Felon In-Charge of Johnstown Scheels Development

On our way to do another boring story, this time regarding the details of Johnstown’s $90 million metro district deal for Scheels, we stumbled across just how serious the developer, Michael Schlup, felony convictions really are that we had been hearing about but local media has decided not to investigate.  see our story

Schlup would not even pass the very casual background questions of the Johnstown Saddle Club to handle their petty cash at rodeos yet Johnstown officials voted earlier this month to trust him with $90 million in taxpayer funds for a massive development.  Here is a brief list of the items we found;

1.  According to Kansas media, Schlup served time in jail in the 1990’s for loan fraud after being indicted for “Conspiracy to Commit Loan Application Fraud” for loans on houses he developed.

2.  Schlup pleaded guilty to 14 felony counts in 2007 for hiring illegal aliens, paying them in cash and failing to pay payroll taxes (up to 30 on one job site according to the prosecutor).

3.  Schlup was sued and settled with the widow of one undocumented worker who fell to his death and another who was badly injured and apparently couldn’t get any compensation from Schlup who kept them off his books.

4.  Schlup is reported to have paid $11 million only two years ago to a condo association for building condominiums where the patios were so unsafe the local fire department had to condemn them.  The homeowners spent years suing Schlup before finally getting the settlement which included a gag-order.

So if Johnstown wants to create a concentration camp or maybe the factory from Schindler’s list – they have the perfect candidate.  But allowing Michael Schlup even near the public’s treasury, or placing him in-charge of a construction project is asking for nothing but trouble.

This entry was posted in Uncategorized. Bookmark the permalink.

33 Responses to Felon In-Charge of Johnstown Scheels Development

  1. Jack Benjamin says:

    Nice scoop! If the Madwire story is any indication,
    the RH will be hot on your heels with their
    story two months from now. Actually, I can’t
    see how they’ll ever take the risk of making
    Scheels angry, as they have to be looking forward
    to the substantial ad dollars Scheels will spend.

    We seem to be in a time when those that can
    tell the most lies win.

    • Admin says:

      Jack, I deleted my first reply to your comment. It appears from early responses to our story there are members of Johnstown Town Council who were not fully aware of Schlup’s criminal past despite what we were told and what is reported.

      We will provide more information when it becomes available. In the meantime, we are interested in hearing any comments from Scheels directly and maybe some explanation for their motive in involving this man and his company into their project.

  2. Carol says:

    Outstanding piece of journalism with everything beautifully sourced from multiple very reputable publications!

    The amazing thing to me is this criminal has no remorse! He has no regret or contrition for his crimes so will now be in-charge of the largest building project in Northern Colorado. He seems to be continuing to blame other people and pretending to be an upstanding citizen! Best quote was Gov. Jay Nixon in the first article – now Colorado has to deal with him!

    “Today’s penalties should serve as a strong warning to others who would consider this type of conduct,” Nixon said.“We will not tolerate unscrupulous employers who, motivated by greed, cut corners trying to gain an advantage over those businesses that play by the rules. Practices such as those employed by this defendant negatively impact the pay of hardworking Missourians, and are unfair to the businesses that follow our state’s laws,” Nixon said.

  3. Not happening says:

    Somewhat related, but not: How can the Chief Building Inspector (Official) of Larimer County, Eric Fried, be qualified to do his job given the documented fact he only has a Bachelor’s Degree in Social Studies? Is this a glaring example of cronyism?

  4. Greg Snyder says:

    Eric Fried is also a chief leader with the Green Party and an anti-growth zealot. He was very active against business and proper planning in Ft Collins during the 1990’s. Inspectors are not required to actually know anything about the trade they are tasked with only how to read and interpret the code requirements. A building may be constructed completely to code specs but still not be of good quality.

  5. Matt says:

    What happened to forgiving in a christian country? Should Mike be punished the rest of his life or be allowed to move on? You are bringing-up things from over 5 years ago and he is not on parole or in jail so what is the big deal?

    • Admin says:

      Matt,

      Even after serving time,

      a. molesters are not good candidates to supervise day care centers,

      b. con artists should probably not be managing people’s retirement portfolios

      C. and abusive contractor’s who try and cheat the system by not paying payroll taxes, falsify loan applications and cause injury and even death to workers through lack of safety procedures should probably not be developing a sporting goods store while handling the public’s money for the public improvements.

      Do you understand? Most felons are trusted to work in an area unrelated related to their crimes. Worse are the ones who haven’t taken responsibility for their actions and continue blaming others.

