City Blinks On County Deal – Acknowledges Law Requires Competitive Bid

The City of Loveland is supposed to take the first step in purchasing the Larimer County building this week while in-turn “selling” it to Rocky Turner’s longtime Loveland construction firm by approving a sale for $732,000 in one hand while giving him a $750,000 check in the other. One snag, as written and approved by a unanimous council vote on Election Day, the deal is in violation of both the URA rules and state law. Anti-corruption measures which require real property only be disposed of by “competitive bidding” in both state statutes and URA governing documents appear to have been ignored by our city’s staff and elected officials who worked on the exclusive transaction for the past year.

Credit for raising this issue goes to new Loveland Mayor Jacki Marsh whose questions regarding the legality of the exclusive land give-away are available to any citizen who accesses the city council email via the city’s website. Last week Marsh wrote an email to the city’s legal team questioning why the URA’s own governing rules and state law were not being respected in this transaction. Absent any evidence the deal was legal, she was unwilling to go along and sign the transaction documents.

The bigger question is why do citizens of Loveland need to rely on a noisy and isolated mayor and state anti-corruption laws to protect their interests? What about the staff and their eight members of the City Council who appear ready to do whatever they are told? Especially troubling is City Economic Director Kelly Peters-Jones sitting on the board of LBP which solicits money for access to economic development decision makers.

In a last minute attempt to avoid a truly competitive bid, city attorney Clay Douglas sent an email tonight to Loveland’s City Council asserting City Manager Steve Adams has the authority to change the illegal resolution by conducting a bid process without having to refer the matter back to council. Incredibly, Douglas mentions new dates for the agreement with LPR Construction presupposing no other buyer will respond to the legally mandated “competitive” bid.

Does anyone else care the city just tried to give away a $1 million building to a city insider in complete violation of the law?

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39 Responses to City Blinks On County Deal – Acknowledges Law Requires Competitive Bid

  1. Jack Benjamin says:

    One of the most suspect property transactions was buying the old Home Stste Bank building for $1.1 million and selling it to Brinkman for $200K. That’s covered in the comments to this blog post http://lovelandclassified.com/blog/?p=106

    • Gary says:

      I was very disappointed to see the sale of the Home State Bank property go to a developer who created a four-story apartment building on that site. The original purpose of the City of Loveland for that site was for museum expansion and it should have been preserved for that purpose only.
      Once the purchase price was reduced to $ 200K, higher bids would likely been offered if Loveland’s management had followed a proper bidding process.
      The Foundry property was purchased for about $ 6 mil and handed over to Brinkman for $ 500.00. Same team made that decision on behalf of the community.

  2. Carol says:

    ubject : Title 31
    From : Jacki Marsh – Mayor
    Date : 5 days ago Wed, 24 Jan 2018 08:17:08 -0700
    To : Clay Douglas , Moses Garcia <Moses.Garcia@cityofloveland…..
    Cc : Temp CCMAIL
    Regarding our discussion yesterday, please see 2016 Revised Statutes Title 31, Article 25, Public Improvements Part 1 Urban Renewal 31-25-106 number (2) (2)

    Did you find anything else in your URA search?

    Reminder – please send me a copy of the appraisal. Thank you,
    Jacki
    Mayor

    • Admin says:

      Thanks Carol for posting this. Councilman Olsen owes Mayor Jacki Marsh a sincere apology. In a recent meeting he angrily challenged her asking question regarding the legality of a matter asking her if she went to law school. Well, apparently City attorney Clay Douglas along with the next interim city attorney Moses Garcia were working this deal for almost a year and didn’t realize it was an illegal transaction.

      Neither was apparently man enough to own the mistake and apologize to the Mayor. Steve Adams, by the way, may also be shaping himself to be the worst city manager the city has ever had while Tom Hacker runs around like a North Korean media manager trying to twist arms to keep the truth away from the public’s view.

  3. Admin says:

    Latest update – City Manager Steve Adams has decided to procede without any council deliberation or public action by staging what appears to be a mock competitive bid process.

    He notified Larimer County the city will simply postpone both the purchase of the building and sale to LPR Construction until after the minimum time passes to allow for a competitive bid, according to a confidential source in Larimer County.

    According to the Resolution passed and the existing agreements, if the city does not conclude the purchase of the county building by January 31 (tomorrow) the entire arrangement automatically terminates. Therefore, Steve Adams has requested Larimer County sign an extension to the agreement which Loveland attorneys have already indicated contravenes state law.

