Following the recent foreclosure announcements regarding The Promenade Shops at Centerra we received many requests from our readers to better explain Centerra’s public bond debt that we have alluded to in the past but not covered in detail.
Click here to read the story detailing the debt and the escalating payments obligated until 2029. McWhinney has reported to locally elected officials the bonds are a fixed interest rate and Centerra is financially sound.
A closer look reveals the bonds issued in 2008 are “variable” rate bonds now at 3.5%. Centerra has signed an agreement with RBS called a “swap agreement” to limit their exposure to changing interest rates but there is risk in these types of agreements. This is explained in more detail towards the end of our story.
Having spent the money from the 2008 bonds McWhinney has been desperately seeking ways to continue developing Centerra with other types of tax waivers and government subsidies. According to the 2008 Centerra audit, the escalating bond debt service payments will exceed current revenues by 2011. Not counting for maintenance and other obligations of the Centerra Metro Districts, failure to continue growing may cause a financial crises as the district will need just under $10 million per year to make the annual bond debt payments. Centerra’s 2008 revenue was only $8 million (property taxes $5 million and “fees” or sales taxes just over $2 million). You can see the reason for concern.
Thanks for your outstanding research and reporting on this. It’s worse than I (or perhaps anyone) thought.
Reading this draws immediately to mind some of the shenanigans that led to the current national economic doldrums.
It makes me angry to think that the City Manager and former Council (including 3 still on Council) were so irresponsible with our taxes, in giving them nearly everything they asked for, and letting them off the hook for the few obligations they assumed.
It also angers me some that I can’t find these alarming details in any newspaper (sorry) . I assume you’re doing this on a shoestring, because I don’t see a lot of ads here….which makes the papers’ poor reporting all the more maddening.
Again, another great job of reporting. Whether a reader is for or against what has transpired regarding Centerra, you’ve done some real heavy lifting to provide context to a complicated story.
And I think there ought to at least be general agreement that this one is complex.
There are, however, some simple points (and questions), too:
1) Local American economies, traditionally, evolved to meet community needs. Can replacing Mainstreet with “lifestyle centers” really work?
2) The role of government should promote economic development, but should it be a “decider” who wins and loses? Especially when the money guys seem to have so much influence?
3) Can downtown Loveland and Centerra’s commercial interests both survive? I don’t think so. That begs the question: which of the two has gained the most by past council decisions? Has the playing field been level?
Economic engrineering, like its social cousin, can be dangerous ground. A lot of attention has been paid to the social/cultural wars — not so much to the economic side. And so we’ve seen corporate welfare on a grand scale brought to us in Loveland by a self-styled conservative Republican majority in positions of power that has bowed to special interests, the Chamber of Commerce and the development crowd.
Setting a new course won’t be easy. Voters have taken the first step.
I knew something was pretty rotten the first time I presented a petition to City Council and it was rejected as unimportant. And my two representatives on the council at the time just sat on their hands.
Hope more will read the information you’ve provided, and reach their own conclusions.
That’s how democracy really works.
Tony Benjamin,
Loveland
Just a comment on the “growth or die” sentiment.
Loveland got hooked on growth like a junkie gets hooked on cocaine.
The money comes in, the feelings are good, everything’s booming — until the bust. Reality kicks in.
We need to pay for the services we expect, but putting all our eggs in the growth basket is foolish. Those who took us down this path need to be replaced.
It’ll take some different thinking; new ideas, retreachment.
Loveland isn’t dead, but the shop-worn ideas are.
There reamains on the City Council a few Trogs — the staff bully, the no-nothing/say less and the spouter of historonics.
How this turns out is not up to them. It’s up to us.
Tony Benjamin,
Loveland
One comment to Tony. While the past Council majority may indeed be Republican in their party affiliation, they are NOT conservatives; at least not in the fiscal sense. (Of course, neither are they liberal or progressive or libertarian.) They’re part of the G.O.P. that believes the party exists almost solely for the benefit for self-selecting businesses. This is not just my view…you can read it in the remarks of then McWhinney representative Rocky Scott when he. Marostica, Kaufman and others spoke to the RH (in 2007, I think) about taking back the Party for its “true constituency – the business community”.
They don’t believe in limited taxes or limited government per se; but in fact believe it exists to further those selected businesses and their friends.
