City tosses hotel back to Rio Nuevo

Council votes unanimously in telling state board that it must take responsibility on downtown plan
2010-09-29T00:00:00Z 2010-09-29T22:02:14Z City tosses hotel back to Rio NuevoRob O'Dell Arizona Daily Star Arizona Daily Star
September 29, 2010 12:00 am  • 

The Tucson City Council continued the game of hot potato over construction a $190 million convention center hotel Tuesday, telling the Rio Nuevo board to make a decision on the hotel.

The unanimous vote marked the third time in a week that either the council or the board has demanded the other take responsibility for the project. This time the council had an ultimatum for Rio Nuevo and the city staff: It won't even talk about building a new hotel until four criteria are met. They are:

• Rio Nuevo must be the lead agency on the hotel, because that's what's specified in the legislation that created the new board.

• The hotel's guaranteed maximum price and the developer's fees must be lowered.

• Rio Nuevo must resolve issues relating to local contractors on the hotel - basically meaning the hotel must hire more local subcontractors.

• Additional money or guarantees must be secured from the hotel operator.

With progress on the hotel seemingly stalled amid growing questions about the financing, the City Council demanded last week that Rio Nuevo take a vote on the hotel.

Two days later, the Rio Nuevo board said it wanted to shift the responsibility completely to the city, in part because some city officials had been lobbying the board so hard to build the hotel. The majority of the board said they wanted the city to take the lead in constructing the hotel.

But on Monday, council members again said the hotel is Rio Nuevo's responsibility, and they don't want to talk about it any more until these issues are worked out by the board.

Both the city and Rio Nuevo must sign off on the hotel, as the plans are owned by Rio Nuevo, and city taxpayers must back the bonds so they can be sold.

Tuesday's vote came after about 90 minutes of closed session, after which Councilman Steve Kozachik read a motion that was approved with no discussion.

The Rio Nuevo board was created by the state Legislature to take over the downtown-development project from the city, with a specific charge to get a convention center hotel built. Lawmakers seized control after the city spent $250 million downtown with little actual construction to show for it.

Many on the Rio Nuevo board want to move slowly in approving the project. They have yet to make a decision on whether construction should go forward at all, contending the board has been busy with other issues. In addition, some members want to wait until a Rio Nuevo audit is released in late October before agreeing to build the hotel.

Hotel developers want approval to build the hotel this year to take advantage of low interest rates afforded by Build America Bonds, which provide that portion of the interest costs is rebated by the federal government.

The council vote adds a new hurdle for the board: to determine whether hotel developer Garfield Traub would agree to reduce the maximum price, lower its design fees and hire more local subcontractors.

Stephen Moffett, Garfield Traub's president of hospitality, said, "All of that sounds fairly reasonable." He said the company already is working on reducing the price and is willing to discuss lowering the design fees, but it needs more information on the local-subcontractor issue.

If the Rio Nuevo board and the city cannot negotiate a solution to their back-and-forth argument, the project could fall through, City Attorney Mike Rankin said.

Rankin said the council's action basically tells the Rio Nuevo board that it cannot wash its hands of the hotel.

"The city is saying it's not accepting responsibility to do this alone - that's for sure," Rankin said.

Mayor Bob Walkup, the council's biggest supporter of the hotel, said he didn't think the council's vote dimmed the hotel's prospects. He said meeting the council's requirements would be tough, but he said Rio Nuevo was looking for an expression of interest from the council in the hotel, and it got that on Tuesday.

Several Rio Nuevo board members did not return phone calls Tuesday. The board is scheduled to meet today at the Tucson Convention Center.

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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