| LovelandPolitics.com |
| McWhinney Proposes Tax Holiday For McWhinney Chad McWhinney Promotes Myths In Local Media |
Loveland - June 20, 2009
Last Friday the Loveland Reporter-Herald ran a guest column by Chad McWhinney on page A4
encouraging citizens to support his company’s request that Loveland reduce CEF's (Capital Expansion
Fees) for building multi-family housing projects. The proposal created by McWhinney provides a
temporary tax holiday just long enough for McWhinney to escape the full fees on a multi-family housing
project they are building.
The request coming before council is the third attempt by McWhinney this year to reduce its fees for the
proposed 303 unit apartment complex in Centerra. Loveland’s council voted down a previous request
for a 25% tax holiday by McWhinney but will now consider a much larger reduction of 61% this
Tuesday. See LovelandPolitics' previous stories regarding the fee details Background or Post Meeting
Story.
The proposed 303 unit subsidized low-rent apartment project has already been planned for Centerra.
Now Chad McWhinney has set about trying to find a way to get a tax holiday from the regular fees and
costs his competitors normally pay despite the fact the project is already heavily subsidized.
Long List Of Government Money in Project
The project anticipates receiving $700,000 in HUD (Housing and Urban Development) funds, waiver of
certain city taxes for affordable housing and likely future property taxes plowed back into McWhinney’s
Metro District to be used on signs and landscaping for other projects. While McWhinney has not released
any details regarding their government financing local news stories have published conflicting
information regarding the nature of the project and just what type of government assistance it will be
receiving. This is not necessarily a comment on the accuracy of either the Loveland Reporter-Herald or
Loveland Connection news stories but instead likely a reflection of the changing story McWhinney has
been telling both newspapers.
Some say it is being entriely financed through low-interest HUD loans while another referred to a figure
of $700,000 grant. What is sure is the nobody in city hall has seen evidence of the "HUD deadline"
McWhinney claims makes their request so urgent. McWhinney has also failed to disclose how much they
are willing to invest in the project, what Chad McWhinney expects to earn both in cash and equity and
what total percentage of their project is being financed through taxpayer's. The figure being tossed
around by McWhinney indicate their cost of the project to be around $155,000 per unit. This is 2-3 times
higher than the cost of existing multi-family properties which means the rents would need to be
catagorized by Loveland's Housing Authority as "unaffordable" for the business case to close.
An important incentive for McWhinney in building the project is the Low Income Housing Tax Credit
(LIHTC) provided by the federal government. This credit can later be sold to other investors or used for
equity in the project.
McWhinney is asking the Loveland City Council to provide a short approximately 5 month tax holiday so
the normal capital improvement fees required to fund emergency services and other basic city services
will be reduced by 61% for a very limited time. McWhinney is likely proposing only a limited time for the
reduction of taxes so the tax may serve as a barrier of entry to subsequent projects proposed by
competing developers and give McWhinney a Loveland City Council induced price advantage over others.
Many communities fight the introduction of low-rent government subsidized housing due to its high cost
on community services in the long run, tendency to bring crime and detrimental impact on the home
values of adjacent single family residential properties. The Loveland Connection recently published a
front page story regarding a similar government subsidized housing project in Loveland that has become
a springboard for gang and other criminal activity in the community.
Below is a clarification of the misleading data published by the Loveland Reporter-Herald
in Chad McWhinney’s guest column.
Myth #1
Without Special Assistance The Project Cannot Be Built
The often used and most effective tool in Chad McWhinney’s lobbying toolbox is to threaten that if the
city doesn’t act quickly to eliminate certain fees, waive costs or otherwise subsidize his project he will
build it somewhere else. At the same time, McWhinney argues the project is “much needed” and that all
comparable buildings in Loveland are full which appears to contradict his assertion that without a
subsidy of waiving fees he cannot close the business case to build the 303 unit government subsidized
low-rent apartment project.
McWhinney planned, proposed and prepared for the construction of the subsidized apartment building in
Centerra with the current city building fees and Capital Expansion Fees (CEF’s) already in place. If such
fees make the project untenable and more attractive to build in Ft. Collins or Johnstown why did he
already only plan to build it in Loveland?
These threats are a common and often disingenuous tactic employed by McWhinney. Anyone with a
cursory knowledge of recent history knows the McWhinney Company employed the same tactic to
absolve itself of the near-term obligation to improve the I-25 and U.S. 34 interchange less risk Agrium not
moving to the community. Council stuck to its guns and denied the request while Agrium moved to
McWhinney’s Centerra development anyway without the city aided incentives being taken from the funds
set-aside to improve the I-25 and U.S. 34.