      Scheels isn’t just using his own money but the public’s as well. That requires a certain standard of accountability he may not be imposing on his own company’s projects.

  6. steve says:

    I thought this site was about Loveland and its politics. Why the sudden change to begin discussing topics unrelated to Loveland?

    • Admin says:

      Steve,

      Johnstown 2534 is directly related to Loveland for a number of reasons. They share various property taxing districts with Loveland as part of Larimer County, compete with Centerra in Loveland (across the street) and rely on the same failing interchange of I-25 and U.S. 34.

      Unless you closely follow local politics, many people have no idea where the boundary is between the cities in that area and assume it is all in the same city.

      Last point. Troy McWhinney has placed the blame for losing Bass Pro in Loveland to the new Scheels all sporting goods store coming to 2534 so if it impacts Loveland to that degree we believe it is relevant.

  7. steve says:

    I remeber when Bass Pro cut bait on Centerra, you beat a pretty loud drum that Bass Pro was only leaving Centerra and looking at other locations in Northern Colorado. Is that still the case or were your sources wrong? Bass Pro discussion has been very quiet. I would think if they were looking at other locations, we would have heard something by now. I know a few who work for McWhinney, they told me, McWhinney told Bass Pro to start construction or give the land back as they were tired of waiting. And Bass Pro response was they didn’t have the funds to open up all the planned stores so they were having to walk away from previous commitments. http://www.wsj.com/articles/bass-pro-shops-considers-financing-alternatives-1411058952
    Do you ever call McWhinney’s to ask their side or do you just rely on rumors you hear from so called sources?
    Your sources say Bass Pro is looking for a new site in Northern Colorado and McWhinney says, Bass Pro will not be building in Northern Colorado. I wonder who will be right. What’s your prediction?

    • Admin says:

      Steve, funny you ask. Yes, I asked Troy McWhinney in person about the rumors of Bass Pro building elsewhere in Northern Colorado and he brought-up Scheels citing it as the reason he believes they will not. I dutifully reported that as his position but it is not mine.

      You need to keep in mind McWhinney tried to compete against their former partner (Poag McEwen) before Promenade was fully leased by announcing Grand Station. As predicted by Poag, Grand Station failed along with Promenade which they lost to foreclosure. MCWhinney relied on Poag (managing partner) to recruit the big name retailers.

      Given that track record, even a national retailer like Bass Pro wants a partner who can fill-in the empty spaces and not compete against their own project before it is filled (what their new development will do).

      So our position has not changed. Given the right terms and developer, Bass Pro will locate here.

  8. steve says:

    Ha. You are a funny guy. I didn’t think the McWhinney’s would engage in a conversation with you. I just called Troy and asked if he really said that to you. Troy said, he would never engage in a discussion with a moron like you and never said anything about Bass Pro not building because of Scheels. He said you are welcome to call him at his office and he’d tell you the same. Admin, its not professional to make up fictitious sources and quotes. If you decide to call Troy, please report back on that conversation.

    • Admin says:

      Steve, no need to try and prove anything. It was at the Steer in downtown Loveland on election night last November. He actually came up to me and introduced himself.

      A number of candidates were there along with members of the City Council. I asked him if he thought Bass Pro would locate somewhere else locally and he said no because…..as stated above. It wasn’t a private conversation.

      He was very polite (under the circumstances) and I doubt would speak in the manner you are claiming.

  9. John Fogle says:

    Personally,
    I like seeing as much data/stories as possible on the 25/34 Johnstown complex.
    This area is going to be Loveland’s nemesis for the foreseeable future when it comes to economic development.
    Loveland also pursued the Sheel’s store, and lost out to bigger/better incentives offered by Johnstown. Johnstown will represent a serious threat for years to come.
    They can give away the farm (Quite literally) because they have no infrastructure to pay for. Missing from the 25/34 area are the most if not all of the traditional amenities we enjoy in Loveland. (Parks/Museum/Library/Rec Center/ect)
    What is truly sad is the fact that the residents of that area come to Loveland for our amenities, without contributing to the tax base that supports them.
    In the case of Sheel’s — maybe Loveland dodged a mess is the developer is as bad as these stories would leave me to believe.

    • Troy Mellon says:

      John,
      I know that the details of the agreement have not been reported in the media (curiously the major papers never show up), so to assuage your fears that somehow we gave up the farm, here are the basic details.
      1) Johnstown rebates 2/3 of the sales tax collected to the metro district that will be formed in the area.
      2) Johnstown, the county, and all special taxing districts retain all property tax revenue (no URA).
      3. All development fees and taxes will be paid as required.
      4) No bonds can be issued by the metro district until 100,000 square feet of retail space is developed.

