Live chat: How Rio Nuevo spent $77 million

July 28, 2008 12:00 pm

Here's the transcript of a live chat conducted on July 28, 2008, with Rio Nuevo director Greg Shelko.

How Rio Nuevo spent $77 million

The director of the city's Rio Nuevo project, Greg Shelko, will answer your questions about the project's track record so far and its next steps in a live chat from noon to 1 p.m. MST Monday, July 28, 2008.

Chat Archived Transcripts

Greg S (Rio Nuevo director): Hello, this is Greg Shelko and I'm looking forward to chatting about what is happening in Downtown Tucson.


Bill L (Yankee54): Why doesn't the city take a role from San Diego where they built Petco park and cleaned up a downtrodden area by building a sports complex--then came the restaurants, hotels, attractions, etc.. Has anyone considered building a 50,000 seat dome arena somewhat like Glendale has that can attract top attractions--i.e. NCAA West Region Finals and Final 4, maybe get the UA to move their football games to downtown,(UA then can knock down the current stadium and use it for valuable academia space)upgrade in concerts, larger convention possibilities, etc...all bring in immediate big time economic impact---you build this as your center piece and then build around it, i.e.hotels, attractions, etc., that will be built at a faster pace because you have a anchor in place.

Greg S (Rio Nuevo director): In one sense Tucson is taking a cue from San Diego and other cities that have experienced revitalization. Our underlying vision is to create larger attractions that will become catalysts for related private redevelopment. Our market can support a 12,500 arena, around which we expect the types of major shopping, dining and commercial uses you describe. That arena will be a multipurpose facility, and the foot traffic from it becomes part of the economic development formula.


Kyle P (kp116): Hello Greg, have you considered adding an IMAX theatre at the Fox and maybe show some current movies that people like to watch? Also, I think that the projects in the west side will be a failure financially. Maybe, the city should reconsider focusing more on the area around Hotel Congress/4th Ave underpass given the proximity close to the UA.

Greg S (Rio Nuevo director): Kyle - the plans for the UA science center / state museum facility presently include an IMAX. In order for downtown to be truly successful in the long run, the City and the private sector must create multiple, diverse destinations. The activity areas downtown - arts/warehouse, congress, convention and museums districts will create such diversity, all walkable and eventually linked by the modern streetcar system to the UA area. As for the west side, I believe the cultural complex has the ability to be successful. It will be an experience that can't be found elsewhere, and the visitation potential (750,000 people) will be catalysts for private development. The museums also celebrate our past and explore our future, they are educational features for the community, and support quality of life. The important thing for the City is to devise financing strategies to get as much of this as we can done. And we must do projects (timing) in ways that maximize the tax district revenue.


Robert G (Bobby G): Is the City of Tucson confident that there will be market support for the 700-room Sheraton Hotel once construction is completed? Is there going to be enough demand for such a drastic increase in hotel rooms, and can the market sustain the room rates that would yield the revenue stream that project requires? What is the status of that project? Hasn't the city council directed staff to move forward on that project at least twice? Didn't the city package the hotel with the arena, saying that profits from the hotel will pay the debt service on the arena? Is that still a valid assumption?

Greg S (Rio Nuevo director): The City is very confident that we need many more hotel rooms. Early-on study pegged the market needs in Tucson, and that was the basis for soliciting proposals to develop approx 700 rooms. The Sheraton number at present is 700 rooms, and that will be confirmed by independent market analyses to get it right. We'll know soon, as that market research ius underway. The hotel is critically important to downtown growth and to maximize the convention business (in our appropriate niche). The Sheraton is advancing into predevelopment stage very soon; the council recently approved the contract. The hotel is actually advancing rapidly. The Council directed staff to solicit hotel proposals April 07, and just over a year later we have the predevelopment work ready to go. Yes, the hotel (publicly financed, privately developed and operated) is expected generate significant net revenue that can be used toward other project debt service and other cost.


Robert G (Bobby G): Is there an appraisal for Alan Norville's property that justifies the purchase of his 7 acres for $17 million? If so, will you release it to Rob O'Dell? How does the value of this particular land compare to the value of land elsewhere in downtown at this time?

Greg S (Rio Nuevo director): There will of course be full dislsoure of the Norville transaction once negotaitiosn are complete.


m g (citystar): Why would people want to go downtown? No parking, no stores, can't drive, two lanes of travel. What a waste of money, and time. Don't forget about the hobos and crime!!!!!

Greg S (Rio Nuevo director): Downtown busiensses, proeprty owners and resdients suffer terribly from perceptions about things you list. Parking inventories show there are many and varied parking opportunities downtown. People complain there is none when there isn't a space in front of the merchant or business they visit. Granted, better directional signage to it will help. Statistically, the downtown neighborhood is one of the safer in our community. Those who frequent the downtown talk in in terms of quite a few shops (But certainly not enough) and restaurants, together with diverse visual and performance art offerings, film festivals, unique events, and diverse housing opportunities in a rich mix of neighborhoods.


