LovelandPolitics
| Loveland's Independent News Source |
| November Ballot Measures Contain Hidden "McWhinney Tax" |
Loveland, August 31, 2016
According to the 2015 audit of the Centerra Metro Districts, "...the District had total
outstanding loan indebtedness of $135,927,500....." which is due and payable by December 4,
2021. The audit notes the District will be "remarketing" their debt in the form of new public
bonds before that deadline since they clearly have neither the assets nor the cash to satisfy their
loan obligation in a timely manner.
Many people in Loveland look at Centerra's growing public debt as somebody else's problem
that someday someone else must repay. In fact, the city's agreement to divert property taxes to
the McWhinney's privately controlled Centerra Metro Districts for a quarter century is
impacting every taxpayer in Loveland already.
As Centerra's debt continues to consume the majority of the property taxes collected in
Centerra, local government service providers that traditionally rely on those property taxes are
seeking new ways to raise revenue.
Background:
In 2004 the City of Loveland entered into an agreement with the McWhinney family owned
development company of the same name to declare open and profitable farm land the brothers
controlled as "blighted" and "menace to the community" to enable certain tax benefits to help
revitalize blight and slum areas restricted only for areas that are a menace to a community in
the form of Urban Renewal Districts (URA). (Colorado passed reform law aimed at Loveland's abuse)
In most URA's, like Loveland's downtown, the impact to future property tax revenue is limited
because public debt borrowed by the URA for re-development is repaid using the additional
property taxes the government receives over and above the base value of the existing
properties. URA's were conceived as a tool to induce developers to take-on dangerous and
unpopular urban blight redevelopment that left as-is would continue draining the municipality
of resources. This financing mechanism is called Tax Increment Financing (TIF).
For example, last year Loveland downtown property owners paid a total of $2,219,817 to
Thompson Schools, Larimer County, City of Loveland and five more entities that rely on property
tax mill levies to help fund their governmental services.
Of that slightly more than $2 million in revenue only $11,598 or just about .5% of a percent of
the total property tax revenue collected went to Loveland's downtown URA. Normally, it can
range between 10% to 30% of the base values over time in more successfully executed URA's.
In McWhinney's Centerra, on the other hand, the base value is determined by prior agricultural
zoning and use (since it wasn't actually blighted as required by law but Loveland's City Council
made a false declaration of blight to enable the URA / TIF funding mechanism). That means all
the improvements to the properties are eligible for the tax diversion leaving almost nothing for
the taxing entities that are still required to provide these residents and businesses a full
compliment of government services.
In 2015, property taxes paid to Larimer County by property owners in McWhinney's URA
totalled $12,326,899. Of that $12 million only $144,524 went directly to Thompson Schools,
Larimer County, City of Loveland or the other taxing entities while the vast majority of
$12,182,375 or 98.8% was surrendered to McWhinney's URA to repay the burgeoning public
debt.
Larimer County
Larimer County, for example, provides law enforcement across the county, prosecution of
criminals, courts, jails, property tax collection and official records, mental health and human
services, road construction and maintenance along with many other critical government
services. The county's primary revenue source is real and personal property taxes.
In McWhinney's Centerra URA, Larimer County's mill levy of 21.882 raised $2,347,666 last year.
Unfortunately, due to the phony URA designation by the City of Loveland, 98.8% of the taxes
paid to the county by residents and business in Centerra's URA, in fact, went to McWhinney's
district instead of the County. Only $27,527 was left for the county of the over $2 million in
taxes paid for the services they provide.
Thompson School District (TSD)
Like Larimer County, 98.8% of the $4,119,091 Centerra URA residents and businesses thought
they paid last year to TSD were diverted back into the McWhinney's districts mostly for
repayment of the adjustable interest rate $135 million of public debt.
Some of the deception lies in the fact residents of Centerra believe they are contributing money
towards the school district directly. They see the 38.393 mills on their property tax bills for TSD
and no mention anywhere of McWhinney's Centerra Metro District that received most of that
money. In fact, only $48,298 (barely the salary of a single teacher) was the total amount paid
directly to TSD after McWhinney's 98.8% was taken off the top last year for all the properties
along the I-25 corridor between Crossroads and Highway 34 that lie within the URA.
Unique to education are measures taken by the state legislature to "normalize" school funding
on a per pupil basis. In other words, much of the $4 million lost by TSD each year to Centerra's
debt is contributed by statewide taxpayers through income taxes. However, this is only true for
the first 22 mills collected for TSD while subsequent voter approved increases after 2004 are
treated differently.
