FBI joins investigation into Rio Nuevo

Development records seized at TCC; AG's office also in inquiry
2011-04-12T00:00:00Z 2014-07-02T14:41:37Z FBI joins investigation into Rio NuevoRob O'Dell Arizona Daily Star Arizona Daily Star
April 12, 2011 12:00 am  • 

The FBI has joined an investigation of the Rio Nuevo redevelopment district. Last week the bureau joined the Arizona Attorney General's Office in seizing thousands of Rio Nuevo documents - virtually all the available records - housed at the Tucson Convention Center.

FBI Spokesman Manuel Johnson said the investigation into Rio Nuevo is ongoing and declined to comment further.

Assistant Attorney General Michael Jette wouldn't confirm or deny an investigation. However, Attorney General Tom Horne has said since January that he would start an inquiry into the downtown-redevelopment district funded with state tax money returned to the city. The district has spent about $230 million in public funds with little actual development to show for it.

Jette did confirm the FBI is working with the AG's office on Rio Nuevo, adding that the office brought the FBI on to work the case sometime in the last few weeks. He declined to answer more questions.

Both the city and the Rio Nuevo District were asked to sign request-to-consent documents - which could have become a search warrant if they had declined. Jette said both entities have been extremely cooperative.

Rio Nuevo's new lawyer, Mark Collins, of Gust Rosenfeld, signed the consent for the Rio Nuevo board, and City Attorney Mike Rankin signed for the city. Rankin said he signed because the council empowered him months ago to comply with any investigation into Rio Nuevo.

TCC Director Tommy Obermaier, who opened up the Rio Nuevo record-storage room for law enforcement, said agents took nearly all the Rio Nuevo documents in the room, calling for more boxes at one point to haul materials out.

"Anything that was in there related to Rio Nuevo, they took it all," Obermaier said, adding that when he returned there weren't "any files or anything in there."

Rio Nuevo Board Chairwoman Jodi Bain said the two agencies took filing cabinets, banker's boxes, computer towers and more from the room.

"We were asked to give consent so they didn't have to enter forcefully," Bain said. "The documents have been taken into custody and seized."

The city's real estate division was also asked to open up the old Rio Nuevo offices at Congress Street and Stone Avenue, said interim Real Estate Director Hector Martinez. However, nothing was taken from that office because the city had moved almost everything to the TCC.

Just a week before the documents were seized, the city and the Rio Nuevo board sparred over who had control of the roomful of documents, eventually agreeing to each having keys to different locks, so the records room could only be accessed by both at the same time, Rankin said.

Rio Nuevo used to be in effect a city department, and the vast majority of the actions that some are demanding an investigation into happened while the city had the reins of the tax-increment-financing district.

Once seen as the last best chance to redevelop downtown when it was approved by more than 60 percent of voters in 1999, Rio Nuevo has become synonymous with failure. The city received a $500 million extension of the tax-increment-financing district in 2006, but by the end of 2009, the city had spent much of the proceeds on planning, design and consulting with few completed projects. The district now has little money left each year after paying its debt service.

Because of Rio Nuevo's track record, the Legislature took control of the project, and in 2010 appointed a new board. In October, the auditor general issued a report highly critical of the city and the former Rio Nuevo board for mismanagement, which led to a majority of its projects' remaining incomplete despite more than $230 million spent. The findings mirrored those found in three years worth of investigations by the Arizona Daily Star.

After winning the election last year, Horne and several Southern Arizona legislators promised an even more in-depth investigation of Rio Nuevo's spending.

Contact reporter Rob O'Dell at 573-4346 or rodell@azstarnet.com

Copyright 2014 Arizona Daily Star. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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