| LovelandPolitics.com |
| McWhinney's Promenade Shops In Foreclosure After failing to repay a $116 million loan from 2004 due in 5 years |
Loveland - November 18, 2009
Many of the signs were already there. Merchants at The Promenade Shops at Centerra were angry
when they received higher fees for minor snow removal during the first big snow this year. The
owners have argued in public and McWhinney said they would buy-out their partner.
Routine maintenance services like emptying community garbage containers were not being
performed on the same schedules as before while McWhinney was trying desperately to renege on
their obligations to fully fund the interim improvements they promised to the I-25 and Highway 34
interchange.
The Promenade Shops at Centerra were approaching formal foreclosure as the managing partners
and McWhinney searched desperately to renegotiate a short-term loan used to construct the
sprawling shopping center east of I-25 in an area of Loveland annexed only for McWhinney to build
the retail center using government subsidies.
According to records filed at the Larimer County Public Trustee's Office, KeyBank National claims the
Centerra Lifestyle Center LLC owes just under $113 million on a $116 million loan taken out in 2004.
Poag & McEwen Lifestyle Centers and a subsidiary of McWhinney together own the Promenade Shops
at Centerra.
The expression that success has a million fathers but failure is an orphan is certainly the rule
McWhinney appears to be playing by as the Loveland based developer is trying desperately to
distance itself from a project they have blown their own horn over many times in previous years.
Poag & McEwen Told Loveland Project Was Over-Built in 2007
McWhinney is now pretending to be only the "silent partner" that provided the land while allowing
blame for the foreclosure proceedings to fall upon their managing partner in the project Poag &
McEwen. A Poag & McEwen employee was interviewed by LovelandPolitics in 2007 during a
proposal for McWhinney's Grand Station who provided "off-the-record" background comments
regarding their troubled relationship with Chad McWhinney.
The researcher cited Chad's now ex-wife as a poor source of market information Chad relied on to
determine what type of store would do well in Loveland. Poag & McEwen employees were also
frustrated by McWhinney's attempts to sign advance leases for Grand Station in direct competition
against Poag & McEwen's professional leasing staff working to fill Promenade Shops that was only
77% full at the time. He called the relationship "an embarrassment" as McWhinney's "ammeter"
leasing staff for Grand Station attempted to contact coveted higher-end retailers at the same time the
Promenade Shops at Centerra were courting those same potential tenants.
He said the confusion was "not helping" their ability to lease space in a timely manner.
According to Poag & McEwen's researcher the majority of the $100,000 per year earners in Northern
Colorado are school administrators or farmers. These two groups are not as likely to shop in trendy
or more expensive clothing stores despite their income level thus demonstrating the market data
obtained by McWhinney was false. McWhinney argued the some 500,000 residents of Northern
Colorado had incomes sufficient to support an additional shopping complex in Centerra at the time
while Poag & McEwen protested that the Promenade Shops at Centerra was already overbuilt.
McWhinney also attempted to buy-out Poag & McEwen in the same time frame but failed to offer
terms they could mutually agree upon. Loveland city staff failed to listen to Poag & McEwen as they
relied too heavily on Chad McWhinney's assurances he would soon buy-out the 50% partner in the
project -- so objections by the retail experts over the Grand Station proposal and other McWhinney
gambles was not fully considered.
Limited Liability Ownership
While the former Loveland City Council assured residents McWhinney stood behind every project in
Centerra and would keep their promises to the city, McWhinney was spending thousands of dollars in
attorney fees making sure they would not be responsible. By isolating each project into a separate
LLC (limited liability company) McWhinney could possibly walk away from any single project with no
liability coming back to the parent company or the McWhinney brothers themselves who run the
various limited liability companies.
Metro District Impacts
McWhinney CEO Doug Hill is telling the media that tightened credit markets and the global financial
crisis are causes of the partners being unable to obtain credit and financing.
The uncertainties regarding future management and ownership of the Promenade Shops at Centerra
could, in fact, damage their ability to draw or retain quality tenants. The Centerra Metro District also
owes some $112 million from bond debt issued last year (this is in addition to the private debt now
in default). The escalating payments and declining revenue at Centerra could cause trouble in the
future if sales do not grow soon.
Unlike the City of Loveland, KeyBank has a judiciary responsibility to its owners and other banks it
organized to fund the Promenade Shops at Centerra and is therefore less likely to renegotiate more
favorable terms for McWhinney without extracting either equity or better leverage over McWhinney.
The Loveland Connection appears to be reporting accurately on this story while the Loveland
Reporter-Herald is playing-up McWhinney's spin that they are just a bystander. This tactic is likely
to backfire in Loveland where residents have been fed a steady diet of public relations claims by
McWhinney taking credit for every lease, job and sales tax revenue generated by retail center --
without ever mentioning the managing partner.
In addition, attempts to separate the project's financial health from the ability to find new financing
is a specious argument given the two are directly related. One McWhinney representative in Garden
Grove, California has been telling the public the national economic down-turn will not impact
McWhinney's ability to finance an ambitious new commercial project there. Clearly the lenders will
need to look at the viability of Promenade Shops and its ability to repay a loan over the long term.
