Brian Watson, the Republican candidate for Colorado treasurer, isn’t ashamed to talk about his personal financial history, including tax liens and other troubles during the Great Recession.
In fact, he’s written a book about it and even says it gives him a unique experience that makes him better suited to handle the state’s assets.
“We all went through a down economy, and you learn lessons,” he said. “I’m thankful for those lessons. We did the best that we could. I want to use that personal experience of growing through such an economy to represent the people of Colorado.”
His Democratic opponent Dave Young and Young’s supporters, however, are trying to make hay of Watson’s financial hardships and claim they make him unqualified for the office.
“Brian Watson can’t manage his own money,” a recent fundraising email from the Colorado Democratic Party supporting Young, a state lawmaker from Greeley, said. “We can’t trust him with ours.”
The Colorado Sun reviewed public records for Watson and his companies and spoke with him about his financial challenges during the recession, including an Aspen-area company that didn’t pay its payroll taxes, the bankruptcy of a Boulder County real estate company he ran and the short-sale of a home in Florida.
Details of Watson’s financial past surfaced during his failed 2012 bid for the statehouse and again during his primary campaign for treasurer. Watson says he has resolved the issues and moved on to create scores of jobs and pay millions in taxes.
But state records show there are outstanding tax liens against one company he ran, Aspen Moving & Storage, although the business no longer exists. Watson says he paid what he personally owed when the company shut down, and a campaign spokesman said, “naturally, there are still outstanding items on the business side, outside of Brian.”
Watson says his political opponents are just trying to dredge the past for anything that might tarnish his image as a job creator who has built a successful commercial real estate company. (If elected, he plans to stay on as chairman of the company, Northstar Commercial Partners, Watson told Jon Caldara on Colorado Public Television’s “Devil’s Advocate.”)
At stake is a job overseeing and investing Colorado’s billions of dollars in taxpayer funds and what could be a precarious future for the Public Employees’ Retirement Association, or PERA.
Watson’s financial history became a point of attack for Democrats in 2012, when he ran against Democrat Daniel Kagan to become a state representative. Watson’s opponents even flew a banner-tugging airplane over his Greenwood Village home as part of the offensive.
During the Republican primary for treasurer this year, questions about Watson’s business practices were raised again. An independent expenditure committee supporting a rival GOP candidate even created a website containing his name and questioning Watson’s financial past.
The site came down after the June 26 primary, which Watson won by besting five other Republicans.
“Understand, this is years ago,” Watson told The Sun. “And my opposition and the bureaucrats are going to continue to recycle the same things, but we addressed it.”
Watson says he had no financial issues prior to the 2008 financial collapse, and since then, he has rebuilt his assets and companies.
But that hasn’t kept Democrats from bringing it up again.
“I’m not going to be bad mouthing on the fact that he experienced problems,” Young, Watson’s Democratic challenger, told The Sun. “That happened to lots of people across the state. Whether that qualifies him for being treasurer is another question.”
The focus of many of the financial attacks against Watson center on Peak Party Rentals, a company near Aspen of which he was part owner.
In 2011, the Internal Revenue Service filed a lien against Peak Party Rentals for employee payroll taxes that were unpaid in the 2009 tax year.
“Unfortunately, there was an unscrupulous manager who was running the company, and I found out from my (certified public accountant) and another individual who worked for me that he decided to change the payroll service and did not pay the employee payroll tax,” Watson said.
Watson says the manager was immediately fired and that he paid the IRS $106,000 — half of what the agency demanded.
“It was a very, very painful check to write,” he said. “I mean six figures, during the down economy, it might as well have been $106 million. It was just a big check.”
Then, about two weeks before he announced his candidacy for treasurer, Watson paid off the outstanding bill — another $106,000, plus interest. Watson said he wasn’t legally required to pay the second half of the LLC’s debt. “But I wanted to do it just to be done with it and move forward.”
His opponents question the timing of the move. They say Watson was simply being politically shrewd when he resolved the lien.
“I think the thing that’s concerning is there were tax liens that he attributed to the recession that were really not settled until days before he filed for treasurer,” Young said.
Watson says he was in a damned-if-you-do, damned-if-you-don’t situation.
“Had I not paid it, they would be saying it’s still owed,” Watson said. “You have to realize that, regardless of what you do, they have to come up with something to use against you.”
