| LovelandPolitics.com |
| McWhinney Taps CSU Asset To Influence Council Council to vote on subsidy for potential McWhinney Tenant |
Loveland - May 17, 2009
McWhinney is now asking the Loveland City Council for nearly half a million dollars to subsidize a potential new
tenant moving from Greeley. The request for a cash subsidy from the City of Loveland to McWhinney’s potential
tenant was allowed to bypass the regular city process and is on the agenda for a decision by the City Council this
Tuesday (May 19, 2009). Unlike other "incentive" agreements where certain city fees are waived, the current
proposal is to provide a cash subsidy.
Loveland City Manager Don William, who authorized bypassing the city’s normal process, will not be attending the
regularly scheduled council meeting. Williams told the council he will instead be judging a dog show. Assistant City
Manager Rene Wheeler will be acting in his stead when the item comes before Loveland’s City Council Tuesday
night.
The companies, Agrium and its subsidiary Crop Production Services (CPS), are moving primarily from Greeley to
either Centerra or across the street to Johnstown’s “2534” development on the south east corner of I-25 and U.S.
Highway 34. The NCEDC (Northern Colorado Economic Development Council) has been working with the
company to facilitate their move out of Greeley. The request prepared by McWhinney is for Loveland to provide
$300,000 to CPS and $140,000 to its parent company Agrium Inc.
McWhinney is a major contributor to the NCEDC’s annual budget and McWhinney’s President of their Centerra
development, Rocky Scott, serves on the NCEDC Board of Directors. One NCEDC member company threatened
to make a formal complaint last month against McWhinney for serving on the Board of Directors while also soliciting
companies looking for assistance from the NCEDC. The disposition of that complaint is not public at this time.
CSU Economics Professor Analysis Misguided – Influenced By McWhinney?
CSU Prof. Martin Shields prepared an “Economic Impact Analysis” promoting benefits to Loveland if the company
locates in McWhinney’s Centerra development. The analysis has many problems not the least of which is it
examines the wrong scenario. The incentive being proposed is not to move the company out of Greeley to the
Loveland area (that decision was made already with two sites under consideration). The only potential impact a City
of Loveland taxpayer subsidy can have now is to prevent Agrium and its subsidiary CPS from locating across the
street from Centerra at Johnstown’s 2534 development.
An independent study would have more appropriately compared the relative economic impacts of the company
locating on the edge of Loveland’s city boundary in Centerra or just across the street in Johnstown. Besides the "use
fee taxes" associated with the construction aspect of the project, the economic impact without the subsidy (if Agrium
located in 2534) would be nearly identical to locating across the street in Loveland.
The Professor’s “analysis” is being presented to the Loveland City Council and local media Tuesday night as an
independent look at the cost versus benefits of providing the subsidy. In fact, the Professor is not independent when
one considers the source of funding for his salary at CSU. According to CSU;
“In 2006 the Northern Colorado Economic Development Corporation (NCEDC) committed to a five year partnership
with Colorado State University (CSU) to hire and partially fund a regional economist ….the two organizations hired
Martin Shields as regional economist…As part of the Memorandum of Understanding, the NCEDC has agreed to spend
$150,000 to supplement salary and fund sponsored research each of the next five years…...”
As funding for Shields’ salary and research comes directly from an organization (NCEDC) both funded and heavily
influenced by McWhinney it isn’t surprising that Shields is attempting to justify the subsidy with faulty analysis. A
proper analysis may have concluded that employees cross city boundaries to work everyday. Subsidizing one
location over the other has little to no economic impact to Loveland due to their close proximity. However, the
impact to a specific developer will be significant thus the subsidy is really mostly to benefit McWhinney and not
Loveland's regional economy.
Some in the real estate community have referred to CSU Prof. Martin Shields as McWhinney’s “coin operated
regional economist” since he provides the economic “analysis” that conveniently fits into McWhinney talking points
when promoting their business objectives. As a result, Shields’ analysis appears to be inconsistent and self-
contradictory.
Prof. Martin Shields’ Incentive Study Contradicts Previous Arguments for RTA
While promoting the RTA (Regional Transportation Authority) tax that was backed by McWhinney a few years ago,
Shields presented a study called, “The Economics of the RTA and Some Early Impressions.”
