The Star published a letter from a reader on Aug. 4 headlined “Rio Nuevo is not a lending institution” regarding the $250,000 investment Rio Nuevo unanimously approved for the Flores Concepts organization to activate three downtown properties as food and beverage establishments.
The letter writer suggested that Rio Nuevo shouldn’t be loaning people money, saying that is why we have banks. We thought we would respond and in so doing continue to educate the public about the value Rio Nuevo is currently bringing to downtown development and the flexibility we enjoy in helping developers launch a variety of projects.
Yes, some banks are engaging with private developers in our downtown, but they are few and far between and the loan-to-value ratios are not very good. Banks are warming up to downtown’s success, but have been very cautious since the recession about commercial loans in the urban core.
Rio Nuevo’s mandate is to use our portion of state tax dollars to create new state tax dollars. It is called tax-increment financing, and not only is it allowed by the Legislature but such financings are, in fact, our legal mandate. The Rio Nuevo TIF district is not citywide as the reader seemed to indicate. Instead, it is a limited area that begins west of Interstate 10 (in the Mercado District), continuing through downtown Tucson and then runs east along the Broadway corridor almost to Wilmot Road.
The current version of the Rio Nuevo board has opted to partner with private-sector developers rather than have the government build and operate downtown venues. We have been extremely successful, as evidenced by the auditor general’s audit of Rio Nuevo at the end of 2016.
Indeed, we have made a number of “loans” to private developers. In each case the return on investment is significant, averaging over $10 for every $1 we invest. We have significant collateral and, in every case, a guarantee.
Everyone is invited to go to our website, www.rionuevo.org, and track every project and every economic return, view every check we write. We have never been busier.
The Joint Legislative Budget Committee increased the Rio Nuevo potion of the state’s tax revenue by 30 percent in the last budget cycle, and anyone driving around downtown can see our signs on eight current projects: The AC Marriot, City Park, the Mercado Annex, Caterpillar, The Marist, Cathedral Square, The Hub and Playground are currently under construction.
Coming soon are the new Moxy Hotel, a Tucson Convention Center hotel, The Chicago Store block and now three new food and beverage establishments, as a result of our investment in Flores Concepts.
We use every tool in our bag: gap financing, tax abatement or rebate, Government Property Lease Excise Tax (GPLET), equity, build to suit, build and lease, rent subsidies, infrastructure and site prep support, and land acquisition to help grow downtown Tucson.
Rio Nuevo has never worked better!