Special interests want special favors from the Rio Nuevo District Board

Posted by AzBlueMeanie:

The usual suspects in Downtown Tucson development appear in this report in the Arizona Daily Star on Tuesday, Businesses press lawmakers to make Rio Nuevo changes:

A group of downtown developers and business interests wants the Legislature to make big changes in Rio Nuevo, including a change that could guarantee them financial relief for future projects.

Fletcher McCusker, one of the key promoters of downtown redevelopment, is unofficially calling the effort the "Downtown Tucson Initiative." He is collecting money to draft a bill and lobby state legislators on the changes.

Backers said it's still too early to have the exact language for what they're seeking. But they said the key to righting the scandal-ridden project hinges on several items:

• Creating incentives for developers to build within the district – potentially waiving development fees, eliminating impact fees, abating property taxes or allowing developers to keep sales taxes collected by their business for five to 10 years.

• Expanding the authority of the Rio Nuevo Board, which can only spend money on a convention center and the as-yet-economically-infeasible convention hotel.

• Streamlining the regulatory burden on developers, to provide more clarity in obtaining building permits.

• Building more accountability and standardization into procurement.

McCusker, whose backers include Jim Horvath, Buzz Isaacson, Kevin Madden, Don Martin and Scott Stiteler, said he fears that with the Rio Nuevo Board and city of Tucson at an impasse and threatening to meet in court, some legislators might decide to pull the plug on the project altogether. This would be a way to show the project still retains support and could get back on track, he said.

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While he said development incentives are common in other similar districts across the country, they need to apply equally across-the-board, whether it's for a small restaurant or a large company. "That takes out all the gaming that goes on," he said, adding "If you make it optional, then we're right back to having popularity contests."

Allowing new projects to retain their sales taxes for some period of time would boost investment, he predicted. While the district is funded through sales taxes, he doesn't look at it as lost revenue, since it's for a fixed, limited time, and then the district would reap the benefits. "If they don't develop, you won't have the revenue at all."

First of all, this is the usual list of suspects in Downtown Tucson development (what, no Humberto Lopez?) who have had their hands out begging for Rio Nuevo subsidies for years.

Second, these "incentives" of which they speak is something which led to massive subsidies that cities in the Phoenix metro area routinely doled out to retail developers — until the Arizona legislature said "enough!" in 2007. Arizona Bans Tax Breaks for Retail Development:

[I]n the waning days of the session, lawmakers at last endorsed — and the governor signed — a measure that outlaws subsides for retail projects in Maricopa and Pinal counties, which encompass the Phoenix metro and include two-thirds of the state's population. Under the law, cities that continue to fund retail development will see their share of state revenue reduced by an amount equal to the incentives they give developers.

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[T]wo particularly massive and egregious tax giveaways announced in May sparked a wave of public outrage. Phoenix agreed to provide a $100 million tax break for CityNorth, a mixed use project featuring Nordstrom and many other chains in one of the most affluent areas of the valley. Then came "the granddaddy that pushed everyone over the edge," according to Cheuvront: the city of Surprise offered a $240 million subsidy to the shopping center developer Westcor to build Prasada, a massive mixed use development slated to include a mall and a big-box power center.

The City of Tucson is not encompassed within the language of the ban. A.R.S. §42-6010 (it is limited to cities or towns located within the exterior boundary of a metropolitan statistical area having a population of more than two million persons, i.e. the Phoenix metropolitan area). But given this recent history, what makes these developers think that politicians from the state of Maricopa are going to look with favor on the Rio Nuevo District offering incentives that they banned for the cities they represent in the Phoenix metropolitan area just a few years ago? They are not inclined to do Tucson any favors.

As for "expanding the authority of the Rio Nuevo Board" for projects that they can spend money on beyond the Tucson Comvention Center and Downtown hotel, it was Jonathan "Payday" Paton, "when he was a state senator, [who] initiated the restrictions on how Rio Nuevo money could be spent." He is now a member of the Rio Nuevo District Board, appointed by state of Maricopa politicians. It would appear that this wound was self-inflicted by a politician who wanted to punish the City of Tucson out of vindictiveness. I see no reason why anyone should trust him now to do the right thing.

And the "streamlining of the regulatory burden on developers" is in constant evolution. Regulations are regularly reviewed and revised. I learn something new every time I attend a Planning & Zoning Commission hearing. You would think that City of Tucson development codes are written on stone tablets handed down millenia ago the way these developers recite this trope about regulatoy burdens all the time. What they really want is an exemption or waiver from having to comply with any development codes — "Rules? We don't need no stinkin' rules!" — but it is never reported this way by the media.

I do agree that "the permitting process takes too long and that elected officials and city managers fail to deliver on promises to get a handle on the Development Services department." This is a personnel problem the City of Tucson has with its Development Services department under the way that city departments are organized and managed. The voters of Tucson had a chance to begin to correct this problem with a charter change a couple of years ago, but rejected the charter changes overwhelmingly.

Finally, the recent procurement issues involved in the firing of Tucson's previous city manager should lead to tighter controls and accountability for procurement. It is my understanding that this is under review. Tucson, a charter city, does not need "big brother" from the state of Maricopa dictating to the city how to manage its day-to-day operations.

UPDATE: For Republican Tucson City Council Member Steve Kozachik's ("The Koz") weekly rant against the Rio Nuevo District Board from last Friday, see Kozachik Blasts Rio Nuevo Board: "Clearly on the Flat End of a Learning Curve" | The Range: The Tucson Weekly.