So new and higher taxes are good with them, in fact, as long as they benefit the developers and land speculators….the people who really matter in their view. That’s why that majority on Council wanted the lodging tax, for example. You can bet that some group will to try to use that to build a conference center or other attraction out at McWhinneyville. That’s also why they wanted a new RTA tax…. to build roads for the same friends. They’re the “tax-and-spend” Republicans, only they want to redistribute the weath from the bottom many to the top few…promising it will all trickle back down somehow.
Hello Harry,
I hear you loud and clear.
These are not my grandfather’s Republicans — the ones I could disagree with, yet still admire.
Tony Benjamin,
Loveland
Thanks for the kind comments. It is a refreshing break from the threats we receive. We try and keep the record of what is happening but it is hard sometimes to keep pace.
Many communities get to debate your first comment Tony about how the city should develop. On LovelandPolitics we are only asking why everyone else should be paying for the expansion of McWhinney’s empire building. The city’s development policy appears to change with the transfer of title of commercial property. What may not be approved for one owner is instantly a good idea if McWhinney buys the property.
The debate on whether it is good for the community seems to be another topic not yet hardly visited. Minimally the city’s development policy should be based on the parcel and not the owner as a matter of law.
In the meantime, the head of Loveland’s Chamber wrote a letter to the Reporter-Herald claiming they are funded mostly from private contributions and haven’t benefited from city money. I guess fact checking letters only applies to some readers as there was some deal involving their headquarters and McWhinney and the city but I don’t remember the details.
Also, a number of readers have sent us the recent Denver Post article regarding the 300 unit luxury apartments McWhinney is building with Chad’s quote about learning to dance in the rain. Again he failed to recognize his “partner” the city taxpayers who are holding the umbrella over his head.
When they don’t pay the same property taxes as everyone else, get a reduction on the development fees and can use Metro District money to subsidize the “infrastructure” for their projects — who says its raining in Centerra?
Where and when was that picture in your story taken? Chad almost looks like he has a mullet.
During a Loveland City Council meeting earlier this year.
It’s wrong for people to state facts about the mud slinging this effort does- those are supposed threats? But it’s acceptable for you to publish explicity threats and to encourage threats against others?
It’s all right for you edit comments submitted here and twist their meanings, but it’s wrong for others to supposedly misquote you?
Does the word ‘hypocrite’ mean anything to you?
You’re nothing trash, a liar, a coward, and a fraud.
Does anyone else comprehend what Nicholas is saying (aside from the name-calling) in his comments? I’ve never read anywhere here published threats or encouragement thereof, by the reporter, or bloggers.
Methinks this site may be hitting too close to home for some. My advice to same: if it (the truth) hurts too much, don’t read it. Stick to pap- it can easily be found at your local newstands.
Well,
Everyone gets to have a say here.
What Nicolas is saying, of course, is anyone’s guess.
It’s sort of English. I think Nick missed Sentence Construction 101.
This is, as the sub-head says, Loveland’s free speech forum — pro, con and every other which-away.
There’s also some reporting and commentary not found elsewhere.
A vigorous, rich debate is essential for democracy to succeed.
Some folks, apparently, don’t buy into that notion.
To paraphrase (i think) Jefferson: I don’t know what Nicholas is saying, but I will fight for his right to say whatever it is .
And this is Jefferson, for sure: If a nation expects to be ignorant and free … it expects what never was and never will be.
Keep up the good work, Mr. Administrator. T
Tony Benjamin,
Loveland
This website is the ultimate tribute to the First Amendment! I hereby nominate you for a Thomas Paine Award.
Thanks as always for your excellent reporting and analysis. Lord knows the local “newspapers” have no interest in doing this kind of real journalism.
Is this venture public or private? Is Loveland Politics upset with a private entity or is Loveland Politics upset with Loveland City Government? On one had you say this is public debt and a real problem for Loveland but on the other hand you say this is basically a private venture.
If this is private, then you have no ground for grievance. Private is private, unless Loveland Politics does not believe in private property?On the other hand if this is public them you do have grounds. Contact your elected officials, amend your city charter and amend the State Constitution.
You provided an example of Centerra revenue growing at 2% till 2029. You pointed out, this was a doomsday scenario, which it is. However 2% annual growth for the next 20 years is a completely uniformed assumption. When the economy recovers, Centerra will have years in which revenue grows 20-30%.
Admin, when did the Centerra tax agreement start? Your chart shows the revenue being less than the annual payments even with a 2% growth. Do you know what the average annual growth has been since the Centerra Tax agreement was started?
Steve
I will respond to “The Joker” “Objective Observor,” “Steve,” and “Cato” as you all are using the same computer to post various comments on this blog. Or is it the same individual using multiple names?