    Adams is working diligently to sign an extension with Larimer County without seeking public discussion or approval by Loveland’s City Council. Whether Larimer County joins the now rogue city manager remains to be seen.

    In the meantime, we understand Loveland’s legal team is cautioning stunned members of the city council that terminating the agreement with LPR by starting over with a completely fair and open bid process may create liability for the city with Rocky Turner’s LPR Construction who were already negotiated agreements to receive a $750,000 subsidy as an incentive to buy the county building for $732,000.

    By their very nature contracts that are illegal are not binding. Loveland’s resolution and the exhibits attached to it cannot be enforced by LPR since acting upon them causes the city to break state laws.

    Notice the sound of crickets by the Loveland Reporter-Herald as this drama in city hall unfolds.

  4. Gary says:

    Isn’t Larimer County as a government body also required to accept bids from all interested parties before making a deal with City of Loveland? Considering City of Loveland as the only buyer may be a violation of the same statute on the part of Larimer County.

    • Admin says:

      Not necessarily, since Loveland gave that building to the county so many years ago. The statute refers to URA’s not cities in general. Nonetheless, there is a prohibition of gifting public funds so Jay Hardy’s free city properties had a fig leaf of cover claiming Brinkman was providing value in return.

      • Admin says:

        I was corrected by a former Larimer County Commissioner who said he was instrumental in the purchase from the city in the mid 80’s so his name is on a plaque under the staircase in the entry of the county building downtown.

        Of course, I am talking about former Loveland Mayor Pro Tem Daryl Klassen. He recalled a sales price around $450,000. Adjusted for inflation, that means the building was bought from the city by the county for over $1 million.

        • Gary says:

          Larimer County may have to back up a step or two. The law covers the sale of all real property owned by government. Larimer County owned the land included in Finley URL and should be subject to law governing URL properties and government owned property.

          • Admin says:

            Gary, the statute Mayor Jacki Marsh raised with Loveland’s legal counsel is specifically for Urban Renewal Authorities (URA). We are not aware of any similar statute relevant to cities in general. Below is the section she is citing in her correspondence copied below. Please let us know if you know of a similar ant-corruption statute for municipalities in general.

            “(2) An authority may dispose of real property in an urban renewal area to private persons only under such reasonable competitive bidding procedures as it shall prescribe or as provided in this subsection (2). An authority, by public notice by publication once each week for two consecutive weeks in a newspaper having a general circulation in the municipality, prior to the execution of any contract to sell, lease, or otherwise transfer real property and prior to the delivery of any instrument of conveyance with respect thereto under the provisions of this section, may invite proposals from and make available all pertinent information to any person interested in undertaking to redevelop or rehabilitate an urban renewal area or any part thereof.”

          • Gary says:

            I recall several years back when Loveland put up several unneeded properties for sale, one being in DDA boundaries. An appraisal and public offering was done then. I haven’t found the details of those transactions yet but I’m still looking.

  5. Tony Benjamin says:

    So the council just agreed to take all this up at next week’s regular meeting. With (of course!) the option to go into executive session. As controversy and questions swirl around this issue, scurrying behind closed doors would be … unwise. And would certainly not serve the public interest. Executive sessions are a by-vote council decision. A majority could (and should) keep this entire discussion out in the sunshine. State Open Meeting Law doesn’t allow executive sessions to shield public officials from embarrassment. We shall see how this is handled. tb

    • Admin says:

      Thanks Tony for the update. We didn’t watch the study session tonight. Any idea if it will be an open and competitive bid or will the city pick the winner by declaring the immediate subsidy again of LPR as the presumed winner?

      • Tony Benjamin says:

        The issue was brought up by Council Member Overcash at the start of Tuesday’s study session. He asked for an update from city staff at next week’s regular meeting, and was supported by several other council members; enough to get it placed on the agenda. No clue offered about what the results may be — except Councilor Overcash’s mention that an executive session might be needed. Which, of course, got my attention. What this situation needs is a full, open, public discussion. No executive session. Without commenting on the merits (or demerits) of how this deal unfolded, the way the council members handle their oft-repeated pledge of transparency in governance will be put to an interesting test. tb

  6. Greg Snyder says:

    How do these city council members walk a public street without shame? I am very encouraged by The Mayor’s actions. The Trump phenomenon at the local level. Is John Fogle still lurking around to chime in with his snarky drivel or is he still in hiding from getting trounced in the last election. The man appears to have the backbone of limp spaghetti.

