OUR VIEW

Council, Rio Nuevo board confusion, posturing on hotel needs to end

2010-09-26T00:00:00Z Council, Rio Nuevo board confusion, posturing on hotel needs to end Arizona Daily Star
September 26, 2010 12:00 am

What's going on with the proposed new $190 million downtown convention center hotel? The truth is, no one really knows - and that is unacceptable.

Both the Tucson City Council and the Rio Nuevo redevelopment board need to stop posturing and squabbling and work together. Immediately is not too soon.

The City Council last week asked the board to sign off on one of the city's proposed "term sheets," which spell out who would own the hotel, and other logistical and planning details. The council asked for an answer by the end of the month.

But the board complained during a meeting later last week that it hadn't received all the term sheets that the council saw. Further, members complained that they hadn't been given a role in drawing them up. Finally, board Vice Chairman Mark Irvin said the plan for financing the hotel had apparently morphed into something new without the board's knowledge, much less its input.

"We're being slammed by the media for something we didn't know about," board Chairwoman Jodi Bain told city staff. "If we're not at the table, you can't know what our problems with the plan might be."

Kelly Gottschalk, city finance director, told the board the City Council had gone ahead with proposed terms because efforts to agree to a timeline for decisions had been stymied, largely because of the Rio Nuevo board's preoccupation with other issues.

"The board's timeline didn't allow us to take advantage of historically low rates with the Build America (bond) program," which expires at the end of the year, she said.

Thus the city has been drawing up plans for dividing responsibilities, she said. Further, she said, the board had received both term sheets - one proposing city ownership of the hotel and the other proposing joint ownership - by e-mail earlier last week.

Board members said they had understood that there were three term sheets, and had received only one, along with an edited copy of that proposal. Gottschalk said the edited version was a second term sheet showing changes from the first version.

And James Sult, an investment banker for Piper Jaffray, which is shepherding financing plans, told the board there is no new financial plan.

Which brings us to Rio Nuevo board member David Jones, the Phoenix-based CEO of the Arizona Contractors Association, who suggested that the board consider off-loading the heavy lifting on planning and financing the hotel to the city.

"The city needs to build the hotel and assume responsibility for the hotel because they are the elected officials," he said.

He suggested Rio Nuevo lease the hotel site to the city on a long-term basis, sell its construction drawings and plans to the city, and then "negotiate our participation." That would free the board, he said, to pursue other revenue-producing projects.

Whether the board can actually do that under the law is not known. Board member Rick Grinnell told us he doesn't believe Rio Nuevo should hand off the hotel to the city unless it's first assured itself that the project will pay off.

The Rio Nuevo board was reconstituted last year by the Legislature to take over the downtown-development project from the city. Former state Sen. Jonathan Paton, who spearheaded the Legislature's takeover, told us on Friday that the bottom line was that "we wanted them to start focusing on revenue-generating projects."

Still, the new law specifies that until a "notice to proceed" is issued for the hotel and expansion of a convention center, Rio Nuevo revenue can be used only for debt service, administrative expenses, existing contractual obligations, and design and construction of the hotel and convention center projects. But it doesn't specify who must issue the notice to proceed.

Paton said he's confident that if the board is "moving toward a specific revenue-generating project" lawmakers would give it "latitude" to do so.

"The board works for the state and they were chosen at the pleasure of the governor, the speaker (of the House) and the president (of the Senate)," he said. "They have fiduciary responsibility to get a return on investment. I think lawmakers are likely to listen to them."

In any case, the project is in … well, "chaos" may be too strong a word, but "confusion" is not. Mix in confusion with political posturing by both the City Council and the Rio Nuevo board and the result is unacceptable. Especially on a project of this size and involving so much taxpayer money.

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

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