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LovelandPolitics
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Loveland - October 27, 2013
Last week Chad McWhinney, partner of local developer McWhinney, promoted Amendment 66
in a special guest commentary for The Coloradoan entitled, "Amendment 66 one of the best
investments we can make for our future."
Amendment 66, if passed, will increase state income tax on those making less than $75,000 by
8% and increase income tax on those making more than $75,000 annually by 26.6%. The
purpose is to increase state revenue available for public education.
What McWhinney failed to address in his commentary is the nearly $4 million he and his sibling
partners divert away from Thompson R2-J School District each year through complicated
property tax schemes finally outlawed by the Colorado Legislature in 2010 through HB 1107. As
the state struggles to make-up for millions of dollars being diverted from the school's property
tax revenues to developers like McWhinney, it is no wonder Chad McWhinney wants
Coloradoans to pay higher income taxes to solve the problem. He helped to create the problem
but is unwilling to reform his own metro district by allowing schools the very property taxes
being collected in their name. In fact, the very agreement PROHIBITS any money he collects
from being used for teacher or administration salaries specifically.
According to HB 1107's sponsor, State House Representative Randy Fischer, “House Bill 1107 is
designed to put the brakes on the exponential growth in the state’s backfill local of revenues
that are being siphoned off through tax increment financing. At a time when the state can least
afford it, the loophole addressed in this bill is costing Colorado taxpayers over $50 million per
year. Alarmingly, the high growth rate in the state’s share of TIF back-fill could end up costing
the state over $200 million by 2020.” Fischer wrote the following editorial in the Denver Post
about his legislation.
Despite closing the door on future abuse, the Legislature was unable to unravel the mess
created in Loveland that has resulted in McWhinney's Metro District receiving over 95% of the
Thompson R2-J School District's combined Mill Levies in Centerra. Unlike Thompson R2-J School
District, Centerra's Metro District doesn't educate any children or operate schools but it will
receive $3,890,363 of the school district's Mill Levy (property tax) collected by the County
Assessor this year from the hundreds of property owners within McWhinney's Centerra Metro
District. A large percentage of the money collected by the Metro Districts of Centerra are used
to repay an adjustable rate public bond.
In other words, over 95% of the property taxes collected each year within most of Centerra
by Larimer County on behalf of Thompson R2-J School District is never delivered to the
district. Instead, County Treasurer Myrna J. Rodenberger writes a check at the end of the
year to the Centerra Metro Districts of nearly $4 million just for the property taxes
collected under the authority of the Thompson R2-J School District Mill Levies. (the actual
check is more than $11 million - see table at right for total Mill Levy diversions to Centerra)
School Funding
Traditionally, property taxes have accounted for the vast majority of funding for local schools.
However, the Gallagher amendment and developers like McWhinney abusing the Urban
Renewal laws have reduced monies available for schools through local property taxes.
Article X, Section 2 of the Colorado Constitution mandates that the state maintain a uniform and
free access public education system throughout the state. Varying property tax revenues and
other issues have necessitated the state backfilling (making up for lost revenue) in order to
meet a standard criteria established for per pupil funding of local schools. Each year the state
evaluates funds available for local schools when calculating its own complicated formula for
determining funding. Approximately 3/4 of the monies being taken by McWhinney's metro
district is backfilled by the State of Colorado as Mill Levies for special bonds are not necessarily
covered. The purpose of Amendment 66 is to reduce this growing burden on state resources.
State backfilling opened the door for lesser sophisticated school district officials to assume any
revenue lost to urban renewal schemes could be fully recovered through additional state
revenue. In addition, clever developers like McWhinney have provided the school some token
funding and property in exchange for taking their property tax base away thus disarming any
potential opposition from school district officials for their urban renewal schemes.
As bipartisan reforms aimed at ending the urban renewal authority abuse continue some have
proposed legislation that would prohibit backfilling from the state as described in the following
article. Such efforts were successfully thwarted by well heeled developers and have shifted the
local political contributions by the McWhinney's from Republicans to Democrats. All the
candidates for the Thompson R2-J School District who support Amendment 66 and are
Democrats, Berg, Marchman, Lauer and Ward received $125 each from McWhinney directly.
Indirectly they are likely receiving much more through independent expenditure committees.