Myth #2
By Reducing the Fees The Project Will Create Needed Jobs In Loveland
Chad McWhinney argued in his guest column, “If the City Council adjusts development fees…..and
construction commences on the Centerra apartments, the project is expected to generate 250
construction jobs – a welcome relief for the 800 construction workers currently unemployed in
our area.”
This argument relies on myth #1 being true that McWhinney planned the project in full knowledge of the
current city fee structure but will not proceed unless given a 61% discount for their project by way of a
short 5 month tax holiday.
Nothing in the proposed fee reduction by Loveland’s City Council for this Tuesday night that Chad
McWhinney is advocating for requires McWhinney to hire Loveland contractors to complete the project.
McWhinney’s clear preference is to have the ability to award the job to the lowest bidder regardless of
where the company is located so the argument his project is creating local jobs for unemployed
construction workers in Loveland is disingenuous.
The low-bidder on the I-25 and Crossroads Blvd. Improvements which was widely touted as providing
local jobs is Jalisco International Inc. of Commerce City Colorado. The company is owned and
operated by the Ledezma family and provided a low bid of $4,886,511 to complete the Crossroads
project. Because McWhinney’s contribution to the project was the “last money in” means the stimulus
money ($3 million) and MPO grant ($1.2 million) will pay for a majority of the project.
In addition, bringing more renters to Loveland who depend on federal government Section 8 housing
vouchers to pay their rent is unlikely to help people already in the community looking for jobs.
Myth #3
Loveland Isn’t Building Enough New Multi-Family Housing Projects
Chad McWhinney argued, “Over the past 10 years the majority of apartments built in Northern
Colorado are outside Loveland.” He offered this as evidence that Loveland’s Capital Expansion Fees
are too high so people building apartments do not consider Loveland to build thus creating a shortage of
“workforce” housing.
In fact, the contrary is true. A disproportionate number of apartment units have been built in Loveland
compared with the rest of Northern Colorado over the past 10 years. Since 1999 the communities of Ft.
Collins, Greeley, Windsor and Loveland have granted 10,187 permits for multi-family housing
construction. Of those, nearly 2,000 were in Loveland. That means 20% of all multi-family housing
permits in Northern Colorado were in Loveland alone since 1999.
Loveland’s population comprises only some 10% of the 528,500 population of all Northern Colorado yet
granted 20% of all multi-family housing permits. McWhinney’s argument that “the majority” of
apartments built in Northern Colorado in the last 10 years were built outside Loveland is true but his
conclusion demonstrate specious reasoning.
Loveland doesn’t cover half the land mass of Northern Colorado and is home to only a small fraction of
the total population. (Reference: The Group Inc. website)
In 2006, Loveland issued more multi-family permits (429) than any other community in Northern
Colorado including Ft. Collins. Last year Greeley issued only three and Windsor zero while Loveland
issued 97 permits. Chad McWhinney’s argument that we lack new multi-family housing projects in
Loveland due to CEF's is not consistent with the facts.
Myth #4
Low-Income Subsidized Apartment Buildings Are Good For Loveland and Cost the City Less in
Government Services
The day after Chad McWhinney’s article appeared claiming low-income apartments are cheaper for a
community to service than single family residential the Loveland Connection published a front page story
demonstrating the opposite.
The Loveland Connection story reported on a government subsidized low-income apartment complex in
Loveland called Creekside Garden apartments. The article reported law-abiding residents are struggling
to deal with the influx of crime, gang activities and all night parties that turn into fights at dawn at the
subsidized "affordable" housing project.
Creekside Garden Apartments has generated over 50 calls to the police and injured two Loveland officers
responding to the affordable housing development. The costs associated with these policing efforts alone
diminish any potential benefit one could argue is creating by the “affordable” housing project. Chad
McWhinney, on the other hand, argued that such housing projects actually cost the city less to support
with local services.
Policing these low-rent subsidized apartments is difficult as compromised landlords accepting Section 8
housing vouchers cannot easily evict unruly tenants. Affordable housing is often a euphemism for people
unwilling to call the project what it is – government subsidized housing. Loveland has an abundance of
hundreds of available apartment units at the prices at or below those that qualify for McWhinney’s
proposed “affordable housing.”
