Control of Tucson's downtown redevelopment project was taken away from the City Council with the stroke of the governor's pen Monday.

The legislative fix to Rio Nuevo's long-standing financial struggles was part of the budget package that lawmakers approved to nibble away at the looming $2 billion deficit.

A nine-member board, appointed by the governor, the House speaker and the president of the Senate, will now control the project's purse strings. Of those members, only five must be local residents.

The Legislature approved a similar slap at Tucson leadership earlier this year, but it was vetoed because of gubernatorial concerns about non-Rio-Nuevo parts of the budget package. This time around, it passed with overwhelming support on a vote of 51-4 in the House and 23-4 in the Senate.

The change doesn't mean Rio Nuevo is going away. But it restricts where what's left of the district's anticipated $500 million in receipts can be spent to the design and construction of a hotel and convention center, paying off bonds and fulfilling contracts that predate June 1. It also requires the auditor general to conduct a performance audit of the district every three years, along with an annual financial audit, and requires the district to develop an online searchable database to help taxpayers track spending.

Although the changes were expected, they weren't popular in all circles. Rep. Daniel Patterson, a Tucson Democrat, argued against the changes, but he ultimately voted for the bill because it had other important elements in it aside from Rio Nuevo.

"I don't think it serves Tucson's interest to pull decision-making power away from the city and give it to a board appointed by people who have not historically been great friends of Tucson," Patterson said, especially since many board members don't have to be Tucsonans.

He said Republicans talk a good game about local control, but "If you really support local control, then it shouldn't just be when you agree with the locals. Apparently, when they don't agree with the locals, that's when we need the heavy hand of the state to come in and boss us around."

Senate Majority Leader Chuck Gray, a Mesa Republican, countered that the state has every right to attach strings. "Rio Nuevo has been mismanaged for years, and everyone is aware of that. When you ask the state for money, then you lose local control."

Lake Havasu City Republican Sen. Ron Gould called the whole premise of a redevelopment district unfair. Since the special districts syphon off a portion of the state tax receipts, Gould said, his constituents have to pay more to compensate for the loss of revenues. "It's just not fair to the other 13 counties, especially since it's clear from testimony that they weren't being good stewards of the money."

While the change is an improvement, he said, "I would just like to see the whole thing go away and phase out."

That attitude explains why the city didn't offer so much as a peep against the legislation.

"The important thing for the city was to be able to move on and protect the core projects we need to get done," said Jason Baran, a city lobbyist. "Having legislative uncertainty is not helpful to anyone, and it's definitely better than the unfortunate move to strip funding or do something worse. There are stores, restaurants, bars and new offices downtown, and at this point, to have the rug pulled out from under those business interests would not have been healthy for the region."

Baran said he believes the controversial and expensive consulting contract approved for former Rio Nuevo Director Greg Shelko would still be allowed because the work he is doing is for the hotel and convention center.

House Speaker Kirk Adams said he had not been lobbied yet by people wanting to sit on the board, and he said it was too early to say which exact qualities he will look for when it comes time to make the appointment. "What's clear is that we need to instill some accountability, which we think is desperately needed."

The language allows the district's four incumbent board members to serve the remainder of their terms, which expire in 2011, with the new members.

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Contact reporter Rhonda Bodfield at 573-4243 or
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