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Loveland - February 22, 2011

A carefully choreographed “public engagement” process for obtaining citizen input on how the council
should remedy a projected $3 million budget deficit beginning in 2012 has come off the rails.   Between the
second meeting on February 9, and the third meeting on February 16, attendance dropped in half from
nearly 100 to only 45 “citizen participants”  as the remaining participants expressed grave concerns over the
integrity of the city's process.

Ralph Trenary, former campaign assistant to Mayor Cecil Gutierrez, presided over the meetings which
were in fact directed by city staff members as a council appointed citizen committee Trenary chairs;
CFAC (Citizen's Finance Advisory Commission) assisted.  

The Problem

The City of Loveland’s net expenses will be $67.1 million next year while net revenue is projected to be
only $64 million.  The $3 million revenue shortfall will grow in future years according to the same
projections unless spending of general fund monies (services) are reduced or revenues (taxes) increase.
CFAC was asked to assist the city in collecting and sorting suggestions from the public over which taxes to
increase or services to cut.

Of the 150 new suggestions collected, none were voted on by the participants as promised nor will the
participants be allowed to prioritize their suggestions collected at the meetings.  Instead, each public
participant was only allowed to vote on topics or questions already prepared in advance by staff.  During
the “Wrap-up” session last week local attorney John Chilson complained loudly that the process lacked
specificity and saying, “There are a whole lot of things about this process that left me hanging.”

Coordinated by Assistant City Manager Renee Wheeler, another Loveland resident described the process as
feeling much like he was on the set of a “
Mockumentary” similar to the popular TV comedy Parks &
Recreation.  Citizen ideas collected through break-out sessions were routinely dismissed or rebutted by staff
in favor of pre-selected staff topics and carefully worded “themes” lacking any specificity or clear
definition.  "It made me sick to my stomach the phoney compliments and mocking tone from Renee" one
participant complained to LovelandPolitics.

By the second meeting on February 9, citizen participants were treated like “Jeopardy” contestants and
allowed only 5 seconds to read, consider and decide important questions posed by staff.  Unlike Jeopardy,
the questions flashing before them on a large screen were not about trivia but instead priorities regarding
whether certain taxes should be increased or services cut for Loveland residents.   

Clarification questions by participants (like which response means what exactly) were sometimes answered
but also greeted by Wheeler shouting back at the audience, “Go, go!” as results tabulated instantly through
electronic voting devices within 5 seconds. Participants grew wary of the barrage and begged for some
more time to at least clarify the questions but their complaints fell on deaf ears.

In response to angry complaints over the almost comical process, Wheeler downplayed the importance of
the answers.  She rationalized the hurried process by diminishing the value to the city of the citizen inputs
thus leaving some participants scratching their heads and asking why they even bothered to come to the

CFAC members and city staff chaired break-out sessions during the first two meetings and provided their
summary reports of the issues raised (see column right) by the participants in the third.  Wheeler explained
that citizen input would not necessarily be part of the recommendations finally provided to Loveland’s
Council as CFAC and city staff enjoy complete discretion over what they will choose to carry forward.  
Frustrated, a number of participants dropped out before the “wrap-up” meeting given the ambiguity over
whether their inputs would even be known to a higher level in the city and the staff’s direction that
participants’ ideas could not be voted upon or prioritized by the citizen group.

Like a real “Mockumentary” or game show the meetings were filmed and are available on
Youtube channel for public review and comment.  Another participant interviewed for this story said he felt
it was “a charade like set-up created by senior city staff and extremely disheartening…..I wasted my
time.”   While the CFAC members appeared engaged and interested in considering all public input, Wheeler
was not and made no bones about dismissing and arguing against perhaps the most popular of all the
publics choices.

Taboo Topics – Centerra and Employee Salaries

At least four topics were determined taboo by city staff before the Loveland Council even heard the public
input plan.  City staff raised the ire of Councilman Daryle Klassen when
presenting a slide entitled “Myths
– Items that did not Contribute to this Concern” refering to the deficit during a council meeting in early

The slide listed the purchase of property along
Highway 402, downtown improvements, vNet subsidies,
library expansions and employee pay and benefits as items that did not contribute to the city’s looming
deficit.  Councilman Klassen angrily objected, questioning the logic of anyone arguing that the single largest
item in the budget, personnel costs, does not contribute to the city's financial problems.  Indeed, only three
slides later in the same presentation a 3.5% increase in salary and benefits is called out as the second largest
“new cost” for the 2012 budget costing the city more than $2 million.

The vNet subsidy was paid from the city's general fund via a special council reserve account that is
replenished with general fund revenue each year.  While staff also appeared reluctant to touch the issue one
break-out group listed an end to the council's reserve account as the first remedy to solving the $3 million
deficit in defiance of staff's direction.

Tax Inequity - Wheeler Upset

Another topic Assistant City Manager Renee Wheeler appeared determined to nip in the bud is the tax
inequity between
Centerra and the rest of Loveland that has been the third rail of Loveland politics since
the agreement was signed in 2004.  A popular subject among the citizen participants, it was raised by at
least half the citizen groups and topped the lists of two groups as a potential remedy to the city’s projected
long-term budget deficits. Despite topping the list of three different break-out groups, Wheeler failed to
mention Centerra tax issues in the documents prepared for Council’s latest study session this week to
update Council on the progress of the "public" inputs.

