The Rio Nuevo Multipurpose Facilities District has found success with a new tool to finance deals when there are limits to its available funding.
The district has about $13 million in cash but has already committed $10 million to various projects inside its boundaries.
Rio Nuevo Chairman Fletcher McCusker told the Tucson City Council on Tuesday that the private sector has pledged $121 million in various investments in downtown Tucson, all without Rio Nuevo having to offer cash incentives.
Instead, the Rio Nuevo board signed off on rebating taxes to various private developers in order incentivize private development. He said every $1 in Rio Nuevo tax rebates is leveraged up to about $10 in private development funding.
For example, the board will rebate up to about $4.8 million for the Moxy Hotel, with local developer Scott Stiteler committed to spending $23 million on the new downtown hotel.
But McCusker did say one project will require a significant outlay of Rio Nuevo money — construction of the Caterpillar regional headquarters.
He told the council the land west of downtown Tucson and south of West Cushing Street would need more than $6 million in remediation before construction of the permanent headquarters for the company. The site is a former landfill.
He said the Rio Nuevo funds for the project are necessary, but represent money that could have been used in other ways. “This is $6 million we could have leveraged into other projects,” he told the council.
Caterpillar is expected to spend $43 million on opening the new headquarters, which is expected to bring 1,000 high-paying jobs to Tucson.
During his 15-minute presentation, McCusker offered updates on some projects including the Tucson Convention Center.
McCusker says the $12 million used on convention center renovations is the “best money we ever spent” and suggested Rio Nuevo may spend more there.
Rio Nuevo is looking to partner with local agencies to put $5 million into renovations of the Tucson Music Hall and is looking to match an anonymous $2.5 million donation to fix up the Leo Rich Theater, McCusker said.
Mayor Jonathan Rothschild warned McCusker that while the board has had success lately, not to over extend itself. He cautioned the Rio Nuevo board should not lead the community to believe that it “has an unlimited checkbook.”
Councilwoman Karin Uhlich noted that a different version of the Rio Nuevo board, run by the city at the time, was hurt by over-promising and under-delivering.
“We lost a city manager because of napkin deals we couldn’t afford,” she said.