LovelandPolitics has never called the Centerra Metro Districts a private entity nor referred to the Municipal Bond debt it has taken out as “private” debt at any time. You argued it was largely a private fund under several pseudonyms.
Though it is operated like a private entity and the funds do go to some private benefits; the Centerra Metro Districts 1-5 are “quasi-public” government agencies operating under the authority of the State of Colorado constitution as a subdivisions of the state government supervised by DOLA (Department of Local Affairs) and the City of Loveland. If Centerra fails to repay the bonds the taxpayers will need to repay the debt. This is not a “private” debt but instead a “public” debt. Yes, the bond debt holder gets first call on local taxes (property and sales) collected within the Centerra area before Loveland.
Maybe your confusion over whether it is “public” or “private” stems from the fact the City of Loveland and McWhinney have provided contradictory messages about Centerra. When there is a need to cover an expense or subsidize a Centerra obligation with federal government funds it is suddenly a public entity in need of assistance that McWhinney never promised to sustain alone. When McWhinney is communicating to the Denver Post or Loveland Reporter-Herald the money being spent in Centerra is McWhinney’s investment in the community and when collecting tenant lease money for their properties located inside Centerra it becomes a bonus McWhinney offers tenants among other publicly funded amenities. I believe the proper term describing this is “Privatize Profits, Socialize Losses” or as others call it “corporate welfare.”
The question you asked under the name Steve was when did the tax agreement begin. The 2004 MFA (Master Financing Agreement) would be the best place to start. Yes, you are correct revenue did grow quickly from 2004 to 2008. They also spent nearly $100 million of Bond Proceeds during that same time period to subsidize that rapid growth. Whether Centerra can bring on new projects without taking out significantly more public debt remains to be seen and will determine the financial health of the Centerra Metro Districts.
The chart does not show a 2% growth in revenue but only the 2008 revenue and a red line tracking the public debt service obligation going until 2029. A modest growth in revenue over a prolonged period would give the Centerra Metro Districts enough funds to repay the debt but that is all. Have you forgotten the other obligations? Regional transportation projects, landscaping, maintenance etc…
A good background story you should reference is McWhinneycrisis100
Who is Steve? So you can track IP addresses, who cares, this is nothing new. Does it really matter who post under what name? Do you want my SS number and DL number?
You assume that any view point different than yours is adversarial. This is not the case. I am just trying to help you bring your never ending rant to a conclusion.
What is your grievance and what are you prepared to do about it?
What is the point of Loveland Politics? Simple watch dog? Town crier?
Seems as though many, many people come here to get involved, only to get stone walled by yet another wannabe power lord. You are no better than government or McWhinney.
Grow up. Get real. Get focused. Gather enough signatures to force McWhinney to privatize their bond. Get another petition that will requiire McWhinney to pay the normal city tax rate. After your measures garner voter approval, be prepared. Loveland City government will have to provide substantial services to district one. What will you have gained?
Do something or get off the pot.
It is called fascism. Many wars have been waged. You need to realize that this was legal and one of the many downsides of government. Government tends to do things that man people do not want. The only redress in Colorado is Tabor. Tabor required that this bond go to a vote of the people.which it did not. What if the voter would have said yes? Then what? In a civil society with government , private property and multiple factions, you do not always get your way.
There is a solution. It will not necessarily erase the past it will however change the future. When it comes to politics you must have 5-25 year horizon. Looking in the rear view mirror is nothing more than mental masturbation.Check out this effort. If you you are serious about doing something, these people need your help!http://www.limitcodebt.com/
I still have not figured out how this is public debt? The debt is to be repaid by fees collected at Centerra and McWhinney is responsible for all liability. How is this public debt? It appears that Loveland City Government used its credit worthiness to gather a bond for McWhinney. Similar to a cosigner yet with none of the liability.
This is uncharted territory with many open ended questions. It is better to avoid this type of arrangement all together. However Loveland can NEVER go back in time and what is done is done. It is in Loveland’s best interest for Centerra to prosper.
I am certain others are not using my computer, maybe the emails are coming from the same server within a common location. Could that be the issue you refer to admin?
Cato -
If I find specials on prices for shoes I want in Ft. Collins, Greeley, Loveland and Centerra each jurisdiction will AUTOMATICALLY calculate a sales tax upon my purchase and demand I pay that before leaving the store. Each will ADD that involuntary tax to the advertised price of those shoes.
Please explain why the sales tax I am charged in Centerra is “voluntary” as you say but the sales tax in the other places is not VOLUNTARY? Listen buddy, you are parsing words – a tax is a tax is a tax.
