LURA board selects national consultant for Centerra audit - Reporter-Herald
Thomas Clayton
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LURA board selects national consultant for Centerra audit
After a contentious discussion that spanned more than three hours, the Loveland Urban Renewal Authority board voted on Tuesday to go ahead with a forensic audit of the entities involved in the original Centerra urban renewal plan and then selected consultant Ernst and Young for the job.
But it was over the objections of four of the 12 board members, who questioned the proposed scope of the audit and whether the LURA board has the authority to conduct the wide-ranging examination that some members of the board have asked for.
“The concern I have is that we are making accusations and that we have not given the developer an opportunity to respond to questions from the body,” said board member Steve Olson, who opposed the audit. “I’m concerned about what we’re going to get, how we’re going to benefit from spending $250,000 or more.”
The city approved the original Centerra urban renewal plan, also known as the U.S. 34-Crossroads plan, in 2004. To fund public improvements within in the plan area, the city, Larimer County and the Thompson School District agreed to divert tax revenues to the project for 25 years, ending in 2029.
The notion of conducting an audit of Centerra’s financials was introduced to the LURA board in April by member Jacki Marsh, a long-term skeptic of the development and its developer, McWhinney Real Estate Services. In July, the board agreed to go along with Marsh, and voted to direct city staff to solicit bids for the project on behalf of LURA.
A formal request for proposals, issued in late August, asked for a forensic examiner to assist LURA in identifying any “transactions, activities, condemnation/eminent domain, procurement, or other practices” related to Centerra or its metro districts that might be in conflict with the plan’s master finance agreement and the its tax-sharing covenants.
“I want to emphasize that Centerra North is a public project,” Marsh said during a 10-minute point of personal privilege on Tuesday. “…It ceased being a McWhinney development when it asked for and received an urban renewal plan.”
To bolster her case for the audit, Marsh has collected hundreds of pages of documents that she claims raise serious questions about Centerra, including check ledgers with missing entries and limited detail. Marsh said that she has also found anomalies in Centerra’s formal bidding practices and in how certain expenses were classified, among other discrepancies.
“So somebody needs to look at this, because I found a lot of inconsistency,” Marsh said.
Marsh had unqualified support from LURA members Erin Black and Rob Molloy, who both said their questions about Centerra and its financial practices have not been met with satisfactory answers from the developer.
“I’ve also put a lot of time into this, and the things that I’ve found as a fiduciary, because that’s my role as a LURA commissioner, there are many red flags,” Black said. “I handle all my father’s financial accounts too, and if I got reports like this and from CORA (Colorado Open Records Act) requests, then I absolutely would be digging in further, because that’s our duty.”
Also on board with the audit were Jon Mallo and Troy Krenning, who said he is hoping that the results will put to rest the “the percolating whisper gossip campaign” against McWhinney and Centerra.
“I think this is an issue where the statement that perception oftentimes leads into reality has done just that,” Krenning said. “Perception has become the reality, because we don’t know what the reality is, and it’s high time that we take a look and discover what is the reality.”
But other LURA members had qualms about moving forward, even if they agreed in principle with doing the deeper financial examination. Several, including Barbara Kruse, Andrea Samson and Dana Foley, suggested asking the board of the Centerra Metro District to address LURA’s questions directly before conducting an invasive audit.
“This looks like we’re looking for a smoking gun, and I don’t believe that we should be part of anything that creates that perception, especially with any partner in our city,” Samson said. “… We should be following a process that would be the very process that we would follow for anyone else.”
As the conversation continued, it became tense at times, with dueling points of order and appeals to Chair Jody Shadduck-McNally’s rulings. After more than one procedural digression, the board went on to approve moving forward with the audit by a vote of 8 to 4.
LURA received two bids on the project, from Florida-based Carr, Riggs and Ingram and from national consulting firm Ernst and Young. Based on a recommendation from city staff, the LURA members selected the latter to conduct the audit, even though its cost estimate was five times higher than its competitors.
With approvals in hand, soon-to-be Loveland City Attorney Vince Junglas and LURA attorney Austin Flanagan will start the engagement process with Ernst and Young this week and return to the board’s next meeting for feedback. In its proposal, the firm estimated that the audit will take approximately eight weeks to complete.
 | Tom Clayton Communication and Media Specialist, Public Affairs |
| Commissioners' Office 200 W Oak St, Fort Collins, 80522 | 2nd Floor W: (970) 498-7005 tcla...@larimer.org | www.larimer.org |