Slide 6 in Shield’s presentation stated,
“Economies are integrated. Our research shows that employment shocks in Weld affect Larimer, and
vice versa.”
The presentation promoted a “regional approach” to transportation and even emphasized the number of job
commuters who travel back and forth between Weld and Larimer Counties for jobs in the regional economy. The
point that Greeley’s economy is closely tied to Loveland’s also provides the obvious conclusion that moving jobs
between one city to another doesn’t have the impact Shield’s describes in his other analysis.
The analysis Shields prepared for the Agrium move between Greeley to Centerra depends heavily on some wild
speculation that disconnects the economies of Weld and Larimer Counties by assuming each is independent from the
other.
One assumption in the analysis projects that at least 50% of the new employees will choose to live in Loveland. This
is ironic since Rocky Scott and other well compensated people working at Centerra have chosen to commute home
to Ft. Collins instead of investing in Loveland.
Shield’s analysis also included the presumed property taxes the future Agrium and CPS employees would pay in
Loveland on their personal residences as “revenue” the city would receive. City Manager Don Williams and
members of the council have long argued that “roof-tops” actually cost the city money. In other words, residences
are a net loss in revenue for the city as the average household consumes more services than taxes paid through
property and other taxes.
Since the analysis contemplates the companies relocating to Centerra the normal community revenue associated with
such a move could not be included. Community impact fees, for example, would be zero and cannot contribute to
the public library, fire and rescue, police protection or other necessary and essential services due to McWhinney’s
MFA (Master Financing Agreement) with the city. No accounting appears to have been made for the true costs of
the city providing basic services.
Recent Direct Subsidies To Businesses Already Failing
In February of 2008 Loveland’s City Council voted to provide nearly $1 million in cash subsidies to the firm V-NET
for consolidating its principle operation out of downtown Loveland to a new location while bringing 14 employees
outside Loveland into the new location. See story from Feb. 2008
Instead of brining jobs to Loveland the company began laying-off employees. Today V-NET employs only 56
employees in Loveland which is down from the 78 employees it had when the “jobs” subsidy was provided by
Loveland’s City Council. Don Williams, an advocate of the deal, has been slow to release the details to the public or
discuss the matter in a public setting.
McWhinney is now asking the Loveland City Council for nearly half a million dollars to subsidize a potential new
tenant moving from Greeley. The request for a cash subsidy from the City of Loveland to McWhinney’s potential
tenant was allowed to bypass the regular city process and is on the agenda for a decision by the City Council this
Tuesday (May 19, 2009). Unlike other "incentive" agreements where certain city fees are waived, the current
proposal is to provide a cash subsidy.
Loveland City Manager Don William, who authorized bypassing the city’s normal process, will not be attending the
regularly scheduled council meeting. Williams told the council he will instead be judging a dog show. Assistant City
Manager Rene Wheeler will be acting in his stead when the item comes before Loveland’s City Council Tuesday
night.
The companies, Agrium and its subsidiary Crop Production Services (CPS), are moving primarily from Greeley to
either Centerra or across the street to Johnstown’s “2534” development on the south east corner of I-25 and U.S.
Highway 34. The NCEDC (Northern Colorado Economic Development Council) has been working with the
company to facilitate their move out of Greeley. The request prepared by McWhinney is for Loveland to provide
$300,000 to CPS and $140,000 to its parent company Agrium Inc.
McWhinney is a major contributor to the NCEDC’s annual budget and McWhinney’s President of their Centerra
development, Rocky Scott, serves on the NCEDC Board of Directors. One NCEDC member company threatened
to make a formal complaint last month against McWhinney for serving on the Board of Directors while also soliciting
companies looking for assistance from the NCEDC. The disposition of that complaint is not public at this time.
CSU Economics Professor Analysis Misguided – Influenced By McWhinney?
CSU Prof. Martin Shields prepared an “Economic Impact Analysis” promoting benefits to Loveland if the company
locates in McWhinney’s Centerra development. The analysis has many problems not the least of which is it
examines the wrong scenario. The incentive being proposed is not to move the company out of Greeley to the
Loveland area (that decision was made already with two sites under consideration). The only potential impact a City
of Loveland taxpayer subsidy can have now is to prevent Agrium and its subsidiary CPS from locating across the
street from Centerra at Johnstown’s 2534 development.
