Loveland - December 11, 2010
In 2007 and again in 2009 prevailing candidates for Loveland’s City Council promised to bring reform
that would end the seemingly endless tax breaks bestowed upon the McWhinneys – a campaign
promise that catapulted Mayor Cecil Gutierrez, Kent Solt and Joan Shaffer onto Loveland’s City
Council.
Last month the same three voted with their colleagues to ignore a city ordinance they passed in 2009
that limits development fee waivers to only 12 years by giving McWhinney another exception to
Loveland’s municipal code. The vote was unanimous even though Solt and Gutierrez expressed regret
in supporting the exemption but believed the city had no other choice.
The city’s affordable housing scheme allows qualified developments that build certain “affordable”
units to bypass the normal development fees and receive deep discounts by freezing the CEF’s (Capital
Expansion Fees) to previous year levels for all the houses they develop so long as 1 in 5 homes meet
the “affordable” housing criteria. The Loveland Municipal Code allows capital expansion fees, water
rights requirements and fees, and all other fees normally imposed by Loveland upon a development to
be calculated from the first date an application for the “affordable” housing development is submitted
often years before a project begins.
Breaking The 12 Year Limit for McWhinney
Loveland’s municipal code also states that developments qualified as “affordable” before July 1, 2009
must complete construction of at least one “affordable” unit within the development at least twelve
years after making the application for the subsidy. The ordinance was passed to ensure speculators
would not acquire qualified developments to sell at a higher price later when development fees
increased thus providing an artificial land appreciation at the expense of city taxpayers.
The original ordinance for the affordable housing incentives was so poorly constructed that it set no
time limit on the generous fee waivers necessitating the 2009 ordinance which created the arbitrary limit
of 12 years for any project’s reduced development fees. Given recent budget shortfalls the City
Council has also expressed concern over this growing liability to the city.
Because the development fees (also called CEF’s for Capital Expansion Fees) should be directly
connected to real costs the city will incur from supporting a new residential development, the
requirement to backfill and fund those lost fees with current general fund monies means the city’s
potential liability was climbing each year as qualified developments were being delayed indefinitely.
For example, the Aspen Knolls project acquired by McWhinney in 2006 will need to pay only the
CEF’s required in 2001 and not the actual costs calculated at today’s prices.
For example, if the annual increase in CEF’s is 3% between now and 2013, the eventual developer of
Aspen Knolls will receive a city subsidy up to $87,668 per unit since the city froze the fees at 2001
levels when approving the project. In exchange, the developer agrees to price 20% of the units at a
level considered “affordable.” If the developer fails to construct at least one “affordable” unit by
November of 2013, the special waiver should expire according to Loveland’s current municipal code.
Troy McWhinney Misleads Council
On November 16, 2010 Troy McWhinney, representing the company bearing his name, testified his
company acquired the Aspen Knolls project for the purpose of building more affordable housing in
south Loveland. McWhinney pretended the project was going forward and only experiencing a
temporary delay due to the slow economy. His remarks were so misleading that one gullible councilor,
Daryle Klassen, asked how many houses had been built to date and McWhinney was forced to
acknowledge none.
Instead of building affordable housing the McWhinneys have been trying to rezone the property
formerly owned by KB Homes in order to apply the water shares to a development in east Loveland.
McWhinney purchased the parcel for only $3 million while the water shares that go with the property
rights were valued at the time at approximately $4 million.
According to an engineer who worked for Landmark Engineering at the time the property was
acquired, the McWhinney’s sole purpose in acquiring the property was to get discounted water shares
at a deep discount while leaving the waterless Aspen Knolls project as an undevelopable piece of
property. The business proposition was reportedly first pitched to the McWhinney’s by Landmark’s
Ken Merritt who created the Aspen Knolls subdivision for KB Homes and was familiar with the
amount of water shares that had been transferred to the city’s water bank to enable KB Homes get
approval for building 507 houses.
When applying to abandon the “plat” for the development back in 2008, the McWhinney Company
claimed the development, as planned, could not be sold for development and documented this assertion
in a letter to the city’s planning staff. While the letter fails to disclose the true motive of moving water
rights for abandoning the planned development, the letter does reveal the McWhinneys were already
marketing the property to other developers and had no interest in building affordable housing on the
parcel.
According to Loveland’s planning staff, the application to abandon the planned development by
McWhinney was still active on November 16, 2010 – the same night Troy McWhinney testified to
council he acquired the parcel to finish what KB Homes had begun. LovelandPolitics obtained a copy
of the three separate applications, still active, after the November 16, council meeting by McWhinney
to declare the plat as "obsolete," down zone the property and abandon any obligations to improve the
roads and utilities surrounding the parcel.