The lack of confidence in the project by commercial lenders that is shutting doors to other financing
options for the project should give Loveland pause.
Many of the signs were already there. Merchants at The Promenade Shops at Centerra were angry
when they received higher fees for minor snow removal during the first big snow this year. The
owners have argued in public and McWhinney said they would buy-out their partner.
Routine maintenance services like emptying community garbage containers were not being
performed on the same schedules as before while McWhinney was trying desperately to renege on
their obligations to fully fund the interim improvements they promised to the I-25 and Highway 34
interchange.
The Promenade Shops at Centerra were approaching formal foreclosure as the managing partners
and McWhinney searched desperately to renegotiate a short-term loan used to construct the
sprawling shopping center east of I-25 in an area of Loveland annexed only for McWhinney to build
the retail center using government subsidies.
According to records filed at the Larimer County Public Trustee's Office, KeyBank National claims the
Centerra Lifestyle Center LLC owes just under $113 million on a $116 million loan taken out in 2004.
Poag & McEwen Lifestyle Centers and a subsidiary of McWhinney together own the Promenade Shops
at Centerra.
The expression that success has a million fathers but failure is an orphan is certainly the rule
McWhinney appears to be playing by as the Loveland based developer is trying desperately to
distance itself from a project they have blown their own horn over many times in previous years.
Poag & McEwen Told Loveland Project Was Over-Built in 2007
McWhinney is now pretending to be only the "silent partner" that provided the land while allowing
blame for the foreclosure proceedings to fall upon their managing partner in the project Poag &
McEwen. A Poag & McEwen employee was interviewed by LovelandPolitics in 2007 during a
proposal for McWhinney's Grand Station who provided "off-the-record" background comments
regarding their troubled relationship with Chad McWhinney.
The researcher cited Chad's now ex-wife as a poor source of market information Chad relied on to
determine what type of store would do well in Loveland. Poag & McEwen employees were also
frustrated by McWhinney's attempts to sign advance leases for Grand Station in direct competition
against Poag & McEwen's professional leasing staff working to fill Promenade Shops that was only
77% full at the time. He called the relationship "an embarrassment" as McWhinney's "ammeter"
leasing staff for Grand Station attempted to contact coveted higher-end retailers at the same time the
Promenade Shops at Centerra were courting those same potential tenants.
He said the confusion was "not helping" their ability to lease space in a timely manner.
According to Poag & McEwen's researcher the majority of the $100,000 per year earners in Northern
Colorado are school administrators or farmers. These two groups are not as likely to shop in trendy
or more expensive clothing stores despite their income level thus demonstrating the market data
obtained by McWhinney was false. McWhinney argued the some 500,000 residents of Northern
Colorado had incomes sufficient to support an additional shopping complex in Centerra at the time
while Poag & McEwen protested that the Promenade Shops at Centerra was already overbuilt.
McWhinney also attempted to buy-out Poag & McEwen in the same time frame but failed to offer
terms they could mutually agree upon. Loveland city staff failed to listen to Poag & McEwen as they
relied too heavily on Chad McWhinney's assurances he would soon buy-out the 50% partner in the
project -- so objections by the retail experts over the Grand Station proposal and other McWhinney
gambles was not fully considered.
Limited Liability Ownership
While the former Loveland City Council assured residents McWhinney stood behind every project in
Centerra and would keep their promises to the city, McWhinney was spending thousands of dollars in
attorney fees making sure they would not be responsible. By isolating each project into a separate
LLC (limited liability company) McWhinney could possibly walk away from any single project with no
liability coming back to the parent company or the McWhinney brothers themselves who run the
various limited liability companies.
Metro District Impacts
McWhinney CEO Doug Hill is telling the media that tightened credit markets and the global financial
crisis are causes of the partners being unable to obtain credit and financing.
The uncertainties regarding future management and ownership of the Promenade Shops at Centerra
could, in fact, damage their ability to draw or retain quality tenants. The Centerra Metro District also
owes some $112 million from bond debt issued last year (this is in addition to the private debt now
in default). The escalating payments and declining revenue at Centerra could cause trouble in the
future if sales do not grow soon.
Unlike the City of Loveland, KeyBank has a judiciary responsibility to its owners and other banks it
organized to fund the Promenade Shops at Centerra and is therefore less likely to renegotiate more
favorable terms for McWhinney without extracting either equity or better leverage over McWhinney.
The Loveland Connection appears to be reporting accurately on this story while the Loveland
Reporter-Herald is playing-up McWhinney's spin that they are just a bystander. This tactic is likely
to backfire in Loveland where residents have been fed a steady diet of public relations claims by
McWhinney taking credit for every lease, job and sales tax revenue generated by retail center --
without ever mentioning the managing partner.