  7. Asst Admin says:

    Here is the latest email chain;

    Audit Trail [MST] Username Event Comment
    Jan 30 2018 04:50:24PM Global Relay Archive Imported Imported Message #37242: Received from Mail Server
    Subject : RE: Building
    From : Jacki Marsh – Mayor
    Date : 1 day ago Tue, 30 Jan 2018 16:48:27 -0700
    To : Steve Adams
    Cc : Temp CCMAIL
    Thank you Steve, in regards to the Appraisers and their preparation, I would ask them to review their appraisals with an objective look at how they reached their assessed value given that Downtown property values and Downtown rents have increased significantly over the past four years.

    Jacki
    Mayor

    From: Steve Adams
    Sent: Tuesday, January 30, 2018 9:55 AM
    To: Jacki Marsh – Mayor ; Clay Douglas ; Moses Garcia
    Cc: Temp CCMAIL ; City Council
    Subject: RE: Building

    Mayor Marsh:
    Good morning. I wanted to respond to your email below with some updating or intended information.
    *I will have Jenell work with our staff and your schedule to set up a meeting to discuss this project.
    *The State Statute is under review by our City Attorney’s Office
    *I will have Jenell work with our Facilities Management Staff to coordinate with Larimer County on organizing a tour of the 6th and Cleveland Building and also coordinate with our Facilities and Economic Development groups to organize a tour of the old Reporter Herald Building. I am copying all of city council on this response in case other Councilmembers would like to participate in the tours, too.
    *The City Attorney’s Office advises me that they have forward to you both appraisals of the County Building and Parking Lot. As a professional courtesy to the appraiser if you could share some of the questions in advance it will assist his effectiveness in preparing for the meeting.
    Thanks for your inquiry.
    Steve

    From: Jacki Marsh – Mayor
    Sent: Monday, January 29, 2018 8:06 AM
    To: Steve Adams ; Clay Douglas ; Moses Garcia
    Cc: Temp CCMAIL
    Subject: Building

    Good Morning,
    I would like to meet and discuss our selling the County building at 6th and Cleveland to LPR. Prior to meeting I would like a copy of all documents regarding our purchase of the building and parking lot from the County. I would a copy of all documents regarding the proposed sale of the building to LPR.

    Please review State Statute 31-25-106 before we meet.

    Please arrange a tour for me of the County building on 6th and Cleveland and of the Herald Reporter building on 5th and Cleveland.

    Likely we should invite Don Overcash as Mayor Pro Tem.

    I have questions regarding the appraisal of the County building and parking lot so please invite the appraisers.

    Many thanks and I look forward to our meeting. I trust we will not execute the sale of the building to LPR before we meet.

    Jacki
    Mayor

  8. Admin says:

    Readers, here is the email where Loveland’s City Attorney Clay Douglas essentially acknowledges the resolution passed election night and signed by then Mayor Cecil Gutierriez is illegal. Of course, he tries to make it sound like a little bump in the road of giving Rocky Turner’s LPR (parent entity is named Longbow) the building.

    Mon, 29 Jan 2018 17:20

    Council Members:

    In November 2017, Council, in its capacity as the Board of the Loveland Urban Renewal Authority (“LURA”), approved the purchase of the 6th Street County building and parking lot from the County. The LURA Board also approved the sale of the 6th Street County building and lease of the 6th Street parking lot to Longbow Industries, LLC (“Longbow”) with an incentive agreement. At this point, neither transaction has closed.

    It has come to the attention of City staff that the sale of the County building to Longbow has one additional statutory step before it can occur: a competitive bid process prescribed by LURA. The bid process should take less than 60 days to complete and is done to ensure that the deal with Longbow, including the sale of the building, is in the public interest and in furtherance of the urban renewal plan, i.e., that there is not a better use of the County building.

    City staff has spoken with representatives from the County and Longbow. Both parties understand the requirement for the competitive bid process and are willing to adjust their timelines to allow City staff to complete the process. This change in timelines should not affect the County’s date to move out of the County building or Longbow’s anticipated date to acquire the County building, unless the LURA Board were to find a better use for the County building.