      According to our independent analysis of revenues vs. expenses for the Town, we are very much in the black as this developement proceeds.

      As to all of the infrastructure you mention “(Parks/Museum/Library/Rec Center/ect)”, first a town of 12,00 will be hard pressed to compete with a city approaching 100,00, not can we even try, but….
      1) Parks – please check out the town’s park’s and trails master plan.
      2) Museum – please visit the Harvey J. Parish Museum, containing a lot of great information and exhibits of area history.
      3) Please visit our town library. One of our Council goals in the next two years is to plug precisely the hole you identify with a branch library of some form in the 25/34 area.
      4) Rec Center – This is also an area of concern, but the solution is not as simple as you think. Most of Johnstown is in the Thompson Rivers Park and Rec district, who is charged with providing those services to Town.

      Obviously, there is a gap there, since the 25/34 area is not in that district. The town is currently commissioning a report on feasibility options of public/private partnerships in constructing and operating a rec center. Once we have that information, we will be better equipped to make a decision moving forward.

      All these things have to be viewed with the following paradigm – the Town will not incur debt, as all of our general and enterprise funds have no outstanding bonds or debts. There aren’t even town credit cards. Our last several capital projects have been paid.

      Lastly, I can say that I was unaware of these felony convictions, and it is my firm belief that none of the town staff or the rest of the Council knew either. I’m wondering if this source may have been referring to someone in the current 25/34 metro district. Be that as it may, mea culpa. We probably should have known, but having had issues in the past with metro districts, we hired the most qualified attorneys and metro district consultants in the state to help forge this agreement. If we would have known would we have done anything different. I don’t know.

      I know that we haven’t made many friends in the development community along US34 by daring to testify publicly against the asphalt ant and industrial rezoning. So be it. Would this even have been brought up publicly if they had developed in Loveland?

      So is Johntown perfect? No. Do we make mistakes? Yes. But we try really hard not to repeat errors that we or others have made. In the end, the best we can do is make the best decisions possible with the information we have.

      One last thought – we didn’t even know who Scheels were until their representative walked into Town Hall last spring. We did not recruit them, nor did we try to get into a bidding war that we would have surely lost. In the end, I don’t know why exactly they chose Johnstown, but they did. It’s presence will benefit both Loveland and Johnstown by bringing in new shoppers from around the region. Isn’t that what we all want?

      Check up our website for agendas, Council packets, and meeting videos at

      http://www.townofjohnstown.com/59/Agendas-Minutes-and-Town-Council-Packets

      • Troy Krenning says:

        Troy,

        I try not to speak for other councilors, and I assure you others are not authorized to speak for me. I view Johnstown as a neighbor, not a nemesis. I wish we could find ways to work together on regional development and not let petty politics get in the way of what is best for not only both towns, but all of northern Colorado.

        I like Trump’s idea of a Great Wall but do not advocate building one around Loveland or Johnstown.

        I am not sure if the two town boards have ever met, maybe its time to do that?

        Hope you’re well!

        Troy

      • Admin says:

        Thanks for your comment. An important point to make here is Johnstown has no phony blight designation at 2534 so when property tax value increases new revenue will be generated for schools, county services, and special taxing districts as a result of the development. In Centerra, property taxes are diverted back to McWhinney’s metro district so there is no new revenue from property taxes for the services those businesses rely upon forcing everyone else to pay more for those services.

        On another point, your agreement for the Scheels store states the developer asked for the following which was included-

        “1% of the sales tax derived from within the current boundaries of TCMD, but outside the boundaries of the new metro district, be pledged to payment for the New Public Debt, after such credit, which is currently provided to Chrisland Investments LLC Pursuant to a letter agreement dated May 15, 2006 expires on December 17, 2025.”

        Troy, does this mean 1% of the sales taxes generated OUTSIDE the special Scheels metro district will begin repaying their debt after 2025? Do the entities paying into TCMD know they will also be repaying the Scheels public debt after 2025?

        • Troy Mellon says:

          Admin,
          The paragraph you highlight was in the non-binding Memorandum of Understanding (MOU) which was approved by Council on July 20th, 2015. The non-binding MOU provided the Developer with assurance of the Town’s intentions and allowed the Developer to continue moving forward with the Project. The Comprehensive Development Agreement, Funding Plan and Intergovernmental Agreement for Johnstown Plaza approved by Council on January 20, 2016 set forth the final terms of the parties’ agreement related to the project. That document does not have that provision you mention included within it.

