LovelandPolitics
| Loveland's Independent News Source |
| Illegal Agreement for Exclusive Sale of County Building by URA Delayed |
Loveland, February 26, 2018
On the night of November 7, last year then Loveland Mayor Cecil Gutierrez presided
over his last full Loveland City Council meeting. Six of the eight council members in
attendance that evening remain on Loveland's City Council today.
On the agenda that election night was final approval of an agreement to purchase the
Larimer County building in downtown Loveland and turn it over to longtime Loveland
resident Rocky Turner's company LPR Construction identified by its holding company
name of Longbow Industries. Turner's company would be granted a subsidy of
$750,000 in exchange for buying and "improving" the building for $732,000.
In addition, Turner's company would be given most of the parking spaces in the parking
lot (40 of 54) behind the Pulliam Building (also being sold by the county to the city). The
City of Loveland cost for the parking lot was agreed to be $271,000 which in-turn, would
be mostly leased to Longbow (40 of 54 spaces) for 50 years for a onetime cost of
$10.00 while Loveland taxpayers will cover cost of snow removal and other routine
ongoing expenses for the duration of the 50 year lease.
Turner is a board member of the secretive LBP (Loveland Business Partnership) for
whom a disproportionately large number of city and urban renewal authority contracts
and subsidies flow.
The legal problem: The scheme anticipated "selling" Turner's company the building
through the Finley URA (governed by Loveland's Urban Renewal Authority) which
Loveland fraudulently declared the otherwise well maintained county building as legally
"blighted...menace to society" in 2012 to artificially reduce its value thus boosting the TIF
(Tax Increment Financing) post future sale by the county. Further complicating the
transaction, Larimer County asked for reimbursement of up to $250,000 in future lost
property taxes resulting from the artificially lowered property value and fake urban
blight declaration.
According to Colorado law, URA's may not sell real property in secretly negotiated
agreements but instead must obtain fair value by offering the property through a
competitive bidding process.
Below is the State Statute that the subsidy Loveland's City Council voted to approve on
November 7, 2017 violates,
Colorado Revised Statutes Title 31 Government Municipal § 31-25-106
(2) An authority may dispose of real property in an urban renewal area to private persons
only under such reasonable competitive bidding procedures as it shall provide or as provided
in this subsection."
Loveland's Director of Economic Development Kelly Jones (pictured upper right) along
with her subordinate Mike Scholl (also pictured upper right) walked Loveland's City
Council through the slides (column right) shortly before they voted unanimously to
approve a plethora of resolutions permitting the transactions to proceed.
Current members of Loveland's City Council who voted on election night to violate this
statute by gifting the public building to Rocky Turner's company include Leah Johnson,
John Fogle, Dave Clark, Don Overcash, Richard Ball and Steve Olson. What they didn't
anticipate on election night was the election of Jacki Marsh, instead of her well funded
opponent John Fogle, to win the seat of Mayor of Loveland.
So confident were both Fogle and his longtime friend and then Mayor Gutierrez, they
held meetings with various developers in the city to introduce John Fogle as the new
mayor prior to the election. According to Max Cooke, an Australian developer who
purchased the Aspen Knolls development, he was introduced to Fogle by Gutierrez as
the city's incoming mayor with whom all future discussions regarding city incentives
should be discussed.
Mayor Marsh Launches Inquiry Into City Incentives
While approved, the agreed upon transaction was not to take place until later January
and early February of 2018 according to the agreements signed in late December 2017
between the city, county and Turner's Longbow Industries. The city manager, mayor
and city attorney were empowered to complete the transaction without returning to the
city council for approval.
Mayor Marsh met with Loveland's legal team in mid-January to review a number of
items. It was during this meeting she raised concern over the state law and whether
anyone had reviewed the agreement for compliance with Colorado's urban renewal
laws which require disposal of real property only through competitive bidding and
public notice.