Attracting people dependent upon welfare or other government hand-outs into a community turns a
handsome profit for the developer who is awarded federal tax credits but creates long-term financial
strains on the municipality. It also increases the number of low-income earners in the community who
are now competing with current residents looking for jobs.
Myth #5
McWhinney Family In Loveland 6 Generations And Just Trying To Help Their Hometown
Chad McWhinney, while supporting a project in 2007, made similar arguments before another city council
regarding his ties to the community and commitment to the region. However, the city was not in
Colorado but instead in Southern California. As reported by The Orange County Register on September
12, 2007,
“According to the Council members’ choice was Chad McWhinney, a developer who built the first
cluster of hotels and restaurants in Garden Grove’s side of Harbor Boulevard – the city-designated
resort area. McWhinney, who grew up in Huntington Beach, is excited about the opportunity, said
Jack Wolfe, the company’s president of Community and Mixed Use Development.”
In his guest column in the Loveland Reporter-Herald Chad McWhinney claims “The McWhinney family –
which has been a part of the Loveland community for more than six generations…” Ironically, the
Loveland Reporter-Herald ran an editorial alongside his column blasting “citizen journalists” who use
the Internet to distribute news. The editorial claimed only newspapers can “protect against potential
corruption” and not reprint company news releases or other propaganda that are not entirely accurate.
While there is no disputing the long heritage of the McWhinney family in Loveland, Chad McWhinney
must soon decide where his generation of McWhinneys grew-up -- in Loveland or Huntington Beach,
California?
Last Friday the Loveland Reporter-Herald ran a guest column by Chad McWhinney on page A4
encouraging citizens to support his company’s request that Loveland reduce CEF's (Capital Expansion
Fees) for building multi-family housing projects. The proposal created by McWhinney provides a
temporary tax holiday just long enough for McWhinney to escape the full fees on a multi-family housing
project they are building.
The request coming before council is the third attempt by McWhinney this year to reduce its fees for the
proposed 303 unit apartment complex in Centerra. Loveland’s council voted down a previous request
for a 25% tax holiday by McWhinney but will now consider a much larger reduction of 61% this
Tuesday. See LovelandPolitics' previous stories regarding the fee details Background or Post Meeting
Story.
The proposed 303 unit subsidized low-rent apartment project has already been planned for Centerra.
Now Chad McWhinney has set about trying to find a way to get a tax holiday from the regular fees and
costs his competitors normally pay despite the fact the project is already heavily subsidized.
Long List Of Government Money in Project
The project anticipates receiving $700,000 in HUD (Housing and Urban Development) funds, waiver of
certain city taxes for affordable housing and likely future property taxes plowed back into McWhinney’s
Metro District to be used on signs and landscaping for other projects. While McWhinney has not released
any details regarding their government financing local news stories have published conflicting
information regarding the nature of the project and just what type of government assistance it will be
receiving. This is not necessarily a comment on the accuracy of either the Loveland Reporter-Herald or
Loveland Connection news stories but instead likely a reflection of the changing story McWhinney has
been telling both newspapers.
Some say it is being entriely financed through low-interest HUD loans while another referred to a figure
of $700,000 grant. What is sure is the nobody in city hall has seen evidence of the "HUD deadline"
McWhinney claims makes their request so urgent. McWhinney has also failed to disclose how much they
are willing to invest in the project, what Chad McWhinney expects to earn both in cash and equity and
what total percentage of their project is being financed through taxpayer's. The figure being tossed
around by McWhinney indicate their cost of the project to be around $155,000 per unit. This is 2-3 times
higher than the cost of existing multi-family properties which means the rents would need to be
catagorized by Loveland's Housing Authority as "unaffordable" for the business case to close.
An important incentive for McWhinney in building the project is the Low Income Housing Tax Credit
(LIHTC) provided by the federal government. This credit can later be sold to other investors or used for
equity in the project.
McWhinney is asking the Loveland City Council to provide a short approximately 5 month tax holiday so
the normal capital improvement fees required to fund emergency services and other basic city services
will be reduced by 61% for a very limited time. McWhinney is likely proposing only a limited time for the
reduction of taxes so the tax may serve as a barrier of entry to subsequent projects proposed by
competing developers and give McWhinney a Loveland City Council induced price advantage over others.
Many communities fight the introduction of low-rent government subsidized housing due to its high cost
on community services in the long run, tendency to bring crime and detrimental impact on the home
values of adjacent single family residential properties. The Loveland Connection recently published a
front page story regarding a similar government subsidized housing project in Loveland that has become
a springboard for gang and other criminal activity in the community.
