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LovelandPolitics
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Loveland, February 22, 2014
In 2001, when Longmont developer Don Macy purchased 12 acres on S. Taft Avenue in
Loveland, (south of the Walgreens on the southeast corner of Taft and 402) he never imagined
that nearly 15 years later the lot would still be empty.
Macy envisions a 220 unit upscale apartment complex he calls Bristol Pointe but finds Loveland's
development fees that have increased annually at a rate of 14% on average are prohibitively
expensive. Shortly after buying the property, 9/11 put the real estate market into a nose dive
that delayed his plans but he thought then only temporarily. As with any large investment, the
$25 million project needs to be timed to the market, interest rates, construction costs and city
fees to be successful.
An experienced developer who owns and manages much of the retail and multi-family complexes
on the west side of Hover Ave. in Longmont among other properties throughout Colorado, Macy
has found the City of Loveland to be frustrating and expensive when it comes to developing the
Bristol Pointe Apartments project.
Through regular correspondence with Loveland officials Macy has expressed concern regarding
the very steep CEF's (Capital Expansion Fees) charged by the City of Loveland. CEF's are a
tool city's use during times of rapid growth to pass the costs of building new parks, roads and
expanded city services onto developers who than convert the higher fees into higher home
prices or rents as is the case with Bristol Pointe Apartments.
When growth slows (as it has for the past 6 years) the funds collected often are stranded as the
new facilities may not be required for another decade. In the meantime, the CEF's counting in
the millions of dollars are used by the City of Loveland as a kind of slush fund despite strict laws
requiring the fees only be used for the purposes collected. Loveland avoids complying with the
law by "loaning" stranded CEF money to themselves for funding purchases like the near 100
acres the city purchased along 402 near I-25 that today sits vacant.
In 2009, when McWhinney decided to submit plans to build hundreds of apartments in Centerra
the Loveland City Council granted a waiver of 61% from most all of the CEF fees. McWhinney
also has the Centerra Metro Districts to fund the infrastructure along with control of 98% of the
future property taxes to subsidize their developments.
Macy, on the other hand, will not only pay for his own project infrastructure (roads, parking,
sewer) but because the property is outside a URA (urban renewal authority) Bristol Pointe
Apartments will generate approximately $200,000 of additional property tax services every year.
Unlike the downtown apartment projects also subsidized by the City of Loveland through CEF
waivers and fee reductions, Bristol Pointe does not rely only on the city parks department to
provide recreation for its residents.
Cost of City Services - By The Numbers
Last summer Macy provided the City of Loveland a fiscal impact analysis conducted by THK
Associates of Aurora. Appalled by the imbalance of tax subsidies where a developer like
McWhinney is incentivised to build apartments even though they will generate no property tax
revenue, Macy tried showing the council a cost versus benefits analysis most cities look for when
determining the level of fees charged for new development.
According to the report, Loveland's 2013 population was 71,146 people residing in 28,623
households with an average occupancy of 2.49 people per residence. Loveland's median
household income for 2013 was $54,677. The city's "General Fund" in 2013 was approximately
$65.19 million which calculates to an expenditure of $916 per person in the city.
To compare, Bristol Pointe Apartments is 220 units with a projected population of 352 residents
who will earn a household income of $61,200 annually which is more than the city average
household income by approximately $6,000 per annum. While apartments, like houses, are
mostly revenue losers for city government in taxes collected, Bristol Pointe's developer makes
the argument the city's upfront fees will cover the deficit for 115 years;
"Based on 220 new units with an average of 1.6 persons per household, the proposed
development will house 352 residents. The annual taxes generated from the proposed
development will be $154,804. The additional Cost to Serve these residents each year from
the city’s general fund will be $191,862. The difference between the taxes generated and
the additional expenditures is $37,058 per year. However, it should also be emphasized that
the estimated one-time revenues of $4.27 million for the proposed Bristol Pointe
development will cover this annual deficit for 115.3 years."
Historically, the City of Loveland has waived fees for nearly all large apartment complexes in
Loveland despite the projected costs to the city to provide services. Former Councilman Don
Marostica's Waterford Place apartments created a much heavier burden to city taxpayers given
the low-income nature of the project and its location on the edge of a flood zone. Nonetheless,
the project was spared many of the CEF's and other onetime fees Macy is being asked to pay.
