McWhinney In Crisis Are Lay-Offs Around the Corner?
Loveland - Feb. 5, 2008
Senior members of McWhinney's management team that were recruited from top firms around the country to help with Grand Station are leaving the company. The recruitment of these professionals was broadcast in press releases by McWhinney just last summer but now their untimely departures is being kept very quiet. Among the most shocking departures has been Wendy Crawford, Vice President of Retail Leasing, Tom Martin, General Manager for Grand Station and now even the company's Senior Vice President of Finance & Chief Financial Officer (CFO), Ken Howell.
In most businesses, the hemorrhaging of so many top executives would indicate a merger, internal dispute or an impending financial disaster. Some say it is the latter. There was a meeting earlier this year where employees were gathered together and told if Grand Station isn't 70% leased by April the project would be officially cancelled and people would be facing potential job losses. As one source commented to LovelandPolitics, "Chad McWhinney is fond of saying 'success comes to those who get in front of the inevitable' so that is exactly what his senior staff is doing."
According to one source, the company is hurting financially and tapped out on a $65 million line of credit and had only $7 million left to make payroll with no new sources of income identified. This would bring the company into mid-March before new revenue would be essential according to the source or the company will began letting people go. "We were no longer willing to drink the cool aid about how great everything was when we knew better" was the comment from one former supporter, advocate and insider.
LovelandPolitics contacted Ken Howell in an attempt to confirm the information we have received from various sources. He confirmed that he has given notice that he will leave soon but said the specific date of his departure is not yet determined. Wendy Crawford and Tom Martin have already left the company.
As recently as last week, McWhinney spokesperson Jack Wolfe was quoted in the Loveland Reporter-Herald saying hotels have already been signed for Grand Station. This is critical since the City of Loveland is a "partner" in Grand Station and committed nearly $80 million of future tax revenues towards the building of a multi-story parking garage that McWhinney indicated was necessary to attract high end retail and a luxury hotel to Grand Station. Another source told LovelandPolitics that any hotel deal reported to the media by Wolfe "is a lie" and the news in the Reporter-Herald is full of fluff McWhinney has been feeding the paper.
In preparing for this story, other senior staff still working in the company were contacted but are unwilling to confirm Wolfe's statement on the record. A message was left on Wolfe's voice mail but he hasn't returned the call. Two potential businesses have been negotiating leases at Grand Station but they hardly represent the higher-end retail experience the Loveland City Council was apparently lead to believe would populate Grand Station when they approved the subsidises for the parking garage. According to one source commenting off-the-record, a Mexican restaurant in Ft. Collins is negotiating a lease and the other new tenant is a bolling alley. Chad McWhinney did, in fact, tell the public the specific business they could recruit would be dictated by market conditions but what they are attracting appears to be for a very different type of project.
Loveland officials appear to be unaware of the potential financial crisis within McWhinney Enterprises or Centerra and are continuing to show future sales tax revenues and spending that rely on future revenue being generated by projects that haven't been built. Industry experts have informed LovelandPolitics that Grand Station was doomed from the start as it was the first large project McWhinney attempted without an experienced partner capable of leasing the spaces. Alone, McWhinney was unlikely to succeed, this according to an industry export who was contacted to provide background for this story.
Other Sources of Funds
In addition to the problems of employees leaving McWhinney in Loveland, a source in the financial industry claimed that the McWhinney's have been "monetizing illiquid investments (local real estate investments) and turning it into paper" (ie. Treasury bills, bonds and other easily convertible assets). While it impossible to independently confirm this information, it is a common practice of people of means when they are relocating or want easier access to cash regardless of where they will be in the future.
McWhinney, like most developers, uses a number of smaller limited liability companies for projects to limit financial exposure thus complicating any overall financial picture. Untangling who owns what and which entity has funding and which does not is virtually impossible for anyone with limited access to such information. Therefore, it is likely other resources could be available to continue with Grand Station even if leasing objectives are not met by April but whether those resources will be used is another question perhaps only the McWhinney brothers can answer with certainty. In the meantime, rumor has it that Troy is the realist who wants to scale back the Grand Station vision while Chad continues to defend his original plan to appeal to what he calls the "creative class" of shoppers and tenants in northern Colorado
McWhinney Enterprises Denies Any Financial Problems
The company has denied there is any pending financial crisis and said McWhinney still intends to build Grand Station as proposed. LovelandPolitics.com has offered to provide a link on this page to any website or story McWhinney Enterprises would like to publish disputing the information above.
In the meantime, we will continue gathering information to disseminate on this website and encourage anyone with information regarding the situation to either email us directly or post their comments on the blog - your identity will be kept confidential if you choose.