NEWS BLOG
LovelandPolitics
Loveland's Independent News Source
Loveland - March 17, 2013

More than a year after purchasing the former Agilent campus in south Loveland, C&W (Cumberland & Western)
has now officially joined perennial ACE (Aerospace and Clean Energy) Project opportunist Don Marostica in asking
for the same types of subsidies Marostica was seeking in his own failed bid to buy the same property.

Sixteen months ago the City of Loveland selected C&W over three other bidders (Marostica's Loveland Commercial,
Beck Investments and The Neenan Company) to buy the former Agilent campus on Taft Ave. in Loveland due
mostly to promises that the long-term financial commitment by the city (required by the other three bidders) was
not necessary for C&W.   C&W had already been interested in acquiring the property from Agilent long before the
city's ACE Project so took the opportunity to purchase it from the City of Loveland while only paying lip-service to
the city's then "partner" CAMT (Colorado Association of Manufacturing & Technology) to develop an ACE Project.

Marostica, along with the other local bidders, saw the ACE Project as their key to owning the property but couldn't
pay the city's expected $5 million price tag.  Instead, Marostica and the other two local bidders sought significant
city subsidies by asking for help leasing the space (using city resources) while also asking the city to be their first
tenant by leasing back any unused space among many other direct subsidies they proposed.  Because the city used
mostly committed reserves (like the city's water enterprise fund money) to buy the old Agilent campus in
anticipation of CAMT finding a qualified buyer, there was no feasible way the city could continue its significant
investments in the property without jeopardizing other legally binding financial commitments already made with
the same funds.

Therefore, Marostica's proposal to buy the property in 2011 by paying $500,000 down while the city carried the
balance at 4% while the city leased back all vacant space for $1 per square foot along with a city commitment to pay
all operating and maintenance costs was hardly attractive.  Now, Marostica has re-surfaced in partnership with
C&W, the new owner of the property seeking similar subsidies again.

Tobacco billionaire Brad Kelley, owner of C&W, provided the most attractive offer in 2011 by paying the city cash
for the old Agilent campus while only promising to try and work with CAMT.  Kelley, who sold his Tobacco interests
some eight years ago owns over 1.25 million acres of land across the country and next to Ted Turner is one of the
country's largest single property owners.   (
see more about Brad Kelley, owner of C&W, in the column on the
lower right side of this page
).

By December of 2011 the City of Loveland concluded negotiations to sell C&W the old Agilent campus on Taft Ave.
for just under $5 million along with a 5-year deed restriction that it only be used for specific high-technology
companies as defined by their ACE Project.  (
see December 2011 story)   CAMT appears to be waiting out the 5-year
deed restriction by not making any significant changes to the property while it remains largely vacant.  In the
meantime, C&W has joined Marostica in asking the City of Loveland to lease vacant space while also paying their
leasing agent to find tenants for the some 800,000 sq. ft. of vacant space.

ACE Project Continues: Getting the Band Back Together Under New Name

Last year, the city hired CAMT consultant David Lung (for $150,000) to assist his other new client, C&W, in finding
companies to lease space in the old Agilent campus while also continuing CAMT's promise of bringing NASA
technologies to Loveland enterprises.  Concerned about the city's continuing role in trying to continue the failing
ACE Project, some on council asked staff for a more formal plan.  Marcie Erion and other city employees have
already contributed considerable hours to assisting C&W without any success.

