Economy & Economic Development  December 11, 2024

Divided LURA board OKs Centerra audit

Loveland City Hall
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LOVELAND — The ideological chasm that has fractured Loveland politics for years reared its head again Tuesday, as a sharply divided Loveland Urban Renewal Authority board voted 7-5 to greenlight a $249,000 audit of the 20-year-old plan that financed the original Centerra development.

The LURA board, which is chaired by Larimer County commissioner Jody Shadduck-McNally and includes all nine City Council members plus representatives from taxing districts within the city, voted to execute an intergovernmental agreement between the LURA and the city to contract with Ernst and Young LLP for the audit, then voted to approve the contract itself.

The City Council had approved the appropriation on first reading last week and is slated to vote on final approval Dec. 17.

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The original financing initiative for Centerra, officially known as the “U.S. 34-Crossroads” urban-renewal plan, was approved in 2004, along with a 25-year agreement that pays for construction of infrastructure for the project by diverting sales and property tax revenue from the city, Larimer County and the Thompson School District until 2029.

Part of the agreement called for yearly financial audits of the project built by McWhinney Real Estate Services Inc., which so far have turned up no major problems.

However, Loveland mayor Jacki Marsh, who serves on the LURA board, has since last spring expressed concern over the financial implications of the Centerra agreements. In April, citing what she called “inconsistencies” in the records of the five metropolitan taxing districts established for Centerra, Marsh called for a deeper-dive independent examination “of monies spent” and to audit not only the metro districts and finance agreements but also McWhinney itself and all its related companies.

Dissatisfaction among many Loveland residents with the previous city council’s favorable treatment of McWhinney and its projects resulted in the election in November 2023 of three members less supportive of the development, shifting the council’s balance of power. At that municipal election, voters also resoundingly passed Question 301, which amended the city charter to require voter approval of plans in urban-renewal areas.

The LURA board last summer conducted a formal bidding process and selected Ernst and Young to do the forensic audit.

If the audit, which Ernst and Young estimates will take around 723 hours, turns up material violations of the urban-renewal agreements, the contract could force McWhinney and the metro districts to reimburse the city for the auditor’s fee.

But is the $249,000 actually paying for a full-on forensic audit? After hearing about the scope of Ernst and Young’s planned investigation, members of the council minority expressed doubt Tuesday.

Council member and LURA commissioner Andrea Samson called the contract “smoke and mirrors” and declared that “I’m not ready to write a blank check to this organization.

“This is a huge project,” she said. “If we haven’t done an audit in 20 years, why are we doing it now?”

Council member Patrick McFall agreed, adding “I don’t like the ambiguity that’s in here,” and Dana Foley questioned whether the nearly quarter-million-dollar expenditure would be worth it in the event that Ernst and Young “might not find that material breach, the big bogeyman.”

Foley said the “money would be better spent developing a performance-based audit moving forward.” He also indicated that the benefit of the development, especially the Shops at Centerra, shouldn’t be discounted.

“We all get to go out and shop at Macy’s and we don’t have to drive somewhere else,” he said, adding that shoppers from outside Loveland also “come here and spend money.”

Council member Steve Olson, a retired certified public accountant, called the audit a “fishing expedition” and “unnecessary.” He questioned “what is it we want out of this” if Ernst and Young does turn up errors, as well as whether the statute of limitations might come into play.

Marsh, however, stuck to her contention that financial irregularities exist, and said “you don’t just turn your back on the past and look forward. That’s irresponsible.”

LURA commissioner Robert Molloy said authorizing the audit was the board’s “fiduciary responsibility,” and its “biggest benefit is to taxpayers, to know their money is spent wisely.” And council member Erin Black added that the decision reflects the desire of voters in that November 2023 election.

Question 301 “passed by 70% of voters in Loveland,” Black said, “and their number one issue was trust in this contract with the McWhinneys that has lasted this many years. These are legitimate concerns. The gaslighting that’s happening is continuing to tell the public they’re full of it and their questions and concerns aren’t legitimate.”

Of Ernst and Young’s plan for the audit, Black added, “We know exactly what the scope is, we know exactly what the public wants, and I’m going to vote to give it to them.”

The Loveland Urban Renewal Authority board voted 7-5 to greenlight a $249,000 audit of the 20-year-old plan that financed the original Centerra development.

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With BizWest since 2012 and in Colorado since 1979, Dallas worked at the Longmont Times-Call, Colorado Springs Gazette, Denver Post and Public News Service. A Missouri native and Mizzou School of Journalism grad, Dallas started as a sports writer and outdoor columnist at the St. Charles (Mo.) Banner-News, then went to the St. Louis Post-Dispatch before fleeing the heat and humidity for the Rockies. He especially loves covering our mountain communities.
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