The unpaid Peak Party Rentals tax bill wasn’t the only problem Watson ran into during the Great Recession, which caused a real estate crash with millions of properties falling into foreclosure across the U.S. Unemployment rates rose as an estimated eight million people lost their jobs, 2.5 million businesses closed and the stock market tumbled.
During that time, Watson also filed for Chapter 11 bankruptcy reorganization in 2010 for Twin Lakes Business Park LLC, which owned a three-building complex in Boulder’s Gunbarrel neighborhood. The filing came a few days before the office complex, valued at $5.1 million, was scheduled for a foreclosure sale on Dec. 29, 2010, court records show.
Watson, the managing partner in the LLC, says the $4.1 million loan from Compass Bank was eventually paid off and that he paid back all of the capital he owed the LLC’s nearly 50 investors.
“They called the note due, and it was the worst time to have that happen,” Watson said. “So I filed for bankruptcy protection to protect (the investors). We then sold the asset and the lender was paid 100 percent of what they were owed, and I was able to return capital to our investors.”
Watson, in the wake of the financial crisis, also agreed to a deed in lieu of foreclosure for a Florida home he owned with his father, who also lives in the state.
“I wanted to help my father,” Watson said. “So I said, ‘Sure.’ I put up the money to buy the home and do all the fixup. He worked very hard and got it all finished.”
When the economic crash happened, however, paying the mortgage became too much of a burden. (Florida’s housing market was hit especially hard during the recession.)
“We fought as best we could,” he said. “I kept paying it. This was the time that between the company and paying six figures there and paying a tremendous amount of money for my employees … it was just a lot of outflow.”
The lender agreed to take back the property, rather than foreclose. Watson said he got a few thousand dollars back in the deal. “At the time, I was like, ‘OK, that sound good — it’s just one less thing that we have to go out and fight.’ ”
Watson said he regrets the decision.
“I wish I wouldn’t have done it, because it’s the only deed in lieu of foreclosure that I’ve ever had,” he said.
MORE: Read more election 2018 coverage from The Colorado Sun.
Young’s campaign also says there are outstanding tax liens from a company Watson owned called 237 AMS LLC, or Aspen Moving & Storage. Records filed with the Colorado Secretary of State’s office show the liens, from 2011, are still active. (The company has since been dissolved.)
Watson is not named on the liens, and his campaign says, “He is not the LLC, and the LLC is not him.”
“Brian has confirmed to me that he knows of zero outstanding liens, etc., anything like that against him to the truest and best of his/our knowledge currently,” said Kyle Forti, Watson’s campaign spokesman.
Watson and his defenders say his financial trouble represents just a sliver of his overall business history. They also note that other prominent business and political figures in Colorado have faced financial troubles.
“I would say that if you ever have somebody who has been involved in business or investments and has never had a tough time, then I would wonder what they are doing in business and, two, what does that look like in terms of an experience?” Watson said. “Because all of us have things happen to us. And, yeah, I was hit hard, and so were a lot of other people, but I didn’t declare personal bankruptcy.”
Watson highlights the successes of his Denver commercial real estate firm, Northstar Commercial Partners, which he founded nearly two decades ago and which has grown to more than $1 billion in assets across Colorado and the nation. He says he has had to disclose his financial history to investors, and they continue to back him.
MORE: A preview of Colorado’s 2018 ballot: Taxes, roads and an existential crisis for oil and gas
In mid-September, as he prepared to close on a loan of more than $100 million, he noted that he has returned profits over the past 18 years at a rate much higher than market averages.
“Which allows us, to this day, to have some of the largest financial institutions, lenders and investors still invest with me,” Watson said. “If I was such a bad credit risk or, you know, such a bad actor, do you honestly believe that investors or lenders would still entrust their money with me today?”
Watson says he takes inspiration from a 1910 Theodore Roosevelt speech in Paris, an excerpt of which hangs in his office:
Roosevelt said, in part: “The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming.”
Watson’s reaction: “Though you may be tired and bloody and whatever it might be, you’re still going to show up every single day and do the right thing. People like my opponent, they can sit in the stands or do whatever they want to do, say what they want to say, but we’re going to continue showing up in a positive way.”
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