In addition, a 2007 IGA (Inter-Governmental Agreement) allows for Centerra to put aside some
monies only for construction of schools (no salaries or maintenance) within Centerra but was far
short of the funds necessary to build High Plains Academy in 2010 as contemplated in the
agreement. TSD than borrowed money for the school's construction through a "Certificate of
Participation" scheme to evade TABOR (Taxpayer's Bill of Rights) prohibition against taking on
new debt without voter approval. If McWhinney fails to fund the repayment of that debt via
future mill levy revenue, as a greed, TSD could be facing a financial crisis.
McWhinney Tax Embedded In School Bond and MLO Measures
Perhaps the least understood consequence to every Loveland property owner are the
subsequent voter approved MLO (Mill Levy Override) and construction bond measures
impacted by Centerra.
Simply explained, the annual diversion of 98.8% of the property taxes paid in Centerra URA's to
McWhinney's metro districts means the mills proposed for both the MLO and school
construction bond are set to an artificially higher rate so the net achieves the same dollar
amount. It is like a gas pump with a leaky hose - to get 10 gallons of gas you need to buy 12
gallons.
For example, the ballot language states "$11 MILLION ANNUALLY BY A LEVY OF 6.5 MILLS"
which is not accurate. 6 Mills or less will raise $11 million dollars across the property values in
TSD if the Centerra hose wasn't leaking. Compound the problem for the bond at much higher
levels and Loveland taxpayers are paying significantly more for the bond than what is being
disclosed.
The fundamental problem is the ballot measures don't disclose the actual dollars they will
raise. Instead, they only disclose what is paid directly to TSD after McWhinney's URA collects
98.8% of the property taxes.
According to the 2015 audit of the Centerra Metro Districts, "...the District had total
outstanding loan indebtedness of $135,927,500....." which is due and payable by December 4,
2021. The audit notes the District will be "remarketing" their debt in the form of new public
bonds before that deadline since they clearly have neither the assets nor the cash to satisfy their
loan obligation in a timely manner.
Many people in Loveland look at Centerra's growing public debt as somebody else's problem
that someday someone else must repay. In fact, the city's agreement to divert property taxes to
the McWhinney's privately controlled Centerra Metro Districts for a quarter century is
impacting every taxpayer in Loveland already.
As Centerra's debt continues to consume the majority of the property taxes collected in
Centerra, local government service providers that traditionally rely on those property taxes are
seeking new ways to raise revenue.
Background:
In 2004 the City of Loveland entered into an agreement with the McWhinney family owned
development company of the same name to declare open and profitable farm land the brothers
controlled as "blighted" and "menace to the community" to enable certain tax benefits to help
revitalize blight and slum areas restricted only for areas that are a menace to a community in
the form of Urban Renewal Districts (URA). (Colorado passed reform law aimed at Loveland's abuse)
In most URA's, like Loveland's downtown, the impact to future property tax revenue is limited
because public debt borrowed by the URA for re-development is repaid using the additional
property taxes the government receives over and above the base value of the existing
properties. URA's were conceived as a tool to induce developers to take-on dangerous and
unpopular urban blight redevelopment that left as-is would continue draining the municipality
of resources. This financing mechanism is called Tax Increment Financing (TIF).
For example, last year Loveland downtown property owners paid a total of $2,219,817 to
Thompson Schools, Larimer County, City of Loveland and five more entities that rely on property
tax mill levies to help fund their governmental services.
Of that slightly more than $2 million in revenue only $11,598 or just about .5% of a percent of
the total property tax revenue collected went to Loveland's downtown URA. Normally, it can
range between 10% to 30% of the base values over time in more successfully executed URA's.
In McWhinney's Centerra, on the other hand, the base value is determined by prior agricultural
zoning and use (since it wasn't actually blighted as required by law but Loveland's City Council
made a false declaration of blight to enable the URA / TIF funding mechanism). That means all
the improvements to the properties are eligible for the tax diversion leaving almost nothing for
the taxing entities that are still required to provide these residents and businesses a full
compliment of government services.
In 2015, property taxes paid to Larimer County by property owners in McWhinney's URA
totalled $12,326,899. Of that $12 million only $144,524 went directly to Thompson Schools,
Larimer County, City of Loveland or the other taxing entities while the vast majority of
$12,182,375 or 98.8% was surrendered to McWhinney's URA to repay the burgeoning public
debt.
Larimer County
Larimer County, for example, provides law enforcement across the county, prosecution of
criminals, courts, jails, property tax collection and official records, mental health and human
services, road construction and maintenance along with many other critical government
services. The county's primary revenue source is real and personal property taxes.
In McWhinney's Centerra URA, Larimer County's mill levy of 21.882 raised $2,347,666 last year.
Unfortunately, due to the phony URA designation by the City of Loveland, 98.8% of the taxes
paid to the county by residents and business in Centerra's URA, in fact, went to McWhinney's
district instead of the County. Only $27,527 was left for the county of the over $2 million in
taxes paid for the services they provide.
