McWhinney Pushes Temporary CEF Discount
Developer looking for 25% reduction in capital expansion fees for project
Loveland - June 1, 2009

The Loveland City Council will consider reducing developer impact fees on Tuesday night (June 2, 2009) by 25% in
reaction to an urgent request by Loveland’s most influential developer -- McWhinney.

The City of Loveland charges developer impact fees which it calls
Capital Expansion Fees (CEF’s) on new
developments within the city and defines the fees as
“An assessment on new development to contribute to providing
new infrastructure necessitated by population growth.”
 Loveland uses the fees to expand the availability of various
governmental services commensurate with the increase in population new developments bring.

Critical government services like fire protection, law enforcement, streets, and even library services rely on CEF’s to fund
their expansions due to population growth.   McWhinney has not made any public arguments to question the efficacy of
the fee rate Loveland charges but instead argues the reduction is needed to spur construction projects inside Loveland.  
McWhinney has also provided information to Loveland’s council indicating the CEF’s for Loveland are higher than in
surrounding communities.

The fee reduction proposal was placed on the council’s agenda by Loveland staff upon a request by McWhinney in
anticipation of building a high-density multi-family project in East Loveland of at least 500 residential units.  McWhinney’s
proposal of reducing the fees by 25% for the next 18 months allows the developer time to construct their residential
development under the temporarily reduced fee schedule.

In an oddly worded document presented for consideration by council, the proposed resolution reasons that the current
economic downtown is now 18 months old and therefore the 25% reduction in CEF's is being proposed for the next 18

Part of Bigger Plan
The proposed impact fee reduction (CEF's) is one in a series of rapid fire requests from McWhinney to exploit their
considerable influence over Loveland’s City Council in recent months.  McWhinney’s  proposed 25% fee reduction
bypassed the normal channels of first presenting it to the city’s finance advisory committee, construction advisory board
and even skipped the usual preliminary discussion by council at their bimonthly study sessions.  Instead, McWhinney’s
Rocky Scott is pressuring Loveland’s city council for a hasty decision Tuesday night before the issue can be fully vetted in
the community or its consequences carefully considered by staff.

In late April the
Loveland City Council approved the allocation of  $2,887,470 to the Colorado Housing and Finance
Authority (CHFA) from the city’s 2009 private activity bond allowance.  The city staff prepared report specifically cites
“rental housing development” as one of the allowed uses for the bonds.   This action provides  McWhinney a potential
low-interest quasi-public source of financing for their high-density residential project.

City Staff  Not Convinced
While it appears the so called “McWhinney’s Magnificent Seven” on Loveland’s city council may already support the
proposal (even before studying its impact), the staff does not.  City Manager Don Williams took the unusual step of not
recommending adoption of the resolution while supporting all the other items on the council’s Tuesday night meeting

Alan Krcmarik, Loveland’s Executive Fiscal Advisor, stated in a memorandum to council regarding the proposed fee
reduction that it was being presented for “consideration” and failed to recommend or urge adoption.

Why Does Staff Have Cold Feet?
John Hartman, Loveland’s budget officer, informed Loveland’s council last December that even their modest and
modified projections of 2% were not realized for CEF collections in 2008.  He informed council that CEF’s for 2009
would be flat like 2008 and warned, “These lower estimates create a ripple effect in the amount of revenue available
throughout all ten years of the program.”

Delayed CEF collections means Loveland will be unable to build fire stations, hire additional police officers or finish the
recreational bike trail in future years.  It also means that if Loveland continues with considerable growth but temporarily
frees their projects and others built in the next 18 months from 25% of the CEF’s such services will be in short supply.

McWhinney Again Provides Misleading Data To Sway Council
The primary argument McWhinney is using to advocate for the 25% CEF reduction is built on misleading data.  
According to McWhinney, Loveland’s development fees are the highest in the region among the cities of Greeley, Ft.
Collins, Johnstown and Windsor.

While the McWhinney document presented online by Loveland’s official website doesn’t disclose McWhinney’s
assumptions or sources for the data, it is misleading.

As the
Northern Colorado Business Journal reported last year, a proper comparison between cities must include all of
the fees or taxes paid by a developer in a community.  On reporting on an analysis done by the City of Greeley, the paper

“The study showed many trends within cities, regardless of the type of building. For example, Fort Collins
and Loveland have higher capital expansion and sales and use taxes than Greeley. However, developers will
find lower street fees in Fort Collins, and lower permit fees in Loveland.  Loveland also has consistently
lower utility fees, sometimes thousands of dollars less than surrounding areas”

McWhinney failed also to disclose that Broomfield (the other Colorado community where McWhinney has a large
development planned) exceeds $40,000 per residential unit in development fees which is nearly double that of Loveland.

Johnstown charges a significant water tap fee to recover infrastructure costs to for recent plant investments that don’t
appear to be included in the calculations provided by McWhinney.

According to a City of Greeley report from 2008,  “307 Fire Protection Development ($345,054) – Funds were not
available in the Fire Protection Development fund to fully cover the cost of the construction of Fire Station 3.”  This is
because Greeley was charging Colorado's lowest impact fees in the state according to a study by Colorado State
University (CSU).

Greeley has been struggling to provide adequate safety and emergency services to its residents who arrived during the
building boom just a few years ago.   LovelandPolitics has learned that Greeley’s overall development fees will essentially
triple by August 1, 2009 in an attempt to make-up for previous losses.  This is another piece of data McWhinney failed to
disclose in their comparison of development fees with other cities.

What Is At Stake
If the City of Loveland can provide adequate services to its residents for a reasonable cost than the city should reduce
development fees.  The problem is the city has not reduced its projections for the costs of the services nor its spending as
a result of the proposed 25% cut in fees.  This means the costs of even a temporary reduction in CEF’s will result in a
lower quality of life for Loveland’s residents as less services are available to an expanding population and/or higher taxes
to cover the increased costs of servicing new residential developments.
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Loveland's Capital
Expansion Fee Funds

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2. Recreation CEF
3. Trails CEF
4.  Open Land
5. Fire Protection CEF
6. Law Enforcement CEF
7. Cultural Services
8. General Government
9. Streets