    City Manager, Steve Adams, by the authority granted in Resolution #R-105-2017, will be acting to (1) prescribe and complete the bid process that will require conditions beneficial to the City similar to those identified in the Longbow deal, and (2) extend the timelines under the contracts with the County and Longbow to complete this last step. Steve will need to enter into contract extensions with Longbow by January 31, 2018 and with the County by early March 2018.

    Claybourne M. Douglas
    City Attorney wake-up saving folder
    City Attorney’s Office
    500 E. Third Street, Suite 330,
    Loveland, Colorado 80537

    • Carol says:

      “One more statutory step”? Other than that Mrs. Lincoln how was the play?

      Clay Douglas is retiring in a few weeks so maybe not worth picking apart this absurd email trying to keep an ill conceived and illegal land swap secret but what about his staff attorney who fashioned the void contract?

      Does anyone know if Moses Garcia will be our interim city attorney again? Is he really deserving of that post after screwing this up so badly? If his only job was to make sure the city/county/LPR agreement was legal his failure was spectacular enough to at leas be career limiting. What does he make $150 per hour?

      And where is the thanks to our mayor for uncovering his malpractice and saving the city the embarrassing litigation that would have been necessary to unwind an illegal transaction?

      • Admin says:

        Good points Carol. Under the “malpractice exception” private communications between an attorney and their client normally sealed as attorney-client privilege can be revealed for the purpose of determining the extent of the malpractice and whether the client mislead the attorney thus causing or contributing to the malpractice.

  9. Jack Benjamin says:

    Maybe someone with far better legal knowledge than I can explain the how the parking lot use (but not ownership) is part of owning the building. If LPR were to ultimately get the building and use of the parking lot, what happens when LPR sells the building? Would a new owner get the same usage rights? Are the usage rights transferable to a third party? What is the term of the arrangement, which appears to be a free lease? Who pays the insurance on the lot? If an LPR employee parks there during the day and doesn’t leave at night, will they be towed? If that same car is damaged by city approved use at night, who’s liable? This looks like a good ole boy agreement rather than an actual arms length transaction.

    • Admin says:

      Jack,

      The agreement shows a lease for 50 years of 40 of the 54 parking spaces for a total cost to Rocky Turner’s LPR Construction of $10.00. He would probably need to get the city’s permission to transfer the agreement.

      • Jack Benjamin says:

        Ok. Good info. Now, let’s say the value of each of those parking spots is $1/day. I don’t know anywhere with pay parking you can park for less than $5/day, but let’s aim low. Forty spaces for 5 days would be $200/week. Fifty some weeks per year makes for $10k per year Times 50 years…those spaces, even at the ridiculously low price of $1/day are worth $500k. Do you suppose that will be included in the bidding announcement?

        • Admin says:

          Unlikely. Taxpayers shouldn’t be expected to maintain the largely private parking lot for the next 50 years. LPR Construction should not be given any preference over any other company or investor looking to acquire the property.

    • LindaRosaRN says:

      It was pretty nervy giving LPR exclusive parking rights to most of the Pulliam lot, when downtown businesses could use even more parking.

      The new parking garage was clearly designed just to meet the needs of The Foundry development, and the City plans to take away some 160 parking spaces in some remodeling the downtown.

      Those downtown businesses will be compensated with sidewalks that are a little wider, parallel parking, and a bike lane that goes down the middle of the street. (City designers have such a wicked sense of humor.)

      Something tells me that the City is already thinking about a second parking garage, even though they had to hock City Hall and other properties to get the first. What will they hock next?

  10. Jack Benjamin says:

    I think the whole reason they city got involved is the parking lot. There have been several proposed uses for the Pulliam Building over the years, made by several outside (non-city) entities. However, without control over That parking lot, the potential uses for the Pulliam dwindle substantially. Now, if this were just the city planning ahead for a city project, no big deal. But if this is another case of private influence for the sake of a future private project, it’s wrong and an abuse of power.

    • Admin says:

      The latter. If the city’s only objective was to ensure the building is improved and purchased quickly than why not offer the building and incentive to go with it in a competitive bid that anyone can submit their offer for the price?

      You can’t on one hand say nobody would want it while jealously hiding the details that you are only offering the “deal” to one party through secret negotiations

      LovelandPolitics has discovered there were already multiple offers to buy the property unsolicited to the county. Larimer County has every right to it to the city for various public reasons at a price they choose. Loveland does not have the legal authority to use the URA to buy it for $1 million and essentially gift it to a member of the LBP board of directors.

