Garfield Traub Proposal Not In Tucson’s Best Interest

In another apparent attempt to show the Legislature in Phoenix that there is some positive movement in Rio Nuevo, the Tucson City Council has voted to approve the development agreement presented by Garfield Traub.  The Counsel has a history of taking precipitous steps which unnecessarily cost taxpayers money. The bond sale last year that took an extra $18 million in interest debt from citizens’ pocketbooks is a prime example. Now they have voted to guarantee a $240 million debt without a final guaranteed maximum price (GMP) or a funding model that will be in effect once that GMP has been determined. Fiscal prudence, especially while wrestling with a significant budget shortfall, would indicate the wisdom in deferring this decision until Garfield Traub was in a position to better identify the true cost of the project, identify a specific funding model and allow the City to assess whether gambling on the proposal with taxpayer guaranteed debt made sense.

In April 2007 the City Council received completed studies and endorsed a redevelopment plan as a new energy for a new place. Greg Shelko (downtown development director) described the committment. “The mayor and council have bought into building these buildings (the arena, hotel and TCC expansion). The issue now is not revisiting the projects, but how to finance them.” (May 2008)

That plan involved a process that included prestigious consultants, local business input and neighborhood involvement.  It clearly laid out a concrete vision and method to achieve the “Big Three” – hotel, arena and convention center.   Years (and millions of taxpayer dollars) later that plan has been pushed aside in favor of a new idea.   No new energy and no new place.

What makes this vote even more curious is that it is taken while there is a “shovel ready” project sitting, ready to go, that would put the taxpayers at no financial risk. That is the remodeling of the Hotel Arizona.  It is anticipated that that project would be profitable to the City nearly immediately, would not force the City to guarantee long term debt on behalf of the taxpayers, would provide remodeled rooms under a major hotel name brand at approximately 1/2 the room rate the Garfield Traub project is requiring, and would have those rooms remodeled in time for next spring’s Gem & Mineral show.

The Garfield Traub proposal admits to the need for “additional revenues” in order to make their own projected debt service (the comfort of a 1 1/2x debt service level of support). Those additional revenues will come from a 6% transient tax and a 2% surcharge on guests at the Sheraton. That money would otherwise be available to the City to fund core priorities such as public safety, road maintenance and transit needs. In a time of tight fiscal constraints, giving away general fund money on a real estate deal that is based on uncertain final costs is unsound financial management. This proposal may make sense in the future but with current market conditions it is doomed to failure.

Unlike the plan presented three years ago, the Council is now relying on quick, one-shot successes. To revitalize downtown the leadership of Tucson needs the entire downtown region needs to be viewed in a holistic plan going forward. We sit atop ancient water and sewer lines. We have no plan upon which to base the eventual capacity requirements. We have no plan upon which to determine where and to what extent we will need power, telephone service, fiber optic, water, sewer – where will there exist aesthetic water elements that will call upon more capacity, where will we build the wide, well-lit walkways with drought resistant foliage to provide shade and to support artisans, and families who will visit such a well thought out entertainment district? Will we install the modern street car tracks on top of our present infrastructure and later be required to tear out those tracks in order to upgrade the systems now in place?

If presented with such an holistic plan, the Legislature in Phoenix would see that the City is finally moving forward with a plan, phased appropriately, has taken the mid-stream step of remodeling a moderately sized hotel to anchor further business development in the downtown area, and on that basis provide sales tax revenue to fund the cultural elements of Rio Nuevo going forward.

It is not too late to rebuild downtown Tucson.  Now more than ever Tucson needs Leadership.  The Council vote to embrace a risky, poorly-financed hotel deal is a step in the wrong direction.

Steve Kozachik, Ward 6 City Council candidate.

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