More recently, the McWhinney brothers began building hundreds of apartments in Loveland
within their URA (Urban Renewal Authority) protected Centerra escaping 98% of the future
property taxes. While not included in the figures stated above, Macy's proposed Bristol Point
Apartments will generate approximately $200,000 in new property taxes annually. This revenue
will go towards Larimer County, Thompson School District and especially the struggle Thompson
Valley EMS (Emergency Services) all which rely on property taxes to survive. Revenue
generated by McWhinney's apartments will be used to repay public debt used to finance
infrastructure in and around the project.
Despite McWhinney apartments not generating the property tax revenue for these services, the
tenants will still use 100% of these local services costing disproportionately more to residents in
west Loveland whose property taxes must fund the county, schools and emergency services.
Developer Pleads For Tax Equity in Loveland
Historically, most cities will not provide incentives to apartment developers given the assumed
cost deficit impact to city financing of apartment dwellers in general who, on average, pay or
generate less taxes but are more costly to serve. That is why a pivot by the Loveland City
Council towards providing incentives for apartments, even for McWhinney, was so surprising five
years ago.
In early 2009 Chad and Troy McWhinney noticed the constraining housing supply and rising
rents in multi-family housing in Loveland as a result of the housing collapse and many
foreclosures converting families from home owners to renters. The McWhinney's were able to
secure loan guarantees by HUD (Housing and Urban Development) to build apartments in their
already heavily city subsidized Centerra in east Loveland.
LovelandPolitics was first to report the Loveland City Council was considering a special tax
holiday for McWhinney to submit their building plans and applications to the city to build
hundreds of apartments thus saving McWhinney millions of dollars in CEF's. Unlike most
developers in Loveland, McWhinney traditionally escaped paying CEF's through a $7 million tax
waiver for McWhinney as part of their 2004 Master Financing Agreement (MFA) with the City of
Loveland.
Having exhausted their $7 million coupon, McWhinney sought a temporary tax holiday from CEF's
just long enough to submit their apartment building plans and permits for approval.
As reported by LovelandPolitics at the time, Loveland's City Council authorized a temporary 61%
reduction in CEF's for McWhinney. Concerned over the legal liability of providing the benefit to
just one developer, Loveland City Attorney John Duval contradicted McWhinney's Rocky Scott
whose carefully laid plans of opening that discount window for only 30-45 days; by Duval
informing council their agreement may not be legal. In consultation with staff, the tax holiday
window was instead opened wider though too late for most developers to react given the
approaching winter and McWhinney having the timing advantage of being first to market.
LovelandPolitics did interview, off-record, several council members who voted for McWhinney's
tax holiday regarding the Bristol Pointe Apartments. One councilor responded with the question
that if Don Macy was really trying to develop his parcel at the time, he could have taken
advantage of the opening but failed to do so.
Following the off-record interviews, LovelandPolitics posed the councilor's question to Macy
directly who responded,
"The answer as to why we didn't build in the CEF window is: we were unaware of the
waiver until McWhinney's had already pulled permits for their 305 unit Lake Vista
apartments, then before they were finished with it they pulled permits for their Greens at
Vanderwater project which was another 240 units. ..........we went to HUD for preliminary
approval of financing for our project and we were denied because McWhinney's had
already applied for The Greens.
They said we should wait until the McWhinney projects are absorbed into the market. The
Loveland market is small in comparison to surrounding areas and we were concerned too
about too many new units on the market at once."