Loveland's then city attorney Clay Douglas promised a quick answer as his staff
researched the question. Within the week, the city attorney acknowledged his office
failed to identify the problem with the agreement and specifically, Moses Garcia (the
city's current acting attorney following Douglas' retirement) who was the one assigned
to work on the agreement from the city attorney's office. Douglas documented his
conclusions in an email to all the members of Loveland's City Council.
Acting With Malice? Loveland City Manager Steve Adams Goes Rogue
Loveland City Manager Steve Adams re-assured Mayor Jacki Marsh, over city emails
obtained by LovelandPolitics, that they were looking into the matter indicating no
decision was made long after she had already learned from the city's legal team the
original agreement was determined to be illegal under Colorado law.
Because the original agreement serves an illegal purpose, to guarantee Longbow
Industries a sole source contract to purchase the county building from the URA absent
any competitive bidding, it is unenforceable. Nonetheless, Adams continued
communicating with members of the city council by cautioning them of a perceived
liability if the city didn't consummate the transaction as agreed in the 2017 agreement
approved by the former council under Mayor Cecil Gutierrez.
According to the Purchase and Sales agreement between the City of Loveland and LPR
signed on December 17, 2017, the City of Loveland would need to purchase the
property from Larimer County before January 31, 2018 or the subsidy obligations
would terminate along with any liability for the city as stated below,
"The parties agree that conveyance of the Property from the County to LURA by
January 31, 2018, is a condition precedent to any obligations set forth in this
Agreement, and that failure of the County to convey the Property to LURA by such
date shall terminate this Agreement with no consequence to or obligation by either
party."
Mayor Marsh, acting as a city official, communicated to Adams her understanding the
agreement would not be amended or extended without new direction from the newly
elected city council. Adams ignored Mayor Marsh, failed to convene a public meeting on
the subject with council and unilaterally signed an extension of the agreement with an
illegal purpose without the authority of the only citywide elected official (mayor) or the
legally constituted city council.
City Council Deliberation February 13, 2018
Nearly two weeks passed before Loveland City Manager Steve Adams allowed a
discussion by council on the topic. He arranged for a "special meeting" to be held in
conjunction with a routine study session by instructing councilors the discussion about
how to comply with the state's "competitive process" would need to take place in a
closed door executive session meeting.
Mayor Jacki Marsh insisted on questioning staff in open, prior to the closed session,
against strong objections by Mayor Pro Tem Don Overcash who repeatedly interrupted
the mayor demanding they discuss the matter in closed session.
When Mayor Marsh inquired to Mike Scholl about the origin and process of selecting
LPR Construction to receive the property in a sole source contract, Scholl first
stammered looking towards the city attorney proclaiming he didn't know what he could
say in public since, "that was discussed in an executive session." Colorado law also
prohibits municipalities from conducting votes or making substantive governmental
decisions during a closed session meeting.
During the February 13, special meeting, Councilman John Fogle tried to embarrass
Mayor Marsh by demanding the city attorney disclose who brought forward the
information about their illegal agreement, which he supported. Curiously, even
normally quiet newly elected Ward 1 councilman Jeremy Jursvig tried to pile-on Mayor
Marsh using his "authority" as an appraiser for Larimer County who works for Larimer
County Assessor Steve Miller.
Mayor Marsh questioned the suspect over year old appraisal of the county building
which set the value of $732,000 used in the transactions. Unlike a prior appraisal from
2013, the January 2017 appraisal the city relied upon to determine the property's value
failed to use comparable properties, erroneously stated Larimer County hasn't assigned
a value to the property (according to the Assessor it is $1.7 million) and lastly only used
the income model to determine value by assigning a slightly higher per square foot
rental rate yet still finding the property worth even less than it was four years prior
when the revenue method assigned an even lower square footage rate.
Mayor Marsh pointed to a nearby smaller but similar office building selling for over $3
million indicating the county's building could approach a value of $4 million.
