of
technology companies into their community.  Whether the benefits outweigh the costs of any subsidies offered will not be known
for a very longtime.  What is clear, however, is the federal government is not funding 10,000 jobs for the center as press releases
and headlines have implied.

Join our online conversation about this story
CAMT CEO Elaine Thorndike, seated left, and
NASA Deputy Administrator Lori Garver, seated
right, sign an agreement at the Colorado State
Capitol in Denver on Monday, Dec. 13, 2010, that
created a Technology Acceleration Program and
Regional Innovation Cluster for Aerospace and
Clean Energy. Looking on from left, Colorado
State Representative Su Ryden, Colorado State
Senate President Brandon Schaffer, Representative
from U.S. Senator Udall's office Jimmy Haugue,
NIST/MEP Director Roger Kilmer and Colorado
State Governor Bill Ritter. A manufacturing park
focused on rapid new product development and
production will be developed to assist growing
Colorado businesses while promoting the
commercialization of technology developed for the
space program.