LOVELAND — It took just one week for McWhinney Real Estate Services to hold true to its threat to bring a lawsuit against the city of Loveland for unraveling a taxpayer-subsidized urban renewal project agreement.
At issue was an agreement between the city, Larimer County, and other taxing districts to partner with Chad and Troy McWhinney to develop South Centerra, a 148-acre urban renewal project that would bring new retail and housing to the area near the existing Centerra development at the junction of US Hwy 34 and Interstate 25. It used a controversial funding method known as tax increment financing (TIF).
Under the South Centerra agreement, the city would give up 1.25 percent of all sales tax revenue from retail within the development for 25 years to help with the infrastructure for the project.
However, at the November 21 regular city council meeting, a newly seated council voted to unwind all that, despite a strong warning from the developers that it would bring a breach of contract lawsuit against the city if it did so.
On Tuesday, the McWhinney’s filed two motions on behalf of their company asking for both a Temporary Restraining Order (TRO) and permanent relief from the repeal.
“The Loveland City Council purposefully disregarded the law by unilaterally attempting to rescind a validly approved urban renewal plan,” the TRO motion states. “It ignored the proper public notice and public vote requirements in an exceedingly hasty attempt to jeopardize development of a long-planned community.”
There will be a special meeting at 7 p.m., Wednesday, Nov. 29 for the sole purpose of discussing the lawsuit and hiring an outside law firm to represent Loveland.
Developers push back
Attorneys for the McWhinney’s — Denver-based Brownstein Hyatt Farber Schreck — called Loveland’s actions a “sort of slapdash process,” in asking for the council’s repeal of both the Urban Renewal Authority (URA) plan and the Master Financing Plan (MFP) to be declared “void and the city should be refrained and enjoined from taking any action consistent with the motions.”
Mayor Jacki Marsh previously told Complete Colorado that the move was done quickly as to limit the damages she expected as a result of the impending lawsuit.
“Timing here is of the essence,” Marsh said. “The more time that goes by, the more liability the city might incur should we go to court and have to pay damages.”
In fact, the actions were taken at the first meeting that included three new council members elected in November who opposed the development.
The TRO motion says the project has already incurred more than $10 million on the estimated $1 billion development, that included a total of about 15 percent in government subsidies from Loveland, Larimer County and several other taxing districts.
“To be clear, absent a TRO and injunctive relief from this court, Defendant’s unlawful abuse of political power will torpedo the Centerra South development as currently planned.”
In the actual complaint, also filed on Nov. 28, McWhinney’s attorneys had some harsh words for Marsh, claiming the move is in violation of a new charter regulation that was also passed in November requiring all major changes to a URA to go to the voters and call Marsh’s moves “political gamesmanship,” with “numerous problems.”
“City Council did not provide the lawfully prescribed 30 days public notice of a substantial amendment to an urban renewal project,” the complaint reads. “Nor did the city council make an effort to submit the motions for voter approval as required by a newly adopted ballot measure.”
The complaint alleges that “acting lawfully was not the goal” of Marsh.
“What mattered was jeopardizing Centerra South development,” the complaint reads. “So, after Mayor Marsh weaponized the city’s procedures to stifle debate about the motions … one councilor (abstained), leaving in protest over these Orwellian tactics.”
In the complaint, McWhinney’s ask for the development to continue and the city council’s actions to be voided, saying that no other action can adequately compensate the developer for an inability to move forward with the project.
“No other remedy than specific performance of the MFA will adequately compensate McWhinney,” the complaint reads.
Although the complaint and TRO filed in Larimer County District Court are seeking action against the city, there is still a possibility for more lawsuits taking personal action against the individual members of the city council. The city’s insurance policy does not cover breach of contract.
The Centerra South project has been an ongoing battle since early 2023.
Those against the project lost a battle at the state level to kill the project when Gov. Jared Polis vetoed a bill that may have stopped the project prior to city council signing the agreements, so they organized two ballot measures aimed squarely at the development. Question 300, which removed a 3 percent sales tax on the retail sales of food for home consumption, and ballot question 301, which now requires voter approval for urban renewal projects (URA).
Both overwhelmingly passed, while two council/fire authority-referred initiatives that would have combated the passage of 300 and 301 lost, albeit by a much closer margin.
Marsh previously told Complete Colorado that she has never been quiet about her opposition to Centerra South, adding that the new makeup of the council better reflects what Loveland residents want.
“From my standpoint it is an illegitimate URA,” she said. “I have said that from the beginning. The difference now is we had a change of council. The voters of Loveland spoke very loudly, and I think South Centerra was the catalyst for flipping.”
Complete Colorado has extensively reported on the story and will continue to do so.
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