McWhinney's Trouble With Aspen Knolls
McWhinney was unsuccessful in obtaining the water shares back from the City of Loveland after
arguing the case in the State’s Water Court. Nonetheless, McWhinney also dodged certain traffic
improvements KB Homes promised to make by 2009, in part, by claiming the development was not
going forward. That matter was settled in a private action brought against McWhinney by the Hein
Family Trust. Loveland forced adjacent property owners to sell land to KB Homes for the road
improvements under threat of eminent domain. McWhinney acquired the property at a discount as the
costly road and utility improvements deadline was approaching.
Another problem McWhinney experienced with the property was the location of utilities. The expense
of moving existing major utility lines for the street improvements were higher than estimated.
Therefore, McWhinney may be looking to unload the property upon an unsuspecting developer if
necessary in the future. This property speculation is greatly improved if the "affordable" housing
reduced fee schedule remains with the property indefinitely thus keeping this option open.
Loveland’s planning staff was asked by McWhinney to sit on their abandonment application of the
“plat” and down zoning actions until McWhinney gives the signal to bring it before the Planning
Commission. This likely enabled McWhinney to argue in court the traffic improvements were
unnecessary since they don’t intend on developing the property while at the same time telling Loveland’
s council they need the affordable housing tax exemptions as they intend to build and would sue if the
"affordable" housing fee waivers expire. One builder told LovelandPolitics this type of strategy relies
on a city staff being either unable or unwilling to disclose to the council the developer's true intentions
-- a feat not easily accomplished by less influential builders.
Why Council Voted To Approve Extension
Off-the-record, one councilor told LovelandPolitics that John Duval, Loveland’s City Attorney,
cautioned the council in a hastily called closed session during the November 16, public council
meeting. Duval warned that McWhinney had threatened to sue the city for a “taking” if the council
didn’t extend the special fee discount to McWhinney’s property that very night. Troy McWhinney had
testified the exemption would expire on Aspen Knolls by 2013 not giving him enough time to develop
the property. The actual date is November of 2013 which was fully three years into the future hardly
necessitating an immediate action by council to avoid litigation.
Another councilor revealed privately he was unaware of McWhinney’s attempt to abandon the
development as the staff presentation by Darcy McClure was equally misleading. McClure failed to
disclose McWhinney’s repeated and ongoing efforts to abandon all obligations associated with
developing the parcel. As an ethical consideration, it is unusual for a city staff member to withhold
pertinent information from council to manipulate the outcome of a legislative decision.
Two other “qualified affordable” projects in Loveland are also impacted by the 12 year limit. One
project called Wilson Commons, near the corner of Wilson Blvd. and 43rd in Loveland, was also
approved for an extension after the developer testified to council. In that case, the qualified parcel is
adjacent to another lot the developer is slowly developing and selling homes on today - though few if
any affordable homes have been built yet on the first parcel.
Another project, called Town Center, will lose its designation at the end of 12 years and not receive the
same special consideration of McWhinney's Aspen Knolls property.
Similar to Aspen Knolls, the property is still vacant and sits in the south part of Loveland. Like
McWhinney, the developer hasn't made any progress toward building on the property but unlike
McWhinney the builder will lose the special reduced developer fees according to the 2009 ordinance.
COMMENT ON THIS STORY
In 2007 and again in 2009 prevailing candidates for Loveland’s City Council promised to bring reform
that would end the seemingly endless tax breaks bestowed upon the McWhinneys – a campaign
promise that catapulted Mayor Cecil Gutierrez, Kent Solt and Joan Shaffer onto Loveland’s City
Council.
Last month the same three voted with their colleagues to ignore a city ordinance they passed in 2009
that limits development fee waivers to only 12 years by giving McWhinney another exception to
Loveland’s municipal code. The vote was unanimous even though Solt and Gutierrez expressed regret
in supporting the exemption but believed the city had no other choice.
The city’s affordable housing scheme allows qualified developments that build certain “affordable”
units to bypass the normal development fees and receive deep discounts by freezing the CEF’s (Capital
Expansion Fees) to previous year levels for all the houses they develop so long as 1 in 5 homes meet
the “affordable” housing criteria. The Loveland Municipal Code allows capital expansion fees, water
rights requirements and fees, and all other fees normally imposed by Loveland upon a development to
be calculated from the first date an application for the “affordable” housing development is submitted
often years before a project begins.
Breaking The 12 Year Limit for McWhinney
Loveland’s municipal code also states that developments qualified as “affordable” before July 1, 2009
must complete construction of at least one “affordable” unit within the development at least twelve
years after making the application for the subsidy. The ordinance was passed to ensure speculators
would not acquire qualified developments to sell at a higher price later when development fees
increased thus providing an artificial land appreciation at the expense of city taxpayers.
