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| Cash Short McWhinney To Take Money Away From I-25 / 34 Interchange Fund Loveland City Council set to approve MFA amendments April 7, 2009 see LovelandPolitics' related story from 1-24-09 |
Loveland - March 25, 2009
Last May the Loveland Reporter-Herald published a story that stated;
“Loveland and McWhinney are moving forward with improvements to the Interstate
25 and U.S. 34 interchange…. This project, to begin in early September, will remove
loop ramps at the northeast and southwest of the interchange..”
McWhinney along with CDOT (Colorado Department of Transportation) and the City of Loveland
later held a public forum to tell the community that $12 million from bond indebtedness of the
Centerra Metro Districts controlled by McWhinney had already been set aside for the I-25 and
Highway 34 interchange project.
The project didn’t begin as promised and now McWhinney is going back to Loveland’s City Council to
ask for permission to use that $12 million for other “public improvements” to develop their light
industrial project instead of funding the interim improvements required at the hazardous I-25 and U.
S. Highway 34 interchange.
McWhinney is in the process of preparing the agenda item for a Loveland City Council meeting to be
presented April 7, 2009. The request will include an amendment to the Master Financing Agreement
(MFA) with the city that will allow McWhinney's Metro District to take money away from the I-25 and
Highway 34 interchange interim improvement project.
Earlier this month the developer briefed secretly each member of Loveland’s City Council and
appears confident the agenda item will be approved. Instead of meeting the councilors in groups of
two (as was done previously and criticized in the local press) they met each individually in an
apparent effort to again skirt the open meetings law and get council consensus long before the
public hearing.
McWhinney is apparently also looking to pocket some of the $12 million to improve the interchange
for repayment of what they call an “advance” to the Metro District plus interest. The 2007 audit of
the financial statements for the Metro Districts show “developer advance” repayment from the public
Metro District of $122,287 and interest of $9,636 in 2006. The 2008 financial statements for the
public entity have not yet been made available to the public but the precedent of McWhinney paying
itself interest from advances to its own Metro District is already apparent from the previous year
reports.
Sources report to LovelandPolitics.com that McWhinney is cash strapped and looking to collect some
$5 million that is claimed as advances to the Metro District. This would leave approximately $ 7
million McWhinney could use on other internal projects by calling them "public improvements." In
addition, the modest contribution the Metro District will make to the Crossroads Roundabout
construction can be substituted for any significant Regional Improvement being funded with the tax
dollars and debt collected by the Metro District.
Public Indebtedness
On October 15, 2004 the McWhinney controlled Centerra Metro District borrowed $57 million
through public bonds and another $60 million in March of 2008. The money plus interest is to be
paid back over 25 year periods using taxes raised from both property owners and sales taxes
commonly referred to as the “McWhinney tax.” Because they are “variable rate bonds” the interest
fluctuates like an adjustable home mortgage on an annual basis. Loveland taxpayers (through the
Metro District) are already obligated to pay an estimated $64 million in interest alone over the next
25 years provided the variable interest rate on the bonds stays at or below 4.25%.
According to the Metro District's financial statements from previous years, millions of dollars in
Loveland sales tax revenue is already going simply to pay interest accrued on the substantial public
debt created by McWhinney's Centerra Metro District projects. In 2008 $2.4 million was paid out in
interest only for the 2004 bond issue and $3.6 million paid in interest and letter of credit charges for
another bond issued in 2008.
So far, the Metro Districts have funded McWhinney projects’ landscaping, architectural finishes,
Centerra monument signs and the Motorplex sign by determining they are “public
Improvements.” As part of their agreement with the City of Loveland, McWhinney also promised to
fund general transportation projects named “Regional Improvements” with the money raised
through the Metro District bonds.
Instead, the McWhinneys have played a shell game with the money by changing the definition of
“Regional Improvements” and regularly amending the Master Financing Agreement. In other words,
in place of really funding the most critical Regional Transportation Improvements, which was the
original intent of the agreement (MFA), McWhinney has simply negotiated changes to the definition
of regional improvements in order to claim they are in compliance with the agreement. Some former
McWhinney employees have jokingly referred to the MFA as the “Mercurial Financing Agreement.”
On December 5, 2006 the City of Loveland amended the MFA to include the “Centerra
Parkway/Crossroads Extension” and the “Crossroads Interchange Runabouts” as “Regional
Improvements.” In addition, the language added to the agreement watered down the definition of
regional improvements by stating the following;
“…all agree to classify as Regional Improvements regardless of whether such Public
Improvements would customarily be considered regional in nature.”