As reported here last August, City of Loveland Director of Economic Development Betsey Hale prepared a plan for
the city to take over the role proposed of CAMT by leasing space in the old Agilent property and than subletting to
companies chosen by the City of Loveland as worthy technology start-ups.  Not surprisingly, Don Marostica was
than working directly for CAMT after leaving his job in the Governor's office and promoting the ACE Project which
could benefit his nearby property holdings.  (
see previous story about Marostica's evolving and conflicting roles in
ACE)

Below is what Hale promised last August to Council,

"Next Steps: City Staff will be spending the next several weeks meeting with public and private sector partners to develop
the business plan and budget.  The development of this program/ facility will place Loveland at the center of Innovation
and Creativity not only in Colorado but in the United States. "

Unable to win support for directly leasing large amounts of space at the now C&W owned former Agilent campus
for a proposed city run business incubator, Hale instead developed a plan working with Marostica to form a 501c(6)
organization to lease space at the campus to implement their ACE Project visions calling the new band Stone Soup
Accelerator.   As a 501c(6), instead of the more common 501c(3) non-profit organization, Stone Soup Accelerator
will not be required to disclose financial contributions and its nine board members (which includes Marostica) can
be working for pecuniary reasons instead of charitable ones without violating the group's non-profit status.


Council Takes the Bait At Recent Study Session

Hale's promise to place Loveland "at the center of Innovation and Creativity not only in Colorado but the United
States
" is a lofty one given the city's proposed modest investment and previous track record with CAMT.  
Nonetheless, Hale proposed the City of Loveland hire the executive director of the new organization (Stone Soup
Accelerator) to work for her department.  The projected city investment for the new position including office space
and supplies is estimated at $750,000 over the next five years and will be paid by the city's general operating fund.  
Curiously, 50% of Hale's current salary is paid by city utility customers instead of out of the city's general fund.

Hale's official and public introduction of the Stone Soup Accelerator came to council last Tuesday during a study
session where she proposed the new salary position which will be reporting to her department.  Similar to CAMT's
now defunct ACE Project plan, the newly formed group envisions "emerging" companies selected by the board to
receive various subsidies presumably at taxpayer expense.   Marostica presented Loveland's council with
projections showing Stone Soup Accelerator could raise some $3.2 million if partnered with the city from other
private sources.

Doug Rutledge, a local consultant who specializes in constructing steel structures, presented to Loveland's Council
the concept of the Stone Soup Accelerator.  During his presentation he proposed the "Accelerator" will use some
40,000 square feet of space which is approximately 50% of an average building on the old Agilent campus.  
However, the only money the organization appears close to raising is the $750,000 they were requesting from the
City of Loveland.

While Loveland's Council cannot take official actions during study sessions, Mayor Gutierrez and a majority of the
council endorsed the plan wholeheartedly leaving little doubt it will be approved at a future regular council
meeting.  When City Manager Bill Cahill explained he needed time to determine the city's contribution would not
be the "first money in" and needed to review lease agreements he was rebuffed.  Cahill said he wanted time to
study the proposed compensation agreement for the city employee who will be running Stone Soup and their lease
agreement with C&W.

Councilman John Fogle, apparently throwing caution to the wind, said the next council meeting wasn't soon enough
for him to approve the expenditure.  Fogle indicated there would be no issue for him if Loveland is the "first money
in" to the Stone Soup Accelerator thus pushing back on Cahill's more cautious approach.   Councilman Ralph
Trenary acknowledged the ACE debacle by stating, "Don Marostica, the Mayor and I know a lot about lessons
learned," but he continued by supporting the proposal when saying, " This is an opportunity to invest back in this
community."

C&W officials along with Betsey Hale and Don Marostica have been privately selling their concept to Loveland's
Council for months so it wasn't the first time the members heard of the plan.  C&W alone approached both Larimer
County officials and the State of Colorado last year with similar requests for the state or county to assist Loveland in
leasing space and hiring a director but was unsuccessful.


Succesfully Funding Advanced Industry Business Clusters

A Boulder based accelerator or business cluster began in 2009, eSpace, recently completed an internal review of
the Brookings Institue study entitled, "Launch! Taking Colorado's Space Economy To The Next Level"  
commissioned by Colorado Governor John Hickenlooper.   Among the ingredients necessary for advanced industry
cluster, according to the review, is significant funding by both relevant industries and state governments.  So far,
the City of Loveland appears to be the only real investor in the aptly named Stone Soup Accelerator or its
predecessor ACE Project.  Unlike the story from which its name is derived, contributions to the Accelerator's soup
will not likely be public except for the tax monies contributed since as a 501c(6) Marostica's organization is not
required to disclose either its contributors or expenditures like a regular non-profit organization.