Metro District fees are a clever way to hide the expenses of a developer into a sales tax so unsuspecting shoppers don’t even realize they are paying more for the same product they thought was cheaper in Centerra but really isn’t. Hiding your business expenses in a so-called fee that operates like a sales tax is sneaky and wrong.
Free enterprise only works when there is a level playing field for everyone. Why do you think it is OK to hide real costs of the developer in a governmental fee? Do you not understand their motive? If McWhinney and the retailers had the cost of their development reflected in the stated price of goods and services they would be less competitive with the other retailers who must put their business costs into the real price of the commodities they sell.
It is a bait and charge game that preys on people who are not sophisticated enough to consider sales taxes and metro district fees into their comparative price analysis; is that fair in your world?
Imagine how much money McWhinney could have saved by just charging the tenants the real cost of the development who would in turn pass that along to the consumer? Simpler and cheaper right?
No, it is a deception intended to hide the real cost of the item and shopping experience into what appears to be a sales tax for governmental services for the shopper. It really isn’t any more complicated than that.
Sorry Steve, you are correct. TheJoker, Cato etc.. also used Patrick and Patrick Henry for a while so I didn’t mention every alias but accidentally mentioned you.
I looked again and you are a Quest out of Denver customer while Cato et al is using a local rural service provider. Your IP address does in fact identify the node and user (which computer within the node) so we do know if multiple comments are being made from the same computer.
This is sometimes normal as various members of a household use the same machine to make different comments or the IP address for one of the Loveland Public library computers infrequently comments here during the lunch hours at city hall.
LoveandPolitics will never publish anyone’s IP Address or the email you provide when you make a posting as this forum is anonymous unless you decide to reveal your identity. However, we will discourage people from arguing with themselves using two names for obvious reasons.
If someone uses too many aliases we just assign the internal name of Cybil. It is just so we can keep track that one string and know it is the same computer using various names.
All your comments, insights and critiques are very welcome on this “never ending rant” which by Cato’s definition is impossible to finish.
Walter and Cato -
A Metro District can serve a valuable purpose and isn’t always a bad tool to raise money for infrastructure in our view provided two things occur;
1. The “service fee” is on top of the regular tax thus every business is paying the same taxes for the city’s normal governmental services. In Centerra the city sales tax is reduced from 3% to 1.75% to assist McWhinney in hiding the fee from consumers at the expense of everyone else in Loveland.
2. All the Metro District monies go exclusively to public improvements for the public’s good.
2534 (across the street from Centerra in Johnstown) also has a Metro District but the property owners are various entities so the money is spent for the mutual benefit of all the adjacent property owners. Centerra’s Metro District board is controlled by a single company (according to the 2008 audit) therefore the money the Centerra Metro District “owes” McWhinney is whatever McWhinney decides it is based on McWhinney’s determination of the value of their own contributions. It operates sometimes like the private slush fund for a private company that nobody is watching.
Lastly, Centerra operates primarily on diverted property tax dollars under the authority of a federal program created to help cities improve urban blight that is a menace to their community. Unless I am deaf and blind, I don’t recall seeing any tenement housing projects, abandoned commercial buildings, illegal drug labs or public prostitution occurring along the I-25 before McWhinney developed that land.
Approving a subsidy to fix a fake or invented problem is not honest government and those responsible for declaring the area “Urban Blight” on Loveland’s city council clearly abused the discretion and authority of their office. Lastly, the “assets” of Centerra are being amortized as having only a 20 year useful life. We agree with Centerra on this assessment, their assets (like the monument signs) only have a useful life of 20 years. So when the debt is finally paid in 2029 whoever owns the project will likely be asking Loveland taxpayers for another subsidy to refurbish their commercial shopping centers.
It is the transfer of wealth from taxpayers in west Loveland to the McWhinney’s of about 1/2 billion dollars over 25 years.
Let Chad McWhinney have his dream of bringing California style sprawl to Northern Colorado. But why should everyone else have to pay for it?
The taxes one pays on purchases in Centerra (not at all shops) is explained…just look at your receipt. “unsuspecting shopper”, “hide real costs”, “don’t realize they are paying more”. Please give the shoppers the credit they deserve. All those who I know are aware that the cost is a little higher at most stores in the Centerra development.
How much higher? On a $100.00 purchase outside of Centerra I would pay the normal 3% city sales tax or $103.00 (not counting an additional 3.7% for state and county).
