City Manager Luis Gutierrez will recommend scrapping both proposals to build the Rio Nuevo project downtown in favor of a bold new plan to extend the redevelopment district eastward to include El Con and Park malls.
All of the new development, which Gutierrez estimated at $320 million, would take place in Rio Nuevo - at West Congress Street and the Santa Cruz River - and downtown.
El Con and Park malls are included because major expansions at both malls are expected to bring increased sales tax collections. Under the proposal, sales taxes from those areas would be used to pay for public improvements such as museums and historic re-creations.
Gutierrez's still-sketchy plans include city creation of a new development plan for Rio Nuevo. It will include shops, restaurants, entertainment facilities and two or three museums, as well as a new hotel adjacent to the Tucson Convention Center.
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It also includes historic re-creations of the Convento and Mission Gardens, long considered to be Tucson's birthplace, the nearby Warner's Mill and a segment of the Presidio wall downtown.
The redevelopment costs would be covered by $80 million in taxes for the public improvements and $240 in private investment.
Gutierrez has asked the City Council to hold a special meeting 10 a.m. Monday at City Hall to present his plan.
If the council approves, Gutierrez will then ask the towns of South Tucson and Sahuarita to join in forming a district to sponsor the project.
A law that makes up to $100 million in state sales taxes available to redevelopment projects such as Rio Nuevo requires that at least one other incorporated municipality co-sponsor the project.
Gutierrez said officials in both towns have expressed an interest in the project. He said the city will have to offer some kind of inducement to encourage those towns to become co-sponsors, but he isn't sure what that would be yet.
Deputy City Manager John Nachbar said the manager's office is recommending against a proposal by Daystar Development of California. That's because a team of experts evaluating the plans determined there's no market for the more than 770,000 square feet of stores, restaurants and theaters space the company planned for the 62-acre site.
The experts said the downtown/ Rio Nuevo area can support about 50,000 square feet to 100,000 square feet of retail space, Nachbar said.
The Daystar plan called for using taxes from the businesses at Rio Nuevo to pay for museums, parking garages and other public improvements.
But if the businesses failed, as the experts projected, Nachbar said city taxpayers would be stuck paying for the project.
The only way Daystar's proposed retail development could succeed would be by taking business away from other retail centers, which would hurt the city in the long run, Nachbar said.
He said the manager's office also is recommending rejection of the Colonial Tucson proposal, submitted by a group of local investors headed by developer Joe Cesare and former Old Tucson head Robert Shelton, because it's too limited.
The historic and cultural-themed village proposed by Colonial Tucson wouldn't generate enough new tax money to pay for the museums and other public improvements the city hopes to attract to Rio Nuevo, he said.
Gutierrez admitted plans for what will be developed are still extremely vague.
He said he's rushing to get the plans in front of the council, despite the lack of detail, because of the late August deadline for completing a financing plan and putting it on the Nov. 2 city election ballot.
State law requires voter approval of the financing plan by then in order to qualify for state funding.
Gutierrez said he hopes to have enough of the plan fleshed out by the election to persuade voters to approve the funding - keeping the project alive at least long enough to work with neighbors and others interested in the project on the details of what should be built.
If voters don't approve the measure, he said, the chance to collect between $50 million and $100 million in state funding will be lost, as could the chance to redevelop the city-owned Rio Nuevo site.
As Gutierrez sees it, the redevelopment district would spread eastward from Rio Nuevo to take in all commercial areas of downtown, including the Tucson Convention Center and City Hall, extending along the East Broadway right-of-way to the two malls. Stores along Broadway east of downtown would not be included in the district.
State law requires that publicly owned property connect different segments of the redevelopment area.
Although the district takes in both the proposed $29 million Union Pacific depot redevelopment and the proposed $57 million city hall, Gutierrez said neither of those projects would receive any money from the plan.
They could, however, count toward the state requirement that at least $200 million of property in the district be publicly owned.
He said the plan to use new tax revenues from El Con, Park Mall and downtown won't affect the 2 percent city sales tax or 5 percent state sales tax now collected from those areas.
What the city and state now receive would continue to go into the city and state coffers.
The only taxes that would be diverted to the downtown redevelopment would be those in excess of what the city and state now collect, he said.
The city does not need approval from businesses in the proposed district to form the district.