ESpace, a true 501c(3) non-profit organization, is anticipating a $20 million contribution by the State of Colorado
this year to continue its efforts to implement a near identical mission of transferring technologies from academia,
government agencies like NASA and industry to smaller companies it is incubating.  ESpace is a partnership
between the University of Colorado and the Sierra Nevada Corporation.

Loveland's proposed Stone Soup Accelerator, like CAMT's ACE Project, is receiving lots of positive local media as the
council prepares to officially approve its own subsidies for the newly proposed Accelerator.  Perhaps, the city
should look into what competition the project will have in attracting companies to better understand the scale of
investments required along with an understanding of the types of partners necessary to make it successful.

During the City Council study session earlier this week when the Stone Soup Accelerator was introduced, Mayor
Gutierrez commented to Councilman Hugh McKean that he is sensitive to complaints that government not be
picking the "winners and losers."  He stated, "We have struggled with this picking winners and losers for quite a
while....sometimes if you can build companies your own home grown ones have the best chances.....yeah I'll support
this."  

Successful start-up companies normally require capital, technology (or a market discriminator) along with
competant management.   Assuming the city government can really determine success or failure of companies in a
competitive high-technology industry sector by its own modest investments is naive at best.
Below Are Links To
LovelandPolitics' Stories
Regarding the Former Agilent
Campus in Loveland beginning
in January of 2011 (bottom) to
the most recent at the top.
Brad Kelley founded
Commonwealth Brands
Tobacco in 1991.  

During a time the tobacco
industry was losing capital and
fighting government
regulations, Kelley invested in
a company to offer the lowest
price cigerettes on the market.

According to one gentleman
who had met Kelley and
worked for his company at that
time, posted the following
description online;

"I noticed that the place was
full of old cigarette
manufacturing machines that
seemed to always be breaking
down.  There was an old guy
or two working on the
machines every time I went in
there to perform the service.  
One of the workers said Mr.
Kelley bought the machines
from a cigarette manufacturing
in North Carolina.  Also, I used
to see large cardboard boxes
of imported tobacco from
foreign countries like Africa
and places like that.  The
place was not the cleanest in
the world either and looked
like everybody in there
smoked.  They even had a
computer graphic designer in
an office who designed the
cigarette package labels as
well as advertising.  I can
honestly say that I had been in
that particular office many
times where such world
famous brand names of
cigarettes were created such
as "USA Gold, "Bull Durham"
and "Malibu."

Mr. Kelley's office was really
cool too.  He had a lot of
stuffed wildlife animals in there
and he was a tall, burly red
headed and bearded man. I
said "hello" to him several
times and he seemed like he
was pretty friendly fellow, at
least he was to me.  It looked
like he was trying to create
some new BBQ, steak and wild
deer sauces too.  They had
even had labels created for
the sauces that were laying
around.  And I serviced a large
old house near the Bowling
Green airport that served as
the sales office for the
company and a large
distribution center warehouse
on Russellville Road in
Bowling Green where he kept
his million dollar Provost
camper bus."

Eventually, Kelley sold his
company about eight years
ago for over $1 billion.  He
began buying real estate
across the nation becoming
one of the largest single land
holders in the country.

Kelley is a significant owner of
various equine racetracks
which include the location of
the Kentucky Derby, Churchill
Downs.

Kelley also owns over 1 million
acres of ranching and farm
land in the states of Kentucky,
Tennessee, Texas, Florida
and New Mexico.

You will see very little if any
mention of Kelley by the
Loveland Reporter Herald,
Denver Post or Northern
Colorado Business Report.  
This is because
representatives for C&W have
threatened to cut-out any
news agency from interviews
or information about the
Agilent property if they
mention Kelley by name or as
the owner of the project.
Subsidy For ACE Project Back - Under New Name