In addition, attempts to separate the project's financial health from the ability to find new financing
is a specious argument given the two are directly related. One McWhinney representative in Garden
Grove, California has been telling the public the national economic down-turn will not impact
McWhinney's ability to finance an ambitious new commercial project there. Clearly the lenders will
need to look at the viability of Promenade Shops and its ability to repay a loan over the long term.
The lack of confidence in the project by commercial lenders that is shutting doors to other financing
options for the project should give Loveland pause.
| Chad McWhinney's "Guest Column" Published Oct. 11, 2009 in the Loveland Daily Reporter- Herald. Chad McWhinney Wrote; "I am writing to clarify misinformation that has shaped the perspective some have about Centerra..." Not Exactly - see responses below Chad McWhinney Wrote: “First, some background on the public-private partnership between the city of Loveland and Centerra. When signed in 2004, the agreement included three key goals: bring jobs to Loveland…..” Not Exactly Of the approximately 52,959 words in the Master Financing Agreement (MFA) signed between Loveland and McWhinney in 2004, the word job doesn’t appear once nor is the word goal mentioned anywhere in the largely legal document governing the relationship. Chad McWhinney Wrote: “Thanks to the building of a 303-unit apartment complex, and updates at the intersection of I-25/Hwy 34 and I- 25/Crossroads Boulevard, there also will be hundreds of well- paying construction jobs added in the area in the coming months.” Not Exactly Jalisco International, Inc. of Commerce City Colorado was awarded the contract to improve Crossroads Blvd. On Oct. 6, 2009 the Denver firm, New Design Construction, was selected to complete the limited improvements to the I-25 and Highway 34 interchange. Both companies will use existing employees from the Denver area. No conditions in the 2004 agreement or more recent and additional subsidies given McWhinney require them to hire loveland workers. A McWhinney representative at one council meeting even scoffed at the mere suggestion it be included as a condition. Chad McWhinney Wrote: "To date the partnership has contributed approximately $25 million of the $29 million designated for three much-needed regional road improvements.." Not Exactly McWhinney and the previous council amended the agreement to redefine what constituted "regional improvements" to include a Centerra road not hardly serving regional needs. In 2006 they also changed the agreement to allow funding from outside sources to satisfy McWhinney's obligations under the agreement. The $25 million McWhinney is claiming credit for includes other moneys not contributed by the "partnership." Crossroads improvements are mostly being paid by federal funds ($4.2 million from stimulus and other federal funds) while McWhinney's taxing district was dragged kicking and screaming to fund even the smallest road improvements to the I-25/U.S. 34. Chad McWhinney Wrote: On the I-25/Highway 34 improvements "...the city awarded the job to a contractor who bid $8.7 million. On top of that there will be nearly $300,000 of immediate ascetic improvements." Not Exactly The council DID NOT approve the additional $300,000 for ascetic improvements on Oct. 6, 2009 but only passed the $8.7 million per McWhinney's original request. The 2004 agreement with the city called for McWhinney's taxing district to fund $12.5 million in improvements to that interchange by 2010 and another $50 million by 2024. Loveland staff indicated the $8.7 is likely all the city should expect to be spent on that interchange. Chad McWhinney: "The McWhinney family has been a part of Loveland for six generations.." Not Exactly The McWhinney brothers grew-up in Southern California. Chad McWhinney has described himself as a native of Huntington Beach California. Similar claims of being developers concerned for their community have been used to promote a Garden Grove, California government subsidized project. Troy McWhinney lives in Ft. Collins and the other brothers still reside in California according to former McWhinney employees. |
Bob Rogers, Senior VP & General Counsel for Poag & McEwen spoke to Council along with John
Cirillo, VP Marketing Research. Poag & McEwen owns and operates 16 "Lifestyle Centers" across
the country. Simply put, the demographics in Northern Colorado (550,000 population)cannot
support two large "Lifestyle" type retail centers side-by-side.
They also explained that Promenade has many thousands of unleased retail that will be competing
with Grand Station if it is built.
Poag & McEwen reps were surprised to learn the Council wasn't really holding a public hearing
and had already decided to ram through the subsidy for McWhinney before the Nov. 6, election
where Brown, Dozier and Pielin may not return to Council. Pleas for more time to study the matter
were ignored by the Council and the Grand Station subsidy was passed 7-1 with the Mayor voting
No. Pielin did not attend the meeting.
Cirillo, VP Marketing Research. Poag & McEwen owns and operates 16 "Lifestyle Centers" across
the country. Simply put, the demographics in Northern Colorado (550,000 population)cannot
support two large "Lifestyle" type retail centers side-by-side.
They also explained that Promenade has many thousands of unleased retail that will be competing
with Grand Station if it is built.
Poag & McEwen reps were surprised to learn the Council wasn't really holding a public hearing
and had already decided to ram through the subsidy for McWhinney before the Nov. 6, election
where Brown, Dozier and Pielin may not return to Council. Pleas for more time to study the matter
were ignored by the Council and the Grand Station subsidy was passed 7-1 with the Mayor voting
No. Pielin did not attend the meeting.