A bureaucratic oversight could cost a developer $260,000 more than he was expecting to spend to build a hotel downtown.
Scott Stiteler, manager of Tucson Urban LLC, has been working with the city’s business incentive team since 2012 to make the vision of a new hotel in downtown Tucson a reality.
The City Council even approved drafting a final incentive package worth about $6.7 million in tax breaks and an $8 million federal Housing and Urban Development loan earlier this month.
But this week, the city informed Stiteler by email that he needed to perform an archaeological study of the parking lot at the corner of Fifth Avenue and Broadway, where his 147-room, eight-story Marriott hotel is slated to go.
Stiteler did not return the Star’s calls for comment.
The decision came from the city’s historical preservation officer, Jonathan Mabry, after he became aware Stiteler was seeking a federal loan.
Federal rules require the study any time someone applies for a HUD loan, Mabry said. “They need to come through our office when federal dollars are involved,” he said.
Up until a about a week ago, Mabry was unaware of the loan request.
“There wasn’t great communication within the city,” Mabry said.
One reason for that, said Chris Kaselemis, the city’s economic initiatives director, was the city was unfamiliar with all of the HUD loan requirements.
“We hadn’t done a HUD 108 loan before,” Kaselemis said. “You want to let everyone know on day one everything they will need,” but sometimes things slip through the cracks.
While it’s late notification, Kaselemis said there’s still plenty of time for Stiteler to put this in his financial plan and for the city to include it as part of an incentive package.
As for the study, Mabry stressed it wouldn’t derail the process. Mabry said an archaeological company just has to dig trenches around the property and document what they find with the State Historical Preservation Office. He said it would take six to eight weeks to complete.
But whether or not Stiteler can meet deadlines or get reimbursed for the study misses the point, Councilman Steve Kozachik said.
“The issue is our totally ham-handed process,” Kozachik said. “Nobody can say this snuck up on them.”
Kozachik criticized both Kaselemis and Mabry on how they handled the matter. He said Kaselemis should have picked up the phone and called Stiteler instead of just shooting him an email.
And he wondered why it took Mabry so long to “pop up from behind his rock to announce” the requirement.
“This is irresponsible and makes me have to wonder if there’s some larger motive behind how these guys have manipulated this mess,” Kozachik said.