|Slippery Slope To Financial Insolvency
Loveland’s Council Flirting With Pillaging Long-term Capital Reserves
To Meet Budget Shortfalls Beginning in 2013
|City of Loveland Definition:
Capital Expansion Fees
"The City of Loveland has utilized Capital Expansion
Fees as a method to meet the capital needs of our
growing community since the mid-1980s. The fees are
set based on studies that indicate the impacts that
result from different types of construction, the major
categories being residential, commercial, and
industrial. Capital Expansion Fees for Fire, Police,
General Government, Library, Museum, Parks,
Recreation, Open Lands, and Trails are based on the
value of capital assets, equipment, fixtures, and
furniture and unspent prior years’ CEF contributions"
|Mayor Gutierrez and other Council
I'm writing to strongly object to the proposed
suspension of the annual CEF adjustment for inflation,
which is listed as an ordinance on 2nd reading for
As a citizen volunteer who served on the City's
"Economic Vitality Committee" during the mid- 1990's,
I spent numerous hours, working with other citizens
from diverse backgrounds and perspectives to make
recommendations for improvement of Loveland's
economic well-being. I also was a member of the
"Costs of Growth" subcommittee, charged with looking
at Loveland's service cost recovery program. That
subcommittee found numerous deficits in the City's
management of its service cost recovery program (the
impact fees), which were bound to leave the City with
growing deficits; and the committee recommended ways
to correct that. While not all of the recommendations
were implemented, some improvements were made as a
But the main result was that it drew to officials'
attention the need to maintain the program as designed,
if the City were not to experience further deficits. The
City had already lost much ground as a prior Council
had, much like the current proposal, suspended its
annual review and adjustment for inflation of the CEF
program; with predictable results. Services were in
decline as the corresponding revenues were inadequate
to keep pace.
When impact fees are arbitrarily reduced, suspended,
or the program prevented from increasing to cover
inflationary costs, there are only 2 potential outcomes.
a) Service levels for City services and amenities must
b) The costs of mainaining/restoring services to their
prior levels will be distributed to all residents and
Usually, both of the above will take place. Thus,
Library services must be cut or new taxes raised; the
same with Parks and Open Space, and Streets, etc.
There simply is no other outcome possible.
To compound the problem, suspension for any period
often means that the CEFs can not be restored to their
proper levels, because to do so would represent an even
greater jump in a single year; which future Councils are
often unwilling to allow. So the long-term effects are
much more damaging than would appear.
So it is troubling that once again, despite having
experienced before the inevitable problems that will
ensue, the development community and or staff would
try to shift the burden for the impacts of new
development on the existing residents and businesses.
This is both inherently unfair, and unacceptable from a
City health and sustainability standpoint. I certainly
will do all I can to make public this example of unfair
treatment of the taxpayer, should it proceed.
Please contact me if you have any questions.
|Cities' Financial Woes Have Roots In Bad
Land Speculation Deal For Annexation
Beginning in 2013 the City of Loveland will need to repay
$1.13 million per year from general fund operating expenses
of a $4.85 million loan from the city's restricted reserves
used to buy 97 acres along I-25 during a lame duck session
back in Nov. 2007.
LovelandPolitics.com first reported the suspicious land
purchase that was first decided upon by council during an
illegal closed session. When LovelandPolitics first reported
the item was a council agenda for final approval, it was
postponed until after a city election. A lame duck 'old guard'
council approved the property purchase shortly after the
Including interest and the $1.6 million already paid from the
general fund, the city will have spent $8.4 million for a
property today worth only around $3.4 million according to
estimates by local commercial brokers.
The city is spending approximately $250,000 per year in
interest alone for the internal loan. While the interest goes
towards future capital programs it is consuming operating
revenue and has delayed the city's plans to open Mehaffey
Park in West Loveland due to a lack of operating revenue.
Last June an Editorial in the Loveland Reporter-Herald
entitled "City takes advantage of economy" lead readers
to believe the long delayed Mehaffey Park for West Loveland
was being delayed due to a lack of capital funds when it is
really being delayed due to limited operating funds;
"The savings with these projects could come in handy
to complete other delayed projects, such as the next
phase of Fairgrounds Park or even Mehaffey Park"
The "slippery slope" is the council's current discussion to
re-allocate the capital reserve funds accumulated for
MeHaffey Park and other capital improvements to cover
current city expenses instead.
read the Face The State website article about Loveland's
financial troubles related to CEF's
|See the slide presentation by Loveland City Staff
providing the history of CEF (Capital Expansion Fees)
in Loveland. Highly recommended as an excellent
overview of CEF's.
See a video of the September 28, Council Study Session
when the idea of using long term reserves for budget
problems was first introduced.