McWhinney's Urban Renewal Abuse
Tax Increment Financing (TIF) is a process used to finance renovations of urban blight by
allowing the developer, through a metro district, to borrow money for improving a blighted area
and enjoy whatever additional property taxes are generated by the improved state (and value)
of the urban area when property values increase. Normally, that represents not more than 1/3
of the total property taxes generated.
In Loveland, McWhinney successfully manipulated an unsophisticated city council into abusing
its own discretion by pretending open agricultural fields were urban blight. By making such a
designation, nearly all the improvements became protected under the "TIF" to be diverted back
to McWhinney's Metro District that borrowed millions to construct the infrastructure, signs and
other assets within Centerra. McWhinney than began selling the improved property while
taxpayers were stuck with the bonds to repay and insufficient property tax revenues for police,
fire, schools and ambulance service. As Centerra grows, residents outside Centerra are being
asked to pay more to support local government services.
Properties owners in Centerra's Urban Renewal area do pay the property taxes commensurate
with the assessed values of those properties. However, the Urban Renewal Authority gets more
than 95% of those funds which are than transferred immediately to McWhinney's Centerra
Metro District.
For additional details on how McWhinney's Urban Renewal scheme works read our 2010 story
regarding the Promenade Shops at Centerra property evaluation dispute.
Last week Chad McWhinney, partner of local developer McWhinney, promoted Amendment 66
in a special guest commentary for The Coloradoan entitled, "Amendment 66 one of the best
investments we can make for our future."
Amendment 66, if passed, will increase state income tax on those making less than $75,000 by
8% and increase income tax on those making more than $75,000 annually by 26.6%. The
purpose is to increase state revenue available for public education.
What McWhinney failed to address in his commentary is the nearly $4 million he and his sibling
partners divert away from Thompson R2-J School District each year through complicated
property tax schemes finally outlawed by the Colorado Legislature in 2010 through HB 1107. As
the state struggles to make-up for millions of dollars being diverted from the school's property
tax revenues to developers like McWhinney, it is no wonder Chad McWhinney wants
Coloradoans to pay higher income taxes to solve the problem. He helped to create the problem
but is unwilling to reform his own metro district by allowing schools the very property taxes
being collected in their name. In fact, the very agreement PROHIBITS any money he collects
from being used for teacher or administration salaries specifically.
According to HB 1107's sponsor, State House Representative Randy Fischer, “House Bill 1107 is
designed to put the brakes on the exponential growth in the state’s backfill local of revenues
that are being siphoned off through tax increment financing. At a time when the state can least
afford it, the loophole addressed in this bill is costing Colorado taxpayers over $50 million per
year. Alarmingly, the high growth rate in the state’s share of TIF back-fill could end up costing
the state over $200 million by 2020.” Fischer wrote the following editorial in the Denver Post
about his legislation.
Despite closing the door on future abuse, the Legislature was unable to unravel the mess
created in Loveland that has resulted in McWhinney's Metro District receiving over 95% of the
Thompson R2-J School District's combined Mill Levies in Centerra. Unlike Thompson R2-J School
District, Centerra's Metro District doesn't educate any children or operate schools but it will
receive $3,890,363 of the school district's Mill Levy (property tax) collected by the County
Assessor this year from the hundreds of property owners within McWhinney's Centerra Metro
District. A large percentage of the money collected by the Metro Districts of Centerra are used
to repay an adjustable rate public bond.
In other words, over 95% of the property taxes collected each year within most of Centerra
by Larimer County on behalf of Thompson R2-J School District is never delivered to the
district. Instead, County Treasurer Myrna J. Rodenberger writes a check at the end of the
year to the Centerra Metro Districts of nearly $4 million just for the property taxes
collected under the authority of the Thompson R2-J School District Mill Levies. (the actual
check is more than $11 million - see table at right for total Mill Levy diversions to Centerra)
School Funding
Traditionally, property taxes have accounted for the vast majority of funding for local schools.
However, the Gallagher amendment and developers like McWhinney abusing the Urban
Renewal laws have reduced monies available for schools through local property taxes.
Article X, Section 2 of the Colorado Constitution mandates that the state maintain a uniform and
free access public education system throughout the state. Varying property tax revenues and
other issues have necessitated the state backfilling (making up for lost revenue) in order to
meet a standard criteria established for per pupil funding of local schools. Each year the state
evaluates funds available for local schools when calculating its own complicated formula for
determining funding. Approximately 3/4 of the monies being taken by McWhinney's metro
district is backfilled by the State of Colorado as Mill Levies for special bonds are not necessarily
covered. The purpose of Amendment 66 is to reduce this growing burden on state resources.