Councilman Jursvig defended the appraisal moments after saying he would not comment
on the appraisal due to his position with the county. Jursvig stated,
"Madam Mayor, as an appraiser, I cannot comment on the value of this building
because that would be violating the terms of my license. I am just looking at the
appraisal right now....It may be dangerous to tread into allegations against this
appraisal. Without commenting on this appraisal they are going to look at a market
approach and income for a commercial property. I would feel there is no reason to
believe there is impropriety using those approaches.
Mayor Marsh shot back,
"...they did not look at comparable sales in the 2017 appraisal [market approach].....
what they looked at was rental income [only].....try and find something for $10 a
square foot in downtown Loveland those are June of 2016. Maybe if you do place and
time you can make an argument but I look at...they did not look at comparable sales
in the 2017 appraisal."
Marsh pointed to offices above Vintage Willow renting for $18 per square foot and
Chase Bank (where Mayor Pro Tem Overcash has his business) renting for $14 per
square foot.
Mayor Pro Tem Overcash then interrupted the mayor again instructing Councilman
Jursvig to read the prepared motion to move into a closed session stating, "I don't want
to re-live the past again."
The council retreated into closed session to determine how a "competitive" bid process
would be allowed while maintaining their agreement to sell LPR construction the
building. The result is detailed on the column to the right of this story where city staff
member Mike Scholl explains to a commercial broker, their strategy on February 21,
2018, eight days after the current council met to discuss the issue and their response.
Below is an excerpt from Scholl's email which can be read in full in the column to the
right of this story.
"The City’s intent is not to act in a speculative manner and to profit from a real
estate transaction but rather to support the growth and expansion of a local
company"
Fortunately, state law clearly prohibits the disposition of real property for the purpose
of helping just one selected private person or his company and instead requires a truly
competitive bidding process. It appears the current strategy being employed is "let's
not and say we did."
On the night of November 7, last year then Loveland Mayor Cecil Gutierrez presided
over his last full Loveland City Council meeting. Six of the eight council members in
attendance that evening remain on Loveland's City Council today.
On the agenda that election night was final approval of an agreement to purchase the
Larimer County building in downtown Loveland and turn it over to longtime Loveland
resident Rocky Turner's company LPR Construction identified by its holding company
name of Longbow Industries. Turner's company would be granted a subsidy of
$750,000 in exchange for buying and "improving" the building for $732,000.
In addition, Turner's company would be given most of the parking spaces in the parking
lot (40 of 54) behind the Pulliam Building (also being sold by the county to the city). The
City of Loveland cost for the parking lot was agreed to be $271,000 which in-turn, would
be mostly leased to Longbow (40 of 54 spaces) for 50 years for a onetime cost of
$10.00 while Loveland taxpayers will cover cost of snow removal and other routine
ongoing expenses for the duration of the 50 year lease.
Turner is a board member of the secretive LBP (Loveland Business Partnership) for
whom a disproportionately large number of city and urban renewal authority contracts
and subsidies flow.
The legal problem: The scheme anticipated "selling" Turner's company the building
through the Finley URA (governed by Loveland's Urban Renewal Authority) which
Loveland fraudulently declared the otherwise well maintained county building as legally
"blighted...menace to society" in 2012 to artificially reduce its value thus boosting the TIF
(Tax Increment Financing) post future sale by the county. Further complicating the
transaction, Larimer County asked for reimbursement of up to $250,000 in future lost
property taxes resulting from the artificially lowered property value and fake urban
blight declaration.
According to Colorado law, URA's may not sell real property in secretly negotiated
agreements but instead must obtain fair value by offering the property through a
competitive bidding process.
Below is the State Statute that the subsidy Loveland's City Council voted to approve on
November 7, 2017 violates,
Colorado Revised Statutes Title 31 Government Municipal § 31-25-106
(2) An authority may dispose of real property in an urban renewal area to private persons
only under such reasonable competitive bidding procedures as it shall provide or as provided
in this subsection."
Loveland's Director of Economic Development Kelly Jones (pictured upper right) along
with her subordinate Mike Scholl (also pictured upper right) walked Loveland's City
Council through the slides (column right) shortly before they voted unanimously to
approve a plethora of resolutions permitting the transactions to proceed.