L C (L109): Have you looked at the online comments on Sunday's story? If not, why not? If so, how do you feel about the overwhelmingly negative view of RN?

Greg S (Rio Nuevo director): Yes, I looked. It disappoints me greatly that downtown does not get the treatment it deserves. Those who are trying to make a go of it (largely the private sector property owners and businesses, not me personally or the government) are undermined. For our part, we need to communicate the vision and the progress better.


A W (air91): If the State were to end the allocation of this portion of their tax revenue to the Rio Nuevo District, would these funds then be available for other Tucson projects, or would they be just as likely to be spent, at the State’s discretion, on development in other parts of Arizona, such as Mesa, Gilbert or Chandler?

Greg S (Rio Nuevo director): The Rio Nuevo tax dollars can only be spent within the defined district. The City and its partners, since the revenue extension was only approved in May 06, and a long range funding allocation guide was only established in May 07, have made some demonstrable progress. Without that extension (ie, much more money), the City simply would not be in a position fund museums, arenas, hotels, etc., and perhaps most importantly, infrastructure to attract and serve private sector redevelopment over the years. Thats a very real assessment, and not offered as excuse for anything. We can continue to look back at failed promises over the many years, or we can start to look forward with hope and optimism from a reasonable starting point.


A W (air91): Do you believe someone without a governmental accounting background, or qualified certification, could mislead the general public by trying to interpret and report on complex financial statements, such as Rio Nuevo’s?

Greg S (Rio Nuevo director): yes


A W (air91): Have other Cities spent this much on downtown revitalization? Is Tucson spending on a comparable level?

Greg S (Rio Nuevo director): Every revitalization program is different, but cities in general have spent enormous amounts of money over many years, if not decades, on downtown revitalization projects. Ours is however unique and I think quite a few cities would like to have the problems we have in terms planning for and making such extraordinary investments.


Demitri d (dirtdogdiddy): Did anyone consider the fact that having a museum district might bring residents of our community downtown once every five years while focusing on entertainment restaurants etc. would bring them down regularly? This seems to be very misguided. Who is responsible for this decision?

Greg S (Rio Nuevo director): I don't agree with your assessment. The museums will be geared for locals and for visitors. And visitors look for authenticity. In an earlier response, I highlighted the importance of multiple and diverse destinations. Most every city that relied upon any one or few things to be successful, failed.


R k (rickardo): Greg, you came from Milwaukee, right? How has that city redeveloped its downtown and how long did it take?

Greg S (Rio Nuevo director): It took decades, from the failed promise of a single mall in the early 80s. Revitalization, on any level, is an organic process - you can't force it or wish it. Its a game of inches early on, and every success, no matter how large or small, is so very important. Once a market is tested and demonstrated, cities go from begging for investment to keeping up with the planning and permitting for it. Its extremely important for us to deliver on the pubic projects, and, to create a positive investment climate.


Ed E (newsreporter): Do you believe that the current slowdown in real estate development and the tightening of credit has had an impact on the Rio Nuevo project? Would more have happened if this slowdown hadn't occurred?

Greg S (Rio Nuevo director): Absolutely. The housing market is very poor, and downtown is an untested market. At the same time, access to capital for busiensses, investors and developers is extraordinarily difficult. Thats why its timely now for the City to focus on the public projects, get what we can going, be ready. The impact of the markets is rarely mentioned in conversations about what's happening downtown.


Roger K (Albert E): Is it true that Bourn didn't just get vacant land for the $100 it paid the city, but they also got the free and clear deed to the Indian Trading Post building worth $2,000,000? How can the city justify giving away that much money to a developer under any condition?

Greg S (Rio Nuevo director): The city acquired the property from the feds for $1, and Bourn got title to the vacant land and the trading post for $100 because - the smaller site is irregular and presents development challenges that increase cost, the market was and still is unproven, the trading property is in very poor condition and requires substantial rehab to historic standards as part of the deal (doubt anyone will pay the kind of money you reference). I believe it was a fair deal for everybody, including the city's site clearance investment to enable future development.


Earl G (Earl): Why did it take so long to reject the rainbow bridge?

Greg S (Rio Nuevo director): I believe the city and the community made it pretty clear all along how they felt about the bridge concept and cost. It took time for the university to come to other terms with the city


John B (StarNet online editor): This concludes today's chat. I want to thank Greg Shelko for participating. I also want to thank the StarNet readers - who sent in many more questions than could be accommodated in a one-hour chat.


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