      • Eric Sutherland says:

        Mr. Mellon, please comment on the pledge of sales tax revenue. At best, this appears to be a soft promise of future sales tax revenue subject to annual appropriations of future Council’s. As such, it is not a legal debt and is not inconsistent with Town of Johnstown’s aversion to debt. Is it accurate to state that the MD has no legal recourse in the event that a future Council elects not to disburse sales tax dollars in the manner contemplated? Or, alternatively, are their guaranties or other contractual terms that secure future payments? In other words, is there any downside to a future Council simply prioritizing appropriations of sales tax revenue to something other than the metro district?

        • Troy Mellon says:

          I simplified how the sales tax split is achieved for clarity. The mechanics are that the Town will allow the merchants a sales tax credit (2%) on each transaction. The merchants instead remit that money as a metro district PIF to a collection agent. That money is then placed with a trustee who disburses it to the metro district. The Town never collects the money, so there is no need for the Council to appropriate money to the metro district.

          • Admin says:

            Thanks Troy, we have a complete story on this subject back in 2009 explaining Ceterra’s sales tax which appears to be the same. http://lovelandpolitics.com/McWhinneycrisis29.html

            What most people (even many in government making decisions) don’t understand is the pif (or whatever name is given to the fee) cannot operate as a tax since it is not a legal tax per TABOR. Instead, the “fee” is actually taxed just like the good or service the customer is purchasing.

            For example, in a town with 3% city sales tax and 8% percent overall sales tax (after adding 5% for state and county) you will pay $108 on a purchase of $100.

            If the city discounts for the developer 2% of their 3% sales tax and the metro district collects a “fee” of 2% the total on the $100 purchase is now $108.12 not $108.

            This is because, by law, the “fee” cannot operate like a tax and is theoretically voluntary by the merchant agreeing with the landlord to collect the fee. Therefore, the 2% is added as a service charge to the transaction ($102) first BEFORE the actual sales tax is calculated. In this scenario, the remaining 6% sales tax is charged to the $102 “purchase” leaving a total cost to the shopper of $108.12.

            Simply stated, you are being taxed on the metro district fee in addition to the product you are buying. The difference isn’t significant but often creates confusion.

          • Eric Sutherland says:

            Any disparity in the rate of sales taxation risks a claim of unconstitutionality based upon due process/equal protection. Such a claim would not be valid if the disparity were applied to to an identifiable class of retail sales that was substantially different from the remainder of a town or cities retail trade. I fail to see how anything in McWhinneyville or the Scheels store qualifies as a protected class and is exempt from our constitutional requirements of equal protection. Certainly, everything that can be found in the case law of the state of Colorado would indicate that the sales tax reductions described here are unconstitutional.

            Cities and towns can’t go around saying ‘only 1 cent on the dollar needs to be collected here, but 3 cents needs to be collected over there’. The courts have consistently ruled that Home Rule authority stops far short of pre-empting due process. Uniformity in taxation is the law of the land .. unless circumstances pertaining to the local government’s police powers or public purpose mission demand otherwise. Such circumstances do not exist here.

  10. Greg Snyder says:

    John: Don’t you think that those living south of Highway 34 will eat, shop, and spend money with Loveland businesses? I think a lot of people who live outside of any community shop mostly where it is convenient and handy. Following your logic about “outsiders” using community parks and other facilities (I am pretty sure they will be charged a fee to use the Rec center and possibly the library) without “contributing” then perhaps people who live outside of the city limits should not be charged the city portion of the sales taxes they pay in restaurants and stores. Wouldn’t that be fair????

    • John Fogle says:

      Everyone pays to use the Chilson Center and small fees for specific library services. These collections cover only a small portion of the true cost of these facilities. These Facilities are built with CEF and sales tax dollars, and if we are to maintain the fine level of service we all enjoy in Loveland — the ADMIN is right — this is a competition for sales tax dollars, pure and simple.
      Loveland has long enjoyed being a NC leader in sales tax collections — that may be changing in the near future — time will tell …….

  11. Drew Whelchel says:

    I live in 2534 and have been curious about the development here. Thanks for reporting on it. I just forwarded the link to everyone in Thompson Crossing and zbig Thompson Ranch.

    • Admin says:

      Thanks Drew. Please report back any reactions or encourage people to comment. I am on the East Coast this week and all last week on business. Anyone I show the story is amazed and especially surprised our local media is not reporting this information.

      If readers ask their local newspapers why they are not reporting the story this might pressure them to finally keep their readers informed. Unfortunately, as stated earlier, struggling newspapers are inclined to only write puff pieces about incoming retail in hopes of receiving advertising revenue.