Current members of Loveland's City Council who voted on election night to violate this
statute by gifting the public building to Rocky Turner's company include Leah Johnson,
John Fogle, Dave Clark, Don Overcash, Richard Ball and Steve Olson. What they didn't
anticipate on election night was the election of Jacki Marsh, instead of her well funded
opponent John Fogle, to win the seat of Mayor of Loveland.
So confident were both Fogle and his longtime friend and then Mayor Gutierrez, they
held meetings with various developers in the city to introduce John Fogle as the new
mayor prior to the election. According to Max Cooke, an Australian developer who
purchased the Aspen Knolls development, he was introduced to Fogle by Gutierrez as
the city's incoming mayor with whom all future discussions regarding city incentives
should be discussed.
Mayor Marsh Launches Inquiry Into City Incentives
While approved, the agreed upon transaction was not to take place until later January
and early February of 2018 according to the agreements signed in late December 2017
between the city, county and Turner's Longbow Industries. The city manager, mayor
and city attorney were empowered to complete the transaction without returning to the
city council for approval.
Mayor Marsh met with Loveland's legal team in mid-January to review a number of
items. It was during this meeting she raised concern over the state law and whether
anyone had reviewed the agreement for compliance with Colorado's urban renewal
laws which require disposal of real property only through competitive bidding and
public notice.
Loveland's then city attorney Clay Douglas promised a quick answer as his staff
researched the question. Within the week, the city attorney acknowledged his office
failed to identify the problem with the agreement and specifically, Moses Garcia (the
city's current acting attorney following Douglas' retirement) who was the one assigned
to work on the agreement from the city attorney's office. Douglas documented his
conclusions in an email to all the members of Loveland's City Council.
Acting With Malice? Loveland City Manager Steve Adams Goes Rogue
Loveland City Manager Steve Adams re-assured Mayor Jacki Marsh, over city emails
obtained by LovelandPolitics, that they were looking into the matter indicating no
decision was made long after she had already learned from the city's legal team the
original agreement was determined to be illegal under Colorado law.
Because the original agreement serves an illegal purpose, to guarantee Longbow
Industries a sole source contract to purchase the county building from the URA absent
any competitive bidding, it is unenforceable. Nonetheless, Adams continued
communicating with members of the city council by cautioning them of a perceived
liability if the city didn't consummate the transaction as agreed in the 2017 agreement
approved by the former council under Mayor Cecil Gutierrez.
According to the Purchase and Sales agreement between the City of Loveland and LPR
signed on December 17, 2017, the City of Loveland would need to purchase the
property from Larimer County before January 31, 2018 or the subsidy obligations
would terminate along with any liability for the city as stated below,
"The parties agree that conveyance of the Property from the County to LURA by
January 31, 2018, is a condition precedent to any obligations set forth in this
Agreement, and that failure of the County to convey the Property to LURA by such
date shall terminate this Agreement with no consequence to or obligation by either
party."
Mayor Marsh, acting as a city official, communicated to Adams her understanding the
agreement would not be amended or extended without new direction from the newly
elected city council. Adams ignored Mayor Marsh, failed to convene a public meeting on
the subject with council and unilaterally signed an extension of the agreement with an
illegal purpose without the authority of the only citywide elected official (mayor) or the
legally constituted city council.
City Council Deliberation February 13, 2018
Nearly two weeks passed before Loveland City Manager Steve Adams allowed a
discussion by council on the topic. He arranged for a "special meeting" to be held in
conjunction with a routine study session by instructing councilors the discussion about
how to comply with the state's "competitive process" would need to take place in a
closed door executive session meeting.
Mayor Jacki Marsh insisted on questioning staff in open, prior to the closed session,
against strong objections by Mayor Pro Tem Don Overcash who repeatedly interrupted
the mayor demanding they discuss the matter in closed session.