State backfilling opened the door for lesser sophisticated school district officials to assume any
revenue lost to urban renewal schemes could be fully recovered through additional state
revenue. In addition, clever developers like McWhinney have provided the school some token
funding and property in exchange for taking their property tax base away thus disarming any
potential opposition from school district officials for their urban renewal schemes.
As bipartisan reforms aimed at ending the urban renewal authority abuse continue some have
proposed legislation that would prohibit backfilling from the state as described in the following
article. Such efforts were successfully thwarted by well heeled developers and have shifted the
local political contributions by the McWhinney's from Republicans to Democrats. All the
candidates for the Thompson R2-J School District who support Amendment 66 and are
Democrats, Berg, Marchman, Lauer and Ward received $125 each from McWhinney directly.
Indirectly they are likely receiving much more through independent expenditure committees.
McWhinney's Urban Renewal Abuse
Tax Increment Financing (TIF) is a process used to finance renovations of urban blight by
allowing the developer, through a metro district, to borrow money for improving a blighted area
and enjoy whatever additional property taxes are generated by the improved state (and value)
of the urban area when property values increase. Normally, that represents not more than 1/3
of the total property taxes generated.
In Loveland, McWhinney successfully manipulated an unsophisticated city council into abusing
its own discretion by pretending open agricultural fields were urban blight. By making such a
designation, nearly all the improvements became protected under the "TIF" to be diverted back
to McWhinney's Metro District that borrowed millions to construct the infrastructure, signs and
other assets within Centerra. McWhinney than began selling the improved property while
taxpayers were stuck with the bonds to repay and insufficient property tax revenues for police,
fire, schools and ambulance service. As Centerra grows, residents outside Centerra are being
asked to pay more to support local government services.
Properties owners in Centerra's Urban Renewal area do pay the property taxes commensurate
with the assessed values of those properties. However, the Urban Renewal Authority gets more
than 95% of those funds which are than transferred immediately to McWhinney's Centerra
Metro District.
For additional details on how McWhinney's Urban Renewal scheme works read our 2010 story
regarding the Promenade Shops at Centerra property evaluation dispute.
| R2-J's Biggest Tax Thief Advocates For Amendment 66 |
How Political Entrepreneurs Work McWhinney political contributions Beginning in the mid-1990's, McWhinney began seeking greater influence over local affairs by sponsoring and funding candidates for Loveland's City Council who would support their annexations of their grandparents' farm near the I-25/Highway 34 intersection and creation of special tax districts. By 2004 the City of Loveland concluded a comprehensive agreement with McWhinney allowing for the Tax Increment Financing (TIF) over thousands of acres of agriculture land acquired by McWhinney in what was designated as "Urban Renewal" district. The scheme uses favorable tax laws meant for renovating dilapidated urban properties by allowing the developer to use future tax values. In an effort to transfer responsibility for their tax diversion schemes away from themselves, McWhinney has become a significant contributor to local Democrats who favor raising state income taxes to improve school funding lost to urban renewal districts. |
| Chad McWhinney |
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| 2013 Property Taxes (R2-J 40.884 Mill Levy) Total Thompson R2-J Property Tax Revenue in Larimer County $56,865,265 Less McWhinney's take $3,890,363 Total property taxes left for schools $52,974,902 |
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| 2013 Larimer County Tax Assessor Records Centerra's Property Tax Diversion/Income |
| Added Nov. 1, 2013 Thompson School District Superintendent Stan Sheer has responded to this story for the school board and the public in various venues. Generally, we are told he has claimed the school district "gets all that money back" when Centerra constructs a school for the district in Centerra. He is mistaken. The agreement he refers to only collects some 2006 bond mill levy funds for construction of a school which is modest when compared to the nearly $4 million McWhinney will divert from the schools in property taxes in 2013 alone. The actual agreement Sheer refers to is linked into our original story where "token agreement" in stated so our readers can review it. It appears the total funding being put away for the future construction of a school within Centerra by the Metro Districts is approximately $500,000 in 2013. As mentioned in our original story, there is token money being returned via a school by McWhinney scheme as described by Section 10 of the original Master Financing Agreement. Money sequestered into a special account as the school's tax increment can be used in the future only to construct schools within Centerra. The agreement specifically states none of the school's tax increment diverted by McWhinney can ever be used for administration or to pay for instruction. |