An independent study would have more appropriately compared the relative economic impacts of the company
locating on the edge of Loveland’s city boundary in Centerra or just across the street in Johnstown. Besides the "use
fee taxes" associated with the construction aspect of the project, the economic impact without the subsidy (if Agrium
located in 2534) would be nearly identical to locating across the street in Loveland.
The Professor’s “analysis” is being presented to the Loveland City Council and local media Tuesday night as an
independent look at the cost versus benefits of providing the subsidy. In fact, the Professor is not independent when
one considers the source of funding for his salary at CSU. According to CSU;
“In 2006 the Northern Colorado Economic Development Corporation (NCEDC) committed to a five year partnership
with Colorado State University (CSU) to hire and partially fund a regional economist ….the two organizations hired
Martin Shields as regional economist…As part of the Memorandum of Understanding, the NCEDC has agreed to spend
$150,000 to supplement salary and fund sponsored research each of the next five years…...”
As funding for Shields’ salary and research comes directly from an organization (NCEDC) both funded and heavily
influenced by McWhinney it isn’t surprising that Shields is attempting to justify the subsidy with faulty analysis. A
proper analysis may have concluded that employees cross city boundaries to work everyday. Subsidizing one
location over the other has little to no economic impact to Loveland due to their close proximity. However, the
impact to a specific developer will be significant thus the subsidy is really mostly to benefit McWhinney and not
Loveland's regional economy.
Some in the real estate community have referred to CSU Prof. Martin Shields as McWhinney’s “coin operated
regional economist” since he provides the economic “analysis” that conveniently fits into McWhinney talking points
when promoting their business objectives. As a result, Shields’ analysis appears to be inconsistent and self-
contradictory.
Prof. Martin Shields’ Incentive Study Contradicts Previous Arguments for RTA
While promoting the RTA (Regional Transportation Authority) tax that was backed by McWhinney a few years ago,
Shields presented a study called, “The Economics of the RTA and Some Early Impressions.”
Slide 6 in Shield’s presentation stated,
“Economies are integrated. Our research shows that employment shocks in Weld affect Larimer, and
vice versa.”
The presentation promoted a “regional approach” to transportation and even emphasized the number of job
commuters who travel back and forth between Weld and Larimer Counties for jobs in the regional economy. The
point that Greeley’s economy is closely tied to Loveland’s also provides the obvious conclusion that moving jobs
between one city to another doesn’t have the impact Shield’s describes in his other analysis.
The analysis Shields prepared for the Agrium move between Greeley to Centerra depends heavily on some wild
speculation that disconnects the economies of Weld and Larimer Counties by assuming each is independent from the
other.
One assumption in the analysis projects that at least 50% of the new employees will choose to live in Loveland. This
is ironic since Rocky Scott and other well compensated people working at Centerra have chosen to commute home
to Ft. Collins instead of investing in Loveland.
Shield’s analysis also included the presumed property taxes the future Agrium and CPS employees would pay in
Loveland on their personal residences as “revenue” the city would receive. City Manager Don Williams and
members of the council have long argued that “roof-tops” actually cost the city money. In other words, residences
are a net loss in revenue for the city as the average household consumes more services than taxes paid through
property and other taxes.
Since the analysis contemplates the companies relocating to Centerra the normal community revenue associated with
such a move could not be included. Community impact fees, for example, would be zero and cannot contribute to
the public library, fire and rescue, police protection or other necessary and essential services due to McWhinney’s
MFA (Master Financing Agreement) with the city. No accounting appears to have been made for the true costs of
the city providing basic services.
Recent Direct Subsidies To Businesses Already Failing
In February of 2008 Loveland’s City Council voted to provide nearly $1 million in cash subsidies to the firm V-NET
for consolidating its principle operation out of downtown Loveland to a new location while bringing 14 employees
outside Loveland into the new location. See story from Feb. 2008
Instead of brining jobs to Loveland the company began laying-off employees. Today V-NET employs only 56
employees in Loveland which is down from the 78 employees it had when the “jobs” subsidy was provided by
Loveland’s City Council. Don Williams, an advocate of the deal, has been slow to release the details to the public or
discuss the matter in a public setting.
| “Economies are integrated. Our research shows that employment shocks in Weld affect Larimer, and vice versa.” Presentation by CSU Prof. Martin Shields |