Centerra receives tax waivers from the City of Loveland of 98% rebate of property taxes on qualified
parcels and 40% of sales taxes within Centerra for the next twenty years.   One unidentified gentleman in
the audience challenged the “Yellow Group” leader and CFAC member,  Jodi L. Radke by arguing
Centerra commercial properties pay 3.7% more taxes than residential properties.  Centerra’s Urban
Renewal actually allows selected Centerra property owners (by McWhinney
see Flex Plan) the right to pay
only the minimal agricultural land value assessments for a quarter century.

Radke’s group, like that headed by fellow CFAC member Bruce Finger, listed tax equity and increased
services from Centerra as considerations for balancing Loveland’s budget.  

When Bruce Finger, also a member of CFAC,  presented his group’s selection of Centerra tax inequity as a
problem,  Wheeler asked the citizens in a sarcastic tone,
“How many of you are enjoying the I-25 and
Eisenhower Interchange and how many of you are enjoying the Crossroads interchange.”
 She went
on to lecture those assembled that diverted sales and property taxes from Centerra are paying for those

In fact, the I-25 U.S. 34 interchange represents only some 10% of the Centerra bond debt monies while the
majority of funds to complete Crossroads came from federal stimulus money and not from Centerra as
promised in the 2004 agreement with Loveland.  While the city later amended Centerra’s agreement to
allow them out of obligations funded with other monies,  Centerra failed to reciprocate and offer an
increased role in providing services to for the tax deferred businesses and shoppers using city services.

As Centerra grows, the tax base for supporting the general fund services does not grow in proportion to
other areas of the city.  While both areas of Loveland require full city services, the larger number of people
and businesses paying 2% of their property tax and only 60% of the normal sales taxes to the city the worse
the situation becomes.    

The growing budget deficit can only be corrected when the 2004 Master Financing Agreement with
Centerra is revisited by the city and rebalanced.  Among the options is an increased role for the Centerra
Metro Districts in performing more quasi-governmental services to offset their collection of local taxes or
implementing a special tax within Centerra to recover some of the city’s lost revenue potential.

Looking Forward

On March 22, 2011 the Loveland City Council is scheduled to conduct a public hearing regarding the city’s
budget deficit and possible remedies to fix the problem.

It is unlikely the current council will muster the political will necessary to take-on an important special
interest like Centerra/McWhinney due likely to the influence McWhinney enjoys over Loveland's Chamber
of Commerce and other key groups in town.  Until the city’s leadership can throw off the yoke of
McWhinney influence, the increasing cost of the 2004 Centerra agreement is likely to continue eroding
Loveland's tax base therefore necessitating service cuts or tax increasing to avoid a reckoning with

Join the online conversation about this story -
Loveland Citizens Drop-Out of

Actual Citizen Inputs -
As reported by each group's chair
during the Feb. 16, 2011 meeting.

Purple Group
1.  Centerra does not pay 3%
sales tax to city, instead to
District.  Have Centerra pay 3%

2.  Ensure Centerra Pays For all services per
metro-district agreement (property tax rebates
starve county and city resources)

Lavender Group
1.  Determine legitimate role
for local government
2.  Cost / benefit decision making

Blue Group
1. Pay for services / identify costs
2. Lean manufacturing (deliver quality “at right

Yellow Group
1. Eliminate Council reserve fund
2. Bring metro district (Centerra) into tax
parity (Totally funds the $3.5 million shortfall)

Green Group
1. Public safety should be TOP priority with
infrastructure and streets second.
2. Each department head should rank priority
of service provided
Renegotiate Centerra sales tax

Grey Group
1.  Are the inefficiencies eliminated?
2.  Support Strategic cuts based on qualitative
Senior City Staff Misleads
Residents on Centerra Tax

Assistant City Manager Renee Wheeler
attempted to shut-down citizen input that
focused on
Centerra's metro districts diverting
hundreds of millions of dollars in future revenue
away from the city's general fund during the
Feb. 16, "Wrap-up" meeting in city hall
searching for ways to solve city budget

When one break out group reported their finding
that the systemic budget shortfall may be best
addressed by revisiting the Centerra tax
diversions Wheeler asked rhetorically,

“How many of you are enjoying the I-25 and
Eisenhower Interchange and how many of you
are enjoying the Crossroads interchange.”

In fact, the vast majority of the funds for
improving Crossroads Blvd. underpass
contemplated in the 2004 Master Finance
Agreement should have come from Centerra but
did not.

Thanks to midnight amendments to the plan in
later years,
McWhinney's Centerra wiggled out
of its primary funding obligations by allowing
"other government funds" from President
Obama's stimulus plan to supplant their financial

What Loveland's previous councils failed to do
was negotiate any reciprocal concessions from
McWhinney's metro districts thus leaving
Centerra with the future tax revenue but no
longer the obligations for various regional
transportation improvements promised in 2004.  

Loveland's cost continue to rise as the new
streets need to be plowed and maintained using
general fund monies and now
an agreement to
even pay for landscaping around Centerra's
signs near I-25 and US 34 is tapping city funds.

In addition, McWhinney's Centerra also has
failed to improve the I-25/ US 34 bridge width
(number of lanes) to accommodate increased
traffic flows.  The same 2004 agreements also
anticipated $50 million coming from Centerra for
that project that appears will now never be
funded.  Instead, McWhinney was forced to
spend less than $13 million for "interim
improvements" a
fter a public uprising forced
former Mayor Pro Tem David Clark and his
colleagues to allow McWhinney escaping even
the interim improvements to I-25 and US 34.