The original ordinance for the affordable housing incentives was so poorly constructed that it set no
time limit on the generous fee waivers necessitating the 2009 ordinance which created the arbitrary limit
of 12 years for any project’s reduced development fees. Given recent budget shortfalls the City
Council has also expressed concern over this growing liability to the city.
Because the development fees (also called CEF’s for Capital Expansion Fees) should be directly
connected to real costs the city will incur from supporting a new residential development, the
requirement to backfill and fund those lost fees with current general fund monies means the city’s
potential liability was climbing each year as qualified developments were being delayed indefinitely.
For example, the Aspen Knolls project acquired by McWhinney in 2006 will need to pay only the
CEF’s required in 2001 and not the actual costs calculated at today’s prices.
For example, if the annual increase in CEF’s is 3% between now and 2013, the eventual developer of
Aspen Knolls will receive a city subsidy up to $87,668 per unit since the city froze the fees at 2001
levels when approving the project. In exchange, the developer agrees to price 20% of the units at a
level considered “affordable.” If the developer fails to construct at least one “affordable” unit by
November of 2013, the special waiver should expire according to Loveland’s current municipal code.
Troy McWhinney Misleads Council
On November 16, 2010 Troy McWhinney, representing the company bearing his name, testified his
company acquired the Aspen Knolls project for the purpose of building more affordable housing in
south Loveland. McWhinney pretended the project was going forward and only experiencing a
temporary delay due to the slow economy. His remarks were so misleading that one gullible councilor,
Daryle Klassen, asked how many houses had been built to date and McWhinney was forced to
acknowledge none.
Instead of building affordable housing the McWhinneys have been trying to rezone the property
formerly owned by KB Homes in order to apply the water shares to a development in east Loveland.
McWhinney purchased the parcel for only $3 million while the water shares that go with the property
rights were valued at the time at approximately $4 million.
According to an engineer who worked for Landmark Engineering at the time the property was
acquired, the McWhinney’s sole purpose in acquiring the property was to get discounted water shares
at a deep discount while leaving the waterless Aspen Knolls project as an undevelopable piece of
property. The business proposition was reportedly first pitched to the McWhinney’s by Landmark’s
Ken Merritt who created the Aspen Knolls subdivision for KB Homes and was familiar with the
amount of water shares that had been transferred to the city’s water bank to enable KB Homes get
approval for building 507 houses.
When applying to abandon the “plat” for the development back in 2008, the McWhinney Company
claimed the development, as planned, could not be sold for development and documented this assertion
in a letter to the city’s planning staff. While the letter fails to disclose the true motive of moving water
rights for abandoning the planned development, the letter does reveal the McWhinneys were already
marketing the property to other developers and had no interest in building affordable housing on the
parcel.
According to Loveland’s planning staff, the application to abandon the planned development by
McWhinney was still active on November 16, 2010 – the same night Troy McWhinney testified to
council he acquired the parcel to finish what KB Homes had begun. LovelandPolitics obtained a copy
of the three separate applications, still active, after the November 16, council meeting by McWhinney
to declare the plat as "obsolete," down zone the property and abandon any obligations to improve the
roads and utilities surrounding the parcel.
McWhinney's Trouble With Aspen Knolls
McWhinney was unsuccessful in obtaining the water shares back from the City of Loveland after
arguing the case in the State’s Water Court. Nonetheless, McWhinney also dodged certain traffic
improvements KB Homes promised to make by 2009, in part, by claiming the development was not
going forward. That matter was settled in a private action brought against McWhinney by the Hein
Family Trust. Loveland forced adjacent property owners to sell land to KB Homes for the road
improvements under threat of eminent domain. McWhinney acquired the property at a discount as the
costly road and utility improvements deadline was approaching.
Another problem McWhinney experienced with the property was the location of utilities. The expense
of moving existing major utility lines for the street improvements were higher than estimated.
Therefore, McWhinney may be looking to unload the property upon an unsuspecting developer if
necessary in the future. This property speculation is greatly improved if the "affordable" housing
reduced fee schedule remains with the property indefinitely thus keeping this option open.
Loveland’s planning staff was asked by McWhinney to sit on their abandonment application of the
“plat” and down zoning actions until McWhinney gives the signal to bring it before the Planning
Commission. This likely enabled McWhinney to argue in court the traffic improvements were
unnecessary since they don’t intend on developing the property while at the same time telling Loveland’
s council they need the affordable housing tax exemptions as they intend to build and would sue if the
"affordable" housing fee waivers expire. One builder told LovelandPolitics this type of strategy relies
on a city staff being either unable or unwilling to disclose to the council the developer's true intentions
-- a feat not easily accomplished by less influential builders.
