a non-partisan website about Loveland politics for residents concerned about our community's
quality of life.  Send us your story or comment on the blog.
Loveland - Update last - March 5, 2008
- click here to see original story February 6, 2008

On January 15, 2008 a small limited liability company that employs 64 people in Loveland sent a letter to Loveland's City Manager asking for
$890,000 to relocate the existing employees plus 14 more now in Longmont to somewhere else in Loveland once a location is found.  A little more
than two weeks later, the City Council voted to direct staff to draw-up a resolution that will give Colorado VNet $900,000 as a result of moving 14
employees to Loveland and with the expectation that more jobs will follow as the company grows in the future.

Council Votes To Appropriate $900,000 For Colorado VNet's Relocation Expenses - March 4, 2008

loan but more as a grant) to assist the company in relocating out of downtown Loveland.  The newly drafted agreement between the City of
Loveland and Colorado VNet is more restrictive than was first discussed at the February 6, meeting and includes the following;

1.  A requirement that Colorado VNet employ a minimum of 250 regular full time employees (212 in Loveland) by the year 2012
2.  The average salary of the 250 employees must be $65,000 a year
3.  The owners, Mr. and Mrs. Beierwaltes, will sign a personal guarantee for $500,000 of the money in the event the company is in default
4.  Failure to meet either the number of employees or the salary targets by 2012 will result in the company having to pay back the City of
Loveland         $2,000 per employee

Final Agreement Requires 134.5 Jobs

The City of Loveland staff is claiming the agreement will ensure 450 new jobs in Loveland but the actual number, according to the agreement, is 134
jobs.  This is beceause up to 15% can be located outside Loveland and 78 already work at the company.  The subsidy of $900,000 works out to
approximately $6,700 per job but the "clawback" provision only requires the company pay back $2,000 per employee short of the 250 by 2012.  If
inflation remains low (as in the past 5 years) the value of the dollars in 2012 will be approximately $1,056,000.  If the company chooses to default
on the agreement than it will make $400,000 (since the clawback maximum liability is $500,000) and have had use of half a million dollars of the
city's money interest free for 5 years.

Councilman Kent Solt offered an amendment prior to the final vote to remedy the shortfall by requiring $5,000 per employee not hired by 2012.  
Even when borrowing money secured by the SBA (Small Business Administration) or other agency businesses are normally required to pay back the
full amount if they are in default of the agreement.   Only Councilman Solt and his newly elected colleague Councilman Cecil Gutierrez voted in favor
of the "clawback" amendment that would fully protect the taxpayers in the event of a breach of the agreement by Colorado VNet.

Mayor Pielin accused Solt of trying to make the risk to the city "zero" earlier in the same meeting and the "old guard" on the City Council denied the
amendment by supporting the staff recommended limited "clawback" provisions written into the agreement.  It is a common practice in providing
small business loans or grants to protect the source of the funding by ensuring, in this case, the city could be made whole again if the applicant is
either unwilling or unable to comply with the agreement.  Instead, the city council passed an agreement where the applicant has been given a
$400,000 gift of public tax dollars and the free use of another $500,000 for five years.  In the event of a serious breach of the agreement the city
will have no recourse to recover the $400,000 after the monies have been provided to pay for the company's relocation in Loveland.

The final vote for the agreement was the reverse of the proposed amendment.  The Mayor and "old Guard" voted in favor of the plan as prepared by
staff while Solt and Gutierrez voted no.
(not loan) $900,000 to Local Business for
Relocation Costs Out of Downtown
Council vote was 7-9 in favor - Company To Occupy Old
WaterPik Facilities in Loveland
fails to meet hiring objectives by 2012