Thompson School District (TSD)
Like Larimer County, 98.8% of the $4,119,091 Centerra URA residents and businesses thought
they paid last year to TSD were diverted back into the McWhinney's districts mostly for
repayment of the adjustable interest rate $135 million of public debt.
Some of the deception lies in the fact residents of Centerra believe they are contributing money
towards the school district directly. They see the 38.393 mills on their property tax bills for TSD
and no mention anywhere of McWhinney's Centerra Metro District that received most of that
money. In fact, only $48,298 (barely the salary of a single teacher) was the total amount paid
directly to TSD after McWhinney's 98.8% was taken off the top last year for all the properties
along the I-25 corridor between Crossroads and Highway 34 that lie within the URA.
Unique to education are measures taken by the state legislature to "normalize" school funding
on a per pupil basis. In other words, much of the $4 million lost by TSD each year to Centerra's
debt is contributed by statewide taxpayers through income taxes. However, this is only true for
the first 22 mills collected for TSD while subsequent voter approved increases after 2004 are
treated differently.
In addition, a 2007 IGA (Inter-Governmental Agreement) allows for Centerra to put aside some
monies only for construction of schools (no salaries or maintenance) within Centerra but was far
short of the funds necessary to build High Plains Academy in 2010 as contemplated in the
agreement. TSD than borrowed money for the school's construction through a "Certificate of
Participation" scheme to evade TABOR (Taxpayer's Bill of Rights) prohibition against taking on
new debt without voter approval. If McWhinney fails to fund the repayment of that debt via
future mill levy revenue, as a greed, TSD could be facing a financial crisis.
McWhinney Tax Embedded In School Bond and MLO Measures
Perhaps the least understood consequence to every Loveland property owner are the
subsequent voter approved MLO (Mill Levy Override) and construction bond measures
impacted by Centerra.
Simply explained, the annual diversion of 98.8% of the property taxes paid in Centerra URA's to
McWhinney's metro districts means the mills proposed for both the MLO and school
construction bond are set to an artificially higher rate so the net achieves the same dollar
amount. It is like a gas pump with a leaky hose - to get 10 gallons of gas you need to buy 12
gallons.
For example, the ballot language states "$11 MILLION ANNUALLY BY A LEVY OF 6.5 MILLS"
which is not accurate. 6 Mills or less will raise $11 million dollars across the property values in
TSD if the Centerra hose wasn't leaking. Compound the problem for the bond at much higher
levels and Loveland taxpayers are paying significantly more for the bond than what is being
disclosed.
The fundamental problem is the ballot measures don't disclose the actual dollars they will
raise. Instead, they only disclose what is paid directly to TSD after McWhinney's URA collects
98.8% of the property taxes.
| Chad (left) and Troy McWhinney. LovelandPolitics file photo by Brendan Weston |
1. Mill Levy Overide (increase) or MLO
“SHALL THOMPSON SCHOOL DISTRICT R2-J’S TAXES BE
INCREASED $11 MILLION ANNUALLY BY A LEVY OF 6.5 MILLS
IN THE 2016-2017 BUDGET YEAR AND BY WHATEVER
AMOUNT IS RAISED BY A LEVY OF 6.5 MILLS IN EACH
BUDGET YEAR THEREAFTER BY THE COLLECTION OF
PROPERTY TAXES FOR THE FOLLOWING EDUCATIONAL
PURPOSES:
ESTABLISHING THE DISTRICT AS A COMPETITIVE
EMPLOYER BY INCREASING COMPENSATION TO ATTRACT
AND RETAIN HIGH QUALITY EMPLOYEES;
UPDATING TEXTBOOKS, CURRICULUM, MATERIALS AND
INSTRUCTIONAL PROGRAMS; AND
PURCHASING AND REPLACING SCHOOL BUSES;
WITH A PORTION OF SUCH TAXES TO BE DISTRIBUTED TO
THE DISTRICT’S CHARTER SCHOOLS EXISTING ON THE DATE
OF THIS ELECTION BASED ON ENROLLMENT; AND WITH
SUCH TAXES TO BE IN EXCESS OF PROPERTY TAX
REVENUES THAT WOULD BE PROVIDED BY THE GENERAL
FUND MILL LEVY PERMITTED UNDER STATE LAW WITHOUT
SUCH INCREASE, BUT IN NO EVENT SHALL SUCH TAX
INCREASE BE GREATER THAN THE AMOUNT PERMITTED
UNDER SECTION 22-54-108, C.R.S., OR ANY SUCCESSOR
STATUTE, AND, TOGETHER WITH REVENUES FROM SPECIFIC
OWNERSHIP TAXES ATTRIBUTABLE THERETO AND THE
EARNINGS ON SUCH TAXES AND REVENUES, TO
CONSTITUTE A VOTER APPROVED REVENUE AND SPENDING
CHANGE UNDER, TO BE COLLECTED AND SPENT EACH YEAR
WITHOUT LIMITATION BY THE REVENUE AND SPENDING
LIMITS OF, AND WITHOUT AFFECTING THE DISTRICT’S
ABILITY TO COLLECT AND SPEND OTHER REVENUES OR
FUNDS UNDER, ARTICLE X, SECTION 20 OF THE COLORADO
CONSTITUTION OR ANY OTHER LAW?”