    • Tony Benjamin says:

      Agreed, Jack.
      And exactly why council members should insist a full discussion with staff on this issue be out in the open. City Council’s long-running penchant for going into executive session is a practice that needs to end. Especially in this case. That has been the real abuse of power. tb

    • Gary says:

      At the first meeting in Council with LPR management, Mike Scholl stated that it was fortunate that LPR was not unduly concerned with the presence of asbestos in the building. What a load of crap! The building is constructed of concrete, steel, glass, terrazzo and tile. Asbestos was used very little in this sort of construction, occasionally in pipe insulation, but most pipe insulation used in commercial buildings in the 60’s was fiberglass. They need an independent engineer to assess this before assuming to reduce the price and subsidize asbestos removal.

  11. Greg Snyder says:

    I think these actions are going to force me to bring the ghost of my old friend Tom Buchanon back, maybe I should bring a bullhorn and attend the next council meeting. Perhaps it would be a good time for a big turnout for the public comment section to ask Don Overcash and the other RINO’s why they seem to be in the same pocket as the previous mayor and express our support for the current mayor. She may have the biggest gonads of anyone on the council. See you there.

    • Admin says:

      Yes, you are on to something. If they disappear into a secret meeting which results in a narrow process to ensure LBP board member Rocky Turner is the only possible winning bidder and nobody shows up then we will have the government we deserve.
      The message should be simple; respect the letter and spirit of the law. Keep the bidding process open like the meeting when you plan it.

      • Gary says:

        Open meetings should encourage proper procedures. Too much of the details are decided upon prior to the dog and pony shows I’ve watched in council meetings. If the details of a business deal are sensitive and require confidential negotiations, don’t involve the City or its treasury in your plans! Take it to a bank.

  12. eric sutherland says:

    Congratulations, admin, on bulldogging this issue. Part of the takeaway here should be this: If the Office of the Loveland City Attorney can screw up something like this, what other unlawful activities are occuring?

    Loveland is so fortunate to have Mayor Jacki Marsh.

  13. Greg Snyder says:

    Follow up. I attended the Council meeting tonight and commended the Mayor for her integrity and character in sticking up for the ordinary citizens of Loveland. I then challenged the other Council members to use her as an example rather than caving to the developers, large contractors, and other manipulators who have been tilting the tables of government to their favor. I did not intend to stay long but the first agenda item was the city broadband proposal. The staff made a presentation of the conclusions of the advisory committee and offered vague reasons why we cannot exist without another city operated bureaucracy. John Fogle, as expected, just blew us all away with his wisdom, direction, and general condescension towards everyone else in attendance. I left before they voted but my feeling is that approximately $2.5 million borrowed from the Light and Power utility will fund the next stage of consultants, engineering studies, and public relations efforts. The comment of the evening was from a gentleman who pointed out that if they were running the fiber optic cables underground they definitely need the engineering study because they could run into another artesion well……….

    Since I think most here are far more technology savvy than I am you may already know this, but I was under the impression from the first wave of PR that this would have the city delivering internet, phone, and television services but when I asked the scope the staff member said it is just internet and possibly phone service. And here I thought the point was to eliminate Comcast! Boy was I disappointed….. For the normal household I don’t see any way there will be a decrease in costs or complexity from another city provided service.

  14. Gary says:

    I suggested to John Fogle that since the council was willing to allow subsidies to support the building of private retail stores, why not work out an incentive package for a reputable private internet provider. The incentive would help defray costs of upgrading the network in Loveland. The incentive would only be available to a company who would place a priority on Loveland’s needs. Many of the internet and phone providers keep Loveland on the end of the list for improvements. John is not willing to consider any other options apart from a city owned utility. If the result is vastly improved service at a lower cost to the user, who cares if City of Loveland gets to operate it as a utility?

  15. Greg Snyder says:

    John Fogle does not care about the ordinary citizens of Loveland. He continually shows his contempt for those who are not of his imagined status every time he speaks. I have met men of lower character in my life but it is really hard to number them…….

  16. Greg Snyder says:

    Admin: Your photo of Councilwoman Leah Johnson is very flattering after seeing her in person at the Tuesday Council meeting.

    Any description of the City Attorney that is not negative is also very flattering after listening to his wisdom and watching his behavior at the meeting. Loveland seems to recruit the “best” quality public servants I have certainly witnessed………… If not for this job I think he would be serving as a public defender.

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