City Manager Don Williams did insist that the city not allow McWhinney to escape their responsibility
of improving the I-25 and Highway 34 interchange. That December 5, 2006 amendment to the MFA
only allowed McWhinney to classify the two items mentioned above as “Regional Improvements”
under their newly amended MFA if the developer and Metro District began in earnest to improve the
hazardous I-25 and Highway 34 interchange.
Now McWhinney is seeking another amendment to specifically remove two paragraphs from that
amendment (Section 4, paragraphs 1.93.7.1 and 1.93.7.2) which require the Metro District to fund
and begin construction on the I-25 and Highway 34 interchange before being allowed to claim
"Centerra Parkway" or the "Crossroads Interchange Roundabouts" as Regional Improvements.
According to an inside source, McWhinney was pleased with the responses they received from the
City Council and expect their request to be approved. The City of Loveland official website has not
yet posted the agenda item for the April 7, meeting at the time this story was posted. This report
based, in part, on inside sources who wish to remain anonymous.
Last May the Loveland Reporter-Herald published a story that stated;
“Loveland and McWhinney are moving forward with improvements to the Interstate
25 and U.S. 34 interchange…. This project, to begin in early September, will remove
loop ramps at the northeast and southwest of the interchange..”
McWhinney along with CDOT (Colorado Department of Transportation) and the City of Loveland
later held a public forum to tell the community that $12 million from bond indebtedness of the
Centerra Metro Districts controlled by McWhinney had already been set aside for the I-25 and
Highway 34 interchange project.
The project didn’t begin as promised and now McWhinney is going back to Loveland’s City Council to
ask for permission to use that $12 million for other “public improvements” to develop their light
industrial project instead of funding the interim improvements required at the hazardous I-25 and U.
S. Highway 34 interchange.
McWhinney is in the process of preparing the agenda item for a Loveland City Council meeting to be
presented April 7, 2009. The request will include an amendment to the Master Financing Agreement
(MFA) with the city that will allow McWhinney's Metro District to take money away from the I-25 and
Highway 34 interchange interim improvement project.
Earlier this month the developer briefed secretly each member of Loveland’s City Council and
appears confident the agenda item will be approved. Instead of meeting the councilors in groups of
two (as was done previously and criticized in the local press) they met each individually in an
apparent effort to again skirt the open meetings law and get council consensus long before the
public hearing.
McWhinney is apparently also looking to pocket some of the $12 million to improve the interchange
for repayment of what they call an “advance” to the Metro District plus interest. The 2007 audit of
the financial statements for the Metro Districts show “developer advance” repayment from the public
Metro District of $122,287 and interest of $9,636 in 2006. The 2008 financial statements for the
public entity have not yet been made available to the public but the precedent of McWhinney paying
itself interest from advances to its own Metro District is already apparent from the previous year
reports.
Sources report to LovelandPolitics.com that McWhinney is cash strapped and looking to collect some
$5 million that is claimed as advances to the Metro District. This would leave approximately $ 7
million McWhinney could use on other internal projects by calling them "public improvements." In
addition, the modest contribution the Metro District will make to the Crossroads Roundabout
construction can be substituted for any significant Regional Improvement being funded with the tax
dollars and debt collected by the Metro District.
Public Indebtedness
On October 15, 2004 the McWhinney controlled Centerra Metro District borrowed $57 million
through public bonds and another $60 million in March of 2008. The money plus interest is to be
paid back over 25 year periods using taxes raised from both property owners and sales taxes
commonly referred to as the “McWhinney tax.” Because they are “variable rate bonds” the interest
fluctuates like an adjustable home mortgage on an annual basis. Loveland taxpayers (through the
Metro District) are already obligated to pay an estimated $64 million in interest alone over the next
25 years provided the variable interest rate on the bonds stays at or below 4.25%.
According to the Metro District's financial statements from previous years, millions of dollars in
Loveland sales tax revenue is already going simply to pay interest accrued on the substantial public
debt created by McWhinney's Centerra Metro District projects. In 2008 $2.4 million was paid out in
interest only for the 2004 bond issue and $3.6 million paid in interest and letter of credit charges for
another bond issued in 2008.
So far, the Metro Districts have funded McWhinney projects’ landscaping, architectural finishes,
Centerra monument signs and the Motorplex sign by determining they are “public
Improvements.” As part of their agreement with the City of Loveland, McWhinney also promised to
fund general transportation projects named “Regional Improvements” with the money raised
through the Metro District bonds.