During the July 2009 council meeting, McWhinney explained to Loveland's City Council that he
needed to give a response to HUD right away. In fact, the Loveland City Council timed the
approval of the CEF's according to a personal request by Chad McWhinney. Councilman Walt
Skowron asked Chad McWhinney several times during the July 2009 meeting, "Can't you give
us some wiggle room" asking for more time to do a proper analyses. Don Macy's explanation
of his inability to get financing from HUD offers an entirely different motive for Chad McWhinney
than what he told council that evening of why McWhinney needed hasty approval of his tax
holiday request,
Watch a video clip of Chad McWhinney's testimony to council (July 2009) about why the Tax
Holiday timing was critical to coincide with his funding application to HUD -
Don Macy says despite the set-backs and inequitable tax policies of the city he will continue
working to find a way to build a competitive, high-end multi-family housing complex on his 12
acres in Loveland. Now facing $4,179,537 in building fees for 2014, he also hasn't given-up his
decade long struggle for tax equity in Loveland. The City Council did provide a slight reduction
for apartment CEF's last year, in response to Macy's request, but at over $20,000 per unit the
CEF's are still higher than any surrounding community.
"We are a family owned company that is self funded and we build for long term
investment, not for resale. We are going to rebid the project shortly, obtain a new
appraisal and hopefully, it will make sense to proceed. The 39% reduction in CEF fees that
the McWhinney projects received would make a huge difference in cost if we were to be so
fortunate."
Don Macy, February 20 2014
In 2001, when Longmont developer Don Macy purchased 12 acres on S. Taft Avenue in
Loveland, (south of the Walgreens on the southeast corner of Taft and 402) he never imagined
that nearly 15 years later the lot would still be empty.
Macy envisions a 220 unit upscale apartment complex he calls Bristol Pointe but finds Loveland's
development fees that have increased annually at a rate of 14% on average are prohibitively
expensive. Shortly after buying the property, 9/11 put the real estate market into a nose dive
that delayed his plans but he thought then only temporarily. As with any large investment, the
$25 million project needs to be timed to the market, interest rates, construction costs and city
fees to be successful.
An experienced developer who owns and manages much of the retail and multi-family complexes
on the west side of Hover Ave. in Longmont among other properties throughout Colorado, Macy
has found the City of Loveland to be frustrating and expensive when it comes to developing the
Bristol Pointe Apartments project.
Through regular correspondence with Loveland officials Macy has expressed concern regarding
the very steep CEF's (Capital Expansion Fees) charged by the City of Loveland. CEF's are a
tool city's use during times of rapid growth to pass the costs of building new parks, roads and
expanded city services onto developers who than convert the higher fees into higher home
prices or rents as is the case with Bristol Pointe Apartments.
When growth slows (as it has for the past 6 years) the funds collected often are stranded as the
new facilities may not be required for another decade. In the meantime, the CEF's counting in
the millions of dollars are used by the City of Loveland as a kind of slush fund despite strict laws
requiring the fees only be used for the purposes collected. Loveland avoids complying with the
law by "loaning" stranded CEF money to themselves for funding purchases like the near 100
acres the city purchased along 402 near I-25 that today sits vacant.
In 2009, when McWhinney decided to submit plans to build hundreds of apartments in Centerra
the Loveland City Council granted a waiver of 61% from most all of the CEF fees. McWhinney
also has the Centerra Metro Districts to fund the infrastructure along with control of 98% of the
future property taxes to subsidize their developments.
Macy, on the other hand, will not only pay for his own project infrastructure (roads, parking,
sewer) but because the property is outside a URA (urban renewal authority) Bristol Pointe
Apartments will generate approximately $200,000 of additional property tax services every year.
Unlike the downtown apartment projects also subsidized by the City of Loveland through CEF
waivers and fee reductions, Bristol Pointe does not rely only on the city parks department to
provide recreation for its residents.
Cost of City Services - By The Numbers
Last summer Macy provided the City of Loveland a fiscal impact analysis conducted by THK
Associates of Aurora. Appalled by the imbalance of tax subsidies where a developer like
McWhinney is incentivised to build apartments even though they will generate no property tax
revenue, Macy tried showing the council a cost versus benefits analysis most cities look for when
determining the level of fees charged for new development.
According to the report, Loveland's 2013 population was 71,146 people residing in 28,623
households with an average occupancy of 2.49 people per residence. Loveland's median
household income for 2013 was $54,677. The city's "General Fund" in 2013 was approximately
$65.19 million which calculates to an expenditure of $916 per person in the city.
