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Loveland - March 10, 2011

LovelandPolitics has learned that McWhinney requested the secret council session held March 1, 2011 to “float a trial
” with council to see if enough members of council would support additional changes to McWhinney’s 2004 Master
Financing Agreement (MFA) with the city before making the request public.

Loveland City Attorney John Duval continues to defend what some have called an “
abuse of process” by claiming the council
was not violating the law when they met in secret March 1, to deliberate on a proposal never allowed to be seen by the public.  
Three councilors,
Kent Solt, Joan Shaffer and Cat McEwen voted against the closed door meeting but attended anyway to
learn more about McWhinney’s proposed amendment to their MFA (Master Financing Agreement) with the city.  

Kent Solt complained when the vote was taken to go into closed session, “I really believe when we deal with
amendments to the MFA those should be public.  I understand there could be some negotiation element to this but I
believe the executive session will mix the proposal by the applicant with negotiations.

Joan Shaffer stated, “Will we be receiving information that lays out a proposal for development….”   
Duval responded he would indeed be briefing the council on the “
background” of the proposal for clarification but the purpose
of the closed door meeting would really only be to discuss "
the points of negotiation."

Rather than a discussion regarding a negotiation, LovelandPolitics learned the secret council meeting instead involved a consensus
building opportunity to see what elements of the proposed changes to the MFA (a 2004 tax diversion agreement by the city with
developer McWhinney) may or may not fly with certain members of council.  One attendee stated this week, “
[McWhinney] were clearly trying to see if they could get five votes for the proposal before making it public.
”  While no
official vote was taken during the closed door meeting comments by each councilor in reaction to the proposal were clearly an
opportunity for staff to count the votes in support of the proposed amendment and report back to McWhinney.

The problem is the law doesn’t permit either McWhinney or Centerra (the public taxing entity they operate) the option to make
or deliberate on any development or agreement modification proposals in secret.  Both Loveland’s City Council and the Centerra
Metro District Governing Board are public entities that must meet and deliberate in public according to Colorado law.   

Title 24 Article 6
2(a) All meetings of two or more members of any state public body at which any public business is discussed or at
which any formal action may be taken are declared to be public meetings open to the public at all times.  

Exceptions to this law include personnel matters, litigation discussions and negotiations where public knowledge of the
government's position could detrimentally impact their negotiation position.  In this case, the closed door meeting regarded a
proposal that officially doesn't exist as none has been submitted yet to the city.

Most developers and residents must follow an open and public process when seeking approval from public entities for a
proposed development or agreement change.  McWhinney and the Metro District they operate, however, have a long and tainted
history of using back room deals to first negotiate with council any proposal or changes to existing agreements before it is made
public to avoid any potential scrutiny.

McWhinney has relied in the past on a process known sometimes as the “
two-by-two” meetings by briefing two councilors at a
time in a series of back to back meetings to evade the open meetings law requiring the discussions be public if it involves three or
more councilors.  Before that most
MFA amendment proposals were discussed in closed session.  By April of 2008 McWhinney
had perfected the "two-by-two" process to avoid the open meetings law debates that were created when their items were
discussed in closed sessions.

Mayor Cecil Gutierrez, a longtime critic of the "
two-by-two" approach and closed door meetings, would not permit McWhinney
to brief their proposal for amending the MFA this time by conducting a series of “
two-by-two” briefings with council.  Instead, a
secret plan was hatched to have City Manager Bill Cahill call each councilor individually the morning of March 1, 2011 and brief
them directly over the phone on McWhinney’s proposal.

By evening the same day, council could than meet in private closed session to discuss negotiations on the still secret proposal.  
Operating more like an illegal cartel than public entity, City of Loveland officials were careful not to write anything down about
the proposal nor correspond with one another in writing or by email on the matter to avoid creating any record of the proposal
that could be discoverable by the public.  Staff were also instructed to avoid taking notes in meetings that could later be

MFA Amendment Possibly Linked To ACE   (March 16, update - the MFA Amendment is not related to ACE)

One attendee of the closed door meeting March 1, would not confirm that McWhinney’s proposal to amend the MFA was
unrelated to the “ACE” project involving the Agilent property.   This raises the question that if it were unrelated they could easily
deny the connection without revealing anything specific about the proposed amendment.  Instead, everyone involved in the secret
deliberations over the proposal are keeping quiet.

Depending on city staff’s report back to McWhinney regarding the reaction of each Councilor to the proposal, the proposal may
be public soon as McWhinney officially seeks approval and places the item on the agenda of a public and open meeting.  This is
unlikely to occur unless McWhinney knows five votes (a majority of the council) are already in favor of the proposal regardless of
what is learned in public comments or deliberations over the request.

In the end, Mayor Cecil Gutierrez appears to have changed nothing as the deliberation by council on the proposal has occurred in
private and the McWhinney’s continue to receive the feedback they were looking for to tweak their proposal based on council
comments without the inconvenience of the public process required by law.
McWhinney Floats Trial Balloon on
MFA Amendment
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Chronology of MFA and McWhinney Subsidies

2004 – Deal to Flow $691 million in future sales
taxes and property taxes to McWhinney Controlled
Centerra Metro Districts
1. Master Financing Agreement (MFA)
 2. Urban Renewal Authority (rural
     land blighted)

2004 - McWhinney’s Centerra Metro District
Creates $57,000,000 in Public Bond Debt to
spend on “public improvements”

2006 – Rich Shannon, McWhinney VP, joins
effort by RTA to create a regional 1% sales tax to
pay for regional transportation projects.

2006 – Loveland City Council (with help from
Shannon) includes ONLY McWhinney obligated
“regional transportation projects” for Loveland’s
share of RTA

•Dec. 5 2006 – Loveland City Council amends
MFA stating McWhinney will be released from
obligation to fund “regional transportation” projects
if “other” public funds become available.

•2007 – RTA falls apart due to neighboring cities
angered that Loveland diverting proposed RTA
funding into already funded McWhinney obligated

•2008 – McWhinney’s Centerra District takes out
$112,000,000 million in public debt (pays off 2004
issue) with floating interest rates fixed through
“synthetic” fixed rate agreement with RBC –
Statndard & Poors rates “Credit Watch Risk” –
McWhinney spends through the public monies and
now want $12 million in escrow for I/25-34

•2009 - Loveland proposes only McWhinney
obligated improvements for I-25 / Crossroads
Blvd. improvement’s for federal “stimulus” dollars
($3,000.000) thus again letting McWhinney off-the-
hook for prior obligations