When Mayor Marsh inquired to Mike Scholl about the origin and process of selecting
LPR Construction to receive the property in a sole source contract, Scholl first
stammered looking towards the city attorney proclaiming he didn't know what he could
say in public since, "that was discussed in an executive session." Colorado law also
prohibits municipalities from conducting votes or making substantive governmental
decisions during a closed session meeting.
During the February 13, special meeting, Councilman John Fogle tried to embarrass
Mayor Marsh by demanding the city attorney disclose who brought forward the
information about their illegal agreement, which he supported. Curiously, even
normally quiet newly elected Ward 1 councilman Jeremy Jursvig tried to pile-on Mayor
Marsh using his "authority" as an appraiser for Larimer County who works for Larimer
County Assessor Steve Miller.
Mayor Marsh questioned the suspect over year old appraisal of the county building
which set the value of $732,000 used in the transactions. Unlike a prior appraisal from
2013, the January 2017 appraisal the city relied upon to determine the property's value
failed to use comparable properties, erroneously stated Larimer County hasn't assigned
a value to the property (according to the Assessor it is $1.7 million) and lastly only used
the income model to determine value by assigning a slightly higher per square foot
rental rate yet still finding the property worth even less than it was four years prior
when the revenue method assigned an even lower square footage rate.
Mayor Marsh pointed to a nearby smaller but similar office building selling for over $3
million indicating the county's building could approach a value of $4 million.
Councilman Jursvig defended the appraisal moments after saying he would not comment
on the appraisal due to his position with the county. Jursvig stated,
"Madam Mayor, as an appraiser, I cannot comment on the value of this building
because that would be violating the terms of my license. I am just looking at the
appraisal right now....It may be dangerous to tread into allegations against this
appraisal. Without commenting on this appraisal they are going to look at a market
approach and income for a commercial property. I would feel there is no reason to
believe there is impropriety using those approaches.
Mayor Marsh shot back,
"...they did not look at comparable sales in the 2017 appraisal [market approach].....
what they looked at was rental income [only].....try and find something for $10 a
square foot in downtown Loveland those are June of 2016. Maybe if you do place and
time you can make an argument but I look at...they did not look at comparable sales
in the 2017 appraisal."
Marsh pointed to offices above Vintage Willow renting for $18 per square foot and
Chase Bank (where Mayor Pro Tem Overcash has his business) renting for $14 per
square foot.
Mayor Pro Tem Overcash then interrupted the mayor again instructing Councilman
Jursvig to read the prepared motion to move into a closed session stating, "I don't want
to re-live the past again."
The council retreated into closed session to determine how a "competitive" bid process
would be allowed while maintaining their agreement to sell LPR construction the
building. The result is detailed on the column to the right of this story where city staff
member Mike Scholl explains to a commercial broker, their strategy on February 21,
2018, eight days after the current council met to discuss the issue and their response.
Below is an excerpt from Scholl's email which can be read in full in the column to the
right of this story.
"The City’s intent is not to act in a speculative manner and to profit from a real
estate transaction but rather to support the growth and expansion of a local
company"
Fortunately, state law clearly prohibits the disposition of real property for the purpose
of helping just one selected private person or his company and instead requires a truly
competitive bidding process. It appears the current strategy being employed is "let's
not and say we did."
