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Only 7 months after receiving $900,000 of taxpayer monies (not tax deferments or waivers) from Loveland's City Council, Colorado VNet is letting
accurate (reported here last March) as the agreement signed by the City of Loveland reveals different numbers.
In addition, the so called "clawback" provision provided to the city has a maximum liability to the company of only $500,000. This means the City
of Loveland provided $900,000 of which only $500,000 would be paid back absent any interest or fees 4 years later. At worst, if the proprietors of
Colorado VNet did nothing and defaulted on the agreement they could keep nearly 1/2 million dollars while keeping another $500,000 interest free for
another 4 years. These terms make the federal government's bail-out of banks through a low interest discount window at the Federal Reserve Bank
look stingy in comparison.
Reporter-Herald Gets the Fact Wrong - Again
The Loveland Reporter Herald has again misreported the facts of this agreement on a front page story regarding the lay-offs appearing in today's
edition. According to the story,
"Its agreement with the city includes the provision that the city would get $2,000 back for each job under 250 not at vNet by Dec. 31, 2012. So
if vNet has not created any jobs over the 80 in place as of the agreement in March, the city would be asking for around $340,000 of that
That is a per new employee subsidy from the City of Loveland taxpayers of over $6,000 per employee while the obligation to pay it back in the case
of default is only $2,000 per employee not hired by 2012.
The original article appearing in the Reporter Herald regarding the potential deal by the same reporter who wrote today's story, Cara O'Brien, was
titled "‘Smart’ move."
Northern Colorado Economic Development Corp
Last week Colorado vNet received an award from the taxpayer supported Northern Colorado Economic Development Corp. for "Economic
Development Project of the Year." This is absurd as the company reported this week they began the lay-offs just one week earlier. This means
they were laying-off employees only months after receiving the $900,000 and still turned-up with straight faces to receive an award for their
accomplishments - the plaques or trophies were likely produced at taxpayer expense as well.
Poor Governing Choices
Following the 7-2 vote on Loveland's City Council in favor of the $900,000 subsidy for Colorado vNet, the Loveland Reporter Herald published a
vengeful editorial ripping the two city councilors, Cecil Gutierrez and Kent Solt, for voting against the precedent setting subsidy.
Maybe the Reporter Herald owes these councilors an apology. Councilman Solt offered an amendment to the resolution approving the agreement
that would have required a "clawback" of $5,000 per employees instead of $2,000 for those under 250 thus making the city whole if vNet were to
go out of business or not complete their part of the agreement. Solt's amendment was defeated on a 2-7. Those councilors who approved the
subsidy and voted down Solt's amendment were complimented in the editorial.
|Colorado VNet Received $900,000 City
Subsidy -- Now Laying-Off Employees
|City of Loveland approving $900,000
subsidy to Colorado vNet