Below is a clarification of the misleading data published by the Loveland Reporter-Herald
in Chad McWhinney’s guest column.
Myth #1
Without Special Assistance The Project Cannot Be Built
The often used and most effective tool in Chad McWhinney’s lobbying toolbox is to threaten that if the
city doesn’t act quickly to eliminate certain fees, waive costs or otherwise subsidize his project he will
build it somewhere else. At the same time, McWhinney argues the project is “much needed” and that all
comparable buildings in Loveland are full which appears to contradict his assertion that without a
subsidy of waiving fees he cannot close the business case to build the 303 unit government subsidized
low-rent apartment project.
McWhinney planned, proposed and prepared for the construction of the subsidized apartment building in
Centerra with the current city building fees and Capital Expansion Fees (CEF’s) already in place. If such
fees make the project untenable and more attractive to build in Ft. Collins or Johnstown why did he
already only plan to build it in Loveland?
These threats are a common and often disingenuous tactic employed by McWhinney. Anyone with a
cursory knowledge of recent history knows the McWhinney Company employed the same tactic to
absolve itself of the near-term obligation to improve the I-25 and U.S. 34 interchange less risk Agrium not
moving to the community. Council stuck to its guns and denied the request while Agrium moved to
McWhinney’s Centerra development anyway without the city aided incentives being taken from the funds
set-aside to improve the I-25 and U.S. 34.
Myth #2
By Reducing the Fees The Project Will Create Needed Jobs In Loveland
Chad McWhinney argued in his guest column, “If the City Council adjusts development fees…..and
construction commences on the Centerra apartments, the project is expected to generate 250
construction jobs – a welcome relief for the 800 construction workers currently unemployed in
our area.”
This argument relies on myth #1 being true that McWhinney planned the project in full knowledge of the
current city fee structure but will not proceed unless given a 61% discount for their project by way of a
short 5 month tax holiday.
Nothing in the proposed fee reduction by Loveland’s City Council for this Tuesday night that Chad
McWhinney is advocating for requires McWhinney to hire Loveland contractors to complete the project.
McWhinney’s clear preference is to have the ability to award the job to the lowest bidder regardless of
where the company is located so the argument his project is creating local jobs for unemployed
construction workers in Loveland is disingenuous.
The low-bidder on the I-25 and Crossroads Blvd. Improvements which was widely touted as providing
local jobs is Jalisco International Inc. of Commerce City Colorado. The company is owned and
operated by the Ledezma family and provided a low bid of $4,886,511 to complete the Crossroads
project. Because McWhinney’s contribution to the project was the “last money in” means the stimulus
money ($3 million) and MPO grant ($1.2 million) will pay for a majority of the project.
In addition, bringing more renters to Loveland who depend on federal government Section 8 housing
vouchers to pay their rent is unlikely to help people already in the community looking for jobs.
Myth #3
Loveland Isn’t Building Enough New Multi-Family Housing Projects
Chad McWhinney argued, “Over the past 10 years the majority of apartments built in Northern
Colorado are outside Loveland.” He offered this as evidence that Loveland’s Capital Expansion Fees
are too high so people building apartments do not consider Loveland to build thus creating a shortage of
“workforce” housing.
In fact, the contrary is true. A disproportionate number of apartment units have been built in Loveland
compared with the rest of Northern Colorado over the past 10 years. Since 1999 the communities of Ft.
Collins, Greeley, Windsor and Loveland have granted 10,187 permits for multi-family housing
construction. Of those, nearly 2,000 were in Loveland. That means 20% of all multi-family housing
permits in Northern Colorado were in Loveland alone since 1999.
Loveland’s population comprises only some 10% of the 528,500 population of all Northern Colorado yet
granted 20% of all multi-family housing permits. McWhinney’s argument that “the majority” of
apartments built in Northern Colorado in the last 10 years were built outside Loveland is true but his
conclusion demonstrate specious reasoning.
Loveland doesn’t cover half the land mass of Northern Colorado and is home to only a small fraction of
the total population. (Reference: The Group Inc. website)
In 2006, Loveland issued more multi-family permits (429) than any other community in Northern
Colorado including Ft. Collins. Last year Greeley issued only three and Windsor zero while Loveland
issued 97 permits. Chad McWhinney’s argument that we lack new multi-family housing projects in
Loveland due to CEF's is not consistent with the facts.