Why Council Voted To Approve Extension
Off-the-record, one councilor told LovelandPolitics that John Duval, Loveland’s City Attorney,
cautioned the council in a hastily called closed session during the November 16, public council
meeting. Duval warned that McWhinney had threatened to sue the city for a “taking” if the council
didn’t extend the special fee discount to McWhinney’s property that very night. Troy McWhinney had
testified the exemption would expire on Aspen Knolls by 2013 not giving him enough time to develop
the property. The actual date is November of 2013 which was fully three years into the future hardly
necessitating an immediate action by council to avoid litigation.
Another councilor revealed privately he was unaware of McWhinney’s attempt to abandon the
development as the staff presentation by Darcy McClure was equally misleading. McClure failed to
disclose McWhinney’s repeated and ongoing efforts to abandon all obligations associated with
developing the parcel. As an ethical consideration, it is unusual for a city staff member to withhold
pertinent information from council to manipulate the outcome of a legislative decision.
Two other “qualified affordable” projects in Loveland are also impacted by the 12 year limit. One
project called Wilson Commons, near the corner of Wilson Blvd. and 43rd in Loveland, was also
approved for an extension after the developer testified to council. In that case, the qualified parcel is
adjacent to another lot the developer is slowly developing and selling homes on today - though few if
any affordable homes have been built yet on the first parcel.
Another project, called Town Center, will lose its designation at the end of 12 years and not receive the
same special consideration of McWhinney's Aspen Knolls property.
Similar to Aspen Knolls, the property is still vacant and sits in the south part of Loveland. Like
McWhinney, the developer hasn't made any progress toward building on the property but unlike
McWhinney the builder will lose the special reduced developer fees according to the 2009 ordinance.
COMMENT ON THIS STORY
| Troy McWhinney Misleads Council And gets another tax break by a unanimous council vote |
| Chad and Troy McWhinney attending a Loveland City Council meeting. |
| First elected to City Council in 2007 and 2009 on platforms of reform, Cecil Gutierrez, Kent Solt and Joan Shaffer's votes now appear more influenced by staff direction and sophisticated special interest lobbying. |
| Below are excerpts from a Press Release by a California Law Firm representing low-income tenants who were evicted from their homes in Garden Grove to make room for McWhinney's heavily city subsidized water park and hotel near Disneyland. Troy McWhinney failed to mention the 2009 incident which brought protesters, lawsuits and angry tenants against McWhinney's ambition to build another heavily subsidized retail project in California when informing Loveland's Council about his company's commitment to "affordable" housing. The last sentence is highlighted for emphasis Press Releases August 10, 2009 Residents Sue To Prevent City's Planned Destruction of Affordable Housing On August 10, 2009, residents of the Travel Country RV Park, together with ........, filed a lawsuit against the City of Garden Grove, its City Council and Agency for Community Development. The lawsuit seeks an order requiring the city to replace over 100 units of affordable housing slated to be destroyed to make way for a hotel and water park. The plaintiffs also seek an order requiring the city to adopt a new relocation plan that includes adequate relocation benefits for residents to be displaced for the development. Most of the plaintiffs have lived in the park for over 10 years. Some have lived there for more than 20 years. "We are taxpaying residents of Garden Grove, and we love where we live," said lead plaintiff and ACORN member Marina Limon, a 22 year park resident. "Many of us have kids in local schools, and many of us work in key industries that keep Orange County's economy going. All we're asking for is the ability to continue living, working, and raising our families here." "Destroying over 100 units of affordable housing to build a water park at public expense is not responsible redevelopment -- particularly without a plan for replacement of that housing or adequate relocation for the tenants," said staff attorney Remy De La Peza of Public Counsel, the largest pro bono law office in the nation. "The lawsuit simply asks the city to comply with state mandated affordable housing requirements before taking actions harmful to its residents. Public Counsel and its co-counsel, California Affordable Housing Law Project and Fulbright & Jaworski LLP, are committed to protecting the rights of these residents." In 2005, when the City of Garden Grove Agency for Community Development ("Agency") acquired the park, over 100 families resided there. Since then, the Agency has used questionable tactics to push some of them out - including offering one-time relocation payments without advising them of their rights under relocation law. In May of this year, the City Council and the Agency entered into a disposition and development agreement with Colorado-based developer McWhinney. The agreement involves the City contributing some $20 million to McWhinney, including giving the developer land at the park and an adjacent business at no cost, as well as a public subsidy for construction of a parking structure |
