Centerra South case may be settled based on motions instead of trial

LOVELAND — A scheduled trial at the end of February to resolve the dispute over the Centerra South development may not happen at all, if the judge agrees to rule on the matter based upon motions for summary judgment filed by both McWhinney Real Estate Services Inc. and the city of Loveland.

The city and McWhinney, in stipulations filed last week, agreed on all the facts about the situation. They disagree, however, on how the law applies, which renders the situation suitable for judicial determination based upon motions for summary judgment.

Both parties filed motions over the weekend, with McWhinney’s motion filed Friday and the city’s filed Saturday.

The Centerra South URA and its master finance agreement were approved by the Loveland City Council in May 2023. After municipal elections in November, a new majority took charge of the council, and Mayor Jacki Marsh moved to rescind the approval of the URA and the MFA. Both motions were under the council’s new business rules, which permitted 10 minutes for each. Marsh took eight minutes for one of them and five minutes for the other in her remarks, leaving little time for other members of the council or the public to participate in the discussion. McWhinney filed a lawsuit to overturn the rescissions.

McWhinney claims that “Colorado’s Urban Renewal law does not allow for ‘rescission’ of an adopted urban renewal plan” and that the MFA “irrevocably binds the city to its pledge of incremental tax revenues.”

McWhinney also argues that “the city’s affirmative defenses consisting of after-the-fact challenges to the procedure the city itself used in adopting the Centerra South Urban Renewal Plan … fail for want of standing…”

The city argues that McWhinney’s claims fall flat because there never was a valid URA approved by the city.

McWhinney’s “claims fail as a matter of law because each necessarily and erroneously relies on the existence (of) a valid Centerra South Urban Renewal Plan.”

The city’s arguments depend upon what Mayor Marsh has contended all along, that the city failed to give required notice under the URA law and under the Colorado Open Meetings Law of the public hearing on the URA. 

The city had advertised a hearing on the matter for April 18, 2023, but when the URA was not ready for the hearing, the council elected to open the hearing and continue it to May 2. Opening and continuing public hearings to avoid having to re-advertise hearings has been a common practice in Loveland as well as other communities in the state.

The city in this dispute, however, argues that continuing a hearing also requires notice of a “date, place and time certain,” which it says didn’t occur. 

“There is no exception to this statutory requirement,” the city’s motion reads.

Because of the flawed process, there is no URA or MFA, the city argued, and thus “each of McWhinney’s claims must fail” and “the vote (on the URA in May) is therefore void.”

McWhinney’s brief, however, takes issue with the city’s argument saying that the city does not have standing to challenge its own actions. 

First, McWhinney said, the city cannot rescind approval of a URA, although it can modify it. 

Second, although the city claims that notice requirements were not met, “the city has not suffered an injury-in-fact.” 

“In effect then, the city is accusing itself of violating its duty to provide the legally required notice (of the public hearing) and asking the court to void its own actions because of this self-accusation. A self-inflicted injury does not confer standing; nor is it protected by these statutes,” McWhinney’s attorneys wrote.

McWhinney also argued that governing bodies are not among the potential plaintiffs identified under state URA law, and even if they were, claims can be raised only within a narrow timeframe.

“The city council is the entity making that legislative determination. It is not afforded a broad right to subsequently challenge its own urban renewal plan or financing plan.”

The company raised the issue of “equitable estoppel,” which it said “bars a municipality from refusing to satisfy an obligation by taking a position contrary to a previous representation reasonably relied upon by the party dealing with the city to the party’s detriment.” The company claims that it has spent $10 million already and has contracts with a natural foods grocer and “a Fortune 1000” business to locate in the development.

Other legal actions

While the city engages with McWhinney at the district court level, it also was served last week with a lawsuit filed in municipal court by several former members of the city council and others. 

That case, filed by former city council candidate and attorney Russell Sinnett on behalf of multiple parties, claims the council in rescinding the URA plan and finance agreement violated the city charter, which under a voter-approved amendment in the November election requires a vote of the public when a URA plan is modified.

The lawsuit claims that Mayor Marsh’s motions were not properly noticed to the public and that she used “improper procedures … designed to prevent any meaningful discussion of the motions by other councilors.”

The lawsuit claims “intentional violations of the newly amended charter,” along with violation of due process under the law, which would render the rescissions invalid and also make those who voted for the rescissions ineligible to serve on the council. 

“No person who has been convicted of … a willful violation of this charter shall be nominated or elected as mayor or council member,” the lawsuit said.

Among the plaintiffs was former council member Richard Ball, who noted to BizWest that the primary remedy being sought is to “rescind the vote that was taken” after the new council was sworn in.

“After the rebels were elected, they didn’t remember we have a city charter,” he said. Ball served on the original charter commission that wrote the governing document for the city.

When asked why municipal court was selected for the venue in this case, he said that municipal court has primary jurisdiction over enforcing the charter and “the municipal judge has to act as an independent arbiter.” 

The cases are:

McWhinney Real Estate Services, et al, versus city of Loveland, case number 2023cv30956 filed in Larimer County District Court.

Richard Ball, et al, versus city of Loveland, filed Jan. 18, 2024, in Loveland Municipal Court.

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