At other stores in Centerra, I would pay the $100.00 plus 1.25% for PIF and 1.0% for RSF or an additional 2.25% making the cost of the purchase $102.50 then add the city’s reduced tax of 1.75% for a total cost of $104.30
So, each $100.00 purchase costs me an additional $1.30
On a good year we may spend two to three hundred dollars at Centerra at those stores using PIF and RSF or $2.60 to $3.90 more.
For me, I’ll pay the additional 2 to 4 dollars each year instead of driving to Fort Collins or Greeley.
Walter, you make it sound as if it’s a great amount and it’s hidden from the consumer…neither is correct.
I largely agree with Ouch in that the PIF is not really “hidden”. It does show on the receipt and the shoppers /consumers have a choice (though many probably do NOT know they’re going to have to pay the extra amount until after their purchase is rung up…and most probably don’t know it’s to subsidize the developer).
Neither is it in my view a huge deal, probably, at least for many shoppers. PIFs are just another way developers now routinely try to subsidize their projects…by distributing their costs to others. In this case, and unlike the TIF (a massive subsidy spread across taxpayers locally, county- and state-wide), the PIF is at least limited to willing payers… who can refuse to pay it merely by shopping elsewhere.
Responses to Cato:
Cato: “It appears that Loveland City Government used its credit worthiness to gather a bond for McWhinney. Similar to a cosigner yet with none of the liability.”
I admit I don’t understand what the actual risks of public indebtedness are, but if the City did lend its credit rating to bond issue, then that itself is at risk. I would also appreciate knowing more about what the actual legal potential is for the City should the Metro District default on its debt.
Cato: “Tabor required that this bond go to a vote of the people.which it did not.”
WRONG. There is no provision under Tabor addressing any part of the creation of the Centerra metro district or its finance mechanisms.
Cato: “[you're] another wannabe power lord. You are no better than government or McWhinney.”
In my eyes (and I’ll bet others’), this is uninformed and unjustified.
This site has consistently provided the ONLY in-depth reporting on the most important issues in Loveland. Your comparison of the author to either McWhinney or “government” is absurd…to put it kindly.
I don’t get from the site that it is “anti-government” (as you appear to be). Rather it seems to be about good government… i.e. keeping the system honest (as was thought the 4th Estate used to do before it became just a corporate enterprise flacking for the elites.)
Cato: “Gather signatures to force McWhinney to privatize their bond. Get another petition that will requiire McWhinney to pay the normal city tax rate”.
Sorry… even if 100% of the voters signed such petition, they’d have no legal effect. Unless the McWhinney MFA was itself illegal (and no one has yet posted any indication of this), than there is no way to unilaterally void such a contract.
This leads to your comments:
Cato: “Grow up. Get real…. Do something or get off the pot.”
It is you, friend, who need to get real and perhaps gain a bit of maturity in the process. I suggest that before trying to put others down or making wrong assumptions and silly suggestions that you take time to read the full story, the documentation and as necessary, the law.
This forum has largely held pretty good level of discourse even amid disagreement, and I hope you’ll help keep it that way by taking the time to be better informed and also less ready to result in baseless personal attack.
Go Harry Go!
Why is knowledge so threatening to some? I thought an informed electorate was a good thing.
Hey Fellow Loveland Politics Followers,
There appears to be two parallel arguments going on in this string of comments — the Centerra situation and the site itself.
On the first part: We have been provided information, background and commentary on the Promenade Shops not found anywhere else. As a result, there’s been a good discussion from several points of view.
As Harry says, it has been largely at a good level of discourse.
On the second part: Maybe it would help if participants actually gave their real, full names. What’s to fear? If you believe strongly enough to make a statement, why not attach your identity? (including the administer — who ought to be proud of the site and its reporting).
And just one other thing: There ought to be a way this site gets some revenue to continue its efforts. It’s part of a great ongoing debate about the internet and its future. Free is wonderful but there should, in my opinion, be a way to sustain good journalism. And that is (again in my humble view) what this site is all about.
Tony Benjamin,
Loveland
ps: Harry, great points. Just one minor disagreement. It’s not just the big corporate media that’s fallen down on the job. Even small newspapers have caved into fear of hard-nosed investigative reporting; fear that they will upset the local elite (or those who think they are). Loveland is a, I think, a great newspaper town. Lots of interesting issues. Waiting and hoping for a great newspaper. Or website — and this one is headed in the right direction.
Hi there, just spent a short break reading this site. I’ll check in again soon after taking a peak at several of your articles. There’s definitely to read, that’s for sure. I’ll be checking back now and then.