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Loveland - September 28, 2009

Council running in this election facing tough questions.  Four candidates refused to hold vNet or its owner
accountable for the $900,000 city subsidy paid in 2008 when they voted to appropriate the funds.

Councilman Kent Solt tried to make the city whole if vNet failed to meet its obligations under the nearly $1 million
subsidy agreement.  
Solt argued that the “clawback” provisions as proposed only allowed the city to recover  
$340,000 of the $900,000 cash subsidy to vNet should the company fail to bring or retain any jobs in Loveland.

Cecil Gutierrez, now a candidate for mayor, is the only other councilman who supported Solt’s amendment thus
it was defeated on a 7-2 vote as
Carol Johnson and Gene Pielin also sided with their colleagues against the
amendment. Instead, the council majority argued that vNet CEO and founder, William Beierwaltes, was a well
known local businessman who they trusted would be successful in bringing new jobs to Loveland if given the
subsidy by the City of Loveland.

Both
Gutierrez and Solt refused to support the subsidy given their concern over the unnatural terms of the
agreement that allowed Beierwaltes to keep half a million dollars regardless of whether he brought jobs to Loveland.  
The $900,000 subsidy was passed by the council on a 7 to 2 vote.  Now that vNet has closed its doors, Beierwaltes
will need to payback only an approximate $340,000 of the $900,000 he received 17 months earlier of taxpayer
funds due to
Solt’s amendment being rejected by the council majority.

Solt Tried To Warn His Colleagues
Solt, an attorney for Lexis Nexis, attempted to warn his colleagues back in February of 2008 before they voted to
give vNet nearly $1 million in cash incentives that vNet CEO and founder William Beierwaltes didn't have the
flawless record of starting successful companies as they were reporting to the public.  Solt mentioned the
Longmont company of
OneStream, a Beierwaltes start-up that raised $50 million in venture capital monies before
laying-off employees in Longmont when it suddenly closed its doors in 1998.  

According to a 1998
article in the Boulder Daily Camera,

"It took just three years for OneStream Inc. to go from tape storage startup, to venture capital darling, to
shuttered tech company.  Company founder and Chief Executive Bill Beierwaltes cited market conditions
as the reason for the closure, which affected 64 people at Longmont headquarters."

Failure of Solt's amendment raises questions as it supported the appropriation for the subsidy or "business
incentive" of $900,000 except the clawback would have made the city whole if Beierwaltes failed to perform under
the agreement.  Instead of
Solt's proposed $5,000 clawback per job not at the company by 2012, the council
majority followed City Manager
Don William's advice and limited the clawback to only $2,000 per employee not at
the company by 2012.  Under
Williams' plan anyone who received such a subsidy could walk away with $500,000
for doing nothing.

The Loveland Reporter-Herald titled an article over the initial subsidy proposal as ‘
Smart Move’ by the City of
Loveland and later ran an editorial attacking
Councilmen Cecil Gutierrez by name for not supporting business in
the community as a result of his no vote against the unnatural subsidy agreement.  What made the editorial
especially insidious is that both
Gutierrez and Solt supported the $900,000 incentive but only if Beierwaltes and
vNet could be held accountable for the complete subsidy.

Four of the Mayoral candidates along with their fellow traveler and now council candidate
Bob Snyder, may have
some explaining to do to voters as they contrast themselves against their opponents as the "pro-business"
candidates.  The inference that
Gutierrez and Solt are somehow "anti-business" for wanting accountability rings
hollow given vNet's failure and the apparent lack of good judgement by the council majority in protecting taxpayer
funds.  The difference between the two camps doesn't appear philosophical but instead one of sophistication.

Can Skowron Really Claim to Be "Protecting Public Funds" on vNet?
Especially troubling for some voters may be Councilman Walt Skowron’s close relationship to Beierwaltes and his
role in promoting Beierwaltes’ company while advocating for giving Beierwaltes what amounts to a gift of $500,000
regardless of whether he could perform as promised in bringing jobs to Loveland.

Skowron and Beierwaltes worked at Hewlett-Packard together for many years and are also longtime friends and
neighbors.  Skowron boasted of his very long friendship with the Beierwaltes during the February 2008 council
meeting when the matter was first raised.  Beierwaltes is also a regular contributor to local political campaigns
including some of those who voted for the subsidy.

Skowron has printed campaign signs now dotted throughout Loveland’s landscape that advertise Skowron as the
best custodian of tax dollars among the candidates for mayor.  Ironically, the man who stands to now keep a
$500,000 Loveland subsidy to bring jobs to Loveland after he just laid-off all his employees in Loveland has littered
his own property with Walt Skowron for Mayor signs that read "Protecting Public Funds."

Both Beierwaltes and Skowron have opposed efforts by the commercial property owner of Westview Place LLC,
Jim Welker, (the lot north of Beierwaltes' lot on Taft) to develop office space in Loveland.  However, the common
accusation of being "anti-business" has not been used to describe council's opposition to that development that
didn't require city subsidies.
Loveland's vNet Failure
Spells Trouble For Candidates
Below - Commercial property owned by William Beierwaltes on South
Taft in Loveland is lined with signs supporting Walt Skowron for Mayor.
Click here to view more information regarding
the exact location of these signs
off South Taft Ave. in Loveland.  Larimer County property records
indicate Beierwaltes owns over $3 million in residential properties on Gail
Ct. alone.  Aerial pictures of the lakeside estate can be seen on
Zillow.com by searching on the address of 1907 Gail Ct. Loveland, Co.
"Colorado vNet of Loveland was the winner of the Economic
Development Project of the Year award. The company is undergoing
a major expansion at its location in the former WaterPik building on
Southwest 14th Street"

LovelandPolitics Reported Nov. 1, 2008 (see article)
"Only 7 months after receiving $900,000 of taxpayer monies (not tax
deferments or waivers) from Loveland's City Council, Colorado
VNet is letting people go."

Loveland Reporter-Herald Nov. 2008 (see article)
"Last week Loveland tech company Colorado vNet made a round of
layoffs, amounting to fewer than one-quarter of the company’s
approximately 90 employees."

CustomRetailer Nov. 03, 2008 (see article)
"Eight months after receiving a $900,000 incentive to stay in its
home town of Loveland, Colo., Colorado vNet has had to lay off one-
quarter to one-third of its work force."

CEPro Sept. 22, 2009 (see article)
According to the terms of the contract, vNet would be obligated to
repay the city if it did not reach certain milestones. Thankful for the
city's faith in vNet, Beierwaltes says he would be heartbroken if he
could not repay the full amount of Loveland's contributions.

Note: According to Loveland City Manager Don Williams and city staff
Betsy Hale, Beierwaltes has already agreed to pay back the full amount of
city subsidy (as reported in the RH).  However, the report above along
with other media accounts quote Beierwaltes himself not making such a
commitment.  Another news account has Beierwaltes saying he will pay
back the full subsidy "if possible."  Thus the inside and outside media are
reporting two entirely different stories regarding Beierwaltes' commitment
to repay the full subsidy he received.