SB 1351 Signed by Governor Brewer Unleashes Potential for Rio Nuevo

Fletcher McCusker and Mark Irvin
Chairman, Fletcher McCusker and Mark Irvin, Secretary of Rio Nuevo board

While Governor Jan Brewer was signing SB 1351 into law, we sat down with Chairman, Fletcher McCusker and Mark Irvin, Secretary of the Rio Nuevo Board to get their views on where things are going for the District. The two were in a celebratory mood anticipating the signing of the bill, as it had flown through the Arizona House and Senate without one single no vote.

The bill now signed, will become law later this summer.

It eliminates the ‘notice to proceed’ placed on Rio Nuevo by the 2009 legislation that stripped control of Rio Nuevo from the city and placed it with the state appointed Rio Nuevo Board. The legislation restricted the Rio Nuevo District from engaging in any projects other than the convention center and a downtown area hotel.

“We were basically handcuffed and can now develop a capital plan that focuses on partnerships that create jobs and enhance the tax base,” McCusker said.

As Rio Nuevo is unleashed, there are several downtown real estate projects already in the works.

McCusker and Irvin discussed candidly how the current board is focused on creating strategic partnerships with other jurisdictions such as Pima County and the City of Tucson, as well as private developers, in order to leverage TIF monies on several vacant downtown parcels around the Tucson Convention Center.

Such as the Board’s decision to assist the private sector development of Nor-Gen and Allan Norville to encourage the construction of a new 120,000-square-foot exhibition hall for Gem and Mineral Show use and other private functions downtown. Draft documents are being prepared that will provide immediate short-term leasing of the current surface parking and after Nor-Gen’s exhibition center completion, Rio Nuevo is committed to developing substantial parking on the 8.5 acres called the Arena Site, that was deeded to Rio Nuevo as part of the settlement with the city. The District has committed no funds to this parking project to date and may not need to if things work out as intended.

In the meantime, it also approved a new Request for Proposal to explore the sale of this same Arena Lot to a developer that would not only build the afore mentioned parking structure but combine it with a mixed-use development that could become the western gateway to downtown. Any proposal received by Rio Nuevo would have to include a minimum bid of $5.3 million dollars and allow input from the Rio Nuevo board on the project design.

McCusker told us, “The disputed claim on the property for $5.3 million has been dismissed, since there was never a written acceptance by the city.” Peach Properties’ settlement offer was not accepted, instead the Board chose to open the opportunity to other developers in the hopes of improving upon the $5.3 million price offered by Peach. Peach can also bid again on the new RFP for the 8.5 acres.

Steps were also taken to explore the possibility of acquiring the La Placita office complex. Both the County and the University of Arizona have expressed interest in partnering with Rio Nuevo on the La Placita redevelopment. McCusker and Irvin both expressed that these were merely preliminary discussions over La Placita and that there was no current plan in place for the complex. However, due to its location, the half occupied office complex, in the heart of downtown development next to the convention center needs to be viewed strategically for its use.

Developer Scott Stiteler’s project for a 150-room, seven-story tower at the Northwest corner of Fifth and Broadway is also proceeding and expected to have HUD approval through the city in time for the next Rio Nuevo board meeting. The hotel, tentatively known as AC Tucson, will reflect the European boutique style of the AC Hotels brand, which Marriott acquired in 2010. The property will sit on the roughly 80-space parking lot behind the Hub restaurant and will require the demolition of the Bellovin Karnas Camarena building. The hotel plans have been changed to no longer include subterranean parking but rather seven above-ground stories instead. In July, the Rio Nuevo board agreed to fund $4.3 million of the $27 million project, which would give Rio Nuevo ownership of more than 200 parking spaces in the hotel’s subterranean garage. Stiteler will then lease back the spaces at $80 per month per space to pay back the loan. The hotel is expected to generate about $10 million to Rio Nuevo District TIF fund over 12 years.

Then there is also the matter of the 80-acres west of I-10, next to Mission Gardens, that Rio Nuevo also owns and where the Urban Land Institute and others have recommended limited development due to its prior use.

McCusker is proud to show off photos of the current $8 million in renovations underway at the TCC arena by Rio Nuevo. To see photos go here McCusker was even more proud to say the project remains on budget and on schedule, with completion expected by Christmas.

When SB1351 becomes law it will establish Rio Nuevo more along the lines of a State agency, reporting to the legislature annually, rather than every three years. Approval of the city is still required and any project conceived by the Rio Nuevo board is to be communicated to the legislative leadership in advance and free of conflicts of interest according to the new legislation.

Conflicts of interest, as defined in Ballentine’s Legal Dictionary are “The existence of a variance between the interests of the parties in a fiduciary relationship” something not unusual or uncommon with five of its seven board members  involved in real estate as brokers and investors.

The board is currently missing two members, and don’t expect these positions to be filled before the election of a new governor. Irvin told us, “There has been 22 board member changes over the past four years, and 15 of those are no longer involved.” Alberto Moore and Mark Irvin are the two longest standing members on the current board, appointed within hours of each other, four years ago.

In that time, Rio Nuevo has resolved all of its lawsuits and major differences with the city, it is renovating the TCC, and it is in the black after being so poorly managed for so long. Maybe unleashed, the Rio Nuevo Multipurpose Facilities District might finally be able to live up to its promise.

Moore explains the mission of Rio Nuevo is to act as a facilitator for businesses coming into the district, creating jobs and improvements in the district.

Much has changed for Rio Nuevo over the years, but one thing that remains the same is that it is ultimately the citizens who act as final watch dogs and wait hopefully to see the unleashing bring a turnaround for the better.

The next Rio Nuevo board meeting will be May 20, 2014 at 2:00 p.m. Room 222, 400 W Congress, Tucson, AZ 85701.