      Absent that “fourth estate” as Edmund Burke called it, representative government doesn’t properly function. We provide deference to locally elected officials who have the courage and integrity to engage our readers on this blog by tackling difficult issue head-on whether we agree with their position or not.

  12. Donna J. Malone says:

    We live in Stapleton and found your website fascinating. Our property taxes are higher than even Denver. We pay roughly 1.1% of the purchase price divided by 12 months. For example, a $500k house will be $5,500 in annual tax which is $458 per month. Our daughter and her fiance bought a condominium in Centerra and also pay extra property taxes to the McWhinney brothers. They first thought it was a good deal until they found out everyone else in Loveland pays less property taxes. How come you don’t report on residents of Centerra which I guess is somehow getting services from Loveland paying so much higher property taxes.

    • Admin says:

      Thanks Donna, we appreciate readers from anywhere contributing to the forum. Per your question, back in 2007 we covered the topic of Loveland’s City Council voting unanimously to give the Lakes at Centerra a metro district to charge 60 mills to each home owner when other developers were denied. Some residences in Centerra are inside a residential metro district taxing district while others are not. If your daughter pays just a fraction over 72 mills than she pays the same as most of Loveland. If you add 60 mills (nearly double the property tax) than she likely lives in Lakes at Centerra or another McWhinney neighborhood.

      Loveland’s policy for residential metro districts is much the same as other taxes. If your last name is McWhinney than you can use nearly any amount of a home buyer’s future property taxes to repay public debt the city will let you encumber the development to offset your initial costs. If you are not a McWhinney, odds are your ability to use public financing to offset the infrastructure cost of developing a residential neighborhood are quite low.

      Here is a link to a blog entry from 2007 showing how city council members voted regarding residential metro districts. As you will see, despite the terms being nearly identical some voted always no except when it comes to a McWhinney application.

      http://www.lovelandpolitics.com/blog.html/1315

  13. John Fogle says:

    Admin —
    Sounds like the real problem with Metro Districts is the lack of disclosure to the new residents/purchasers. (Anyone buying a pre-owned house clearly knows what the property taxes are).
    We have several Metro districts in Loveland that have nothing to do with McWhinney’s – it is a useful tool for developers to pass the infrastructure cost onto the property purchasers and keep the original costs lower.
    Property taxes in Loveland are the lowest in the region — and personally, I’m happy about that.

    • Admin says:

      In their defense, the prior Loveland Councils were emphatic with developers regarding full disclosure so maybe the problem is in second homebuyers.

      Of course, home buyers compare new home prices and often assume property taxes are unrelated to price. In this case, Lakes at Centerra homebuyers may have thought their house was a good deal. Price per square foot comparisons don’t include the differences in property taxes so they paid more than they realized.

      Like everything involving McWhinney, equity is the problem. The city should either allow all or no developers the opportunity to hide infrastructure costs in public debt.

      Those who cannot use a metro district end-up charging higher prices to recover the infrastructure costs in the price of the property.

      After KB Homes was denied their metro district request for Aspen Knolls they were forced to sell to McWhinney who stripped the land of water rights they used elsewhere.

      Council decisions have real consequences on the private market. Essentially, not having McWhinney’s special access to local government is a real market disadvantage. Too bad their near monopoly on local regulation and taxes hasn’t resulted in the revenue they projected in 2004 for the city.

    • Eric Sutherland says:

      The Thompson School District certified a mill levy of 38 mills for 2015 taxes (collected in 2016) . The Poudre School District certified a mill levy of 52 mills.

      Part of that difference stems from the fact that PSD is keeping their levy artifically high in the hopes that voters will go for the “a yes vote on the new bond levy will not increase your taxes” ploy. But that arificial elevation in tax amounts to only about 2 mills. The remainder of the difference is attributable to the GF levies (22 v. 27) and the MLOs and BIs for each district ( 16 vs. 25)

      Other than this, there is no reason to say that Loveland has low property taxes. Even then, the TSD property tax is fraught with problems. When the diversion of property tax to the corrupt LURA comes to an end, TSD will be deprived of the “bonus” 7% it was getting above and beyond what the voters approved in 2005 and 2006 that it currently expects to pay for the “URA school”. That 2006 MLO, by the way, should have hit is cap this year and have dropped below 4.15%. However, TSD decided that the cap was applied only to the amount that the school district receives .. not the total amount paid including the pseudoincrement … and the rate stayed at 4.15%. But what the heck. The school district needs the extra. Otherwise people might die of vanity over their low tax rates.

Comments are closed.