To compare, Bristol Pointe Apartments is 220 units with a projected population of 352 residents
who will earn a household income of $61,200 annually which is more than the city average
household income by approximately $6,000 per annum. While apartments, like houses, are
mostly revenue losers for city government in taxes collected, Bristol Pointe's developer makes
the argument the city's upfront fees will cover the deficit for 115 years;
"Based on 220 new units with an average of 1.6 persons per household, the proposed
development will house 352 residents. The annual taxes generated from the proposed
development will be $154,804. The additional Cost to Serve these residents each year from
the city’s general fund will be $191,862. The difference between the taxes generated and
the additional expenditures is $37,058 per year. However, it should also be emphasized that
the estimated one-time revenues of $4.27 million for the proposed Bristol Pointe
development will cover this annual deficit for 115.3 years."
Historically, the City of Loveland has waived fees for nearly all large apartment complexes in
Loveland despite the projected costs to the city to provide services. Former Councilman Don
Marostica's Waterford Place apartments created a much heavier burden to city taxpayers given
the low-income nature of the project and its location on the edge of a flood zone. Nonetheless,
the project was spared many of the CEF's and other onetime fees Macy is being asked to pay.
More recently, the McWhinney brothers began building hundreds of apartments in Loveland
within their URA (Urban Renewal Authority) protected Centerra escaping 98% of the future
property taxes. While not included in the figures stated above, Macy's proposed Bristol Point
Apartments will generate approximately $200,000 in new property taxes annually. This revenue
will go towards Larimer County, Thompson School District and especially the struggle Thompson
Valley EMS (Emergency Services) all which rely on property taxes to survive. Revenue
generated by McWhinney's apartments will be used to repay public debt used to finance
infrastructure in and around the project.
Despite McWhinney apartments not generating the property tax revenue for these services, the
tenants will still use 100% of these local services costing disproportionately more to residents in
west Loveland whose property taxes must fund the county, schools and emergency services.
Developer Pleads For Tax Equity in Loveland
Historically, most cities will not provide incentives to apartment developers given the assumed
cost deficit impact to city financing of apartment dwellers in general who, on average, pay or
generate less taxes but are more costly to serve. That is why a pivot by the Loveland City
Council towards providing incentives for apartments, even for McWhinney, was so surprising five
years ago.
In early 2009 Chad and Troy McWhinney noticed the constraining housing supply and rising
rents in multi-family housing in Loveland as a result of the housing collapse and many
foreclosures converting families from home owners to renters. The McWhinney's were able to
secure loan guarantees by HUD (Housing and Urban Development) to build apartments in their
already heavily city subsidized Centerra in east Loveland.
LovelandPolitics was first to report the Loveland City Council was considering a special tax
holiday for McWhinney to submit their building plans and applications to the city to build
hundreds of apartments thus saving McWhinney millions of dollars in CEF's. Unlike most
developers in Loveland, McWhinney traditionally escaped paying CEF's through a $7 million tax
waiver for McWhinney as part of their 2004 Master Financing Agreement (MFA) with the City of
Loveland.
Having exhausted their $7 million coupon, McWhinney sought a temporary tax holiday from CEF's
just long enough to submit their apartment building plans and permits for approval.
As reported by LovelandPolitics at the time, Loveland's City Council authorized a temporary 61%
reduction in CEF's for McWhinney. Concerned over the legal liability of providing the benefit to
just one developer, Loveland City Attorney John Duval contradicted McWhinney's Rocky Scott
whose carefully laid plans of opening that discount window for only 30-45 days; by Duval
informing council their agreement may not be legal. In consultation with staff, the tax holiday
window was instead opened wider though too late for most developers to react given the
approaching winter and McWhinney having the timing advantage of being first to market.
LovelandPolitics did interview, off-record, several council members who voted for McWhinney's
tax holiday regarding the Bristol Pointe Apartments. One councilor responded with the question
that if Don Macy was really trying to develop his parcel at the time, he could have taken
advantage of the opening but failed to do so.
Following the off-record interviews, LovelandPolitics posed the councilor's question to Macy
directly who responded,
"The answer as to why we didn't build in the CEF window is: we were unaware of the
waiver until McWhinney's had already pulled permits for their 305 unit Lake Vista
apartments, then before they were finished with it they pulled permits for their Greens at
Vanderwater project which was another 240 units. ..........we went to HUD for preliminary
approval of financing for our project and we were denied because McWhinney's had
already applied for The Greens.