| Click on thumbnail images below to see slides presented by Kelly Jones and Mike Scholl to induce Loveland's City Council into voting for an illegal subsidy for Longbow on November 7, 2017 |
| County Building - 205 E. 6th Street - Marketing Opportunity From: Mike Scholl [mailto:Mike. Scholl@cityofloveland.org] Sent: Wednesday, February 21, 2018 12:04 PM To: Kris Laine <klaine@bhhsrmr.com> Cc: Ken Cooper <ken.cooper@larimer. org>; Steve Adams <Steve. Adams@cityofloveland.org> Subject: FW: County Building - 205 E. 6th Street - Marketing Opportunity Dear Ms. Laine, The City Manager requested that I follow up with you regarding your email, he is also copied on this email. Thank you for your offer to act as a broker and to market the property on behalf of the City. I would like to offer some additional information regarding the deal that was negotiated with Larimer County, which will shed some light on why the City is not hiring a commercial real estate broker at this time. In 2016, Larimer County agreed to sell the County Building and associated parking lot to the City for the appraised value. The City and County jointly commissioned an appraiser, Don Shannon to complete a full appraisal of the building, which came back at $732,000 for the building and $271,000 for the parking lot for a total of $1,003,000 for both parcels. At that time, it was decided that the Loveland Urban Renewal Authority (LURA) would act as the purchaser and a purchase and sale agreement was entered into with Larimer County. The parties have not closed on the property as of today and the building and parking lot are still owned by Larimer County. Through the City’s Economic Development Department, the City entered into an agreement with LPR Construction and Longbow Industries whereby they would acquire the building for $732,000 and invest over $1.5 million to renovate and occupy the building. LPR/Longbow is a very successful construction company that was started in Loveland that has been in business for nearly forty years. They had outgrown their current location and are looking to expand in Northern Colorado region. It was at that point, LURA agreed to buy the building for the appraised value and sell to LPR/Longbow for the same price. It was only after the fact that staff realized that the LURA statute requires a competitive bid process to sell the property. The bid process takes into account many factors including, but not limited to the sale price. As a result, LURA recently published an RFP, which you reference in your email below. The City/LURA are committed to a fair and transparent RFP process and welcome all responses. Here is a link to the public bid process and I’ve also attached the RFP documents. https://www.bidnetdirect. com/colorado/solicitations/open- bids/LURA-Purchase-of-Real-Property- with-Eonomic-Incentive-Agreement-of- 205-E-6th-St/0000184167? purchasingGroupId=8409951&origin=2 Because the City/LURA and Larimer County mutually agreed to set the sale price at the appraised value, if the City were to sell the building at a price that exceeds $732,000, the City has an obligation to Larimer County to share any profits. The City’s intent is not to act in a speculative manner and to profit from a real estate transaction but rather to support the growth and expansion of a local company in Loveland and to support the ongoing revitalization of the downtown district. Therefore, the impact to the City taxpayers would be neutral regardless of the sale price. I have also copied Ken Cooper, the Project Manager for Larimer County. If you are interested in representing the County as the seller, please reach out to him directly. Also, if you have any further questions, please feel free to reach out to me either through email or by phone. My contact information is below. Sincerely, Mike Scholl, Economic Development Manager Economic Development Department City of Loveland (970)962-2607 (970)593-2965 (cell) “Leadership is the art of accomplishing more than the science of management says is possible.” Colin Powell Audere est Facere From: Kris Laine [mailto: klaine@bhhsrmr.com] Sent: Tuesday, February 20, 2018 5: 20 PM To: City Council <CCouncil@cityofloveland.org> Subject: County Building - 205 E. 6th Street - Marketing Opportunity Dear Mayor and Council: I have recently received information regarding the above referenced building. I am a seasoned licensed Real Estate Professional in Colorado and have extensive experience in Commercial Real Estate. I did inquire previously, and was told that the building was not for sale and that a contract was in place for the purchase. On Friday, I was sent a link for an RFP for this property, and learned that it was available for purchase through a submittal RFP process. I have read through the RFP and believe that this property, if properly presented, could bring forth additional funds for the County and City. Given the current market conditions in Loveland and Northern Colorado, I believe the County and City have an opportunity to capitalize on the value of this asset. Giving this asset the marketing exposure, not only Nationally but Internationally, will bring forth potential investors both inside and outside of Colorado. A strong marketing program will help facilitate many conversations, thus exploring all the growth and employment opportunities the right investor would have with this property. I would appreciate the opportunity to discuss the property and what the expectations are as it relates to not only the highest possible value, but also, strategic discussions as to Highest and Best use for the property. I would be happy to send along my resume, qualifications and list of references. Please feel free to email or call me directly. Thank you for your time. Kris Laine, RPA Broker BHHS - Top 13% Nationally |