Instead, the McWhinneys have played a shell game with the money by changing the definition of
“Regional Improvements” and regularly amending the Master Financing Agreement. In other words,
in place of really funding the most critical Regional Transportation Improvements, which was the
original intent of the agreement (MFA), McWhinney has simply negotiated changes to the definition
of regional improvements in order to claim they are in compliance with the agreement. Some former
McWhinney employees have jokingly referred to the MFA as the “Mercurial Financing Agreement.”
On December 5, 2006 the City of Loveland amended the MFA to include the “Centerra
Parkway/Crossroads Extension” and the “Crossroads Interchange Runabouts” as “Regional
Improvements.” In addition, the language added to the agreement watered down the definition of
regional improvements by stating the following;
“…all agree to classify as Regional Improvements regardless of whether such Public
Improvements would customarily be considered regional in nature.”
City Manager Don Williams did insist that the city not allow McWhinney to escape their responsibility
of improving the I-25 and Highway 34 interchange. That December 5, 2006 amendment to the MFA
only allowed McWhinney to classify the two items mentioned above as “Regional Improvements”
under their newly amended MFA if the developer and Metro District began in earnest to improve the
hazardous I-25 and Highway 34 interchange.
Now McWhinney is seeking another amendment to specifically remove two paragraphs from that
amendment (Section 4, paragraphs 1.93.7.1 and 1.93.7.2) which require the Metro District to fund
and begin construction on the I-25 and Highway 34 interchange before being allowed to claim
"Centerra Parkway" or the "Crossroads Interchange Roundabouts" as Regional Improvements.
According to an inside source, McWhinney was pleased with the responses they received from the
City Council and expect their request to be approved. The City of Loveland official website has not
yet posted the agenda item for the April 7, meeting at the time this story was posted. This report
based, in part, on inside sources who wish to remain anonymous.
| Federal Stimulus Money Aids McWhinney Shell Game Instead of funding the long promised "Regional Improvements" the McWhinney organization is simply amending its agreement with the City of Loveland to broaden the definition of "Regional Improvements" and take credit for federal expenditures on local projects. McWhinney wants the $ 3 million of federal stimulus money being paid to the Roundabouts on Crossroads in their Metro District to count as their contribution towards Regional Improvements and let McWhinney off-the-hook to improve I-25 / Highway 34 in the near-term and use that money for McWhinney's own projects. The longer-term plan appears to be McWhinney's OPM (Other People's Money) strategy. Wait for other public funds to repair the dangerous I-25 and Highway 34 interchange. McWhinney continues using tax revenue and bond debt to directly subsidize its own projects while ignoring the critical transportation infrastructure needs of the community that have been exacerbated by McWhinney's own developments. The original MFA was sold to the community as an opportunity to fund badly needed infrastructure improvements. McWhinney has instead played a shell game to avoid properly funding the I-25 / U.S. 34 interchange despite adding to the traffic and collecting taxes originally intended for that purpose Loveland's Public Debt Growing Centerra Metro District public debt in both principal and interest owed has now exceeded $3,000 of debt for every man, woman and child in the City of Loveland. (this includes principal and interest to be repaid for the next 25 years on the approximately $117 Million in bonds already exercised or authorized). While Loveland city management contends the city is not liable in case of default - this isn't entirely true. All the taxes collected in the defined Metro Districts cannot go to the city unless the bonds are paid (in the case of a default by the Metro District) and the city's bond rating would be adversely impacted thus raising the borrowing costs of the City of Loveland. Tax Dollars Now Going To Service McWhinney's Metro District Public Debt Bond Interest Paid in 2008 $ 2.4 million Bond Interest and Letter of Credit fees for 2008 Issued Bond $3.6 million |
| What is the McWhinney Tax? PIF (Public Improvement Fee) 1.25% retail sales tax TIF (Tax Increment Financing) Any property tax collected above the property's base value determined at the time the Metro District is formed Specific Ownership Tax County collected automobile registration tax distributed to all taxing entities in the county |
| Important Reference Documents Provided by LovelandPolitics.com Archive 1. Centerra Metro Districts 1-4 Annual Audited Budget Statements (2007) 2. Original Master Financing Agreement (MFA) between Loveland & McWhinney 3. December 5, 2006 Amendment to the Master Financing Agreement (MFA) 4. See below the City of Loveland list of promised general transportation improvements and amounts the Centerra Metro District was supposed to contribute. |