They said we should wait until the McWhinney projects are absorbed into the market. The
Loveland market is small in comparison to surrounding areas and we were concerned too
about too many new units on the market at once."
During the July 2009 council meeting, McWhinney explained to Loveland's City Council that he
needed to give a response to HUD right away. In fact, the Loveland City Council timed the
approval of the CEF's according to a personal request by Chad McWhinney. Councilman Walt
Skowron asked Chad McWhinney several times during the July 2009 meeting, "Can't you give
us some wiggle room" asking for more time to do a proper analyses. Don Macy's explanation
of his inability to get financing from HUD offers an entirely different motive for Chad McWhinney
than what he told council that evening of why McWhinney needed hasty approval of his tax
holiday request,
Watch a video clip of Chad McWhinney's testimony to council (July 2009) about why the Tax
Holiday timing was critical to coincide with his funding application to HUD -
Don Macy says despite the set-backs and inequitable tax policies of the city he will continue
working to find a way to build a competitive, high-end multi-family housing complex on his 12
acres in Loveland. Now facing $4,179,537 in building fees for 2014, he also hasn't given-up his
decade long struggle for tax equity in Loveland. The City Council did provide a slight reduction
for apartment CEF's last year, in response to Macy's request, but at over $20,000 per unit the
CEF's are still higher than any surrounding community.
"We are a family owned company that is self funded and we build for long term
investment, not for resale. We are going to rebid the project shortly, obtain a new
appraisal and hopefully, it will make sense to proceed. The 39% reduction in CEF fees that
the McWhinney projects received would make a huge difference in cost if we were to be so
fortunate."
Don Macy, February 20 2014
| LovelandPolitics Archive of Stories Relating to CEF's See McWhinney Tax Holiday See LovelandPolitics story announcing the tax holiday plus refuting misinformation Chad McWhinney published in RH editorial from 2009 story from July 2009 of council voting to grant the tax holiday Video Along With 11 minute video clip of council meeting City Uses Fire CEF's for Property Speculation July 2010 Abuse of Discretion Aug. 2010 Slippery Slope to Financial Insolvency Nov. 2010 Earlier Stories Story Background Links 1. October 2007 - 97 Acre Purchase Plan Revealed 2. November 2007 Lame Duck Council buys 97 acres 3. August 2008 - Fire Chief resigns 4. June 2009 - CEF's limited plus fire station delayed |
| Apartment Developer Seeks Tax Equity From the City of Loveland |
| Article Source Documents JHK July 2013 Study Correspondence |
| Cost Vs. Benefits Analysis On City Revenue for Bristol Pointe City of Loveland 2013 Population 71,146 2013 Households 28,623 Persons Per Household 2.49 Median Household Income $54,677 2013 Budget city General Fund $65,192,070 General Fund Expenditures Per Person $916 2013 General Fund Expenditures $41,138,760 Bristol Pointe Development - Projections General Fund Expenditures Per Person $578 Population at Buildout 352 Households at Buildout 220 Pop. Per Household at Bristol Pointe 1.60 Median Household Income $61,200 Fees/Taxes Generated Annual city tax revenue generated $154,804 Per capita Cost of service by city $191,862 Annual deficit total ($37,058) Onetime fees charged by city $4.27 million $4.29 Million / 115 years of cost collected by city in first year of project |
| "All we ask for is to be treated fairly and with respect for taking the risk on a $25 Million project. As we related to the staff during the meeting, we can and will proceed with the project on the same fee basis as McWhinney's had for their projects." Developer Don Macy in an email to Loveland's City Council in 2012 |
| "We have two main arguments why the fees for our project ought to be less: 1) This is an infill site with all public infrastructure in place, not one to be annexed or without public utilities, streets and other community amenities, and 2) Fairness, the CEF fees are not charged to downtown projects and their residents would likely use the public parks and other facilities more than our residents and furthermore, McWhinney's obtained a moratorium for a substantial amount of their CEF fees for both of their apartment projects built in the last two years." Don Macy, July 7, 2012 email to Loveland City Council |