2. Construction Bonds for Thompson School
District
“SHALL THOMPSON SCHOOL DISTRICT R2-J’S DEBT BE
INCREASED $288 MILLION WITH A REPAYMENT COST OF
$535.5 MILLION OR SUCH LESSER AMOUNT AS MAY BE
NECESSARY, AND SHALL THOMPSON SCHOOL DISTRICT R2-J’
S TAXES BE INCREASED $26.7 MILLION ANNUALLY OR SUCH
LESSER AMOUNT AS MAY BE NECESSARY FOR THE
PAYMENT OF SUCH DEBT, ALL FOR THE PURPOSE OF
PROVIDING INFRASTRUCTURE FOR DISTRICT STUDENTS TO
DEVELOP THE NECESSARY SKILLS TO COMPETE FOR THE
JOBS OF THE FUTURE BY:
UPGRADING SCHOOL BUILDING SAFETY, SECURITY AND
FIRE ALARM SYSTEMS;
EXTENDING THE USEFUL LIFE OF AGING SCHOOL
BUILDINGS BY REPLACING, REPAIRING, AND UPGRADING
HEATING, VENTILATION AND COOLING SYSTEMS AND
MECHANICAL CONTROLS, PLUMBING, ROOFS, WINDOWS AND
DOORS, REMOVING ASBESTOS AND MAKING BUILDING
EXTERIOR IMPROVEMENTS;
CONSTRUCTING, FURNISHING AND EQUIPPING A NEW HIGH
SCHOOL AND A NEW K-8 SCHOOL, AND SCHOOL ADDITIONS
AND FACILITIES, INCLUDING ADDITIONS TO BERTHOUD HIGH
SCHOOL AND BERTHOUD ELEMENTARY SCHOOL AND
THOMPSON VALLEY HIGH SCHOOL;
RENOVATING AND REMODELING BILL REED MIDDLE
SCHOOL AND THOMPSON VALLEY HIGH SCHOOL AND
REMODELING THE EXISTING LOVELAND HIGH SCHOOL TO A
K-8 SCHOOL;
AND ALSO IMPROVING, CONSTRUCTING, EXPANDING,
REPAIRING, REMODELING, EQUIPPING AND FURNISHING
DISTRICT AND CHARTER SCHOOL BUILDINGS, ADDITIONS,
FACILITIES AND GROUNDS; AND WITH SUCH DEBT TO
MATURE, BE SUBJECT TO REDEMPTION, WITH OR WITHOUT
PREMIUM, AND BE ISSUED, DATED AND SOLD AT, ABOVE OR
BELOW PAR, AND AT SUCH TIME OR TIMES AND IN SUCH
MANNER AND CONTAINING SUCH TERMS, NOT
INCONSISTENT HEREWITH, AS THE BOARD OF EDUCATION
MAY DETERMINE, WITH THE LIMITATION ON THE AMOUNT
OF THE DISTRICT’S DEBT TO BE INCREASED UP TO 6% OF
THE ACTUAL VALUE OF THE TAXABLE PROPERTY IN THE
DISTRICT AS ALLOWED BY §22-42104(1)(b), C.R.S.; AND IN
CONNECTION THEREWITH (I) TO INCREASE THE DISTRICT’S
PROPERTY TAXES IN ANY YEAR AS STATED ABOVE IN AN
AMOUNT SUFFICIENT TO PAY THE PRINCIPAL OF AND
INTEREST ON SUCH DEBT WHEN DUE AND TO FUND ANY
RESERVES FOR THE PAYMENT THEREOF, AND (II) TO
COLLECT AND SPEND THE PROCEEDS OF SUCH DEBT AND
THE REVENUES FROM SUCH TAXES AND THE SPECIFIC
OWNERSHIP TAXES ATTRIBUTABLE THERETO AND ANY
EARNINGS FROM THE INVESTMENT OF SUCH PROCEEDS
AND REVENUES AS A VOTER APPROVED REVENUE AND
SPENDING CHANGE WITHOUT LIMITATION BY THE REVENUE
AND SPENDING LIMITS OF, AND WITHOUT AFFECTING THE
DISTRICT’S ABILITY TO COLLECT AND SPEND ANY OTHER
REVENUES OR FUNDS UNDER, ARTICLE X, SECTION 20 OF
THE COLORADO CONSTITUTION OR ANY OTHER LAW?”