Loveland council votes to settle Centerra South lawsuit

LOVELAND — The Loveland City Council closed the books on the breach-of-contract lawsuit between developer McWhinney Real Estate Services Inc. and the city over the Centerra South development.

On a vote of 6-3, the council approved a settlement agreement that provided for a payment to the city of $750,000 in exchange for dismissal of the lawsuit. McWhinney would receive assistance in moving the development through the standard approval processes, and the city would commit to defend the company should additional challenges arise to the development.

Mike Plachy, a private attorney from the firm Lewis Roca Rothgerber Christie LLP who represented the city, reviewed the progression of the case since its filing Nov. 28, 2023, shortly after the newly elected city council rescinded actions taken during the prior year to create the urban-renewal area and master finance agreement related to the $1 billion development.

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He said that after discussions, the case came down to legal arguments that might have been resolved by a judge based on the pleadings.

Plachy said that while initial attempts at a settlement stalled, someone from the city encouraged McWhinney to offer a settlement, and on Feb. 16, the initial draft of a settlement agreement was presented. That offer required the city to decide four days later whether to roll back the rescission, which it did.

“We received the formal settlement offer at 7:07 p.m. on Feb. 20, and you took a vote very late that evening (to reverse the rescission). It had to happen that night in order to continue settlement talks,” Plachy said.

Opinions of council members were mixed, with Mayor Jacki Marsh continuing to object to the development deal, saying that improper meeting notice was given, thus rendering the original URA decision moot. “We should pursue this. Challenging this is the will of the people,” she said.

Councilman Jon Mallo objected to language that suggested how the city should spend the settlement money. 

Erin Black objected to the city employee who went around the attorneys to negotiate a settlement. She also said that McWhinney has not upheld its promises to the city. “They’ve overpromised and underperformed, and I won’t fall for it again.”

Dana Foley said that the illegal vote was the one that rescinded the original agreement. “That being said, this is a good step forward.”

Andrea Samson said the council would be “short-sighted” if it rejected the settlement offer. “Considering we broke the contract, it wasn’t their (McWhinney’s) onus to bring forward a settlement.”

Steve Olson said that “none of the money is the city’s money; the developer has to develop in order for there to be any money. I would like us to put something to bed and move on. A billion dollar project is something good for the community.” 

Krenning, saying he would not have voted for Centerra South in the first place, also said that the rescission “is a never-ending quagmire, and I’m not willing to go there. We’d be tangled up in litigation for years.”