Myth #4
Low-Income Subsidized Apartment Buildings Are Good For Loveland and Cost the City Less in
Government Services
The day after Chad McWhinney’s article appeared claiming low-income apartments are cheaper for a
community to service than single family residential the Loveland Connection published a front page story
demonstrating the opposite.
The Loveland Connection story reported on a government subsidized low-income apartment complex in
Loveland called Creekside Garden apartments. The article reported law-abiding residents are struggling
to deal with the influx of crime, gang activities and all night parties that turn into fights at dawn at the
subsidized "affordable" housing project.
Creekside Garden Apartments has generated over 50 calls to the police and injured two Loveland officers
responding to the affordable housing development. The costs associated with these policing efforts alone
diminish any potential benefit one could argue is creating by the “affordable” housing project. Chad
McWhinney, on the other hand, argued that such housing projects actually cost the city less to support
with local services.
Policing these low-rent subsidized apartments is difficult as compromised landlords accepting Section 8
housing vouchers cannot easily evict unruly tenants. Affordable housing is often a euphemism for people
unwilling to call the project what it is – government subsidized housing. Loveland has an abundance of
hundreds of available apartment units at the prices at or below those that qualify for McWhinney’s
proposed “affordable housing.”
Attracting people dependent upon welfare or other government hand-outs into a community turns a
handsome profit for the developer who is awarded federal tax credits but creates long-term financial
strains on the municipality. It also increases the number of low-income earners in the community who
are now competing with current residents looking for jobs.
Myth #5
McWhinney Family In Loveland 6 Generations And Just Trying To Help Their Hometown
Chad McWhinney, while supporting a project in 2007, made similar arguments before another city council
regarding his ties to the community and commitment to the region. However, the city was not in
Colorado but instead in Southern California. As reported by The Orange County Register on September
12, 2007,
“According to the Council members’ choice was Chad McWhinney, a developer who built the first
cluster of hotels and restaurants in Garden Grove’s side of Harbor Boulevard – the city-designated
resort area. McWhinney, who grew up in Huntington Beach, is excited about the opportunity, said
Jack Wolfe, the company’s president of Community and Mixed Use Development.”
In his guest column in the Loveland Reporter-Herald Chad McWhinney claims “The McWhinney family –
which has been a part of the Loveland community for more than six generations…” Ironically, the
Loveland Reporter-Herald ran an editorial alongside his column blasting “citizen journalists” who use
the Internet to distribute news. The editorial claimed only newspapers can “protect against potential
corruption” and not reprint company news releases or other propaganda that are not entirely accurate.
While there is no disputing the long heritage of the McWhinney family in Loveland, Chad McWhinney
must soon decide where his generation of McWhinneys grew-up -- in Loveland or Huntington Beach,
California?
| Barriers To Entry A key component of McWhinney's tax holiday request strategy is to ensure no other developer can also benefit from the proposed tax holiday from the CEF's (Capital Expansion Fees). According to sources inside city hall, McWhinney has been negotiating through Mayor Gene Pielin who directed City Manager Don Williams to shorten the period to only 30-45 days for the upcoming proposal. City Attorney John Duval is worried about the legal ramifications of doing this and asked for a longer tax holiday window to help obfuscate the fact it is being done only for McWhinney. Under the 14th Amendment of the U.S. Constitution all persons have a right to equal treatment under the law. Changing the law temporarily to benefit only one company could be challenged as a violation of the rights of other developers who must pay the fee. McWhinney has lobbied the city to keep the period as short as possible to close the door on any competition. The compromise between McWhinney and the city attorney is only 5 months -- from Tuesday night until December 31, 2009. City Attorney John Duval also directed staff to be sure and remind the media that "all companies" are eligible so that it appears the measure is for the general welfare of the community and not to favor only one company. Given the time required to file for a multi-family housing project it is unlikely any competitor to McWhinney will have time to get in under the new deadline. While illegal, the Loveland City Council appears to be changing the law temporarily to benefit just one company and provide McWhinney favorable tax treatment not available to other developers. |
| The proposed resolution will reduce nine CEF's (Capital Expansion Fees) for the following; 1. Fire Protection 61% 2. Law Enforcement 61% 3. General Government 61% 4. Library 61% 5. Museum 61% 6. Parks 61% 7. Recreation 61% 8. Trails 61% 9. Open 61% By reducing these fees the additional impact to these services will need to be paid by Loveland's current residents or the services reduced as the CEF's are a calculation of the cost to services of adding additional residents to the community. |