Rio Nuevo and a developer have reached an agreement to bring another new Marriott-branded hotel as well as several million dollars worth of improvements into existing businesses in downtown Tucson.
The taxing district board voted last week to expand an existing deal with businessman Scott Stiteler and his business partners related to the new AC Hotel by Marriott on East Broadway and Fifth Avenue. The agreement includes an estimated $3.2 million in new investments by Stiteler into businesses and property he owns in the 200 block of East Congress Street.
The new agreement frees up money for Rio Nuevo, which is funding a number of projects — including a permanent regional headquarters for Caterpillar Inc. west of downtown.
The Hub restaurant and the Playground Bar and Lounge, which he owns, will be renovated and expanded, and Elvira’s Restaurant, where Stiteler is the landlord, will also see some improvements.
The now-empty former home of Pizzeria Bianco, between The Hub and the Playground, will also be renovated to accommodate the expansion of Stiteler’s businesses.
Additionally, the board signed off on an agreement that would end legal disputes between Stiteler, the city of Tucson and Rio Nuevo related to the Depot Plaza Garage. The central dispute dates back to when Rio Nuevo was still under city control and built the underground parking garage. Despite a settlement in 2013, some issues continued to linger.
With those disputes settled, the downtown developer said he would be able to move forward with his plans for a 100-room Marriott-branded boutique hotel catering to millennials called The Moxy.
The hotel would be built on top of the Depot Plaza underground parking garage at 45 N. Fifth Ave., across the street from Stiteler’s businesses on Congress and near the hotel now being built.
Rio Nuevo Chairman Fletcher McCusker hailed the new agreements as continued progress in revitalizing downtown.
“It is one of our most active blocks,” said McCusker about the 200 block of Congress. “It is an unbelievable deal for Rio Nuevo.”
The taxing district had an agreement with Stiteler to buy the 200-space parking garage attached to the 137-room AC Marriott Hotel for $4.3 million. Stiteler was expected to lease the garage back from Rio Nuevo.
Under the new agreement, Rio Nuevo would forgo the purchase and Stiteler would invest $3.2 million on expanding and renovating the Hub and the Playground. Stiteler would be able to keep the taxes usually collected by Rio Nuevo that are generated by The Hub, Playground and Elvira’s. The amount would be capped at $7.7 million over the next eight years.
McCusker said it is possible Stiteler will not receive the full amount $7.7 million before the taxing district is set to expire in 2025.
“We sunset in 2025, so everything we are doing would only last until then,” he said. “And there is no way he’d hit those caps unless (Rio Nuevo) is extended.”
Stiteler said he expects to begin work on the renovations to the businesses as early as this summer, ahead of the planned opening of the AC Marriott hotel this fall.