Loveland council restores Centerra South pacts it had rescinded

LOVELAND – Faced with the prospect of costly and protracted litigation,  the Loveland City Council reversed course early Wednesday morning, voting to restore the Centerra South urban-renewal plan and financial agreement it had rescinded in November, and to enter into settlement talks with developer McWhinney Real Estate Services Inc., which had sued the council for breach of contract.

The 7-2 vote, with Mayor Jacki Marsh and council member Erin Black dissenting, came at 2:15 a.m. after a nearly two-hour executive session in which council members and city attorney Moses Garcia weighed their options.

“I’m glad we were able to have this conversation and bring it back,” said council member Andrea Samson just before the vote. “I genuinely think we’re doing the right thing by the city at this point in time, in particular, because there could be so many negative impacts to this continuing to just play out and be drawn out. So I appreciate the council being able to work together and show that we don’t have to be a council divided or a city divided. We can differ on some issues but ultimately be good stewards of our dollars and the people who voted us into office.”

The council had voted on Nov. 21 to reverse its May 2 resolution that approved the Centerra South Urban Renewal Plan and its May 16 resolution that established a master finance plan and intergovernmental agreement with McWhinney for its planned $1 billion mixed-use project on farmland on the city’s eastern edge. The proposed pacts would use 25 years of tax revenues the development would generate to pay for Centerra South’s infrastructure including streets and utility lines.

Samson had opposed rescinding the URA but voted for it on Nov. 21 as a parliamentary move so it could be brought up again later.

Even on Wednesday morning, Marsh remained steadfast in her opposition to the plans and to the move to restore them. She believed that the May votes came after improper notice and were not valid under a state law passed in 2010 aimed at stopping the practice of farmland being used for urban-renewal projects. She also was emboldened by Loveland voters’ 70% approval of citizen-initiated Ballot issue 301, which amended the city charter to require any development projects proposed or changed under Loveland’s Urban Renewal Authority to be submitted to a public vote. Although it took effect immediately, it was not retroactive and thus didn’t cover the Centerra South agreements, prompting Marsh to recommend that they be rescinded.

Marsh’s motions were further boosted by an altered climate on the City Council with the election of three new  members who all opposed the Centerra South agreements: Erin Black, Troy Krenning and Laura Light-Kovacs.

A week after the new council rescinded the agreements, McWhinney filed a lawsuit in Larimer County District Court, contending that the Loveland City Council acted illegally and unconstitutionally. The suit sought a temporary restraining order and an injunction to prevent the city from moving forward with rescinding the agreements.

When the city and McWhinney filed responses to each other’s motions in District Court last week, it appeared the sides remained firm in their stances. In fact, those positions didn’t change this week, when the parties filed final responses, which were due Monday but appeared on the court website Tuesday afternoon. But the city relented after emerging from Wednesday morning’s executive session.

Council member Steve Olson said the episode had been “damaging to the city,” and added that “If we can come to an agreement and move on, we can begin to repair that damage.”

“I still don’t believe the notice was proper,” said Light-Kovacs, but she was swayed to vote to reverse course and restore the agreements by the prospect of “endless legal fees.

“I know I’m going to come under fire with my constituents,” she said, “but I’m going to begrudgingly support this as well.”

Krenning, an attorney who was among those who led the charge to rescind the agreements, said he would “support this motion in the best interest of Loveland citizens and our ability to move forward. I am concerned about the prolonged legal maze we may find ourselves in.”

Part of that maze involves two other lawsuits that followed the one by McWhinney and were filed by attorney Russell Sinnett in Loveland Municipal Court. One, filed on behalf of several former city council members, alleged that the members who voted to rescind the agreements had violated the city charter. In the other one, filed Feb. 9, Loveland resident Peter Gazlay contends that Krenning was ineligible to be elected to the council because he had refused to submit to a background check before the election, and that the city clerk’s office was wrong to certify his election on Nov. 7 without having the results of a background check in hand.

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